Q1 2021 South Plains Financial Inc Earnings Call
[music].
Good afternoon, ladies and gentlemen, and welcome to the South Plains Financial Inc. First quarter 2021 earnings conference call. During today's presentation and all parties will be in a listen only mode for all.
And the presentation. The conference will be opened for questions with instructions to follow at that time.
As a reminder of this conference call is being recorded I would now like to turn the call over to Mr. Steven Crockett Chief Financial Officer of South Plains Financial. Please go ahead Sir.
The operator and good afternoon, everyone. We appreciate your participation on our first quarter 2021 earnings Conference call with me here today are Curtis Griffith, our chairman and Chief Executive Officer, Corey and loosen, our President and Brent Bates Citibank's, Chief Credit Officer.
As a reminder, a replay of this call will be available through May 11, 2021 and.
Additionally, a slide deck presentation. The complement today's discussion is available on the investors section of our website.
Before we begin let me remind everyone that this call may contain forward looking statements that are subject to a variety of risks uncertainties and other factors that could cause actual results to differ materially from those anticipated future results.
Please see our safe Harbor statement beginning on page four of our earnings press release and on slide two of the slide deck presentation.
All comments made during today's call are subject to those safe Harbor statements.
Any forward looking statements presented herein are 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 reconciliation of these non-GAAP measures to the most comparable GAAP measures can be found on page 11 of our earnings release at this point all Kurt I'll turn the call over to Curtis.
Thank you, Steve and good afternoon.
On today's call I will briefly review the highlights of our first quarter 2021 results provide an update on our capital allocation strategy and conclude with comments on our inaugural corporate sustainability report, which we released in February of 2021.
Laurie will discuss our initiatives designed to accelerate organic growth and Steve will conclude where the more detailed review of our first quarter 2021 and financial results. We will then open the call for your questions.
Turning to our first quarter 2021 results on slide four.
We reported net income of $15 $2 million or 82 cents per diluted common share, which compares to net income of $7 $1 million or <unk> 38 cents per diluted common share that we reported in the first quarter of 2020.
Pre tax pre provision income for the first quarter of 2021 was 19 point out millions of dollars, which compares to 20 point of a million dollars and the fourth quarter of 'twenty, and 'twenty and $15.1 million and of last year's first quarter.
Our provision for loan losses in the first quarter of 2021 was minimal for the second consecutive quarter and compares to $6 $2 million and the year ago first quarter.
It is important to emphasize that we remain confident of and the credit quality of our loan portfolio and the reserves that we have recorded over the last year.
We have instilled a conservative credit culture at the bank and adhere to strict underwriting standards, which we believe position our loan portfolio the weather the COVID-19 crisis.
We recognize that economic activity is accelerating and many of the hardest hit areas of the economy are improving that.
That said, we are maintaining our conservative stance and keeping our reserve stable at current levels given the continued stress in certain sectors, most notably the hotel sector.
The U S. Government's recent stimulus package has provided much needed support for many individuals and businesses and we are watching to see how the economy evolves is that stimulus spend through the year.
We have started to see more banks, releasing some of their reserves. This quarter. We will continue to monitor our position at the end of each quarter as we assess the risks and the loan portfolio along with the economic environment at that time, and we'll adjust accordingly.
And as we have discussed on prior calls our hospitality exposure is the primary area of our loan portfolio that has been slow to recover.
Though we are beginning to see some improvement as the governor of Texas has lifted many COVID-19 related restrictions the roll out of the COVID-19 vaccines continue and the pace of activity and the economy starts to accelerate.
This improvement can be seen and are active loan modifications attributed to the COVID-19, pandemic, which declined to $46 $9 million or two for 1% of our loan portfolio as of March 31, 2021 as compared to $64 $1 million or two 9% of our loans.
Portfolio as of December 31, 2020.
Approximately 95 per cent of our active modified loans at the end of the first quarter of 2020. One are in our hotel portfolio and we're encouraged with the trends that we're seeing and which corie will touch on and more detail on the moment.
Overall, we continue to believe that our current reserve position is appropriate and are cautiously optimistic that the economy will continue to improve.
And looking forward our team continues to remain focused on growing the value of the bank I am very proud of the success that we've achieved.
Over the last year, we have grown tangible book value per share 16, 6% to $19.28 as of March 31, 2021 as compared to $16 54 per share as of March 31, 'twenty 'twenty.
We have utilized a disciplined and thoughtful capital allocation strategy to support this growth, while providing a steady stream of dividends to our shareholders. We will continue to be disciplined in the year ahead as we look for accretive acquisitions like our acquisition of West, Texas State Bank are Debbie TSB.
And I am proud to report that we met or exceeded all of our integration goals, including our expense save target.
Additionally, we were very focused on our process throughout the W. T S. B integration, which has prepared our team for the next acquisition.
That said, we understand what the investment community expects on valuation and earn back and an acquisition and will approach any M&A opportunity with that and mine.
As part of our capital allocation strategy, our board of directors approved a 40% increase and our quarterly dividend of two seven per share of this past week.
This will be our ninth consecutive quarterly dividend and will be paid on May 17, 2021, the shareholders of record on May 3rd 2021.
During the first quarter of 2021 we repurchased approximately 40000 shares of common stock under our $10 million share repurchase program, which we are continuing at this time.
And importantly, we will remain disciplined as we weigh the opportunities for improving shareholder value and capital redeployment to grow the bank.
Another area of focus from the year ahead, as our effort to expand our engagement across the broad spectrum of sustainability initiatives over the years, we have been very active providing service and aid to our local communities ranging from financial support for local nonprofit organizations to our employees volunteering as part of their work for the bank.
Our dedication and commitment of our communities is at the core of our culture and ultimately how we have succeeded over our long history.
That said and now we can do more and I'm proud of our first corporate sustainability report, which we launched in February of 2020 one and.
The report outlines our commitment to of diverse workforce and board of directors and our goal to reduce our carbon footprint and our ongoing support to our local communities through increasing employee and bank engagement. We understand that this is a journey and are excited with the many opportunities ahead that will enable us to make a positive and.
And our communities.
To conclude our local Texas markets continue to recover through the first quarter of 2021 and it's the pace of business has started to accelerate real estate volumes remained strong and the price of all continued to rise. Additionally, new COVID-19 case numbers have remained very low as our restaurants have returned to full occupancy and <unk>.
<unk> began to come back and.
As a result, we have opened all of their bank branches and lobbies to our customers and are optimistic on the outlook for the economy and the bank now let me turn the call over to Corey.
Thank you Curtis and good afternoon, everyone, starting with our loan portfolio on slide our loans held for investment at the end of the first quarter of 2020, one were $2 $24 billion, which is $21 million increase from the fourth quarter of 2020 and $134 million increase from the first quarter of 2020.
The increase from the fourth quarter of 2020 was largely driven by organic net loan growth of $47 million, partially offset by seasonal payments of $25 million and agricultural operating loans. Additionally, we funded $78 million of new T. P. P loans during the first quarter of 2020, one which resulted in a net into.
Kris and PPP loans of $4 million.
Our loan growth is being driven by improved demand from our customers for credit as the economy continues to recover from the COVID-19 and in it while.
While we are still early and the economic recovery, we're seeing strength and residential construction across many of our markets as well as continued improvement and our indirect auto channel, which began in the fourth quarter of 2020.
Our focus continues to be on accelerating organic loan growth through the year as we work to add experienced relationship bankers across all of our markets, where the focus on Dallas Fort worth Houston and El Paso.
Youre being selective and our hiring and will maintain our strict credit culture as we grow the bank.
As demand begins to build across our industries and our loan pipelines continue to growth, we expect loan growth to reaccelerate to the low single digit rate through 2020, one excluding PPP loans before returning to mid single digit growth and 2020 two.
As part of his touched on our active loan modifications related to the COVID-19, and in it are down to 2.1 per cent of our total loan portfolio with the majority of those loans and our hotel portfolio, where we have been seeing improving trends are and are cautiously optimistic as can be seen on slide seven and.
At the heart of the COVID-19 paint and at our hotel portfolio's revenue per available room declined on average by over 50%.
Well it continues to improve quarter over quarter now approaching 75 per cent of prepaid and it has.
Importantly, none of our hotels of our airport property and many of our operators have expressed optimism that they will continue to see cash flow improvement over the near term.
That said the industry's recovery has been relatively tepid and we have made the decision to be cautious and hold substantial general reserves at eight eight per cent of our hospitality segment. We will continue to work closely with our borrowers as they navigate the economic recovery.
Our direct energy exposure at quarter end was 63 million or three 1% of our loan portfolio, excluding PPP loans, which is in line with the fourth quarter's level. As a reminder, nearly 100 per cent of our energy exposure is located in the Permian and powder basin, while 92 per cent of our exposure is support services.
Additionally, almost half of our direct energy exposure is one service sector alone, where we have strong guarantor support outside of the energy industry.
We continue to feel very comfortable with our energy exposure, especially as oil prices have continued to rise along with the economic activity and the Permian basin.
While the COVID-19 pandemic has created challenges, which we believe we have navigated well. It's also created opportunities for our team took the.
And to accelerate several strategic initiatives across the bank what areas and the Permian basin that we entered through our acquisition of Debbie TSB will ease of use the time that our branches have been closed to perform facility upgrades to improve their look and feel while rebrand and now with a true Citibank brands.
We reopened our branches through the first quarter of 2020, one and we're already seeing of retired on that spend is our customer traction has markedly recruit.
Another area of focus has been the expansion of our digital offerings, where we are currently in process of increasing contactless banking and digital signatures across the bank.
We're fortunate that we began our investment and our digital platform several years ago, which has positioned the bank to transition our customers to remote banking throughout the COVID-19 pandemic.
We continue to see strong utilization of our digital platforms and view technology as an opportunity to enhance our processes and improve our customer satisfaction and lower expenses, which will continue to positively impact our efficiency ratio.
One area, where we have effectively used technology to scale and our mortgage banking business, where we've experienced robust growth without a commensurate increase in head count.
And as seen on slide eight our mortgage volumes continued to be strong our mortgage teams many of whom we've recruited over the last several years continued to increase market share and drive production. This.
This is evident and our results again, this quarter, where they delivered $435 million and mortgage loan originations as compared to $458 million of originations and the fourth quarter of 2020.
This led to $19 million of mortgage banking revenues and the first quarter and compares to $17 billion and the fourth quarter of 2020, the raws and the mortgage banking revenues and the first quarter of 2020, one as compared to the fourth quarter of 2020 was largely due to improved fair value of <unk> for our mortgage servicing rights portfolio as mortgage rates beginning for.
Leasing and the first quarter.
Our mortgage banking strength can be seen in our fee income and as outlined on slide nine for the first quarter of 2020, one we generated $26 $5 million of noninterest income compared to $26 $2 million and the fourth quarter of 2020 well.
While we continue to expect on mortgage banking revenues to moderate through the year as we as.
And its volume slow we believe we are positioned to mitigate the margin compression given that we have effectively used technology to scale. Overall, we believe the noninterest income remains of real differentiator for South plains assets.
The income represented 47% of total revenues and the first quarter of 2021, it's compared to 38 per cent and a year ago quarter.
To conclude we have started the year strong is the economic activity and our market is accelerating our loan pipelines are building and the credit quality of our loan portfolio is strong.
We continue to be cautiously optimistic on the future of walnut maintaining conservative reserves on our portfolio, which will protect the bank and our shareholders. If the environment were to deteriorate I.
I would like to now turn the call over to Steve.
Yeah.
Thank you Corey.
Starting on slide 11, net interest income was $29 $5 million for the first quarter of 2021 as compared to $34 million for the fourth quarter of 2020 and $32 million for the first quarter of 2020.
The decrease since the first quarter of 2020 was due to a decline of 69 basis points and loan rates and interest expense for the $50 million of subordinated notes that we issued and the third quarter of 2020, partially offset by a decrease of 50 basis points and the cost of interest bearing deposits.
During the first quarter of 2021, we recognized $2 $5 million and PPP related SBA fee income, that's and adjustment to interest income, which included accelerated income on loans forgiven during the quarter at.
At the end of the first quarter, there was $5 $1 million and unrecognized deferred PPP fees. The majority of which are expected to be recognized as PPP loans continue to be forgiven by the SBA over the next several quarters.
Our net interest and interest margin decreased to 352% and the first quarter of 2021 as compared to 364% and the fourth quarter of 2020.
Our non P. P. P loan rates declined 18 basis points as we've continued to see some rate pressure and our loan portfolio.
Additionally, our margin declined approximately nine basis points from the continued growth and deposits that has added to our excess liquidity.
Our average cost of deposits declined two basis points to 29 basis points and the first quarter of 2021 as compared to 31 basis points and the fourth quarter of 2020 and declined from 65 basis points and the first quarter of 2020.
We will continue to monitor our rates going forward.
Our current rates to be nearing the floor of this cycle.
And the first quarter of 2021 deposits increased $181 million to $3, one $6 billion.
As compared to $2 $97 billion and the fourth quarter of 2020 as can be seen on slide 12.
We ended the first quarter of 2021 with total noninterest bearing deposits of $962 million for 35 per cent of total deposits.
We've continued to see an influx of deposits and the first quarter, especially considering the recent government stimulus package and the latest round of PPP loans funding.
Turning to slide 13, our nonperforming assets to total assets ratio declined three basis points to 42 basis points and the first quarter of 2021.
And as compared to 45 basis points and the fourth quarter of 2020.
As Curtis touched on we believe our loan portfolio remains well reserved and are a triple ALLL to total loans, excluding PPP loans was 2.18% at March 31 and 2021.
Which is the decline of four basis points from the fourth quarter of 2020.
We believe that the reserves that we've built to help guard against an uncertain outlook are appropriate.
Excuse me and ahead to slide 15, our noninterest expense was $37 $1 million for the first quarter of 2021 as compared to $36 $5 million and the fourth quarter of 2020.
This increase was primarily due to higher health insurance costs, and a change to our lender incentive compensation plan and.
Importantly, our core expenses have been running relatively steady and remain a focus of our team as we continue to work to improve our efficiency ratio, which was 65, 8% and the first quarter of 2021 as compared to 64, 2% and the fourth quarter of 2020, and 69, 1% and the year ago first quarter.
Keeping ahead to slide 17, we remain well capitalized with tangible common equity to tangible assets of $9 three 9% at the end of the first quarter of 2021 compared to 960% at the end of the for fourth quarter of 2000, 29.37% and the first.
Order of 2020, I will now turn the call back to Curtis for concluding remarks.
Thank you, Steve I would like to thank all of our employees for their hard work throughout this challenging environment.
And the success that we have achieved through the first quarter for 2021 and our strong foundation, which positions us for the future would not have been possible without your tireless efforts and commitment of the bank.
And as I look for the balance of the year on filled with optimism and hope the economic recovery will take hold and providing a real tailwind to our business I am also incorporated with our cautious approach to credit and the provisions that we have taken the guards bank and our shareholders against the unexpected which I have encountered often over my almost decade career and <unk>.
Thank you.
We believe we are well positioned for the future and excited to take advantage of the many opportunities that we see in front of us.
You again for your time today operator, please open the line for any questions.
Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment and may be necessary to pick up your <unk>.
Handset before pressing the star keys.
No ma'am. Please go on with polling for questions.
The first question is from that Brad Millsaps from Piper Sandler. Please go ahead.
Hey, good afternoon.
Hey, good afternoon good afternoon.
Hey, it looks like you guys had a nice quarter, maybe just wanted to.
Touch on the balance sheet and and the loan growth that you are.
Did that you are seeing Steve I think you mentioned you know some.
Pressure on loan yields so just kind of curious you know kind of where new loans are coming on the books, and then and sort of how you're thinking about.
Managing the excess liquidity that you have there's only really look like you bought a mini bonds during the quarter and so just kind of curious how you're thinking about managing that excess liquidity going forward. As you think about you know P. P. P loan forgiveness and then the loan growth growth that you've hopefully got coming on in the second half of the year.
Sure Yeah, we.
We had a good first quarter, we we saw some good loan demand.
We we did see some rate pressure, but you know some some of the growth. We had was as we mentioned was in our indirect auto business does do you have a little bit the.
Lower rates, and then and some of the commercial stuff and but those are obviously much shorter term and advertise off so that that is a little bit of.
Lower yields we're seeing there but.
And again, it's better than you know better than the alternative we got it and having it and liquidity overnight and said as far as the Securities go for sure we are.
And we would like to continue to the to invest we did invest you know the overall fair value the portfolio was and it was down with the with the change and change and rates towards the end of the quarter as of the fair value was down but we will continue to look for.
Good good investment opportunities.
And we don't want to extend too far out and and duration of at this point.
But again, we keep getting.
Flooded and flooded in with with the with liquidity and so we.
And we don't want and we don't want making that decision all at one one time to invest all of that but we'll just keep looking for good for good opportunities.
Brad This is curtis of kind.
Kind of echoing what Steve said, we have been a little cautious we are keeping quite of bit of liquidity, but as the long end of the curve began to move up a we we kind of backed off a little on the securities purchases during that period to try to figure out.
For the lines headed a little bit or we don't want to get in too early on that and as Steve said, it's still a bit of a challenge to determine what our liquidity is really going to be going forward over an extended period.
We're still a little bit surprised frankly about the the growth deposits that were still seeing but I think with all of the injection of liquidity and of the system from the federal.
From a free that's primarily I think it's affecting everybody to some degree and I just don't want us to be out there getting too much tied up too long.
And what we are seeing and I'll, let Brent bites.
And this little bit of our pipeline out there right now is one of the best we've ever seen and I don't know and you never know how of much of that turns into the final funding, but the breaking on the address that a little bit yeah. We have a really strong pipeline right now I'm really encouraged by its best we've had a really since I've been here.
And as far as the size of it and the probability of close.
We're seeing good demand and C&I and and still some on the residential side, although that's an area where.
Uh huh.
We're being selective and and and we're seeing strong demand and owner occupied commercial real estate has been a focus of ours for a while and we saw good traction during the quarter and owner occupied CRE and.
And we saw about a 6% growth in AR and AR.
Quarter over quarter, just in that category, which also and kind of contributed a little bit to the margins. There so breadth of scoring and one of the thing well if it's weak.
Grant and the middle of the COVID-19 stuff is last year, we got fairly aggressive on rates trying to figure out how to keep it a little bit of the demand going we've been crazy and those rates back up on the loan side and not getting a whole lot of pushback on it I mean, we'd love to see them going up higher than they are today, but where we're.
Kind of pleased with what we're seeing on some of that.
And that's great and and and maybe just one follow up around.
Credit quality I, certainly appreciate you guys being conservative and how you're thinking about provisioning and the reserve and a lot of your peers have maybe been more aggressive with our you know releasing reserves this quarter.
And I.
I guess you know what would happen the happened you know for you guys and maybe.
Maybe take a negative provision or you know based on what the Brent staying around you know the loan pipelines and something you can view, we'd like the kind of grow into a kind of as you move through the year I need to and then the next.
Well this Kurdish and obviously the best answer is to grow into it but realistically I don't know that we can ramp it quite that quickly.
And we arent, we'd still have a very significant qualitative adjustment out there and the calculation and that really goes back to Paul we're cautiously optimistic about the where we're going as far as the pandemic, where we're going with the recovery of the overall economy.
And we do have some issues out there on international and supply chains, and I don't think any of the snow just yet how that's going to affect our everyday customers, but anecdotally. We're seeing many of our businesses that are having problems getting either things they need to sell or items, they need to keep working on their manufacturing and.
One of the things like that that's not going to be good and I don't think it's a it's catastrophic by any means but it still gives us a little bit of pause and that's one reason, we didnt make any adjustment here at the end of the first quarter. We're gonna be very are working very hard and we're and everything is as we move forward and I'll. Just say you know if trends continue on a path.
Positive direction.
And we would be looking to maybe release some in Q2 Q3, but right now we just wanted to kind of see where everything is kind of move before we start trimming it back.
That's great I appreciate it I'll hop back into queue. Thank you.
The one comment I would just make is the along with what price was saying you know there's supply chain issues, we're not seen as many within our own portfolio as we're seeing as a whole throughout the economy. So we're pleased with what we've got but we're just waiting for a little bit of clarity to come along.
Yeah.
As a reminder of it is star one to ask a question.
The next question is from Brady Gailey of <unk>. Please go ahead.
Hey, Thank you and good afternoon guys.
Okay.
And I wanted to ask one more on the reserve a just remind US you guys are not yet.
See saw compliant bank right and then when and if that's correct. When do you expect to be C. So compliant for some reason and I remember maybe January the first of 2023 as of the plan.
That is correct.
We have not adopted seasonal that's when we have to we we had gone through the process and we're ready we're ready to do it you know just right before the COVID-19.
COVID-19 hit and so we're.
We're very far down the road, but that's that's what our that's one of the required date is.
Okay Alright.
Alright and.
The next I wanted to ask about mortgage I.
I think you guys had a little bit of and the MSR.
And right up in there, but even if you back that out mortgage was still.
Very strong and even stronger than the fourth quarter.
And I heard your comments earlier about you know mortgage moderated and at some point.
And I was just wonder and even if you could.
You provide a little more color on how you think the degree to which mortgage could moderate.
And then you know as you look if you looked like the 2020, two and a more normalized.
And the mortgage market, what you think of mortgage fees.
And it could ultimately moderate too.
Well, I guess, Steve and I will probably tag team. This one in and one of the things that I would tell you that what we saw the difference between really first quarter and where we're taking off on on the second quarter is we're seeing the difference between the purchase unit.
As a percentage of the whole between those two quarters.
We had and the first quarter, we had a little bit more refi business.
Uh huh.
During the first quarter than what we're seeing and even in April and we're seeing a pretty substantial swing, where we're moving more to the to the purchase of thought and that's what we've been focused on and that's what we've been of.
And the teams that we've been bringing on everything that we've been doing is to be focused on the purchased business to be able to.
Keep our bid or our mortgage business and headed in the right direction as we move for where you are seeing margin compression.
The compression that's already happening and we don't think that that's that's kind of slowed down, but we still anticipate a pretty decent year.
For 2021.
So he knows how about the mortgage servicing rights.
Yeah, No I mean, I, just just to add on what we're of course, saying I mean.
If you look and the slide deck, we've got we got on the chart and they're talking about going back to 2019 and 2020 and.
As well as Q1 of of this year and I mean.
2021.
And is projected to still be of.
So really good year, but it does you know we do see of moderating in 2020 twos hard to know but.
We've added we've added more more and more teams and we've got more producers and what we had back in 2019, and so you know we would we would assume that the levels level should be above above where they were at that time.
So you know as far as as far as the mortgage servicing rights and I think that was Oh, we don't necessarily like all of the volatility, but we saw you know we saw a lot of a lot of write downs last year with all of the refinances and.
This was really the first quarter, we've seen the increase in and in and the value. We've got on on those but that may just be more of a one off.
Due to the market changes.
And see if we see some pullback and I mean, everybody across the mortgage industry is struggling with inventory I mean, that's that's the biggest challenge that's out there, but as we see volume as it starts to moderate through the balance of the year. If it does then we think within a 30 to 45 day lifetime, our expenses will moderate as well because of the.
The the lion's share of what were our expenses of our commissions.
And so they are directly tied to it we've tried to make sure. The technology continues to take larger foothold and what we do how we how we process on a daily basis and we've seen some really good outcomes as a result of that.
Alright, that's helpful.
And then I know when we spoke 90 days ago, you all were you know.
More upbeat on the bank M&A and your markets, maybe and update where we stand today it seems like.
Stock prices are up and people are feeling better about the economy and it seems like things and Texas are clearly better and maybe just an update on kind of how your view on M&A for South Plains.
Well.
And.
We are beginning to see some activity and we're in contact with some potential targets for ourselves.
Not in any serious discussions at this point, but the but definitely staying in touch with some that are that could be sellers and our attitude right. Now is that we could do and all cash purchase for a smaller bank.
And if we really have the right deal comes along and we think it's a good fit for us and it still generates enough Ah Ah <unk>.
Synergies and there to make a meaningful damp and the and the growth.
I don't see any reason to buy something thats very small template to make the purchase of.
Obviously, right now with where our stock is trading are doing anything that has a large stock component would be problematic.
Given where pricing is probably going to be so.
And until we can hopefully generate something out there that the market likes us a little better than they have recently, it's going to be a little hard to go out and and play in that arena, but nevertheless, we are still looking and for the right at the right transaction, we'd love to do another deal sometime during 2021.
And she does the deal along with that I mean, the thing that we're focused on is making sure that we keep the organic growth is front and center as possible and that's where as we continue to look at the season quality lenders and we're very very careful about our hiring process and we're very focused on it but as we continue to to stay and.
And that direction and we're pleased with what we're seeing I mean, it's our organic growth just like Brent was talking about the pipeline I mean, it's it's very.
It's very robust for what we're seeing coming out of the the COVID-19 pandemic.
Alright, and then sorry, if I missed this but the the 50 million of assets.
L P.
And that was repaid without any prepayment prepayment penalty.
And what that well that'd be a material add to spread income I'm wondering does the.
If that was of costly of HIV events.
No. It was not it was the was actually of variable rate. So it was it was a low low cost, but the obviously based on our liquidity position and that just wasn't anything that we we needed.
Got it that makes sense. Thanks for the color guys.
Thank you. Thank you on Friday.
This concludes the question and answer session I would like to turn the call back to Mr. Curtis Griffith for closing comments.
Thank you operator.
Thank you everybody for participating today and for those listening and on the call as well.
We are very pleased with the group that we have here a leading south plains financial we think we have some great opportunities ahead of us and.
And our credit quality is strong and I think continues to improve.
We are not seeing the the kind of dire consequences of the pandemic.
A year ago, I think we were all fearful of.
That's the result of many things, but I think we did have some strong underwriting as we were going into all of this and that's now paying off for us as Corey indicated we have some great lenders and place and continue to add some so I think our organic growth. This year is going to be strong. We are very optimistic on what we're been able to achieve the techs.
This market is certainly a great place to be right now.
And we continue to work on cost saves at every opportunity, adding new technology. When we have the opportunity to and we can see the the quick repayment of the investment and that technology the.
The pandemic has allowed us to have.
And I have on our digital platform spread across a much greater percentage of our customers and I think they are generally very satisfied with that so we will continue to improve efficiency by utilizing those kind of channels for delivery of the banking services. So all in all of we feel really really good about where we are right now and think we're going to have a good.
21 of the mortgage business will probably have a gradual slowdown but again, we're pleased so far that it hasn't been anything drastic and unless we see of significant spike and the long end of the Reits I think at least here in Texas, we're going to see a substantial activity and and single family homes, particularly on the purchase side.
And as Refis slow and certainly and I in our estimation, even if refis do slow down the reason they will and was probably because we're seeing an increase in longer rates and given all of the way we've positioned our portfolio that should allow us to see our net interest margin for getting to widen back out to the levels above where.
We've had to deal with for the last several months. So all in all of we see a very bright outlook and the Joe welcome any of you who participate on our stock and and thank you for believing in us and being part of our investors and look forward to migrate years of him.
Operator.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
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Okay.
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Yes.
Okay.