EverBank Financial's CEO Discusses Q1 2014 Results - Earnings Call Transcript

Apr.30.14 | About: EverBank Financial (EVER)

EverBank Financial Corporation (NYSE:EVER)

Q1 2014 Earnings Conference Call

April 30, 2014, 8:30 AM ET

Executives

Scott Verlander - Vice President, Corporate Development and Investor Relations

Rob Clements - Chairman and Chief Executive Officer

Blake Wilson - our President and COO

Steve Fisher - Executive Vice President and Chief Financial Officer

Analysts

Ebrahim Poonawala - Merrill Lynch

Michael Rose - Raymond James

Jefferson Harralson - KBW

John Pancari - Evercore

Jeff Lengler - Goldman Sachs

Kevin Barker - Compass Point

Peyton Green - Sterne Agee

Matthew Keating - Barclays

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to EverBank Financial Corp's First Quarter 2014 Earnings Conference Call. My name is Amy and I will be your conference operator today. At this time, all participants are in listen-only mode. After the prepared remarks, the management from EverBank Financial Corp. will conduct a question-and-answer session, and conference participants will be given instructions at that time. As a reminder, this conference call is being recorded. (Operator Instructions)

I would now like to turn the conference over to Mr. Scott Verlander, Vice President, Corporate Development and Investor Relations for the company. Please go ahead sir.

Scott Verlander

Thank you, Amy. Good morning, everyone, and welcome to EverBank Financial Corp's first quarter 2014 earnings call. Today I'm joined by Rob Clements, our Chairman and CEO; Blake Wilson, our President and COO; and Steve Fisher, our Executive Vice President and CFO.

Before we begin, I would like to remind you that our first quarter earnings release, financial tables and earnings supplement are available on the Investor Relations section of our website.

I would also like to remind you that comments made on today's call deal with forward-looking statements related to the company and the banking industry and are subject to risks and uncertainties. Factors that may cause our actual results to differ from expectations are detailed in the company's filings with the SEC.

In addition, some of the company's remarks this morning may contain non-GAAP financial measures. You may find reconciliations to the most comparable GAAP measures in the company's earnings release and financial tables.

I would now like to turn the call over to the company's Chairman and CEO, Rob Clements.

Rob Clements

Thanks, Scott, and good morning, everyone. I'm pleased to report that the company got off to a good start in 2014, as we achieved strong portfolio loan growth and meaningful expense reductions as well as further progressed in simplifying our business model.

Net income was $32 in the first quarter compared to $18 million last quarter and $39 in the first quarter last year. Earnings per filly diluted share were $0.23 in the quarter compared to $0.13 last quarter and $0.30 in the first quarter last year. Tangible common equity per share increased 11% year-over-year to $11.78 at March 31.

During the quarter, we generated solid loan origination volumes that resulted in portfolio loan growth of nearly 5% quarter-over-quarter. We believe that we are on track to achieve the full year origination portfolio growth target we communicated last quarter, as we convert our strong pipeline into loans over the coming quarters.

We continue to be pleased with our net interest margin, which increased 4 bps from the prior quarter to 3.41%. Core NIM, which excludes the excess accretion from our Tygris acquisition, increased 6 basis points to 3.36%. Importantly, asset quality remained strong in the quarter as adjusted non-performing assets declined to 62 basis points and annualized net charge-offs declined to 12 basis points.

Our capital position also continues to be strong, with a bank Tier 1 leverage ratio of 9.1% and a total risk-based capital ratio of 14.3%. In addition, we are pleased to close the servicing sales of Green Tree at the end of the first quarter. Subsequent to the quarter-end, we received Ginnie Mae approval for the sub-servicing partnership and expect to get default servicing platform and sub-servicing transfer to be completed later this week.

The completion of our transaction with Green Tree is a key milestone in the extensive repositioning we've executed over the past nine months that was designed to simplify our business model, drive cost reductions and position the company for strategic growth. We believe the company is poised to continue benefiting from the long-term franchise financing investments we've made in our commercial and residential asset generation capabilities in corporate infrastructure.

We also continue to supplement our strategic organic growth plan with selective portfolio acquisitions that offer attractive risk-adjusted returns, accelerate our balance sheet growth and optimize asset performance.

I'll now turn the call over to Blake.

Blake Wilson

Thanks, Rob, and good morning, everyone. Consistent with the strategic objective we've shared with you over the past few quarters, we achieved strong portfolio loan growth of $611 million or 4.6% compared to the prior quarter, which represents an annualized growth rate of 18.4%. Organic asset generation volumes for our portfolio were $1.1 billion in the quarter or $4.6 billion annualized. We were pleased with the strong volumes in a seasonally low quarter and remain confident in our ability to achieve our full year retained origination guidance of $4 billion to $5 billion.

In the first quarter, we originated $326 million of commercial loans and leases to small and mid-sized businesses. Year-over-year, this represents a 30% increase in our commercial loan activity. The sequential decline we experienced was driven by normal seasonality as well as the strong fourth quarter of 2013. We're pleased with the profile of our growing commercial client base. I would like to highlight some recent transactions to demonstrate the quality of the assets we are originating.

Our commercial real estate business specializes in single and multi-tenant lending in the top 50 markets nationwide, with loans typically ranging from $2 million to $20 million. To give you an example of a typical single tenant loan, we closed a $9 million 70% loan-to-value loan secured by an 80,000 square foot office building in Southern California during the quarter with pricing in the mid-5% range. Another representative transaction is a $4 million 53% loan-to-value loan secured by a 49,000 square foot multi-tenant mixed-use office and a retail property in Albuquerque, New Mexico, that was priced around 5%. These types of transactions fit our credit risk appetite and often allow us to successfully compete between where the local community banks, regionals or life insurance companies participate.

Our commercial finance business specializes in small to mid-ticket equipment leasing nationwide with average leases ranging from $20,000 to $10 million. In addition, our lender finance business provides financing to other specialty finance and leasing companies across the country ranging in size from $15 million to over to $50 million. One representative equipment finance transaction completed during the quarter was to an A-plus rated existing commercial banking client in Florida. We were able to successfully cross-sell our leasing capabilities and executed three new equipment leases totaling $6 million with average yield in the high-4% to low-5%.

Another example is $50 million facility with an established aircraft leasing company, which resulted in a $3 million deposit relationship, demonstrating the client's appreciation of the value proposition we can bring on the deposit side.

We also continue to benefit from the integration of our commercial lending businesses and have been successful at attracting significant business deposits like I just described. We currently have $1.8 billion in business deposits, which represents 13% of total deposits. Heading into the second quarter, our commercial pipelines remain strong and we expect these businesses to drive meaningful loan and deposit growth this year.

As we have described over the past couple of quarters, we have simplified our residential lending activity to focus on serving the needs of our core consumer clients with prime purchase-oriented lending in top growth markets nationwide. Our growth and success in the jumbo segment is evidenced by our ranking as a top 10 jumbo originator based on the inside mortgage finance survey for 2013. We continue to build on that success in the first quarter with prime jumbo originations of $808 million, flat compared to the fourth quarter and up 5% year-over-year.

We believe we continue to take market share with total residential originations of $1.7 billion, decline of 15% in the quarter versus an overall market decline of 23%. Purchase transactions represented 47% of the volume in the quarter compared to 43% in the prior quarter. And our retail channel purchase mix increased to 70% from 67% a quarter ago.

The profile of our core consumer lending and banking clients is high quality. During the quarter, the average prime jumbo loan we originated was approximately $807,000 with an average loan to value of less than 68% and a FICO of 7.64. Also during the quarter, average household deposit balances were approximately $86,000 with an estimated 45% of our banking clients having income-producing assets of $250,000 or more.

Total deposits were flat in the quarter at $13.3 billion, in line with our expected funding plan. Over the last three to four quarters, we've been in a position of excess liquidity and intentionally reduced our marketing efforts in order to slow deposit inflows. We expect to resume growing deposits in the second half of the year.

With the successful execution of several strategic and cost reduction initiatives over the past few quarter, we are well positioned for strategic growth in our core consumer and commercial businesses.

And now, I'll turn the call over to Steve to cover the financial results for the quarter in more detail.

Steve Fisher

Thanks, Blake, and good morning. Net interest income was $131 million in the quarter, a decrease of $4 million or 3% compared to the fourth quarter, driven primarily by lower loans held for sale and lower commercial loan average balances and yield. As Rob mentioned, core NIM increased 6 basis points to 3.36%, driven primarily by the composition of our interest earning assets.

Underlying credit trends continue to be strong as our non-performing assets declined to 62 basis points and net charge-offs declined 8 basis points from the prior quarter to 12 basis points. Our allowance coverage stands at over four years based on the annualized charge-off activity we experienced in the quarter.

And for the first quarter, nearly two-thirds of our $5.7 billion non-governmental residential HFI portfolio was originated after 2010 with an average LTV of less than 67% and a weighted average FICO of 7.60. Our delinquency rates in this portfolio are approximately 70 basis points.

Looking upstream, we don't see any indicators that would materially change the favorable charge-off activity we experienced in the quarter, and we continue to expect quarterly provisions in the $3 million to $5 million this year.

Non-interest income was $85 million for the first quarter, a decrease of approximately 12% quarter-over-quarter. Excluding the impact of MSR valuation allowance recoveries, non-interest income decreased from $81 million to $80 million quarter-over-quarter.

Non-interest expense decreased $36 million or 18% to $161 million in the first quarter, driven by lower salaries, commissions and employee benefits, lower staffing levels as well as lower G&A expense resulting from reductions in other credit-related expense, FDIC and other agency fees, consent order related costs and professional fees. We are pleased with the significant progress we've made in reducing expenses. And consistent with our previous guidance, we continue to expect total non-interest expense to be approximately $650 million for 2014.

Now I'd like to turn it back over to Rob for some closing remarks.

Rob Clements

Thanks, Steve. We are on track to deliver the annual portfolio loan growth and expense guidance we outlined in January, which should result in a greater percentage of spread income and enhanced efficiency throughout the year. We remain focused on building sustainable shareholder value over the long term, optimistic about the future for EverBank and its shareholders.

We'd now be happy to take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question is from Najarian with Merrill Lynch.

Ebrahim Poonawala - Merrill Lynch

It's Ebrahim on behalf of Erika. A couple of quick questions. First, you mentioned in terms of increasing marketing efforts to grow deposits in the back half of the year. Can you give us a sense in terms of when we look at the loans to deposit ratio, it's about 104% on a period-end basis at the end of first quarter. How much higher can this go and sort of how do we think about deposit growth in the context of where this ratio can go in the next few quarters?

Rob Clements

We do have a history of carefully calibrating our deposit growth based on our funding needs. Of late, we've had strong liquidity and have intentionally moderated our deposit growth. But if you look at our experience and I think 2012 is a great example of where first half of the year, deposit growth was relatively flat and we intentionally backed off of our market efforts. And then in anticipation of stronger asset growth and in particular the acquisition of business property lending from GE, we did increase our marketing effort and significantly accelerated our deposit growth to fully fund that acquisition.

And as we indicated and as Blake referenced, we anticipate in the latter part of the year a similar dynamic where in anticipation of meaningful balance sheet growth with the latter part of the year that we're in a position to start reactivating some of our marketing efforts and would expect to enjoy kind of a similar outcome that we did before.

Blake Wilson

And just to add to that specifically to the loan to deposit ratio, we are comfortable, given the strong asset-based liquidity that we have, taking that up in north of 100%. But like we also mentioned in the call, we'll have a targeted deposit growth strategy, specifically looking at particular products or client segments to grow deposits in the back half of the year, commencing with some of our loan growth.

Ebrahim Poonawala - Merrill Lynch

And then I guess in terms of as you look to grow these deposits, should we expect deposits cost moving higher, or can you still deposits at lower than where current cost of deposits are today?

Rob Clements

We think we can pull back significantly on our marketing efforts over the last nine months. We think with increased marketing efforts, our real focus on a particular few product opportunities combined with some particular client opportunities that that will be a real attractive way for us to grow deposits without a broad-based rate change or pricing change in the deposit structure.

Operator

The next question is from Michael Rose with Raymond James.

Michael Rose - Raymond James

Hey, just a follow-up on Ebrahim's question. On the non-interest expense side, would you expect to incur additional cost related to ramping up the efforts on the marketing side to grow deposits and kind of what would that impact or what could that impact be?

Rob Clements

We really expect that to start to occur more in the back half of the year commensurate with a lot of the continuation in the loan growth. So we really on the margin don't expect that to be significant. We'll use our historic channels, online, et cetera. There'll be some marginal increase there, but we think we still have a fair amount of room to do that and still stay within the $650 million target that we gave for the year overall.

Michael Rose - Raymond James

And then on organic asset generation retention, should we expect that the shift in the mix will shift away from the residential mortgage side and shift to the commercial and commercial real estate side as we move through the year?

Rob Clements

That would be the anticipation. It can be lumpy in the first quarter with a higher mix of residential organic growth versus commercial. But over time, we would expect longer term to see that approach more of a 50-50 split. And as the year progresses, we would expect to see the commercial mix continue to improve.

Michael Rose - Raymond James

And just one follow-up to that. What did BPL represent of this quarter's retained production?

Blake Wilson

BPL came in $123 million for the quarter. And the commercial finance group came in at $203 million for a total of 3.6. And so obviously the fourth quarter was seasonally high particularly on the equipment finance side, and as Rob mentioned, can be a little lumpy. The two quarters on average tend to be representative probably sustainable results.

Rob Clements

And I would say on a relative basis, we're seeing more momentum in our single-tenant pipeline on a relative basis going into the next quarter after a relatively slow first quarter.

Operator

Our next question is from Jefferson Harralson with KBW.

Jefferson Harralson - KBW

How should we think about the size of the balance sheet in the next two and three quarters? You had guided to flattish, but think it possible to use that more of the liquidity than you may have thought this quarter. Should we expect flat in Q2 or is it should be growing from here?

Rob Clements

No, we think that we really turned the corner overall with the repositioning execution over the last three quarters. As you know that we've brought down the cash position, we've brought down the loans held for sale significantly and have now reached a real baseline with incremental growth from here in loans held for investment. So we think from here on out, we'll see nice net adds to our asset base consistent with the overall asset growth targets that we've been talking about.

Jefferson Harralson - KBW

And how should we think about the servicing sale affecting the quarters versus this quarter in the next one or two quarters?

Blake Wilson

Right now, as you can see from the release, the transfer date is May 1st, we're close, a few days away from that. And then as you saw in the supplement, there's about 700 folks that will relocate out of the bank at that point in time. So we'll see the expense reductions that we've been talking about really beginning in the second quarter. We'll also start to see some of the revenue declines as we did sell the asset at the end of the first quarter. So you'll see that from a full quarter perspective. But I'd reference you back to the guidance we gave you around the pre-tax benefit of the deal is about $20 million to $25 million. And when we said that, we were thinking there was kind of a 10 to 11 month benefits or call it $2 million of pre-tax income benefit on a monthly basis. And so beginning May 1st, we should start to see that play through.

Jefferson Harralson - KBW

On the representative transactions, you guys gave two commercial loans, the mid-5%. Can you just talk about the maturity? Is that a 10-year maturity or 15, or what's the maturity on those?

Rob Clements

As you know, the commercial real estate transactions tend to be [ph] 5 one, 7 one, and 10 one. So I think the examples that we gave here were in that range.

Operator

The next question is from John Pancari with Evercore.

John Pancari - Evercore

I wanted to get a little more detail on the loan growth in the quarter. Again, the ended period balance looks like it's above the average balance. I mean is that indicative of stronger growth late in the quarter, particularly in resi, and is that sustainable here?

Rob Clements

That's exactly what it represents. We had really strong momentum building more into March with closings and continuing with strong pipelines into the second quarter.

John Pancari - Evercore

And also on that front, I wanted to get a little bit more color on the decline in the CRE balances. And I believe you had indicated some of that is seasonality. So can you give us a little bit of color on the change there in CRE? And then what is a good growth rate to assume going forward for a couple of these commercial portfolios, like the BPL portfolio in CRE as well as the leasing portfolio? How should we think about the growth rate?

Blake Wilson

In the fourth quarter, commercial closings were unusually high and in the first quarter was impacted by seasonality and we hate to point out the weather issue. But we'll go ahead and do that as well. But the important thing is the strong momentum we're seeing in the pipelines. And despite a slow first quarter, we're still on target to hit the asset growth projections that we had indicated previously. So we feel very good about the momentum looking forward.

Rob Clements

And I think just to draw you back to if you look at the fourth quarter, in some of the businesses that's seasonally high, particularly the equipment finance business. And the first quarter is seasonally low. And then some of the other transactions can be a little bit lumpy. But if you look at the fourth quarter and the first quarter on average, you're just over $500 million, couple of hundred million dollars from commercial real estate, $300 million-ish from commercial finance. On average, that's probably again pretty good.

John Pancari - Evercore

And then on the competition front, wondering if you can give a little bit of color on what you're seeing in terms of competition by portfolio? And if you can, can you provide us with the new production yield that you're seeing in the loan book by loan type?

Rob Clements

Yeah, sure. Maybe first with the yield, we're seeing residential yields generally in 3.5% to upper 3% range depending on the maturity, most of those being in the [ph] 5 one, 7 one, and 10 one, hybrid range. From a commercial perspective on the commercial real estate side, we tend to see most of those in the kind of 4.5%, a little bit higher as I indicated with a couple of examples, 4.5% to 5% range. And then on the commercial finance business, that tends to be in the kind of 5% to 5.5% range overall.

In terms of competition, it depends on segment and market. In particular, we're seeing some of the commercial finance segments, where particular high-quality sectors, there's more competition. So we've adjusted our positions and focused on clients, where we can really balance out risk and return. There are really no particular markets in general that as highlighted on the residential side, outside California, it's got particular competition. And in particular, we continue to see some of the large banks participate in the 30-year fixed jumbo market and really gain market share in that particular segment kind of through secondary level. So overall, it's nice to be diversified and in markets to find value and compete in the categories where we're strong.

Blake Wilson

And most importantly, we're able to achieve our risk-adjusted returns in this environment without having to compromise a lot on our credit discipline. So it's competitive, but we're able to accomplishing our asset targets without having to change our overall philosophy on price and credit.

Rob Clements

The area that we found most competitive and that we really pulled out of was the core C&I lending. And so we're really not participating in that market because of the risk/return relationship really not meeting our requirements.

Operator

(Operator Instructions) And our next question is from Jeff Lengler with Goldman Sachs.

Jeff Lengler - Goldman Sachs

Seems like despite your intent to grow deposits, funding costs can still be more or less stable from here. I guess as you think about kind of the incremental margin that you're going to get on new asset growth, how should we think about the trajectory of the net interest margin throughout the rest of the year?

Rob Clements

I think you're hitting on a key point that as we transition from here, we feel like we've got a good stable base in our interest expense and the blended yield that we see overall when you kind of factor that all in with the asset rotation, given run-off, the NIM and the core NIM that we saw during the period has been stable to improving a little bit. We've got generally into the low to mid-3s. And that tends to be over the last couple of quarters, we did stabilize in that area there.

Jeff Lengler - Goldman Sachs

Just on the purchase mortgage environment, we've heard from a couple of banks that the amount of inventory or just housing stock available is quite limited. As we're entering into the spring selling season, I guess do you expect this dynamic that perhaps are thought in less of a seasonal uptick and kind of the purchase mortgage volume you do in the second quarter than what we've historically seen? And as we kind of look out the next 12 months, can you just give us a sense of like your expectations for the purchase mortgage environment?

Rob Clements

Yeah, clearly coming out of the winter months, you really got to take it market-by-market. Your point relative to housing supply, particularly on the West Coast markets, is where we're seeing more of that play in. The Southeast continues to be strong and we see good opportunities there. The Northeast has been slow seasonally because of the weather. All in, we are seeing a building momentum as we enter into the spring home buying season. Where that ultimately goes, there is a range of outcomes, but there is strength building from the recent months that we've seen.

Jeff Lengler - Goldman Sachs

And just one quick housekeeping question. The $650 million total NIE guidance, does that include any one-time costs related to the (inaudible) transaction?

Blake Wilson

No, it doesn't.

Operator

Our next question is from Kevin Barker with Compass Point.

Kevin Barker - Compass Point

Given the changes in your business and the change in strategic direction over the last several quarters, how should we think about where your efficiency ratio is going to end up at the end of the year, given it's running at about 76% this quarter, and it's come down from about 80% in prior quarters. Where do you think that ends up by the end of the year and maybe coming into 2015?

Rob Clements

Kevin, as we've stated before, we have to start going out because of our business mix, not focused heavily on the efficiency ratio. However, as you pointed out, it has come down materially as a result of the repositioning. And we see the potential to decline, which has climbed materially going forward. So we would expect at the end of the year, but we'll see some meaningful improvement from where we are today.

Kevin Barker - Compass Point

And then given all the moving parts on the servicing transfer and that the platform is going separately from the asset, do you have any anticipation of selling more servicing assets to reduce your exposure to that asset class, or do you expect it to remain stable over the long term?

Rob Clements

We don't anticipate at least in the near term selling any more servicing assets. We aren't producing as much MSR, given the shift in portfolio growth strategy. So now that a decent amount of the production overall is going into the loan product portfolio versus origination and sell, so the creation of the asset relative to the capital growth is declining on a relative basis.

Operator

Our next question is a follow-up from Erika Najarian with Merrill Lynch.

Ebrahim Poonawala - Merrill Lynch

Ebrahim here. Just a quick follow-up on the expense line. Obviously, the $161 million run rate implies a full year expense of $645 million. And I understand there is some pickup maybe on the marketing expenses, but then servicing related cost (inaudible) should come down. I mean I am just wondering are there any other expenses that might go up to get you closer to that $650 million number versus maybe closer to the 1Q run rate or likely lower than that as we go forward?

Blake Wilson

I think we're still very comfortable with the $650 million. The $161 million did include a $5 million FDIC recovery that we had in the quarter. So I think if you backed that out, you get a run rate that's closer to the kind of mid-$660s million. And then with the benefit from the Green Tree transaction gets us back to under that $650 million. We also have assumed some marginal production increase in cost that come with that. So the areas we've talked about the seasonal decline in the first quarter, the relative commission level, for example, you would expect to increase as production and revenue-producing activities increased as well. So we really look at it as tied to some of the assumptions that we're making as to some of the growth and some of our production channels.

Ebrahim Poonawala - Merrill Lynch

And one more question just in terms of following up on sort of from a strategic standpoint if the franchise had a lot of changes and moving parts over the last year or two, if the franchise is where you want it to be and sort of grow it from that base as opposed to all the other changes that we should anticipate over the next year or so, you might still exit certain lines of businesses or portfolios?

Blake Wilson

Overall, I would say our major repositioning efforts are behind us. And we're very bullish on our growth prospects and our ability to generate stronger earnings growth and in particular build our net interest income through just the ongoing organic growth that we'll see in our existing business lines. There are interesting M&A opportunities out there and we'll continue to evaluate those opportunities, but there is no pressure to still avoid today and feel really good about what we have in place and what we'll be able to achieve just by nurturing our existing business lines.

Operator

Our next question is from Peyton Green with Sterne Agee.

Peyton Green - Sterne Agee

Blake, I was wondering if you could touch on the servicing business just in a little bit more detail. Would you expect the servicing UPB to decline over the next couple of years as you continue to retain balances? What kind of roll-off rate should we expect on that?

Blake Wilson

It will continue to grow, but at a lower percentage growth rate, given the mix or depending on the mix of retained loans versus sold loans. Overall, relative to the pace of capital growth, we think it will continue to drift down. I think we ended up the quarter just over 25% in MSR to capital. And so as we grow capital at a faster rate, we'll think that ratio will continue to decline.

Steve Fisher

Just to add to that, Peyton, if you look at the current quarter, we had about $20 million, $20.5 million of amortization that's been coming down, but it also had some benefit from the Green Tree transactions since the bases we sold out, we'll reduce the amortization number. But we added only about $12 million of MSR in the quarter. So to Blake's point earlier, we're adding less MSR with the change in strategy to the portfolio. Assuming that the amortization continues to come in, we'll probably still run it off a little bit faster than the equipment on, assuming we stay about where we are now.

Peyton Green - Sterne Agee

And then with regard to the pro forma portfolio versus what's being moved off to Green Tree, how much more would you expect the amortization to drop?

Steve Fisher

Well, I think we disclosed that there is $56 million of basis that we've sold and the $10 billion of UPB that we've sold. So I think that will evaluate to something around $1 million to $3 million of amortization per quarter if you just see kind of historical prepayment fees.

Peyton Green - Sterne Agee

Wouldn't the asset that you're selling have a higher prepayment rate and a higher amortization rate, or isn't that right?

Steve Fisher

I think it would. I was just trying to give you a kind of a frame as to what it would be. So I think it's in that $1 million to $3 million a quarter type range.

Peyton Green - Sterne Agee

The interperiod balances certainly were probably a little bit better than we were looking for. What would you expect the average earning asset balance to ramp more? The cash position was pretty big at the end of the year. Does it still have more to go, or is there more securities remix that you'd like to do, or earning assets growth loans going forward?

Steve Fisher

We think we've turned the corner on that and we'll start to see the average assets continue to see growth.

Operator

Our next question is from Matthew Keating with Barclays.

Matthew Keating - Barclays

The gain on sale loans this quarter actually held up pretty well vis-à-vis the fourth quarter despite the drop in residential mortgage origination volumes in the quarter. I was hoping you could comment on what you expect from that going forward or at least maybe what you saw in the month of April and through the month there in terms of gain on sale and what you think kind of a reasonable full year approximation might look like in terms of that revenue line item?

Rob Clements

In the first quarter and some over the fourth quarter, one thing we've been relatively pleased with is really the stability in the agency margins overall. And so we haven't seen anything that suggests that's changing from the recent activity.

Matthew Keating - Barclays

And so with this current quarter's base fee, a target you think you might see for the full year or do you expect a continued decline in that line item as discontinued portfolio more jumbo hybrid on?

Rob Clements

If you really kind of look at all of the repositioning over the last three quarters, we've really kind of normalized down in non-interest income, in particular around servicing income and gain on sale. We've normalized down to a base level of non-interest expense. And so we think both of those categories are stable from here and then really the key driver of growth will be the asset growth number and net interest income as we look forward. So nothing we see really the mix from the first quarter and the gain on sale numbers are indicative to maybe some improvement, given the seasonality factors. But no other color than that really.

Operator

There are no further questions at this time. I would like to pass the call back to Rob Clements for closing remarks.

Rob Clements

Well, thank you joining us today. And we look forward to updating everyone on future calls. Have a great day.

Operator

The conference is now concluded. Thank you for attending today's presentation and please disconnect your lines.

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EverBank Financial (EVER): Q1 EPS of $0.23 beats by $0.02. Revenue of $215M (-22.4% Y/Y) misses by $5.17M.