Q1 2022 Equity Bancshares Inc Earnings Call

Good day and thank you for attending.

For the first quarter 2022 equity Bancshares earnings conference call. At this time, all participants are in a listen only mode. After the presentation. There will be a question answer session. Just a question during the session you will need to press star one on your telephone please.

Please be advised that today's conference is being recorded and if you require any further assistance. Please press star zero.

I'll hand, the conference over Cheeseburger today, Chris remember to please go ahead.

Good morning, and thank you for joining equity Bancshares conference call, which will include a discussion and presentation of our first quarter 2022 results presentation slides to accompany our call are available via PDF for download at Investor equity Bank Dot com by clicking.

The presentation tab you May also quickly event icon for today's call posted at Investor equity Bank Dot Com to view the webcast player.

If you are viewing this call on our webcast player. Please note that slides will not automatically events. Please reference slide one including important information regarding forward looking statements from time to time, we may make forward looking statements within today's call and actual results may vary following the presentation. We will allow time for questions and further discussion. Thank you all for joining us.

With that I'd like to turn it over to our chairman and CEO Brad Elliott.

Thank you, Chris and good morning.

Thank you for joining our call and your interest in equity Bancshares.

Joining me is Eric Newell our CFO .

Greg costs over our Chief operating officer.

And our President Craig Anderson.

I'm pleased with the operating trends we showed in the quarter.

Our earnings were both very strong and surpass expectations.

We had an excellent loan growth and reported strong net interest income.

Our EPS was <unk> 93 per share versus consensus of <unk> 63, as Eric will discuss in a few minutes.

Our hard work.

Yielded.

Significant credit quality improvement with a decrease in our classified and nonperforming assets.

<unk> purchased in both the Armenia and American State Bank mergers.

And our previously disclosed aerospace related credit all saw improvement and.

In some cases elimination through pay off our disposition of assets.

This resulted in a meaningful reduction of our criticized asset ratio.

The continued execution by our special assets and credit teams is a reflection of the edition a year ago.

Council Edna's are.

<unk> expanded role in this area.

This team has transformed our process management of this area.

Our fee based businesses continue to add to our income stream.

After several years of focus on improving.

And introducing new products and services.

We continue to see improved trends.

We are just in the beginning phase of many of these businesses. So it is very encouraging to watch these teams of Christian Humphreys, Andrew Musgrave's, Ben Morris and all our commercial and retail staff increasing sales.

We will continue to keep an eye.

On our expenses and find ways to uncover positive operating leverage.

We start implementation of our I T M network over the next several quarters.

And our operations teams are always looking at ways to automate processes.

We stayed committed to our capital management measures in the first quarter.

We were well positioned to take advantage of downward pressure on financial stocks with our stock repurchase program and declared a common stock dividend in the quarter also.

We have many other positive items to note, but I will leave some of those for Craig Eric and Greg to talk about.

I will let Eric take you through the numbers and then we'll walk you through some of the other areas of focus for 2022.

Thank you Brad and good morning.

Last night, we reported net income of $15 7 million or <unk> 93 per diluted share.

Non interest income decreased slightly linked quarter to $9 million and noninterest expenses less merger costs decreased $4 1 million linked quarter to $29 1 million.

We calculate core EPS to be 94 per diluted share.

To reconcile GAAP earnings to core earnings this quarter remove merger expenses of 323000, and a boldly death benefit of 134000.

Sure.

I would note that in our first quarter, we recognized 827000, PPP fee and interest income compared to a peak of $8 2 million recognized in the third quarter of last year.

We haven't been excluding PPP from our core numbers given its contribution to our financial results for the last eight quarters.

But its contribution is now de Minimis and we're pleased about the improved quality of our first quarter earnings.

Our GAAP net income includes a net release of ACL provision to the allowance for credit losses totaling 412000.

The uncertainty of the economic environment and continued impact on the economy of previous stimulus measures are reflected in our qualitative and economic components on the calculation.

At March 31 coverage of ACL for non PPP loans is 140% down from 155% the previous quarter the.

The decline of the coverage is entirely driven by ECL that was being held against specifically analyzed loans.

If we normalize one times benefiting NIM normalized provision expense to approximately 10 basis points on average loans on an annual basis and zero out the release of reserves for unfunded loans, we get an EPS of <unk> 70 per share, which beats the consensus of <unk> 63.

The beat was primarily in the expense line with consensus at $31 6 million and our normalized level at $30 1 million.

I'll stop here for a moment and let Greg talk through our asset quality for the quarter Greg.

Thanks, Eric as we anticipated during the fourth quarter 2021 earnings call. Other repossessed assets declined $20 million in the first quarter of 'twenty two based on the resolution of the largest of our aviation assets, which were sold at an attractive price and above where it was mark there remains one smaller.

Asset tied to this relationship equity banks portion of that participated total is approximately $1 1 million.

Overall, nonaccrual loans declined $8 $6 million quarter over quarter and now stand at just 64 basis points to total loans the lowest level. Since we went public as a reminder, our non accruals were driven mostly by acquired assets and the teams are constantly evaluating these for evergreen status as Craig.

That's improved.

The ACL is 148% of non PPP loans as Eric has discussed and not net charge offs are muted at just five basis points annualized.

I am proud to report that through the hard work of our special assets and credit teams. We now have a classified asset ratio of approximately 17% without the required gross up for gas of the remaining participated repossessed aviation credit that ratio would be lower by 160 basis points. We expect this.

Ratio to continue to decline as we see improvement in classified assets acquired in mergers and we have done this in the face of great uncertainty driven by the pandemic Eric.

Thanks, Craig I do think it's worth commenting about our general reserve, while we had significant improvement in our asset quality during the quarter, resulting in a large release of specific reserves, we did build ECL through general general reserves during.

During the quarter, we saw significant growth in our loan portfolio and an important model endpoint that drives general reserving.

In assessing the economic landscape, we first acknowledged that our customers experienced a great benefit over the last quarter with some of the headwinds as public safety measures in place during the pandemic.

Largely or entirely been lifted.

A common concern has been replaced by the uncertainty of inflation supply chain disruption and input cost escalation and our customers are starting to experience in part due to the stimulus pumped into our economy since the start of 2020 as well as the geopolitical situation.

To be clear, we've yet to see our customers experienced any specific difficulties from these concerns but in assessing the landscape. We believe the risk of an economic slowdown coupled with inflationary pressures presents uncertainty that supports our general reserve build during the quarter.

Craig why don't you take everyone through your thoughts on the quarter. Thanks.

Thanks, Eric organic originated loans totaled $304 million in the first quarter.

Of the total originations, 92% were in commercial CRE and agricultural loans.

These originations resulted in linked quarter loan growth of $87 million.

When excluding the change in our PPP loan balances loan growth in the quarter was $111 million or 14, 3% annualized.

I am proud of the work that the sales teams have put in over the second half of last year that helped us not a very successful first quarter.

We have renewed our focus on speed to market over the last couple of years, our attention was rightly focused on helping our customers get access to PPP and main street lending programs to assist with pandemic related challenges and uncertainties thankfully we have turned the corner.

Yeah.

We are working with the shared service and credit administration teams to further streamline our underwriting process.

By finding ways to better automate and enhance our loan processes, we provide a service to our customers and prospects that our competition cannot match and.

And better yet it allows our sales teams to focus on being trusted advisors to our customers, helping them find solutions and products to make their businesses more successful.

Our fee income did show a modest decline from the fourth quarter, but this is clouding some very positive news first.

First we have seasonality in our crop insurance sales that peaks in the fourth quarter and is not repeatable in the first quarter.

Second the contribution of mortgage banking revenue declined this quarter due to rising mortgage rates and the slower selling season in the winter.

Commercial credit card and debit card interchange with similar to modestly growing linked quarter. Despite some of the typical seasonality generally experienced with spending.

We continue to emphasize putting commercial cards in the hands of our clients driving debit card utilization through marketing campaigns.

The build out of our HSA platform is nearly complete.

We are growing pipelines that our health care services team has developed that will allow us to service their employees HSA and other tax advantaged flexible spending account needs in time. This will contribute fee income through interchange and accounts that use of brokerage option.

We have recently had to changes in regional leadership that I am very excited about we have recruited a new leader for our Tulsa region that has spent much of his career in the region working for top National Bank.

We are excited about his leadership and potential to continue to develop our tulsa footprint and enhance its contribution to our results.

We've also promoted an internal candidate to lead our southwest Kansas region.

His prior experience was successfully supporting sales efforts in our retail network and Western Missouri, Southeast, Kansas and Northern Oklahoma Eric.

Thanks, Craig.

Interest income totaled $39 3 million in the first quarter, increasing from $37 $2 million in the linked quarter, representing a $2 1 million acres.

During the first quarter the yield in the loan portfolio, excluding PPP increased approximately 32 basis points.

We had a $1 5 million benefit to interest income in the quarter from loans previously nonaccrual being moved to accrual.

When excluding a onetime benefit in PPP impacts in both comparable periods NIM in the first quarter increased 19 basis points to three 2%.

Slowed premium amortization in our investment portfolio contributed approximately seven basis points of improved yield in the quarter from the linked period.

Our interest bearing liabilities also experienced continued improvement decline.

Declining two basis points from the fourth quarter.

Origination fees recognized from forgiven PPP loans continuing to decrease.

NIM was benefited by PPP loan fees in the first quarter by five basis points as compared to 12 basis points in the fourth quarter.

We recognize 755000 of fee income and 71000 of interest income related to PPP loans in the first quarter down $1 9 million from the fourth quarter.

At quarter end, we had 500000 of net unrecognized fee income associated with PPP loans, which totaled $20 3 million.

The team has been focused on ensuring we proactively positioned the balance sheet for a rising rate environment.

Over the last 18 months, we've been quite conservative about originating loans that were priced out further than three to five years on the curve.

We've recently seen some customers up to accept the variable rate because of the steepness in the front end of the curve that is causing fixed rates to be significantly higher.

We recently took advantage of a record increasing two year yields and swapped a part of our portfolio from variable to fixed for two years.

While that may seem counterintuitive, our modeling and analysis showed that there was a great deal of value to capture that will benefit our NIM.

In the event interest rates don't rise as the market currently expects, we do even better.

Our outlook Slide does show moderate decline in NIM in the second quarter.

There is some conservatism in that number due to some uncertainty with the cost of funds.

Currently our competitive landscape in our community markets remains very rational, which should allow us to lag any rate increases.

However, if the <unk> follows through with a 50 basis point increase in May and even June as some market observers think may happen that could alter the competitive landscape on rates.

On the asset side, we're seeing improvement in our origination and renewal yields.

C&I origination yields increased 14 basis points in the first quarter, which was about 40% of the corners origination volume.

We expect premium amortization in the investment portfolio to remain slower which should assist in yields from that portfolio and as I have said in prior calls we are working to move earning assets away from the investment portfolio to a loan portfolio, which will assist in higher asset yields.

Brad.

I'd like to point out our progress on our strategic goals for 2022.

We are focused on the continued improvement of operating performance. We saw progress in the first quarter on our goal to achieve a return on tangible equity in the mid teens.

We continue to look for opportunities to reduce excess liquidity on our balance sheet and increase fee income in our revenue mix.

We saw our loan to deposit ratio increase as I mentioned before tailwind from our credit and loan growth will help drive us towards greater operational efficiency.

We're excited about the build out of our HSA business, which provides cross selling opportunities to our commercial and municipality clients as well as state of the art platform to our existing HSA client base.

Our commercial credit card product continues its positive momentum and contributing to fee income.

We are looking at several other opportunities to add to our suite of services and products for our customers.

That will support our goal of increasing fee income as a part of our revenue mix.

Eric.

I wanted to turn your attention to the forecast slide upon the earnings deck, which will put some specifics on our expectations for the remainder of 2022.

As Brad mentioned, our long term goals remain unchanged, improving our revenue mix, increasing the contribution to that mix driving positive operational leverage off of our expense base and driving our loan to deposit ratio to levels, we saw pre COVID-19 .

This last call is dependent in part on economic factors in the markets. We serve successfully shifting excess liquidity into the loan portfolio from cash and investments as critical to improving our pretax pre provision return on assets.

Brad.

We're in active conversations with several different companies about partnering.

Equity continues to be ready and willing to act as a partner to banks that fit and complement our organization.

Provided they assist equity and making progress to our stated financial profitability goals.

As I regularly emphasize we will stay true to our requirements on earn back cultural fit and geographic strategic fit.

We will maintain our focus on organic growth efforts.

And as always we'll look for opportunities to rationalize our branch footprint, while improving the digital experience for our customers.

And with that we're happy to take your questions.

As a reminder to ask a question you will need to press star one on your telephone.

To address your question press the pound key.

Please and finally completed a kidney roster.

Our first question comes from the line of Terry Mcevoy from Stephens you may begin.

Hey, guys good morning.

Good morning.

Maybe Eric just to start with your question.

The fed raises rates 50 basis points in May can you just kind of walk us through kind of both sides of the balance sheet and what you think that would mean to the net interest margin and I know you ran through your outlook slide and touched on a couple of things, but just wanted to maybe specific to to this quarter in an event, we will likely see.

Yes, I mean on the funding side.

We don't have a lot of dependence right now on wholesale funding so that the impact there would be fairly minimal and.

Given our liquidity our loan to deposit ratio.

We have been looking at.

Letting some customers that might be a rate a rate sensitive and they are only here for one product that we don't have a relationship with them.

We might let that.

The bank, but we would be competitive with the.

Customers that you have a relationship with us, particularly if they are providing.

Are using.

Our service that has a fee income contributor to fee income.

But again I think we haven't really seen a lot of irrational pricing in our markets yet.

And I'm, hoping that even with a 50 basis point increase we'll we'll continue to see that that not change on the asset side.

Thank you.

Are we use the loan pricing model everything goes through that model and we.

We've obviously seen market rates already pop up on the expectation of.

Increases.

And so.

We've been seeing that already in what we've been originating.

One of the examples there in my prepared commentary was C&I being about 14 basis points higher than the <unk>.

Our first quarter versus the fourth quarter in terms of originations.

So putting that all together.

I think that hopefully you are fairly.

Balanced NIM I, just don't I don't know if we will have a lot of movement from where we're at right now.

Thank you.

So Brad maybe as a follow up you talked about just conversations with potential M&A partners.

How are pricing expectations may be changed as rates have gone up but then you also have to balance some some economic uncertainty in inflation.

I guess, maybe if you could maybe talk to the size of the potential partners that you are having conversations with as well. Thank you.

Yes, we've got three or four active conversations that we have going on and.

Some are in modeling stages, and what I would tell you is everybody understands how they have to fit in the box.

And how they have to work on an earn back they are sophisticated.

Organizations with good bankers on the other side.

So.

I think I think expectations are in line.

With where things need to be to get deals done.

<unk> is.

Which ones are the best strategic fit which brings the right opportunities to us.

We passed on the deal that was fairly sizable.

For us.

And we just said it had a lot of.

Cleanup work in the portfolio is still and so we just thought it in this time of the cycle. It wasn't the right time.

To get to that opportunity and so.

We passed we passed on that so we're looking at strategic fit still has.

To fit economically and then.

Do we think it will move the needle for us and our shareholders.

I appreciate that thank you both.

Our next question will come from the line of Jeff <unk> from D. A Davidson your line is open.

Thanks, Good morning.

Morning, Jeff.

Just a couple of follow ups on the kind of the outlook slide as well.

So the loan growth guide and kind of the average balances.

If you could kind of frame up.

The.

The low and high end.

Three 2% to three 4 billion and average loans is the should we.

Soon the low side is sort of economic uncertainty.

That sort of plays out.

Or are there some other competition or price sensitivity on the low end and maybe just.

Three four at the high end.

Absence of those pressures thanks.

Yes.

Kind of a nuance with that's a full year average balance so that three two is taking into account that the actual average for the first quarter.

No.

I would say that.

That's a little bit of a nuance there.

I wouldn't expect we don't have an expectation that our loans are going to shrink from where we're at right now.

It would probably look more towards the midpoint there for average for the year, which I think using that midpoint I think it gets to about another 8% annualized growth from where we're at.

At $3 31 to the end of the year.

Which I think is a little bit stronger than where we started.

Our expectations.

Coming into 2022, where I think we were looking at more than 4% growth.

Yes.

Got it so okay.

Right if you are.

Got it three two on average exiting first quarter again, if you kind of flatline that's just.

The reason for providing that conservative low end is is.

Is it true that the economic uncertainty is what.

Push that down.

Yes that is a fair that's a fair statement Jeff.

Given we feel good about that.

The remainder of the year based on what we know now and what we see our pipelines.

However, again.

The fed moves 100 150 basis points here in the next couple of quarters that could alter the dynamics of the market and an uptake of our customers.

But we're not seeing that at the moment.

Sure, Okay and to that end Eric.

The $3 to 310 margin guide.

Both for Q2.

And the full year.

Can you clarify that assumes no further rate hikes or it assumes sort of an average of expectations out there.

Yes, we're not really.

We don't build in.

Rate hike future rate hikes.

Into our modeling so it's not like we were.

It's not like we put or however, many rate hikes decided as expected or what the market is expecting on there for.

For the second quarter outlook, though I mean, it seems like the market has coalesced around the fact that that is going to move in may.

So we have.

Looked at.

Some modeling with.

I talked to Terry about that his question.

So I think there is probably a little bit in expectation of a rate hike in Q2, but not not so much beyond that in our outlook.

Got it Okay, maybe last one.

Brad I just wanted to add.

Firm up the buyback appetite again.

You sort of.

If you apply first quarter activity.

To what <unk> got remaining authorized you get sort of to the end of that I just wanted to for the balance of the year and I know that valuations change in the environment to change but your.

View of further appetite maybe the boards.

Do you know of.

Maybe increasing that other extending the authorization.

Yes, I think our board understand.

The capital markets and the use of capital market's tools and so I can't ever see when our board wouldn't have an available.

Appetite could be.

And the stock buyback as long as it's prudent.

But we will always have an authorization available.

Unless we were not allowed to do that for some regulatory purpose.

But.

I can't see in anytime in the foreseeable future, where we wouldn't have a standing open.

Buyback available.

Using that.

Increased earnings per share and doing the right thing for all shareholders.

Okay. Thank you.

Our next question comes from China.

Robertson from Hovde Group your line is open.

Hey, guys good morning.

Morning.

Wanted to I guess first talk about the alone.

Line utilization.

And I know, it's been in the Twenty's and it's usually in the <unk>.

Update on on AG and other farmers, we've talked about how they're making money hand over fist, what what's the demand might be in.

In the AG markets and then just generally as you are looking at the long pipeline.

Pieces of the business looked like they're poised for more growth.

I'll take part of this question and then turn the rest of it over to Craig.

The AG utilization is still remains down which is a positive from the standpoint of.

Our customers are sitting on lots of cash.

And our AG customers are seeing lots of cash and so they're not utilizing the lines of credit.

That's positive from the standpoint of it puts them in a very healthy position it gives us lots of flexibility.

Yes.

There is a change in the commodity prices right now the input prices are going up but the grain sales prices are also going up faster.

So.

At this point.

They are on pace to make a lot of money again this year.

And they're all starting to forward sell some of that crop we have very stable crops in our area.

Because we are in a place where uses irrigation. So we're not dependent on mother nature as much.

As other places and so I think that also bodes well for us.

And so our AG guys are in good shape I'll, let Greg take the second part of that question yes.

The results of our first quarter loan growth were primarily driven by significant activity in both Wichita in Kansas City.

We were able to win a couple of very significant C&I opportunities and then we had a very large CRE transaction in Q1, our pipelines right now are very very strong, they're very consistent with where we've been over the last probably four quarters.

Very excited about the opportunities to continue to increase our our loan portfolio and there is a significant focus in our community markets on kind of the smaller middle market.

Credits and so starting to see some nice lift in that particular area, primarily from our kind of our western Missouri, Northern Oklahoma in Southeast Kansas territories.

Okay.

That's helpful. And then wanted to get back to the conservatism around the margin on the funding side.

Can we get an update on.

I think.

We based on anticipating a higher beta on MDA.

75% beta is still what you guys are thinking on.

Money market or has that changed and maybe any any thoughts on those more rate sensitive pieces of the funding mix.

Yes.

I agree with your statement or question on what could be driving that conservatism. So again.

We have been seeing a lot of rational.

Pricing within our community markets in terms of competition on the deposit side.

And I think there's just a lot of liquidity out there.

So I think.

Some of our competitors are probably looking at the same way. We are if you have some customer that doesn't really have a deep or any relationship with us other than just that one product where.

We're willing to let that go across the street.

And so it might have been experiencing a little of that here in the first quarter.

But I do think that if.

The fed moves and <unk>.

So concerned about the ones, but some market observers are thinking that there could be another follow up 50 basis points. In June . So you have a 100 basis points in a very short period of time I do think that that could alter some of the dynamics there and caused some of the betas.

Rise from where we're seeing it right now.

We think that that.

That's pretty much sums up.

The reason for the conservatism on the on the NIM.

Okay.

And then just lastly for me I just wanted to talk about credit leverage from here and it was nice to see the decline.

Classified assets.

Hey, guys addressing the aerospace.

It seemed like you could have some credit leverage from here like maybe you said provisioning was still having a potential to be.

Pretty light.

Can you give us any color on.

Specifically the reserves around the commercial real estate book on the C&I portfolio from here.

Dynamics around <unk>.

Possibility of having.

A low provision continuing going forward.

Yes.

We kind of we budget.

And kind of what I would say is we were budgeting for growth.

So youre right in that we might be.

<unk> has some credit leverage is how you explained it in terms of.

Asset quality improving.

Knock on wood, no further losses, which would drive provisioning from our historical loss perspective, but.

We continue to expect loan growth.

And so that's one of the reasons why we budget for about 10 basis points.

Annualized based on average loans.

Through through the year. So yes, we did have that release here in the.

First quarter, which I'll walk through on my prepared comments and I will repeat repeat myself, but so we did have that but that was really driven a lot by what happened with what Greg talked about so.

I would really actually.

Probably.

I'd say that I would put 10 basis points of <unk>.

Division going forward.

On an annualized basis.

Okay, Great I appreciate all the color.

Thanks.

<unk>.

Once again Thats star one.

Yeah.

One for questions. Our next question comes from the line of Andrew Liesch from Piper Sandler you may begin.

Hi, guys. Good morning, just kind of following up on this last question here so on the.

The reserve build from the economic and qualifying factors here.

First quarter Thats more what youre seeing currently in more of a one off event, the 10 basis points as to what we should be using going forward just assuming that for.

With the caveat that maybe there is another one of <unk>.

One of these provisions down the line.

Yes.

I kind of look at it from a coverage.

<unk>. So if you look at ACL to non PPP loans were.

Hovering around 150 basis points based on how we're seeing.

Uncertainty in the economy based on what I talked about in my prepared commentary.

Inventory I would expect that that coverage would stay pretty close to that 150 basis points.

I'm sorry, an anchor in our modeling it just happens to be where we're where we're landing so that 10 basis points is just expecting further growth.

To maintain that.

Around 150 basis points.

Okay. That's helpful.

And then just on the expense guide in the.

On the outlook slide there.

It looks a little conservative on the high end, but I guess, what what would happen for expenses to get to $128 million. This year.

Yes.

Sure.

The biggest contributor to expenses.

As our people.

I think we've done a really good job.

<unk>.

Limiting our.

Some of the.

Yes.

A lot of it theres been a lot of attention on wage growth.

And I think that we've done a pretty good job in and limiting that here I think from a budgetary perspective, we had between 3% and 4% growth and Thats.

Currently in our numbers.

But if we need to respond to something that we.

We're not expecting to that could be one source of.

An increase but at this point.

Feeling comfortable that we won't get up to that 128.

Got it okay.

That's helpful. All my other questions have been asked and answered thanks, so much.

Thanks, Dan.

And our next question comes from the line of Damon Delmonte from K B W.

Okay.

Hey, good morning, guys hope everybody's doing well today. Thanks for taking my question. So.

So just wanted to kind of.

A little bit bigger of a broader picture on the loan growth outlook can you just kind of talk about maybe some of the dynamics youre seeing in the market with supply chain issues in.

Just broader geopolitical risks that could be impacting your local economies that are you seeing any.

Any slowdowns anywhere or is there any major areas of concern on your end.

Yes, we don't at this point, we don't see a lot of.

The slowdown in our marketplace. So our region has some oil and gas dependency.

And so with oil and gas being at $100.

The Oklahoma, Kansas.

Missouri markets are doing incredibly well.

Arkansas is doing incredibly well driven by retail.

The J B Hunt trucking.

Technology and wall.

Walmart effect down there.

And so everything in our marketplace is doing well we have some uplift from the <unk>.

Aerospace industry.

There's huge backlog right now in that in that industry. So there is a good.

Good demand on that side, there are some supply chain issues, but the supply chain issues or just holding back the ability to produce more jets at this point. So we don't really have any.

Indicators right now that there is any problems or any slowing of the economy and our place do you think yes, and David I would also say as you listen to Brad's commentary, what's embedded in that is even in our four state geography, there is a pretty sizeable.

<unk> of diversity, so western Kansas.

It is really.

Very propped up by a healthy AG economy, Kansas cities.

Economy is healthy and Thats, a little different than in Wichita is is a little different than pulses. So we're blessed with having some diversity in our economic basis in our footprint.

Got it Okay. That's helpful. I appreciate that and then I guess just.

And most of my other questions have been asked and answered, but I guess with regards to the.

Fee income Eric the last couple of quarters. The other noninterest income line has been.

Higher than it was earlier in previous quarters I should say.

Is there anything in there that you don't have a lot of confidence in being repeatable or do you think that something in the.

The low $2 million quarterly ranges.

As appropriate.

Sure.

I think though the high.

Hi, 1 million low $2 million is appropriate going forward one of the things that is in there is.

Is the.

Mark to market for derivatives and with higher rates.

That's a positive benefit to us.

Got it Okay. That's helpful. Alright, that's all I'd add thanks, a lot guys I appreciate it.

Thank you.

Thank you.

Ladies and gentlemen, Im showing no further questions. At this time this will conclude our first quarter equity bancshares' presentation have a great day.

Okay.

[music].

Okay.

Hum.

[music].