Q2 2023 Civista Bancshares Inc Earnings Call
Okay.
Good afternoon before we begin I would like to remind you that this conference call may contain forward looking statements with respect to the future performance and financial condition.
Mr Bancshares, Inc.
Those risks and uncertainties.
Various factors could cause actual results to be materially different from any future results expressed or implied by such forward looking statements.
These factors are discussed in the company's SEC filings, which are available on the company's website.
The company disclaims any obligation to update any forward looking statements made during the call.
<unk> management may refer to non-GAAP measures, which are intended to supplement but not substitute the most directly comparable GAAP measures.
Yes release also available on the company's website.
The financial and other quantitative information to be discussed today as opposed to break reconciliation of the GAAP to non-GAAP measures.
The call will be recorded and made available on the system.
Insurance website at Www Dot <unk> dot com.
At the conclusion of Mr. Shaw for his remarks, he and the management team will be we'll take any questions you may have.
Now I'll turn the call over to Mr. Schafer.
Good afternoon. This is Dennis Shaffer, President and CEO , Mr Bancshares, Inc.
Thank you for joining us for our second quarter 2023 earnings call.
I'm joined today by Rich Dutton SVP of the company and Chief operating officer of the Bank Chuck Parcher SVP of the company and Chief lending officer of the bank and other members of our executive team.
This morning, we reported net income for the second quarter of $10 million or <unk> 64 cents per diluted share, which represents a 28% increase over our second quarter in 2022.
Net income of $42 9 billion.
Or $1.45 per diluted share for the six months ended June 32023, which represents a 41, 8% increase over the first half was $4 42 performance.
Our margin, which was 349, 9% year to date and 386% for the quarter continues to drive our earnings however, like the rest of the industry. Our margin is under some pressure our yield on earning assets decreased by nine basis points during the quarter to five.
Three 1% and was 527% year to date.
The cost of our funding our balance sheet increased by 36 basis points during the quarter to 145, 1% it was 133% year to date.
Let me provide some additional color around our deposit strategy.
Late in the first quarter with the uncertainty surrounding the bank failures, we went out and locked up funding to fortify our balance sheet.
We filled in order for $141 $5 billion of nine months broker Cds paying five 2% and $151 million on a 12 month brokered Cds paying 5%.
This replaced $92 million of maturing broker Cds and provided additional liquidity and preserve our overnight borrowings capacity at the federal home loan bank.
We felt this was extremely important given the bank failures in March.
Beginning in the first quarter. We also began what are you seeing interest rates, primarily two of our larger balance money market and time deposit customers to maintain balances.
Excluding the increase in brokered deposits and increases in deposits related to our tax refund processing program. Our deposit balances have declined just two 3%.
No.
As a result, while our cost of deposits during the quarter increased from 48 49 basis points to 107 basis points, our cost of deposits. Excluding brokered deposits only increased 10 basis points during the quarter with 39 basis points to 49 basis points are.
Cost of deposits, excluding broker deposits year to date was 46 basis points.
Our deposit beta excluding brokered Cds was seven basis points over the last 12 months and our cost of overall funding beta was 22 basis points over the last 12 months our loan beta has been consistent over the 12 month cycle with 30 basis points.
We will continue to monitor deposit flows and react accordingly, but we do not anticipate a similar increase in Europe .
<unk> costs going forward.
Our earnings were also impacted by lower gains on sales of leases. This was primarily the result of internal changes made to our lease sales process in may which were not fully implemented until the quarter is we anticipate resuming the sale of our originations in the third quarter.
For the quarter, we originated $36 $6 million of loans and leases through BSG and sold $10.8 million for a gain of 256800, we typically target the sale of 50% of our lease production.
Yesterday, we also announced a penny per share increase in our quarterly dividend to <unk> <unk> per share. This is a six 7% increase in our dividend and represents a 25% dividend payout ratio based on our second quarter earnings. This is our second consecutive.
The increase reflects our confidence in our earnings our year to date earnings per share increased 32, 3% when compared to the same period a year ago.
Our return on average assets was one 2% for the quarter compared to 147% for the linked quarter and a return on average equity was 11, five 8% for the quarter compared to $15 three 2% linked quarter year to date, our return on assets was 129%.
And our return on equity was 13, 14%.
During the quarter non interest income declined $1 9 million from 17, 3% in comparison to the linked quarter and increased $3 million year over ear.
The primary driver of the decrease from our linked quarter was the timing of fees from our income tax refund processing program.
Require years income from our tax programs during the first quarter was $1 $9 million compared to 475000 in the second quarter.
We also received a $1 million bonus as part of a newly negotiated desert brand agreement we entered into during the first quarter, which was also included in other non interest income.
Year to date non interest income increased $6 $9 billion or 52, 3% in comparison to the prior year.
The primary driver was $4 $2 million in lease revenue and residual fees from the addition of BFG late in 2022. These fees are primarily made up of operation operating lease payments and gains on the sale of equipment at the end of the lease term.
Also included was the previously mentioned $1 million of bonus we received as part of the debit brand degree.
Second quarter gains on the sale of mortgage loans.
$615000, which was consistent with our linked quarter and year to date gain on the sale of mortgage loans was $1 2 million and represented 17, 4% decline from the previous year.
Well, maybe that's net revenues for the quarter more consistent with the linked quarter and declined slightly year to date compared to the prior year, while we anticipate that market uncertainty will continue for some time, we view the expansion of these services across our footprint as an opportunity to diversify and grow non interest income.
Uh huh.
Noninterest expense for the quarter of $27 $9 million was comparable to our linked quarter as increases in FDIC assessments and software maintenance were mitigated by declines in compensation and professional fees.
Year to date noninterest expense increased $14 $9 million or 36, 7% over the prior year much of the increase is attributable to our acquisitions of commuter Bay and BSG in the third and fourth quarters of 2022.
Our compensation expense increased $5 $9 million or 24% over the prior year.
Bulk of the increase is due to $4 $4 million in additional salaries commissions and benefits attributable to our new team to the bank and we got a G and employees.
The increase in depreciation is primarily due to our new leasing company.
Quick one that is under an operating lease its own and depreciated by this up until the end of the lease term.
Included in this year's professional fees of 400000 dollar payment to a consultant that assisted in the negotiation of our new <unk> agreement.
The increase in amortization of our deposit base and tangible and marketing were also due to our 2022 acquisitions.
These and other non interest expense was primarily due to growth in the unfunded loan commitments and the related $264000 provision required by our adoption of C sold during the first quarter.
Our efficiency ratio was 67, 9% compared to 62, 4% linked quarter and 65, 1% year to date.
Turning to the balance sheet.
Year to date, our total loans have grown by EUR eight $6 million, which includes $24 $8 million of loans and leases originated by V. S. G. This represents an annualized rate of 7%.
Well non owner occupied CRE loans led the way lease financing receivables were up due to lighter than anticipated sales residential real estate loans increased as we originate more of our on balance sheet mortgage products, including RCRA.
In construction products.
Commercial revolving lines of credit currently at a 35% utilization rate and not reinvest and are well below pre pandemic balances.
Along with our year to date loan production, our Undrawn construction lines for $211 3 million at June 30th adding to our confidence that we will grow our loan portfolio at a mid single digit rate over the balance of 2023.
At June 30th our loan to deposit ratio, excluding deposits related to our tax refund processing program was 98%.
On the funding side total deposits increased $322 8 million or 12, 3% since the beginning of the year if.
If we adjust for increases in broker deposits and tax program funding our deposits declined just two 3% year to date. We believe this illustrates the strong relationships, we have with our commercial and retail customers.
Non interest bearing demand accounts continue to be a focus making up 34, 1% of our total deposits at June 30.
If we exclude so this is one deposit accounts and those related to our tax program 13, 2% or $397 million of our deposits were uninsured by the FDIC at June 30th.
Our cash and pledged securities were 415 $5 million a quarter in which more than covered our uninsured deposits at June 30.
Other than the $378 2 billion hours of public bonds with various municipalities across our footprint. We have no concentration in deposits at June 30th.
We continue to believe our low cost deposit franchise is one of the lessons most valuable characteristics and contribute significantly to our peer leading net interest margin and profitability.
We ended the quarter with our tier one leverage ratio at 886%, which is being well capitalized for regulatory purposes.
At June 30, and all of our $619 $2 million in securities were classified as available for sale and had $63 $1 billion of unrealized losses associated with that.
Our tangible common equity ratio improved to $6 one 6% at June 30 of 2023 compared to 583% at December 31 2022.
Given the turmoil in the banking industry as we entered the quarter and our good fortune of being a federal reserve bank of Cleveland for safety and soundness exam. After the failure of Silicon Valley and signature bags, we thought it prudent to hold off on the resumption of our stock repurchase program during the quarter.
I am happy to report that we received our exam report earlier. This month, we were very pleased with the results. We continue to believe our stock is a value and anticipate resuming our repurchase program now that we have released earnings.
Despite the uncertainties associated with the economy and the expense pressures our borrowers face our credit quality is strong and our credit metrics remain stable.
We did make an $861000 provision during the quarter, which was primarily attributable to loan and lease growth.
Our ratio of our allowance for loan losses to loans improved from 112% at December 31, 2022% to 133% at June 30, reflecting growth in our adoption of <unk> sold during the first quarter.
In addition, our allowance for loan losses to nonperforming loans increased from 260, 145% at December 31, 2022 to 327, 5% at June 30.
In summary, although our margin compressed more than anticipated we continue to generate strong earnings.
Large M remains healthy we continue to see quality loan growth solid opportunities across our footprint and no material deterioration in our credit quality.
Our focus continues to be on creating shareholder value, which is evidenced by the year over year increase in our earnings per share and the two increases in our quarterly dividend.
Thank you for your attention. This afternoon and now we'll be happy to address any questions that you may have.
We will now begin the question and answer session.
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At this time, we will pause.
Momentarily to assemble roster.
Yeah.
Our first question will come from Terry Mcevoy with Stephens.
You May now go ahead.
Hi, Thanks, Good afternoon, everybody I'm, Dennis you talked about reminding us of the deposit strategy late in the first quarter and we definitely saw deposit costs come up in the second quarter.
Could you just maybe run through your outlook for funding cost deposit costs in the second half of this year and and ultimately and kind of think about how should we think about the net interest margin trends over the coming quarters as well.
Yeah, I would say you know, we're not going to be adding a big slug of deposits like we added there with the broker deposits.
In late late first quarter.
So you know.
You know that that was a 300 bed that's going to be with US now throughout the end of the year. So I don't think that they are we don't expect the NIM I think quarter. The quarterly NIM contracted about 25 basis points, we don't expect that big of a decline as we move forward.
Throughout the remainder of the year, we're going to see some contraction I think but not that significant of a decline and that's really where our miss was this quarter.
What was just with that that slug of deposits. So you know, we think maybe maybe half of that amount, maybe 10 12 basis points large and compression.
As we move forward, it's probably a little bit more reasonable.
As we go throughout the year here.
Thanks for that and then you know last week, the larger Ohio based banks on their calls talked about just optimizing their balance sheet and being more selective on lending given new crack capital rules I guess I'm wondering are you seeing a change in behavior in some of your larger competitors and how are you positioned to take advantage of.
Market share gains should that continue.
Chuck you want to give some color around competition and stuff, we've definitely seen some of the larger original kind of fall out of some of the deals from that perspective Terry.
You know, we're still there's still a really competitive landscape out there from that perspective, especially slipped from some of the other community banks, obviously, Columbus, Cincinnati Cleveland, there, they're all very competitive markets right now, but we do feel like we.
We have the advantage of being still in the lending business and being in the lending business gives us the opportunity to ask for those deposits and try to Peel those deposits out of those larger regional banks.
Terry we are adding new relationships. So as we look to fund new loans.
You know that would be one way you know, we we fund them with these new deposits that were getting in we do have some of our securities portfolio, turning over and can fund loans, there, but I do think from the lending side. We have also tried to push loan yields and we're seeing that as loans renew.
And new loans come on our books, we are pushing our loan spreads we just think it.
We can't we can do that in this environment and our teams have been pretty.
Pretty effective at pushing those spreads.
And quite frankly with the yield curve inverted we have to push the spreads I'm surprised it although we still see some outliers from some other banks out there and I'm surprised it's not everyone is doing that at this point, but.
Definitely some of the bigger players I think I pulled back a little bit.
Great. Thanks for taking my questions.
Okay.
Our next question will come from Nick Puka, Randy with Heartbeat.
You May now go ahead.
Good afternoon, everyone. How are you today.
Hi, <expletive>.
Just a question on expenses can you help us think about your expectations in the near term and if you have any sizeable initiatives on the horizon.
Hey, Nick this is rich.
I don't want to get any sizable initiatives on the horizon I think yes.
So the run rate that we're kind of projecting for the balance of the year is probably 28 million each of the next two quarters.
So I don't think there's anything new in there.
I'm trying to think what the big things and expense were this quarter I don't know signet.
Significant yeah I.
See I see assessment had gone up so I think that was a pretty good jump I think it was up maybe 400 or 202.
300.
Software expense was up slightly.
Slightly or is it just things I think we're out of the software expense I think we absorb you know there's a difference.
The more data analytics, when we evaluate CRA and fair lending and stuff that's cost us a little bit more.
Money and so like Rich said, we don't have really any huge initiatives that should impact the expenses as we move forward.
The rest of the year and I don't know if we talked about it on the last call, Nick but we did and it wasn't as significant but we made some reductions in loan operating staff are kind of in reaction to the kind of falloff in mortgage lending.
Again, not big numbers.
But certainly it gets the point is that we're continuing to look at and everything that makes sense to look at going forward yeah. It absorbs some of those increases that we see.
That's very helpful. And then at the halfway point of the year pretty solid loan growth. So far can you help us think about the size of your pipelines and how that may translate into a full year growth rate.
Nick This is John .
Pipeline is still a pretty consistent I would say there may be down slightly from last year, but you know really feel good about where we're sitting at mid year.
Denis mentioned in his comments that we've got $211 million of construction availability looking into the second year $50 million a little over 50 million of that is the increase in our single family and construction program that would seem like we're doing a lot more real estate construction, but the other $150 million is out there on the commercial side, we feel like.
We've got some good tailwind coming into the second half and.
I would say we're in that mid single digit growth range looking forward.
Just a follow up on the under construction. It is most of that in Columbus.
I don't have a breakdown of of of all the different metropolitan areas, but I can tell you at a nice size chunk of it isn't construction, we've had tremendous especially on the multifamily side tremendous.
Appetite there for multifamily they can't build enough units fast enough to house, everybody, that's either moving into town or getting ready to work in or on the Intel and other large projects in that city.
Great. Thank you for the color and thank you for taking my questions you bet Nick.
Our next question will come from Tim, Switzerland with VW.
You May now go ahead.
Hey, good afternoon, thanks for taking my questions.
Yeah.
The first one I had just real quick do you guys have the purchase accounting accretion impact to NII or the NIM.
Oh I do we do.
Is it eight basis points I'm going from memory.
Yes.
And I remember it was correct eight basis points.
Alright, thank you.
Jim.
Yes.
I had a follow up on the talk about some of the larger banks pulling back from lending has that.
Opened you to maybe any opportunities to finding some new talent at all or do you think that's something that could happen down the road if the banks continue in this position.
I think you know we do you know.
Back when we had the great recession, we added talent in this organization and are we you know I think anytime there's disruption it or are there, but you know the.
The big banks pull back I think that does give us opportunity to add talent throughout the organization. Both on the you know production and support side. So.
We continue to look for opportunities. If we think that we you know it would have.
Revenue, we definitely would look at that.
You know right now, it's a little bit more challenging just because you know youre pretty well wound up so you got to figure out how you're going to fund those with the yield curve. So inverted I think it does make it a little bit more challenging.
For that but that's our.
We view that as opportunity.
In particular, when it comes to adding staff and we're also seeing Tim This is Chuck.
Some talents start to flow our direction at least make some inquiries on the residential mortgage side as you know as the market gets tighter a little bit a lot of time with the mortgage brokers you don't have the same array of products to be able to sell and so we're starting to see the surface. We've got a few openings that we're trying to fill it looks like we'll be able to do that with some larger producers than what we.
Haven't.
In our SAP previously and that really doesn't cost us anything because those are commission based position so.
You know generally was they had.
Originations are generally paying for themselves.
Right, Yeah that makes a lot of sense and then can you guys give us a quick update on the credit outlook I think last quarter. You guys are talking about everything seems fine your major metro areas, but any update you can provide around like the CRE and office exposure I think you sounded like 45% of loans.
Yeah. This is Paul I'll start with where we are.
I would say that the outlook hasn't changed significantly I think.
Obviously, we're watching the office market, where we're diving into kind of the makeup of it but the vast majority of our of our office space is more in the in the in the outlying communities as opposed to the urban centers.
I think we only have about three or four properties that are actually kind of in the center of Oh by say Cleveland.
But overall, we see that they've been performing very well you know.
Occupancy remains high you know the only thing you don't really know yet as you know what's going to happen in a few years when when the leases are up and we don't have I think only about a 15% of our leases are our properties are going to have a a.
Maturities in the next two years, so really haven't seen anything in the landscape residential stays pretty solid I know that they are stressed out there, but our numbers are good pretty consistent quarter to quarter and right now we don't see any real dark areas that make us change that perspective, its hard work stay on top of it but right now.
I'm not seeing anything until more of our portfolio is pretty diversified. So when you look at the CRE buckets between multifamily industrial retail.
Office.
It's pretty it's pretty diversified so no real concentration in those areas.
Okay, Yeah that nothing too surprising there do you have what percentage of total loans at the office book you do.
This is rich right now so pure office I guess is just under 6% five eight and then we've got another.
Less than a percent of our health care Medical office medical office as yet.
Less than 1% as health care.
Yes.
Maybe I'll just throw out a number is one 2% one point too.
I highlight that.
That's great. Thank you guys. That's all for me.
They said it.
Our next question will come from Manwell neighbors with D. A davidson.
Oh go ahead.
Hey, good afternoon.
With your NIM outlook, just clarify do you think that that it kind of trough in the fourth quarter.
Kind of just add a little.
Color there.
This is rich and wont have it yeah, I guess it depends on what the fed does but I think kind of like what Dennis said it right in terms of big chunks of funding.
The moves that we made at the end of the first quarter are in place that will stay in place and if you look at our deposit funding, even though we feel like we were aggressive in the first and second quarters non broker cost of our deposits only went up 10 basis points this quarter.
And if we assume similar moves from the fed in the second third and fourth quarters those would be the kind of moves that you might see on the potash side and again our.
Loan betas have been pretty pretty consistent over the cycle. So that has been 99 basis points.
Banking.
At 930, 30 basis points of expansion in each of those quarters. So.
Barring anything crazy happening.
I see things happening.
Barring any crazy happening E L F.
I would say that that's a fair statement, but you know probably a trough towards the end of the year.
It's interesting you talked about loan yields I was kind of wondering they didn't move that much this past quarter.
I would've thought they did it seemed like maybe more of that production.
End of quarter I would think if keeping on leases those are usually higher yielding.
I was wondering why loan yield.
It's even more.
I think it's a couple of factors on that man well I'm. The first one was we had a couple of of a large pay off in the month.
May.
April end of April early May.
It was bound was actually went down a little bit so a lot of the production did come in in the back half of the quarter, especially in mid to late June I think the other thing that they can call does not expand quite as much.
We talked about a little bit earlier, but our mortgage the mortgage lending side, we did a little bit more on balance sheet versus.
Saleable product and I have a few mortgage mortgage lending rates are.
The consumer or a little bit lower than the commercial rates. So we had some growth in that area that it may come down a little bit, but all in all were happy with where we're going our trend line in our production piece of it continues to the up slope and we feel like that.
That those rates will continue to arrive you know looking into the yeah I don't have a great crystal ball as far as what those will go too, but we seem to be pension them up on our production piece.
Probably 10 to 15 basis points, a month lately as far as new originations.
But I think Jack hit it right on the head.
The pay offs early in the quarter and then the portfolio residential loans are those yields are not as high and that mixes where portfolio a little bit more right now because people are.
Buying the arm products as opposed to the fixed rate products and those are our residential rates are a little bit lower.
I don't want to think the payoffs were not were negative the payoffs from both of them. We have one of our one of our really good customers sold this business for for for a nice piece of change and then we also had.
A large industrial building that went to the to the to the CNBC market.
What are you like your new commercial yields.
Well I would tell you you know everything starts pretty much with us.
What was the seven and then working up from there.
I would tell you new production probably in that.
Youre doing a three year or maybe even a five somewhere between seven and a quarter and 775 well.
We're seeing some people choose with or what their thought process for breakthrough.
Declining you know, we're probably on that sofa, plus $2 75 range as far as on some floating on the new floating.
Originations from that side of it.
If I jump over to the deposit side I.
I understand it the broker came on early in the quarter.
You gave some.
Nice stats are.
Deposit costs ex brokered.
From here what are your thoughts on.
Deposit cost increases from here.
Well I think I think they're going to stabilize a little bit I mean again I don't think we'll see the big.
You know.
NIM contraction that we had in the second quarter. They are under pressure, but we will we are holding on to more of our deposits. Today I think we're just a little closer on that you know we have no deposit rates starting with a five.
There's a lot of banks would do have that and we found that our highest rate right. Now is four and a half we've found as we've gotten a little bit closer about you know before we were trying to hold it in the threes and you know we were seeing some deposit run off in the first couple of months of the year. So we got a little bit more aggressive.
Right now we're at the four and a half we're not seeing we're meeting every week.
We have every other week with our deposits were not seeing that run off so we feel that we do have this strong core deposit franchise, we do feel that our customers are pretty loyal.
We've never chased the rate shopper before where we've gone out and advertised.
Oh.
The highest rate Oh, you're in social media or in the newspapers.
That's not our customer our customer is coming to us and they're asking what alternatives. They have and we're telling them Hey, we got you know.
Four and a half months C. DS seven month, CD special and they are taking some of that money from some of the lower interest bearing accounts and non interest bearing accounts and putting that money to use but they're not leaving too.
To some of our competitors that are paying five in a quarter five and a half so we.
We feel we just have to stay close in that in the game. So some of it depends on what the competitors are doing what we do feel there is value to this corporate deposit franchise that we have in Maine.
<unk> maintained some of those customers.
I appreciate that it is in fees.
You said, you're keeping you kept leases this quarter do you feel like there's going be an extra backlog of lease sales next quarter.
No.
No probably not will probably you know because of what happens as rates move it makes it harder to sell those loans because the the.
Gain on sale.
No that decreases so it makes it harder so we're probably not going to go back and try to capture some of those just going forward, we'll just keep those additional loans kind of on the balance sheet.
There was interest rate yields are good on those so I think we just you know ticket bad pick that back up here this quarter.
Okay. I appreciate it is there like just a ballpark a fee run rate then.
Oh gosh.
Gosh, I don't know what I'm thinking about that I mean, I guess I would add to what Dennis said I mean, we had some personnel changes at the leasing company. So as we integrate those guys in that was part of maybe the slowdown in sales for the second quarter I think we've.
But he did what sales are.
I'm trying to back into a gain number for you.
There's probably a dangerous way to do that let me yeah, let.
Let me think about it I'll get back to all you guys how about that okay. Thank you very much I'll step back in Turkey.
Again, if you have a question. Please press Star then one on <unk>.
Next question will come from Daniel Cardenas with Jamie you.
You May now go ahead.
Hey, good afternoon guys.
Hi, David.
Just a couple of questions here.
The run off that we saw on the securities portfolio was that was it.
Anticipated and planned I mean, you've seen some run off here the last couple of quarters.
In a row and should we expect to see continued reduction in.
Overall securities book throughout the second half of the year.
I'd say, yes, again, if youll recall.
I guess early last year, when we kind of.
It took some of our excess liquidity and what's in short term securities. Those were all have kept at the bank and as those mature we are letting them run off and use that to fund loan growth.
Those pretty much run through the middle of next year, and then we're kind of done with that we've typically most of our.
Securities around our investment subsidiary and.
Our tax rate and start to bring those back if we don't have to so those are the last one will bring back we'll continue to reinvest those but youre right I mean, the one off that you've seen was just.
Just a kind of redeployment of the liquidity that we had an early last year and then put into the market.
Okay excellent and then with some of the noise that we've kind of seen in the leasing side.
Are you still kind of sticking to your guidance in terms of.
Where this or this book of business could be by the end of the year or does that get the truncated somewhat.
I think we're sticking pretty much to the guidance I mean, we're still the leasing business picks up you know, it's new to us, but we're told that it picks up.
It's pretty heavy in the fourth quarter. It picks up that second half of the year. So I think we're still probably picking it up.
Sticking with the guidance that we provided earlier.
About $27 million of originations in Q1, and they had $36 million to $37 million of production in Q2, and that's in line with kind of what we thought.
But like Dennis said, where we're new to this.
But I think also like Dennis said I think what we guided to earlier one is kind of what we think is going to happen.
It's our best guess how about that.
Sounds good sounds good and then.
Last question for me, how how should I be thinking about your tax rate here in <unk>.
In the second half of the year.
I mean, it's always been pretty good right I think our effective tax rate for the quarter was 114%.
And again like we kind of.
That's probably I'd put in 15 or 16% in there.
Can't see him, but theyre not in their head at me so that must be the right number.
Alright, great. That's it for me I'll step back.
Thanks, Dan.
There are no further questions. This concludes our question and answer session.
I would like to turn the conference back over to Dennis Shaffer for any closing remarks.
Well in closing I, just want to thank everyone for joining and those that participated in today's call. The.
The interest rate environment continues to be a challenge. However, our earnings remained strong and our margins remain healthy I remain optimistic that our low cost core deposit franchise will continue to produce superior results and I look forward to talking to you all but a few months to share our third quarter results.
Thank you very much.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.