Q1 2023 ServisFirst Bancshares Inc Earnings Call
Greetings and welcome to the service first Bancshares first quarter earnings call.
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A question and answer session will follow the formal presentation.
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As a reminder, this conference call is being recorded.
I would now like to turn the conference on what's your host Davis Mange director of Investor Relations.
Good afternoon, and welcome to our first quarter earnings call.
Tom Broughton, our CEO Rodney rushing our Chief operating Officer, Henry Abbott, our Chief Credit Officer, and Bud Foshee, our CFO covering some highlights from the quarter and then we'll take your questions I'll now cover our forward looking statements disclosure.
Some of the discussion in today's earnings call May include forward looking statements actual results may differ from any projections shared today due to factors described in our most recent 10-K and 10-Q filings forward looking statements speak only as of the date. They are made and service first assumes no duty to update them with that I'll turn the call over to Tom.
Thank you Davis and good afternoon to everybody. Thank you for joining us on the call of the year is off to a great start with the first quarter's who will review for you.
Over the next few minutes and we have various reports for our various management people.
We've always done well in times of stress in the banking industry, we did after the recession.
The recession and we certainly did during the pandemic to bankers.
<unk> experienced significant growth during those periods of time, and we do expect significant opportunities.
Again during this time, a little bit of dislocation in the industry.
So you're asking why don't we do well during times like this one thing there are several reasons.
Firstly as our business model hasn't changed in over 18 years. Since we opened 18 years ago, we are well capitalized we're financially stable and we retained 75% of our net income.
To fund our growth and increase in capital.
We do have an industry, leading efficiency ratio, we're highly profitable.
We have very strong credit quality and risk I'll talk about this in more detail in a few minutes.
We don't have any broker deposits for federal home loan bank advances like many of our competitors.
So in summary, our bank is built for times like this it will.
Demonstrate that to you during the course of the call. This afternoon.
I was going to talk a few minutes about our most recent expansions in our community banking offices, which are in.
Our newest ones, we're in Asheville, North Carolina, and Panama City in Tallahassee, Florida, all are doing quite well theyre off to a great start. We're also in the process of opening a new office in the like normal area.
The paid model in North Carolina, which would be another community bank in office and we are very pleased with that.
These are off too we're building up the right way with core customers with our bankers have had a relationship with for many years.
Ron is going to talk in a few minutes about our new corresponding office in Houston.
We opened last month.
That's certainly a plus.
It became apparent to us in mid 2022 that the fed tightening cycle.
Two a focus on deposit rather than the lending side of the buying.
We do anticipate some economic slowdown based on recent events.
And Rodney Russia is going to give a quick review of our deposit franchise Rodney.
Thank you Tom.
You noted how we have had virtually no dependence on broker.
Our wholesale deposits to fundings and I wanted to provide some understanding and details.
Our deposit metrics and our bank's deposit base.
Yeah.
From our beginnings our model has always been to bank relationships and <unk>.
Not just transactions.
Excluding correspondent banks, 25% of our deposits have a credit relationship to service first.
There are no industry concentrations outside with private households, and corresponded banks.
For example, commercial banking makes up four 7% of our deposit base law firms were 3% and real estate firms were 2% and it goes down from layer <unk>.
As you can see we are very granular with no concentrations.
When it comes to correspondent banking.
We have 340 plus correspondent relationships in 28 states and just over 100 poorly or settlement.
Yeah.
Some banks are downstream.
Downstream correspondent banks, whose daily cash lenders are cleared with us.
Or they are federal reserve accounts. These are settled through us.
Looking much like a corporate cash management accounts.
As rates have risen you will see a shift from a compensating DDA balances, which are noninterest bearing into interest bearing.
But because we pay for settlement expenses with the DDA earnings.
There is no effect on profitability.
Cost of the settlement relationship we keep the fund needs by sweeping into interest bearing.
Accounts, making nice deposit space sticky.
In fact, 65% of total correspondent fundings are with these settlement customers.
This past month proved how stable these deposits and relationships are.
As Tom mentioned, we opened our Texas correspond in office with the addition of non Dickerson.
John and I worked together previously.
And with over 40 years of experience in Texas banking done was the perfect choice to expand the Texas market with a large number of relationships developed over the last 40 years. We are looking forward to the growth that this market will provide.
Growth, we should realize in the near future.
I just wanted to highlight some of the details more details are in the slide deck that we provided about our stable conservative deposit base, and we have and where we have plans to grow.
With that I'll turn it over to our Chief Credit Officer Henry at.
Thank you Robyn.
They've got off to a strong start in 2023 with continued strong credit quality I am pleased to say, we ended 2022 with NPA to total assets of 12 basis points.
And we're able to maintain that in the first quarter.
With no major changes in NPA, they continue to be near historic lows.
Realized charge offs were five basis points well below the same period prior year of 11 basis points six basis points for the fourth quarter of 2022.
At the end of the quarter, our Asia will help to total loans was 128 versus $1 two five at the end of 2022.
This is not associated with any one loan rather conservative steps the bank took in the first quarter.
We'll go through each of the bullet points, but you should have access to some additional information in the slide deck that our CRE portfolio and I can go over any questions you have during the Q&A session.
In highlights AT&T as a percent of total risk based capital dropped from 100% at year end to 93% at the end of the first quarter.
It'll income producing commercial real estate also drop for the quarter and is now 317% of risk based capital.
The majority of our commercial real estate projects or in the Sunbelt as we've only had a handful of projects, where we followed our customers outside of the southeast.
Office space makes up roughly three 5% of our total loan portfolio.
The average loan size within our income producing office bucket is $1 $5 million.
They're typically in suburban locations and are more traditional one or two storey office walk ups.
We had very minimal CBD office exposure.
Comparable to our office exposure of the bank has never been a big single family residential development lender and a raw land and lot of exposure is minimal.
We have stress and continue to look closely at our CRE portfolio to ensure we are appropriately managing the risk.
We continue to be best in class within our peer group with our past due management.
In the first quarter service <unk> switched to a new residential mortgage loan servicing company.
Because of client issues with our prior vendor.
We did see an increase in past due loans for the quarter, but they are still near historic lows and a major component of the increase in past dues was related to operational changes.
Cause delays within our residential mortgage portfolio.
The majority of mortgage loans that were showing this past due has now been caught up.
A lot of the issues were related to getting <unk> set up correctly and we're in half properly make payments with this change in servicing companies.
Switching gears towards pricing of new loans that were originated in the first quarter more than 80% were variable rate loans, we continue to push to increase the yield on both new and existing loans. We have also begun various repricing effort on existing loans prior to their maturity.
Those efforts, we were able to reprice, roughly a $130 million in existing debt by an average of one 4% in the first quarter.
We also had over $70 million in fixed rate debt pay down early in the first quarter.
These two items combined for roughly $200 million in positive movement within our fixed rate loan portfolio.
In summary, very pleased with the results from the first quarter, the remainder of desert foot associates.
Thank you Andrew good afternoon.
Earnings we kicked off 2023 with strong earnings in the first quarter as we continue to build capital and liquidity.
A loaded earnings per share increased 7% compared to the first quarter of 2022, when adjusting for income on triple paid loans, our investment portfolio. The portfolio is a small component of our balance sheet, 11% of total assets.
Portfolio is managed for liquidity.
The components of the portfolio or 45% pass through mortgage backed securities, 30% U S Treasury and agency.
1% municipal.
24% Bank and bank holding company sub debt.
We have never purchased a CMO.
The average life of the total portfolio is four two years.
Average life of our peer group is seven two years and that peer group is 33 banks with total assets greater than $10 billion.
The average life of our Treasury portfolio is 2.8 years and an average life of the bank and bank holding company sub debt.
Is 2.4 years and an average life of the bike and by Coby can be sub debt is based on the call date.
We have the expertise to analyze bank and bank holding company said that.
Liquidity excess funds were $732 million March of 2023, our goal is to increase sales to a $1 billion range total.
Total balance sheet liquidity in March 2023 was $1 5 billion and total available liquidity was $8 4 billion.
Margin average loan growth was 166 million for the first quarter.
Triple pay fees and interest income were 29000 in the first quarter of 2023 versus $4 9 million in first quarter of 2022.
NIM compression as a result of record rate increases.
Fed funds have increased by 475 basis points since December of 2021, we had four consecutive 75 basis point increases during the period from December 21 to March of 2023.
Second largest fed rate increase over a one year timeframe was from February 1994 to February 1995, and that increase was 300 basis points only 175 basis point increase occurred during that cycle.
We see deposit rates stabilizing and NIM improving.
As loans are repriced the average rate for new loans in the first quarter was 771%.
Having a short maturity loan portfolio will improve the margin overall.
Over time.
Our noninterest income credit card income continues to be impacted by our conversion in September of 2022.
Mortgage fee income has been impacted by decreased volume and rate increases we expect improvement in both areas over the course of 2023.
Noninterest expenses.
As a result of our market expansions.
Total salaries and benefits increased by 765000.
Investment write down related to tax credits was $2.7 million in 2023 versus $2 5 million in 2022.
Tax credits were $3 9 million in the first quarter of 2023.
Versus $3.3 million in the first quarter of 2022.
Capital Tier one leverage ratio was 9.91% at March of 'twenty three versus 779%.
December 2021.
The ratio was 911%.
After adjusting for the net unrealized losses.
Both are available for sale.
Held to maturity securities.
That concludes my remarks, I will turn the program back to shop.
Thank you Budd.
Murray.
So again a record deposit pipeline.
<unk>.
Slide deck that we filed this afternoon should give you a lot more information about the bank and we think it's all very positive.
One thing we are.
Excited about we opened 23% more accounts in the first quarter than we did in the first quarter of last year. So we're very free place of improvement there.
We think we're close to the other side of this.
Fed tightening cycle, we're certainly going to be vigilant on credit quality. It because we do expect a slowdown and we will certainly be watching to make sure. We're doing everything correctly to manage our loan portfolio and manage our assets properly. So we are in summary, we do like where we are today.
Our simple business model is paying dividends and we will be happy to answer any questions you might have.
Ladies and gentlemen.
I'll now be conducting a question and answer session.
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Please pull for questions.
And our first question comes from the line of Brad Millsaps Piper Sandler. Please proceed.
Yes.
Hey, good afternoon.
No Brian .
Tom maybe wanted to start on loan growth.
I think this is the first quarter, maybe outside of the pandemic, where you didn't you didn't grow loans, just kind of curious last quarter, you talked about high single digit loan growth and double digit deposit growth.
I know a lot has changed just kind of curious how you would sort of think about those numbers as we sit here today.
Oh, we think.
There, we had a fair number of payoffs.
But some of them are unexpected Brad, but a lot of them are very pleasant surprises because they were low fixed rates that paid off during the quarter. So that was a win win.
For us and our customers. So we had a.
So Tyler for you, but it's pretty substantial amount of pay offs.
And we started to try and slow the loan train down the middle of 2022, when we realize the fed tightened and what's going to give the industry issues.
<unk>.
Treasuries are leading the way on rates going up and they were going up in lockstep with.
Fed rate increases it was a concern to us and we started slowing it down a bit and.
The result has showed up in this.
Finally in this first quarter. So we feel like we will start growing loans again, probably in the back half of the year you will see some increase.
Increased loan growth.
Brad but.
Sort of par.
Part of it was unexpected with loan paydowns on fixed rate loans again or not.
Not an unpleasant surprise, a very pleasant surprise.
Part of it was because we started slower things down the middle of last summer so.
Longer answer than you wanted probably Brad.
Yes, I know construction has been a big area of growth for you guys. Obviously those tend to be some.
Some of the higher yielding assets as well.
Would you expect to see a kind of similar decline I mean, obviously you want those launched yet.
Those projects finish up and move off your books, but.
Would that sort of downward trajectory kind of continue in your mind and you pick up growth in other areas.
We have a pretty good you know a fairly robust pipeline of construction.
Loans, so they are falling.
A positive increase in construction loans on a monthly basis of around.
$20 million.
A month I think Henry is the last number we computed that'd be correctly, correct I think more than that I think.
Maybe closer to $70 million, a month, maybe $200 million a quarter and new.
New funded construction loan, but net of payoffs is about $20 million a month or so so yes.
Yeah, it's still there's still positive there and we like those projects, Brian we're not concerned about any of those.
Projects in any way, but I'll stop there to see what your other questions are.
No. That's helpful. Maybe just kind of switching gears, a second to but I think I heard your comments that you expect the.
NIM to improve from here as loans reprice.
Are you expecting improvement.
As soon as the second quarter. It just seems like that could be a challenge.
If the fed's continuing to move rates up you guys are sitting right around 100% loan deposit ratio.
I wanted to kind of square that with your comments around building that liquidity book back up to $1 billion, just trying to understand all the moving parts on how you had on how you get there and kind of how you think about the NIM.
Sure Yes.
And it looks like it's going to increase rates that may meeting that significantly impacted from the second quarter.
So if that happens I think it would it might take into the third quarter, where you start seeing some gradual improvement where it is.
You just got you've got about nine.
And either.
Total floating rate deposits and fed funds purchased.
Assets.
Between loans and fed funds, you're looking at about $5 billion. So.
That keeps.
Keeps increasing.
It's going to hurt for awhile.
You'll have you'll have some compression put it that way.
Yes.
To start for what can really say is going to move forward.
Right right and then maybe final question to me it looked like your first quarter expenses were up.
About 10% year over year I know, there's a few adjustments in there.
Is that kind of how we should think about growth.
Growth rate in 'twenty three or.
I know your incentives are tied to typically loan growth I know more so deposit growth. This year, but just kind of wanted to think about kind of how to think about expense growth. It did look like professional fees were maybe a little heavier this quarter anything to back out of there.
That you think it's worth noting.
Let me think on professional.
I don't remember anything unusual let me.
I'll look at it and email you after the call.
Everybody then I'll go back and look at it I don't have anything highlighted but let me go back and look at there.
And you just said it would.
Our comparative quarter.
Both.
But then I was just looking at the total expenses in totality up about 10%.
It's down because we had a.
Artur added that we ran through over commitments, but I'll I'll look at everything just to make sure there's nothing.
We're looking at <unk> 23 versus <unk> 22 up about 10% year over year that is that kind of growth rate do you kind of think about as you think about 'twenty three versus 22.
Uh huh.
I wish I had more data in front of me because I know in past market expansion in different markets. Let me, let me look at it now I've sent something out on that just to make sure I give you a good answer.
Okay. Okay. Thanks ill hop back in queue.
Our next question comes from the line of Kevin Fitzsimmons with D. A Davidson. Please proceed.
Hey, good afternoon guys.
Excellent.
I appreciate the.
The detail on the correspondent.
Deposits and maybe.
I wanted to ask just maybe a very top level sort of way like it's obviously a good business to be in you guys wouldnt be in it if it was.
But what with what is going on right now in terms of.
The pressure on deposits and the mix shift within deposits that's going on is a correspondent network.
Helping you in the near term or is it really exacerbate this pressure and make it make it.
More challenging for you just in that.
Sure.
Our client banks are.
Probably dealing with the same thing and maybe.
Therefore, you guys reflect some of that on your balance sheet just trying to.
So you can either deposit deposit beta Kevin or for what respect interest rate sensitivity I mean, what what do you mean.
I guess just the.
Pressure on.
Mix shift that's going on.
Mainly on that mix shift and the pressure to.
To grow deposits in general I guess.
Well this is rodney rushing.
Let me answer it this way and you can see if I've answered your question.
It has been business as usual on the deposit side, we what I tried to explain in my comments was.
We are in the correspondent banking business with the relationship and we find.
Clearing the settlement relationship.
What is beneficial to us in the downstream Bank, We act as an intermediary between the small community bank and to say it and.
And because of that we get their settlement account and Dan.
And they keep compensating balance player suites in the fed funds.
And that makes those relationships very sticky.
Out of <unk>.
340 plus relationships.
This past month, we may have had less than 10.
<unk> moved any material amount of money.
From us.
It was just a small amount.
So those those relationships are very sticky.
We have looked at.
The best place to grow that.
In Alabama, Georgia, Tennessee.
We have.
Probably all the vast majority of the correspondent relationships, we're going to get.
In Alabama, we have 90, something financing we had 60 plus.
A corresponding camps and stay out of Ireland that same ratio was true in Georgia, Tennessee. So that's why we look to grow in Texas, Texas was a big correspondent market for me when I was at Compass.
And.
And we expect withdrawn dickerson is going to be.
An area of growth for the correspondent Division.
Through the rest of this year and next year.
As Rodney said on the call is money shift from noninterest bearing DDA.
The interest bearing deposits or the fed funds purchased there's there's no effect on profitability of the buying whatsoever.
There's no deterioration in our profitability so.
If it moves it's right start falling it moves back to the Dodge Van DDA accounts, it will not improve our profitability it'll be the same.
It was just for show more money in Ashburn DDA, that's right and the simple fact that we pay they are fed deals with the DDA area.
So youll see a corresponding expenses go up.
When we bring on more.
Settlement accounts.
In rising rates, if they have to keep less money with us.
Then.
That money as Tom said shifts into interest bearing accounts, but it doesn't affect profitability.
What the settlement relationship does for US is it makes it a.
True.
The shift between us and the downstream, but instead of instead of a relationship.
It is a transaction where we're just buying.
Equation.
And not to I'm no I'm not actually your question, Kevin but right it won't you.
Mentioned that during the time that couple of wastewater there's little stress in the industry.
When a car so I just wanted to test wanted to borrow money some of our competitors didn't take care of we had a number of banks that call them on the test and learn with us and they did.
Jordan is here in the room with us as managers our correspondent operation.
And.
And during the half we learned that they tried to.
Test their lines are drawn there other upstream loans from other correspondents and they were not able to do so.
And that's talent.
Yes, I guess, one follow up on that I was going to ask was just this whats going on in the environment.
<unk>.
Our focus on deposits and particularly on.
Uninsured deposits.
Does it make it better.
Better not better, but I guess you said.
Is it an easier service to sell.
<unk> like to for them too.
Have you has your correspondent network as a resource.
I don't know if it's easier.
To my knowledge, a bank is not lost money to another bank in fed funds. So in that counterparty relationship where one bank is selling another bank overnight funds.
I don't know maybe somebody could correct me, but I don't know of a case, where a bank has lost money.
Now.
With that there is prudency and the only deposits we lost over that couple of weeks, where some downstream community bank too.
We were their primary course fun it may be a small $200 million money.
What about Alabama is $20 million in capital and they look up and they've got $15 million sold to us.
I call. This is Rodney.
No.
We looked at our amount of funds were selling you were going to move some of that to say it so I'm going to leave with you in the 7% to say it sure go ahead and that happened less than 10 or 12 times in that two week period that was the only stress we saw on that deposit base.
Business as usual and I don't know.
It's all about.
The relationships and Thats, what <unk> done in Texas.
So important to us.
I hope that answers your question, yes, no that's great. Thank you. Thanks Robyn.
And one just I guess a follow on to Brad's question, So trying to bridge.
The comment about things stabilizing and getting better, but then is it I guess I guess the way I would want to ask whether the fed moves or not when we look at the linked quarter.
Decline in the margin.
More importantly decline in dollars of NII is it.
Fair to say you.
You know, maybe we're not Bob because there could be some incremental pressure, but the size of the.
The pressure linked quarter is not going to be.
This is probably the high point is that fair to say.
We think we're close.
So it will bottom and.
You know with our short, allowing the securities portfolio work on our margin will start moving up.
It'll take a couple a couple or three quarters, but we'll start seeing some pretty good improvement.
Once the fed achieves our take rate I don't but I don't know if you can answer it.
Anything to that no I think that's true yeah. We're just.
It's kind of what you're saying on the fed side.
Okay.
One last housekeeping keeping thing more for me I noticed.
The restructuring and the <unk> sections seem like it was blanked out for the first quarter 'twenty three is that due to that.
Is that just.
An omission or was that due to that change in servicer.
You referenced I was just just was confused about that.
Yeah that was that was due to an accounting change and that is something that we no longer yeah.
After a fourth that there were no material changes within the category that was just something we would do.
We don't have to report any more under your guidance.
Okay. Okay, alright, thanks, very much guys.
Thank you.
Our next question comes from the line of Steve Moss with Raymond James. Please proceed.
Good afternoon.
Great.
Yes.
Maybe just following up on the margin here curious to see.
Where our loans pricing these days and any color you can give on that front as we think about the repricing aspect of your of your loan portfolio going forward here.
Okay, but in terms of what the price was in the first quarter.
For the first quarter, new loan production was at 771.
80% floating okay.
Yeah, we were at <unk> 70.
78% variable rate in the first quarter.
That's definitely improving we're definitely putting a more variable rate loans.
It's just a slow okay. Yeah, I mean that is that's going to take awhile to improve margin.
Just.
You know what surprised me is how quickly we're seeing.
Payoffs and pay downs on floating rate loans, I mean, Henri mentioned above $200 million in the fourth quarter already.
In the second quarter.
And what's already.
Close this quarter and in processes like $85 million and fixed rate loans, either paying off or paying down.
So it's moving much more quickly.
You don't notice it when rates are flat you certainly noticed that when rates are have gone up as much as they have we say the.
Potential improvement in margin that really is very hard for you to quantify in your model.
But of.
Of course.
The natural cash flow off they tried loans as substantial as well.
Over a billion dollars a year natural play now.
Right.
That's helpful.
And then in terms of just.
On the deposit side, just curious on your interest bearing deposits if by any chance to give us a spot rate at quarter end.
Just kind of get a feel for where things shook out.
Yeah, let's see.
The cost of total deposits at the end of the quarter was $2 31.
Interest bearing DDA was 3312 and total interest bearing deposits three point awake.
Did all that great.
Got all that and then in terms of just.
Okay.
Just going back to just thinking about.
Credit overall still remains pristine kind of just any updated thoughts instead.
How youre thinking about the reserve ratio in.
Credit costs going forward here.
You know that.
We keep as much in the reserve as we can keep in reserve.
Catalyst will let us keep safe.
No.
And that's the one point to 8% is the most we've ever had in our reserve going going into the Oh.
Oh, I don't not in recession, we had 105% or so in the loan loss reserve. So we're you know.
We feel like we're in much better shape for loan loss.
Reserve today than we were.
At that time, so sexual obviously helps a little bit but you know we feel good about where we are.
And we feel really good when we file that day that you probably hadn't had time to look at but you know what.
Details of our office building exposure.
A D C exposure.
Remember when pandemic, yet everybody's worried of death about bikes, the industry's retail exposure and how much brito the bikes were going to lose all retail and.
You know that turned into a non event I mean, yes, some bikes lost some money on.
Big malls, but you know what at R&M.
Just sort of got handle so I think it will stop to we don't have any of that exposure, but I think it's just a you know.
Some of that's just CNBC headlines I like to put out.
Oh different loan exposures out there, but I just I don't know what bikes are have a lot of office building exposure.
But maybe there are some at all.
Right I appreciate that color.
That's pretty much everything for me so thanks for all the color here today.
I can say thank you.
Yes.
Our next question comes from the line of David Bishop with D.
Please proceed.
Yes, good evening gentlemen.
Okay.
Hey, a quick question most of my questions have been answered, but I think in the preamble I think it was maybe Rodney or Bud you mentioned that you've been able to be opportunistic in.
And may be repricing of refinancing certain I think it was variable rate loans.
Was that done with a view of getting ahead of potential cash flow pressures.
On these loans repricing or just curious what the impetus was for some of the repricing there maybe the the nature of the loans repriced and was that sort of a credit driven decision.
No. These were those are all fixed rate loans and you know we're talking about an average rate of.
Henry would it be.
4% something like that yeah, you know so.
Those are the loans.
Yeah, it's just surprising to us how often somebody you'll need something to redo up and it's not necessarily a credit issuer default issue they might need to borrow more money they might not finish construction on time.
Of alone this has a fixed rate on it. So you know, we're taking the right price and opportunities and again.
You can't captured in your model except for.
Well, we have a commercial loan portfolio that has an average maturity of three and a half years, we're going to have a lot of repricing opportunities on fixed rate loans. We yeah. We have a few more fixed rate loans and we'd like to have today in this environment, but one thing when rates start coming down.
That's correct right long as might not look as bad as they do today, but anyway, we are seeing repricing opportunities on a lot of loans again like I say in gist.
What 17 days of this quarter with over $80 million just in the process of being re priced or buy it. All we've had a cup of coffee companies are always constantly sell it are there. Some people are selling assets that might have on them.
A fair amount of them.
Hum.
Multifamily project, that's going to.
Anybody with any SaaS is going to any of our developers any sense or go into the Fannie and Freddie are.
They were permanent financing as quickly as I can say.
Paying us off so that's certainly in their best interest.
Got it and then as we think about the Texas, Texas expansion into Houston.
I assume.
You expect to see some of that flow into the.
The balance sheet. This year, just curious if any of that shows up in the current deposit pipeline you mentioned in the slide deck.
It's not enough that we don't have any of that no. We don't have anything in his pipeline yet right.
No no it's not in the pipeline and we.
We anticipate.
Our growth coming.
He has already opened two or three accounts.
With new banks, we probably had.
In total, Texas accounts before Dawn came on board. So he's out meeting those current customers. So I would expect in the third and fourth quarter.
Looking for growth in that Texas market.
How many bikes were in Texas 400 odd over 400.
Based in Texas.
Okay.
The numbers are.
A lot of lot of charters in Houston, and Dallas markets.
San Antonio Austin.
And.
Again, the state of Alabama, we're down to 90 something.
Total bank charters.
They say everything is bigger in Texas and that's true.
Or banks bigger banks bigger deposits.
Got it appreciate the color.
Thank you Jay.
Well I think we have no more questions in the queue. If you all need any further information I know, but it's going to get out some.
Expense management answers to you and looks.
We look forward if you all have any further questions. Please let us know thank for joining us today.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Okay.
Yeah.