Q2 2020 South Plains Financial Inc Earnings Call
Greetings and welcome to the South Plains financial second quarter 2020 earnings call.
At this time, all participant Arnie listen only mode. A question and answer session will follow the formal presentation.
Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
This conference is being recorded I'd now like turn the conference over to your host Mr., Steve Crockett Chief Financial Officer. Please go ahead Sir.
Thank you operator, and good afternoon, everyone. We appreciate your participation in our second quarter 2020 earnings Conference call with me here today, our Curtis Griffith, our chairman and Chief Executive Officer.
40, new some our president Brent Bates Citibank's, Chief Credit Officer.
As a reminder, telephonic replay of this call will be available through August 12, 2020.
Additionally, a slide deck to compliment today's discussion it's available on the Investor section of our website.
Before we begin let me remind everyone that this call may contain certain statements that constitute forward looking statements within the meaning of the private Securities Litigation Reform Act has 1995.
These include statements about our future expectations beliefs estimates plans and prospects such statements are subject to a variety of risks uncertainties and other factors that could cause actual results to differ materially from those anticipated future results performance or achievements express deanne or implied by the board look.
These statements.
Factors that could cause such differences include but are not limited to general economic conditions. The extent of the impact of the ongoing cobot 19 pandemic all our customers changes in interest rates regulatory considerations competition in market expansion opportunities changes in noninterest six.
Turning to church or in the anticipated benefits of such expenditures and changes in applicable laws and regulations.
Therefore, the company can give no assurance that the results contemplated in the forward looking statements will be realized.
Such risks and other factors are set forth in our most recent annual report on form 10-K, and quarterly report on form 10-Q on file with the Securities and Exchange Commission.
We urge listeners and readers of our earnings release to review the risk factor section of our most recent annual report on form 10-K.
Quarterly report on form 10-Q, as well the risk factor section of other documents that quite financial files with the FCC from time to time.
Listeners are readers of our earnings release are cautioned not to place undue reliance on forward looking statements contained in this earnings call or in our earnings release.
Any forward looking statements presented here at our made only as of today's date and we do not undertake any duty to update such forward looking statements, except as required by law.
Additionally, during today's call we may discuss certain non-GAAP measures, which we believe are useful in evaluating our performance.
The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with gap.
A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found in our earnings release at this point I'll turn the call over to Curtis.
Thank you, Steve and good afternoon.
On today's call I will provide an update on our operations and local economies given rise a number of covered my team cases in Texas before reviewing the highlights of our second quarter 2020 results.
Cory will discuss our proactive customer centric strategy to manage credit and our continued focus on reducing expenses as we strive to improve our profitability and the return profile with the bank. Steve will then conclude with a more detailed review of our second quarter 520, 20 financial results.
We will then open the call for your questions and we ever Chief Credit Officer, Brent Bytesphere help.
Starting on slide four of our presentation I'd like to thank all of our employees for their continued work ethic and dedication to our customers and communities. During this unprecedented time.
This has enabled the bank to maintain a tri level, what customer support even as the number of covered my team case is starting to spike in Texas and Jan.
This call is best to limit our branch lobbies once again to appointment only service to ensure the safety of our employees and customers.
Overall, we continue to operate very effectively through our drive through Windows are successfully transitioning our customers door digital banking platforms, which Cory will discuss in more detail.
Importantly, we have invested in the technology and develop the digital platforms and systems over the last several years, which has positioned our teams to effectively service our customers remotely throughout the ongoing covert matching pandemic.
Turning to our local economies, we started to see an economic recovery in may into June as businesses began to reopen activity really started to pick up.
As momentum picked up started the number and you covered my Dream cases, which has caused our governor to scale back to stage reopening plans, including the closure bars and tightening capacity limits on restaurants Governor Rabbit has also put in place I state wide mandate on wearing masks and I ask citizens to adhere to social distancing.
As of today, the state of Texas remains committed to opening K through 12 schools in the fall.
Colleges are planning on a hybrid model consisting of both in classroom and remote learning.
The latest we've heard from Texas Tech University, the largest university in our West Texas market areas is that they remain committed to having students on campus this coming fall semester.
We are certainly watching the environment closely and continue to believe that the governor does not walk reinstitute the economic locked down of course. The next four to six weeks, we'll be very important as we watch the trajectory of new carbon not doing cases and result in hospitalizations.
Well the economic backdrop was challenging through the second quarter I'm very pleased with our financial results and the underlying earnings growth that is building within the bank as outlined on slide five.
For the second quarter 2020, we reported net income of $5.6 million or 31 cents per diluted common share, which compares to net income of 6.1 million or 37 cents per diluted common share there were reported in the second quarter 2019.
Pretax pre provision amcom for the second quarter, a 2020 was $20.1 million, which compares to 15.1 million in the 2021st quarter and only 8.6 million in a year ago second quarter.
We recorded a 13.1 billion dollar provision for loan loss in the second quarter, which compares to 875000 provision expense and the your go quarter.
Our net charge offs were $1.6 million in the second quarter.
I will touch on provision expense more detail in a moment, but I'd like to highlight the substantial growth at the bank has enjoyed over the last year.
As we've executed upon our strategy to grow the bike and leverage our infrastructure. We are seeing the earnings power and profitability, but grow and believe we are very well positioned to take advantage of opportunities to further expand our franchise through this cycle.
Another barometer of our success can be seen in the 11.9% annualized increase in book value per share in the second quarter 2022, $18.64 as compared to $18 mine stance in the first quarter 2020.
This growth was delivered despite the outside provision expense that we recorded.
Our net interest margin decreased to 3.79% in the second quarter 2020, as compared to 4.13% and the first quarter 2020.
The paycheck protection program or PPP loan fundings accounted for an estimated 11 basis points of the decrease as well as seven basis points being attributable to a reduction in the purchased loan income accretion.
Oh, no our average cost of deposits declined 26 basis points to 39 basis points in the second quarter 20 twice as compared to 65 basis points in the first quarter of 2020, and 108 basis points in the second quarter 2019.
This improvement was largely due to the decline in federal funds rate in March of this year, which allowed us to lower than right, we will pay on deposits.
Looking forward, we see an opportunity to modestly reduced cost further.
Our efficiency ratio for the second quarter, 2020 was 63.3% compared to 69.1% in the first quarter of 2020, and 77.5% and the second quarter of 2019, I am very pleased with the continued progress that we've achieved scaling our infrastructure.
And she room for further growth and profitability gains.
Let me take a few moments to discuss our provision expense more detail.
The increase this quarter is primarily due to our conservative and cautious approach given the uncertain economic outlook as a result of the pandemic.
Our provision expense is being driven largely by qualitative factors based upon what we're seeing in our local economies and the potential impact of cobot 19 through the second half of the year combined with specific downgrades in our portfolio, which are primarily related to loans in the hospitality and energy sectors.
Importantly, our loan modifications have flattened out through the second quarter at 19.9% of the portfolio, which is only a modest rise from 17.4% at the time of our first quarter call.
That can be seen on slide six.
Are these loan modifications approximately 64% have moved to interest only.
Which continues to be our preferred loan modification as it better aligns the needs of the customer and the bank.
As we have discussed we've taken a very proactive approach through the pandemic with all of our borrowers, especially in the at risk categories our loan portfolio.
This has allowed us to identify issues early work with our customers and feel confident in our provision build this quarter.
Well the outlook for the co. The 19 pandemic energy economic impact remains uncertain, we believe that our aggressive provision built reflects a conservative outlook as of the hand off the second quarter.
We also remain well capitalized where the common equity tier one to risk weighted assets ratio of 10.51% and have excess liquidity on hand, as well as approximately $450 million and Unpledged securities and access lines of credit with the federal home loan Bank of Dallas, The Federal Reserve Bank and other banks.
To conclude we learned many important lessons from the great recession, and I've been positioning Citibank, whether the next downturn, we have worked aggressively to improve our operations and still a disciplined credit culture diversify our founding and scaled the bank as a result, we remain confident in our underwriting risk management and cap.
Policies and plans as we look forward now let me turn the called Corey.
Thank you started and good afternoon, everyone, starting with our loan portfolio and so on slide seven loans held for investment at the end of the second quarter of 2020 were 2.33 billion, which is a 223 million increase from the first quarter of 2020 in a 396 million increase from a second quarter of 2019.
So for the first quarter of 2020 was driven primarily by origination of 215 million and PPP loans and 35 me any seasonal agricultural loan funding, partially offset by 24 million and pay downs and non residential consumer loans and direct energy levels.
Within our loan portfolio approximately 5.4% of art loans are the hospitality industry, excluding properties under construction and our direct energy exposure is 3.7%. These percentages do not include the effect of the balance of our PPP levels.
As we've discussed on prior calls we employ a conservative approach to credit and utilize our ERM system to aggressively and continuously review our loan portfolio for a potential challenges.
Any economic uncertainty that exist today, we have been proactively managing our portfolio and assisting our borrowers to help them weather. The storm, we define members of our executive team to our most at risk borrowers to ensure that our customers have the full support of the bank and more importantly that the bank look better.
Turning to slide nine.
The two areas of our portfolio, where we are most focused our energy and hospitality at quarter end, we had 79 million and energy loans, 91% of which our service in midstream related. Additionally, approximately 40% of our exposure in that segment is one all service loan where we have strong guarantor support outside of the energy sector.
Through the second quarter, we've been working with our borrowers to create solutions to help them manage through the current economic environment Heaven and had been able to restructure several of the loans, whereby we have attained additional guarantors and collateral.
The recent rebound in oil prices has also provided relate to certain of our borrowers in the region as well continue to pump and many producers can continue to operate with all of it a $35 per barrel.
Our hospitality portfolio had a 115 million in loans at quarter end and our hotels in the portfolio or more limited service with strong brands that are beginning to see business pick up overall, we have reworked 81% of our hospitality loans and are focused on our full service exposure, where the road recovery is going to take time as with the full service hotel.
It's across the country the hospitality Andrew industry has been hit, particularly hard and this is one area of our portfolio, where we are booked most focused.
We will also remain disciplined on expenses, which can be seen at our efficiency ratio at that improved to 63.3% in a second quarter compared to 77.5% in a year ago work to accomplish this we're adapting our branch network to more effectively meet customer traffic trends, which remain robust and closed our branch in spring like.
This is at the end of June as we continue to focus on doing more with less.
Looking forward, we will reduce our branch staff through attrition further analyze opportunities to reduce branch hours to better meet customer demand patterns and look to further optimize our expense structure is we believe the white people in businesses live and work has changed.
One example is a significant shift in the usage of our digital channels throughout the company that pandemic.
We continue to push our customers to our digital platforms and has seen a notable increase in remote deposit capture and online or mobile customer log it.
We're also promoting contact with payment through Apple, Android and Google pay and with contactless smart merchant product on the business.
Lastly, we are finalizing improvements to the customer experience of our online customer account platform and expected to be live in the second half of the year.
Another example is our PPP loan closings, which were completely additional in the second quarter. If we work to ensure both customers and employee safety I well executed process using staff from multiple apartment and he signatures allowed us to close more than 2000, PPP loans quickly and safely have note many of our regional and national competitors had challenge making.
TPP loans, which allowed us to step in to bring on several new relationships with high profile businesses, but also brought deposit activity.
Turning to fee income on slide 10, we generated 24.9 million of noninterest income in the second quarter of 2020, which compares to 18.9 may end that we generated in the first quarter of 2020, and 13.7 million that we generated in the second quarter 20 that team.
The increase from the first quarter 2020 was primarily due to an increase of 9.2 million in mortgage banking activity. As a result of an increase of 153 million in mortgage loan origination and partially offset by 2.3 million gain on sale securities recorded in the first quarter 2020.
Overall, the prevailing low interest rate environment has continued to drive strong refinance volumes and we also have seen a robust pickup in purchase volumes to the quarter. This strength has continued into July which is tracking to be a record month for the bank.
Accordingly, we have delivered these strong volumes without adding to head count which is contributing to our proved efficiency this quarter.
As I discussed earlier, we are laser focused on managing expenses as we strive to leverage our infrastructure and deliver returns in line with our peers for the second quarter fee income represented 45% of total revenue and continues to be a key differentiator of south plains relative to our peers I would now like to turn the call over to Steve.
Thank you Cory this afternoon I will briefly review the remainder of our second quarter 2020 results as Curtis inquiry have touched on many aspects of the quarter before turning the line back over to Curtis for concluding remarks.
Turning to slide 12, net interest income was $30.4 million for the second quarter of 2020 as compared to $30.2 million for the first quarter 2020, and $24.8 million for the second quarter 2019.
The increase since the second quarter 2019 was largely attributable to the rise on our average loans a $429 million.
Primarily from the West, Texas State Bank or Wtsp acquisition as well as the new PPP loans that were funded in the quarter, partially offset by a decrease of 64 basis points and non PBP loan rates due to the decline in the rate environment experienced in the first quarter of 2020.
During the second quarter 2020, we collected $7.7 million of ERP fee income, but only recognized $641000 as an adjustment to interest income.
In the second quarter of 2020 deposits increased $282 million to $2.95 billion as compared to $2.67 billion in the first quarter 2020 as can be seen on slide 13.
The increase in deposits during the second quarter 2020 was largely a result of organic growth.
Loan fundings to customers that are still on deposit.
Other go government stimulus payments some programs.
We ended the second quarter 2020, with total noninterest bearing deposits $941 million for 31.9% of total deposits, which compares to $741 million or 27.8% of total deposits at the end of the first quarter 2020.
Core you touched on our loan portfolio in the steps that we are taking to work with our borrowers to manage our credit overall, we believe our strict underwriting and strong credit culture has our loan portfolio well position as we endured this uncertain environment.
As can be seen on slide 14, our nonperforming assets to total assets ratio increased five basis points to 33 basis points in the second quarter 2020, as compared to the first quarter 2020.
As Curtis mentioned, we did add to our reserves in the second quarter 2020, given the headwinds that we are seeing expecting from the cobot 19 pandemic and the recent volatility in oil prices.
Additionally, total classified loans increased to $95 million and the second quarter 2020 from $39 million in the first quarter 2020.
This increase was.
Largely in hotels, the majority of which are performing as agreed including recently modified terms.
Importantly, we will remain conservative as a result of the pandemic and are confident that we're well positioned given our aggressive provision build this quarter.
The yield on average interest, earning assets was 4.23% for the second quarter 2020, a decrease of 85 basis points as compared to the same quarterly period in 2019 and was driven by the overall decline in interest rates over the time period.
Additionally, our interest earning assets increased $684 million, primarily due to our wtsp acquisition and the origination of ERP loans.
Given the head to slide 16.
Our non interest expense was $35.2 million and the second quarter 2020, as compared to 34.0 million in first quarter 2020, and $29.9 million in the second quarter 2019.
The increase compared to the first quarter of 2020 was primarily due to an additional $2.2 million and commissions and higher variable expenses related to the strong mortgage activity. This quarter, partially offset by higher expenses in the first quarter 2020 for data conversion expenses and purchases to upgrade equipment.
In our existing branches as wells those acquired through our acquisition of Wtsp.
Keeping ahead to slide 18.
We remain well capitalized with tier one capital the average assets of 9.60% at the end of the second quarter 2020, compared to 10.34% in the first quarter 2020, and 12.10% in the second quarter 2018.
As Curtis discussed we are watching our capital closely and our board of directors will continue to our to review our dividend quarterly.
On July 16th we announced that our board of directors had approved our fourth consecutive quarterly dividend of three cents per share.
I will now turn the call back Curtis for concluding remarks.
Thank you Steve.
While the environment is challenging I'm very proud of our results as they clearly demonstrate the success that we are achieving as we work to grow the earnings power of the bank.
We have taken an aggressive approach to managing the credit profile of our loan portfolio and are confident that our provision expense. This quarter is adequately addressing the challenges that currently exist.
We remain well capitalized and believe that there will be opportunities to expand our reach as a result of the dislocations that will most assuredly come from the cobot 19 pandemic combined with the volatility in energy prices.
Over the long term our priorities remain the same way.
Leverage the investments that we've made in our infrastructure through organic growth and opportunistic M&A as we strive to deliver peer leading ROI is in our waves.
As we exit the second quarter, we are confident that we're on track to achieving our goals with that I'd like to ask the operator to open up line for any questions operator.
Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad a confirmation total indicate your line is in the question Q you May press star to if you'd like to remove your question from the Q for participants using speaker equipment it may be necessary to.
Your handset before pressing the star keys, one moment, please while we pull for questions.
Your first question comes from line of Brad Milsaps with Piper Sandler. Please proceed with your question.
Hey, good afternoon guys.
Brad Brad the current below.
Thanks, Thanks for taking my questions.
Maybe just a little bit.
On the mortgage and.
We also relates to expenses you guys I think revenue doubled.
Linked quarter, but personnel cost, where maybe only up six or $800000. Just curious if theres any other kind of benefit related to deferred origination cost that you know kind of held expenses down are you just had some other saved elsewhere just trying to get extensive.
Mortgage continues to run at this pace, you know kind of what that means for expenses.
So Brad this is Corey so I will tell you. We're we're very pleased with how mortgage is working for US what are the things that we've been very focused on is making sure that we don't wake up and if it's been a whole lot of time did about to revise that it goes away. So just to give you. Some examples of some of the things and while we've been up to keep some of the expenses down but our purchase production is up 100.
25% over that same time last year. So we're staying very focused making sure that were not just building something that they will just kind of dissipate on it though the big thing for US is that all the technology and set that we put in place back early on we said all along we were building this to grow shorter the commission I mean, our expenses have not gone up on the.
On the on the mortgage side if.
Able to augment just a little bit of the health that we'd need through some third party support.
But overall, we we're very pleased with what we're seeing from from mortgage production, our mortgage production as a whole is up over 218% year over year.
We are doing like Repowering fts down pretty much right, where we work so they're working long hours and now it's.
Going above and beyond that they're getting work turned to emerge definitely helping our bottom line one of the things that we've been able to do because we have the back office built like we do we've we've found opportunities to bring on some new pocket teams for production and most of those are all tied around new production in the even new home builder business.
That's bringing in the production side of it so we do like that but it seems like it's it's got to continue longevity with it with what we're seeing so far.
Okay great.
And then maybe just yes, Steve moved to the margin.
Curtis in his remarks.
Comment that Youve got some room on the deposit side.
Loan yield even ex pp were under quite a bit of pressure in the quarter.
It's kind of curious kind of what your thoughts on the on the margin going forward, how you're going to be able to you.
Hold on to some of that are kind of how much pressure you'd expect from here.
Yes, sure those Steve we.
We do still have room on the deposit side is as Curtis mentioned and we we continue continued to lift there.
We we obviously saw a lot of liquidity come in during the quarter.
So that that kind of changed up our our mix a little bit on the asset side and then.
Yes.
Depending on where the where the deposits came from but but you're right on the on the loan side. We did we we definitely saw the solve that pressure there in the second quarter. We we think we've seen.
The majority of.
Those issues, but I mean, there's still no we're still fighting to the to maintain what we've got.
On the loan side, but it will do it will continue to the.
To see to see little bit of pressure.
Hi.
Hesitate to give a to give an exact number we tried tried last quarter, we undershot just a little bit just given all the.
Given all the moving parts that we saw but we're.
I was hoping to see that stabilize.
In the in the third quarter, one thing on the deposit side, we think with the amount of liquidity that we have that we don't have to cut succumb to rate pressure and I mean, we made loose in the process of tried to drive our cost down just a little bit more than we think that that's one of the things that we see a benefit that we have ahead of us that we can continue to do.
Great and then maybe just final question for me I mean I know its.
It's tough known as a crystal ball, but you've.
Reserve up to about 1% to 1.9% of.
Total lows.
How do you guys think about or how should we think about sort of provisioning going forward. Obviously I know, it's very much tied to various economic scenario that outlooks, but.
You know kind of with that number of deferrals you had been kind of where you think those are going how should we sort of think about directionally reserve and provisioning.
Well, obviously, we're going to look at economic data as it comes in and trying to look that on the macro scale and be well prepared for and.
We're looking at our own portfolio constantly.
And lastly, where we're not seeing anything that really scares us yet, but we know the hospitality industry is in for long slog to get out of yours.
We're seeing little pressure on in the restaurant side as well.
The energy side is has definitely looking brighter than it was just few months ago I'll, let Brent speaking a little bit right here, Hey, Brian can begin talking a little about what are you seeing everyday in our loans.
Yes, our hospitality I mean, when we think about the reserves, we've we've really.
Tried to.
I tried to model or at least tie that in with with where we see a moderate to severe.
Stressed scenario, which.
As far as ever portfolio is concerned we're not seeing the losses, you would see in those type synergies, yet and and we feel like we've been pretty aggressive and identify and so you know our any kind of credit risk in migrations to the substandard or further.
And largely that as was mentioned on the call is.
Isn't hotel sector, but but even in hotel sector, we're seeing on occupancy rates coming back up.
And even.
The Revpar, Kevin back up as well so the trends are there, but it just all depends as well known on kind of how the virus.
And local governments.
Make decisions to contain the spread of Iraq. So.
Right now the trends are good and are moving around correction, but nevertheless, the level that that fell to during the quarter for hotels on leases is.
Was a pretty sharp drop.
And as far as energy as Curt mentioned, I mean, I've been really pleasantly surprised with our service sector.
They have.
We have had a good effort and good work on our borrowers part to maintain revenues and and as a sustainable level.
So we feel really.
Pleasantly surprised about the performance there but.
We will all depend on obviously, how how the second half the year works economically as far as.
I would think what our reserve will look like going forward.
This is corey so I mean, I'm just won't let the color I would put to that is.
If you look at the mounted provision expense that we did during the second quarter became basically from us from a qualitative standpoint of how we looked at those industries and we just had tried to be conservative I mean, we think that's that's the only thing you can do today is from the standpoint, it being conservative and be in touch with your borrowers almost daily trying to figure out where you are and what what.
Triggers you need to pool to make sure that we work our way through this and are not wait to play catch at the end because we didnt pay attention.
And I have to address the amount of.
Modifications that we did and we know that's we're above a lot of our peers out there in that percentage that we did but Jeff to remember we went and ask our customers if they'd like to do something we pursued the and in many cases, obviously about two thirds of what we did we're just taking the interest only for the ones that did require some kind of a modification after we discuss.
Stick with them and we really don't see that has difficulty for us we're still have a good earning asset in a gave them a little bit of cash flow relief during a rough time, but several of them are back on track solidly and and we just don't see that number changing very much. So it's not like we really saw major problems and 20% of the portfolio. We went out in simply ask people.
Would you like no interest on wait for awhile and kind of see where all this thing goes in quite a few took a settlement.
I would tell you one additional thing is you look at the hotel side of it.
We've been.
Even more optimistic on on the limit on the limited services compared to the full service and we've gone out and in really spent time working with our borrowers in the full service side of it in and lot of cases have have.
Put ourselves in better positions than we were before in and in return they get a little bit it had to try to work their way through some stuff and so we're seeing the wins come in both late.
Great. Thank you guys appreciate the color.
Thank you Brad Thanks, Brett.
Your next question comes from line of Brady Gailey with KBW. Please proceed with your question.
Hey, Thanks, Good afternoon, guys afternoon.
One more on the net interest margin right in the release that I'd say lower levels of Accretable yield burden the margin by about seven basis points linked quarter. I was just wondering what was the total.
Impact to the two Q margin from Accretable yield on wise, it was down seven basis points, but how much total yield accretion was in the margin this quarter.
Let me see if I've got that right here in front of me, though.
I think it was I think we had about.
Around 300000.
All right that's that's helpful.
And then.
I wanted to ask about loan growth. So if you look.
Loans.
Excluding seasonal increase in AG.
The PPP loans that you added a loan balances were down a little bit linked quarter.
Our which is.
Not a huge surprise, that's obviously what most banks are stand this quarter, but how do you think about loan growth going forward kind of excluding the noise from the PDP shrinkage from here.
Yes. This is Brent I mean.
We're still seeing some demand out there, obviously, we're being cautious and optimistic as we kind of look at those are cautious of realistic as we're looking at those opportunities but.
During the quarter, we obviously saw some pressure.
By design on oil and gas balances on consumer auto balances and and even on service business loans.
That created some downward pressure in our portfolio.
He said offset by the AG.
Seasonal high production, but.
We're still seeing opportunities out there. Thank you know as is.
Some banks have completely.
May be turned off their production side.
We're being very cautious in.
In looking at opportunities for new clients and think we might be able to get some some winners in that process.
This is Korea out under one step further one of the things that we are proud of the fact that we did have an ASP plan in place for all of our lenders. So we've come back in for for 2020 and that this is as as we've come through co bid and we've realized the changes that are out there while there's still a heavy weight on production.
Weve increased the weight of quality.
In the bringing those two mixes together so that that.
We don't have our guys out there just trying to jump on the books, but actually out there legitimately chasing business, but the quality is got to be there and we've also gone through and we've looked at at.
Some of the underwriting criteria that we have and we've we've adjusted so that we thought that we've got better equity positions more cash went into deals and things like that but we're still seeing opportunities and that's what we're excited about and and then it seems to be working I mean, we we spent time around the table today looking at some really good.
Opportunities.
And so I mean, just to give you a little color of how we're looking at it we know that we can't just stop but we got to make sure. We put stuff on the books that we're going be proud of two years from now in five years from now.
Got it thank you guys.
Thanks, Brian Thank you.
Ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back to Mr. Curtis Griffiths for closing remarks.
Thanks, operator, and thanks to everybody to joined US today on the call.
I appreciate your interest in South Plains financial we're still trying to stay safe them stay profitable and stay ready for whatever the economy brings us and looking forward to the value that we can work our way through the pandemic whenever that may be and see our economy and all of our areas get restarted we're still very proud of the areas that were.
We're still seeing a lot of economic strength here and we believe that we're going to continue to have a year. The economy performed fairly well and we intend to be a beneficiary of all of that so again. Thank you for your time and we will be visiting with you later.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
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