Q2 2022 Bank of Marin Bancorp Earnings Call
During the presentation, all participants will be in a listen only mode. After the call. We will conduct a question and answer session.
At that time, if you have questions. Please press one followed by four on your telephone.
If at any time during the conference call if you need to reach an operator, Please press star zero.
This conference call is being recorded on July 25, 2022.
Joining us on the call today are Tim Myers, President and CEO , and Tani, Girton Executive Vice President and Chief Financial Officer.
Our earnings press release, which we issued this morning can be found on our website at bank of Marin Dot com.
This call is also being webcast before.
Before we get started I want to note that we will be discussing some non-GAAP financial measures on the call.
Please refer to the reconciliation table on page three of our earnings press release for both GAAP and non-GAAP measures.
Additionally, the discussion on this call is based on information, we know as of Friday July 22022, and May contain forward looking statements that involve risks and uncertainties.
Actual results may differ materially from those set forth in such statements.
For a discussion of these risks and uncertainties. Please review the forward looking statements disclosure in our earnings press release as well as our SEC filings.
Following our prepared remarks, Tim and Tony will be available to answer your questions and now I'd like to turn the call over to Tim Myers.
Thank you Andrea good morning, everyone and welcome to our call as we reported in April Q1, 2022 originations were the strongest since 2017.
Through disciplined client outreach and enhanced business development efforts robust loan production continued in the second quarter. During the six first six months of 2022, our loan originations totaled 152 million more than double the same period a year earlier.
With the legacy American River Bank core system conversion behind US we are laser focused on loan growth as our seasoned teams complemented by talented new additions actively developed business across northern California.
Given our focus on relationship banking and the caliber of our branch in commercial banking teams, we are able to prioritize and maintain a low cost of deposits noninterest.
Bearing deposits continue to make up more than half of total deposits at June 30, representing one of the strongest deposit franchises in the industry.
Notably our net interest margin increased nine basis points in the quarter as we saw the early impacts of the rising rate environment.
This increase was driven by deployment of cash into securities and higher interest rates on our loans, while the cost of deposits held steady.
We expect further improvement across the portfolio in the current quarter as we experienced the full impact of the federal Reserve's 75 basis point rate increase in June and anticipate additional fed increases in the second half of 2022.
Our production was strong total loans decreased modestly in the quarter due to expected construction project completions and borrower sales of underlying commercial real estate and business assets.
<unk> loan pay offs and third party refinancing of acquired loans outside the bank's credit risk appetite, we remain prudent and consistent in our underwriting and will not sacrifice our credit standards as we grow.
Our nonaccrual loans remain extremely low and our overall credit quality continues to be excellent.
Now I'll turn to our second quarter results.
We delivered record net income of $11 1 million compared to $10 5 million in the first quarter.
Diluted earnings per share of <unk> 69.
Compared to 66 in the first quarter.
Total loans decreased modestly to $2 2 billion driven by pay offs within the portfolio.
<unk> second quarter originations of $102 million were offset by non PPP loan payoffs of $109 8 million that included $35 million in expected construction project completions and $29 million, whereby borrowers hold underlying assets and businesses.
With noninterest bearing deposits of 53% of total deposits. The average cost of deposits was just six basis points unchanged from the prior quarter and better by one basis point on a year to date basis.
Credit quality remains strong as I noted with nonaccrual loans, representing 37% of total loans. There was no significant change in classified loans.
We were not immune to the effects of post pandemic employee migration. However, we have recently made some outstanding strategic hires in.
I am excited about what these investments in talent will bring to the bank in the months to come.
Thanks to the strength and durability of our financial performance our board of directors declared an increase in the quarterly cash dividend of <unk> 25 per share on July 22022.
This represents the 69th consecutive quarterly dividend paid by bank of Marin Bancorp.
Now I'll turn the call over to Tani, but this has got to discuss our financial results in more detail.
Thank you Tim and good morning.
Return on assets of one 3% and return on equity of 10, seven 4% for the three months ended June 32022 would have been one 5% and 10, 95%, respectively without one time and conversion costs related to the 2021.
Merger with American River Bank.
That compares to nine, 8% and 961% GAAP and 1.0% to 1% and 996% non-GAAP respectively for the three months ended March 31.
As can be seen in the reconciliation of GAAP and non-GAAP financial measures in our earnings release merger related costs reduced second quarter net income by $219000 or <unk> <unk> per share.
Net interest income totaled $31 2 million in the second quarter compared to $29 9 million in the first quarter.
The $1 3 million increase was driven by higher average balances and yields on investment securities that added $1 6 million in interest income while the cost of deposits remained flat.
Tim covered the major changes in the loan portfolio and I will just add that we have.
112, PPP loans totaling $17 million net of 420000 unrecognized fees and costs at the end of the quarter.
We recognized $573000 in PPP fees net of costs during the quarter.
Digging a little deeper into the nine basis point increase in tax equivalent net interest margin over the first quarter.
Average invested balances grew $181 million with an 18 basis point improvement in average yield.
At the same time average cash balances held $136 million with a 57 basis point improvement in average yield.
The average rate on gross loans increased 10 basis points, but lower interest and fee income from PPP loans created a seven basis point drag on margin improvement.
The six basis point total cost of deposits was unchanged from the first quarter and improved by one basis point year to date versus 2021.
The $96 million decrease in money market accounts included a large customers transfer to our non interest bearing account prior to in early July disbursement consistent with the customers' normal business activity.
Deposits held off balance sheet with deposit networks decreased $28 million as we allowed some excess liquidity to run off.
There was no adjustment to the allowance for credit losses on loans and off balance sheet commitments in the second quarter.
Improvements in the California unemployment rate forecast that decreased the quantified the quantitative calculation were offset by changes in qualitative factors associated with supply chain issues inflation and recession risks.
The decrease in noninterest income to $2 7 million in the second quarter was related to payments on bank owned life insurance in the first quarter.
Year to date non interest income was up by $1 7 million due to increased activity in fees in all categories, mostly attributable to the acquisition.
Noninterest expense of $18 9 million in the second quarter of 2022 was down $5 million from the first quarter.
The decrease was primarily due to a $1 2 million reduction in salaries and benefits. After the completion of the acquisition related conversion in March 2022.
Decreases were partially offset by a $466000 increase in charitable contributions due to the annual distribution of grant funding related to the bank's corporate giving program in the second quarter.
As Tim mentioned earlier, we have been successful in hiring talent to fill immediate needs and support our long term strategic priorities.
Continued focus on talent acquisition and development in this competitive environment could put upward pressure on our expense run rate.
As we continue to integrate and build on our most recent acquisition the efficiency ratio illustrates its positive impact on operating leverage.
The efficiency ratios of 55, 7% and 57, 4% in the second quarter and year to date, respectively. Both improved from 59, 1% in the prior quarter and 61, 4% last year.
The same improvement is evident in the ratios, excluding one time acquisition and conversion costs.
All capital ratios were above well capitalized regulatory requirements. The total risk based capital ratio for bank core was 14, 7% at June 30, compared to 14, 4% at March 31, and 14, 6% at December 31 2021.
The banks total risk based capital ratio was $14 two at June 30, compared to $14 three at March 31, and $14 four at December 31 2021.
June 32022, tangible common equity of seven 8% for Bancorp and seven 5% for bank of Marin were down, 24% and 53 basis points, respectively. Due to an increase in after tax unrealized losses on available for sale securities associated with rising interest.
During the second quarter.
The reduction in other comprehensive losses relative to the preceding quarter.
It was due to greater increases in interest rates at certain points on the yield curve and a larger available for sale portfolio in the first quarter.
In March we took the opportunity to transfer $357 5 million in securities from the available for sale to held to maturity given our substantial liquidity position.
Transfer helped to reduce the impact of lower valuations on our capital ratios.
Yeah.
<unk> strong balance sheet liquidity and capital continue to generate profitability across the interest rate and economic cycles and serve as resources and support for the success of our exciting initiatives going forward.
With that I'll turn it back to Tim to share. Some final comments. Thank you tani, while we are mindful of inflationary pressures driven rate increases and concerns about a potential national recession. We're also confident in the long term economic prospects of our markets and the resilience of our customer base as we move into the second half.
Of the year.
Commercial loan demand has been incurred by higher interest rates industry wide.
Despite this trend our bankers collective focus on consistent client outreach positions us well to anticipate customers and customer needs and we will aggressively work to acquire new customers as demand adjusts to the rate environment.
For more than 30 years, our disciplined lending principles have served us well with a loan portfolio that has consistently performed across multiple credit cycles. Additionally, our customers know that they can rely on us in both good and uncertain times reinforcing the strength of our relationship banking model.
With the merger behind US we are executing on our strategic priorities to invest in key talent and technology further improving our internal efficiencies and customer experience.
We are committed to developing the expertise and capabilities that will drive growth by exceeding our customers' expectations.
At the same time, we continue continue to identify cost saving opportunities and new efficiencies to offset investments and ensure that we carefully manage expenses.
With that I want to thank everyone on today's call for your interest and support.
We will now open the call to your questions.
Good morning, and thank you for joining one followed by the four on your telephone you will hear a squeeze on prom technology request. If your question has been answered and you would like to withdraw your registration. Please press one three questions can also be submitted via the webcast page.
By clicking the ask question Scott.
And typing your question into the box that appears to be below the cap one moment. Please for the first question.
And our first question comes from the line of David Feaster Raymond James. Please go ahead.
Hi, good morning, everybody.
Good morning, David how are you.
Great.
Maybe just starting on growth it was great to see.
Improvement in originations a record quarter payoffs and Paydowns still still kind of a headwind here just curious some of the puts and takes how much of the strong originations do you think might be a pull forward of demand, perhaps and just any commentary on like how demand the health of your clients.
The pipeline.
And maybe how the complexion of that or new loan yields.
Any commentary on any of that I know, it's a big question that would be helpful.
I appreciate it. So there is no question that there was probably some pull forward, but we had a really big pipeline, leading up to that period, where rates shot up so I'll kind of an inverted that order a little bit in terms of the rise in gross loan yields they did see an increase but not where we'd like but we now expect to see more of that there was a lot in that pipeline.
That were rates that were set based on.
Relationships as rates rose and so we found it more into that especially early in the quarter.
At the lower rate rather than at the higher rates, but now we're seeing obviously things going out at higher rates. There's no question that we're seeing some contraction in demand at this rate, especially with investor real estate that being said the pipelines remain healthy and I think there was a period of time, where borrowers particular investor real estate owners, we're sitting on the sidelines.
A bit wait and see what happens, but if you look at some of the numbers that affected us the largest.
Asset sale and there was 10 31 into another property and we funded that loan in July . So there are some there are some positives there as well on the construction side those are.
For better or worse is performing as agreed.
A complete Senate finance is out in the Sun vehicle or sell.
By and large though our lenders are active not a lot of that growth came from new people. So we've hired a number of new people.
And that are getting their sea legs under them.
Expect that pipeline building in production to continue a lot of that growth did come from just mining our client portfolio and being good relationship managers that being said, where we have added people like Sacramento. We saw good growth out of that so I think in terms of that being dispersed nature.
The nature of that growth I feel positive about and I do think the payoffs wallpaper and again some of that's already coming back to us.
Okay. That's encouraging maybe just shifting gears the deposits could you just help us understand.
And some of the flows in the quarter how much of the decline was maybe more seasonal issues like tax payments versus strategically maybe letting some more rate sensitive deposits leave.
Obviously, we have that seasonal decline from a large customer this quarter that you highlighted.
How do you expect deposits to trend near term and maybe when would you consider bringing the remaining $150 million off balance sheets back on.
Yes, so I'll start high level, and then I'll hand, it over to Tani, but.
Seasonal that that big outflow you mentioned, one large deposit customer we mentioned they are.
Sir inflows and outflows fluctuate, it's really hard to pick a seasonality specific to that we have been very cautious about raising anyone anyone's rates, but have not seen a lot of people ask to the extent, where they would leave over that that may happen, but we haven't experienced a lot of it yet, but we're being very cautious we have a lot of a lot of liquidity.
Got it can elaborate.
Yes, I think.
As you saw we.
Brought some of the.
Off balance sheet deposits in onto the balance sheet.
And all of that activity was happening to prepare for it.
Some of those have gone back out to off balance sheet, but not all of them. So we will bring it back as we need it for liquidity.
But we still have a lot of excess liquidity, both in the deposits and in the portfolio.
So.
We watch it every day.
I think we're in pretty good shape there.
The.
And now that allows us to allow.
Allow some deposits to roll off if thats going to happen. So if you think back about the.
The surge that we got with all the PPP.
Money and other physical programs out there.
Is that still hasnt completely come off we've seen activity in the greater marketplace, where deposits are starting to flow out. So we are standing at the ready.
But we.
We've seen some but not not a lot.
Okay. That's helpful. And then maybe just curious on your thoughts on capital priorities, obviously organic growth top priority. It sounds like we're kind of at an inflection point and theres plenty of capital to support that.
So just as you think about dividend growth and share repurchases has your appetite changed at all for buybacks here and then maybe on the third leg of that there will be an M&A just how are conversations going and what's your appetite for a deal here just in light of the economic uncertainty.
Got it. Thank you and good question, Paul I'll start with the M. There, we're certainly open and I continue to have conversations on the M&A front view.
Can't predict one someone will decide it's time to sell their organization, but.
We expect those kind of conversations and continue as we potentially head into another cycle.
In terms of capital preservation, if you will right now given the uncertain environment, given where given where the high deposit levels of cap capital ratios.
Being cautious we have said that before.
We would certainly be open to considering a share buyback or.
Reactivated in the share buyback program when we understood that.
What are competing priorities work, but we do have some investments to make in technology and growth.
And we are a little bit cautious right now given the external environment and a potential recession that capital may became so we're balancing all of those as we consider that.
Okay that makes sense thanks, everybody.
Youre welcome.
Our next question from the line of Matthew Clark Piper Sandler. Please go ahead.
Hey, good morning, Tim and Tony.
Good morning.
Maybe just as a follow up too.
To the.
Pressure points you saw on loan balances. This quarter, you mentioned that third party competition and some refis away at unfavorable terms or structure.
How much of that.
How much of that did it contribute to payoffs and has that type of activity subsided at all here in July .
It is swallowing Theres no question a good chunk of that was third party revised some of that as you mentioned was stuff that we.
Chose not to compete for US one of the larger chunks of that wasn't it was a set of acquired loans that were done on types of properties and locations that we weren't interested in competing over so it wasn't as if we were being taken out of a property we wanted to on the pay offs.
Move outs from investors out of that property is at relatively low leverage and markets that have done very well historically.
And given the environment they were choosing to cash out of those but as I mentioned, a moment ago. The largest of those already has come back in the form of a new financing opportunity or a closed loan for their 10 31 exchange into another property. So some of that is timing in terms of the opex.
Okay.
Thank you.
<unk> talked recently about a desire to do a little bit better than maybe kind of a three.
4% annualized growth rate.
PPP.
And given.
The outlook in.
Growing uncertainty new hires.
Pipeline kind of putting it all together I mean do you feel like you can still do better than that or is 3% is probably a reasonable.
Forecast from here at least in the second half.
Well I think it's a reasonable assumption, we would definitely like to do better though on some of our hires if you look at our hiring patterns. We've got a few really quality managers that have joined in the last quarter a month into the prior quarter that we're very optimistic about San Francisco, our construction group a new leader in the North Bay covering the teams in rent and Sonoma.
And so they're going to have an impact does not right away a lot of the hiring that we've done to replace positions that were vacant and we're more on the portfolio management.
Underwriting side as opposed to so we're still filling positions on the relationship manager side, the folks charged with bringing in new business. So with those new managers and those hires are growth rates today really doesn't reflect those kinds of positions or the impact of that so in that regard I feel optimistic as you pointed out.
We don't exactly know what the rate environment, how that will affect demand, but the pipelines are still healthy and we're optimistic that the combination of all of that will we will increase that but I think your assumption is fair given the totality of all of those circumstances.
Great.
And then any update on the the weighted average rate on new production and whether or not you've seen some additional lift here.
Sure.
Recently more recently.
Yes, we have seen some left if you look at the more recent loans like I mentioned when you look at the quarter as a whole a lot of loans got pulled through right at that moment from that moment when rates jumped up.
Our relationship and reputation reasons, we needed to honor rates.
Put on paper, but we are seeing that increase we saw increase towards the end of the quarter and we're seeing certainly higher rates now.
Pereira a phenomenon that I think caught a lot of us by surprise in terms of the speed of it but.
Certainly the loans now are going out at yields that reflect market trends.
Okay. So that's like $4 five 5% range is that a reasonable range.
Yes, that's a reasonable range, but there is still competition out there. So competition is probably keeping spread over indices below where all of us would like but it's certainly in the on average in the lower end of that range, you've quoted but we don't know how that will play out for the rest of the quarter.
Okay.
And then maybe for Tony.
Do you happen to have the.
Net amount of purchase accounting accretion from American River that was in net interest income guesstimate and it's about 300000 based on that.
The core loan yield comment of being up 10 basis points in the PPP contribution in the quarter.
Matthew I'm going to have to come back to you with the specific number there's a lot of stuff going on in the feed category between the accretion we had a lot of.
Deferred origination cost.
And then we also had some pay offs so I'll come back to you on that.
Okay, and then maybe as a follow up on expenses. It sounded like you might expect a little bit of upward pressure here. Despite.
Historically trailing lower throughout the year.
I know you've been you've been hiring.
But I also know you have some additional cost saves from American River.
Netted altogether, you think that run rate grows modestly from here in the back half.
So, yes, I think Q.
Q2 is a good starting point as we discussed last quarter because now the conversion personnel are out, but we are continuing to hire.
We have had.
With the great migration that has had a bigger impact that we've had.
Some salary increases this year, but those are also pretty much baked into the second quarter.
So yes, we are continuing to hire but we are very focused on expense management through building efficiencies.
In both our processes and technology.
Yes, Matthew to your point, we do have more cost savings to come time to the <unk>.
The merger. So we will we continue to make progress on that and we can talk about that when we're able to.
Okay. Thanks again.
Our next phone question comes from the line of Jeff relief with D. A Davidson. Please go ahead.
Thanks, Good morning, just a couple of follow ups.
The margin.
Good morning.
You mentioned the drag from.
Lower.
Key fee recognition what was that in the prior quarter. So if you have it.
Seven.
Well I guess a margin Jeff Pvp.
Excluding that I guess 312.
Excluding the accretion part of it.
What was that in the prior quarter.
So just that seven basis points represents the drag on NIM improvement quarter over quarter. So.
Seven basis point, we would've been we would've improved an additional 70 basis points over the quarter, if it hadn't been for the PPP.
So I think what you might be asking me is.
What the differences between TPP the dollars.
In the first quarter and the third quarter.
Alright.
Well, yes, just to put it in another way.
Reported was 305 day would have been essentially $3 12 ex PPP drag.
What was the $3 12 compared to the first quarter on the same apples to apples.
Yes, let me pull that for you and we want to make sure I give you the right information as opposed to trying to do it off the top of my head.
Okay, and maybe just a broader question of.
That remaining TPP balance any visibility on when do you expect that to be appear.
<unk> zero next quarter or.
Is it is it going to you've got to balance that premier.
Expectation, that's really hard to for that project predict alright.
We're down to the loans, where it's hard to connect with people, where there may be less sophisticated in terms of preparing and presenting all the information necessary to desert forgiveness.
Cases, where business was sold so we're kind of down to the ones that are just taking more time, so I'd hate to predict exactly the timing of that.
We have more payoffs last quarter than I expected for those same reasons. So the team is doing a good job.
We have an outsize CPA firm that helps us on some of the more complicated ones that are doing good job, but we can't predict the timing of when they will respond and go through that process.
Got it fair enough.
And more specifically on those cost savings I think the original target on the American River could you say.
You think you're through.
Made it sounded pretty confident that youre going to get those and maybe exceed your expectations, but.
Thank you thank you Debbie.
70% of the cost save 90, where would you peg <unk>.
As the original target.
Okay.
Ah versus the original target.
Probably around 80, 590% there.
Okay.
Got it okay.
And maybe a last one Tim just trying to get a sense for the higher.
Youre speaking of.
Timing wise.
Market could you just I don't know if thats the year.
Year to date.
What you've brought on but.
A high level.
When when where have those folks been added.
Yes that wasn't all this last quarter, but certainly the impact of that started into the quarter. So we added a new construction team manager Jason Miranda, we added a new manager in San Francisco that brings a lot of sophisticated background.
They are both relationship banking and deal structure, we expect that to help us in that market. The new hire just started in the North Bay, but it's a very experienced person in the market is pretty hard to find someone with deep experience managing lending teams in Marin and Sonoma.
We've had added key lenders in Sacramento, we added actually as we've talked about over the last number of months a whole team in Sacramento.
<unk>.
I'm trying to think of some of the other just like I said some of the other hasnt been more on the portfolio maintenance underwriting side and we have some positions to fill on the relationship manager side.
That will help us really all across the footprint, so it's pretty spread out but the key ones that we're really excited about are the managers I mentioned, because they'll build out teams that we'd expect to do really well.
Okay that sounds like a lot of that may.
Maybe Tony you said that that's sort of baked in the expense run rate with some lift.
We need to look at it hires.
Yes, I mean, some of this goes back to April .
Those like in Sacramento go back to your much earlier in the year.
And the newest was July so I think Tom's comment about expense run rate is there.
Okay. Thank you.
Next one question from the line of Stuart Lotz with BW. Please go ahead.
Hey, everyone. Good morning.
Good morning Stuart.
Most of my questions have been asked at this point, but maybe just one on credit.
I think that no provision this quarter to kind of make sense, just given stable credit trends.
So malone shrinkage, but kind of wanted to dig into.
I believe you disclosed two relationships.
<unk> on deferral related to the cares Act.
Currently about $24 million.
Just given where about two years from when they were probably originally deferred maybe could.
Could you provide a little bit more disclosure on what those credits are remaining and maybe how.
How do you think about.
Those working through those credits over the next couple of quarters.
Yes, so I will say this I mean, it's one.
One relationship.
What they are dealing with now is sort of.
<unk>, but changed effect from the pandemic and.
It's been an industry and I'd, rather not go too much into detail about them, but it's in an industry where.
There's visibility and they'll have all due each year, but theres not a lot. They can do within that year to change. It. So that's actually been considerable improvement.
Okay.
That's probably all I'll say about a specific credit, but we expect that to continue to improve.
Okay.
Would those come off deferral.
This year I guess, given kind of the exploration of the cares Act.
And then how would you think about working through those.
Would they be.
Is there any chance of a potential loss going forward.
No.
Okay.
Great. Thanks. So this is not a we don't view that Theres a lot sorry steel we don't view this as a loss potential credits just the timing of when it comes off any relief that was provided.
When it was provided under the cares act, but.
We can manage this under normal relationship management credit management.
<unk> norms and were not concerned in any way by the loss.
Great Okay.
And then maybe.
Tim.
I think we had a conversation this quarter.
Jamie.
Initiatives to potentially increase the fee contribution if I look at your.
Your fee revenue stream as a percentage of your total revenue, it's a little bit below peers.
High single digits. So.
And any potential.
Initiatives there and.
What are your thoughts on pursuing an acquisition to maybe support.
That kind of the fee revenue generation.
Sure those conversations continue we have a number of initiatives that we hope will initially drive that nothing to report now certainly all the options are on the table certainly looking at ways to.
Increase our contribution from our wealth Management Trust group.
But we're looking at that among other options and as you pointed out we talked about it because it's important to us.
Just wanted to get a prudently.
But we do have a number of internal initiatives.
On other non wealth management trust fee income about maximizing what we can do based on the service offerings, we have today as well as considering new ones or any potential acquisitions. So that's all on the table is just not something that's going to happen next quarter.
Okay awesome.
And Todd maybe maybe one more for you.
I think we're not really worried about deposit betas.
For you guys just given.
Our loan to deposit ratio.
The composition of non interest bearing but.
Maybe if you could provide a little bit more color on where deposit costs were trending at the end of June and as we get into July and <unk> started to see any any pressure there or are you just kind of letting the higher cost funding continue.
Continue to roll out the door.
And yes, there is no trend toward the end of June that is different from what happened throughout the quarter.
And.
And as you know.
We will publish our.
Interest rate risk metrics in the 10-Q.
So.
You'll see that the betas on the deposit came down in the modeling.
That makes us more interest rate sensitive, but not all the way down to historical levels, because we wanted to be conservative.
We.
We fully understand that that some of those deposits might run off.
Different from what happened in the great reception recession.
And.
So yes, no no visible trend yet on those.
So I will address the other.
Tim.
I'm sure that you're.
Youre looking at the.
Net interest margin impact of that and I would say that in.
In addition to the lower betas.
Youre going to see higher sensitivity.
In our higher asset sensitivity in our net interest margin.
In the numbers that get published in the in the 10-Q.
There's also a lot of the loan. So so we didn't have a lot of loans on floors last time, we ran those numbers, but we had some and now all of the loans are at their floors. So we're getting a bigger lift faster.
Great that's very helpful color.
Thanks for taking my.
My questions guys.
Thank you.
Yes.
Okay.
Once again to queue up for a question. Please press one four on your telephone next question from the line of Andrew <unk> with Stephens. Please go ahead.
Hey, good morning, Tim Good morning, Tommy.
Good morning, how are you.
I'm, great how are you guys.
Good thank you.
Just most of mine have been asked and answered already but one quick one just on.
On the securities portfolio.
Should we be thinking about.
Are you guys are forecasting kind of loan and deposit growth moving forward I guess, what should our expectation be for the securities portfolio should we expect.
Expect kind of flat to 5% down from these levels.
Well, that's what we hope.
So yes, the securities portfolio has gotten to very high percentage of the balance sheet and.
What we've done we do have about 50% of that portfolio and held to maturity to limit the impact of future interest rate changes on.
The tangible equity.
But we also have 50% in.
Available for sale, so that that gives us some flexibility we get a fair amount of cash flow off of the portfolio that can be redirected into loans when needed.
So, but we really even with the larger portfolio, we haven't changed.
The general allocation.
They contain all of those securities tend to be.
High credit quality agency.
Based or municipal credits.
So that has that has not changed.
Okay.
Can you remind us how much.
And kind of quarterly cash flow you would expect from a bond book.
Wells, depending on the interest rate environment.
Probably somewhere between 15% to $25 million.
That's per month or per quarter.
Quarter.
Okay.
Perfect I appreciate you guys, taking my questions.
Thank you.
We have no further phone questions.
Thank you very much everyone for joining us we appreciate it.
Okay.
Yes.
That concludes today's call. We thank you for your participation and ask you to please disconnect your lines.
Yeah.
Okay.
Okay.
Okay.