Q2 2021 Independent Bank Group Inc Earnings Call
Greetings and welcome to independent Bank group cute shoot 'twenty 'twenty 1 earnings conference call. At this time all participants are in a listen only mode. A question and answer session will.
Will follow the formal presentation, if anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn this conference over to your host Mr. Paul Langdale. Thank you Sir you may begin.
Morning, everyone I am Paul Langdale senior.
Vice President and director of corporate development for Independent Bank Group and I would like to welcome you to the independent Bank Group second quarter 2021 earnings call. We appreciate you joining us and the related earnings press release, and a slide presentation can be accessed on our website at <unk> Dot com.
I would like to remind you that remarks made today may include forward looking.
Statements those statements are subject to risks and uncertainties that could cause actual and expected results to differ we intend such statements to be covered by safe Harbor provisions for forward looking statements.
Please see page 5 of the text and the release or page 2 of the slide presentation for our Safe Harbor statement. All comments made during today's call are subject to that statement.
Please note that if we give guidance about future results that guidance is a statement of managements beliefs at the time. The statement is made and we assume no obligation to publicly update guidance.
And this call we will discuss a number of financial measures considered to be non-GAAP under the SEC's rules reconciliations of these financial measures to the most directly comparable GAAP financial measure are include.
And our release I am joined this morning by David Brooks, Our chairman and CEO and President Dan Brooks, Our Vice Chairman and Michelle Hickox Executive Vice President and CFO at the end of their remarks, David will open the call to questions with that I will turn it over to David Thanks.
Thanks, Paul Good morning, everyone and thank you for joining us on today's call.
Our company's second quarter results represent a strong return to organic growth with our teams delivering 12, 4% annualized growth and our core loan book for the quarter as the Texas and Colorado economies continue to rebound.
This loan growth is both broad based geographically across our markets as well as in terms.
Our product type.
Most importantly, this growth represents the disciplined execution of our teams and building relationships, winning business and taking care of our customers.
For the second quarter, we reported EPS of $1.35 grew tangible book value per share and maintained robust liquidity.
Additionally, credit metrics remain resilient with non performing assets, representing just 29 basis points of total assets at June 30.
Given the strength of our company's position our board has elected to again raise the dividend to <unk> 34 per share in line with our long standing philosophy of providing return.
Turns to our shareholders and.
And with that overview I'll now turn the call over to Michele for more detail on the operating results for the quarter.
Thank you David Good morning, everyone selected financial data for the quarter is on slide 6.
Our second quarter adjusted net income was $58.2 million.
Or $1.35 for diluted share compared with $49.1 million or <unk> 90 per diluted share for the second quarter last year, and $60.1 million or $1.39 per diluted share for the linked quarter.
Net interest income was $129.3 million and the second quarter up from 128 point.
$4 million and the second quarter last year and down slightly from $129.7 million and the linked quarter.
The slight reduction in net interest income over the linked quarter was primarily due to lower accretion income, which was $5.2 million and the second quarter compared to $6.2 million and Q1.
This decrease was partially.
We offset by interest income on loan growth and the securities portfolio.
PPP fees of $5.1 million were recognized in Q2 versus $4.8 million and Q1 with approximately 10 and a half million of fees remaining to be recognized.
We estimate around half of these will be recognized in 2021 with a remain.
And early 2020.2.
The adjusted NIM, excluding all loan accretion was 3 point O, 2% for the second quarter compared with 3.29% from the second quarter last year, and 3.1, and 3% and the linked quarter.
The margin decreased by 11 basis points from the linked quarter due primarily to continued increases.
And levels of liquidity, which impacted the margin by 15 basis points.
The average loan yield increased 3 basis points from Q1, excluding the impact of accretion.
Total noninterest income was $15.9 million for the second quarter compared to $18.6 million and the linked quarter.
And a reduction in non interest income over the linked.
<unk> is due to lower origination volumes and the retail mortgage operation, coupled with compression and gain on sale margins.
Noninterest expense totaled $78 million for the second quarter and increase of $2.9 million over the linked quarter, which was primarily driven by increases of $1.2 million of occupancy and.
And $1.4 million other noninterest expense.
Occupancy expense was up due to completion of several branch refreshes during the quarter as well as an unusual amount of small equipment purchases for upgrades and return to work I do not expect that to recur at that level. Other noninterest expense includes an increase and operations losses and 200.
Quarter 1000 loan related expenses of 365000, and 422000 and travel and entertainment expense as relationship managers return to meeting with customers on more normalized levels.
There's approximately 1.3 million of consulting and contract labor expense related to the P. P P forgiveness and the quarterly run.
60 that will continue through 2021.
Slide 19 shows our deposit mix and cost total deposits for $15.1 billion as of quarter and with total non interest bearing deposits up by $168 million from linked quarter and 650 million from the second quarter of 2020.
And we brought back.
$350 million and reciprocal deposits that were off balance sheet at March 31, 2021, and those were offset by decreases and specialty treasury deposits, including broker dealer and correspondents that were earning higher rates than desired.
Capital ratios are presented on slide 21, and the second quarter, the company's consolidated capital ratios continue.
Continued to grow with the common equity tier 1 capital ratio increased increasing by 20 basis points to 11, 14%.
And the total capital ratio, increasing by 10 basis points to 14, 23% for the quarter.
We call it a $40 million tranche of subordinated debt last week on July 20th that had a range.
75%.
This had minimal impact on pro forma capital ratios.
That concludes my comments I will now turn it over to Dan to discuss the loan portfolio.
Thanks Michelle.
Overall loans held for investment excluding mortgage warehouse purchase loans were $11.6 billion at quarter end.
And compared to $11.7 billion and the linked quarter.
Excluding the impact of PPP loans core loans held for investment increased by $333 million over the linked quarter.
As David mentioned this loan growth was driven by broad based relationship lending to our customers across Texas and Colorado.
5 point and was underwritten with the same discipline on rates and structure that has guided our bank for over 3 decades.
PPP loans on balance sheet totaled $495 million at quarter and down from $912.2 million and the linked quarter.
Average mortgage warehouse purchase loans.
<unk> increased to $855 million for the quarter, reflecting the reduction in demand versus prior quarters and lime with the broader mortgage market.
Overall, our credit quality metrics continued to remain strong with total nonperforming assets of $53.1 million or <unk>.
2.9% of total assets at June 32021.
Net charge offs were 13 basis points annualized for the second quarter and were primarily driven by the charge off of 2 commercial credits that had been previously reserved for.
At June 32021, and the seasonal allowance.
Owns and deeper credit losses on loans, it was $154.8 million or 1 point for O percent of loans held for investment, excluding PPP and mortgage warehouse loans.
These are all the comments I have related to the loan portfolio. This morning, so with that and I'll turn it back over to David.
Thanks, Dan.
As we enter the second half of 2021.
Loan demand remained strong and we anticipate that we'll be able to achieve high single digit loan growth for the remainder of the year.
In addition to this continued organic growth, we are well positioned to capitalize on strategic and financially attractive and well structured and M&A transactions.
As the opportunities present themselves.
Our company operates and for the strongest markets and the country and looking ahead, we remain committed to the disciplined execution of our strategy to grow opportunistically, especially as the Texas and Colorado economies continued to be supported by strong secular tailwind tracking.
And all and talent.
Thank you for taking the time to join us today.
We will now open the line for questions.
Great.
At this time, we'll be conducting a question and answer session. If you would like pause for questions. Please call star 1 on your telephone keypad.
And <unk> <unk> from <unk>.
A question for you.
Sorry <unk>.
Like Joe will be a question from the queue for participants using speaker equipment and may be necessary for you to pick up your hands up for question and I'll start Keith.
On the following poll for questions.
Our first question comes from the line of Brad.
Ed <unk> with Piper Sandler you May proceed with your question.
Hey, good morning.
Good morning, Brad.
Michelle and maybe I wanted to start on the expense side of the equation I was writing quickly there, but it sounds like you expect some of the increased occupancy expense.
On the topic.
Pull back offset whilst some of those PPP consulting fees will remain at least through the end of the year would you expect expenses to kind of fall back into that sort of $70.677 million range or and my way off base there.
I think that's fair, Brad Yeah, and occupancy I think theres, a little over $1 million of costs that.
And we recognized in Q2 that shouldn't repeat at that level.
The run rate is a bit higher than what I guided to last quarter, because our expenses related to the P. P. P repayment for people that were paying on contract labor to help with that as well as some of the software solutions that we're using are more than we expect it to be for a longer period of.
And so I think thats, probably good as probably 76, 5% to $77 million and expense run rate for now.
Great. That's helpful. And then maybe just moving to the balance sheet, David obviously, some really good loan growth and the quarter.
You guys are still sitting on a lot of cash just Michelle and just kind of curious.
And what.
Is your plan there to sort of kind of wait for the loan growth continued to accelerate and redeploy it there or might you grow the bond portfolio. Additionally, with some of that excess cash and liquidity you have.
Yes, given that the minimal amount of return, we get with many setting and at the fed even with rates on securities.
Ties you know coming back a bit this past month, we're continuing to deploy our excess cash into the securities portfolio and you're right now our plan is it would be close to 2 billion by the end of the year, but obviously, we monitor that and that will depend on loan growth as well.
Great. Thank you guys I'll.
I'll hop back in queue.
Thanks, Brett.
Our next question comes from the line of Michael Young with Choice Securities. You May proceed with your question.
Hey, good morning. Thank you for taking the question wanted to maybe just start on the loan growth front.
Obviously very good.
Net production this quarter, but curious about kind of just the outlook in terms of.
Payoffs and Paydowns and we've seen a lot of pressure from other banks about area are you guys seeing any of that and is that kind of the maybe the reason for the high single digit growth versus.
And it's lower could it be could it actually be stronger growth on that on a core basis.
Good morning, Michael.
We we feel really good about the loan growth for the quarter.
We think the high upper single digit estimate for the second half of the year.
Once for a day.
The summer time, and the normal lull and.
And as in the summer so you could see a little bit of a pull back here and the third quarter and then probably accelerate again in the fourth quarter is how we would see it and the pipeline right now.
But.
The.
And the loan growth and net loan growth, we had for the quarter was really a function of increased production more than a.
Closed pay offs are.
And our pay downs, while they normalized a little bit we're not down materially from what they were in the first quarter.
Where we saw was over $800 million and net production for the quarter.
Which was.
A couple of hundred million dollars more than we've been seeing.
Seeing we've been running kind of in that 600 to 650, a quarter and having similar sized paydowns. This.
And this quarter second quarter, the pay offs and Paydowns were.
Under $600 million and our net production was well over $800 million. So we got that's how we ended up with a net 12, 5%.
And it also was very well spread or 45% of the new production was and our core CRE just.
Our customers and our markets spread across all the different product buckets.
And then about 20% of it was in construction lending.
As.
As you know the single family market and are in Texas, and Colorado was.
And at a historic.
Historic high levels. So we're seeing a lot of our single family construction. We're also seeing multifamily construction and some neighborhood retail construction just all of the markets and product types that we've always done well and.
And then.
Over 20% of the new production was in our and new C&I funded debt and we had a lot more commitments than that but that's the funded portion.
And then the rest of it would have just been we've got a portfolio of product for jumbo single family some retail.
Tail, we're seeing some pick up and and retail consumer demand as well so.
Really a very strong base and then in terms of geographically it was about 2 thirds, Texas, 1 third Colorado, which is right in line with our balance sheet, so evenly spread and Texas across our 3 major markets.
And so our team did a really good job they've been hustle and everybody has been working hard for 18 months and it's been frustrating that we haven't had been able to show the net loan growth.
But I think this quarter's a reminder, Michael that what we've been saying for 8 years as a public company that were both and organic.
Ganic growth company and.
Strong acquire when the when the right opportunities come around.
So we're not in a situation, where we feel like we have to go do M&A to keep the accretion train moving or whatever we.
We can grow organically, we are gonna grow organically I.
And consistent in saying that this quarter was I think a welcome.
A reminder, that we can still grow our company organically, where and the best markets on the country.
Okay, great. Thanks, David for all that color I really appreciate it I.
I guess my second question was maybe just on loan pricing.
And how that kind of compares to the back book, you know, how and what kind of pressure I guess, maybe do we expect over the back half of this year and.
And then when will we kind of see stability and those loan yields.
Yeah, we were encouraged by that as well Michael that I believe I'll, let Michelle.
Give the exact number but I believe our.
The net loan production for the quarter came on it with 2 or 3 bps higher than well average loan yields for this quarter were up 3 basis points over previous quarter, you know and we've got PPP loans paid off and I predict our new production and our loans held.
Held for investment and obviously those rates are higher a lot higher than 1% right I think our when the last time I'll, let Michael the loan yields were coming in and maybe sell 10 to 15 basis points lower than what our overall average yields are ex fees right now so.
And you know I thought that was good to see that increase and.
Yield this quarter, if we can maintain that stability I think that's good that's good outlook for our NIM.
Okay, great. Thank you.
Our next question comes from the line of Brady Graley with K B W. You May proceed with your question.
Yeah, It's Brady Gailey good morning, guys good.
Morning Brady.
And so I wanted to start with the dividend, it's great to see another increase seems like Goldman and increasing at a lot recently, but you know the payout ratio is still pretty modest it's only about 25% to 30% how and how do you think about you know kind of continue dividend.
Average increases from here and in Europe.
They're a.
And the landing zone, and you Wanna be on as far as the dividend payout ratio.
Our current philosophy Brady has been to pay out about 25% of our trailing earnings.
To your point, though our board is really having a lot of discussion.
And around is 25% the right number.
And given that we're generating capital even with our growth rate, we're still generating capital more quickly than weak and deploy it.
So we've been watching and and expecting that there would be some strategic opportunities on the M&A front. So we.
Dividend and been and a huge hurry to.
You know to be buying back our stock and you've talked about it the prices it was trading at.
And so yes, the dividend is 1 way we can continue to you.
And <unk> trend toward paying back more I think our board is.
<unk> is looking at that payout ratio now whether 25% for the right number given the M&A given the possibility of stock buybacks.
We've been comfortable with the 25% level, but we also have an eye toward continuing to increase the dividend as time goes by.
So I think that's our.
We Havent asked if you will our leanest towards continuing to increase the dividend and you know and.
And then with the volatility we've seen and bank stock prices pulling back here.
And there maybe opportunities for us to be opportunistic on the on the stock buyback as well and we certainly would have been and the market last week with the volatility we saw.
And you had we not been blacked out for the earnings. So so we're going to and you'd look to be opportunistic there and and our M&A discussions continue to.
And be positive.
Surprised I think as anyone is that we haven't seen more announcements here and by late July we're well.
Our third quarter now and and.
I think theres a lot of discussion on dialog going but.
Every every board has taken a look at their situation and trying to ascertain what the best pathway for it is and I think youll see opportunities and activity here and the and the second half of the year, but we are.
And to the half of the year now so we'll see.
And.
And David on the M&A topic, Alright, just from talking to other banks it seems like it could be on it.
Issue with sellers expectations, just being pretty.
Elevated I mean do you think thats 1 of the biggest reasons why we haven't seen.
And the sector M&A and Texas.
I do I.
And I do think that Brady I think our pricing I think the volatility of the stock prices has been a little bit of a damper on activity as well you know the private companies that are going gosh.
What if we announce a deal at a certain price and then.
More trades, all bank stocks down 10% for next week and then all of a sudden I didn't get a premium for my company and so there's those kind of discussions going on and and I think people are I am encouraged that people are being thoughtful around finding a partner that makes sense.
And for you and negotiating.
And the market deal that's a win win.
And so those are the discussions were in and.
As I mentioned, a moment ago, we're we're going to be.
Patient, we've been disciplined and our M&A approach for.
For 2530 years, now and and I don't think now is the time to jump out and lead the league and.
Shading, it and hitting.
And then last question for me, David and it was interesting to see the press release, you all put out I think last week for maybe the week before about hiring a drawn turbine for.
And I know he was recently on T. C. B I mean, maybe just a comment on that higher and kind of what he brings to IV.
Thanks.
Yeah. So we we aspire and they get to set the stage Brady first that we aspire to continue to grow and we're a growth company.
We're continuing to look not only at our organic growth, but strategic opportunities. So.
Said debt, we could easily be.
$30 billion company by the end of next year, and then growing from there. So as we aspire to continue to grow we felt like we need to continue to you know them.
To add and expand our team our leadership team.
We got to know John during the Texas capital merger.
And this last year really thought highly of him and he's a seasoned executive with a terrific background from U S Bank and other large companies and the.
The truth of the matter is we're a big community bank and we've grown up from a small community bank and do a bigger community bank and as we become a regional bank.
I think it's important that we continue to add and expand our leadership, we've got new leadership and areas like human resources and marketing.
And opportunity to pick up a season, a risk guy who can come in and help us build.
A deeper and better infrastructure around compliance and enterprise risk management and all those things.
<unk> and with a view toward how it's done and you.
U S bank and other bigger companies and it was an important hire for us and.
I think you'll continue to see us.
Add to our team expand our team as time goes for.
As we build out leadership for the future.
Okay great.
And sorry, guys.
Thanks for it.
Our next question comes from the line of Matt on that.
Stephens you May proceed with your question.
Thanks, Good morning, and that was going to ask about the.
Mortgage warehouse been pretty volatile so far first half of the year would love to hear.
Thanks for your thoughts on on balances for the back half for here.
Sure Good morning, Matt.
Yeah.
We were hopeful that we can land it on that.
900 million to a $1 billion range the markets pull back a little faster than we expected.
3 or 4 months ago, and so it looks like we're going.
Hear about here and the $800 million ish range, that's where we've been trending here. The last couple of months and talking with Jim White, who runs that business for us that's roughly where we think we'll we'll be now for the balance of the year.
It's been very competitive and that space as you know as the businesses come back a lot of.
A lot.
Settling says been aggressive in trying to hold onto market share and that's led to a little more competition on the pricing side and.
And so our guys are doing a great job of working with our customers. We have we use the opportunity of that.
And that expanded our world.
Bank of mortgage debt was going on and the last year.
2.
Upscale some relationships and get into some stronger credits and then where we are and they are slugging it out for for fundings with everyone else and.
So it looks like and land rent $800 million.
Okay.
Alright. Thank you David and then Michele you had mentioned already that the securities balances.
Could potentially get up to $2 billion at the end of the year as you deploy some of the liquidity.
I'm curious about that liquidity and sort of level, you're trying to get this down to I think you know we're not level.
From 2 and a half million dollars.
And 30 or 16% of average earning assets.
What are you targeting within the overnight levels.
Yeah, that's that's a lot higher than we would like for it to be Matt and I think pre pandemic, we were closer to $700 million and really.
From Iraq, and do is deploy it back into our loan portfolio and that obviously, they can't do that overnight and so we will continue to put it and the investment portfolio you know as we as we need to also being mindful of the fact that if rates go up we do have to pay attention to unrealized losses and so we're trying to be careful there and make sure we're investing.
What we love.
Okay. So Michelle just to clarify maybe.
$100 million might be a longer term target and I assume that will take awhile to get there beyond just the back half of the year is that right and I think we're going to continue to have some excess liquidity through the remainder of this year and Matt It's probably a good outlook.
Yeah.
Okay. That's all for me thanks, guys. Thank.
Thank you Matt.
Our next question comes from the line of.
Thats Robertson.
Boyd Group Robertson group.
Good question.
Hey, good morning, David Michelle.
And Brett.
Wanted to ask I was wondering a few minutes late.
And so you may have covered this.
And to some degree but wanted to ask about fee income and then on that I noticed that there was.
Other kind of dropped off a little back and so on it now if there was anything.
And out there and then just wanted to ask about the mortgage banking outlook and how are you.
And it felt about gain on sale margins from here on production levels obviously.
And just comment on the warehouse.
Yeah, and mortgage has been impacted more friends and margin decreases I think it's down about 30 basis points from Q1, Brett and so their volumes are down just a bit but they are really mostly being impacted and.
By margin.
And and the volumes are at least through the.
And the end of June July have stayed pretty steady and not really.
I hate to give an outlook on on more mortgage.
Mortgage because it's getting it is volatile at times, but I think probably Q3, though I would expect there'll be some art and where they were in Q2, and then generally fourth quarter.
And this season and all of them will go down a bit.
That's what drove for being done and you're right. That's primarily our fee income line is mortgage.
Okay.
And Michel and there was a little dip and other was there anything noteworthy and the other bucket.
The biggest thing and other has to do with some of our derivative mark to market spreads.
There isn't really up and out there.
And that it can be volatile as well, depending on where interest rates are.
Okay.
And then David.
My other question on was just you gave some commentary around M&A that was helpful.
The volatility of the bank stock market and sort of.
Impact.
Packaging.
And maybe some stuff happening.
Is there.
And is there anything else that's hindered.
Hindering more M&A happening and the state whether it's the sellers.
I'm wanting to see if the economy continues to strengthen or was there anything else that's for like kind of slowing down.
And which you would consider it to be.
And more robust M&A environment.
And you touched you just touched the other point I think and that is that.
The markets have really improved rate and and we didn't see I think and other things impacted us we didn't see the credit.
Problems or the depth of.
Session that normally would have shaken would've tested people's underwriting and I'll put it that way and we didn't see that this time and I really believed when we were talking a year ago that we I think everyone thought we were gonna see more of.
Credit.
Differentiation between different banks and there.
<unk> risk underwriting and all of that and we didn't see that and so I think thats.
And that's <unk>.
Allowed everyone to kind of continue to perform at a higher level and then and then I think people are generally optimistic right now about the future and so it's kind of like while we've been through this difficult period of the pandemic and now we're getting into the best.
For credit on and me and you know and and a.
Strong growth, especially for banks, and Texas and Colorado for example.
Yeah that looks pretty good for banks, and so theres no real impetus and some cases that I think a lot of us expected a year ago.
That we would see a deep deeper.
Stick more pressure on banks loan portfolios more pressure.
Really kind of testing everyone's underwriting the last 2 or 3 years and we just didn't see that so there really hasnt been a differentiation on the credit side, which is good for the good for our.
Our business good for for.
The bank's overall and and good for the economy, but but it has.
Yeah.
<unk> to provide pretty solid ground for people to stand on so that and there's no pressure I guess, Brett right now it seems like for people to do anything and so I think that's another thing is kind of flow in a down.
And as people go on and Gosh, it's it's a it's sunny.
And the pathway ahead is sunny and whats kind of run our own company and see if we can do.
Yeah.
Okay, Great appreciate all the color.
Sure.
Yeah.
As a reminder, if you would.
To ask a question please press star.
And 1 on your telephone keypad on Goldman while we poll for questions.
Our next question comes from the line of Michael Rose with Raymond James You May proceed with your question.
Hey, good morning, Thanks for taking my questions I just wanted to go back to.
For loan growth.
Core C&I kind of ex PPP.
Okay.
And it looks like that was a little over 40% of your growth. This quarter, you know really strong.
What what drove that was it increased line utilization picking up.
Seen that nudge up a little bit higher is just market share gains and then any differentiation on the C&I side, yeah between them.
And <unk>. Thanks.
Good morning, Michael.
I think it's.
Really broad based across C&I front we.
<unk> added new teams as we've talked about and new team members and.
<unk> and <unk>.
Texas and and Denver.
Denver, and so really nothing.
And that remark, 1 and Dan.
You know, we are getting a lot of traction and that CNI space, where we've been hiring.
But you know really.
Not a lot of color Michael that I can add other than we've just been gaining market share the market's growing.
Well the new teams, we've hired overhead and brought new relationships with them and so we're seeing you at the margin that really is impacting our net loan growth.
Great and just a kind of follow up on that so if I go back a couple years pre the MLP announcement and you guys had talked.
About 1 of our strategic initiatives as you got bigger was was to grow C&I relative to commercial real estate, which is kind of being.
The company's bread and butter for a long period of time and get that CRE concentration sub 300% can you just give us and I know, you're making progress and can you just give us an update on what the longer term.
Expectations would be for for the loan book and the complexion of it is we are as we get into the next couple of years. Thanks.
Sure and I think Dan what our numbers right now and the euro.
A 310% and and 90% on there for them and so we're at or below the thresholds.
We've come way down and balancing our book the last couple.
A couple of years, Michael and so we're right on track with where we expect to be there. We've done that as we said look we've got a we've got to introduce a broader portfolio set other than just you know.
Commercial and CRE commercial real estate lending.
And we've done that we continue to do a great job and CRE continue to.
That's our bread and butter of regional community Bank of course, but.
But by introducing we've seen some traction and energy the last couple of quarters.
Against selective high quality.
But and.
And opportunity to add there to a small book same thing on commercial C&I, We've always had a good engine and Colorado, but we'd been building 1 in Texas now it's getting traction.
So those are the things that have you don't have allowed us to to balance up the book and I think you'll continue to see that debt.
But become more balanced over time, and we'll look as we've talked about Michael I know you and I've talked on the past.
We would love and opportunity to acquire a bank debt has a bigger a C&I book or our special product or something that they've got expertise and that would be additive to us.
Similar to our guarantee.
Net acquisition, where we picked up.
And some expertise and retail some expertise and and middle market C&I.
<unk> picked up a nice wealth management strategy. So.
Acquisitions like that where we can pick up a a team a company and and a team that has you know maybe a little different.
Guaranteed.
<unk> set maybe than we had in the past and so on.
And that's what we're looking to do I think we've been successful we're right on track with where we hope to be 3 years ago. When we began moving in this direction and and I think a couple of years, you'll see us be even more and more balance.
Very helpful. And then maybe just finally for me another.
And a provision in this quarter reserve release, and the environment continues to improve here I know, there's some concerns about the delta Varian.
And things like that but it does seem like the reserve level has room to come down you know could we potentially see some additional releases as we move forward and and just remind US where you were you know post.
Negative and so on.
You think you can get back there may be and potentially below just given the improving outlook. Thanks.
And Michael This is Dan and I'll I'll take that 1 and our intention as we've said in the past is always to continue to grow into.
And the seasonal reserve is today.
Youre correct the credit provision that we took during the quarter was was clearly driven by the improvement and the Moody's forecast that we all work toward and I would say, we'll continue to monitor what Moody's does and as it relates to the Delta variant, but what I think is the best way to say it is you know based on what we know today.
They want some new provisions are expected in the latter half of the year and we will have to continue to monitor what economic conditions, do and and determined what impact that would have but and we expect no additional new provisions and we'll monitor what moodys does and the impact of that as it relates to future quarters.
Great. Thanks for taking my questions.
Thanks, Mike.
Ladies and gentlemen, we have reached the end for both question and answer session I would like to turn this call back over to Mr. David Brooks for closing remarks.
Thank you.
I appreciate everyone joining today, we I.
As I mentioned earlier, it's shown the value of our franchise that we've built over the last 33 years of of.
Of being in great markets being able to grow organically as well as you know being strategic when the opportunity presents itself and that's our pathway forward I'm really proud of our team we continue to add new team members.
<unk> and and just really happy with where we are today and where we're headed and I. Appreciate your interest and our company and our story and we'll talk to you soon bye.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation or the rest of it though.
I think for.
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Okay.
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Okay.
Right.
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