Q2 2021 Origin Bancorp Inc Earnings Call
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Good day and welcome to the origin Bancorp incorporated second quarter earnings Conference call.
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I'd now like to turn the conference call for to Mr. Chris Riggleman head of Investor Relations Mr Inc.
<unk> the floor is yours Sir.
Good morning, and thank you for joining us today.
We issued our earnings press release yesterday afternoon, a copy of which is available on our website along with a slide presentation that we will refer to during this presentation.
Please refer to slide 2 of our slide presentation, which includes our safe Harbor statements regarding forward.
For 2 statements and use of non-GAAP financial measures.
Those joining by phone. Please note the slide presentation is available on our website at www.
That origin Bad Bank. Please also note that our safe Harbor statements are available on page 5 of our earnings release filed with the SEC yesterday.
All comments made during today's call are subject.
Back to the Safe Harbor statements in our slide presentation and earnings release.
I'm joined this morning by origin, Bancorp's, Chairman, President and CEO Drake Mills, our Chief Financial Officer, Steve Brolly.
President and CEO of origin Bank Lance Hall, our Chief Risk Officer, Jim Crotwell, our chief credit and banking Officer Preston Moore after the presentation.
He will be happy to address any questions you may have.
Now I'll turn the call over to you Drake.
Thanks, Chris and good morning, this quarter marks 3 years of reporting as a public company, we will get into the details of our performance over the period later, but first I am pleased that our investment thesis that we introduce to the market during our roadshow.
Roadshow has and continues to drive shareholder value our goals from a P. O are on target as we maintain a long term value creation strategy.
This quarters results is a great example of maintaining a focus on our long term objectives. As we took advantage of opportunities to strengthen our balance sheet and credit profile at the expense of reporting short term.
<unk>. We have included a couple of slides that present, the value being created for our shareholders, which continue.
To show positive trajectory and double digit compounded annual growth rate since our IPO.
Through the first half of 2021, we focused on efficiency as we continue to experience positive operating leverage while improving.
Moving to our credit metrics.
Out of our results and our strategic focus we have as we move forward.
Looking at the results for the quarter, our diluted earnings per share was $1.17 for the second quarter with net income over $27.7 billion.
Net interest income was $54.3 million in noninterest income was 12 point for me.
Yeah.
Noninterest expense was $37.8 million and our efficiency ratio for the quarter came in at 56, 7%. We had a provision release of $5.6 million with total assets ended at $7 billion to $7 billion with loans of $5.4 billion and deposits of $6.3 billion.
Lance.
Steve will dive into the numbers, but I think about these performance metrics for the quarter and what we have accomplished this year I'm extremely proud of how our company is manage expenses, while we continue to invest in growing the bank and enhancing the customer experience. Our bankers are consistently communicating with our customers and I'm excited about the pipe.
Pipelines that are being built throughout our footprint throughout our markets. We are seeing a growing sense of optimism as economy continues to strengthen certainly there are some challenges with the competitive landscape continued into the effects of COVID-19, and the levels of liquidity and the financial system have or origin is well positioned to expand the foundation.
Jim Hill over the past several years 1 of the primary contributors for our long term success has been our continued growth within our Texas markets. As you can see on slide 9 our Texas markets now comprise 56% of our loans across the bank, excluding mortgage warehouse and 48% of our deposits across the day in the past we've talked about our strategy of adding keybanc.
We bidders and teams in our markets and in 2021. We've continued this trend by taking advantage of dislocation by adding 7 dynamic bankers in our Texas markets 7.
As we've said we continue to focus on dislocation within our markets and for other capitalizing on the right opportunities now I'll turn it over to Lance.
Key bank strike in Q2, we were successful in continuing to set ourselves up for long term success and grow in profitable loan relationships, improving our credit profile and building out our production teams.
On Slide 10, you can see an update on our P. P P metrics.
We have nearly 55% of our PPP loans forgiven at this point.
Another 12% of the loans and the forgiveness process at June 30.
We've collected over $26 million in fees through the PPP process.
They'll have over $9.2 million for those fees left to arm.
On slide 11, you'll see we remained focused on the way, we're using technology within our company.
Our.
Well the numerous post COVID-19 adoption rates of banking technology still continue to be extremely positive and we're having ongoing conversations with fintech partners on streamlining processes and continuing to add value and enhance the customer experience.
On slide 12, you'll see an overview of deposit trends our average deposits for.
For the quarter were $6.2 billion, an increase of $374 million over the first quarter of 'twenty 'twenty 1.
During the quarter, we reduced our broker deposits as you can see on the top left and ended the quarter with no brokered funding.
Our total loans this quarter in at just shy of $5.4 billion, which.
It was a decline from the prior quarter, but up year over year.
During the quarter and as we expected we saw warehouse in PPP balances declined quarter over quarter.
Absent those 2 drivers in our loan portfolio. Our total loans held for investment were down $14 million in Q2 as compared to Q1.
We've all.
Always been proactive when it comes from managing credit risk and during the second quarter, we reduced $47 million of loan balances that we chose to exit based on our continued focus on client selection.
Without these factors our annualized year to date loan growth is approximately 5.6%.
Our bankers have been proactive.
And pipelines.
You know from our past calls we continue to be optimistic about our 2021 loan growth outlook.
Timing was a big factor in the second quarter as some larger loan deals with long term relationships have closed or are set to close in the third quarter.
So as Greg mentioned, we have several new additions to.
Our Texas markets that will continue to build out their portfolios in the coming months as well as bankers across our footprint with capacity to drive future growth.
Based on all of those factors, we remain optimistic about high single digit loan growth throughout the rest of the year.
Now I'll turn it over to Jim to go through our credit quality metrics.
Thanks.
<unk> been building since we are extremely pleased with the performance of our loan portfolio through the pandemic.
Probably believe that the resiliency of our portfolio is a direct result of our focus on relationship banking and sound client selection, resulting in the well diversified loan portfolio that we have.
During the quarter, we experienced stable levels of pass.
2 loans at 6.1% net of PPP loans as well as stable levels of non performing loans also at 0.61% net of PPP loans I.
I am pleased with our stable level of charge offs of only <unk>, 3% annualized for the quarter.
And the $11.9 million reduction in classified.
Thanks, Helane in the quarter, resulting in total classified loans of $1, 66% of average loans held for investment net of PPP loans as Lance mentioned during the quarter, we proactively reduced a total of $47 million of outstanding loan balances and credit that no longer fit our client selection criteria.
Loans to such we feel that we significantly enhanced our overall overall portfolio strength during the quarter.
Based on improving credit metrics and forecasted economic conditions, our allowance for loan credit losses declined by $8 million to $77.1 million, which represents $1.43 per cent.
And sales for investment and 184% net of PPP in mortgage warehouse loans, we will continue to closely monitor economic forecast keeping a close watch on the impact of recent increases in Covid cases, as well as inflationary and labor pressures and continue supply chain disruptions.
Again, we are extremely pleased with the performance and resiliency of our loan portfolio.
Now I'll turn it over to Steve Thanks, Jim.
Slide 15, you can see trending information for our yield and cost.
For more significant declines in loan yields in prior quarters this quarter, our yields on loans held for investment both.
<unk> alone without PPP have stabilized during.
During the second quarter, we saw cost of total deposits declined by 4 basis points for the quarterly cost of total deposits and borrowings at 38 basis points.
With a weighted average rate of 72 basis points. Our CD book still provides an opportunity to lower our cost of deposits even more.
On slide 16, our quarterly net interest income was $54.3 million slightly lower than Q1, driven by anticipated declines in mortgage warehouse volumes.
NIM for the quarter on a fully tax equivalent basis came in at $3, 1.2% down from 3.2% in Q1.
Main contributor of our decrease in then you can see in the bottom right was an increase in average cash balances.
During the second quarter, we reduced more than $500 million of brokered deposit balances to offset the anticipated declines in mortgage warehouse and PPP balances.
Our bankers continue to do a great job with the core deposit growth.
We believe we are well positioned to fund future loan growth.
Slide 17, you can see a longer term trend of our net revenue distribution for Q2.2021, we generated over $12.4 million of noninterest income for about 19% of total net revenue for the quarter.
When you look at the longer term trend since early 2018, the year of our IPO, we have seen a consistent increase in non interest revenue dollars.
In Q2.2020 as mentioned earlier, we recorded historically high mortgage banking revenues with the second quarter 2021 results slower than that historic high.
Community banking mortgage model, we built has done a great job protecting our earnings as interest rates declined in 2020.
Moving to slide 18, our non interest expense for the quarter was 37.8 million down $1.6 million from Q1.
Driver of this decline was because of the $1.6 million.
Prepayment penalty from the federal home loan bank advance from the prior quarter and prudent expense management.
Slide 19 shows our continued strong trends with capital ending the quarter with a total capital ratio of $14.85 per strength percent.
Our strong earnings continue to be a significant driver of capital enhancement.
And we will support future loan growth now.
Now I'll turn it back to Drake.
Thanks, Dave we had a solid quarter with record net income improving credit trends excellent expense control impressive core deposit growth a strong loan pipeline and our capital is in a good position to support for the growth we continue to make purpose.
Purposeful and strategic decisions and building this company to put us in a strong position to capitalize on opportunities I. Thank you for your time and we will now open the call for questions.
Thank you Sir we will now begin the question and answer session.
I ask a question.
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It's early to us from our roster.
And the first question, we have will come from Matt Olney of Stephens. Please go ahead.
Great. Thanks, Good morning, guys.
Morning, Matt.
Lance I think it.
Maam, you had mentioned that the bank exited around $47 million of loans this quarter.
Would love to hear more about these credits and what was it that ultimately drove the decision to exit these and are there other credits that could fit this profile that could be exited in the future. Thanks.
Yeah, Hi, Thanks, Mike Good morning.
Yeah.
You know for US is we've really really focused on drugs used this term for last couple of quarters around client selection and so for us it's not necessarily around credit all the time, there's other factors about.
Deposit balances and secondary repayment.
Payment sources and succession in these companies and some things like that so this particular for us was.
Concerns about.
The future operation capacity of this company and where they were going it wasn't purely Oh short term credit issue.
I think for the long term benefit.
It's really maybe had a really good decision.
Okay. Thanks for that and then drag based on your commentary it sounds like you brought over from <unk>.
7 producers recently would love to hear more about those producers what markets, they're focused on and kind of what's the sweet spot for for loan production.
Oh man I want I want to talk just for a second about this client selection process because.
I think for for this institution.
You know as we look at the liquidity in the markets and we see some of the opportunities that we're passing on and the reach that.
Maybe the industry is making for loan volume.
You are going to stay focused on client selection and what's best for this organization for the long term growth perspective, So when you think about.
Our our Texas movies, where I'm tickled to death with where our pipelines are right now in the direction things are going with the 7 new lenders for in DFW.
We were in Houston, 2 of them come out of our accomplish 1 wells won't be of a 1 from capital.
1 and 1 from Comerica and then we also picked up the next market President in Houston that is a big time.
Name that debt is going to really do some good things for us. So we're excited about that.
3 are focused in private banking C&I and some owner occupied real estate and some of the real estate, but just really pleased with the size of these portfolios. They have I've met with a couple of their clients are both a and b and both by the Fort worth and Dallas and then last week a few in Houston have been extremely pleased with.
With how quickly I think these portfolios will come over so not only is the engine are really moving in Rev. In any direction from our producers and what that what we're seeing their pipelines and we closed 2 deals.
Last month the closed early this month, we have positive growth and we still believe.
From a loan growth perspective that we're on target for to do that high single digit overall growth for the year and feel very good or bad debt. Our pipelines are outstanding right now.
Okay perfect. Thanks for that drink and then on the credit front, we saw the.
The negative provision expense in <unk>, but the reserve ratio is still relatively high I think we are still well above day 1 levels.
What are the updated thoughts around provision expense. These next few quarters and do you expect to get back towards day, 1 levels in the near term or could it be could it be a while thanks.
Yeah, and I'm going to let Jim crotwell speak to that a little bit because we're doing a lot of work around you know it's still with us.
Delta variant in and what we're seeing and in the world of Covid and the impact that could potentially have a certainly still feel good about where we are and feel optimistic and think that maybe.
When you look.
At probably 3 to 4 quarters to get back to day, 1 levels, but Jim why don't you take them through what some of the work we're doing what we think at this point.
Thank you right, yes, I agree with that I really feel that we will be walking down the reserve and taking a close look based upon continued oh.
Really deep dives into the economic forecasts.
You can see over the next several quarters and so in some respects what I hope to see is that we will.
As we evaluate things it'll walk down commensurate how we built the reserve if you will be the pandemic, but still a lot of uncertainty.
They're particularly as it relates to the impact of the resurgence of the.
It was the Delta variant and also we're kind of have a better idea as we move to the latter part of this year as these inflationary pressures that we're seeing right. Now we are hopefully that will subside in the second half for the year. So we're keeping a close eye on things I think we have a very conservative reserve at this point in time and.
And we're in a really good place from a fortress balance sheet that we talked about in previous calls, but I do continue to anticipate that we will see some continued decline in the required level of our reserves.
Okay. Thanks, Jim I'll hop I'll hop back in the queue.
Thank you Matt.
And next we have Brady gailey of K B W.
Hey, Thanks, good morning, guys.
Good morning, Brian how are you doing a day.
Well so what we saw we saw mortgage start to normalize which is no surprise, we're seeing that across everywhere.
But $2.7 million of fees in the second quarter, how are we thinking about the outlook. There do you think you could.
See a little more slippage or is that kind of a new normalized run rate.
No I don't I don't think you're going to see any further slippage in from a when you look at.
Mortgage overall, where we see the pipeline for the.
You know third quarter feel pretty good that we were stabilizing that business.
Yeah, that's it really talks a lot about when you talk about the pretax pre provision Miss we had you know.
Big influence your there is debt.
Pipeline valuation and when you look at the fourth quarter.
Where we originated a $160 million and 725 million obviously.
We had a zero impact of valuation in the first quarter we.
We saw $138 million of origination with $185 million or so so we had a pretty good mark.
A negative mark to that pipeline valuation will that continued in the second quarter surprisingly with a $122 million of origination and another $40 million of sales.
So that $2 million a pipeline adjustment are mark was was.
Somewhat of a surprise and certainly fueled the pretax pre provision miss but when you look at the third quarter.
See the origination and the sales.
Almost identical so we do not expect to see that type of mark are going into the third quarter.
And so if you add that $2 million Mark back you know your back up that you know for point 7 million, which is common in line with the first quarter.
Could we see.
That 4 to 4 and a half million dollar level in the third quarter, assuming there's no marks that go against you.
We.
We we can't we could.
Alright, and then drink what what's the latest on M&A I know you guys have a pretty strong organic growth pipeline and I know in the back half for years is looking for like recently, you kind of downplayed M&A, saying, Hey, we really don't need it but what's the latest on how youre thinking.
Oh M&A at this point.
Yeah, and I I still look at this.
We are an organic growth.
Story, and you can sit here and say hey, what happened the second quarter. Obviously, we did take what I think are some best way that I can remember conversations about a couple of these credits and maintain them.
You know for this.
Thinking about where the sake of growth at any time, we have the opportunity to strengthen our credit profile, we're going to do that and we certainly could have held on to these credits and end up but we will let somebody else report that growth this quarter and we go in and do what we do but.
From an M&A perspective, we are.
For some very good conversations it's not necessary, but it. This is all going to be about a cultural fit with with with a group of people that want to come in and be a part of what we do and be a vital part and we're looking for that type of partnership and certainly those.
Our habit opportunities are out there and we're having some good conversations.
So, it's and it's within and footprint and it makes it makes tremendous amount of sense. So are not anything that I can sit here and say hey, we're going to report in the next couple of quarters, but.
Certainly we have we have some good conversations.
Some good things going with with what we feel are very nice fits.
Okay, great well good luck with that.
The question I have is just on the P. P. P benefits I know you have about $9.3 million of fees. What is left to be realized that how should we think about the timing.
So that will most of those be recaptured in the back half of the year or does some of that slip into 2022.
Hey, Brady most of it will be recaptured in the third and fourth quarter, but there is going to be some that's going to probably be in 2022.
Based on our projections and these change on a daily base.
As we may have.
$150 million at December 31st last and so.
Whenever they get forgiven then they'll be in the next quarter, but.
To answer your question yes.
At 9 million I would say probably our goods.
At least 50%.
And next quarter, and then maybe of that remaining 50% maybe 30% in the fourth quarter.
And then 'twenty going for it, but that's where we see today.
Got it thanks, Steve.
The next question, we have will come from Brad Millsaps.
<unk> subtype of Sandler.
Hey, good morning, guys. How are you all doing.
Good morning, Brian.
Drake just wanted to ask on <unk>.
New loan yields it looks like you guys saw.
We saw quite a bit of stability in the quarter.
Just kind of wondering if you could turn the corner there that's something that.
So you think that can stabilize going forward just wanted kind of get a sense of.
Kind of where new loan yields are coming on and kind of what that might mean for the NIM going forward.
Yeah a day.
When you look at the reduction in NIM with a basis point contributor to loan yields we feel very good about stabilization of the loan yields and feel like we can move forward.
So we've had a lot of discussion.
Couple of opportunities to put some political liquidity to work in some markets and we're going to kick that off here. This next week.
I feel like we're going to be able to pull out some some nice relationships out of some of these new lenders that we picked up so.
Feel feel very good about.
For where that turned the corner and a stabilization at this point I'm going to report and hopefully that debt.
We see some upside but at least stabilization.
Okay, Great and then just to follow up on the mortgage discussion just.
To ask Lance do you guys have.
Bad picked up a lot of your customers on the mortgage warehouse side of the business.
Do you think you were sort of kind of nearing a trough in those balances obviously subject to what happens in the overall market, but just kind of curious kind of what your crystal ball might stay on net mortgage warehouse.
Yeah, Hi, Thanks, No we actually met with our group the other day kind of forecasting.
Imbalances in and you're right.
If you think back over the last.
So 12 months or so we've gone from 23 clients in that business still 47, and we're actually still Onboarding, maybe 1 at this moment.
That that'd be instead balances we think.
At the end of Q3 will probably dropped about $750 million.
And then by the end of Q4, we're projecting $600 million and those are kind of quarter end balances.
Okay, great. Thank you guys.
Thank you Brady.
And the next question, we have will come from William Wallace from Raymond James.
Casting.
Sorry, I was on mute.
You didn't think it was going to get in.
Thanks for taking my point of all of them.
Nickel difficulties this morning, but glad I could get into Q1 follow up question.
2 to the to the question you just answered.
I believe Steve had said not only are.
Our yield stabilizing but you continue to.
Lower deposit cost so so I assume it's fair to assume especially if loan growth is re accelerating debt net.
Net interest margin you anticipate will be up in the second half.
We really think right now it will probably be.
<unk> tightened in the second half.
Our EBITDA really pretty flat and they may go up a little bit.
But we also have don't forget we have that securities and we have cash and we're going to take the cash and put them into loans. If not we can put them into securities Securities right now.
R.
Our book.
Flat $2.15, and what were seeing out there is about 1 we're not going to stretch for $1.50, because you go way too far and so there's going to be a little pressure based on just securities, but if you look at I guess core NIM, yes loans are going to be pretty stable and deposits will be coming down a little bit.
Book is about 20 basis points, there's only so much more they could come down definitely the CD balances will come down and we will probably bring down the non interest bearing a little bit more.
But if you see the core I think theres going to be okay, but there may be a little pressure based on securities and cash.
Okay.
Alright. Thank you and then just just clarify if you will the loan growth guidance, because I think I heard 2 different things. So the high single digits guide is that is that anticipated to be what you are run rating in the second half or should I look at full year on a core basis take out.
Okay, PTT noise and and be thinking that Youll get high single for the full year on a core basis that net.
Well that is high single for the full year, we said that at the beginning of the first quarter.
And when you look at.
The growth engine being intact and when you say.
Say reestablish our.
Ignite loan growth, we actually had positive momentum in loan growth, especially when you look at <unk> 21 versus <unk> 19, we went back and looked at.
How are we doing from the standpoint of the.
Of the growth engine.
And it was pretty significant it was 40 some odd percent.
Between those those quarters and so that showed that we were making significant growth also when you look at the utilization of our line utilization, where it's down to a low of about 42%, whereas generally.
Running at 48.40.
49%, we saw significant growth in lines added to that utilization.
In the second quarters.
About 7.5% increase in lines added. So we are going to start seeing a ramp up in that line utilization on top of.
The the the loan growth we have from from new originations. So we're pretty excited about where we are and that's why we're so positive about what looks like in the pipeline. We've already had a very strong July and expect that to continue through the third quarter.
Okay, great. Thank you very much strike.
Hum.
Moving on to kidney expenses Lee.
Is this a good run rate for for yes.
I think we're going to pretty much hold.
We can we can maintain expense.
Around a 2% growth for the year and this is.
The reason being I don't know if you heard it but 7 new lenders out there in the markets and we're doing a lot of work internally to be able to reduce costs to suck that up and pretty much have a flat.
<unk> expense.
<unk> profile and that's why we've been so excited in our in my comments.
I was so pleased with the management of this organization to be able to accomplish that when we're still adding investment into the customer experience technology. These people that were putting on in the markets to continue to utilize that infrastructure. So those are all positive things, but we're being able to do some good work around a flat expense environment.
Yeah.
Okay.
Great. All my other questions have been answered thanks for taking my taking my question I appreciate it.
Wally Thank you very much.
Again as a reminder, if you'd like to participate in today's Q&A. Please press Star then 1.
Environment has some fun again at a star then 1 to ask a question.
The next question, we have will come from Kevin Fitzsimmons of D. A Davidson. Please go ahead.
Hey, good morning, everyone.
Good morning, Kevin.
True.
<unk> backed out.
To look at that full year loan guidance, but what does that imply for the back half given that loans were down and I'm, assuming that guide us on is that on total loans is that on a ex warehouse X P. P P basis.
I'm just trying to get through does it imply.
Kind of a mid to high single digit growth for the back half for your or something even more.
Yeah that that in that loan growth projection for us was less.
Mortgage warehouse less PPP so that's.
The core portfolio and we see that.
You know being probably.
In the third quarter.
A little higher than single digit, but but we're gonna come in like I said between that.
I'm trying not to give specific numbers, but we're going to we're going to have a high single digit loan growth.
For the year and so so you can take the second third and fourth quarter and pretty much calculate what you need to calculate to get there.
Okay great.
I didn't hear your question.
Yeah, how youre, making me do math that's fine.
And then.
Yeah I didn't remember.
That give you some numbers.
That's right that's right yeah on the new hires is that something where you.
Think that's opportunity has kind of settled for a while or do you think theres more and I guess I guess, what I'm what I'm. It's.
Kind of about.
Parallel question is that I.
I believe a quarter or 2 ago you guys.
You know you were trying to make the point that.
We've been in our prior years very focused on growth and getting scale in getting to a certain point in the market and now we really wanted to deliver improved.
For every core bottom line profitability, and so obviously with new hires and things like that.
A little bit of spacing out okay.
The expenses come day, 1, but we have to wait a little while for the revenues to come in so I'm just kind of wondering how that is balancing out for you all in terms of those growth opportunities versus the the.
Goal to deliver improved core profitability. Thanks, Yeah, a couple of things here first off as I mentioned earlier, we're working really hard on our back in Covid.
Being able to manage and reduce expenses to cover this up as we put these people on but we are going to take advantage of disruption in the marketplace and we're certainly.
Seeing that now that's the way. This this this company's built as long as the people fit our culture.
And they can and their portfolios fit our portfolios as I talked about earlier client selection.
It is something that is extremely important to us and we are passing on deals.
Even last quarter.
That didn't fit that profile and why I'm concerned about that as I mentioned earlier.
I want our credit profile to continue to improve and I wont as we see.
The liquidity move out of the market and and maybe see a weaker credit cycle that we.
Hold up very well there so where we're looking at every opportunity. We can pick these people up that fit our model debt culturally fit their portfolios are in line and they see the world. We do that with 7 this last quarter and we feel very good about that continue and maybe not at the level of 7 but we have some some 1 offs that were looking.
And even today.
That will fit in with these teams.
And Frank just 1 add on on that client selection point the loans that you guys proactively offloaded.
Was that all 1 client was it a number of relationships just trying to get a gauge on what.
Theres, a handful or just 1 big client.
No. It was it was a handful 1.1 client made up about 28 million of that number.
And in a couple of loans in a piece of real estate in a different deal, but it was it was a handful of clients that.
Day, It was time to renew it was time to to either battle.
Looking at each of those types of things, but when we look at our client selection profile of deposits that go with that type of business in succession of those business, which was a big issue.
They just didn't fit the model and.
And I would say Kevin it would have been easy for us to sit here and say Hey, we got to report loan growth.
Let's keep the zone I don't think we'd had a loss.
But they would have been tipped basically in a in a down environment potentially stressed and we had that opportunity. So we're going to as I said earlier. This is a long term value play. This is we're here for the duration and I think those decisions are good for us.
Well I think and I think the other.
Right away is that you felt comfortable enough.
Offloading them, because you probably saw those new better for clients that you could get.
Absolutely Okay, alright, thanks very much.
Thank you.
And next wave a follow up from Matt Olney.
<unk> of Stephens.
Yes, thanks for taking the follow up on slide 15.
You included some good details around variable rate loans and how.
How much of those are currently on their floors I think it's around $1.67 billion.
Any commentary you can provide as far.
For us how many fed fund increases won't we'll need to see to get above those for levels.
You know on the prime rate loans, 1 increase takes us to where we pretty much will enjoy the next full increase at 25 base point consideration.
And on the LIBOR side, 1 increase.
Much puts us there. So we are we're set up well Matt to enjoy a rising interest rate environment.
Okay. Thanks for that and then.
As far as the tax rate from here for the back half of the year.
Steve any any.
The tax rate.
[noise] unless something is enacted it should be about the same that we have year to date.
Okay.
Good.
And then going back to the discussion on fees around mortgage.
Any color you can give us as far as the production within.
Color on X of how much is new.
Purchase versus refi and and then as far as the channels. If we go back a few years ago. I think there was a some wholesale production, but it seems like we've kind of gotten that down to pretty low levels any any update on kind of what percentage now retail versus wholesale production.
Yeah.
And let me go back to the first part of the question because in our mortgage group. This last quarter, we had a 48.
Refinanced feature to origination split, which was pretty interesting because our mortgage warehouse was $43.7 or <unk>.
43.
Refinanced 57.
Origination it will we'll see that.
Even with this last pull down in rates, we've seen a little pickup in origination. So it's probably going to be very similar to 2 that debt 48, 52, but I'm going to call. It 45.55.
Refinance origination.
And so.
As for the day about we're running about 90, 192%.
Origination our footprint versus wholesale and even our wholesale.
Is is an individual that is a free agent is working in the DFW day sales everything to us. So if you throw that in where we're.
100% origination.
Origination our footprint now.
Okay.
Okay. That's all from me thanks, guys.
Yeah. Thank you.
Well so no further questions at this time, we will conclude todays question and answer session I would now like to total conference call back up.
Mr. Drake mills for any closing remarks, Sir.
Thank thank each and everyone of you given us time of day and in the interest in this company and I will tell you that I've never been in a better place as far as the quality of this organization our growth opportunities.
And our opportunity as a partner we do have a couple of.
Insurance.
We're almost to acquisitions in the pipeline that we continue to work on and we'll close 1 of those before the end of this year and possibly even 2 but I'm excited about where we are I'm excited about the quality of this company overall and I. Just appreciate your interest your investment and look forward to any questions and calls each 1 of you have my cell number in.
I look forward to hearing from you. Thank you for your time and hope to see you soon.
And we think he's also sir.
For you in for the rest of the management team for your time again. The conference call is now concluded at this time you may disconnect. Your lines take everyone that has a great day.
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Insurance.
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Okay.
Okay.
Okay.
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