Q4 2019 Earnings Call
All participants will be in listen only about please note. This event is being recorded.
I would now like to turn the conference over to Mr. Susan Cottle.
Mr Relations Officer, and Secretary of the Board Certex warning.
Thank you before we get started I'd like to remind you that this presentation may include forward looking statements and those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ the company undertakes no obligation to public would revise any forward looking statements.
This kind of your loved the into our webcast. Please refer to our slide presentation, including our Safe Harbor statement beginning on slide two for those of you joining by phone. Please note that the safe Harbor statement and presentation are available on our website Varitek Bank Dotcom all comments made during today's call are subject to that right.
Harbor segment.
In addition to some of the financial metrics discussed will be on a non-GAAP basis, but our management believes better reflects the underlying core operating performance of the business.
Please see the reconciliation of all discuss non-GAAP measures in our filed 8-K earnings release.
Joining me today, our Malcolm Holland, our chairman CEO , Terry Earley, our Chief Financial Officer, and claim we beat our Chief Credit Officer No.
Thank you Susan good morning, everyone.
First of all year, the new vertex is in the books, we've accomplished a great deal build some real positive momentum moving into 2020 for the quarter ending 12, 31 night team delivered operating income of 30.3 million or 58 cents per share.
For the year, ending 12, 31 night team, our operating EPS was $2.29 per share versus the dollar 84 for the year ending 12 30 118.
25% increase the annual earnings just like we forecasted at the announcement of the Green merger in July 2018.
The non mortgage warehouse loan growth for our fourth quarter was the best quarter the year.
Why result, Paydowns and payoffs pull back a bit and some and found some funding stability in Houston, our DFW market continues to produce a majority of our net loan growth.
For the quarter loans increased 6% annualized majority funded in December so we didn't receive the full interest income benefit during Q4.
Our pipelines remain steady and growing you can see later in the deck that our coordinate all commitment to continue to progress upward at a nice pace.
Previously stated that we underestimated the disruption that merger would have went on loan production side. We're now approaching levels of new commitments that should produce mid single digit loan growth for 2020.
The growth on the deposit side was remarkable D.A. growth exceeded 20% annualized interest bearing transaction accounts grew 20% we've not seen this type of growth in these accounts for years.
The reasons for this growth can be found on a few areas first getting the noise in the merger behind us both our relationship managers and clients feel that the challenges of our combination are behind us.
The competitive marketplace for deposits seems to have softened fueled by the said slowing a reduction in rate.
Third our continued pursuit from the top of the house pushing the importance of deposit gathering behaviors and our corresponding deposit incentive programs.
I'm pretty sure we'll build keep this pace, but I'm encouraged by the momentum we currently have an area.
Net interest margin does appear to be settling down a bit although it is still somewhat challenging as we continue to reprice in deposit book Jerry provides additional detail shortly.
From a credit perspective, we feel we had an excellent quarter with just one exception legacy grain relationship and the child care industry with two real property loan facilities.
Total debt of 18.9 million was added to non accrual during the quarter and impairment analysis was performed on both loans and there's currently no impairment to the principal balance. This relationship is the main driver increasing our npis from point to 1% the 0.5%.
Other than that outlier, we continue to have strong confidence in our original marks on the Green PCR loan book.
Specific book reduce 22 million or 15% during the quarter for the year. The book has been reduced from 177 million to the current level of 126 million.
I'll now turn the call over to Terry. Thank you welcome and good morning, everybody wants a few minutes to provide you with more details on bridgetex its financial results for the fourth quarter and the full year 2019.
As in the last couple of quarters, we do have some noise in the numbers. Although the noise has declined substantially this almost out of the operating results. So please note that the most part my commentary will focus on Bridgetex is fourth quarter financial results on a non-GAAP operating basis, which excludes Lawson security sales merger expenses and other tax related items.
Now on slide four which focuses on the Q4 results Mountains already mentioned are operating fully diluted earnings per share. But in addition, the operating pretax pre provision return on average assets was 2.07%, which represents our fourth consecutive quarter above 2% and the operating return on average.
Rich tangible common equity improved to 16.87%.
On slide five the table at the bottom half the page shows 2019 versus 2018 operating results Mountain mentioned, a few in financial metrics in his remarks, but I don't want to pass by this page without highlighting the strong earnings profile that has been created through the merger between Veritex Green.
Skipping to slide seven.
Focusing on the bottom right hand graft.
Tangible book value per shares $14 and 74 test after the end to the fourth quarter.
This is equal to the book value immediately before the Green merger. During 2019. In addition to the dollar 38.
And tangible book value dilution from the Green Bank merger that was disclosed in the Q1 results. We've also absorbed approximately $1.32 cents per share dilution stock buybacks and dividends from our perspective, the earn back the tangible book value dilution from the merger is occurring meaningfully faster than originally modeled on.
On slide eight the GAAP net interest margin decreased nine basis points, the 3.81% in Q4, while the adjusted net interest margin, which excludes the impact of purchase accounting declined 13 basis points to 3.47%.
The table in the bottom right in slide shows the in the items that impacted both the GAAP NIM and the adjusted NIM.
Focusing on the adjusted net interest margin, which excludes the impact of purchase accounting falling short term interest rates, coupled with a loan portfolio that is 70% floating impacted the yield on loans and reduce the adjusted net interest margin by 24 basis points. The purchase interest rate floors and those are embedded in our floating rate loans will come.
You need to help offset potential continued downward pressure on short term rates. This was partially offset by 40 basis point NIM expansion from lower rates on interest bearing deposits and another four basis points expansion from the lower rates paid on or federal home loan bank advances as we have discussed for several quarters, we will continue to be agree.
Good on the funding side, including rate reductions on the deposit portfolio and to use a structured federal home loan bank funding more to come on the funding slide in a minute as we announced during the quarter vertex completed the issuance of $75 million and subordinated debt. This funding cost of three basis point decline the net interest margin.
Finally, as can be seen on page nine an earnings release, we carried considerable excess liquidity during the quarter as a result of the debt issuance strong deposit growth and lake quarter loan growth. This excess liquidity was largely deployed by the ended the quarter.
Which management's intent to continue the transition to balance sheet to more neutral position as we believe the risk is greater to falling rates as opposed to rising rates. We've made good progress on reducing interest rate risk into fourq default rates as the impact on net interest income from 100 basis points decreasing.
Rates declined almost 30%.
On slide nine vertex reported operating fee income of 7.6 million down from 8.4 million in Q3 results for the quarter were weaker in all categories, except deposit fees deposit fees account for 45% of fee income and a growing 6% since Q1 it was another disappointing quarter.
Yes, the business after a great start to 2019 in Q1 also our customer interest rate swap business had a weaker Q4 after a very strong Q3.
On slide 10.
Continues to operate efficiently realizing the benefits of scale from the green merger and the brands like business model overall expenses.
Point 8 million due primarily to personnel costs within this category. The vast majority the increases in variable compensation and stock based compensation. If you recall, we've been signaling for several quarters than we expected expenses to run in the $34 million to $35 million range, we were slightly above our target in Q4.
For the reasons I just mentioned.
On slide 11, total loans increased 87 million or 6.1% on a linked quarter annualized basis.
Excluding mortgage warehouse one could production continues to improve with Q4 levels. The best of the year BMW continues to be very strong with Houston, making some progress clearly an improving growth profile as we head into 2020.
We acquired loan portfolio is now down to 2.2 billion and has declined approximately one in a quarter big entered 2019.
We're pleased with the progress and working down this part of the portfolio and continued significant reductions remain a goal for 20 Cohen. Please see the table the topline crop quadrant of the page.
A detailed on the floors embedding our loan portfolio was shown bottom left and again should provide additional rigs relief if short term rates continue lower.
The loan portfolio mix as shown in the bottom right. We liked the diversification portfolio, but would prefer to increase the allocation to residential mortgages the cost of the duration of this asset class.
As Malcolm mentioned I'm on page 12, it was an amazing quarter on the deposit product growth. Excluding time deposits was $210 million were 21% growth linked quarter annualized.
The mix of the deposit portfolio has improved significantly over 29, King widget reliance on time deposits dropping from 36% to 29%.
The loan deposit ratio, excluding the mortgage warehouse stood at 97.3% inside the range we've targeted.
As we've discussed on every earnings call since the fed pivoted on interest rates in may we've been aggressively reducing money market and time deposit rates and shifting out of the higher cost market indexes market index deposit.
And into structured borrowings the graph in the bottom left of the page shows and on a quarterly basis deposit rates, excluding purchase accounting declined by 24 basis points from Q3 Q4.
Turning to federal home loan Bank side, obviously, we were able to lower the cost to federal home loan bank borrowings from Q3 to Q4 about 48 Bips. This was on top of the rate reduction we achieved in Q3 of 69 basis points. So the total in the back half of 2019 was 117 basis points when the Fed reserve Federal Reserve moved only 70.
Five basis points finally, noninterest bearing deposits now stand at 26.4% of total deposits.
Moving to slide 13 markets already discussed credit his comments I would like to point out that approximately 1.2 million of the Q4 loan loss provision relates to the migration of the acquired portfolio into the Veritex originated portfolio through the normal renewal process.
After the implementation of seats on January one. This quarterly addition to the provision will no longer be necessary because this will be incorporated into the Cecil transition adjustment.
Finally on slide 14.
Capital ratios at the holding company in the bank remains very strong our tangible common equity to tangible assets decreased only slightly to 10.1% even with all of our capital actions.
Back in December Veritex announced.
Recent stock buyback to $175 million.
During the quarter, we returned 42.2 million to common shareholders, including 35.7 billion from the repurchase of 1 billion 454000 shares of stock and 6.5 million in dividends on a year to date basis. We returned 121 billion to shareholders through the buyback of over 3.8 million shares.
Were 7% of the outstanding shares and dividend, which we've initiated and 19.
Outstanding shares of the company looking forward, considering our excess capital organic capital generation from our strong earnings profile and the 80.5 million we have remaining under our improved buyback we expect to remain active with the share repurchases because weve list leave this to be the best investment we can make when their excess capital.
As you saw in the press release vertex increased its regular quarterly dividend by 36% to 17 cents per share which will be paid in February .
Lastly, sir understanding that during Q4, our last private equity shareholder that held 2.6 million shares at September Thirtyth has exited their position.
Glad to finally have the overhang from the private equity ownership multiple things with that I'd like to turn call back over to Mark.
Thank you Terry as you can see we continue to execute on our plan to deliver the metrics, we communicated over a year and a half ago our year over year metrics included 25% increase in operating earnings operating pretax pre provision return of 2.24% return on average assets of 156 per se.
And return on PC, a 17% and an efficiency operating efficiency ratio of 44% my team and I still think we have room for some improvement.
We continue to be very active on the hiring front. Since 930 19, we have hired three new lenders and have ongoing discussions with several high level managers.
Lenders and leaders in both DFW and Houston, the recent disruption in our marketplace by another announced merger has triggered quite a story of potential seasoned bankers that may be available for our higher in all areas of our business model.
Spec hiring opportunities to increase over the next couple of quarters.
Concerning M&A it'd be fair to communicate that it is lower on the radar not something that we're actively pursuing.
However, we remain open to any opportunities that may present themselves that would add value to our business.
I came continues to focus on maintaining our topic Jack objectives for 2020 quality credit growing loans and deposits and deploying capital in the most efficient way possible 2020 is looking like a solid year for very tax and we're already off to a good start.
Operator at this time, we open the line for any questions.
Asked a question you'll need to press star one when your telephone to withdraw your question press the pound.
Please standby well, we compile the Q and a roster.
Our first question comes from Brad Milsaps.
Hyper Stanley Your line is now open.
Hey, good morning, guys.
Morning, Brad.
Jerry maybe start with expenses I hear you glad unclear that you guys have been talking about investing in a franchise and that sort of $34 million to $35 million run rate, but maybe I would've thought that would've come with.
You know more and more fee revenues related SPD and swaps kind of noted that in the quarter that they were weaker but the expenses were still there just kind of curious on your outlook for both as you kind of move into 2020, particularly on the expense side is that 34 to 35.
Still a good run rate, even if you see a step up in some of those revenue line items that maybe we're little little weaker than you would've thought this quarter.
You know Grad I think we've got to continue.
We're focused on getting short term targets, but our goal is really to create a better bank for the long term and I'm just not in a position to support not investing where we need to invest and we need to where the market that gives us unbelievable opportunity in growth, there's tremendous disruption and.
DFW in Houston.
And there's good if there's good people in the market that are available we've got to bring them onto our team. We've got to put the best people on the court, we can and if that means we over smells a little bit right now in the short Ron to create a better bank in the long road I'm, Okay with that.
So much for the monologue.
You know its look.
30, 435, it's probably too I don't really see us running at that level and 2020.
No I think 35 to 30 right now if I look at the first half of the year 35 to 36 is probably more reasonable where we get in the back half is going to be a function of how successful we are on the recruiting process.
Lets say this if we're going to invest a lot and people we need to expect more out of growth in fees side.
Fair enough and then just maybe on.
The NIM, maybe specifically relates to the accretion I think on the loan book this quarter there was about 5.6 million.
They came through just kind of curious under the Cecil framework, you know kind of how you see that number.
You know tailing off maybe in 2020 and kind of what that would mean for a.
Provisioning as you mentioned in your opening remarks that obviously some without that you built this quarter won't be needed undersea. So as you will not be able to recapture some of that discount.
Well.
You know on accretion.
29, I'm excited to get the 2020, Curt accretion versus 2019 accretion because accretion is going to create some headwinds and getting through 2020, when accretion didnt get bigger part of our NIM. Our earnings is going to really set us up well for 2021, so it's going to continue to come down the impact of the Mark.
On the deposit side is almost is almost too.
We're almost through with it and on the loan side, it's going to continue to come down I don't see Cecil affecting our it's going to come down on its own because we have less of a portfolio still in the acquired book as I said, we took that book down a big in a quarter dollars. This year. So there's less loans to earn accretion on and were later into.
Bringing it down so it's going to come down I wanted to come down because it improves the overall quality of our earnings.
There was another question there to have already forgotten it but.
It's about is about NIM and accretion yeah sure just yet any outlook for the NAV would be great.
Yeah, I mean look I believe what I'm really focused on the adjusted NIM.
Because accretion is going to bounce around and do and do what it's going to do I think on the adjusted NIM I expect it to fit stays flat, which is not what the market expects that what I expect.
No I think we're going to be pretty stable, because we've got a threat.
We've got hundreds and hundreds of millions of dollars and the first half of the year in Cds is going to reprice meaningfully lower and we've gotten most of the loan repricing right through that comes from the November adjustment.
I'll just add so I'm looking for a pretty stable now.
I do think that liquidity affected us a little debt and we can certainly shifts and things around but overall I'm looking for a pretty steady NIM from here as long as the fed stays on hold.
Great. That's helpful. Appreciate it guys.
Thanks, Greg.
Our next question comes from Brady Gailey with KBW Your line is helping.
Hey, Thanks, good morning, guys.
Right right.
So the child care facility that was a legacy green loan.
So no no impairment taken this quarter did did you already or do you already have a mark.
Kind of set aside for that asset and any idea.
When that.
NPL you may be resolved.
Yeah Clay Ribi, our Chief Credit Officer has details on that one yeah. Thanks Brady.
Yes, so we did not have a credit mark on that on that asset primarily because it did not show any signs of delinquency or.
Houston until mid.
Late.
Third quarter.
So there is no mark associated with that.
The where we stand on that right now as we're working with a borrower.
Bankruptcy of the tenant is the issue in that credit and we're working with the bar where to find a replacement operator for that.
For that property for both of those properties and we really view this as the best outcome for the bank today is to continue to work with the borrower on that the relative to when this is going to resolve with the bankruptcy of the tenant being an impact there we.
The basis to be a late Q2, possibly Q3 top resolution.
All right that's helpful and then.
Is it about material, we're talking about I think it was a legacy green portfolio that had been reduced down to 126 million what were you referring to there in that bucket.
Yes that was the PCR buckets, we initially had that bucket at about 177 million at close and so one of the goals last year and continue is just to just to shrink that bucket up and so we made some great progress over $50 million worth of moving some of those problem credits.
So thats the it's the PCR bucket.
All right and then finally from me.
It sounds like Youre going to continue to be active on the buyback.
I will say you all you all repurchased 7% of the company in 2019, which was a big number but the stock was a little cheaper I think on average you repurchased stock a little under 25 Bucks now the stock is that roughly 20 850. So it's not as it's still cheap not as cheap as it used to be.
David how does the price per share impact your buyback decisions as we.
Enter 2020.
I think the buybacks going to still be important part of 2020 for US you Scouts exactly right I mean, it's a little bit more expensive.
But there's a lot of different metrics that we run on on our buyback we still think it makes sense.
At these levels we have some.
Some forward thinking around our table on what the real valuation of this company is and it's.
Yes, we can buyback cheaper than that and thats something we need to look at so.
The answer is that we're going to continue to evaluate.
We've obviously been blacked out so we haven't done much recently, but.
The the the price doesn't completely scare us and will still be active in in the buyback for 2020.
Yes, Brady's Terry.
For every dollar you said the metrics really well sub 25 on the 7%. We bought back you will see us be more aggressive on price, but the higher the price goes the less aggressive we're willing to be but but.
Even you know even $3 share movement is still only extend the buyback.
The TBV earn back about one year and so we still think it's a great investment we've got too much capital we've increased the dividend at capital is going to build and eat.
Even with no mid to high single digit loan growth I mean, we were generating say much more capital than we need underpin that growth and so there's a level at which we will we will not do anything.
But right now.
It's important pretty important way to continue to deploy capital and we think at current levels, it's not unreasonable to be a buyer. There now there is the price place, where it'll go where we won't be there, but it's not where it is now.
Got it thanks guys.
Thanks, Brad Thanks.
Our next question comes from Matt.
Stephens. Your line is now open hey, great. Thanks, Good morning, guys.
On that.
I want to go back to the that the reinvestment opportunities that you see I think back them you mentioned, you've hired three new producers since September thirtyth and it sounds like you've got more opportunities from here.
Any more color on what you're looking for the season commercial lenders are they in Houston are they in Dallas, I'm curious kind of where the opportunity is right now as you see it.
Yes, yes, and yes.
Yes.
The big too.
Mergers in our in our markets.
I can communicate more the disruption that's gone on.
The lender side now listen it's not just lenders these or other folks at different parts of the bank.
That are becoming available in a couple of different areas that we need to.
Some help and some upgrading in and so.
You know I'm, just I'm talking to everybody that I can try to upgrade our company people that have seen the movie that we're running here.
With experience and so it's not just the it's not just revenue generators with the lion's share is probably that but theres still some other folks and other areas that accompany that could be quite helpful. It's happening more in the DFW market that in Houston, but Houston, there's disruption as well so you've got these.
Varitek six and $8 billion right in between the lower public bank at five and the next winds up at 25, So we're a viable option for some of those folks and.
We're just we want to be want to be at the table to to to hire those folks that we need we don't know how many theyre going to they're gonna be but I can I can't tell you there's lots of opportunity and so we're going to be smarter about how we do it.
But I think if you will enhance our company big data.
Okay, that's great and then going back to BRAF question on the outlook for fees. I think you noted these were a little bit softer in the fourth quarter. So is this 7.6 million dollar level in the fourth quarter is this a good run rate as we move into early 2020.
Well I hope not.
You know I've certainly you know.
I don't know that will necessarily get how much more will get from SP. I think we can do better but do I think we're going to have a quarter like Q1 of 19 adult.
But I think we're I'm, probably most encouraging were I think we can make it up is on the interest rate swap side.
We've already had a we've already done more in the first 10 days of January than we did in fourth quarter right. So.
But don't don't take that remain I'm, saying I'm going to do not or 10 million either but I'm, just saying we can do better than this we've got to do better and I think the opposite look deposit fees are wonderful annuity, but there are two real leverage our gain on sale of SPD and interest rate swaps and I think theres a.
Unity really is probably just to beat what we did in 2019 is much more on the interest rate swap side than the SPX and the fact is we underperformed on SBH side, that's this plain and simple.
We can do better there and we will and we didn't do any US right you have no usdsix business.
Okay. Thank you and then I guess on the core margin I understand the outlook Perry is first to be relatively stable if the fed kind of hold from here. It looks like you built some liquidity in the fourth quarter was this any kind of seasonal impact or are you trying to build liquidity for any reason just any color around liquidity built its helpful.
Well it just as I said.
We didnt sub debt raise deposit growth was strong through the quarter loan growth came light and it just call. It caused us to carry in spite of running off a lot of high priced.
Tom deposits its still caused us to carry.
Some some some pretty hot.
Liquidity levels on the ended the quarter things have gotten right, but I just I just wonder by the realized that it was there it was a drag on the NIM, a little bit and it's pretty well taken care off now and look out when you have to stronger quarters. We had on the deposit side I'll take that liquidity excess liquidity challenges that come with it.
Sure Okay.
Okay, great. Thanks, guys.
Thanks.
Our next question comes from Gary Tenner.
Your lines.
Hey, guys good morning.
I wanted to ask a follow up on the on the CD.
Maturities.
Sounds like there is a good slug coming in the first half of your turn to the repricing gap.
On the maturity versus what your renewal rates are could give us a little color there and what you're thinking about in terms of retention rates.
Well, we have $725 million and the first two quarters at a rate of 227.
The average right, it's probably repricing down in the 55 to 65 basis point level something like that.
Retention, we had the best quarter of the year, you can't see it but I can we ran all we were we were really good on CD retention in Q4, even while reducing rights, but we ran off we're really more brokered stuff and so you know it would be is coming we actually on our customer Cds we were.
Flat over the quarter, what we were flat over the quarter, while doing that will probably down a little bit I don't know that would necessarily be that good again, but.
It's a meaningful opportunity, but you've also got there's some floating rate loans that havent you know that are more than what than just one month lot more and prime and so I'm in my mind I'm using this repricing of the $725 million of Cds to little bit hedge the repricing of a long.
Folio that was more than 30 to 45 days out because we got 90 day lot more we've got other things that are in there and so I'm just kind of think thats going to kind of.
Keep is pretty level.
Hello, Yes, that's that's great. Thank you.
And then also I missed.
You mentioned Cecil with regard.
To the not not having the need obviously on the provision build for renewing loans or renewing acquired loans did you update at all your kind of projections for the day one seasonal impact.
We have I would yeah. When we took our audit committee through this day before yesterday.
I'd say our range is centered right around where it was which I think last quarter. We said 115 to 135 the range has gotten tighter on both ends.
So so let's just call it 120 to one third.
Great. Thank you and I'd like to be that you know and I want to.
Within the confines of gap, which can be very confining at times.
I would like to be is.
[laughter] above the midpoint of the range if possible.
And our next question comes from Michael Rose with Raymond James Your line is now open.
Hey, guys how are you.
Hey, Michael.
Hey, I'm just wanted to talk about this quarter's loan growth. So if I and figure out how much was the re underwriting of the of the green loans, because if I look at the acquired non PCI loans. Obviously those were down about 400 350 million, but the originated loans, obviously strong growth. So how much of this quarter's growth was kind of re under.
Writing up the green loans.
I mean, the 6% annualized growth with all new business was all new all new loans. So none of that was rewriting or renewing or what have you that was cells real growth I think the.
The best Slide on there is just our commitment slides.
And it just shows you that the movement that weve started to gain a little bit more momentum each quarter on the amount of new commitments, we're putting out and so that probably gives you the clearest view of our home production and and coming loan production.
First quarter looks looks pretty gang solid.
Nothing crazy, but I.
I think we're saying we're seeing a lot of commitments and we're getting some funny paydowns are listen there's always going to have pay downs healthy portfolio, but I.
I think there they're getting to a point where were managed in those an understanding those better but I'm encouraged.
For what 20 claims that bring us on the loan side.
Yes, Michael I'll add that what I tend to watch that pipelines on an incredibly granular basis week to week loan by loan by loan.
John and where it is in stage and how it's progressing through and its strengthening week to week, which is not only are weve closing deals and funding deals, but as we look ahead, the quality and the opportunity within there is building. So I think thats a function of focus on our team that's.
From a function of the market disruption and it's a function and just how good.
Yes, w., especially but Houston also is right now so.
Pretty bullish on the and how the pipelines are building.
Yes, I'm glad you brought up the other commitments because I was going to be my next question, so kind of balancing.
The the natural payoffs in the acquired book with pretty strong commitments and commitment growth is kind of a upper single digit loan growth on a net basis the way to kind of think about growth for you guys. This year.
Yes, Sir I wouldn't want to see you guys get any higher or what the consensus growth is.
Okay.
I'd just like that fair.
Fair enough they'll take our optimism don't take our optimism as a sign we think you want to raise it [laughter] person.
I'll try to 35 banks in the medium the median loan growth is negative this quarter and for us to do six a little over six excluding mortgage warehouse, we're pretty happy about and some people had some good quarter. Some people have done some shrinkage and six person.
It's pretty good most did.
We will take that.
For you guys are for the and and let me just add on to where we think we good and I agree with carry I think your numbers are right on but if we are able to be successful at hiring somebody so depending on when we hire them.
We may give you a little bit different answer later in the year, because we're not just hired and these new people to just continue that mid single digit loan growth, there's going to be expectations from us those are going to change.
But lets get him in house, let's figure out who they are and we probably give you. Some more insight later in the year and once you get them. It takes time take six months to year to before they start churn.
Fair enough on just one follow up question for me you guys around 100% loan or deposit ratio I know you had good growth.
This quarter as we're thinking about moving through the year to fund that growth.
Could we expect some potential.
Further pressure on the core margin once the CD repricing hits in the first part of the year.
For sure we don't have a lot of degrees of freedom on the loan to deposit side. There's there's there's no doubt about that.
I mean, you know if growth really accelerate sure I mean in India.
Well, we're going to continue to manage the same between we like the 95% to 100% loan to deposit ratio, excluding the mortgage warehouse and what's the if the mortgage warehouse seasonal low for the mortgage warehouse and obviously, that's a lower spread business and as that builds in the middle two quarters of the year, that's going to have put some pressure on the NIM as.
Well, so I mean, theres, a lot of moving pieces, but but.
You know.
Yes.
It could go a little bit.
It's going to come and go depending on the mix of the loans and how that works and it's going be also be affected by a little bit if we have to get real aggressive on deposit side for sure, but it feels like.
The sensitivity to customers to interest rates right. Now is just changed materially from where it was 9100 80 days ago and I hope, it's going to stay there and if we need to tournaments, because if we need to open this pick it up a little more.
I hope it doesn't take that much in terms of price to drop that if you will and the disruptions in our marketplace not only does on people, but it's really really on deposits. We think thats a big driver of why we've been able to grow that deposit book I don't see that slowing down.
Fair enough. Thanks for thanks for all the color guys appreciate it.
Okay. So you Michael.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.