Q4 2022 South Plains Financial Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the South Plains Financial Inc. Fourth quarter 2022 earnings Conference call.
Today's presentation, all parties will be in a listen only mode.
Following the presentation. The conference will be opened for questions with instructions to follow at that time.
As a reminder, this conference call is being recorded.
Now I'd like to turn the call over to Mr. Steve Crockett, Chief Financial Officer, and Treasurer of South Plains financial.
Please go ahead Sir.
Okay.
Thank you operator, and good afternoon, everyone. We appreciate your participation in our fourth quarter of 2022 earnings Conference call with me here today are Curtis Griffith, our chairman and Chief Executive Officer, and Cory Newsome our president.
This call will be available on our website within two hours at the conclusion of the call until February 2023.
Additionally, a slide deck presentation complement today's discussion is available on the news and events section of our website.
Before we begin let me remind everyone that this call may contain forward looking statements are subject to a variety of risks uncertainties and other factors that could cause actual results to differ materially from those anticipated future results.
Please see our safe Harbor statement in our earnings press release that was issued this afternoon and on slide two of the slide deck presentation available on our website.
All comments made during today's call are subject to the safe Harbor statements.
Any forward looking statements presented herein are made only as of today's date and we do not undertake any duty to update such forward looking statements, except as required by law.
Additionally, during today's call we may discuss certain non-GAAP measures, which we believe are useful in evaluating our performance.
Conciliation of these non-GAAP measures to the most comparable GAAP measures can also be found in our earnings release and on slide 22 of the slide deck presentation at.
At this point I'll turn the call over to Curtis.
Thank you, Steve and good afternoon.
On today's call I will briefly review the highlights of our fourth quarter and full year 2022 results as well as our outlook for the year ahead.
Cory will discuss our loan growth and the credit profile of our loan portfolio in more detail as well as review our strategic initiatives for 2023.
Dave will then conclude with a more detailed review of our Q4 results.
To start I am very proud of our execution over the last year as we successfully navigated a challenging economic environment and while the economic outlook remains uncertain. We believe we are positioned south plains for continued success in the future.
Central to our success has been the expansion of our commercial lending platform, which has driven the acceleration in our organic loan growth and contributed to an improvement to our run rate net interest income.
As our net interest income improved through the year. It began to offset the expected decline in our mortgage banking revenues as the federal reserve aggressively raised their benchmark interest rate to combat inflation.
Looking forward, we believe we are well positioned to continue to deliver returns in line with or better than our peers.
Given that backdrop, there are five key points that I hope you will take away from our results and todays call.
First we delivered eight 6% annualized loan growth in our seasonally slower fourth quarter driven by strength in both our community markets as well as our major metropolitan markets of Dallas, Houston and El Paso.
Second our major metropolitan markets experienced 13.9% annualized loan growth to $879 million, which now represents 32% of our total loan portfolio at year end as our new lenders continued to successfully grow their portfolios.
Third the credit quality of our portfolio remains stable through the fourth quarter and we believe we are well positioned for the uncertain economic outlook.
Fourth we have diligently managed our expenses to drive profitability as our mortgage banking revenues have declined and wage pressure has increased across the bank.
Lastly, we remain focused on returning capital to our shareholders.
During 2022 we repurchased four 8% of the company's shares of common stock that were outstanding as of December 31, 2021.
We also distributed 46 cents per share and quarterly cash dividends in 2022, representing a 53% increase as compared to 2021.
Turning to our results in more detail on slide four of our earnings presentation. We delivered net income of $12 $6 million or 71 cents per diluted common share for the fourth quarter of 2022.
This compares to net income of $15 $5 million or 86 cents per diluted common share in the third quarter of 2022, and $14.6 million or 79 cents per diluted common share in the year ago fourth quarter.
As we discussed on last quarter's earnings call. Our third quarter 2022 results benefited from 10 cents per share of legal settlements net of increased legal expense and a negative provision for loan loss net of tax.
As a result, our fourth quarter earnings per share experience their more typical seasonal decline like we have experienced in prior years.
We recorded a provision for loan losses of $248000 in the fourth quarter of 2022 as compared to a negative provision of $782000 in the third quarter of 2022 and no provision in the year ago fourth quarter.
The provision was mainly due to our loan growth in the fourth quarter.
Looking forward, we believe we are well reserved for an uncertain economic environment.
Our allowance for loan loss ratio is 30 basis points higher than our pre pandemic levels.
Our base case outlook is for the national economy to experience a mild recession in 2023 with the Texas economy is seeing a slowdown but avoiding recession given the continued strong in migration and low unemployment that we have been experiencing.
As a result provisions for loan losses might be necessary in future periods.
While we expect economic growth to slow in Texas as the Federal reserve continues to raise their target benchmark interest rate loan demand remained strong through our seasonally slower fourth quarter as we grew our loan portfolio eight 6% annualized from the third quarter of 2022.
Our loan growth was driven by gains in both our community markets as well as our major metropolitan markets.
For the full year 2022, we grew our loan portfolio was 12, 7% to $2 $75 billion.
Which exceeded our expected mid to high single digit loan growth.
This strong loan growth contributed to net interest income growth of 13, 7% to $138 5 million as compared to 2021, and which helped to offset the 47 and a half per cent decline in mortgage banking income that we experienced through 2022.
As a result, we were able to modestly grow diluted earnings per share to $3.23 in 2022 as compared to $3 17 per share in 2021, which is quite an achievement.
Overall, I am very proud of our accomplishments in 2022 as we've grown our lending team taken share across our markets and delivered results above our expectations that said our share price has not fully reflected this improvement as we believe our shares have continued to trade below intrinsic value as.
As a result, we utilized the remaining capacity on our share repurchase authorization to buyback 130000 shares during the fourth quarter.
For the full year 2022, we repurchased 860000 shares representing approximately 4.8% of our shares outstanding at December 31 2021.
Our board of directors is currently analyzing our prior buybacks and evaluating the merits of another share repurchase program.
We also understand that liquidity in our shares is important and we need to balance our liquidity with the benefits of our share repurchase programs.
Additionally, as was disclosed earlier this month, our board of directors adopted resolutions to terminate our employee stock ownership plan on December 32022.
This plan was created in 1994 and no longer serve its intended purpose.
Plan will be distributing the shares to the plans participants, which may improve our stock liquidity over time and will also reduce the expense required to maintain the plant.
We believe this will benefit the company our employees and our shareholders.
Returning a steady stream of capital to our shareholders through our share repurchases and quarterly dividends remains a priority for our management team.
Along those lines our board of directors authorized a 13 cents per share quarterly dividend as announced last week. This will be our 16th consecutive quarterly dividend to be paid on February 13, 2023 for shareholders of record on January 32023.
The full year 2022, we distributed 46 cents per share quarterly cash dividends, representing a 53% increase as compared to 2021.
To conclude we remain cautiously optimistic that the Texas economy can deliver moderate growth in 2023 and avoid a recession, but we do expect a mild recession in the national economy.
That said, we will remain vigilant and will not sacrifice credit quality for growth.
You have been underwriting the more conservative assumptions and remain confident in the credit quality of our portfolio.
Looking forward, we also believe that more challenging economic environments can lead to opportunities for those with strong balance sheets and sound loan portfolios, while we expect M&A to remain subdued through 2020 three we look to further expand the bank and remain in contact with potential sellers as we believe.
There could be a resurgence in 2024.
Now, let me turn the call over to Corey.
Thank you Howard and good afternoon, everyone. It's Curtis touched on loans held for investment increased during the fourth quarter of 2022.
Seven $7 million or eight 6% annualized compared to the.
The third quarter of 2022 as outlined on slide <unk>.
How long demand remain primarily in commercial real estate residential mortgage and consumer on overall loan demand remained strong despite the fourth quarter being a seasonally slower quarter for the bank principal payments in our hotel segment, which is not a growth sector for us.
Loan yield in the fourth quarter out of 2022 was 5.59%, which compares to $5 one 2% in the third quarter of 2022.
And our loan yields in the fourth quarter reflects our efforts to proactively price new loans to account for a higher market interest rate environment.
Our funding cost did accelerate in the fourth quarter as the federal reserve.
Breakfast interest rate increases and quantitative patent policy.
As we will discuss.
Managing our funding costs and deposit growth is a focus for our team in 2023.
We have discussed on prior calls we are a community retail bank and our smaller markets and primarily a commercial bank and our major metropolitan markets of Dallas, Houston, and El Paso as outlined on slide six our strategy has been to redeploy our excess liquidity consisting of lower cost deposits from our community oriented markets.
Two major metro markets to accomplish this we have added experienced commercial lenders, who share our culture and values and who.
Focus on developing long term customer relationships and the right way.
Our expansion and growing scale in our metropolitan markets is a key factor to the accelerating loan growth that we delivered in 2022.
With a market share game that are community bankers continue to deliver as outlined on slide seven we grew loans in our metropolitan markets by $29 $5 million in the fourth quarter of 2022.
Representing 13.9% annualized growth as compared to the third quarter of 2022.
Year to date, we've grown our loan portfolio by 19, 2% to $859 million in our major Metro markets, which has strongly contributed to the bank's 12.7% total loan growth for the full year of 2022.
As far as touched on we expect the national economy to experience a mild recession. During 2023 with Paas is seeing a slowdown but avoiding in a recession as our economy gotcha.
Higher market interest rates.
We are fortunate to operate in Texas, given the favorable environment for businesses.
<unk> strong in migration had solid demand for housing.
Currently demand for commercial real estate and residential properties remains healthy.
Writing with inventory constrained.
If market interest rates begin to stabilize at current levels. We believe this supports our low single digit loan growth outlook for 2023.
We will remain cautious with a focus on maintaining the credit profile of our own.
Loan portfolio, all while keeping tight control of our expenses.
Currently we have the ability to add space and bankers and our major metropolitan markets.
With opportunities present themselves.
As the economy continues to transition to a higher market interest rate environment, we were proactive playing it in writing to more conservative levels and asking for more money down on new loans as we focus on disciplined growth. Likewise, we continue underwriting to lower energy prices in the Permian basin to ensure we avoid potential problems economic downturn it hurts.
We were continually stress testing our loan portfolio remained pleased with the improving credit quality that we have experienced overall, we believe we are entering 2023 internet advantageous position and remain pleased with our asset quality and strong capital position, which will serve us well as both the Texas and national economies begin to pick back up in 2010.
Four.
Looking ahead to slide nine.
Indirect auto loan portfolio increased by $10 million to $296 million in the fourth quarter of 2022.
Compared to the third quarter of 2022, while there is a modest growth in this sector were maintaining a disciplined approach to underwriting is 78% of the indirect auto loan portfolio originated with a credit score of 690 or better.
Strong credit profile have positioned the portfolio for resilience across varying economic cycles.
Additionally, less than 3% of this portfolio is comprised of recreational vehicles and area, where we believe challenges kind of terrorism. The economy were to experience a more severe recession.
Turning to our mortgage business on slide 10 mortgage loan originations decreased 17, 7% to $125 million in the fourth quarter of 2022.
Compared to the third quarter of 2022, as a result of rising market interest rates combined with normal seasonality.
As we discussed last quarter, we have been aggressively managing this business for profitability as volumes declined while focusing on growing our commercial lending platform across both our community and Metro markets. We believe that we have reached an inflection point, where our growing loan portfolio will generate improving interest income.
Positioning the bank for growth.
Our mortgage business is now at a level, which will likely no longer have any material impact on our results positive or negative.
Looking forward, we will remain in the mortgage business as long as it's profitable and drive incremental business through cross selling.
Turning to slide 11, we generated $12 $7 million of noninterest income in the fourth quarter of 2022.
Third to $29 million in the third quarter of 2022.
This decrease was primarily due to the seasonal decline of $2 million in income from insurance activities and a decline of $3 $5 million in mortgage banking revenues. Additionally.
Third quarter noninterest income benefited from $2 $1 million in legal settlements, which skews the comparison.
For the fourth quarter of 2022, noninterest income was 26% of the bank's revenues as compared to 37% in the third quarter of 2022.
Looking to the year ahead, we have several strategic priorities in 2023, including first continue to selectively add experienced lenders with a focus on our major market given the significant opportunity for commercial loan growth as well as other services.
[laughter] work to enhance and expand our deposit gathering capabilities with a focus on adding treasury and wealth management professionals.
Third continuing to pursue opportunities in the Permian basin to drive loan and deposit growth as well as fee income.
We are proud of our customer service in the state of our technology given the investments we have made over the years and 2023, we will largely complete our migration to the play out while also enhancing our cyber security as we focus on having industry, leading technology and tools and lastly, continuing to tightly manage expenses.
We strive to maintain the bank's profitability and inherent inflationary environment.
To conclude I am very proud of our results. This past year as we have successfully executed our organic loan growth strategy, which has delivered strong net interest income growth and offset the decline in our mortgage banking business, which positions the bank for continued growth.
I would now like to turn the call over to Steve. Thank you Cory starting on slide 13, net interest income was $36 $3 million for the fourth quarter 2022, as compared to $35 $1 million for the third quarter 2022.
The increase was primarily a result of it of an additional $74 $4 million in average loans outstanding.
Combined with higher interest income received on other interest earning assets in our portfolio as a result of the continued rising interest rate environment.
We also benefited from $900000 in our purchase low recovery in Q4 looking.
Looking forward, we continue to believe we are positioned for our net interest income to benefit as we grow our loan portfolio and benefit from the anticipated rise in interest rates through the first quarter of 2023.
Our net interest margin calculated on a tax equivalent basis was 388% in the fourth quarter of 2022 as compared to 370% in the third quarter of 2022.
This improvement in our net interest margin was driven by our organic loan growth combined with a corresponding increase in loan yields due to the rising interest rate environment, which outpaced increases in our funding cost.
Our average cost of deposits was 97 basis points in the fourth quarter of 2022, an increase from 52 basis points in the third quarter of 2022.
We discussed on last quarter's call.
Competition for deposits started to increase through the third quarter and we made the decision to proactively raise our deposit interest rates to maintain relationships.
Through the fourth quarter, we have seen a further increase in the competitive landscape, which has necessitated a more aggressive we're supposed to keep our deposits in house.
As Cory discussed this is a focus of the bank in 2023, as we strive to manage our cost of funds as well as grow the bank's deposits and a more competitive environment.
Turning to slide 14, total deposits decreased $54 $1 million in the fourth quarter to $3 four $1 billion as compared to the third quarter of 2022.
Majority of the decline was due to the elevated competitive environment, though we also experienced outflows due to mortgage escrow relationships, which declined approximately $32 million and which we expect to build back through the year.
Posit base during the quarter reflected the impacts from a shift in the competitive landscape as noninterest bearing deposits decreased to 33, 8% of total deposits in the fourth quarter of 2022 as compared to 36, 5% of total deposits in the third quarter of 2022, turning to slide 15.
We continue to believe that our loan portfolio remains appropriately reserved.
<unk> to total loans was 143% at December 31, 2022, as compared to 1.47%.
At September 32022.
As Curtis touched on we recorded a provision for loan losses of $248000 in the fourth quarter, which compares to a negative provision for loan losses of $782000 in the third quarter of 2022.
Overall, we continue to experience stable credit metrics in our loan portfolio led by continued improvement in the hotel segment, which had a net reduction in principal outstanding of $16 $8 million in the fourth quarter.
This can be seen in our nonperforming assets to total assets ratio, which was unchanged at 20 basis points in the fourth quarter of 2022 for the third quarter of 2022.
Importantly, we believe we are well reserved for the uncertain rising rate economic environment, given that our allowance for loan losses ratio was 30 basis points higher than pre pandemic levels.
Nevertheless, future economic conditions remain uncertain due to the rising rate environment and persistent inflation levels.
Packaging customers and businesses in the United States, which may make additional provisions for loan losses necessary in future periods.
Skipping ahead to slide 17, our noninterest expense was $32 $7 million in the fourth quarter of 2022 as compared to $37 $4 million in the third quarter of 2022.
The decrease was primarily due to a decline of $4 $2 million in personnel expense and a decline of $587000 in legal expenses.
The significant decrease in personnel expense during the fourth quarter of 2022 was largely the result of a decline of $1 $8 million in insurance commissions and a decrease of $1.2 million in mortgage commission and related personnel costs as compared with the third quarter of 2022 as a result of the decline in <unk>.
Insurance and mortgage revenues.
Importantly, we have carefully managed our personnel expense through driving efficiencies.
Not replacing some of our personnel, who have retired and managing mortgage overhead lower which taken together has allowed us to manage wage inflation across the bank through 2022.
Looking to the first quarter of 2023 and the year ahead, we expect noninterest expense to be flat.
Lastly, rise from the fourth quarter's level as wage pressure and cost inflation continue.
That said, we believe we can continue to find offsets to manage inflation. While also remaining competitive in the market as we work to keep our employees as well as attract talented individuals from across the industry.
Moving ahead to slide 19, we remain well capitalized with tangible common equity to tangible assets of 850 per se that at the end of the fourth quarter of 2022, an increase from 8% at the end of the third quarter of 2022.
The increase was driven by an $8 $4 million increase in the fair value of our available for sale securities and related fair value hedges net of tax and net income after dividends paid of $10 $6 million.
The increase in fair value of our Securities was a result of the reduced volatility in the markets as valuations stabilized and increased in the fourth quarter.
Tangible book value per share increased by 96 cents to $19.57 per share during the fourth quarter of 2022.
Now I'll turn the call back to Curtis for concluding remarks.
Thank you Steve to conclude I'm very proud of our results. This year as we successfully expanded our lending platform in our major metropolitan markets, while our bankers in West, Texas continued to take advantage of the bank ownership changes in our local community markets. This.
This lab to better than expected loan growth and a sizable increase to our net interest income, which effectively offset the decline in our mortgage banking revenues.
As I look to the year ahead, we believe that we're in excellent position.
We believe our markets will slow but remain resilient in the face of what will likely be a national recession positioning our team to deliver moderate loan growth. Additionally, we will maintain our expense discipline and our conservative underwriting standards and risk management as we strive to deliver on our long term goal of achieving <unk>.
Appear your returns for our shareholders I would like to thank our employees for their hard work and commitment to our customers and our communities over the last year.
You again for your time today operator, please open the line for any questions.
Okay.
And at this time, we'll be conducting a question and answer.
Session, if you'd like to ask a question. Please press star one on your telephone keypad confirmation tone will indicate your line is just a question you May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing need states.
And one moment, please while we poll for questions.
And our first question comes from the line of Brad Millsaps with Piper Sandler. Please proceed with your question.
Hey, good afternoon.
And Brad Brad Brad.
I appreciate you guys taking my questions.
Maybe I'll start with the expenses I appreciate the color around kind of what you think is going to happen in the first quarter, obviously, some great expense control in the fourth quarter, but.
As you think about the entire year I think maybe last quarter, you said, maybe flat to down slightly is that.
It's still possible from where you sit today given given how great. The fourth quarter was just kind of curious how to think about the full year.
Yeah.
Yeah, I mean, we will definitely have some some some fluctuations I mean.
Again insurance and mortgage that those those do have a little bit of cycles. So it will be will be down.
Q Q1.
Maybe a little bit lower and then some of that will will increase over.
Q2, Q3, and then come back down.
We do we.
We do still feel good about the overall.
Projection you know.
Yeah that.
That will be able to keep it keep expenses are fairly fairly in that flat to slightly increase.
<unk>.
So Brad this is Brad this is Cory I'll, just add color to that I mean, obviously, we've got expense saves on the mortgage side, but here's the thing that I'm really proud of we have expense sites outside the mortgage and if you look at everything people are facing on mortgage I mean on a salary expense and everything else, we were able to really.
Handle those and keep it pretty flat.
And find a way to take care of our team through some other savings.
Yeah no great. It was it was really impressive work this year.
Maybe just shifting gears a bit to the net interest margin EBITDA.
Steve It sounds like you know you saw additional pressure or you know.
Late in the quarter and.
In year to date on deposits do you think you know kind of with everything you have going into the NIM may have likely peaked and it probably.
Starts to contract from here, just kind of curious kind of what your thoughts are.
You know sort of around a NIM trajectory.
As you move through 'twenty three.
Yeah, No. That's a that's a great question I mean, we've we've looked at it a lot of different ways, we really think.
I think we're.
I won't say, it's peaked but it's probably a pretty pretty close to that I mean, we're a wood.
I would say we would continue to see increase on the on the interest cost but.
But we should see increases are still on the income side. So.
Again, it would be we'd be hopeful we would see NIM a while.
While it's not going to.
May not grow like we did in in Q4.
Either.
Maybe you know strive to keep it flat, maybe maybe slightly grow but it's you know it's going to be right around we believe it'll be right around that that area I mean.
I guess you could see.
A slight downward, but I mean, we we don't think at this point that it's a that is going to contract.
And then just to follow up on that can you remind me is there a certain percentage of your taxable securities portfolio. That's that's floating or variable the yield there has improved really nicely for several quarters in a row and just kind of wanted to get a handle on you know kind of what kind of the key drivers are there.
Yeah, so on the tactical side.
And I think it's around <unk>.
$80 million or so that's a that's an that's in some Cmos that do reprice every month.
So those those those have helped that yield.
Honestly it didn't look very good at the beginning of the year, but as the rates have gone up that those does do reprice. So that's that's what's helping us out there.
Okay, I guess I'd only be about a little over 10, 15% of it or something because the rest of it is just kind of regular repricing I guess.
Yes, yes.
Okay. Okay, great. Thank you very much I'll hop back in the queue.
Thanks, Brad Brad Brad.
And our next question comes from the line of Brady Gailey with <unk>. Please proceed with your question.
Hey, Thanks, good afternoon guys.
Yes, good afternoon.
I want to make sure I heard something correctly, Steve I think you mentioned a $900000 benefit.
I'm a purchase loan recovery that did that happen.
In the fourth quarter and did that flow through spread income and the margin.
Yes, it did and that was I think it was.
About eight or eight or nine basis points.
The.
That had an improved NIM.
Okay.
That could be a modest at least from a percentage when do you that could be a modest headwind in the <unk> on the margin.
Yes.
Okay.
Alright, and then so I mean, you guys were pretty active in the buyback.
2022.
Understand you want to increase the liquidity of the stock on a cancel on the Aesop well helped.
To help with that but do you think you will be asked.
As you said the stock is still an expensive. So do you think you will be active with the buyback potentially in 2023.
This Curtis.
We're really looking at it we're in a.
Good position, we've got plenty of cash available at the holding company level, but our board is going to really analyze things over probably the next month or two.
And make a decision on that whether we do get back in and if so really kind of what level, we want to go after it.
I think theres still some value to be had right there, but it's going to be a board decision on that as we look at everything we've got several moving parts kind of happening right now and as we look at all of those.
We just didn't feel like it's a good time to make a decision right here in January .
And then do I remember correctly, the seesaw who's now in play for you guys beginning in 2023.
Oh, yeah, yeah. So yeah, we adopted in January .
Steve can give you more color on that if he can give you a whole lot of color on that if he was not a whole lot of it.
Yes.
41%.
Yeah, Mike maybe just a.
Thought on you do you think it will have a material impact on the reserve.
You know just given adoption.
Yeah. So.
At this point and as Curtis said, we we are adopting and we're still finishing up some validation in and a few other things before we will have to disclose that number either in the in the 10-K, but as of now no there's not a material.
Impact to what to where we are.
In our in our current model I think a lot of that goes back if you look how conservative we've been at this point I think it's been.
Our numbers are pretty high anyway.
Okay.
And then finally for me I know historically, you guys had guided to mid to high single digit loan growth I I think I heard you say, but what what's the expectation for for 'twenty, two 'twenty three loan growth.
Well I'd like to still think we can achieve high single, but I'm I'm a little cautious in this environment.
Of course, we can't keep working with a bigger number there as well so that affects it but I.
I think if we can hit here, it's going to be doing.
Good and.
We don't have some pay offs.
And a lot of projects are kind of on pause, but we are still seeing some some customers coming in place some new customers coming that are interested there so where we're getting to look at some really great deals.
I think we can still achieve some growth during 2023, but I do think it'll probably be more in the low to mid single digit range.
Just might look like.
Yeah, I agree with George I think low singles not not unrealistic for us I mean.
You can't base. It all on January but January has been a good month, but if you look at what that's on the projections for the economy. We think Texas is a great place to be we're really glad that's where we are but reasonably it's certainly one of the single digits.
Uh huh.
Alright, great. Thanks for the color guys.
Thanks, Prady Thanks Brady.
And we have reached the end of the session and I'll now turn the call back over to Mr. Cory Smith for closing remarks.
Thank you operator.
As you heard we've had a good quarter, we've had a good year very proud of what we did achieve in 2022. This economic outlook is very uncertain and we don't expect significant credit problems in our markets.
And we are dealing with many of the same funding and deposit cost issues as most other banks, we're going to handle that just as we do our other issues and that's through strong relationships, we will be incentivizing our people to have good growth in deposits and we're going to focus on controlling expenses, while achieving we believe good race.
Organic growth in both deposits and loans, we have an incredible team, we're confident that they will keep delivering excellent results for our customers and for our shareholders and thank all of you for being on the call today and please reach out to US if you have any questions.
Okay.
And ladies and gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Okay.
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