Q4 2023 ServisFirst Bancshares Inc Earnings Call
Greetings and welcome to the surface first bancshares fourth quarter and full year earnings call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star.
Zero on your telephone keypad.
At this a reminder, this conference is being recorded it is now my pleasure to introduce your host David meet the director of Investor Relations. Thank you Davis you may begin.
Good afternoon, and welcome to our fourth quarter earnings call. Today's speakers will cover some highlights from 2023 and then take your questions.
Tom Broughton, our CEO Rodney rushing Chief operating officer.
David: Abbott, our Chief Credit Officer, Mike <unk>, our CFO, and Kirk correctly, who will be taking over as CFO. After about two hours later this quarter.
Speaker Change: 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 filed.
Speaker Change: Forward looking statements speak only as of today, they're made and Cybersource assumes no duty to update.
Speaker Change: With that I'll turn call over to Tom.
Thank you Davis and good afternoon, and thank you for joining our fourth quarter earnings call.
Tom: Well you know 2023 was not what we expected to see when the year began.
Tom: But we are pleased with them was also the hard work of our bankers, who I think are the best in the industry, where we ended up the year.
Tom: Bud will go into more detail on that but we certainly are pleased to see the net interest income.
Tom: Not only stabilize but to improve in the fourth quarter.
Bud: Yeah, well found over the years and banking you can cut expenses to improve profitability, but you cannot reach prosperity without the dangerous margin reaching acceptable levels.
Bud: We do expect some tailwind from the margin both this year and 2025, you'll hear more about that as we move through.
Speaker Change: Our speakers.
Speaker Change: We are pleased to announce that Joe Smith has joined us as president of Memphis, Tennessee.
Joe Smith: Market and we'll certainly provide more information on what the team in a location there soon.
It has great market total deposits in Memphis at $41 billion, we think we have a great opportunity there.
Joe Smith: As we've commented in prior calls once we saw the run up in treasury rates in mid 'twenty two.
Joe Smith: We pivoted to deposit gathering, which proved to be great time, and given the events in March of 2023.
Joe Smith: Our results in 2023 exceeded expectations with year over year deposit growth of 15%.
Joe Smith: New commercial accounts were up 15% over 2022, and the total new accounts, including retail accounts were up 12% year over year.
Joe Smith: We are one of the few banks our size, who has no broker deposits or federal home loan advances. This will certainly serve us well as the regulators announced new liquidity standards.
Speaker Change: As expected.
Speaker Change: Rodney Russian will discuss a little bit more about the correspondent division after I finish my remarks.
Rodney Russian: Loans grew slightly in the fourth quarter, we did have loan growth in five of the last seven months of the year C&I line utilization has really not improved since it's been pretty flat since June.
<unk> already for 2022.
Speaker Change: Certainly with it.
Speaker Change: After effects of the Triple T program.
Speaker Change: And then as rates moved higher that also reduce borrowings.
Speaker Change: More than you would see otherwise and of course most of this reduction in the borrowers on the C&I side with <unk>.
Funded with non interest bearing deposits. So you really ever had the worst of both worlds later, when you're taking money out of non interest bearing accounts to pay down our lines of credit.
Speaker Change: So we.
Speaker Change: We do think most of that is in the rearview mirror at this point.
Speaker Change: The back story of the quarter as we had $178 million of <unk>.
Speaker Change: Loans that paid off early in the quarter at an average rate of four 3% so that getting those loan payoffs was a good thing and improve profitability.
Speaker Change: We are growing increasingly optimistic there's activity.
Speaker Change: Is picking up we will see more normalized loan growth this year.
Speaker Change: Our loan pipeline has increased 50% since last quarter Ed.
Speaker Change: Which has improved substantially from 2023 levels.
Speaker Change: We're certainly not at a blistering pace of 2022, but that year was certainly way above normal in <unk>.
Speaker Change: Loan activity and will not be a typical year.
Speaker Change: We think the pipeline is very robust at this point and we do see loan activity is picking up on a weekly basis.
Yeah, certainly activity in a new market like Memphis will help carriers.
Speaker Change: Give us some momentum later in the year.
Speaker Change: On the production side, we hired seven new producers in the fourth quarter.
Speaker Change: A net of three <unk>.
Speaker Change: About 143.
Even though we are adding the attainment Memphis, we do expect to.
Speaker Change: Improve the efficiency of some of our other markets over time, and maybe our head count.
Speaker Change: We ended up more balanced as we go through the year.
Speaker Change: Credit quality does remain strong.
I think most of us in the industry and all of the investors have been waiting for a recession since 2019.
Speaker Change: But we do not see early signs of difficulties margin in.
Speaker Change: Henry Abbott or discussed it in a few minutes in more detail. So at this time I will turn it over to Rodney to talk about the correspondent division.
Thank you Tom.
Rodney Russian: Correspondent banking had a strong second half of 2023 and fourth quarter, both deposit growth and new relationships.
Rodney Russian: As I reported last quarter that corresponded balances grew they continued expanding with just over.
Rodney Russian: $280 million or 15% increase during the second half of the year.
Rodney Russian: During the fourth quarter, we opened nine new correspondent banking relationships with a total of 28.
Rodney Russian: For 2023.
Rodney Russian: Three new agent Bank credit card issuers.
Rodney Russian: Which where we had 14, new issuers with an entire year.
Rodney Russian: Eight new settlement banks during the fourth quarter this thing for the year.
Rodney Russian: Most new account activity came from our newly expanded Texas market, while new agent credit card issuers were spread across the U S.
As we look to continue this momentum into 2024 focus has shifted some from deposit growth and toward improving liability cost.
Rodney Russian: We are specifically optimistic about this outlook of correspondent banking.
Rodney Russian: It's interest rate futures markets are accurate and we are in a declining rate environment correspondent banking should benefit from these falling rates.
Rodney Russian: As rates decline, a corresponding liability costs declined step for step.
Rodney Russian: With a beta of one.
Rodney Russian: In addition at the same time close will migrate from interest bearing deposits.
Rodney Russian: Noninterest bearing accounts.
Speaker Change: The only other topic I'd like to mention Tom is that we've completed the credit card system conversion and we have worked through the changes and have the benefits and extra features it provides both of US and are our agent base.
Speaker Change: Most of that we are optimistic about credit cards revenue contributions in 2024.
Speaker Change: So with that I'll turn it over to Henry Abbott for comments, who has a short report I believe I'm.
Henry Fulbrook Abbott: Short usually means good news coming from our Chief Credit Officer.
Henry Fulbrook Abbott: I'm pleased with the bank's performance in 2023, more specifically in the fourth quarter.
Henry Fulbrook Abbott: Bank loan portfolio continued to perform at an exceptional level in a unique environment with rising interest rates, we experienced in 2023.
Henry Fulbrook Abbott: Yeah, Tom covered pipelines and loan outlook for 2024, but I will also add that we brought on some strong team in North Carolina and Virginia in 2023.
Henry Fulbrook Abbott: The bulk of the past year, we had them focusing on deposits did not loans. So we are well positioned for loan growth in 2024 and beyond because we will have some good tailwind in these new markets.
Henry Fulbrook Abbott: These bankers are now focusing their efforts on lending.
Henry Fulbrook Abbott: All of these markets are having disruption either bank mergers and other changes create an opportunity for service effort to attract and retain high quality customers.
Henry Fulbrook Abbott: Our asset quality continues to remain strong and our core key credit metrics were all generally stable or improving our charge offs for the quarter were only nine basis points when annualized and that is down from the annualized 15 basis points in the third quarter, which is roughly a 40% reduction quarter over.
Henry Fulbrook Abbott: Quarter and charge offs.
Henry Fulbrook Abbott: Or a triple allowance to total loans went from 1312132 for the quarter.
Henry Fulbrook Abbott: Nonperforming assets decreased in dollar and NPA to total assets from 15 basis points in the third quarter growing 14 basis points in the fourth quarter, our asset quality continues to remain strong.
Henry Fulbrook Abbott: Also note we started the year with AT&T loans as a percent of risk based capital being at 100% over the course of the year that would come down to 90%, we don't see any issues within our portfolio problematic asset classes, such as office space.
Our commercial real estate portfolio continues to perform at a very high level.
Henry Fulbrook Abbott: Feel good about our loan portfolio and how it performed in 2023, how we're positioned for 2024 and beyond.
Henry Fulbrook Abbott: That I'll hand, it over to Bud.
Bud: Thank you Henry and good afternoon, we're very pleased with the progress <unk> made in the fourth quarter with a quirky credit quality.
Bud: Capital.
Bud: Improving loan pipelines and net interest margin stabilize our noninterest bearing deposits were stable in the fourth quarter. Our total deposits grew by $132 million.
Tom mentioned, we saw net loan growth in five of the last seven months of 2023.
The key to improving earnings per share as loan growth and our team is focused on a more balanced approach to loan and deposit growth in 2024.
Bud: Our 2023 focus on deposits work or child liquidity remained strong at $2 1 billion.
Our adjusted loan to deposit ratio at year end was 82%.
Bud: This ratio includes the correspondent fed funds purchase.
Bud: Our loan repricing initiatives will contribute to net income in 2024, as we don't anticipate increasing deposit costs.
Bud: Examples of our repricing effort.
Bud: $525 million year to date of loans, where the rate has been restructured.
Bud: Loans paid off early were $185 million.
Bud: We have 554 million pending and loan repricing.
Bud: Loan repricing, its best opportunity to improve profitability combined with loan growth.
Bud: Loans that repriced or paid off in the fourth quarter were $212 million.
Which combined with loan Paydowns on fixed rate loans totaled two 2 billion on an annualized run rate.
Bud: The cumulative effects of this re pricing will improve margin and earnings per share over time.
Bud: We have low rate investment securities of $347 million maturing in 2024.
Bud: We would improve the margin by $8 million on an annualized basis.
Bud: Reinvest in short term treasuries or overnight funds.
Bud: Net interest margin increased in the quarter of $110 million in the fourth quarter versus a 100 million in the third quarter.
Bud: Variable rate loan originations made up 69% of the total production in the fourth quarter at a rate of eight 3%.
82% of these loans have a lower rate.
Bud: 36% of our production had a floor rate of 5%.
Bud: And 18% had a full rate of five 5%.
Bud: About 42% of total loans are floating rate today.
Isaac costs stabilized in December.
We haven't gone rationalizing higher deposit costs in the first quarter. So we expect higher cost excess funds to decline. In addition to normal seasonal declines in first quarter excess cash.
Bud: Credit card income in the fourth quarter was impacted by billing issue with one vendor that was not timely passing through certain expenses.
Despite this income returning to normalized levels in 2024.
Bud: And discussing noninterest expense, we made an effort to hold the line on expense growth in 2023.
Bud: Sad payout for 2023 or more than we anticipated as we focused on deposit growth for the entire year.
Our focus on 2020 for incentive plans is to enhance earnings per share.
Bud: We anticipate new additions from the Memphis market.
Bud: Will be offset by production officer attrition in 2024.
Bud: We have several nonrecurring expenses in the fourth quarter, which are detailed in the earnings release.
Bud: Our teams are performing quite well and are growing new accounts, 12% year over year.
Bud: We continued our growth in book value per share our CET, one ratio was 10, 91% and our tier one capital.
Bud: Leverage ratio was nine 1% 2%.
Bud: Our capital continues to be a strength.
Speaker Change: I'm retiring next month, so not be here for the first quarter of 2024.
Curt: Curt press label by the next CFO and I will turn the program over to haven't comment on 2024. Thank you Budd.
Speaker Change: Tom's given some good color on the business I'll give some color on the earnings side I'm optimistic about 2024 as a reminder, like most other banks Q4 2023 was significantly different than Q1 2023. So I'll focus my comments on the run rates from the fourth quarter versus year over year the <unk>.
Speaker Change: Good news is that we feel good about where we're going we expect the margin to grow from here not only due to loan growth, but also from the repricing of fixed rate loans and securities as Bob discussed, we think our deposits reprice quicker than most of our peer banks. So we're probably a little farther along on overcoming increases in funding costs.
Speaker Change: We think our dollar margin bottomed out in the third quarter of 2023, and then it'll continue to grow from here.
Speaker Change: We expect Q1 2024 to be higher than Q4 2023, despite there being one less day, we think the margin expansion will accelerate from there due to both the fixed rate loans and securities cash flows and growth in the loan book.
Noninterest income should do well this year, but as you know that is a smaller part of our business. We do expect growth in the low double digits.
Speaker Change: Noninterest expense is a little more of a challenge to explain but as you all know we keep a firm grip on expenses.
Speaker Change: The fourth quarter had a lot of noise, primarily due to the non-GAAP adjusting items noted in the press release, which are the FDIC special assessment duplicate privilege tax expense and the termination of our Edp contract.
Speaker Change: In addition to those items, we also had elevated expenses related to historic tax credits.
Speaker Change: If you strip out the unusual or infrequent items, we think our fourth quarter core noninterest expense run rate was closer to $44 million.
Speaker Change: We expect expenses to grow slowly from here year over year, we expect expenses to grow mid single digits from the 2023 reported numbers.
Speaker Change: This would be closer to 10% after taking out the infrequent and unusual items from Q4.
Speaker Change: The increases are due to normalized incentives for the full year the investments in the Memphis team and their facilities Meredith.
Speaker Change: Merit increases and continued investments in technology and back office.
Speaker Change: We expect nice progression in the income statement in the first quarter as well as loan growth, we expect EPS for the quarter to be up modestly when compared to the adjusted fourth quarter of 91.
Speaker Change: However, the funding of the allowance for credit losses for loan growth is expected to limit the growth in the net income and EPS. The good news is the extra margin from the loan growth will go to the bottom line in subsequent quarters.
Speaker Change: Let me turn it over to Tom for some final thoughts.
Thank you Kirk.
Tom: We previously.
Tom: <unk> announced a <unk> <unk>.
After year end. So this will be his last earnings call bundles.
Tom: Budd was here for the formation of the bank in 2005.
Tom: He handle all back office functions cash management HR. In addition, as finance duties.
Tom: So when Bud came on board.
Tom: So, but two things.
Tom: <unk> hired a head of deposit operations.
Tom: Right.
Tom: And also in our bulk bonuses.
Tom: And.
Tom: You said you didn't think the deposit ops person was really all that good and sure enough. He resigned two weeks before we open the buying.
Tom: And when you.
Tom: Through the phone system in the trash you've got a new one.
Tom: After that I think tailbud, how to do anything in the back optioning more I'll, let him handle that and you've done a great job. He's obviously the stock price is still depressed.
Tom: At current levels.
We started it was $1 66, a share in 2005 and assumes 60 as today's of Motors clearly done an outstanding job, but thank you for all you've done for the company. So with that we'll turn it open it up for questions now.
Speaker Change: Thank you.
Speaker Change: Now be conducting a question and answer session.
Speaker Change: You would like to ask a question. Please press star one on your telephone keypad.
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Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you. Our first question comes from the line of Graham <expletive> with Piper Sandler. Please proceed with your question.
Graham: Hey, good evening evening, everyone How's it going.
Graham: Great. Thanks.
Just wanted to start on the loan side of things I know, we talked a little last quarter you talked about it.
Just a bit just now but.
Graham: I think things are a little slower than I expected this quarter on the loan growth side and I add some payoffs.
Graham: But we had talked about that one 5 billion of liquidity you wanted to deploy.
Graham: Trying to get a sense for.
Graham: I guess, a better sense for how much loan growth you expect in 2023, whether it'd be a dollar amount or a percentage growth number or something to just set the set the bar at going forward and then I guess also.
Graham: In tandem with this you think Youll just have this elevated liquidity position for a bit longer than you thought last quarter basically how are things looking on that front I'd say relative to where you were three months ago.
Graham: Hey, Brian This is Tom.
We're quite optimistic.
So as you said in the prepared comments.
Tom: In terms of <unk>.
Tom: Loan demand has picked up markedly pipelines double.
Tom: Where it was and we expect those loans.
Tom: That's a 90 day pipeline so.
We kind of know what the next 90, it looks like it could be a little drag on that it could take.
120 days to close.
The amount in that pipeline, but that that kind of funding that will give us a nice number at the end of the year.
Speaker Change: We don't.
Speaker Change: I am participating high single digits for the year.
Is kind of what we're in our internal budget. So we're budgeting so.
Speaker Change: We think that the loan demand is clearly coming back.
Speaker Change: In terms of and maybe we're doing a better job.
Speaker Change: Get out in the market and we will market and deposits for <unk>.
Last night's 10 months and we honestly.
Speaker Change: Lift and obviously marketed both loans and deposits, but we're certainly got a real key on loans right now compared to where we were before right.
Speaker Change: Okay.
Speaker Change: It's helpful and I guess as you look at loan growth it sounded like C&I lines are.
Speaker Change: Pretty much just staying where they are.
Speaker Change: I guess I'd add a percentage basis, where do you think the growth is going to come from from your customer base what segment or are we talking CRE here. Our construction what are the main areas that youre seeing demand pickup in I guess.
Honestly already but.
And a lot of.
Speaker Change: There's a lot of different things I mean.
Whether it's marina in Florida or whatever else.
Speaker Change: There is some construction.
Speaker Change: Out there honestly, Florida is continuing to see very nice growth.
Speaker Change: With a population inflows that we have there so.
Speaker Change: Certainly we hope to see a nice pick up.
To where it's been and I think if we get some lower rates towards the back half of the year hopefully we can see some C&I growth.
Speaker Change: Our pipeline today includes some C&I.
Speaker Change:
We're optimistic that we'll grow everything but.
Speaker Change: We don't we've got room, certainly we've got room to grow CRE, when we got some room to drive.
Structuring as well we've got room in our in our bucket. So we feel good about we're not we don't feel like we will have to constrict any.
Speaker Change: Any one segment.
During the year frame.
Okay. That's helpful and then.
Speaker Change: But or whoever wants to take this.
Speaker Change: I think you said that there is some.
Speaker Change: Obviously, there are some one timers called out in the release and then a higher write down on the tax credit investment, but I guess, just specifically in that accrual.
That was booked this quarter.
Speaker Change: At the end of the day was that a $1 $9 million net benefit to the bottom line because in the release. It looked like there was there was a tax benefit directly tied to that accrual of.
What was it $4 1 million.
Is that is that the right way to think about that that it was at the end of the day, even though it hurt expenses by a little bit it was actually $1 9 million benefit to the bottom line.
Speaker Change: Well you had $4 one made in tax credit and the tax expense related to that was $3 3 million.
Speaker Change: So are you looking at something else.
Speaker Change: No no that makes sense I thought that $2. One 5 million that was called out in the non-GAAP was Oh no that's perfect.
Speaker Change: Totally different yes, that's privileged tax okay.
Speaker Change: Okay.
Speaker Change: Okay, and so but the run rate essentially at the end of the day with $44 million like you said and mid single digit from here yes.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Alright that makes sense and then I guess just the last one for me would be on the margin specifically just deposit costs it sounds like.
Speaker Change:
Speaker Change: At the end of quarter cost of interest bearing deposits was actually lower than the average rate.
Speaker Change: If the average is four 6% at period 404.
Speaker Change: Are you starting to see some some actual relief and the cost of deposits move lower on the interest bearing side or is that just more stabilization at this point than anything.
Speaker Change: Well, we're working at it Graham I guess.
Speaker Change: It takes effort, but it doesn't happen it doesn't happen without effort on our part obviously, but you know what.
Speaker Change: We're trying to rationalize the higher cost deposits that we said so.
Speaker Change: We're trying to reduce.
Speaker Change: We're reducing certain deposit rates.
We obviously have a.
Speaker Change: We're in a good position from a liquidity standpoint.
We.
Speaker Change: We need to improve margins. So we're working hard at that but none of us are.
Speaker Change: Nave enough to think our charge offs are going to stay at 10 basis points for the rest of the micro reader.
Speaker Change: They can be there can be times, where it will be higher than 10 basis points a year. So we need to have higher margins in order to absorb the loan losses from that as well. So yeah. We've got to improve margins. That's certainly a focus that we have for the whole year end.
Speaker Change: There's only one way to do it in a raise loan rates and lower deposit cost. So that's what certainly we're not forecasting in our internal budgets any rate cut.
Speaker Change: Alright increases for that matter, we always forecast flat rates and.
Speaker Change: We're gonna have to to make it based on what we have.
Speaker Change: The cards, we are dealt we don't count on that getting a read shuffle and getting better cars into that.
Speaker Change: Okay does that answer your question Greg.
Greg: Definitely definitely okay. That's all for me guys and bug congratulations and good luck. Thank.
Thank you.
Greg: Right.
Greg: Thank you. Our next question comes from the line of Steve Moss with Raymond James. Please proceed with your question.
Stephen M. Moss: Hi, good afternoon.
Maybe just starting off on just circling back to loan growth here the quarter was driven with a tilt towards <unk>.
Stephen M. Moss: Just curious do.
Stephen M. Moss: Do you expect this will continue here for another quarter or two.
Stephen M. Moss: Looking to maybe.
Just trying to guess that's hard increase your asset sensitivity just the dynamics, there and what kind of products you put on as well.
Stephen M. Moss: Hum.
Stephen M. Moss: First of all.
Speaker Change: Yeah, we didn't we didn't really have any.
Speaker Change: Loan growth in the quarter.
Speaker Change: And I don't think we've got on the residential side I don't think we don't have much.
Speaker Change: They are safe.
Speaker Change: What do you see there.
Speaker Change: I had a fixed.
Speaker Change: Six 8% quarter over quarter.
Speaker Change: For one to four family.
Speaker Change: Yes.
Speaker Change: One to four family with certainly kind of part of the driver of the growth.
During the quarter, but that's an anomaly.
Speaker Change: Focus on commercial clients, where we're going to see our growth again commercial C&I and CRE.
Speaker Change: Bread and butter exactly rent, though.
Speaker Change: I mean, excuse me net rent and rent node.
Speaker Change: Okay wonderful.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: There's still a lot of big.
Yeah and the.
Rest of your question I'm, sorry, I'll focus on that stake give me the sure.
Speaker Change: Yes, I'm just thinking.
Speaker Change: Just sticking on assets Im just making it too.
Speaker Change: A more broader question, obviously brake pads should help you guys here just curious all right.
Speaker Change: What youre doing either on the balance sheet.
Speaker Change: To benefit from potential rate cuts and.
Speaker Change: Hey, where youre positioned.
When it moves up 25 basis points to your margin.
Kirk: This is Kirk.
Kirk: We are liability sensitive, but it is not massively were pretty pretty close to neutral at this point and that's where <unk> always tried to direct this bank.
Kirk: I think we're a lot more neutral than we were or.
Kirk: <unk> been liability sensitive compared to where we were a year ago.
Kirk: I think at this point, if there was a nominal increase in rates or a decrease in rates as we're talking about we don't think it's going to have a major more than like.
Kirk: 2%, 3% and that's at a 1% rate change over a year. So it's pretty nominal so we're playing the hand that we're dealt right now we think the repricing story.
Kirk: It is something that really is going to help us a lot over the next year and we like whats happening with the securities too. So we like where we are today.
Speaker Change: Okay, Great I appreciate all that color and just one more thing I apologize if I missed it on the credit card income I know there is I heard the issue with the vendor and you guys mentioned just.
Speaker Change: Curious how you guys are thinking about the growth for that business in the upcoming year, how much of a pickup.
Speaker Change: Thanks, Rodney rushing.
Speaker Change: Yes, we had we.
We had a vendor billing, where we actually had double expenses for the fourth quarter.
Speaker Change: Which cost of revenue.
Rodney Russian: Hurt the credit card income.
Rodney Russian: For the fourth quarter a bit.
Rodney Russian: We also went through a conversion, which I noted during the year all of that is behind us now.
Rodney Russian: <unk>.
Rodney Russian: Besides our growth.
Rodney Russian: With our own commercial customers with P cards and credit cards were adding.
Rodney Russian: Agent banks.
Rodney Russian: 'twenty three we added 14 other banks correspondent banks are issuing credit cards.
Rodney Russian: You know we share that revenue with them through the American Bankers Association endorsed program.
But through all of these new issuers, we're adding in our pipeline of new banks.
Rodney Russian: <unk> is stronger for 2024 and it was 23.
Speaker Change: Okay great.
Speaker Change: All the color guys and best of luck on your retirement.
Speaker Change: Alright, thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Dave Bishop with Husky Group. Please proceed with your question.
David Jason Bishop: Yes, good evening gentlemen.
Okay.
I think in the prepared remarks, you said the outlook for it'll be a balanced approach between loan and deposit growth I think for the year, how should we think about the funding of loan growth.
David Jason Bishop: High single digit is gonna be purely cat deposits or is going to be a combination of runoff from cash and securities just curious.
Speaker Change: Should we think about that.
Speaker Change: It's going to be deposits, we're trying to be balanced this year on dollars, so a little bit different obviously in percentage, but we're trying to be balanced on dollars.
Speaker Change: And remind me the cash flow.
From the Securities portfolio, what you are expecting this year.
Speaker Change: About $2 billion.
Speaker Change: Debate.
Speaker Change: Sorry.
Loans.
Speaker Change: And the securities.
Speaker Change: Okay.
Speaker Change: It's about $7 million a month to pay down.
Speaker Change: $7 million okay.
And we haven't.
Speaker Change: Yes.
Speaker Change: $350 million or so in maturities.
Speaker Change: Got it.
Speaker Change: Originations this quarter.
Speaker Change: I missed it during the preamble.
Speaker Change: What was the new origination yields on loans.
Speaker Change: Origination right yeah.
Speaker Change: It was.
Speaker Change: 834 for the quarter.
Got it and then more of a housekeeping item I know theres a lot of noise in the tax number this quarter just curious what we should.
Speaker Change: Model for a good tax rate moving forward.
Speaker Change: Okay.
17 five.
Speaker Change: Perfect and then Tom you mentioned the.
Speaker Change: The new hire in Memphis, obviously, a good a good start there and just curious.
Speaker Change: If you sort of had some numbers of the buy and how big you think that market could go to either on the loan deposit side or both.
Speaker Change: But we don't we don't really go into any market. If we don't think you can achieve.
Speaker Change: $300 million minimum three year period of time in loans and deposits. So that this would certainly fit in that.
Speaker Change: As well in there these are.
Speaker Change: Joe's team, they're gonna be relationship bankers are not going to be transactional bikers and that's what we prefer to build on this relationship bikers layers of we've already.
Speaker Change: We.
Our bankers are coming from a number of different buyers. So we get a little cross.
Speaker Change: All they should layer.
Speaker Change: Uh huh.
Speaker Change: Faithful. So we're we're optimistic that we can.
Speaker Change: We can be successful in Memphis.
Speaker Change: Got it thanks, and yes, but congratulations on the retirement.
Speaker Change: Thank you.
Thank you Doug.
Speaker Change: Thank you everybody for listening on the call I don't think there's any other questions, but appreciate it by the end of the day they have a great evening.
Speaker Change: This concludes today's conference you may disconnect your lines at this time thank.
Thank you for your participation.
Speaker Change: Mhm.
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Speaker Change: Hum.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change:
[music].
Speaker Change: Okay.
Speaker Change: [music].