Q2 2023 SB Financial Group Inc Earnings Call
Good morning, everyone and welcome to the SB financial second quarter, 2023 conference call and webcast.
Like to inform you that this conference call is being recorded and that all participants are currently in a listen only mode. We will begin with remarks by management and then open the conference up to the investment community for questions and answers.
I would now like to turn the floor over to Sarah Amicus with SB financial Ma'am. Please go ahead.
Thank you and good morning, everyone I would like to remind you that this conference call is being broadcast live over the Internet and will be archived and available on our website and I are that your state bank Dot com joining.
Joining me today are Mark Klein, Chairman, President and CEO Tony.
Tony <unk>, Chief Financial Officer, and Steve Boyle, Chief lending Officer.
Today's presentation may contain forward looking information cautionary statements about this information as well as spec affiliations of non-GAAP financial measures are included in today's earnings release materials as.
Well as our SEC filings and other investors material.
These materials are available on our website and we encourage participants to refer to them for a complete discussion.
For a complete discussion of risk factors and forward looking statements.
These statements speak only as of the date made and SB financial undertakes no obligation to update them.
I will now turn the call over to Mr. Klein.
Okay.
Thank you Sarah and good morning, everyone highlights of this quarter's results include net income of $3 1 million up 241000, or eight 5% from the prior year quarter, but would be up 443000 or 16.7%, excluding the effects of the MSR recapture for both.
Ears.
Year to date adjusted net income is up 738000.
Approximately 15, 5%.
Return on average assets of 91 basis points with return on tangible common equity 12, 4%.
Net interest income of $9 8 million was up 200000, or two 5% from the prior year as loan growth and better asset mix have offset higher funding costs.
However, compared to the linked quarter margin income was down four 8% as the betas on funding costs have begun to exceed those on the asset side.
Loan balances were higher from the linked quarter by just $8 5 million.
But have now risen over 89 million or 10% over the prior year quarter.
Deposits were down from both the linked and prior year quarters as challenges to identify funding at or below the margin continued.
Expenses were down from the linked quarter by 434004, 4%.
And down 463000, or four 3% from the prior year.
Mortgage origination volume strengthened in the quarter up 32% from the linked quarter, However were still down from the prior year.
And asset quality metrics continued to trend in a positive direction on N P A's and our coverage of Npls.
As with prior webcast, we continue to concentrate on our five key initiatives revenue diversity more net interest income and fee based revenue more scale.
Scope seamless operations and of course asset quality.
First revenue diversity for.
For the quarter, our mortgage business line originated $65 million and volume higher by $16 million or 32% from the linked quarter.
We also increased our percentage sold in the quarter to 73%, which is in line with more traditional levels and is a critical metric as we continue to manage both the size and makeup of the funding side of our balance sheet.
The quest to seek out and find quality <unk> and our high growth markets continue.
Continuous and we expect that production in the coming quarters will show positive growth for both the linked quarter measurement and the prior year.
Overall non interest income was 4.4 million, which was up from the linked quarter and down just slightly compared to the prior year, primarily due to declining residential real estate volume.
However, the gain on sale nearly doubled from the linked quarter and is reflective of more competitive pricing once again in the Freddie Fannie Arena as.
As well as our initiative to constrained portfolio volume.
That said the residential business line fee income was down by over $1 9 million for the first six months of the year first as the same periods last year.
Interestingly this decline represents 79% of our year over year fee income variance.
Our commitment to the title insurance business remains strong despite the headwinds in the residential lending space.
As we discussed in prior webcast, we intended to bolster our volume and revenue with a more conscious commitment to escalate title policy revenue that peak received from state Bank.
As a result of our initiatives State Bank has generated transaction volume for the first six months.
For peak of.
$36 2 million in revenue for peak of 183000.
As such over 34% of peaks transactions, representing 21% of the revenue.
What does it do to state bank sponsored activity.
Our goal is to not only diversify our sources of revenue from our other 20 plus plants, but to also escalate state banks title work revenue peak title to at least that 50% Mark.
Of potential activity all else being equal.
The current environment of purchase transactions presents a greater challenge as the.
Sellers typically a direct tie to work.
Year to date, our title policy revenue is off 36% over the prior year period, whereas our residential lending volume that's off 40%.
Yeah.
Wealth management continues to be a competitive advantage and a complement to our more traditional commercial banking services. Although he does it potentially provide a broader range of products and services to our now 36000 households.
But also a unique source of noninterest income and greater revenue diversity to which we aspire.
Well over 50 years of providing wealth management services in our market, we have a unique ability to manage much more of our clients' financial needs than most peer banks.
We recently added new executive leadership, who has a long history of advising wealth clients in the region.
We believe she not.
Only be a complement to our other six business lines, but additive to our sales initiatives to expand our current level of assets under management.
Additionally, the business plan is on track to provide $3 8 million in revenue for this year.
Secondly, more scale.
And the current rate environment loan growth must be accompanied by substantially higher rates in order to ensure margins remained stable to our benefit we have witnessed a number of our competitors pulling back on lending in our markets, which we clearly have not done.
We continue to reach out to identify opportunities with new and existing clients, but we've also become much more selective in providing financing to higher risk loan sectors and structures that we are willing to provide our customers.
Until funding at the margin retreat from the current five plus percent Mark loan growth, we feel will be intentional in conscious, but yes selective.
Yeah.
Loan growth in the quarter slowed as we were up just $8 $5 million from the linked quarter, but as I mentioned $89 million or 10% from the prior year quarter. Unfortunately, our commercial lending activity has been impacted by pay downs in the agricultural sector and limited growth in the level of business activity.
Within our current book.
We continue to call aggressively in all of our markets.
For the first two quarters of the year, our commercial lenders have made over 1900 client and prospect calls.
And have enabled us to log a current pipeline in excess of $60 million.
As an organization, we have recommitted on our quest to garner a deeper deposit relationship with all borrowing clients absent, which pricing will be adjusted.
Liquidity was fairly stable during the quarter with deposits declining slightly which required us to replace funding with slightly more costly wholesale borrowings.
Overall, the size of the company remained fairly flat.
However, we forecast a slightly larger balance sheet for the remainder of 2023 in light of the pay downs in the investment portfolio and that limited borrowings to fund loan growth.
Third more scope.
SBA lending as a preferred lender continues to be another great complement to our core business model.
We began to drive a more intentional model.
2015.
Since inception, we have now closed $64 million that we would have missed absent this strategy as.
As we discussed last quarter timing of our SBA loan closings delayed our gain on sale to be recognized in this quarter.
As such we have now closed $7 5 million in the first half of the year and have sold $2 5 million for again on sale year to date 242000.
While retaining 5 million on our books.
To drive both noninterest income as well as net interest income higher.
We continue to be bullish on two of our growth markets Columbus, Ohio in Indianapolis, Indiana.
Lower cost funding continues to be provided by our legacy markets. While loan demand is projected to provide greater asset left particularly from these growth markets.
Overarching goal here is to gain market share and expand relationships with clients that can provide not only lending opportunities, but also the expansion of our deposit gathering initiatives through our Treasury management Department.
Yes.
Our new corporate sales champion we referenced in prior quarters is singularly focused on expanding the number of services in each of our single service households.
As we discussed in prior quarters. His focus remains on organic initiatives to drive scale on both sides of the balance sheet.
Given our expansion in the mortgage business line over the last decade.
Number of markets, where we are clearly on a branch a number of these clients have a limited relationship beyond the initial mortgage product.
With our expanded ability to service. These clients digitally we intend to continue to drive more scope by adding additional products and services to each household in fact to date, we have logged a services per household now of 290. Our goal is to add one more service per household and our 36000 households.
To drive the depth of our relationship nearer to for all else being equal.
The need for us to provide a seamless digital experience for our clients remains a key objective we have begun the process of testing a more robust online account opening process and we continue to make strides to improve our internal CRM usage and utilize the <unk> platform to drive.
Efficiency and our lending processes.
Clearly there remains more work to be done to fully realize the potential of our technology gains.
Operating expenses have been on a general downward trend over the last 18 months due to not only our lower volume driven commission levels that have led to a pullback in revenue.
But also our targeted reduction in resources in those business lines.
Our total head count is down over 5% compared to the prior year, even with the additions we identified for our client contact center, we launched this year and five new MLR rose.
As a result of our focus on cost containment, we have delivered positive operating leverage for both Q1 and Q2.
We expect to continue this positive trend as the balance sheet expands asset mix normalizes and expenses moderate.
Our client contact center was introduced in Q1 and is now as I mentioned assisting with client care. In fact this group is now fielding approximately 12000 calls per month.
More success on referrals and cross sells is in the Q as we begin to more effectively embraced the capabilities of our sales force platform.
Fifth and final asset quality.
Asset quality continues to reflect strong credit underwriting charge offs were down from the linked quarter to just 22000 and for the year our annualized charge off rate is just two basis points.
Thus far the resilience of our clients has been as anticipated as they appear to have manage their exposure to higher interest rates quite well.
Tony will discuss the favorable favorable position that we continue to see with our allowance level that now includes coverage of our nonperforming loans above 500%.
This industry, leading metric is a direct reflection of our commitment to not only prudent lending practices, but also the measures. We took during the pandemic to build our reserve in order to provide greater earnings stability post COVID-19.
Delinquencies ended the quarter at $2 4 million or just 24 basis points with are less than 90 day delinquencies ending the quarter at just 10 basis points.
With client credit Bureau scores higher and household debt as a percentage of disposable income lower all signs point toward continued positive trends in our loan portfolio.
At this time I'd like to ask Tony to give us a little more detail on the quarter Tony.
Thanks, Mark and good morning, again, everyone again for the quarter, we had GAAP net income of $3 1 million with EPS of <unk> 44 per share which is up 10%.
Excluding the servicing recapture from the prior year core diluted EPS are up 22% as compared to the similar core earnings achieved in the second quarter of 'twenty two.
Total operating revenue was up from the linked quarter, but down just slightly as compared to the prior year.
And when we exclude the servicing rights recapture from both years operating revenue would be up three 3%.
Margin revenue was up two 5% compared to the prior year and for the full year is up 11, 5%.
The efficiency of our balance sheet continued to improve in the quarter as our loan to deposit ratio rose to 91, 9% and total loans to assets increasing to now 73, 4%.
Now, let's take a look at the second quarter income statement.
On margin for the quarter.
Net interest margin came in at three 6%, which is flat as compared to the prior year due to the shift in our earning asset mix and a net negative beta of earning asset yields versus funding.
Compared to the linked quarter the impact of much higher funding costs as Mark mentioned could not be overcome by our loan growth and the improvement in those earning asset yields.
Cash and securities as a percentage of total assets continued the reduction in the quarter.
We are now just 19, 2% of total assets.
This compares to $19 nine and 23, 4% for the linked and prior year quarters.
The shift in mix has benefitted interest income as evidenced by the improvement in our earning asset yields for.
For the quarter, we had an earning asset yield of $4 six 1% up 12 basis points from the linked quarter and up 116 basis points from the prior year.
Interest income as a result of balance sheet growth and that yield improvement was $14 4 million up 582000, or four 2% for the linked quarter and up $3 9 million or nearly 38% from the prior year.
Yeah.
As we experienced last quarter funding betas have exceeded earning asset betas from both the linked quarter in the prior year.
Deposit cost rose to $1, two 9% in the quarter up 35 basis points from the linked.
And up 109 basis points compared to the prior year.
We forecast that these negative betas will continue for the remainder of 2023 based upon the current rate forecast.
And that we will begin to see stabilization entering 2024.
Yeah.
The income as a percentage of average assets improved from the linked quarter to a level of one 3%.
Positive that we have discussed in residential lending were supplemented by better SBA sales volume.
As Mark mentioned, we feel that the SBA products well positioned for the current economic environment.
Additionally, we continue to see stable results in our other fee income categories as compared to both the linked and prior year quarters.
While GAAP operating revenue is down for the year when we adjust for the servicing rights recapture total operating revenue growth on a core basis is actually a positive two 6%.
And when we added to our operating expense reduction is a $1 $3 million cumulative pre tax change compared to the prior year.
Mortgage gain on sale yields came in right on the expectation for the quarter at two 2%, which is still below historical levels.
But we anticipate this to be the floor on yields in 2023 and into 2024.
Sales volume improved this quarter, nearly 75% and our pipelines are running in the high seventy's of salable product.
We continue to forecast 2023 origination levels to be slightly below our breakeven level of approximately $350 million.
But we will continue to reviews resource allocation to preserve profitability.
Market value on our mortgage servicing rights stabilized in the quarter with a calculated fair value of 123 basis points up 12 basis points from the prior year.
That servicing rights balance increased compared to the linked quarter at $13 7 million in remaining temporary impairment was flat at just 137000.
As has been our focus in 2023 total operating expenses were down from the linked quarter by 434000, and when we look at year to date expenses were down 549000 or two 5%.
This compares to our operating revenue declined for the year of one 3%.
Now, let's take a quick look at the balance sheet.
Total assets of $1 4 billion were flat to the linked quarter and were up $47 5 million or three 7% compared to the prior year.
We were able to fund the growth in loans by the scheduled amortization of our investment portfolio.
And we expect that investment portfolio to continue to decline with that amortization and some prepay payments over the next 18 months.
When we would stabilize the size of the portfolio at that new level.
On the funding side the deposit declined from the linked quarter was replaced by higher borrowings from the federal home loan bank, albeit at a marginally higher cost.
Deposits compared to the prior year were flat, which required a loan growth of 10% to be funded by the investment portfolio run off and those higher <unk> borrowings.
Our investment portfolio is now down by over 14% compared to the prior year. However, since overall rates are generally flat to a bit higher prepayments have them as a source of funding had been constrained.
Tangible common equity, including the OCI impairment declined slightly in the quarter to $7, one 3%, while tangible book value was stable at $13 81 per share which.
Which includes a OCI.
And when we exclude the temporary impairment.
Tangible common equity rising to 963%.
Regulatory capital continues to be strong with common equity tier one and total risk based capital reported at $13, two and 14, 4% respectively at the end of the quarter.
We continued an aggressive buyback of our shares in the quarter with 91000 shares repurchased an average price of $13 67.
Which is well below the adjusted tangible book value of our shares in the quarter that I just mentioned of $18 65.
Our loan loss allowance improved in the quarter and ended at one 6% of total loans.
Due to the improvement in the economic factors and a reduction in our level of unfunded commitments or.
Our total provision expense for the quarter was just 145000 net.
We were however, we're able to add 375000 to the allowance and coupled with our low level of charge offs. The allowance level improved by two basis points compared to the linked quarter.
And again this quarter, we had positive momentum in our classified loans.
Our criticized and classified loans now stand at just $8 9 million or down five 8% compared to the linked quarter and are down $3 3 million or 27% from the prior year.
And quickly before I turn the call back to Mark just a quick summary of our year to date earnings per share, which while flat to 2022 on a GAAP basis would be up 12 or 18% when we exclude the impact of the temporary servicing rights recapture from both years.
Mark turn the call back over to you.
Thanks, Tony once again I want to conclude by acknowledging the dividend announcement that we made this week of <unk> 13 per share, which equates to approximately three 8% dividend yield and a 30% payout ratio.
We continue to believe that our strong dividend and continued buyback strategy will drive tangible book value improvement.
Maximize returns to our shareholders.
Optimistically, we continue to expect higher performance one that includes prudent organic balance sheet growth asset mix corrections as Tony had mentioned expense control and a return by us to a more traditional ratio of non interest income to total revenue at or near that traditional 40% mark, albeit on a.
Marginally slowing economic front.
Now I'll turn it back over to Sarah for questions Sir.
Thank you we're now ready for our first question.
Ladies and gentlemen at this time, we'll begin the question and answer session.
To join the question queue, you May Press Star and then one to withdraw your question you May press Star and two.
Our first question today comes from Brian Martin from Janney. Please go ahead with your question.
Hey, good morning, everyone.
Good morning, Brian Hi, Brian .
Maybe a couple of things I, just kind of touch on it sounds like the the loan outlook or grow it sounds like its pipeline is pretty healthy.
And maybe some people pulling back in the market just kind of want to confirm just kind of how you guys are thinking about loan growth just I mean hearing that's positive there are a lot of people with rates being up seem like there is some activity slowing a bit so just trying to understand the loan growth and then just Tony you talked about funding the loan growth just trying to understand you know in the past <unk> been relying on some of those.
Securities portfolio runoff.
Borrowings increased this quarter just want to understand the loan growth you do have you know how youre thinking about funding it here in the near term.
Yeah, Hey, Brian just a quick comment Steve Wallace is here, our chief lending officer, but from from my seat as you heard we're making tons of calls and we all agreed when we made the presentation of the 23 budget to our board that it's going to take twice as much work to get half as far and I think our commitment out worked competition is somewhat evident in that $60 million.
But.
Steve <unk> is here and he can kind of give us a little more color on where that is coming from Steven and what you see in the next two to three months sure. Thanks, Mark Good morning, Brian Yes, we saw definitely some acceleration of our pipeline from a first half some of the looks we saw in the first half a lot of some investment CRE that given our commitment to AST.
Quality didn't appeal to us we are seeing some improvement not only in the volume of our pipeline, but the credit quality.
And I think Brian some of that is due while a few factors certainly recent economic indicators show some increase in confidence from.
From borrowers consumers as well as businesses that are.
Take care of them. So we're seeing more broad activity, but I think also as Mark mentioned earlier some of the competition is pulling back I think.
They have probably liquidity concerns that arent quite the quite the concern there are for us and allow us to perhaps pick up some new clients.
Place. So we're seeing some some opportunities from competitors as well are driving that and then as Mark mentioned, we saw some softness in our rural AG markets due to the strong earnings over farm community, which is great for asset quality, but it hasnt resulted in as much borrowing from them. So that's kind of the picture.
And then couple of I think on that Brian you asked about funding I think that's still continues to be a challenge.
And I do think as Mark said, we're being a little bit more selective on what we're looking at but I think.
We're willing to take.
Uh huh.
A piece or two off of our margin that we'd been accustomed to in the past for good quality credits because we know most of our funding has now come in kind of at that four in a quarter or two 5% range on the margin. We've done okay on relationships, we certainly could do better at any time, but thats certainly kind of the bottom line I think you are still able to.
Generate.
A fair amount of funding dollars call. It 100 basis points below the wholesale market. If you want to do that the risk. Obviously is your current book of business and how you manage that which thus far we feel like we've done a pretty good job.
Okay. So not much in the way of Securities I guess the growth you do have in the back half of the year Theres not much opportunity to fund it from the on the bond book at this point or even into next year. It should we should think about it being more growth in the balance sheet going forward.
Yes, So I think we're gonna have kind of our normal $2 million to $3 million of amortization of the portfolio. Some slight prepayments as we get to some rate notches in some maturities but.
It's going to be like we said $30 million to $40 million that the portfolio is going to decline, but thats about it not any kind of rapid prepayments.
Okay. That's perfect and then maybe just a couple of others just on high level on the mortgage I think you talked about Tony the gain margins it sounded like there.
At a bottom here a trough in are either stable or up from here that seems fair and the sale volume seems pretty definitely improved.
Just as far as origination volume how are you guys thinking about that just holistically over the next couple of quarters.
Months, just how do you see things playing out there.
Well I think we've done $114 million through the first half of the year.
32% I would think we're comfortable that we're probably in the $70 million to $80 million third quarter.
Either.
I guess I would lean more to the upside on that at this point of what we're seeing.
And then we'll see how how Q4 lands so that kind of lends us somewhere between $2 50 to $2 85 for the full year, which I think is still as we've talked about below that kind of $3 50 kind of Mendoza line for us.
But I think that lends towards a nice 2024, and Brian just to comment.
As I mentioned, we continue to be very bullish on this new and in the MD&A.
<unk> market that we've descended upon we now have five producers there.
Last month.
We're at the top of the list on production still like some limited PSEG kind of mortgages kind of thing, but we're very bullish on that market and as we've discussed before we can be all of what Columbus has been in the past, but we got five high level producers that.
I get the concept then we kind of like to classify them as self propelled lawnmowers, yes. They want to do as much as volume is we want to do so we're bullish on that and we think that's going to certainly help us going forward to get back to where we used to be which is somewhere around a 500 million in north of 500 million Mark.
Yeah Okay.
That's helpful and maybe just jump into the margin for a moment.
As far as how you're seeing things play out here with the <unk>.
<unk> increase yesterday.
And then just.
The growth outlook going forward and just the funding cost how should we think about the margin over the next couple of quarters.
Again, the trough and then.
And then with the rate environment potentially being down next year, just trying to understand the dynamic near term and then how we should think about the balance sheet being positioned with.
Potentially seeing rates dropped.
Yeah, I think I think that.
You're spot on there and what we've seen is I think the market has stabilized if you can call it stabilization that call it that.
Four five to five and a quarter range that that's where marginal retail funding is.
Most community banks can kind of survive there, we're seeing loan pricing in the high sixes to low sevens and that seems to be okay with our clients.
I think.
Our $3 16 margin is going to stay roughly in that range I would think.
I think we'll start to get some slight improvement as we get into 2024, we were very aggressive on being short term on our funding.
So we're gonna have a lot we will often if we do get rate declines.
And if the market cooperates I think we will start to take some funding cost off the table as we enter call. It <unk> 'twenty for being a little more liability sensitive yes.
But so really this quarter it could be a trough Tony as far as where the margin is and it's flat to up from here or is that kind of what you're seeing there is also a more pressured near term and then.
I do think Q3 will have some still have some downward pressure.
Just because as.
As <unk> seen probably in all your banks that the the rapid acceleration of funding costs is just it's just not really stopping.
And.
There is a lot of competition out there, which I'd tell there's which tells me on the funding side Theres real liquidity strain, which is why as mark talked about we see some some of our competitors pull back on the asset side, because they just can't find the funding.
Gotcha Okay.
That's helpful and maybe just the last one just on the.
Expenses have been really strong.
Management wise just understanding what.
How that looks for the back half of the year, just kind of run rate we're at today.
The swings in mortgage volume up or down I guess, what it's a pretty good level or are there more things and more initiatives. You guys are undertaking or is this a pretty good level.
Yes, I think the.
10, three to 10 five as we've talked about is kind of what we consider to be our core level of expense range I do think theres, probably some bias to the downside from that just because we continue to be.
I think very cognizant on the frontline, we've had pretty detailed and instructive lessons with our teams about.
Let's understand what we're doing and what we are.
Getting to where on the back half of kind of our technological investments that we put in place I don't think thats going to be a headwind going forward.
So it is going to be a bit of a volume game I think we've we've rationalized some head count resources as we've talked about we've consolidated some positions we've done some other things.
We've got management all in place that we think so I don't I really don't think other than producers that's going to be our only kind of FTE increases going forward. So.
Answer to what I think is this is kind of our core level with a slight bias downward going forward absent volume constraints.
Got you no. That's helpful. And then one other thing you mentioned.
The SBA business.
I guess it sounds as though you expect the momentum there given current market conditions too.
Continue to be pretty healthy is that is that I don't have that Tony talked about Wi Fi, maybe I missed it but just understanding is that similar or whatever the level of earnings. This quarter was that kind of how to think about that going forward or is that anything ramping up from here or is it pretty pretty consistent.
Well I think Brian it's kind of consistent but it's also very bullish as I mentioned, we think that SBA program as a preferred lender really fits quite well and finding some of the deals we're finding which would be generally a replacement of equity with debt or companies changing ownership because of aging management and so forth.
Playing really well into that arena of the SBA and we not only get good yielding residual portfolio, we sell off the parts that we want we keep some of them are for net interest margin in comparison, and obviously getting that C&I deposit account is really important which they are willing to do so very broad.
Sean that in a market, where the economy may be slowing a bit.
And I think we've found what we generally like we're trying to score a few more of them. So that we can be more nimble with the process, but we.
We expect that $15 million to $20 million in 2023 is kind of our bogie and it gets us back to where we pretty much landed before COVID-19.
And I would just supplement there Brian traditionally we've seen SBA call it as a percentage of that commercial loan pipeline to be in.
Kind of mid to high single digits you know.
That number is call it 20% to 25% now so that $60 million you got a fairly strong pipeline out there and again.
Those are a little bit more.
Risky because they take a little bit longer, but that's why we try to have a big pipeline in there to get that to the bottom line and Tony some of it is on client need yes, Brian half of it is on more pointed to call.
And those 1900 calls we're doing more calling on the C&I kind of thing like we talked about over a year ago, but it's easier said than done because they're harder to find theyre more work and they're a little more elusive, but it's making some difference on the SBA platform.
Alright.
60, and there are pieces the SBA portion some of it's going to go I guess, if that's part of it.
Good chunk of the pipeline.
Good piece of that if it gets done gets sold and you keep a limited piece of it so the $60 million pipeline per se is is somewhat diluted by some of that going sale market and.
Coming on balance sheet, but getting the benefit both sides on the fee income side and the piece you put on the balance sheet getting the revenue is that fair to think about remotely.
We'd like to have our cake and eat it too you know, we'd love to be able to get the gain as well as a balanced growth.
Exactly right. If some of that is going to be SBA, but we're selectively deciding how they're priced what is the market value if we sell versus the breakeven on the net interest margin. So.
We're constantly deciding per deal what do we do with it and we put it on our books and keep the gain longer term or do we saw it and take it upfront and I know, Tony we're kind of evaluating each one as we speak and it's probably a nice balance of each in there yes, yes.
Okay perfect I appreciate all you guys, taking the questions and the update and a nice quarter. Thank you Jeff Thanks, everyone.
Talk to you later thanks, Brian .
Once again, if you would like to ask a question. Please press star and one to withdraw your questions you May press star two.
While we're waiting for additional questions I'd like to remind you that today's call will be accessible on our website at IR Dot Your state Bank Dot com.
Once again that is star and then one to ask a question.
And ladies and gentlemen, im showing no questions at this time I'd like to turn the floor back over to Mark Klein for any closing comments.
Thank you Sir once again, thanks for joining us I look forward to bringing you up to date on our third quarter in October .
Goodbye.
Ladies and gentlemen, with that we'll conclude today's conference call. We do thank you for joining you may now disconnect your lines.