Q4 2022 Bridgewater Bancshares Inc Earnings Call
Good morning, and welcome to the Bridgewater Bancshares 2022 fourth quarter earnings call.
My name is Joe and I will be your conference operator today.
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After a bridgewater switching remarks, there will be a question and answer session.
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At this time I would like to introduce best enforcement director of Investor Relations to begin this conference call. Please go ahead.
Thank you Joe and good morning, everyone. Joining me on today's call will be Jerry Bach, Chairman, President and Chief Executive Officer jokes about E Chief Financial Officer, Jeff Shelburne, Chief Credit Officer, and Nick place Chief lending officer in just a few moments we will provide an overview of our 2022 fourth quarter financial results, we will be referencing a slide presentation.
Patient that is available on the Investor Relations section of Bridgewater as web site investors that Bridgewater Bank M N Dot com.
Following our opening remarks, we'll open it up for questions.
During today's presentation, we may make projections or other forward looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. Please see the forward looking statement disclosure in our 2022 fourth quarter earnings release for more information about risks and uncertainties, which may affect us.
The information we will provide today is as of December 31, 2022, and we undertake no duty to update the information.
We may also disclose non-GAAP financial measures during the call. We believe certain non-GAAP financial measures measures. In addition to the related GAAP measures provide meaningful information to investors to help them understand the company's operating performance and trends and to facilitate comparisons with the performance of our peers.
And that these disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP.
See our 2022 fourth quarter earnings release for reconciliations of non-GAAP financial non-GAAP disclosures to the comparable GAAP measures.
I'd now like to turn the call over to Bridgewater, as chairman President and CEO Jerry Bar.
Thank you Justin and thank you everyone for joining us today for our first ever earnings call. We're excited to begin hosting quarterly earnings calls as we think it will be a good way for us to provide more insight into our financial results and share more about what we're seeing across the business.
Starting on slide three we provide an overview of our strong full year 2022 earnings since our IPO in 2018, our results have consistently been highlighted by robust balance sheet growth, a highly efficient business model and superb asset quality.
This was the case again in 2022, as we saw loan growth of 27% and an efficiency ratio of 41, 5% and nonperforming assets to total assets of just one basis point.
All of which are among the best in the industry.
As a result, we had another record earnings and revenue year in 2022.
Our sustained growth throughout the year was due to the hard work of our team members as we continue to build and develop client relationships as well as deepening our brand presence and the ongoing market disruption in the twin cities.
Finally, one of the most important metrics to us as tangible book value as it is a good measure of shareholder value. We are creating we're able to grow tangible book value by six 5% in 2022, despite the market value depreciation of the securities portfolios related to rising interest rates, which put significant pressure on tangible book value across the.
Industry.
Turning to slide four we reported 2022 fourth quarter earnings per share of <unk>, 45, which was driven by a continuation of our strong growth efficiency and asset quality trends as well as emerging funding pressures, which impacted the net interest margin as interest rates continue to rise.
Loan growth remained strong with balances increasing 22% annualized during the quarter as we continue to get in front of high quality deals.
Given the level of loan growth, we've seen that we've been able to generate during the year and where we are in the interest rate cycle, it's not surprising to us that we've started to run up against funding pressures.
While our teams will while our teams continue to work to bring it in core deposits. We have supplemented these with higher cost wholesale funding and borrowings to support our loan growth Cup.
Coupled with increased competition on interest rates to retain current deposit clients. We saw our net interest margin declined to 3.16% in the fourth quarter.
Joe will provide more color on the margin how we plan to manage the balance sheet as we head into 2023.
We can continue to operate very efficiency efficiently during the quarter with an efficiency ratio of 44%, even as we invest in our people technology and overall scalability of the business.
Finally asset quality was superb once again as NPA has remained extremely low levels and we saw no net charge offs in the fourth quarter. In fact, we finished 2022 with net recoveries for the year.
As we head into a more uncertain environment in 2023 were taken steps to proactively assess our portfolio, but at this point, we're really not seen any early warning signs.
With that I will turn it over to Joe Tobolski.
Thank you Gerry turning to slide five I'll provide some more details on net interest income and the net interest margin compression we saw during the quarter.
Over the last few years, we have seen strong growth trends in net interest income driven by a relatively stable margin and robust loan growth.
These trends have become more challenging to maintain based on where we are in the current cycle as well as a further inversion of the yield curve.
Last quarter, we indicated our expectation for flattening net interest income over the near term as we saw funding costs begin to rise coupled.
Coupled with our strong loan growth outlook. This implied a meaningful drop in the net interest margin and this is largely what we saw in the fourth quarter.
Our margin declined 37 basis points during the quarter, which was a bit more than we expected as robust loan growth resulted in the need for additional wholesale funding and borrowings.
As a result, net interest income declined to $32 9 million.
We were anticipating this margin reset for a couple of reasons first is the recent growth in higher beta deposits and borrowings to support our robust loan growth.
Second we have a more sophisticated higher balance deposit client base it tends to be more sensitive to rising interest rates and has the wherewithal to move, especially given the unprecedented competition, we have seen from the treasury market with yields north of 4%.
Lastly, two thirds of our loan portfolio is made up of fixed rate loans, which means a slower pace of repricing initially.
This is evident on slide six as you can see that funding costs have increased faster than loan yields so far we.
We expect loan portfolio yields to continue grinding higher for the foreseeable future, especially with yields on new originations today typically coming on at a six 5% or higher rate many of which are being structured with strong prepayment penalties, which will help make these higher yield stickier for longer.
In addition, we have over $400 million of fixed rate and adjust where REIT loans scheduled to reprice over the next year and over $500 million of variable rate loans at or above their floors.
On the funding side, we expect a steeper increase in funding costs to continue into the first quarter before beginning to stabilize.
This all implies additional net interest margin pressure from our fourth quarter margin of $3 16.
Looking ahead to the first quarter of 'twenty three we expect to see a similar pace of margin compression as we just saw in the fourth quarter with stabilization thereafter, and the potential for margin expansion in the back half of the year as funding costs flattened and loan yields continued to expand.
Obviously this is all with the caveat that the interest rate outlook is uncertain and can always change our expectations assume fed funds peaks at 5% and remains there throughout 2023.
Turning to slide seven we have demonstrated a long track record of strong revenue and profitability. This was impacted in the fourth quarter by the margin compression we discussed given that the vast majority of our revenue is spread based however, total revenue was still up 14% year over year.
On the fee side noninterest income was up 25% during the quarter as other noninterest income included elevated rate lock fees, which you don't typically or we don't expect to recur.
Turning to slide eight we continue to operate with a high level of efficiency, given our branch light model and CRE focused loan portfolio. Our efficiency ratio remained in the low 40% range at 43, 8% with.
We typically look to grow expenses in line with it with that with asset growth, which we did in 2022 as core expense growth of 19% came in below our asset growth of 25%.
Expense growth in the fourth quarter was a bit higher at a 29% annualized rate primarily due to derivative collaborat collateral fees, which we expect to remain elevated in 2023.
With that I'll turn it over to Nick place.
Thanks, Joe turning to slide nine we continued to generate robust loan growth as balances increased 22% annualized in the fourth quarter and nearly 27% year over year.
Overall, we have seen a decline in demand in recent months as fewer deals are penciling out due to higher interest rates.
However, our teams are continuing to get in front of good high quality clients with good yielding loans in our core business lines.
For example, there are many large names in the twin cities that we have been trying to bring on board for years, we were able to bring some of these clients over during the quarter as other banks pull back. This is similar to what we did in 2008 to 2010 to develop some of the long term client relationships, we still have today.
So despite the funding pressures our growth is creating in the near term we believe it puts us in a better position for the long term.
We have certainly demonstrated a comfort level with growing the loan portfolio in excess of 20%, but we are also aware that our loan to deposit ratio was close to 105% as we enter 2023 near the top end of our comfort range.
We are taking several actions to help manage the growth of the portfolio going forward, including selling participations on new loans being more selective on pricing and credit and requiring increased compensating deposit balances on new and renewed loans.
We do expect a much slower pace of loan growth in 2023, as we look for better alignment with core deposit growth.
Turning to slide 10, given the reduced loan demand in the market. We continued to see a slower pace of originations and advances which totaled $313 million in the fourth quarter down 13% year over year. However.
However, this is being more than offset by the decline in payoffs and pay downs, which is contributing to the continuation of our robust loan growth.
Payoffs and Paydowns declined 37% from a year ago as many borrowers have interest rates below current market rates, making refinancing less attractive.
As I mentioned, we have also been selling participations on new originations to help manage our growth over the past two quarters, we have sold $116 million of participations or 17% of our total originations and advances.
Our loan participation portfolio balance is now over $425 million and over $580 million, including unfunded commitments in.
In addition to helping manage manage our growth. This servicing provides an added revenue benefit as well.
On Slide 11, you can see we had strong fourth quarter loan growth across the various loan types led by multifamily which continues to be a key growth driver given our expertise in the twin cities market and the low risk characteristics of the portfolio.
We also saw good growth in the construction and development portfolio, which we would continue to expect to continue in 2023, given the upcoming construction draws on existing loans.
As these projects complete their construction phase some of the balances will migrate into other loan portfolios similar to what we saw in prior quarters.
In addition to continued growth in the C&I portfolio, we are taking steps to expand our CNI function to help drive incremental growth and diversification of our loan portfolio, while also creating new deposit grow channels over time.
As a long term initiative, we are building out in 2023 that will take time to implement but we expect to see the benefit in future years.
Turning to deposits on slide 12 growth has remained strong as balances increased 13% annualized during the fourth quarter and 16% year over year.
As we've mentioned generating sufficient core deposit growth to keep up with our loan growth became more challenging later in 2022 and.
In addition, new deposit relationships don't always come in a linear fashion, given the larger nature and sophistication of our commercial deposits, which have longer and less precise onboarding that our loan pipeline.
As a result, we brought in more higher beta broker deposits and borrowings during the fourth quarter than we have in the past.
Over the course of 2023, our focus will be on funding more of our loan growth with lower beta core deposits. It.
It is worth noting that we have the cumulative beta on our core interest bearing deposits has been well controlled at 31% cycle to date.
Increased funding from core deposits should help our overall spreads even as betas are likely to continue trending higher.
I will turn it over to Jeff Shell Burke.
Thanks, Nick turning to slide 13, our asset quality continues to be superb nonperforming assets have been steadily declining from already low levels and totaled just zero point of 1% of total assets at year end. In addition, we had no net charge offs for the second consecutive year. In fact, we have had cumulative net charge off.
Offs of just $381000 over the last five years. This is largely due to our measured risk selection consistent underwriting standards active credit overtime and experienced lending and credit teams.
While we have seen an extended period without credit issues, we do expect normalization at some point given the higher interest rate environment and potential recession on the horizon.
Therefore, we are taking proactive steps to address our future credit concerns. For example, we are evaluating loan repricing risk by assessing our clients' ability to meet loan covenants in the current interest rate environment.
It's worth noting that our fixed rate loan portfolio actually helps from a credit standpoint as it reduces some of the repricing risk.
In addition, we will be adopting seasonal in the first quarter and we do not expect a material day, one impact given our low historical losses in.
In terms of classified assets, we saw a decrease of $2 7 million in the fourth quarter.
The bottom of slide 14 provides some more detail on your classified assets, which made up less than 1% of total loans and just over 5% of total capital.
The majority of the classified assets are C&I loans.
In the fourth quarter, we saw a $9 5 million dollar increase in watch list balances primarily due to two relationships. We moved to watch. These relationships included a multifamily and C&I relationship and reflect our ongoing monitoring of the loan portfolio overall.
Overall, we feel good about the risk profile of the portfolio and feel it is well positioned as we head into 2023.
I'll now turn it back over to Joe.
Thanks, Jeff Slide 15 highlights our strong capital and liquidity positions, we remain comfortable with our current capital levels as C. G. One ratios finished the year at 840 and tangible common equity at 748, we.
We did see our capital ratios trend lower in 2022, primarily due to robust loan growth and $10.8 million of common stock we repurchase throughout the year.
Although we did not purchase any stock during the fourth quarter.
We will be looking to build our tangible common equity and CET one ratios back up throughout 2023, as we slow the pace of loan growth and continue to retain earnings from.
From a capital priority standpoint organic growth remains our primary focus beyond that we continue to review and evaluate potential M&A opportunities.
We also have a new $25 million stock repurchase program that was approved by the board in 2022. However, it is unlikely we will repurchase shares in the near term as we look to build capital levels from here, but we'll remain opportunistic based on market conditions. We also remain comfortable with our liquidity position as we maintained $1 4 billion.
Of on and off balance sheet liquidity at year end with our investment portfolio being completely unencumbered.
Turning to slide 16, I'll summarize our thoughts on our near term expectations as we head into 2023.
We expect overall balance sheet growth to slow as we look to better align loan growth with core deposit growth and reduce our reliance on higher beta funding sources over the course of 2023.
Coupled with a loan pipeline that is about one third of what it was at its peak in mid 2022, we expect loan growth in the high single digit to low double digit range for 2023 in.
In general the.
A more core deposit growth, we were able to bring in the more loan growth, we will be comfortable with.
There are a couple of factors to keep in mind here.
First the level of payoffs and Paydowns is difficult to predict and can affect our net growth.
Second we already have built in fundings coming in throughout 2023 on previously originated construction loans totaling approximately 5% of our loan portfolio. Today overall, we plan to maintain a loan to deposit ratio in the 95 to one 5% range as.
As I mentioned earlier, we expect margin compression in the first quarter to be similar to what we just saw in the fourth quarter. However.
However, we expect the margin to then stabilize near first quarter 2023 levels with the potential for expansion in the back half of the year as loan re pricing catches up to the funding side.
Once the margin stabilizes growth in net interest income will again be tied to the pace of loan growth similar to what we have seen over the past several years.
We expect our efficiency ratio to move slightly higher into the mid 40% range, which is still very strong as margin pressure impacts revenue. We also expect noninterest expense growth to slow a bit and align with our slower pace of asset growth.
And as I mentioned from a capital standpoint, we will look to build our tangible common equity and CET one ratios throughout 2023.
Now I'll turn it back over to Gerry.
Thanks, Joe before we open up for questions I want to take a minute to look back at the 2022 strategic priority as we identified and a look ahead to our priorities in 2023 on.
On slide 17, our first priority in 2022 was to continue our balance sheet growth trajectory, which we did as loan growth was very strong.
We also invested in our business scale ability, including the launch of Encino commercial origination system. In March. This is in addition to other partnerships with established such as service now and sales force.
As we've mentioned we continue to operate one of the most efficient business models in the industry with expense growth coming in lower than asset growth.
And lastly, we recruited developed and retain top talent, while we didn't add as many people as we were expecting due to a challenging hiring environment, our employee base still increased 12% during the year, including key hires across all areas of the bank.
Finishing up on slide 18, our strategic priorities for 2023 are based on positioning the bank for long term success.
First we want to manage a high quality balance sheet growth by better aligning our loan growth with core deposit growth over the course of 2023.
Second we want to maintain our strong efficiency, while continuing to invest in the business.
Given the slower pace of balance sheet growth. This means pulling back on some expenses, which we plan to do by looking at areas of discretionary spend we can eliminate while also continuing to leverage and embrace technology investments. We have made in recent years.
Third we want to proactively assess asset quality and repricing of risk as we expect credit to normalize at some point.
Jeff shared his thoughts on this earlier.
Lastly, we want to implement initiatives that prepare us for longer term success.
The C&I build out initiatives, Nick mentioned earlier as well as preparing to be opportunistic as M&A opportunities become available.
Overall, while the environment remains challenging as we begin 2023, we remain optimistic that the actions. We're taking now will allow us to continue to be our usual strong growth and high efficiency big over the long term.
With that we're going to open this up for questions.
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At this time, we will pause momentarily to assemble our roster.
And our first question here will come from the line of Brendan Nosal with Piper Sandler. Please go ahead.
Hey, good morning, guys hope you're well.
It may be <unk> in the dark.
To start off here just on the margin question kind of accurate that the first quarter and it really feels like a slowdown in deposit pricing increases is really the key to getting that stabilization if not inflection later in the year.
So just talk about your confidence that you can actually realize that slowdown in stability and funding pressures.
Rather than just a continuous grind higher kind of throughout the year.
Yeah, Brandon This is Joe I'll take that one I think for US I mean, if you look at the growth that you know in the third and fourth quarter, you know with the pace of loan growth and having to you to kind of fill the gap with with higher cost wholesale funding or broker deposits.
When we highlighted the core deposit betas that we've experienced and we feel confident in our ability to grow core deposits throughout 2023, and I think given those beta levels. Those are obviously meaningfully lower than where it is to borrow overnight or in the wholesale markets. So that's that's really the from your funding cost question I think.
You know our ability to continue to grow core deposits, which you know we have line of sight to real opportunities and feel good about them throughout 2023, we feel like those coming in at lower betas than really the wholesale markets should certainly that's.
That's definitely margin accretive from there.
And then I think on the flip side on the asset side as we talked about I mean the.
The more time passes the more time for the loan book to reprice in this higher rate environment.
And I think also the other piece to talk about is really the slowdown in paydowns and payoffs that we experienced in 2020 two.
The components of the margin that's that's loan fee based and so you saw in the last quarter that was in half compared to what it was in the third quarter and certainly.
Quarters historically, so it feels like if loan payoffs do pick up and you do see an acceleration of that loan fee income obviously, that's a that's margin positive as well.
Okay understood. That's helpful color, maybe one more for me.
Just kind of given the intentional slowdown in loan growth just kind of curious how you keep your lending staff motivated in light of that after a very long track record of years of much higher direction.
No we actually had those Gerry Brendan we had we had a meeting with their whole lending staff last night actually and talk through that I mean, obviously, where we're incentivizing them and to easily go out and get deposits versus loans, which.
It is a change in in.
And their thought process on how they go out and sell but you.
You know our staff's been really.
<unk>.
Really.
Good at representing the bank out there and kind of pivoting when they need to and I'll, probably let Nick maybe talk a little bit more about him since he manages all of them.
Yeah, Hey, Brian This Nick Yeah, the only thing I'd add to that is and we touched on it in our presentation. I think we will continue to find good new loan opportunities I think we're just encouraging our staff.
You know to be diligent about focusing on those types of opportunities that will help bring.
You know really good long term growth for the organization through acquiring.
Core well know in la.
Long history well.
He'll clients that we can do good business with in the long term. So we had some of those wins and in the fourth quarter. We've got some additional wins that we're working on now.
And then we're just really focusing on the deposit aspect as Jerry mentioned, which allows us to continue to find the transactions of our long term historical clients, which is which is really where we're trying to put our time and energy today. So I Echo Jerry's comments that our staff feels good about that.
The game plan going forward and how we're going to try to continue to ship.
To manage the balance sheet through 2023.
Okay. Thank you for taking the questions.
Our next question will come from Jeff <unk> with D. A Davidson. Please go ahead.
Thanks, Good morning.
I appreciate that.
The deck.
And sort of the outlook slides those are those are helpful. So you I think you've framed it up well.
Just wanted to kind of get into the mind of of your deposit customers that third of sophisticated bunch that sensitive to rate just wanted to.
Yeah, you know our fourth quarter and into the first quarter as you approach them and have those conversations do you feel like they've received the catch up rate that they need it and maybe aligns with your thought that kind of trough in margin.
Beyond Q1, and then kind of stabilizing.
If that's a piece of it.
Our customers now you feel like that satisfies you have gone through the round.
I've asked you know delivering a.
A little bit better rate.
I'll, let mix going to handle that one Jeff Hey, Jeff Good morning.
Yeah, Great question I think.
You know that the deposit customers that we've we've our car core deposit customer we've.
So we've got great relationships with them I think what we.
We continue to be pleased by is that that that relationship that we have is giving us the opportunity to keep those deposits.
So you know while we have seen some increased betas on some of those sophisticated clients as treasuries and.
Are there high yield savings accounts are attractive to them.
We do have the goodwill in relationship with a client where we get the calls where we at least have the ability to try to retain and potentially reprice that that deposit up.
The other thing to note is we given the some of our.
Niche deposit markets that we've been in those.
Those industries have seen just overall industry declines in balances. So like some examples of that would be it was a 10 31 clients that we have that that industry and that has slowed title company balances are down as as interest.
They're higher than mortgage refinances.
That have slowed so.
You know some of it is just.
Structural in nature due to some of their businesses.
And then just on the new business side of things I mean, Joe Joe touched on this briefly I mean, we do feel good about and we have shown historically, a really strong ability to grow core deposits.
That has not changed and our our attention to that has really only increased.
In recent in recent months, so I feel good about our ability to continue to bring on core.
Posit customers.
That will have betas that are much lower than sort of borrowings and and other wholesale funding. So we feel good about our ability to do that so maybe that's just some insight on the customary mid Joe I don't know if you have anything else on the margin no. I think you I think you nailed it I think that's it's as Nick said in his prepared remarks, too I mean, I think it's it's not <unk>.
Any or either like a loan pipeline right, where you have a real precise.
The time period of which that lands, but I think to reiterate Nick's point that we when we look out on 'twenty three and we see the relationship opportunities that are in our deposit pipeline you.
So we feel like we have good visibility.
To those landing and it's you know, it's certainly less precise and it's chunky when it hits it.
And it takes time to bring over but I think if you continue to get in front of those relationships keep that momentum there's a huge opportunity in this market as we've talked about.
In prior quarters, and certainly since we went public I mean theres been material disruption here and I think we continue to get in front of some really high quality relationships and we certainly are confident in our ability at <unk> relative to our customer or to our competitors.
And so obviously that continue that momentum and it takes time, but we feel good about it.
Got you.
The pivot a little bit to the expense side.
How expectations for that to slow my guess is a bit of that is a function of incentive comp with slower growth. But also would you be intended kind of gear back hiring is that sort of tabled or take a pause.
On that end.
Yeah.
Yeah I mean.
We're always going to if we find some great Treasury management people.
It would be all over that.
Outside of that its really just some some key replacements.
And upgrades to some of our staff in the risk area.
But yeah generally overall, we don't we don't expect.
We don't expect a lot of hires in 2023, but obviously, we're also going to continue to build and scale our business.
If the right people come along that we think.
Adds to the value of our bank long term, we're not going to shy away from that either.
Okay, Thanks, and maybe one last one if I could.
They mentioned that the CSO adoption.
Coming up maybe a question for Jeff just.
I guess, how would you expect that impacts reserve levels at.
No.
NPA level pretty skinny, but just want to kind of see what the kind of dual track kind of modeling it looks like if you expect a big adjustment there.
Hey, Jeff This is Joe I'll actually I'll take that one yeah. We don't as we said in prepared remarks, we don't expect a material impact to today one.
I think as we talked I mean within 5% of current levels you feel really good about that percentage in the portfolio.
Obviously as macro conditions can change on a on a future basis that certainly can change, but I think.
Today, where we sit the reserve levels under sea. So we do feel those are appropriate.
Alright, thanks for the call.
And our next question will come from pad drilling.
Please go ahead.
Hey, good morning, everyone.
Hey, Brian .
Just curious.
In the prepared remarks.
You said that the linked quarter change from <unk> to core margin compression.
Could it be similar.
So you're kind of guiding towards a call.
Call it roughly two eight to eight five type range and then therefore kind of bottomed in the first half and then it increases and just wanted to confirm that I got.
I'll follow up based on that.
Yep, Yeah, I think that's I think do you think about it right away.
Okay. So based off of that I know you have repricing throughout the back half of the year and let's assume that the fed has kind of slowed things down.
Can you get above three again before.
The end of FY2023 or is it is it rather muted I mean, I get that theres upside an upside it's good but once you kind of hit the bottom I'm just trying to look at the magnitude assuming that fed kind of stops here.
Let's call it 5% terminal.
Yeah, I mean, I think it's certainly an uncertain rate environment I think when we when we consider all the variables on both sides of the balance sheet I mean, we feel comfortable in the back half of the year that expansion is possible I mean, I won't specifically call out a number I just think when you consider those those inputs on the loans.
And the deposit core deposit growth.
And given our rate outlook I mean, we're assuming a 5% fed funds rate.
I think we're comfortable with expansion in the back half.
So well leave it at that.
Alright fair enough.
And then this is more of a philosophical in nature given that.
Slowed things down a little bit intentionally I mean, just given the market is.
Too many higher rates across the board cost makes sense I think you guys are doing a good job from a shareholder value perspective.
I think longer term is there.
You've taken anything off the table in terms of initiatives intentionally for a year or is it kind of more so.
Really dependent upon the franchise's growth of the deposit base longer term I get that you guys manage expense and they're selling things that are attached to retain profitability, but let's say the deposits I mean.
It causes is the hard part of the business I'm, just trying to think about the out years and I get that we're pretty far from 24 or beyond and I'm just trying to think as a strategy change or are you just tapping the brakes a little.
Well I wouldn't say that that our overall strategy has changed at all I mean, we continue to take market share.
As you're well aware I mean U S Bank and wells are control a big part of the twin cities market here and we continue to get it in front of great long term clients of theirs, you know decades long clients and so I mean, we continue to be in front of people take market share and I would say, yeah, we'd certainly pausing.
On the loan side compared to the Super strong growth, we've had in the past but.
We're certainly still.
Our image.
And the community continuing to network continued to be in front of our clientele and trying to grow the business I'll, let Joe follow up on answering what's out there and I'll speak more to just the internal initiatives. If theres a part of your question there too I think we've done a lot of scaling the business over the last couple of years a lot of technology.
Investment and I think we're just starting to really Hum.
Harness and really see the value and so a lot of it is really just optimizing that technology investment that we've really been internally focused to help us better serve our clients.
As Jerry said, if hiring is muted from a from an FTE standpoint, we feel comfortable a lot of the technology investment internally will allow us to.
Use the same amount of staff from it from an FTE standpoint, and still get more productivity. So I think a lot of those internal initiatives over the last couple of years are really starting to bear fruit and we feel good about a lot of the deficiency.
Technology based investment that.
That we should consider continue to scale and optimize.
Even while we might on an asset basis.
See more muted growth.
Awesome sounds good thanks, guys.
This concludes our question and answer session I would like to turn the call back over to Jerry Fox for any closing remarks.
I just wanted to thank everybody for taking the time today, we appreciate it and we'll we'll be in touch soon.
The conference has now concluded.
Thank you very much for attending today's presentation. You may now disconnect your lines.