Casey Haire: Great. Thank you.
Operator: Your next question comes from the line of Matthew Breese of Stephens Inc. Your line is open.
Matthew Breese: Hey, good morning. I know office CRE grabs a lot of the attention these days, but I was curious thoughts and updated color on the sponsor specialty and leveraged loan book. How have those portfolios been performing in a higher rate environment?
John Ciulla: Yes, Matt, so far, so good. We’ve talked about it before those companies that we underwrite there tend to have protectable, predictable cash flow streams, recurring cash flow streams, contractual cash flow streams. And so we haven’t seen a deterioration — significant deterioration in the credit profile. I’d say it’s behaving like the rest of the book, probably some level of moderate negative risk rating migration, but it hasn’t spooked us at all. And again, it’s always hard to predict the future, but one of the wonderful things about that portfolio besides the type of companies that we lend to are the private equity firms that we’ve been doing business with for 10 and 20 years that are kind of flush with cash, raising new funds and really not reticent to capitulate and give up these really good companies.
No question about the fact that these are floating — generally floating rate loans. So their debt service has increased. They generally are lower in contractual amortization. So really, it’s the interest expense and so far, the capacity to continue to service that debt has seemed strong. And obviously, we feel comfort in the fact that we’ve got strong private equity firms behind those companies in case things start to go sideways. Generally, we work things through with them and the deals continue to perform. So, so far, I’d say it’s coming out according to oil, which is they’re able to service the increased interest rate cost and we seem to have a pretty stable performance in that book.
Matthew Breese: And then just a reminder, what is the size of the — what meets the definition of leveraged loans and then anything beyond that, that would be considered a syndicated loan portfolio?
John Ciulla: Yes. This is — it’s tricky because there’s overlap everywhere, right? And we’ve reported on our regulatory, statutory leverage loans, those have actually remained relatively flat over the last couple of quarters. It’s about 6% of our total loan book or $3 billion. And most of that, as you intimated in our sponsor and specialty book. Our shared national credits are about 12% and there’s some subset of that, which is leveraged, but about 12% of total loans. That number is actually down from premerger Webster numbers as a percentage of total loans, just given kind of the mix that came together between Webster and Sterling. Again, no kind of differentiated performance there. So I’ve told the story a million times to the Street over the last 15 years about shared national credits.
We don’t have a buy-side desk. We’re not a stuffy for the big banks or the nonbanks who are syndicating out loans. Our use of shared national credits over the last 15 years has been in strategy or in geography or in product meaning that it’s a middle market or corporate company within our middle market footprint where we have cross-sell opportunities, direct access to management, but they have a $700 million credit facility. And certainly, we don’t have the balance sheet to provide that. So we’ll participate in that credit and cross-sell. It’s in our sponsor and specialty group where we have expertise in technology and other industry verticals where we’ll strategically participate with access to management. Again, we underwrite and portfolio manage all of our shared national credits exactly the same way we do a bilateral credit and our Shared National Credit book has a weighted average risk rating of about a full 0.5 turn, 50 basis point better than the overall weighted average risk rating of our commercial portfolio because those bigger companies can be more resilient and have more revenue streams.
So those are the data points, and I figured I’d share with you our view on how we go about underwriting and participating in shared national credits.
Matthew Breese: So understanding it’s likely a blend of the leverage loan portfolio, probably some real estate in there. Is it fair to assume the underwriting characteristics like sponsor and specialty, from a leverage perspective are similar to that book and from a commercial real estate perspective, or similar to the LTVs and debt serious coverage ratios we find in that
John Ciulla: Yes, I think that’s a fair statement. But I’ll also tell you, we have very little shared national credit exposure in commercial real estate and I mean very little. Most of our shared national credit exposure is in sponsor and specialty, in our middle market geography groups on mid-corporate and large corporate relationships we have. And then we have some in asset-based lending, those are the ones I worry about the lease. Those are larger retailers, strong agents, cash dominion we generally don’t have any problems with those transactions. So we don’t have very much shared national credit exposure in commercial real estate. It’s just not been one of our tools.
Matthew Breese: Understood. Okay. Last one for me. John, you had mentioned keeping capital handy for perhaps tuck-in acquisitions. I know historically, it’s been discussions around perhaps HSA tuck-in acquisitions, but I was curious if that comment meant anything broader is in whole banks or other sorts of fee income vehicles?
John Ciulla: Yes. No, great question. And I think we quite clearly mean sort of complementary acquisitions around fee generating or deposit gathering businesses where we have a path to some organic growth but would like to enhance and speed up that path to get a better balance of noninterest income and interest income rather than a whole bank acquisition. We don’t feel that right now, you never say never, and I’ve learned my lesson there. But given where we are, the great integration and conversion we just did, given the look at the dynamics in the marketplace, I would say highly unlikely whole bank activity on the inorganic side and it would be something that would be targeted on further low-cost deposit gathering or fee-generating businesses that are complementary to our existing activities.
Matthew Breese: Great. I’ll leave it there. Thank you for taking all my questions.
John Ciulla: Thank you.
Operator: Your next question comes from the line of Mark Fitzgibbon of Piper Sandler. Your line is open.
Mark Fitzgibbon: Glenn, I wonder I wondered if you could share your thoughts on restructuring or selling available-for-sale securities in the fourth quarter, given that rates may be stuck up here for a while.
Glenn MacInnes: Yes. So it is something we looked at, Mark, and you know that we did that in the first quarter of this year, we restructured about $400 million at that time. What I would say is it’s something we continually look at. And we balance that obviously because our capital levels and our capital forecast and things that we see as far as that. So I’ll leave it at there. It’s something that we continue to look at. And there’s obviously some opportunity there is competing against capital for other initiatives as well. So that’s where we are on there.
Mark Fitzgibbon: Okay. And then can you update us on how much you sold in this quarter in performing office loans and roughly where you sold those relative to par?
