Q3 2019 Earnings Call
Shortly please continue to standby. Thank you for your patience.
I'd now like to turn the conference over to Miss Susan called <unk>, Investor Relations Officer, and Secretary to the border Veritex Holdings.
Thank you before we get started I'd like to remind you did this presentation may include forward looking statements no statements are subject to risks and uncertainties that could cause actual and anticipated results to differ.
He undertakes no obligation to publicly by any forward looking statement at this time, if you're locked into our webcast. Please refer to our slide presentation, including our Safe Harbor statement beginning on slide two for those of you joining us I phone. Please note that the safe Harbor statement and presentation are available on our website varitek.
Uh Huh all comments made during todays call are subject to that safe Harbor statement.
In addition to some of the financial metrics disgust will be on a non-GAAP basis, what our management believes better reflects the underlying core operating performance of the visit please see the reconciliation of all this GAAP non-GAAP measures in our filed 8-K earnings release.
Joining me today are my Malcolm Holland, our chairman and CEO , Terry Earley, our Chief Financial Officer, and Clay <unk>, Our Chief Credit Officer Malcolm.
Thank you Susan good morning, everyone. Overall third quarter was another nice quarter for vertex for the quarter. We produced operating income of 28.6 million or 53 cents per share.
This is after accounting for the previously announced charge off of a $6.1 million.
And gas long, we acquired the sovereign bank.
Like everyone else, we continue to be challenged with the declining rate environment. In addition to slower growth anticipated.
Sure he and his team have done an incredible job managing our balance sheet over the last six months to soften the blow of these declining rates remain focused on expense management.
The increase in our noninterest income.
I can make mention of a few of our year to date or nine month metrics keeping in mind. This is how long varitek and grain have been one company.
Diluted operating EPS is up 36 cents or 26.3%.
Pretax pre provision operating return on average assets is 2.3 per se.
Operating return on average assets is 1.58%.
Operating efficiency ratio was 43.2%.
And operating return on tangible common equity is 17.6%.
These strong back church were all achieved in a declining rate environment and while we were involved in integrating consolidating and transforming into the new veritex.
From a growth perspective, our mortgage warehouse book increased 33 million wire non mortgage warehouse loans decreased 78 Megan.
The 45 million dollar decrease in quarter over quarter loans can be attributed to three primary drivers first our paydowns and payoffs continue to accelerate.
We had a few relationships relocate to smaller banks were more the majority of these payoffs were commerce, driven and the sale of a company or moving loans through a long term fixed rate provider.
Silver lining the payoff number is that were resolved or paid off over 25 million of previously identified problem assets from the legacy Green portfolio.
Second new loan production is down 32% from the same period in 2018.
Even though our markets remain vibrant and strong with historical lows and statewide unemployment continued corporate and family relocations like gubernatorial 3000, new employee campus here in Dallas.
And overall state economy, that's booming opportunities appear fewer as clients are becoming more conservative as we move later in the cycle. We continue to have an active pipeline. However, we do anticipate that the fourth quarter will produce a mid single digit growth.
And third we're probably a bit optimistic that there wouldn't be a transition period and the credit delivery side, especially in Houston or bringing our two.
Lending cultures together under the leadership, a Jeff Kessler in Dallas, and John Honey in Houston, we see momentum beginning to build and replace our production staff in the rights seed and add some key new hires.
Oh, the credit from aside from the previously mentioned $6.1 million charge off we had a good quarter credit wise, we resolved 25 main a problem assets during the quarter and it looks like we haven't another strong problem asset loan reduction number in the fourth quarter.
Total M.D.A. decreased 26 million during the quarter.
From a 0.54% to point to 1% in total assets, we continue to see progress and shrinking the pool a problem assets, we acquired from Green and we still have confidence in our original credit marks.
Our energy book is now less than 25 million net of any mark.
I'll now turn the call over to Terry.
Thank you Malcolm good morning, everybody, let's take a few minutes to provide you with more details on bear, Texas financial results for the third quarter and 20 Nineteenone here today basis, you. The 2019 year to date financial results are the best I've seen in my career. These results have been accomplished while integrating and converting grain working through problem assets from the acquired.
Loan portfolios significant headwinds from declining rates and a more difficult growth environment skipping over to slide five note the table at the bottom half. The page. We chose 2019 year to date operating results not mentioned these in his remarks, but I do want to pass by this page without mentioning a few of them again these results clearly show.
The importance of scale and the impact of the merger between Veritex in Green.
Operating net income has grown almost $60 million from 2018 translating into an increase in fully diluted earnings per share of over 26%.
Operating return on tangible common equity has improved almost 350 basis points and now stands at about 17.6%. Finally, the operating efficiency ratio is it 43.2% an improvement of over 6% from 2018.
Skipping to slide seven focusing on the bottom right hand graph tangible book value per share. This $14.61 as of the ended the third quarter. This is down less than 1% since the end of 2018, starting in 2019, we had the merger with Green Bank and $1.38 cents intangible book value dilution.
And then the merger this was disclosed in the Q1 results. We've also absorbed approximately 88 cents per share dilution from the stock buyback and the dividends. We initiated this year from our perspective, the earn back to the tangible book value dilution from the merger is occurring meaningfully faster than originally modeled.
On slide eight.
The GAAP net interest margin decreased 10 basis points to 3.9% in Q3, while the adjusted NIM, which excludes all purchase accounting impacts declined nine basis points to 3.6 <unk> percent the table in the bottom right. This slide shows the items that impacted both the GAAP NIM and the adjusted NIM.
Focusing on the adjusted NIM falling short term interest rates have impacted the yield on earning assets and reduce the adjusted NIM by 12 basis points. This was largely outside of our control given that 69% of the loan portfolios floating this was partially offset by six basis point NIM expansion from lower rates on intra.
Bearing liabilities, where we executed a funding shift moving away from higher cost.
Deposit sources to much less expensive wholesale funding sources. So part of what we plan to do this quarter, we were able to do lower loan volumes and a negative shift in the earning asset mix accounts for the other three basis points and the adjusted NIM compression its management to chat to continue to transition the balance sheet to more news.
Oh position to reduce the risk of further falling interest rates.
On slide nine Veritex reported operating fee income of 8.4 million up from 6.7 in Q2 results for the quarter were positively impacted by stronger deposit fees and loan fees RSP. A revenue was basically flat with Q2, but our pipeline route remains strong and we're looking for improvement.
Q4, also where customer interest rate swap business had the best quarter. The year with 671000 fee revenue on 10 customer transactions as follows a weak second quarter, where we only had 12000 revenue also remember that Q2 fee income levels were negatively impacted by the $434000 right now.
The best DRA investment.
On slide 10, the company continues to operate efficiency efficiently.
Realizing the benefits of scale from the Green merger and a branch light business model overall expenses were below our target due to the credit on the FDIC insurance assessment and lower variable compensation expenses looking forward I expected operating expenses will stay in the $34 million to $35 million range.
On slide 11, total loans declined 3% on a linked quarter annualized basis. Please note that production from the Dallas Fort worth market increased significantly from the second to the third quarter. In addition to the improvement in our nonperforming assets at Malcolm mentioned the bank is also able to achieve a $25 million.
In the acquired loan the acquired PCI portfolio. Please see the table at the top right quadrant of the page the detailed on the floor is embedded in our loan portfolio shown bottom left and should provide additional relieved that short term rates continue lower.
On slide 12 blown to deposit ratio stood at 100.2% at the ended the quarter. If you back out in the mortgage warehouse balances from the loan total then the ratio moves down to 96.2%. We think this is even more important metric because of the liquidity characteristics of our mortgage warehouse loans one zone.
Our warehouse lines turn quickly and can be converted to cash of liquidity is needed.
As we discussed on last quarter's call, we've been aggressively reducing money market deposit rates and shifting out of our higher cost market index deposits and into federal home loan bank structured borrowings the graph on the bottom left of page shows it on a quarterly basis deposit rates, excluding purchase accounting declined by five basis points from Q2 to.
Q3, but we feel the progress is even greater than the quarterly analysis can show. Therefore, we added a monthly graph on the bottom right showing the cost of interest bearing deposits in federal home loan bank borrowings as you can see from June tools till September we were able to lower interest bearing deposit costs by 15 basis points. Additionally, we were able to lower the cost of.
FHLB borrowings from May to September about 99 basis points.
The executed rate reduction and funding shift has put upward pressure on our loan to deposit ratio, but has been instrumental in mitigating the downward NIM pressure from the floating rate loan portfolio.
Finally, noninterest bearing deposits now stand at 25% of total deposits.
Moving to slide 13, as Mel mentioned, we made good progress in reducing or Npis to 21 basis points of total assets. The Q3 loan provision was elevated because the resolution of the acquired energy loan from sovereign Bancshares, along with migration of acquired loans to originated loans through normal and scheduled renewals.
Now concerning Cecil how much will our allowance increase when the final implementation stage isn't are currently getting the Cecil model, who used to determine the allowance amount each quarter independently validated.
Preliminarily, we believe that the allowance for loan loss as a percentage of total loans could be in the range of 1.15% to 1.35% up from 45 basis points. Currently this amount includes a meaningful amount of purchase credit impaired reserves, which upon adoption will transfer into the allowance.
Without an impact the capital as of September Thirtyth this amounts approximately $36 million.
Finally on slide 14 capital ratios at the holding company in bank remained very strong our tangible common equity to tangible assets increased slightly to 10.17, even with our capital actions back in September Veritex announced an increase in a stock buyback to $100 million during the quarter. We returned 35.7.
The common shareholders through 20, my 29 million them the repurchase of almost 1.2 million shares and 6.7 million in common dividends.
On a year to date basis, we've returned 79 million to shareholders through the buyback of over 2.3 million shares and the dividend, which we initiated this year.
Additionally, veritex did declare its regular quarterly dividend 12, and a half sense, which will be paid in November .
Finally vertex has been working through the ratings process with croll and expect to have the rating announced shortly given the attractiveness of the sub debt marking market, we're considering an issuance in the future.
Closing, it's my opinion that Veritex as a significantly better company today than it was a year ago.
Our potential is significant and supported by our earnings power.
Growth markets culture market positioning and scarcity value.
Our job to execute on our strategy deliver strong financial results on a consistent basis and to keep telling this story to analysts investors with that I'd like to turn the call back over to Mike.
Thanks, Terry all in all we're very pleased with third quarter results. Despite the acquired sovereign bank charge off a little slower than expected loan.
We completed all conversions, we are fully integrated with Green bank extremely proud of my team's hard work and the progress we've made in nine months.
Seven acquisition since our inception nine years ago, M&A will always be a part of our company.
We have accomplished a great deal and have achieved a meaningful asset scale, where we can maximize profitability and efficiency. My team's focus is on three main items to continue to manage our credit risk to increase our deposit market share percentage and efficiently manage our capital we are not currently focusing on M&A.
But if we're successful on accomplishing these goals we'd be open to consider new opportunities that may present themselves down the road.
The markets we reside in are arguably the best in the nation, we have a top class executive team and our earnings power as an institution continues to be validated quarter after quarter, our balance sheet and capital position exhibit a strong and sturdy company and we're looking forward to closing out this transformational year with strong.
Order.
At this time, operator, I'd be happy to open line for any questions.
As a reminder to ask a question you need to press Star then one on your telephone to withdraw your question press. The pound key we ask that you. Please limit yourself to one question and one follow up question.
Please standby well, we compile the Q and any roster.
Our first question comes from Brett Rabatin with Piper Jaffray. Your line is now open.
Hi, guys good morning.
Great.
One of the first as Terry can you just give us the I appreciate the additional color on the monthly.
Cost of funds can you can you just give us some color it would seem like youd be able to mitigate margin pressure from premier to some degree you can you just talk about your outlook.
Now kind of post three Q and then you know kind of what other changes you're going to make on the balance sheet to insulate the margin from pressure.
Well I think with a great. That's a good question and I think with it with each move visit fed makes the beta from how you're able to reduce deposit your deposit rates, especially on money market goes off our certainly did in the July increase to the September increase.
And we'll continue to see that as we go to the rest of the rest of the year in general I think that.
Even if you do everything you can on the money market book, though you're still got it depending on what the fed does you're still going to feel some NIM compression.
Six.
The floors.
They're going to continue to to help and the deposit side I think you're doing we're doing everything we can there I think we've been pretty aggressive.
But I still think you're going to feel some compression. So my general view is that with each move you're going to get plus or minus about five bips of of compression to the core NIM.
I had you know so I guess, that's the best way I confess I can say to answer it.
I think I think.
We're going to have to continue to be aggressive we're going to have to look.
In terms of the funding mix, we're gonna have to continue to be opportunistic.
And I.
I know that deposits were down on a quarter over quarter basis, but believe we talked about this in the call core at the beginning of Q3 a lot of this was intentional we were we weren't we purposefully tried to move out some of our high priced market index deposits or the spread.
Yeah.
And use other sources can can we replicate what we've done on the wholesale borrowings side. This quarter I think is going to be I think it's going to be tough, but I do I mean, our wholesale borrowing rates are lower than what you see here on the scrap as we head off into Q3, but but can you can you move down the had another 100 basis points.
And for months now you probably can't so net net on the NIM with every move I think you're going to get somewhere in the 456 basis points of NIM compression with each move my personal view is that.
You know that the fed.
I think I think one more moves all they need to do if they need to do that but they don't listen to what I think anyway, so stop randomly.
Yeah I know that's that's that's helpful.
And then the other thing I wanted just to ask about was the payoffs were obviously a little more than that I expect it anyway do you have any visibility into.
You know kind of what's left that might be.
Susceptible to prepayment or getting taken away and then can you talk maybe about origination rates versus existing portfolio.
Yes, so yes, we have vision into payoffs I mean, it goes down to officers being in front of their their borrowers and managing their books, a little bit better I will say.
A lot of that stuff you can planned for and some of it you can.
The last day of the corridor on the Thirtyth.
We've got $66 million and pay offs.
So it's very if we would have closed the quarter a day before you would be seen positive.
Loan balances.
So we didnt know about some of those so.
Some of them or pay off some of.
Couple of them are refinances some of them are the problem asset resolution that I spoke about in fact, I think a majority of the problem assets.
Resolved on that day. So the answer is yes, we do have visibility we have an active pipeline we.
We get better added every month and we get better added every quarter.
We like what we see in the fourth quarter, we had some stuff rollover.
So.
Yes, we do have visibility, but everyone to allow you you look up and you get some payoffs, we didnt expect 66 million.
And then on the operating rates side, we've seen our lenders are doing a pretty damn good job of holding the line.
So I think it's.
No the origination rates for about 10, bips or so less than contractual portfolio right. Okay. So it's not fair or not it's not terrible our guys. It did a pretty good job and you know, we're getting back to that lower rate environment, where.
People quit moving money around because theres not much benefit the movement across the street and borrowers that they can't make deals work in the mid fours, they probably I'm going to work at any lower rate. So.
I think we're going to get back to some.
Some level of.
Yes, so keeping these things these things to say, but we'll see.
Okay.
Thanks appreciate all the color.
Thanks for accent Brad.
Thank you and our next question comes from Brad Milsaps with Sandler O'neill. Your line is now open.
Hey, good morning, guys.
Florida and breadth.
Terry I joined just a couple of minutes late but I did a catch the part.
Regarding Cecil you saw the purchase accounting impact would be.
Around 36 million moving from I guess.
The discount bucket over to the reserve if my numbers right you had about 60 million of discount on the books at.
June 30.
Is that is that about correct. So you'd have maybe 25 million or so less which you recognize this quarter that could.
Come back in through a net interest income.
That's correct.
Okay, and then on the CD on the deposit side of things to do those marks kind of run out at the ended the year or does some of those carry through into into 2020.
No no theres not enough that carry I mean, I'm sure. There's some fraction level that carries forward, but in my own internal internal forecasting I don't I don't even think about that and in 2020.
Got it okay and.
Knock them I apologize if you addressed this but but I know you guys have.
I've been doing a great job lately have taken advantage of some.
New hires can you talk about kind of maybe what you Didnt a quarter and then just sort of your outlook for what you think you might be able to do you know over the next 612 months given some disruption in kind of all your markets.
Yes, I mean, we continue to look for some new hires both Dallas Fort worth and in.
Houston.
We will announce pretty large higher here in the next week.
That we're super Super excited about.
We are.
We're chasing a pretty good higher in Fort worth.
That hasn't been done yet at the death.
Okay. So we have got we haven't finalized that one and then there's a couple in Houston and there's more than a couple.
We're working on Houston, So I.
I look I think it's going to be fairly active.
The issue is always come up with.
The season on when you get higher these folks into as we get closer to year AD and they get their bonuses and all that type of thing.
Im not exactly sure when we're going in land them I will tell you. It's a very active we actually have inbound calls.
To us.
Inquiring about opportunities, sometimes those aren't always the ones you want but we have a couple ones that are really strong so.
To answer your question I think it's going to be an active six months for us and adding to our.
Our relationship manager team.
If you go to guess the the bench strength that you've added this year what are you seek.
Sort of their capacity would be in terms of.
Being able to bring on loans over the next you name it six to 12 months.
Yes, I mean, so the way I read that question, Brad as you know what do you think you can do you and loan growth next year.
Net net.
There are certainly ended the cycle you got to be careful and so we're not going to run out there.
I'm not looking for us to do big double digit growth here in 2020, I do think that we're going to add some strong opportunities to deliver a high single digit number next year I feel really confident about that.
So that's probably how it after that.
Great. Thanks, guys appreciate it.
Thanks, Brett.
Thank you in the next question comes from my only with Stephens. Your line is now open.
Thanks, Good morning, guys.
On that.
Well I dig a little bit deeper on your loan growth commentary a your expectations sounds like mid single digit net growth in the fourth quarter and little bit higher than that next year.
That'd be a nice swing from what we saw in the third quarter help US understand is this is assuming the pay down flow from what we saw in the third quarter or is it more bad originations.
Really improving from when we saw in the third quarter.
I mean, it's both and but but the heavy the heavier side is the pay down side.
We had a heavy heavy third quarter pay down the specially in our Houston.
Market.
I still see a little bit of Paydown common but.
Originations.
Our pipelines are really strong I mean, not within 45 minutes ago I was working through our pipeline for the fourth quarter to try to give you. Some good color knowing that this.
A question might come up and I really I really like what I see.
So and that's a diverse it's not all in one area, it's not concentrated in one specific area.
The new hires that we that we are going to announce isn't that see eni space.
And so there's some.
There are some really nice disciplined.
That we're bringing on so I look at the third quarter is a little bit of an aberration.
Listen we've been a growth company for nine years, and we've been focused on growth, yes, we've done M&A, but we've always had a growth profile and I don't see that changing but as I said in my comments I think putting two companies like this together.
We were we were probably.
You know, we're probably too optimistic in putting together the credit piece of it to where we could continue at those growth levels I think those coming back.
Not not double digits, not 15% like we used to do but I do think I think we'll get back to and we're already headed that direction.
And I was just teary eyed follow Malcolm insight you know.
Yeah I'm vault.
Lot of banks.
And I always seen prepay speeds accelerate only acquired loan portfolio, especially.
Through the first three quarters following the close the deal.
They do start to normalize and if this when did I'm more Malcolm is if this one didn't revert to the main if you will then it would be the exception not the norm and I think we're going to see that starting this quarter used.
Okay.
And then switching gears, a I guess on the liability side.
Harry I appreciate allowing the loan deposit ratio drifting higher and lean more on the F.L.A.H. L b, but how much more room do you have on this and would you be willing to let the loan deposit ratio drift above 100%.
No I don't want to see the loan to deposit ratio, excluding mortgage warehouse go above 100.
I, just think that the more with the mortgage warehouse go into one of five we'll know eight.
Okay with that because we have a lot of off balance sheet liquidity, we've got a very liquid investment portfolio. We've got a lot of excess collateral. We can raised a lot of money quickly from a liquidity perspective.
So were you know we had this discussion with our board last week.
We are comfortable letting the FHLB things continue to move up.
Just because it's we're just trying to be opportunistic.
To help support the NIM so.
That's the we were encouraged but what we've been able to do this quarter I don't think we can do it to the same magnitude that in Q4, but I do think we'll continue to play pretty heavily there because of just the optimistic pricing that it affords us.
Got it thank you guys.
Thanks.
Thank you and our next question comes from Daniel Maddox with Raymond James Your line is now open.
Thanks, guys good morning.
Daniel.
Just wanted to start with buybacks, so you're about 60% utilize under the current plan if I look at.
What's left.
We have to be two active to get through this pretty soon just looking at that juxtaposed with your commentary on the sub debt offering can you give us a potential size of that and how you're thinking about a replacement authorization on the buyback.
Terry you want to answer that one yes.
Let me just comment a little bit more on the on on the sub debt deal look you know you I mean are bound this call knows where those rates are today it and when you look at those rates and those spreads and you think about the impact of increasing your tier two capital level optimizing your capital stack and lowering your overall cost and.
Capital that's the right.
Corporate financial thing to do and so that's playing into our thinking secondly.
Once you get through the ratings process your ability to access the market is pretty fast and.
And we've never been a company we have not been there as Veritex. We certainly have some acquired sub sub debt that will be callable in a couple of years and I look forward to that day.
But you know.
If we were first issuance is probably somewhere 52.
70 $580 million is more what we're thinking we want to be very conservative with the double leverage and you know we're trying to get optimizing capital stack and the reality is it can find its way into round three of the buyback units.
Got it. Thank you that's great color.
I want to switch over to fee income you mentioned now come that it's.
One of the focuses looking forward so.
There were a couple line items that were good in the quarter, such as swaps and it looks like loan fees.
Thinking about loan fees, specifically, how much of that is tied to the higher level of pay downs, where could we see that going forward and then if you guys could just touch on the Sta revenue.
I think you're expecting a bit more of a bounce back this quarter.
That.
Kind of has that moved over into the fourth quarter or should we expected to be threeq would be a good run rate there.
Yes, so I'll address SP a lumpy as you know we had we had a slower quarter than anticipated, but yes, there's quite a bit that rolled over into Q4.
We have a couple of opportunities in.
The U.S. da side in the fourth quarter that good.
Really haven't really have a nice quarter.
We're not 100% certain those are going to happen, but Sps has been very active.
In our fee business is one that we've we've really focused on the swap business is extremely active would you can certainly expect as rates go down and borrowers want to want to lock in.
What we've seen on the fee side is the Dallas Fort Worth group.
That's all vegan legacy Veritex folks have now bought into that and so they're starting to show a lot of product that that pipeline is again very very active.
The loan fee income I don't it's it's not hugely material and it does it's not driven by that prepayment piece.
It's more unused line fees.
Theres, certainly a little bit a prepaid fees there are some.
Servicing revenue on a growing SP, a portfolio that where we've sold off the guaranteed piece, but.
Were you are seeing the Prepays help you as an additional accretion income which was flat on a linked quarter basis wouldn't have declined as you would have expected, but that you're seeing it in the NIM the gap now and that's where you're seeing that come through.
Their area that we've the green had a really nice specialty treasury business.
We are spending some time right now and figuring out how we can grow some of that business and other lines.
And so we are going to spend a little time, there because it's a nice noninterest.
Barry I mean.
Interest income area, recognizing that that is one of our shortcomings.
So we are spending some time, there, but I think the fee outlook for Q4 as is actually quite good.
All right really helpful. Thanks, guys. That's it for me.
Okay. Thanks Daniel.
Thank you and our next question comes or Brady Gailey with KBW. Your line is now open.
Hey, good morning, guys.
Morning, writing so maybe we can start with expenses me all you have harvest or the cost saves expenses on a quarterly run rate has been coming down.
The 34 to 35 million our guidance I look out to be flat to up a little bit in the fourth quarter as you look at 2020.
Do you think that expense growth.
Kind of normalize and you could see a mid single digit.
Our growth rate and the expense base.
Yes, Brady's teary eyed due from the standpoint of not year over year, but using you note Q O Q4 run rate as we jump off into 20, I think you're going to see a more normal.
Not a normal expense growth right now we've got to be very we've got to be very focused on operating leverage and be sure to drive.
Positive operating leverage from the growth on the revenue side.
But I do you know we've done we've been talking a lot about new hire, especially in the production credits special asset space over the last the last six months and I. Thank you you know you've got we've been able to offset that.
But but I don't think theres not much juice left in the orange to squeeze out. So we are going to start to see expenses start to grow you got the whole benefit costs thing.
Of the health care et cetera that you're going to have to deal with and so yes. It's as I look out the 2020, I think you're going to see us start to does have some expense growth.
That's what we've been talking about not trying to drive this efficiency ratio on down the harvest these cost saves and get them invested back into risk management and growth because I think thats, what we need growth that we needed with really good risk management, especially at this stage of the cycle.
Got it right and then finally from me is just back to.
The deposit growth I get that some of it was.
Strategic and you don't purpose as you think that we see deposits continue to fall from here or do you think though there will be more stable looking forward.
I I'm more into stable camp I mean, you know when you. When you guys are looking at it from the outside I mean, I think the key thing is DTA was stable our core money market customers, where there's.
Good relationship and good spread in those.
We didn't get a lot of pushback from these rate cuts at all surprisingly.
But.
You know those that were were overpriced with negative spread or Cds that were overpriced with the same negative.
We've been okay, and letting those goes because we don't think those those are just price sensitive customers without deep relationships and so.
I think it should be stable, because I think a lot of what weve.
A lot of what we wanted to work out we've worked out kind of worked out the rational pricing as the Feds, Florida rights.
Okay got it thanks for the killer.
Okay Zebra.
Thank you and as a reminder, if you'd like to ask a question. Please press star one on your telephone to withdraw your question press the pound cake.
Next question comes from carry tender with D.A. Davidson. Your line is now open.
Thanks, guys good morning.
I appreciate the commentary on the on the kind of last day of the quarter payoffs of the 66 million, but if you adjust the kind of growth for the quarter.
For that number you're looking at about 2% linked quarter annualized growth.
Even with.
With that said so you know if you do get to.
Slowed down in the payoff activity in the fourth quarter.
I just.
Wonder about kind of the outlook for mid single digit growth is what needs to happen to.
There.
Yes, I mean these loans.
If you do.
Since mid.
Five 6%, you're talking about 100 million dollar growth rate.
Net mortgage warehouse, so when I when I do say probably need to make that clear. It's just net of mortgage warehouse. So.
I mean, we we have that identified these are loans that are in terms needs. These aren't loans that are being underwritten. These are loans that we know about we've we've got some payoffs in there that number is net of that so all I can tell you that.
From from our vantage point in our view today. That's that's a number we think is extremely achievable.
We're very granular in our tracking we track every loan over two and a half million dollars in every stage as it moves through here and his mouth I'm, saying our confidence in that tracking is improving and we can we keep we've got our eyes on what they are and they garner an enormous amount of attention to make sure. They are moving through the pipeline.
Okay. That's great appreciate the color there and then just on the on the buyback obviously very active in within the third quarter at a price, there's just a little bit lower than the stock is right right now.
And you did as much in third quarter is I think you had in the first few quarters of your combined so how do we think about the pace of a buyback fourth quarter and into early 2000.
I think it's a function of the strength of the stock price.
We have our buyback set up that the weaker the price gets the higher we're willing to move up into our maximum buying limit for every day.
So if the price stays weak and similar to current and what the prices kind of averaged over the third quarter, you'll see us be buying just as much we're not going to slow that down if the price strengthens up then you'll see a slowed a little bit so.
Yes, we've got the the authorization and the ability to be just as active but it'll be price driven but and I will say at these levels. We're we're pretty active and there's still some room to be active.
We still think this is the best way for us to reinvest our capital.
These levels and even a hair higher so I mean its a.
It's a positive for us we have to do something with this capital and there's no better investment we can make than in ourselves.
Great. Thank you.
Thanks here.
Thank you and there has no further questions in the queue at this time, ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.