Q2 2022 Bank Ozk Earnings Call
Thank you for standing by and welcome to the Bank Uzi K second quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.
As a reminder, today's program may be recorded and now I'd like to introduce your host for today's program Jay Staley Director of Investor Relations. Please go ahead Sir.
Good morning, I'm, Jay Staley director of Investor Relations and corporate development for bankers.
Thank you for joining our call this morning and participating in our question and answer session in today's Q&A session.
Statements about our expectations estimates and outlook for the future.
Please refer to our earnings release management comments and other public filings for more information on the various factors and risks that may cause actual results or outcomes to vary from those projected in.
Or implied by such forward looking statements.
Joining me on the call to take your questions are George Gleason, Chairman and CEO Brannon Hamblen, President, Tim Hicks, Chief Financial Officer, and Cindy Wolfe Chief operating officer.
We will now open up the lines for your questions. Let me now ask our operator, Jonathan to remind our listeners how to queue in for questions.
Certainly once again, if you have a question at this time. Please press Star then one.
One moment for our first question.
Yeah.
Our first question comes from the line of Tomorrow from Wells Fargo. Your question. Please.
Okay.
Hi, good morning, everyone.
Good morning, Mark.
Maybe just looking at the pace of origination activity and our ESG that was quite impressive.
Was that consistent throughout the quarter was that Frontloaded and then I'm just trying to gauge what the broader kind of uncertainty it has done for for demand within that product more recently.
Alright, well tomorrow with your permission I'll, let Brandon Hamlin, our president take that question. So Brandon go ahead.
Alright, good morning, Thanks for the question.
Happy to answer we we did have a very good originations in Q2, and you know as to a frontloaded back loaded middle load. It you know it was really consistent through the quarter. We are very pleased that.
That growth is still very diverse in terms of its location. We we continue to achieve.
Achieve is a strong diversity across the country and.
The strong diversity with respect to product type as well.
So there's there's consistency in that story and you know the pipeline as we look forward remained strong.
We.
We acknowledge some of the macroeconomic factors and events that are that are being watched our reported geopolitical events et cetera et cetera.
But here in our business the pipeline continues to be very strong with the with the type of product that you know, we we continue to see great sponsors great great projects.
Across a number of markets.
Okay. Thank you for that and then the commentary for the expectation of continued record repayments pay down in 2022, but for positive loan growth is that pertaining specifically to our ESG that you'd think that funding its output.
Or pay downs for the remainder of the year or is that for the portfolio as a whole.
Yeah, let me.
And Brandon you might want to add some color I think we expect as we've said.
You know a record year pay downs in our ESG and.
We will have substantial pay downs in Q3 and Q4.
<unk>.
Kind of be net net over the next couple of quarters of push to probably I think where we are leaning towards slightly positive growth in the resi portfolio.
Over the next couple of quarters in regard to funded balances.
We've got pretty good momentum as you guys saw on the other lines of business our asset base lending group has gotten good traction.
Our indirect lending group has had positive growth several quarters in a row.
In our community banking group and our corporate investment specialty script, they've had negative growth very slightly negative and funded balances has actually been increasing their unfunded bugs out of that unit is growing even though it's not translating through into funding balances. So weird.
Guidance. We gave is that total loans, we expect to grow over the remaining second half of the year I think our ESG might be a small contributor to that on a net funding basis, but likely posture contributor if paydowns accelerate chunky loans.
To get to Marin pays down that could not materialize on the ISG side, but we expect positive growth in the aggregate over the second half of the year.
Great.
Thank you.
The Q1 moment for our next question.
And our next question comes from the line of Michael Rose from Raymond James Your question. Please.
Okay.
Hey, good morning, guys. Thanks for taking my question just following up on the on the loan growth you guys did have really nice growth in some of the other.
Businesses, but how should we think about.
What the market will give you and then your desire to continue to grow those businesses should be.
The economic backdrop deteriorate and we do move closer to a recession I would think that you have.
Some of those businesses.
You would want to slow down potentially the growth in <unk>.
Just wanted to get some just broader contextual thoughts on.
On how we should think about the non <unk> businesses. Thanks.
Well the macro you you know we have a long term commitment to conservative underwriting and.
While we don't really change our underwriting standards.
Hum.
From quarter to quarter and year to year end and up cycles and down cycles macroeconomic conditions do effect.
Ability of borrowers to qualify for our underwriting standards. So an adverse environment will lead to a slowdown brandon's already mentioned.
Our our ESG pipeline is good.
Really strong.
At this point going forward.
Obviously, the more <unk>.
Severe the macroeconomic downturn and the higher interest rates go that will.
Longer term in future quarters weigh against that forward pipeline, but even with that even in the most severe times we've been through in the.
19 years at our ESG has been a better business unit.
<unk> found opportunities that make sense every quarter.
You're out that and quality sponsors where quality projects that might be economic sense. So I think yes that that could lead to a lower level of pipeline strength.
The economy got.
You know in a in a very.
Adversely affected condition, but the portfolio as strong now as far as other lines of business you know that varies a lot from.
Your line of business to a line of business, our asset based lending groups dealing with really high quality.
Customers, who have strong earnings and EBITDA.
But need the additional capital that monetization of their inventory and receivables allow them. So.
No.
And there'll be people that will do less well and won't qualify in the future, but there'll still be business opportunities I would think given the scale and experience of that group.
The indirect lending group may be the most impacted because.
If we do get in a situation where the fed destroys enough demand in the economy that it really is.
And the job markets.
Significantly that is a consumer line of business and obviously.
RV is a big part of our business and higher gas prices do have some impact on consumers' desire to buy our base. So I can say a combination of higher gas prices and weakening job market conditions.
Weakening.
Actual market conditions that would affect <unk>.
<unk> balance sheets, the valuation of consumer balance sheets.
Wine against that so it wouldn't surprise me.
If our positive growth number in.
The indirect portfolio got compressed as the economy gets worse.
But generally we feel pretty good about.
The prospects for continued growth and.
The bottom line of that is was 17.3.
$3 billion in unfunded loans, we've got.
Significant growth potential for 2023 and 2024.
In the <unk>.
And can already booked in and moving towards funding as the equity and other capital structure components that those loans are funded in front of us. So.
We feel very positive about our ability to book funded growth in 2023 and 2024.
Under a wide range of macroeconomic scenarios.
Yeah.
That's great color, George and maybe just a follow up on <unk> itself the growth in unfunded commitments. This quarter was was really strong and I know historically during times of of concern of stress.
Competitors in that space that you compete against they've historically pulled back and <unk> been able to get better better spreads better risk adjusted returns I understand the credit box that is very very tight but are you starting to see that dynamic unfold.
In that environment, even if the pie of available.
Potential loan opportunities continues to shrink should we expect to see a similar dynamic where you would get an increasing share of that pie just because the competitors pull back. Thanks.
Yes, Brandon you're closer to that on a day to day minute to minute basis than I am. So please take that one.
You bet, Michael I use I think.
Thank you hit the nail on the head there. We we are starting to see some of that and they're different institutions pull back for different reasons.
A lot of institutions have had pretty good volume and some may be reaching sort of there.
The top of their allocation I think the bank world maybe in the debt fund world It's more around.
Their leverage lenders, reaching allocations, but for different reasons in different places we are seeing some pullback and our guys do a phenomenal job of knowing where the market is and.
We're always pushing the lower limits on leverage and upper limits on spread and you know here in the last couple of months, where we are making good progress in that area and seeing situations, where we might have bid for a particular project and lost it to another.
Party higher leverage and lower pricing in those some of those deals are not closing in.
Good deals absolutely makes sense to do but were getting revisited and of course, we do.
We do our best to capital in those capitalize on those opportunities to get the most attractive leverage and spread that we can so I.
Don't want to overstate.
Massive massive pullback, but we are seeing evidence of that in the market and to George's point structure every deal in the portfolio to make sure we're in a position.
To know that our credit is good and that we can stay in the market and.
Find those those great sponsors with great deals that we can continue to make good loans to.
I appreciate it maybe just one final one for me just on the buyback you've got about 178.
Left.
Is there the desire.
To continue to use that.
Kind of a go forward tool.
The current authorization, meaning should we think about <unk>.
<unk> is just one of the.
Proverbial arrows arrows in the quiver for Ozark.
Froze the K moving forward, whereas historically, we did not I know it was a big step for you guys to initially authorize it after after it seeming seemingly years of contemplation, but is this something that we should.
<unk> is part of the toolbox moving forward. Thanks.
Chief Financial Officer questions, Tim Hicks, Please take that one yeah, Hey, Michael.
Yes, I appreciate the question I think we will have.
Our conversations with our board regarding that as we approach.
Get into the fourth quarter.
As you know a lot a lot goes into that consideration current macro environment.
Growth potential organically or through M&A.
A lot of factors go into that.
As you pointed out we've made good use of our of our authorization so far.
And we've got strong earnings strong capital.
So we've got a lot of opportunities to use use our earnings and capital go going forward and we'll just have to have that conversation at the right time with our board.
Understood. Thanks for taking my questions.
Thank you. This does conclude the question and answer session of today's call.
Okay.
Once again, if you have a question. Please press Star then one.
Great.
We've got a lot of folks in queue for questions gentlemen.
I don't see any in Q, but okay alright.
Once again, if you have a question. Please press Star then one.
Our next question comes from the line of Matt The only from Stephens one moment here.
Line.
It is now open.
Alright, Thanks, guys can you hear me yes.
Yes, we can thanks, all right good.
Thanks for taking the question.
Wanted to ask more about.
Funding the back half of the year and to the extent that the bank achieved loan growth.
How are you thinking about funding aspect of it and what do you expect this to come from it seems like the reliance on wholesale borrowings is.
Pretty low is that something you would consider the back half of the year or you think you can fund this growth with core deposits.
Okay, Chief Banking officer, Sandy will certainly take that one great. Thank you well first of all we always have large unfunded, our ESG loans and of course, they overlap with our ESG payoff. So you have to look at both.
The question isn't so much how we're going to fund it because we will fund it using the same channels. We've used in the past, but rather how well are we going to be able to optimize the funding for.
Timing and pricing and duration and mix. So we have the benefit of a really seasoned deposits team at this point Audi currently Chief deposit Officer, Carmen Mclennan, Chief retail banking officer drew heartburn, managing director of wholesale deposits.
All of us have been working together for years now.
Position ourselves to meet the demands of any economic rate cycles cycles that we've been working on our fundamentals our core deposit growth of course, you can see our growth in non CD deposits this quarter.
I wanted to point out we hit an all time high and our number of personal checking accounts, we have more savings account growth than we've ever had in our history. So we expect the positive momentum recurring core to continue.
We have reduced our concentrations as we've talked about in the past week, we've improved our composition.
Our ESG is very diligent about projecting fundings and payoffs, but we've improved our agility and our ability to be precise.
Add to that as part of that team.
All that said we.
We do.
<unk> to increase.
CD.
As we need to.
And we've added for example.
Some broker deposits towards the beginning of this quarter that just happened to be.
Very good pricing and locked in some decent pricing there. So I expect that we will need to supplement.
Deposit growth with Cds and other deposits sources over time as needed as we have in the past.
Okay. Thank you for that Cindy and then.
I guess switching gears over to the operating expense side.
The commentary last night said that been a little bit slower to fill some of the open positions in <unk>, but would love to hear about kind of the outlook for expenses in the back half of the year.
I am pleased to report, we really have had good momentum in the last.
Five or six weeks and adding staff and probably added net 100 plus positions over that last six week period of time, so where.
We're finally getting this logjam of unfilled positions flowing at a really nice rate, but Tim I'll, let you address the overhead parts of that yes, youre right George I mean, we.
Pretty much kept a fairly stable head count number throughout Q2.
And we're already with the.
The progress that George was mentioning we're already seeing an increase in the <unk>.
Number of teammates that we have on staff and are looking to continue to fill those positions.
To support our future growth, which we certainly view as a positive.
But we'd certainly expect.
Noninterest expense total noninterest expense to increase probably several million dollars each quarter for the next few quarters.
As we fill those positions as we give raises to our our teammates.
Continue to grow our bank.
Okay guys. Thank you.
Thank you.
Once again, if you have a question at this time. Please press Star then one.
One moment for our next question.
Our next question comes from the line of Brian Martin from Janney. Your question. Please.
Hey, guys.
Hey, good morning, Brian .
Just a quick comment or just some commentary I'd love to hear some thoughts on just kind of the margin outlook I see that obviously.
Well as you've moved through their floors will continue to move through their floors. If we get the rate hikes that we're expecting but also know that some of the pricing on the new our new production is a little bit less than it was.
On the old stuff.
Kind of the.
Really nice expansion this quarter, just kind of looking at the follow through in the next couple of quarters, how to think about that or some commentary there would be helpful.
Yeah, a lot of moving parts there.
Brian you mentioned that you.
Remember from our last several.
Press releases that we commented that the new loans, we were originating particularly in our ESG. We're on a little tighter spreads than loans, we might have originated.
A year or two years ago, and Brandon alluded to that in the comment that he made earlier and you saw that I think that comment probably disappeared from this addition of our management comments document.
And that comment disappeared because as.
As Brian indicated earlier.
<unk> have dropped out of the space those competitors, who are unlike us not here all the time in the space some of them have dropped out.
Were getting better margins on deals were quoting today than deals were quoting a quarter two quarters ago. So that comment disappeared purposefully from the management comments document.
That's helpful.
As you saw in the quarter just ended R. R.
Non purchased loan yields were up 18 basis points.
Obviously, the pad three fed rate increases so far skewed light toward the quarter was that 75 basis point increase later in the quarter.
We're getting the impact of that our loans are getting off their floors.
Most of them it seems like will be off their floors.
Month after the.
The next fed meeting next week so.
Loan yields are going up and as we said in our management comments, we expect those will continue to go up.
Most of our variable rate loans are tied to.
Sulfur in LIBOR. So those are sort of forward looking.
Indexes will use 30 day LIBOR.
One month, LIBOR and one month term so far though so those rate increases tend to get Ratably press down on a daily basis on a ratable basis, starting about 30 days in advance of the expected increase so.
That translates into our loan yields going up a little bit on the <unk>.
Syed.
Most of our interest bearing deposits or Cds, so they tend to lag going out pants.
You had a 19 basis point increase.
And Pfizer are in loan yields.
Non purchased loan yields and a six basis point increase in deposits, we would expect in sandy reference that lag in her comments, we would expect to.
Most likely continue to see loan yields outrun deposit cost early in the cycle and then late in the cycle when.
The loan pricing changes or pretty much all priced and the fed's about <unk>.
Stop or has stopped deposit cost cd's rollover will will tend to catch up so probably late in the cycle. We may have a quarter or two where deposit costs go up more than loan yields.
That coincides with a point where were really.
Growing deposits more aggressively to.
Find a lot of this growth it's already.
Could it into our balance sheet.
Certainly say quarter to quarter.
Deposit cost accelerate.
Faster than loan growth, but obviously, we've got a great net interest margin a great course bread and.
We expect that to continue.
We've got a <unk>.
Short duration securities portfolio and.
<unk> kept that really short over the last couple of years.
And we're getting good cash flows as we alluded to in the management comments document from that.
Securities portfolio, and that's given us an opportunity to either use that cash flow to fund loans or reinvest that in securities.
Last quarter, we found some pretty decent reinvestment opportunities, we like we're finding some this quarter being very particular and very careful and trying to get real value. When we purchased securities, but the guys are doing a really good job of that and.
Being patient in.
That has some favorable implications for that.
Alone that securities portfolio as well so.
Russias lay optimistic about our ability to really keep a great man throughout.
Throughout the tightening cycle.
Gotcha Thats helpful. George and just as far as have you changed your outlook on just kind of.
Kind of through the cycle deposit beta.
How youre thinking that will play out as it as it picks up over time.
I think we'll do a lot better than we did in the last cycle for all the reasons that sandy of Nomura.
Our deposit team in our retail banking team has been doing a great job growing core deposits.
They continued to grow core deposits Mastec this last quarter, they've got good momentum.
Bank on that going forward, we feel we do.
So they are doing the right fundamental things day in day out to grow core deposits now we will.
We let some expensive Cds go this quarter, because we didn't need the deposits we can get those back.
Or replace them with other state aid.
When we need them later.
So I think they've done a really good job of positioning as will our deposit costs go up absolutely and I think Sandy mentioned.
Go up more in Q3 than they did in.
Q2.
Quarter, just ended I certainly will go up more.
But we think the deposit betas are going to be.
Very tolerable and our deposit guys are doing a really good job in managing that process.
Got you Okay. That's really helpful and maybe just one last one for Tim.
It was just on.
I think Michael already asked about the buyback, but just as far as M&A goes given kind of the market conditions and this might be opportunities going forward is that something that's still being considered I know you had some good activity our conversations in the past, but just wondering if that's changed at the market dynamics here.
Yes, I would say that the conversations are few and far between right now just given the macro environment and the rate great cycle.
Certainly when you start to think about mark to markets on loan books in this type of cycle.
Investment portfolios.
Get some pretty meaningful.
Purchase accounting type marks that will impact pricing.
From a buyer perspective that may not be fully reflected in seller expectation. So.
I think there's just too much uncertainty in the macro environment right now for much or very much M&A to happen for the foreseeable future. Yes, okay. Perfect that makes sense, that's what I thought just to confirm it but thanks for taking the questions and nice quarter guys.
Thank you.
Thank you ladies and gentlemen, if you do have a question. Please press Star then one slowly on your phone and one moment for our next question.
And our next question comes from the line of Catherine Mealor from K B W. Your question. Please.
Thanks, Good morning, everyone.
Good morning Catherine.
I wanted to follow back on the margin on.
Just on loan yields or is there any is there any level of elevated loan fees this quarter and maybe what does that look like relative to last quarter, just given the level of payoffs Lisa.
It's hard to say, what's normal, but we considered this certainly to be a normal quarter now we had a comment in our management comments document there was noting that our net interest income. This quarter was was almost exactly in line with our fourth quarter of last year. When we did have.
Significant.
Fees on prepayments and short term extensions or renewals and I think <unk>.
We shouldn't put that comment in there in retrospect, because I think it might.
It might have been confusing to some people, but this most recent quarter was what we would consider a very typical quarter. So thank you for the question Katherine and letting me clear that misunderstanding that.
Okay great.
And then on.
The deposit rates.
But certainly expect deposit costs to come out this quarter is.
Is there any indication of maybe what.
June deposit costs look like just to kind of give us a sense as to where their needs to the quarter and then.
On that comment Eric CD is interesting.
You've continued to see Cds declined.
Is it fair to say that we could see kind of in this higher cost Cds declined again, maybe next quarter and then really the CD growth is kind of a more of a 2023 event.
Or how do you guys think about the timing of when we'll see the CD portfolio bottom.
Catherine I don't know and I don't think Cindy and her team.
Yes, they're going to they're going to monitor.
Week to week day to day.
Probably hour to hour sometimes says.
Expectations regarding funding some prepayments get updated continuously and our world. So I think.
That's one factor just the changes in expectations literally day to day.
What are our pre payments and fundings are going to look like.
On a on a weekly and daily basis monthly basis over the remaining part of the year and then the other thing Cindy mentioned.
We did add some brokered deposits in Q2 and that really wasn't because we needed those deposits, but our our wholesale funding guys for monitoring market and they've got an opportunity to add several hundred million dollars.
At.
That have some term to them and that had relatively favorable rates and they.
They looked at it and thought it was an opportunistic time to take advantage and capitalize on opportunity there in the market. So if I added that so.
If we find similar opportunities, where we felt like those deposits are bargain and we're having made them in Q1 or Q2 or Q3 of next year and we want to go ahead and lock up some funding for that they might do that otherwise it will just be day to day pricing decision based on the day to day.
Estimates in our.
Our expectation for funding needs going forward, we could have.
Cap the deposits that the time deposits will roll off in Q2 had we been willing to pay a little bit higher right for them, but we didn't need them in.
It's a present value analysis.
And today, a one right or you buy them six months later, when you need them at a 100 basis points higher right.
What's the net present value in the best long term.
A lot of black of cycle outcome for the bank. So they are doing very careful decisions on that and I think they did a great job.
Managing our deposit costs and keeping us with plenty of deposits and I think they'll continue to do that going forward.
Okay. That's helpful.
Then I will talk a little bit late so if you're talking about this already I apologize, but just on the originations it looks like when I looked at.
One of your charts that kind of showed the number of loans. It was interesting because it looked like a lot of the new originations this quarter awareness kind of more on the smaller end of the range is that would you say that's more of what's available or is there any kind of intentional shifts there.
No kind of intentional shift in.
I think you will see quarters, where.
The average loan size originated is down I think you will see quarters, where the average loan size originated as is really high I think it's just the randomness of it in <unk>.
And you might want to comment on.
You guys are seeing size wise.
And you might also want to comment on the fact that we are doing more business in secondary markets now and those tend to be smaller deal size and that's just to diversify the portfolio geographically so Brian on add any comments you want on that.
No you're exactly right George.
I think one thing I would I would say is I'm just incredibly proud of the team.
Both in terms of the where the what and how many I mean, it wasn't just a record in terms of.
Origination, but it was a record in terms of number of loans originated so.
Is that that does obviously, a higher number of wasteful waste that average down we had I think it was $82 million average loan size closed in the quarter, which was probably a little a little wider than Q1.
I think.
We're doing a great job at both ends of the spectrum, Catherine we're seeing opportunities with that.
We have an increasing.
Volume with larger loans, new sponsors great projects, but to George's point, our guys just keep hammering away.
Some of these tertiary markets and we continue to to grab a new one here and there it seems like every quarter or so.
So it's all of the above it is not a particular focus other than just on quality and the guys are doing a great job of digging up quality and across the size spectrum.
Great and then maybe my last question is just on the reserve.
It's interesting that you've got more weighting towards the adverse scenario, which makes sense. So you can.
Conservative there, but is it fair to say that as we move through and Paul the baselines change.
Really the acis.
And so as we as we move through the next couple of months.
The baseline changes at the baseline, perhaps kind of news.
Little bit closer to the adverse or worsened a little bit is it is.
Is that does that mean, there's less risk for you to have a larger Stifel reserve Bill because you've already got so much weighted towards an adverse scenario that likely won't change.
Or if we do kind of start to see more recessionary signs it.
Actually we're still going to see or is there a building for you.
Yes for the last couple of quarters, we add up until this most recent quarter and we had the heaviest weight on the stagflation scenario and secondary weights on the what was then known as the protracted slump in the leased rate on the baseline scenario because the the baselines.
Scenario when you dug into all the assumptions and it looked like a pretty.
Pretty much an upside scenario to us and as we looked at.
Political geopolitical fiscal policy monetary policy.
Macroeconomic environment in all its forms.
We just didn't we felt that was too positive scenario.
The stagflation scenario has become less.
A more benign scenario.
Baseline has gotten a little more.
Elastic, but still looks like an upside scenario. So we shifted our weighting to the protracted slump we are conservative people.
We tend to we.
We tend to look at.
Yeah.
Adverse range of outcomes and think about running our business constantly in terms of.
What could happen and prepare for that so I think we've tended to be.
More conservative side in our scenario selection.
Obviously, if we get in a situation where the baseline assumes an economic downturn.
Then the baseline probably becomes more heavily weighted but right now the baseline scenario and Moody's seems to be pretty positive and not saying theyre wrong, but.
Its just not consistent with our conservative view of the World, Tim you might want to comment on that too.
George you summarize it.
Very well and.
And Katherine I think you put a note out earlier this month on the July baseline for.
For Moody's has already gotten a little bit more.
Negative than the June version.
We were utilizing the June June version of all of these scenarios.
And so it's a matter of us really digging into the details of each scenario evaluating those at quarter end.
In selecting the weightings that we think is appropriate given our view of what the macroeconomic trends are showing us at the time.
Got it.
Feels like a lot of your reserve builds actually more coming from your unfunded commitments versus what's on balance sheet instead of there Steve.
For model, how does that shift when you're moving from unfunded.
To kind of fund. It is there is that just the move from one bucket to the next or can you get.
Is there more provision when youre actually moving from unfunded to funded that could drive provisions higher.
As we kind of worked through that unfunded commitment bucket.
No a lot of dynamics underlying that question Kathryn.
On the funded balance if you just looked at the funded balance.
And looked at.
Our asset quality on balance sheet asset quality over the last several quarters. It has improved tremendously our nonperforming loans nonperforming assets are down our sub standards are down.
Our special mentions are down quarter over quarter.
Our past due ratio is.
Is really favorably low.
And then if you look really if you looked at the bubble chart you would have seen some of the higher LTV loans and the bubble chart paid off this quarter. So.
The funded balance.
And some of the older vintage loans that our ESG it paid off over the previous quarters. So the funded balance asset quality is continuing to improve.
So that's part of that dynamic and then improving from an already really good level already low level and then.
It's just how the models or are working through the scenarios selections and the mix of loans that we have in the unfunded balance changes that.
Little bit.
Thats grown a little bit.
A few basis points quarter over quarter.
Got it okay very helpful. Thank you so much.
Thank you and once again, if you have a question. Please press Star then one slowly and one moment for our next question is a follow up one moment.
Okay.
Our next question is a follow up from Tomorrow <unk> from Wells Fargo. Your question. Please.
Hi, Thanks for the follow up just a couple points of clarification.
In the release had mentioned that 20 million of additional buyback was completed during the first 20 days of July .
But the third quarter repurchases wouldn't exceed $100 million I'm, just wondering why kind of the pause off of the current run rate is that just keeping dry powder for.
The communities later on or is there.
Ability for other uses of that capital just.
Any color around that statement would be appreciated.
While our authorization goes through the <unk>.
First part of Q4 so.
Expectation that we would limit Q3 buybacks too probably not more than $100 million is just to keep some powder dry for Q4.
Okay, and then just lastly on the commentary around.
Job openings and accelerating getting through some of the log jam as you put it what's the remaining level of vacancies and is the expectation that you keep on hiring through the rest of the year or are these 100 plus positions that you've added over the last couple of months is that primarily.
Fill up the open positions you're looking to fill.
We've got about probably after those positions those people show up and start working most some have some haven't but.
After those positions with those positions that we've probably got I don't know.
225 to 250 other open positions now.
We normally will have three or 4% of our staff positions open because we're looking for candidates with specific deals. So I would say were 125 to 150.
Positions remaining debate failed.
That.
Would need to be filled to get us to what we would consider a normal level of open positions.
So fairly significant hiring still to go and as Tim mentioned in his remarks.
A lot of those newly created position summer refill of existing positions for quite a few newly created positions in there.
Those positions are.
There because we expect to continue to grow and actually see an acceleration in our balance sheet growth in 'twenty, three and 'twenty four.
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We're glad to have our business in a position.
Where we are.
Feel confident enough about growth over the next couple of years to still be adding new positions to manage that growth.
Great. Thank you George.
Thank you.
Thank you. This does conclude the question and answer session of today's program I'd now like to hand, the program back to Mr. George Gleason, Chairman and CEO for any further remarks.
Thank you guys for being on the call today, we appreciate it and we look forward to talking with you in about 91 or 92 days whenever on on our next quarter's results. So thank you have a good quarter, having a good day.
That concludes our call.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
The conference will begin shortly to raise your hand during Q&A you can dial stolen.
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