Q2 2021 Hilltop Holdings Inc Earnings Call
Quarter Hilltop reported net income of $99 million or $1.21 per diluted share for it.
Turn on average assets for the period was $2.2 9% and return on average equity was 16, 4%.
Despite certain headwinds and each business our collective business model was able to generate strong earnings and growth capital while at the same time, returning capital to shareholders through dividends and share repurchases.
And capital Bank generated pretax income of $87 million.
Compared to a pretax loss of $17 million and Q2.2020.
Improvements and the economic outlook and positive credit migration drove a $29 million reversal of provision.
Compared to a provision expense of $66 million and Q2.2020.
Outside of a few pockets of weakness such as business focused hotels, our borrowers generally are seeing improved results with the economy reopening and rebuilt and robust activity.
Strong deposit growth has continued with average interest bearing deposits, excluding broker deposits and hilltop securities sweep deposits, increasing by 26% from Q2.2020.
This growth was partially offset by the planned runoff of approximately $858 million and broker deposits and.
And the reduction and hilltop securities suite deposits of approximately $690 million.
As we optimize our liquidity sources and defend our net interest margin.
We attribute this core deposit growth primarily to increase liquidity in the market from government stimulus and the work our bankers have done to increase deposits from existing and new clients.
Total average bank loans declined modestly by 2% versus Q2.2020.
As PPP loans have run off and commercial loan growth remains pressure.
Quality loan demand has been muted as our borrowers are flush with liquidity, leading to paydowns and payoffs or the use of elevated liquidity to fund capital expenditures and other investments before seeking bank debt.
However, the Texas markets, we are and continue to experience significant activity from business and household migration.
Which should drive meaningful long term opportunities for the day spin.
Specifically and higher growth markets, such as Austin, and Dallas with products like multifamily.
Importantly, our business model has allowed us to selectively retain high quality mortgages from prime lending to support loan balances and provide improved yield opportunities for our elevated liquidity and capital.
Prime lending had another solid quarter generating $49 million and pre tax income.
While the mortgage market has begun and normalized compared with the frenzied activity in 2020 volumes and profitability still remain elevated relative to historical levels.
Prime lending originated $5.9 billion and volume with a gain on sale margin on loans sold to third parties of 364 basis points.
Although average mortgage interest rates declined year over year refinance volume decreased to 32% of total originations compared to 47% and Q2.2020.
A decrease in mortgage interest rate typically lead to an increase and refinancing volume. However, significant refinancing activity. During 2020 has limited the population of loans eligible for refinance.
Importantly, our focus on home purchase mortgage origination.
Should allow us to outperform the broader market.
As the third party market for mortgage servicing has continued to improve we have reduced our retained servicing to 25% of total mortgage loans sold during the quarter and executed and MSR sale of $32 million and.
Reducing our MSR assets for $144 million.
In addition to rate inventory and affordability are the main themes, we are paying attention to and the mortgage industry.
With low inventory continuing to drive home prices higher for properties that are available are increasingly getting out of reach for buyers.
This phenomenon affect both volume as well as gain on sale margin as certain products are more competitive in this environment.
Despite the ever shifting mortgage landscape prime lending continues to execute well on its growth strategy, primarily centered on hiring purchase oriented loan officers.
And the second quarter Prime lending had a net gain of 11 loan officers that we believe could add incremental annual volume of nearly $300 million.
For hilltop securities they generated $6.9 million and pre tax income on net revenues of $994 million for a pre tax margin of 7.3%.
This was a challenging quarter for the mortgage centric and fixed income businesses.
Although these businesses have performed exceptionally over the past year, they are subject to volatility, which illustrates the importance of diversified revenue streams within hilltop securities.
For structured finance business was adversely impacted by mortgage market volatility in March and April and generated net revenue of $11.5 million.
And a 75% from Q2.2020.
On a positive note lock volume remained relatively strong compared to pre 2020 historical level and.
We continue to add and maintained strong relationships with existing clients.
Importantly, our public finance and wealth management businesses generated revenue and income growth and.
And we are pleased with our positive momentum.
Moving to page 4.
Hilltop maintains strong capital with common equity tier 1 capital ratio of 20% at quarter end.
During the quarter hilltop returned $55 million to shareholders through dividends and share repurchases. So.
For $45 million and shares shares repurchase are part of the $75 million share authorization. The board granted in January.
This week the hilltop board authorized an increase to the stock purchase program to $150 million and increase of $75 million.
Factoring and shares repurchased made during the first half of 2021 hilltop now has approximately $100 million of available capacity through the exploration of the program on January 2022.
Even with sizable capital distributions to shareholders over the past 2 years.
Including the opportunistic tender offer executed in 2020, our tangible book value per share has grown at a compound annual rate of 21%.
Because of the profitability of our unique business model.
We plan to continue to prudently distribute capital to our shareholders through dividends and share repurchases.
And closing here.
Hilltop performance and the quarter highlights the versatility of our franchise and the value of our diversified operating model.
Although near term headwinds and volatility may occur we believe each of our businesses are well positioned to take advantage of profitable growth opportunity and that we have the leadership capital and strategies in place to build on our franchise.
With that I will now turn the presentation over to will to discuss the financial results.
Thank you Jeremy I'll start on page 5.
As Jeremy discussed for the second quarter of 2021 Hilltop reported consolidated net income attributable to common stockholders of $99 million equating to $1.21 per diluted share.
Included in the second quarter results will deliver virtual and provision for credit losses of $48.7 million, which included approximately 500 barrels on dollars of net charge offs for the quarter.
On page 6 we detailed the significant drivers to the change and allowance for credit losses for the period.
The most significant drivers on the quarter with a positive migration of certain credits and the portfolio.
And the further improvement and the expected macroeconomic outlook.
First related to the macroeconomic outlook, we leverage the Moody's <unk> scenario for our second quarter now.
And the scenario highlights improving real GDP.
And fluid trends, coupled with increasing risk of higher inflation and future periods versus the economic scenario selected for our first quarter assessment.
The impact for the improving economic outlook resulted in the release.
And $1 million of ACL during the second quarter.
And second key driver was the ongoing improvement and credit quality across the portfolio.
During the quarter.
On the restaurant portfolio experienced positive migration, resulting from improving financial performance and more resilient outlook for future periods.
For the business solve broader based improvement across a set of clients.
Other full year 2020 results were not and severely impacted as was previously expected and their first half results were improving from prior risk rating assessment periods.
The result of the improvements at the client level equated to a net release of ACO of $17 million during the second quarter.
The combination of improved client performing and the improving macroeconomic and Bob outlook.
Which were only modestly offset by net charge offs result of Nols for credit losses for the period, ending June 30 of $115 million or.
For 151% on total.
Further the coverage ratio of ACL to total loans increases to 186%.
On loans that we believe have lower loss potential, including DPP broker dealer and mortgage warehouse loans are excluded.
And starting with Asia.
Net interest income and the second quarter equated to $108 million, including $12.4 million of PPP related interest and fee income as well as purchase accounting accretion.
Net interest margin declined versus the first quarter for 'twenty, 1 driven by lower PPP fee recognition and higher average cash balances and continued pressure, although low held for investment yields.
Somewhat offsetting these items were higher loan held for sale yields.
Resulting from higher overall mortgage rates, coupled with lower interest bearing deposit costs, which will continue to trend lower as expected, finishing the quarter Vail and 9 basis points to 32 basis points.
We continue to expect and interest bearing deposit costs will move modestly lower over the coming quarters as the consumer CD portfolio continues to mature and reset the lower yields.
As it relates to asset yields the.
And the current competitive environment for commercial loans is resulting in substantial pressure on new business loan yields as well as our ability to maintain current forward.
Further with funded loan growth continued to be slower than we expected we are increasing the level of 1% and for family loans, we retained on the balance sheet to approximately $50 million to $75 million per month for.
On the prior outlook of $30 million to $50 million per Boe.
As we've noted in the past calls we are using a 1% for family loan retention approach to offset the slower growth commercial lending environment.
While this does provide a high quality source of assets and net interest income on these loans generally carry and yields below that of our traditional commercial wells and as a result, we will put downward pressure on NIM.
So that and we expect that NIM will maintain.
And will remain pressured into the second half of 2021, moving lower for 240, and 250 basis points by year end.
Turning to page 8.
Total noninterest income for the second quarter of 2021 equated to $340 million second.
Second quarter mortgage related income and fees decreased by $99 million versus the second quarter of 2020, driven by lower origination volumes decline and gain on sale margins and lower lock volume.
As it relates to gain on sale margin. We noted on our key driver tables and lower right on the page the gain on sale margin on loans fell 22 basis points versus the prior quarter.
Further we are providing the impact on gain on sale margin related those loans that had been retained on the balance sheet.
For additional clarity the reported gain on sale is the margin reported by our mortgage origination segment and reflect on distributed and retained on the balance sheet.
Gain on sale of loans sold to third parties provides the margin on those wells and were distributed outside of Hilltop holdings for purchased at market value.
As a result of our 1% for family loan retention approach and the increase in aggregate and what we've all retention levels. These gain on sale margins have begun to diverge and more than they have and the past and as a result, we have provided those statistics for referenced in this presentation.
These statistics have been provided in our form 10-Q and earnings release materials Historic.
During the second quarter of 2021, and the environment and mortgage banking remains solid and is expected to continue to shift to a more purchase mortgage centric marketplace.
During the second quarter purchase mortgage volumes increased by $1.1 billion or 38, 5%.
While refinance volume declined 43% or $1.4 billion versus the first quarter origination levels.
We expect this trend to continue towards a more purchase mortgage centric market over the coming quarters, which could continue to pressure gain on sale margins into the future.
We continue to expect the gain on sale margins for third party sales will fall within our full year average range of 360 and 385 basis points.
Other income declined by $37 million driven.
Driven primarily by declines and TBA lock volumes volatility and market rate and volatile trading and fixed income capital markets.
As we've noted in the past the structured financings and fixed income capital markets businesses can be volatile from period to period.
And are impacted by interest rate market volatility origination volume trends.
And overall market liquidity.
Moving to page now.
Non interest expenses decreased from the same period and the prior year by $27 million to $343 million.
The decline and expenses versus the prior year was driven by decline and variable compensation of approximately $35 million and hilltop securities and prevalent.
This decline and variable compensation was linked to lower revenues and the quarter compared to the prior year period.
Looking forward, we continue to expect and our revenues will decline from the record levels of 2020, which will put pressure on our efficiency ratio.
That said, we remain focused on continuous improvement leveraging the investments we've made over the last few years to aggressively manage fixed cost.
While we continue to further streamline our businesses and accelerating our digital transformation.
Moving to page 10.
In the period HFF flow equated to $7.6 billion.
As we've noted on prior call, we expected that loan growth will be challenging during the for example, <unk> 'twenty 'twenty 1.
And the results bear that out and we've.
We've seen substantial increases and competition for funding loans across our Texas markets, which we expect will continue into 2022.
Further the ongoing growth and available liquidity, both on bank balance sheets and customer balance sheets could further delay a return to more normal commercial loan growth rates for at least a few quarters.
We continue to expect that full year average total loan growth excluding PPP loans.
We will be within a range of zero to 3%.
As noted earlier, we are increasing the level of retention of 1% for family loans originated primarily to between 50 and $75 million per month.
During the second quarter of 2021, prime lending locked approximately $176 million of loans to be retained by plains capital over the coming months.
These loans had an average yield of 3.1%.
And and average FICO and LTV of 780, and 64% respectively.
Turning to page 11.
Second quarter.
Continue to reflect the slow, but steady recovery and the Texas economy is the reopening of businesses continues to provide for improved customer cash flows and fewer borrowers on active deferral programs.
As of June 30, we have approximately $76 million flow on active deferral programs down from $130 million at March 31.
Further the allowance for credit losses to end of period loan ratio for the active deferral loans equates to 16, 8% at June 30.
As is shown on the graph the bottom right the page to the allowance for credit loss coverage ratio, including both mortgage warehouse lending.
As well as PPP loans at the bank into the second quarter at 164%.
We continue to believe that both mortgage warehouse lending as well as our PPP loans will maintain a lower loss content over time.
Excluding mortgage warehouse and PPP loans the bank. Thanks.
<unk> for end of period loans, and <unk> ratio equated to 186%.
Turning to page 12.
Second quarter end of period total deposits are approximately $11.7 billion and.
And it remains stable with the first quarter 2021 levels.
While the overall balances were relatively unchanged the mix of deposits continues to improve as broker deposits declined approximately $300 million.
And non interest bearing deposits rose by approximately $200 million.
Versus the first quarter, 2020.1 levels.
Given our strong liquidity position and balance sheet profile, we are expecting to allow broker deposits to mature and wrote off.
At 630, hilltop maintains and $268 million of broker deposits that have a blended yield of 31 basis points.
While deposit levels remained elevated.
It should be noted that we remained focused on growing our client base and deepening wallet share through the sales of our commercial treasury products and focused client acquisition efforts.
Turning to page 13.
In 2021, we continue to remain nimble as the pandemic evolved to ensure the safety of our teammates and our clients.
Further our financial priorities for 2021 remains centered on delivering great customer service to our clients attracting new customers to our franchise.
Supporting the communities, where we serve.
Maintaining a moderate risk profile and delivering long term shareholder value.
Given the current uncertainties and the marketplace, we are not providing specific financial guidance, but we are continuing to provide commentary as to our most current outlook for 2021 with the understanding that the business environment, including the impact of the pandemic could remain volatile throughout the year.
That said, we will continue to provide updates during our future quarterly call.
Operator that concludes our prepared comments and we will turn the call back to you for the Q&A session on the call.
Thank you and we will now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone hearings on speakerphone. Please pick up your handset before pressing and the kids.
So on draw. Your question. Please press Star then 2 at this time, we will pause momentarily to some bar losses.
Our first question will come from Brad Millsaps with Piper Sandler. Please go ahead.
Hey, good morning.
Good morning, Brad.
Hi, Jeremy maybe I want to start with the broker dealer.
Just wondering if you could maybe offer a little bit more color.
On your outlook there.
And I know a tougher quarter I think you've made comments in the past you thought performance and 2021 might look a little bit more like 2019.
And just kind of curious if that still holds with kind of this quarter and the books now kind of based on what Youre seeing maybe here and to start the second half.
Sure.
We saw a very volatile quarter.
Scott and Q2.
Particularly in the businesses that were.
Really outperforming and fixed income and structured finance that are the higher margin businesses as well.
And we see.
Those being rectified and improving from where they are today, but clearly not at the levels. They were in 2020.
With the.
The tailwind that we had so getting to your point and I think debt.
As we look through the rest of the year I think we're looking at and net revenue somewhere around $425 million and pre.
Pre tax margin and the low teen.
For the year.
Okay, Great. That's helpful. And then just maybe move the balance sheet.
Cash continues to build you'll continue to get more back with the PPP program and last quarter. You commented you didn't really expect it to build the bond portfolio and a big way and you really didnt just curious if that kind of still holds.
And we're kind of what Youre plans are kind of with some of the excess liquidity.
Day rates will couple things delayed to note I do think the bond portfolio for is higher.
To probably hire into the 2 for 2.5 to $2.4 billion and work Bob at our level and it appeared to $2.1 billion.
As we continue to kind of work just to address as you note. There are cash levels. Our liquidity levels were also increasing below and retention.
As we noted on our comments to $50 million to $75 million, we view these.
Mortgage retention strategy or approach both both of the counterbalance to.
Softer commercial oil demand, but also somewhat as an alternative to the investment securities portfolio. So that increase we'll continue to monitor on a quarterly basis, but as we sit here today those are the 2 things we're proactively doing too.
To address liquidity overdrafts.
And then just a final for me I know you kind of address it there and but I guess your provision guide would imply that you guys would be actually taking a provision and the back half of the year.
Can you just kind of talk a little bit of that that <unk> got a pretty large reserve, obviously youre not expecting.
A ton of commercial loan growth. So just kind of kind of curious kind of what's what's kind of driving your assumption and the back half.
Yes, I think as we as we look at it and if you look and the.
And look in the appendix Youll see the Covid modified loan portfolio, we still got about $76 million.
Deferred loans, we're actively monitoring the portfolio I think we've consistently said, we expect charge offs to be.
A little higher on the second half year. They are on the first half and Thats.
That kind of bears its way here into into the outlook and.
And I think the other the other portion of that is always out there is what's the economic outlook going to go on to bear and.
Subsequent quarter, so from a from our perspective.
Again, we've got we've got a lot of monitoring going on across the portfolio. While there has been as Jeremy mentioned and I've tried to mentioned and my comments I'd say substantive improvement across a lot of industries and a lot of dimensions and the portfolio we still got.
We still got certain credits that were monitoring very very closely principally those business centric hotels.
And the short run so that's that's what's leading to that to that outlook on it.
We've got a recapture so far of about $34 million.
But again I think it continues to be our perspective that will have higher charge offs and the second half.
Great. Thank you guys.
Sure.
Our next question will come from Michael Rose with Raymond James. Please go ahead.
Hey, good morning, everyone. Just wanted to start off following up on on Brad's question. So if I if I look at the a triple X Pvp it looks like you're at 112, if I'm doing my math right. So that would imply a little bit of a build here just given the outlook.
For credit, which is still pretty positive I understand the comments around the COVID-19 exposed.
Industries and things like that but.
We kind of at a level for the for the Triple al but.
You would think would be relatively steady steady state from here.
Yes, I think all else equal, yes, I think it will be.
We got for the traditional kind of cash.
Caveat around out of the economic outlook can be volatile and net debt can move the number 1 way or the other materially in any given period as it relates to kind of the other key drivers whether it be credit migration again, we continue to see positive credit migration across large large swap of the portfolio. We still got the the watch portfolios, which I mentioned just on.
Moment ago.
And as you mentioned, we don't expect loan growth to be outsized and the second half. So those those historically be the key drivers loan growth and.
And migration, which will both continue to watch, but I think the guidance. We put forward here tries to capture our best thinking around.
Around where that provision goes from here.
Okay. That's helpful. And then maybe it's a follow up just on the mortgage business I think we're all cognizant that you guys have.
<unk> had a great run here and things are normalizing GAAP. So spreads are normalizing volumes and normalizing, although we did get another upward revision from the MBA the other day.
Which should we.
Which should help what can you guys do.
Whether it's from hiring additional producers or targeting certain markets too and I guess quote unquote soften the blow and generate on a kind of a softer landing.
And as the market normalizes.
Yes, and Thats, a good point, Michael and I think.
Even though it is normalizing.
Still strong from the historical rate 2020 perspective, and tier point, what we're what we're really are the main focus we're doing is trying to recruit profitable.
And to date, we've hired.
We've increased our ALLL count by 72 and in the quarter as I've mentioned and my comments, we increased by a net 11, and we think will add an incremental.
$300 million.
Volume and Thats net of.
The terminations that we've had.
Okay. So what's the what's the base of that off of in terms of lenders and and obviously it dovetails into the higher origination.
Targets, you've laid out for the year moving it from 17% to 'twenty to 2020, 3 which is a nice move but just trying to get a sense for what the net add is and what it means for the head count.
Sure.
What we're our head count is right now is about 1300.
Okay.
Helpful and maybe just 1 final 1 for me you guys doubled the share buyback authorization to $150 million.
I guess the assumption would be that you would probably use most if not all of it.
And then just given the capital levels are still elevated is there that I guess, the willingness and desire to continue to purchase shares just given you're trading about 1.2 times tangible.
Yes, I mean I think that.
Clearly, we've been trying to we bought $50 million year to date.
And so we had 25 nano and the first.
<unk> nation.
And so we didn't we authorized under 75 million, because we didn't want to run and that pressure and with that so.
And we'll take things.
<unk>.
1 on a time and I think what we'll be looking to be and the market will obviously be.
Prudent about price and where we're at now I think.
Probably in an area that we would be and the market and we'll just kind of play out the year and.
And do it well and doing this and open market and on rolling in and do it at a level that doesn't impact us for stock price.
Understood. Thanks for taking my questions. Okay. Thanks.
Our next question will come from Matt Olney with Stephens. Please go ahead.
Thanks, Good morning, guys want to go back to Michael's question around Prime and the new hires that were disclosed.
Is this a newer initiatives for for.
Prime hiring new lenders or is this just the same hiring strategy.
Finding more success recently I'm trying to appreciate if we should assume additional hires on the future and we could see additional market share takeaway and the mortgage business.
Eric I think.
It's part of the business.
Period, however, with Covid and just the overwhelming volume and 2020.
It's really not a lot of movement there.
So youre always going to have churn, you're always going to have higher and terminations I would say that there is a renewed focus.
On the hiring talented purchase oriented loan officers this year.
And particularly because we're seeing and normalization and the market.
And the second part of that Jeremy given the new hires should we anticipate some market share takeaways and.
And the mortgage business.
And as I said and our comments I think given the models and the.
The team that we have I do think that and refinancing wanes, we will be market share taker and thats our goal.
Okay.
And then sticking with prime on the expense side, you guys already disclosed some really good data around the variable comp for <unk>.
That business.
But it is industry volume slowdown are there any more fixed cost you consider pointing down if you think mortgage volumes can be slower for a while.
We're going to obviously really pay attention debt.
But and this market where you've got like.
And in some cases 10.
Buyers for a property, we're still having to do the work.
And we're originating like last year, so we still have to maintain staff.
And we want to make sure that we were able to really deliver.
Exceptional service and.
And being on time is a big part of that so I don't.
See that waning, but we'll obviously be.
Very focused on it.
Okay.
And then lastly from me on the loan growth outlook I definitely appreciate the commentary about the increased level of single family retention.
But she also dropped the commentary around <unk>.
Question on loan growth rebounding and the back half of the year, then I think you'd previously mentioned back in April.
Any more color you can add to that and why that was dropped.
Well I think we're still at zero to 3% kind of full year average, which has been our but our position on kind of a full year average loan growth. So I don't know that.
Although that we've changed our loan outlook I do think.
Commercial loans, what were seeing is its for funded loans and particular as hyper competitive and.
And.
Both pricing, which we generally are comfortable competing on the on a pricing dimension, but also structure and starting to starting to move and again, we're going to be.
As we have been over time for very prudent about structure and maintaining structure and maintaining kind.
And of our underwriting principles and so.
And as we as we look forward and again I think as we look out with both liquidity and customers continue to maintain as deposits and customer deposits remain at very elevated levels along with the overall liquidity on on bank balance sheets.
We think that could for this kind of a lower growth environment could persist as we noted in the 2022 really driven by by those items as well as again.
And a slowdown already.
And overall funded loan demand as customers put cash to work ahead of ahead of borrowing.
Okay. Thanks, guys.
Thanks, Matt.
Our next question will come from Michael Young with TD Securities. Please go ahead.
Hey, Thanks for taking the question.
Michael.
And wanted to see if I could just get sort.
More of a real time update maybe quarter to date, we've obviously seen a material drop in interest rates over the last couple of weeks compared to the prior for months and then also the removal is kind of a 50 basis point additional charge for refinance.
Have you guys seen the last couple of weeks.
<unk> will increase and volume.
And does that give you any additional confidence maybe above and beyond when you guys were originally setting guidance.
I don't think I don't think we've seen anything that would cause us to change change our guidance. We took we took the origination volume.
The range of of basically 3.3 billion.
And to reflect both first half performance, but also what we're seeing on a real time basis.
Fee reduction I think in principle, we're seeing and pass through to the clients at this juncture. So.
And there we're seeing it but at the end of the day.
Most most originators from the past and that's where we certainly are.
And so from our perspective again I think while.
While the market continues to be choppy, we are still very constructive on on the purchase purchase origination market as Jeremy mentioned.
There are some constraints there as it relates to overall availability.
And and affordability, but that said, we still remain very constructive on on the purchase side of the market we think refinanced.
Got it and move around a little bit based on where rates are.
But there was there was there was a lot of refinance activity over the last 18 months and as a result of that.
Probably not as sensitive to short small basis point moves and the 10 year.
As it may have otherwise been historically, so we think that we think the guidance outlines our view and what we're seeing at most card levels.
Okay, Thanks, and maybe.
In addition to low hiring could you talk about any other strategic initiatives that you guys might pursue I know in the past you guys have gotten a little more involved and kind of the construction and renovation market.
Obviously, there might be a HELOC opportunity at the core bank.
Market values appreciate but people want to hold on to their their core loan and any other things like that that we could look for joint ventures et cetera.
And maybe kind of over the medium term.
I wouldn't look for any like product differentiation, we have our joint venture business that debt.
And the homebuilding.
Business is really strong and we'll continue to try to grow that however, our JV businesses.
And prime lending as just 3.
Affiliated partners and it represents about 8% to 10% of our overall volume.
No.
I think that the big thing and prime lending.
Continue to try to do is.
And.
Really enhance there.
Their technology and.
Support for our loan officers and.
And.
And that's and that so that we're able to continue.
Continue to leverage that network and grow it more and that's what we'll continue to do.
And then we have with the implementation of our new loan origination system was safe and and we've got some and some other add on applications that should hopefully increase flow.
Okay, Great and 1 last 1 if I could sneak it and just on sort of fair value marks or adjustments that may and flowing through the income statement. This quarter that we shouldnt necessarily forecast going forward I know, that's typically a bigger mover and the TBA business just just any.
Color there would be helpful.
Yes.
Not a lot of fair value marks as it relates to pipeline mortgages, we've historically and in periods I think.
And we did note in our press release, we had about 6.5 million.
And our fair value marks related to certain harp investments.
Where transactions were executed in the period, but that was.
Episodic, if you will and not necessarily related to any pipeline activity and the quarters.
Okay. Thank you.
Our next question will come from Woody lay with <unk> and Scott.
Hey, good morning, guys good morning.
Most of my questions have been answered, but I had a couple of quick follow ups.
It was another nice quarter on on the deposit cost front. It looks like you have around $300 million of broker deposits remaining I was just curious when these broker deposits are set to mature and what yield do they carry.
For the blended the blended rate right around 30 basis points and theyre going to mature between now and over the next 2.
Relative to 12 months to 18 months, so theres a long long window.
In terms of in terms of the maturities so they kind of move I would say.
There'll be there'll be a block of Cds that continue to kind of rollout here over the next 90 days and then.
The more kind of money market funds.
<unk> have a longer maturity value on them.
Okay got it and then last for me and you noted that you executed and other MSR sale of $32 million was there any material gain that came out of that sale.
Yes.
We.
Did execute for sale, we also executed a few LOI, which will be.
Noted as well we did we did see kind of favorable pricing there relative to the mark.
And the tune of about $9 million.
Okay got it thanks guys.
Yes.
This will conclude our question and answer session and now the conference has concluded.
Thank you for attending today's presentation you may now.
Net.