Q1 2021 First Foundation Inc Earnings Call
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Speaking today will be Scott Kavanaugh first.
First Foundation's Chief Executive Officer, Kevin Thompson, the Chief Financial Officer, and David The Pillow President of first foundation before I hand, the call over to Scott. Please note of that management will make certain predictive statements. During today's call that reflect their current views and expectations about the company's performance and financial.
These forward looking statements are made of subject to the Safe Harbor statement included in today's earnings release.
In addition, some of the discussion may include non-GAAP financial measures for a more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward looking statements and reconciliations of non-GAAP financial measures see the company's filings with the Securities and Exchange Commission.
And now I will turn the call over to Scott Kavanaugh.
Hi, good morning, and thank you for joining us.
We would like to welcome all of you to our first quarter 2021 earnings conference call, we will be providing some prepared comments regarding our activities.
And then we will respond to questions.
Our earnings for the first quarter were $22 4 million or <unk> 50 per share. This represents a 16, 9% increase over the first quarter of 2020.
Total revenues were $66 1 million for the quarter of 19% increase from the first quarter of.
2020.
Our tangible book value per share ended the quarter higher at $13.84.
We declared and paid our first quarter cash dividend of nine cents per share.
As many of you have heard me say our business model is designed to help clients wherever they are in their financial lives.
And today's results indicate that our model is working very well across the diverse and dynamic markets we serve.
During the quarter as we previously announced we expanded in the taxes, which included the move of our principal executive office as well as the addition of new employees to our team in the Dallas Fort Worth Metroplex, We believe this move solidifies our positioning as a REIT.
On the commercial bank.
We are seeking further expansion in the area.
Including building out her team, having the retail branch presence and eventually adding trust powers in the state there isn't an enormous opportunity for growth in taxes, and we're excited to be here.
Our operations in California, Nevada, and Hawaii will remain unchanged, we think our regional presence across all four states that we operate in is a great fit for the products and services. We offer we were in the areas that have great opportunities for everything from wealth management.
Meant to lending to business and personal banking.
Related specifically to the profile of our bank, we had record loan originations of $765 million for the quarter with 53% of those originations coming from C&I.
M. P. A's remained low at 24 basis points for the quarter.
We continue to have a well balanced loan portfolio and Dave will touch on in more detail later on in the call.
Deposits increased by $322 million for the quarter and our loan to deposit ratio was 91% at the end of the quarter driven in part by our ability to continue to attract high quality commercial clients.
All of this speaks to the strength of our deposit team.
Over the last year, our core funding has increased from 73% to 98%.
We continue to reduce our broker deposits and we will not have a need for a home loan bank borrowings for the foreseeable future.
Our wealth management and trust business continued to provide meaningful contributions to the success of the firm the.
The wealth management business is continuing to gain scale and the combined pre tax profit margin for trust and wealth management was 16% for the quarter.
We generated 101 million of new assets under management for the quarter and ended at record levels eclipsing $5 billion.
Our private wealth management business serves our clients with high touch and sophisticated investment and planning solutions the.
Along with our Trust Department were very instrumental in retaining and attracting new clients. During some volatile times last year and have experienced a great start to this year.
Our new business pipelines across our entire platform remain remarkably strong as we continue to attract new clients to all facets of our offering.
And with our recently announced strategic investment in the institutional Bitcoin provider 90 day, we are seeking ways to add bitcoin related solutions to our platform.
And a first such partnership of its kind of this strategic investment helped lay the foundation for building the infrastructure required to offer safe and reliable access to digital assets, we believe crypto currencies and blockchain technology will play a critical role in the future refine.
And we are pleased to be the catalyst to bring digital assets and the traditional financial services.
There are many ways, we can participate in this important asset class and we're very excited about what.
While we will be able to offer our clients with the support of our partners and I dig in our processing provider of Pfizer, we are looking to bring digital assets into the forefront.
Before I hand, the call over I want to take a moment to thank all of our employees for their extraordinary efforts over the past quarter. We have some of the best employees in the business and I am also very grateful to our clients, who entrust us with their financial needs.
Now, let me turn the call over to our CFO Kevin Thompson.
Thank you Scott earnings per diluted share of <unk> 50 in the first quarter is flat to last quarter and of 47% increase over first quarter 2020.
As a result of this momentum our tangible book value per share increased 3% to $13 $84 in the quarter.
The return on assets was strong at 125% with the return on tangible equity of 14, 9% debt.
Net interest margin contracted three basis points to 316% in the quarter.
As a result of high average cash balances from the success, we have had in increasing core deposits.
For the month of March our NIM increased to $3 two 4% following the deployment of excess cash through our paydown of higher cost funding sources and growth in loans in the second half of the quarter.
We maintained discipline in loan production with the average yield on loans dropping just two basis points to 399% and we continued our efforts to lower deposit pricing, bringing the cost of deposits down from 41% to 31 basis points.
With the strong C&I C&I loan production and increasing core deposits over the past several quarters, our balance sheet is trending less liability sensitive.
We recognized $1 2 million of PPP fee income or 20% of the total net PPP fees, bringing the total fees realized the 76% from the $171 million of the first round of PPP loans funded.
Excluding the effects of PPP, the NIM would have been 313% for the quarter.
Credit metrics remained strong in all of our loan portfolios and the allowance for credit losses for loans decreased to 45 basis points of total loans.
This was primarily a result of improvement in the economic scenario, we utilized for the seasonal calculation.
We had net recoveries of one basis point and nonperforming assets remained low at 24 basis points to total assets.
The allowance for credit losses for investments increased by $1 6 million as a result of the lower interest rate environment and faster than expected prepayments that negatively impacted the projected cash flows on our interest only securities.
Asset management fees were strong with revenues of $8 3 million and our advisory and trust divisions achieved a combined pre tax profit margin of 16% in the quarter.
Assets under management of the FFA increased 5 billion, while trust assets under advisement at FSP increased to $1 2 billion.
Our noninterest expense increased due to merit increases that were effective at the beginning of the year and annual bonus and commission payouts in the first quarter.
The efficiency ratio for the quarter was 51, 5%.
With strong expense management and the investments we have made in our infrastructure, we're seeing growing benefits from operational leverage and efficiencies.
I will now turn the call over to David the pill.
Thank you Kevin It was indeed, a very successful started the year from first foundation.
As Scott mentioned, we originated $765 million of loans from the first quarter of record for us.
Our commercial business lending accounted for over half of our originations in the first three months of the year, we funded $406 million of C&I loans, which was also a record for us.
48% of our C&I loans from the quarter were adjustable revolving lines of credit, which is a strategic move for us as.
As we look to shift the balance sheet to more rate neutral from liability sensitive.
The remaining of C&I originations were comprised of $108 million of commercial term loans.
$69 million of public finance loans.
$4 million of equipment finance loans of 9 million of owner occupied commercial real estate loans, Inc.
<unk> and commercial term loan originations is $45 8 million of the second round of PPP fundings we.
To focus on high quality loans with solid borrowers.
As a percentage breakdown the composition of our loan originations during the quarter was as follows.
<unk> hundred 53%.
Family of 42%.
Single family, 5% and 1% in another week.
We accomplished this without changing our high underwriting standards and the loan pipeline remains strong headed into the second quarter.
In addition, it is worth mentioning that even with record loan originations in the first quarter of $765 million, we achieved a weighted average rate of $3 55 on originations, excluding PPP compared to $3 61 in the fourth quarter only of six basis points decline. This.
This continues to demonstrate our ability to achieve record volumes, while still defending of the yield on our portfolio.
As of March 31st.
Our loan portfolio balances consist of 43% multifamily loans, 26% commercial business loans, 5% non owner occupied CRE, 15% consumer in the single family loans and 1% line in construction.
Of note our commercial business loan balances increased approximately 25% year over year, which reflects our continued focus on commercial banking.
As mentioned our deposit business also experienced the strong quarter with an increase of $332 million. During the first quarter of 2021 to end the quarter at $6 2 billion, which reflects a 14% increase compared to the first quarter of 2020.
Deposit growth during the quarter of 2021 was primarily driven by an increase of $527 million or 32% and noninterest bearing demand deposits largely attributed to our commercial deposit services Division.
An increase of $141 million or 16% in interest bearing demand deposits, primarily driven by our retail branches.
Our noninterest bearing deposits now.
Account for 35% of our total deposit balances the three.
$332 million growth in deposits during the first quarter of 2021 included increase in our commercial deposit service group of $419 million and retail branch deposits of $45 million.
Of the 500 million of 11, increasing core deposits $491 million or 96% were attributed to commercial business deposits from both our commercial deposit channel serving complex Treasury management commercial customers and from our business banking customers served by our retail branches.
Deposits were 70% of total core deposits as of March 31, and as Scott mentioned, our current deposits now stood at 98% of total deposits.
All of the success in this quarter could not have been achieved without the great team. We have in place I am so grateful for their dedication and hard work at this time, we are ready to take questions. So I'll turn it back to the operator.
The floor is now open for your questions.
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The standby, while we can power of the Q&A roster.
Thank you. Our first question is coming from Steve Moss with B Riley Securities.
Good morning.
Hey, good morning.
Hope everyone's well.
Nice quarter here in terms of loan originations.
You guys indicated the release that the pipeline remains strong just kind of wondering if you can.
Give us an update in terms of your expectations for the full year in kind of the underlying mix of the within.
Within the pipeline.
Dave.
So I would say the first quarter will probably at this rate probably be.
The low point for originations based on current pipelines.
So I would expect.
Growth from here.
That the pounds certainly of how the year develops.
As we go forward. The current pipelines would indicate that we would have a stronger second quarter than the first.
And I would say it's across again all of them all books of business will probably have a.
A little more disproportionate in the multifamily in the second quarter compared to the first.
So I would expect that to probably be over 50%.
Sort of traditionally how spin, but C&I in the multifamily are kind of neck and neck.
But again from.
Just the general trajectory.
Every aspect of our business pipelines are at levels, we haven't seen historically.
Part of that Steve is we continue to make.
Investments in our sales teams and support.
A higher growth level.
As we've mentioned in the past.
Trying to step up two of.
A new level going forward so.
Long story short I would say first quarter.
<unk> would be the low point for the year.
Got you that's helpful.
As we just think about full year originations I think the previous kind of call. It $2 9 billion just kind of curious.
It sounds like going to be north of $3 billion.
Meaningfully I think you could just take the current quarter run rate of extrapolate and you should get a higher number than we previously indicated but.
We would be comfortable with debt.
Of that range and the $3 billion plus.
Okay.
And then in terms of just loan yields here, an update on loan pricing and how youre seeing things in the market. These days.
It's interesting.
A lot of fully funded out of the first quarter related to previously quoted of loans. It takes a while before the.
I will go through the pipeline of most of those have rate locks.
We are seeing rates in the market stabilize.
We are.
Our expectations are our average loan yields should be approximately the same going into the next quarter part of that is mix too steep since we're doing a lot more adjusted lending on the C&I side trying to.
Reposition us for potentially of <unk>.
Higher short end of the curve over time.
Again, I think the average of a lot depends on the mix of the relative mix, but pricing seems to be relatively stable since most of us had been pricing on floors.
<unk>.
The longer end of the curve is really where we've seen the movement. We don't we don't typically land.
That end of the curve so.
I would say, we expect it to be consistent with where it's at today.
Okay. That's helpful. And then just in terms of funding costs here.
The contingency.
Good luck, Dan in terms of the deposit costs.
Since you basically have no borrowings.
At quarter end kind of curious as to where deposit pricing is today and how we should think about that and maybe any trends youre seeing in April for deposits.
I mean, the pipeline itself remains very very strong.
Frankly, we have to keep it Brian.
As you saw NIM had a bit of a drag due to the excess cash that we had and as you also saw it got deployed or a large majority of it got deployed in the month of March.
I would say that most of the cost saves that we've seen.
Yes.
Had been factored in at this point.
Theres, probably some minor adjustments here and there.
But if.
If deposit strength continues at the towards the pace. It's been then we will probably have to reduce rates a little bit more.
Scott I agree and I would just add you saw that our cost of deposits was 31 basis points in the quarter.
At the end of the quarter the last months in March it dipped down to about 26 basis points. So to Scott's point, there is still some room as theyre going down now and probably that trajectory will continue slightly but at a certain point I think those will stabilize throughout through the year until we start seeing eventually.
The yield curve change and some deposit beta down the road.
Great Alright, thank you very much nice quarter.
Thanks, Steve.
Our next question is coming from David Feaster with Raymond James.
Hey, good morning, everybody.
Hi, good morning.
I wanted to start on the <unk>.
The partnership I think this is pretty neat just hoping you could maybe give us some details on the investment the timing maybe of when do you think it could be up and running and ultimately what do you expect to see in terms of the benefits from this partnership whether it would be <unk> and growth in wealth management deposit growth.
<unk> can help fund the the growth engine fee income opportunities just curious what you expect to see from that partnership.
Kevin Ullianna start with that.
I'd say all of the above.
Okay.
Yes.
Yes, so we haven't disclosed the exact amount of of the investment, but we did make an investment with Knight dig, which which you may be familiar with a really great player in this market, they're really at the forefront of from a regulatory and security perspective in the Bitcoin world. The IAA personally is the bitcoin investor of Heartland is recall for many years of always been very.
Impressed with this company and we're very excited to work with them and to bring some of these this opportunity to bring bitcoin into the traditional banking world and yes, all of the above we're exploring the different opportunities that we could pursue both from an AUM perspective.
A lot of this will probably be fee increased fee based income.
Again as someone who holds bitcoin, there's an awkward interaction between traditional banking and the these bitcoin.
Providers within the economy, and it's getting better over time, but I think of lot of people really want to work with our traditional bank. The they have a lot of trust with an operating that traditional banking environment and have much more easy access to these types of investments to move between Fiat and bakeware and currencies, both within the banking side of the world as well as in the wealth management.
<unk> side of the World. Your other questions of the timing, we're not exactly sure. Yet this will take time to put these rails in places we work with Knight, Inc. As we work with fiserv to build this on our traditional banking model and do this in a really secure way for our clients.
To be quite honest, we couldnt, we couldnt have to better partners.
Truly excited.
That's great.
Pretty exciting.
And the mobile could you just give us an update on the Dallas Dallas expansion, how hiring standard it sounded like you are already you've already picked up some folks there and just how the pipeline has been of you're starting to see any contribution from the region, yet and will you have an early successful how's reception been in the region are you seeing more opportunities on the <unk>.
Of the family or the core commercial business banking, just curious any updates there.
Well initially the higher was in the commercial real estate side of things.
It's a bit early yet I've only been here for about a month or five weeks.
But I would say we've been fortunate in that some of the local periodicals, the Dallas business Journal of the Dallas morning News.
The Houston business journal of carrying the articles and we've gotten a very warm reception from a lot of people a lot of curiosity about our expansion plans.
So I'm very optimistic.
About the opportunities here I would say that you should probably expect expenses more than.
A lot of production this quarter, but I think in the outer quarters, you'll start to see some some loan production ramping up.
Frankly, some of our staff here is just getting out of.
Their feet grounded and starting to get out there, but in talking to them.
We've gotten a very warm reception from some of the borrowers as well.
The only thing I would add Scott is.
<unk>.
We have had some traction on the C&I side, and we will have.
Fundings in the.
Well second quarter related to the C&I.
But.
From.
Getting our production people in place, we're adding original.
Underwriting staff around them when you're moving to make sure that we don't have any false starts to Scott's point, we're building the the infrastructure first taken a very methodical patient approach and making sure that we can meet the needs of clients out there but.
We already do have some C&I business that will should fund out in this quarter.
That's true.
I'm just kind of yes go ahead.
No I was.
Just say.
Still believe on the M&A front theres opportunities here, obviously, it depends on how our stock trades relative.
The other folks that we continue to have.
Discussions out there and I'm sure something will come up at some point in time so.
I'm still very optimistic about that as well.
That's great.
Just maybe following up on the C&I commentary it was great to see the growth that you guys put up in the quarter. Just curious if you could give us some commentary on.
The trends Youre, seeing and where youre seeing demand on the commercial term loan side of them.
Kind of what's what's driving that.
The growth that Youre seeing.
Just kind of interesting at the world.
Kind of defined with the haves and have nots right now on the C&I side. So what we've typically seen is.
Smaller companies.
Maybe struggling to two regional COVID-19.
COVID-19 constrains.
Or other aspects to their business debt.
I think of affected more small community banks.
We've tended to lean towards mid market and above are companies that have durable balance sheets diversified business plans.
<unk> had lots of liquidity going into the crisis.
<unk> done very well through the crisis, so it could be anywhere from.
Food manufacturing to heavy equipment to you name it.
It's been across the board, we're just seeing.
No.
Very very very strong companies come to market to try to.
Take advantage of.
This environment.
That we're in today of lower interest rates.
Seem to believe credit spreads from the C&I side of tightened up to the point where it's.
It makes a lot of sense for them to continue to expand their businesses.
We're tending to look at.
Larger credits for well diversified companies many of them are regional.
As well.
Certainly we've had some regions of Texas.
For good quality companies.
And then we.
Tend to focus on SBA and small balance to kind of bolster the local communities to help on the community development side and then.
Frankly, the municipal lending space has been.
Barry.
The robust.
There's a lot of.
So you would say communities that may not have access or need for.
$100 million of.
Of revolving debt and they're really looking for.
Smaller pieces in the $5 million to $10 million range and that's a huge market on the municipal side not that we don't do some larger ones, but that's Tim tender, where we found in the months of demand and again, our equipment Finance group is.
Hitting record levels as well so.
It's really been across all channels. It's been now I think six years of.
Focus effort to kind of reposition the company's focus to more diversified lending we've been very patient.
And our approach to that and I think.
Given our.
Metrics through the.
The pandemic in C&I, it's proven that.
Good diversified book has served us very well, but it's been across.
Say every aspect of our business, we deemphasize a little on the smaller business banking of you'd typically see in the commercial banking space for community banks.
Just because the demand there has been.
Or more distressed companies.
We're taking a more of a patient and wait and see attitude around the well quite.
Honestly most people elect to go through the PPP route.
Through a traditional bank ground.
Well that is true if you can give them money for free it's much better than.
Okay enough of them.
Okay, that's great color thanks, everybody.
Our next question is coming from Gary Tenner with D. A Davidson.
Thanks, Good morning.
Hey, Gary.
I just wanted to ask a little bit more on the kind of expense outlook last couple of years really since 2018, you've done a great job of kind of holding expenses flat if not lowering them.
And kind of generating positive operating leverage obviously a bit of a step up this quarter I am sure. There is obviously the seasonal component there, but as you talk about investing.
People and sales teams.
Plus the touch the Texas expansion can you talk about maybe just some guideposts in terms of.
The operating expense for the year or for the next quarter or two.
I'll start and then Kevin and Dave you guys can fill in but the reality is.
We were kind of sitting around the table as we were.
Planning for this year and yes, we decided we were going to step up a little bit.
Earlier or late last year early this year of <unk>, we're running fairly hard.
We feel like debt.
It was time to try to step up on the loan demand. So we've been fortunate there's been some acquisitions that have taken place.
The steps that the other institutions have done that of created value.
Or opportunities I should say for us so.
There are a couple of the teams that were either currently working on are or have already brought on that maybe haven't fully been announced yet.
But our goal is to continue to expand probably the teams.
On the expansion side will probably be more on the C&I side than than anywhere else.
And yes, there was some large.
Bonuses and other things that took place at the typically our seasonal.
So I'll leave it there Kevin.
Well the way I would probably characterize the areas.
This year, whereby as Scott mentioned, we are making some strategic investments not only on the sales side, but also on the support side to make sure that we've got continued good customer experience through the entire process on all aspects of what I would expect is even with a little bit of higher first quarter because of the seasonality.
This year it looks like about 50.
The percent efficiency overall with those investments, but really looking into next year, you'll you'll see that operating leverage really kicked down so yes, it's a little bit again of the front loading for growth.
But at 50%, we really feel that's still fairly optimal but I would expect next year it dropped.
Yes, well below.
So I think with Hawaii, count or employee count Gary has remained at about plus or minus 500 people for the last several years.
And I would suspect that we'll be closer to $5 50, or maybe even a little bit more.
Between the operational side of that Dave just talked about and the other teams.
So that hopefully that gives you a little bit of guidance on.
The employee count.
And what we.
We're experiencing strong organic growth, we expect to continue that we will have to add resources to match that over time, but.
We will still be able to.
Resources at a lesser rate than we're able to take advantage of operational leverage over time.
Okay I appreciate the color and then just on PPP I think you gave pretty much all of the all the numbers needed there other than just wondering kind of if you could.
Confirm the average PPP loans outstanding for the quarter I don't think is part of it.
That number.
It would have been so we started the quarter at $145 million and we ended at $136 billion.
So we added new PPE and had some payoffs during the quarter as well.
Does that mean for average purposes.
I assume the adds were mostly in March in the on the pay.
The offshore February March is the <unk>.
As of all central adds kind of February timeframe. So ive kind of just take an average of those two it was around $140 million for the quarter the average.
Fair enough. Thank you my other questions were answered.
Thank you.
And again, if you would like to ask a question at this time of simply press Star then the number one on your telephone keypad. Our next question is coming from David <unk> with Wedbush Securities.
Hi, Thanks, a couple of questions for you starting with deposits can you talk about the deposit outlook should we assume that deposit flows should be similar to the strong pipeline that you've talked about on the loan side.
Yes.
The.
As I mentioned earlier I almost feel like we're having to bridal discussions of Brean.
Bringing.
Deposits on too quickly.
So we do have.
A fairly significant round of deposits coming in around March or excuse me may.
First.
We've got several relationships that are requesting.
The either new relationships or existing relationships to bring on more so I'm pretty convinced that.
We can stay somewhere under.
100% loans to deposit ratio, even with our strong.
Funding our loan base.
Great and then on Securities I see how.
You had a pretty strong quarter for loans and it looks like the securities portfolio came down a little bit sequentially can you talk about how we should think about securities. The securities portfolio on a go forward basis in light of the strong pipelines on the loan side.
Yes, we try to average and this is.
So the discussion with our primary regulators and we try to stay somewhere around 12% on balance sheet liquidity.
As you suggested the prepayments on our securities.
It had been.
A little bit brisk, they are slowing down.
But we are going to have to add some securities over the next several quarters.
And quite honestly, depending on what we tend to put it into.
That might put a little drag on.
The NIM overall.
But I would still say our loan fundings are going to be of high enough.
It won't be that significant but we are going to have to add to the.
Portfolio.
If you just look at the composition of the Securities portfolio, we've always been very conservative.
So we have relatively few of municipal bonds, most of mortgage backed securities either our own deals or.
Pass throughs.
That we've purchased in the past.
And.
So.
We're going to have to continue to add to that.
In some form or fashion, we have very little of sub debt, we might buy a little bit of that but probably not inclined to do much of it.
Got it that's helpful and you answered this a little bit.
The net interest margin question, you said that it could be the securities purchases could be a little bit of a drag on our NIM, but overall should we how should we think about the NIM on a go forward basis.
I think NIM should stabilize basically as long as we can control the excess liquidity.
I think Dave was suggesting that are the loans that were funding out of pretty stable right now.
And the loan yields should be stable I think what youre going to if you also read between the lines with daves comment.
Our loan fundings for the quarter youre going to be higher than what they were this quarter.
So, let's say, we add $100 million or so of securities over.
The next several quarters it just won't have that much of an impact.
On NIM will have a modest impact, but not much but <unk>.
Between having our funding costs continue to decline just slightly and our yields staying the same but yet funding more loans on the balance sheet, we believe that NIM should be pretty stable.
Yes.
The securities yield is probably the biggest impact over time as we grow and we carry more securities in this environment. It will have an impact but.
I would say.
Over time, where we're at at the end of the quarters from.
Oh good.
What we've average for the quarter that would give you kind of the effect of the liquidity drag over time versus.
I mean.
And what was shown or demonstrated on the press release.
NIM was what 316, but the month of March was $3 24.
I mean it shows that.
First carrying cash is probably the biggest detriment to.
The NIM otherwise it would have been much stronger than.
What it was what it actually was.
Very helpful.
Oh, thanks very much.
Our next question is coming from Bob <unk> with Piper Sandler.
Good morning.
All right.
I just wanted to talk about future provisioning in the reserve going forward.
With I think you did about $1 million.
Releases for improving economic forecast should we kind of see the level of provisioning kind of stay the same as you provide for growth and assume kind of a relatively stable reserve or is there room for this the drift lower if we get further improvement in the economic forecast.
We're we're modeling.
The former is.
Which is if you just take our general reserve levels of 45 add growth to it that's kind of what we would model as additional reserve requirements is the room for improvement, yes, probably but.
It's hard to predict given the.
Seasonal modeling out there.
It could depending.
Depending on the funding mix from our C&I as higher reserves. The multifamily. So we just kind of forecast 45 basis points against the growth.
As you know six of those are very sophisticated calculation involving economic scenarios.
And.
Yes.
Mixed with the historical view and so it's hard to know at this point at this point, we see the economy kind of continuing as is so the 45 basis point would probably be sufficient over time, but.
But we'll we'll.
We will advertise as that changes.
Okay. Thanks for that and then last one from me.
The prepared remarks.
Mentioned about seeking further organic expansion in the Dallas area could you maybe give us an update on your appetite for M&A in the area and maybe any color on how those conversations with potential partners have been going.
In terms of.
Updates with other people the answer is I, probably cant really speak to that but I would say that very much. So.
We would like to have.
In the M&A deal and the Texas marketplace, specifically, the Dallas Fort worth Metroplex.
We're in the hyper focused right now.
As you know there's more banks in Texas.
With the exception of Illinois.
And so I remain optimistic and especially if our.
Stock can continue to trade at.
Premium levels.
I feel fairly strongly that.
Something will come up at some point in time.
Thank you all my questions have been answered.
This concludes our allotted time for question and answer session I will now turn the call back over to Mr. Scott Kavanaugh for closing remarks.
Thank you again for participating in today's call I'm very proud of how we have started the year.
All of our business lines are doing exceptionally well as evident evidenced by the results. We reported there are great opportunities related to our geographic expansion to the Dallas Fort worth Metroplex, and I'm very excited about our efforts related to bitcoin and digital assets.
As a reminder, our earnings report and Investor presentation can be found on the Investor Relations section of our website.
And have a great remainder of your day.
This concludes today's conference call. Thank you for participating you may now disconnect.
[music].
Okay.