Q1 2024 Equity Bancshares Inc Earnings Call
Hello, and welcome to the equity Bancshares incorporated Q1 2024 earnings Conference call. My name is Carrie and I'll be coordinating your call today.
Harry: Hello and welcome to the Equity Bancshares Incorporated Q1 2024 earnings conference call. My name is Harry, and I'll be coordinating your call today. If you'd like to ask a question during Q&A, you may do so by pressing star 1 on your telephone keyboard. I would now like to hand over to your host, Brian Katzfey, Vice President, Director of Corporate Development and Investor Relations at Equity. Please go ahead.
If you'd like to ask a question during the Q&A you may do so by pressing star one on your telephone keypad.
I would now like to hand over to your host Bryan Kennedy Vice President director of corporate development and Investor Relations at equity to begin. Please go ahead.
Unknown Executive: Good morning, Thank you for joining us today for equity Bancshares first quarter earnings call before we begin let me remind you that today's call is being recorded and is available via webcast investor equity Bank Dot com, along with our earnings release and presentation materials.
Brian Katzfey: Good morning. Thank you for joining us today for Equity Bancshares' first quarter earnings call. Before we begin, let me remind you that today's call is being recorded and will be available via webcast at investor.equitybank.com, along with our earnings release and presentation materials. Today's presentation contains forward-looking statements that are subject to certain risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed. Following the presentation, we will allow time for questions and further discussion. Thank you all for joining us. With that said, I'd like to turn the call over to our Chairman and CEO, Brad Elliott.
Unknown Executive: Today's presentation contains forward looking statements, which are subject to certain risks uncertainties and other factors that could cause actual results to differ materially from those discussed.
Unknown Executive: Following the presentation, we will allow time for questions and further discussion. Thank you all for joining us with that I'd like to turn the call over to our chairman and CEO Brad Elliott.
Brad S. Elliott: Good morning.
Brad S. Elliott: Good morning, and thank you for joining Equity Bancshares' earnings call. We're excited today to take you through our first quarter's results, including record net interest income. Strong overall earnings and the completion of our merger with Rockhold Bancorp just 67 days after the formal announcement. Joining me today is Rick Sems, our Bank President, Chris Navratil, CFO, and Krzysztof Slupkowski, our Chief Credit Officer. We entered the year positioned to grow our balance sheet and revenue streams through both organic and acquisitive avenues.
Brad S. Elliott: Thank you for joining equity Bancshares earnings call.
Brad S. Elliott: We're excited today to take you through our first quarters results, including record net interest income.
Speaker Change: Strong overall earnings.
Brad S. Elliott: And the completion of our merger with Rockhold Bancorp, just 67 days after a formal announcement.
Brad S. Elliott: Joining me today is Rick Sims, our bank President, Chris <unk>, CFO, Christoph <unk>, our Chief Credit Officer.
Brad S. Elliott: We entered the year positioned to grow our balance sheet and revenue streams.
Brad S. Elliott: Both organic and acquisitive avenues.
Brad S. Elliott: During the quarter, we executed on this positioning with the cash acquisition of Rockwell as well as organic commercial loan growth.
Brad S. Elliott: During the quarter, we executed on this positioning with the cash acquisition of Rockhold as well as the acquisition of Organic Commercial Loan Group. The Bank of Kirksville added more than $340 million, and Core Deposits at eight locations in North Central Missouri.
Brad S. Elliott: The bank of Kirksville added more than $340 million.
Core deposits over eight locations in north Central Missouri.
Brad S. Elliott: Our new team members in the market are excited to be a part of the equity bank franchise and continued to provide excellent service to their communities.
Brad S. Elliott: Our new team members in the market are excited to be a part of the Equity Bank franchise and continue to provide excellent service to their communities. Our team remains focused on organic growth initiatives while completing the transaction. Rick has worked hard to enhance the sales culture throughout our organization, which will pay dividends through the remainder of the year. We have excellent leaders and operators throughout our organization that I expect to thrive under Rick's leadership.
Yes.
Brad S. Elliott: Our team remains focused on organic growth initiatives, while completing the transaction.
Brad S. Elliott: Rick has worked hard to enhance the sales culture throughout our organization, which will pay dividends through the remainder of the year.
Brad S. Elliott: We have excellent leaders and.
Brad S. Elliott: Operators throughout our organization that I expect to thrive under Ricks leadership.
Brad S. Elliott: Growth in earnings driven by our growing balance sheet allowed us to emphasize shareholder return through continuation of quarterly dividends.
Brad S. Elliott: Growth in earnings driven by our growing balance sheet allowed us to emphasize shareholder return through continuation of quarterly dividends, as well as active participation in our share repurchase program. During the quarter, we repurchased 209,591 shares under the current authorization of up to 1 million shares, while uncertainty remains.
Brad S. Elliott: As well as active participation in our share repurchase program.
During the quarter, we repurchased 209591 shares under the current authorization of up to 1 million shares.
Brad S. Elliott: While uncertainty remains.
Brad S. Elliott: In the economic environment, our bank closed the quarter with a well-positioned balance sheet to continue to take advantage of opportunities to grow both organically and through strategic M&A. Our team members are engaged, and have the tools to meet the needs of our community. I am proud of how we started the year and look forward to continuing our positive momentum. I will let Chris talk you through our financial results.
Brad S. Elliott: The economic environment, our bank closes a quarter with a well positioned balance sheet to continue to take advantage of opportunities to grow both.
Brad S. Elliott: Organically.
Brad S. Elliott: And through strategic M&A.
Brad S. Elliott: Our team members are engaged.
Brad S. Elliott: It has the tools to meet the needs of our community.
Brad S. Elliott: I am proud of how we've started the year and look forward to continuing our positive momentum.
Brad S. Elliott: I will let Chris talk you through our financial results.
Chris: Thank you Brad last night, we reported net income of $14 9 million or <unk> 90 per diluted share adjusting for merger expenses incurred related to a bank of cross sell as well as the day one provision for the acquired performing loans net income was $16 1 million or one points a year of <unk> 30 per diluted share that.
Chris M. Navratil: Thank you, Brad. Last night, we reported a net income of $14.9 million, or $0.90 per diluted share. Adjusting for merger expenses incurred related to Bank of Kirksville, as well as the Day 1 provision for the acquired performing loans, net income was $16.1 million, or $1.030 per diluted share. Interest income was up $4.7 million from the previous quarter, while net interest margin improved from $349 to $375. We will discuss margin dynamics in more detail later in this call.
Interest income was up $4 7 million linked quarter, while net interest margin improved from $3 49 to $3 75.
Chris: We will discuss margin dynamics in more detail later in this call.
Chris M. Navratil: Non-interest income, adjusted for the loss on the repositioning of investments in Q4, was up $4.5 million in the late quarter. The positive trend was driven by $2.7 million in positive outcomes on special assets, as well as $1.2 million in gain on acquisitions related to the Bank of Kirksville transaction. In addition to these non-run rate items, we also saw service fee revenue, including service charges, debit card, credit card, trust, and wealth management, and mortgage improved by 5% during the quarter. Non-interest expenses adjusted for one-time M&A charges totaling $35.5 million were modestly off the lead quarter and in line with expectations based on the timing of the Bank of Kirksville closing.
Chris: Noninterest income adjusted for the loss on repositioning of investments in Q4 was up $4 $5 million linked quarter. The positive trend was driven by $2 7 million and positive outcomes on special assets as well as $1 $2 million gain on acquisition related to the bank of America transaction. In addition to these non run rate items. We also saw service.
Chris: Fee revenue, including service charges debit card credit card Trust and wealth management and mortgage improved by 5% during the quarter.
Chris: Noninterest expenses adjusted for onetime M&A charges totaling $35 5 million were modestly up linked quarter and in line with expectations based on the timing of the bank of America on clubs.
Chris: While we are still in the process of finalizing the accounting for the Bank of America transaction original estimates continue to appear in line with 2020 for EPS accretion of 36%.
Chris M. Navratil: While we are still in the process of finalizing the accounting for the Bank of Kirksville transaction, original estimates continue to appear in line with 2024 EPS accretion of 36 cents. The gain on acquisition is primarily due to the improvement in the fair value of Kirksville's bond portfolio between the announcement date and close. As previously disclosed, the merger of systems will be completed during Q2, after which cost savings are expected to be fully realized.
Chris: The gain on acquisition is primarily due to the improvement in the fair value of <unk>. So the bond portfolio between the announcement date and close.
Chris: As previously disclosed merger systems will be completed during Q2, after which cost savings are expected to be fully realized.
Chris M. Navratil: Our GAAP net income included a provision for credit losses of $1.0 million. The provision from the court is entirely attributable to the day one adjustment to reflect the acquisition of the Bank of Kirksville portfolio. We continue to hold reserves for potential economic challenges, but to date, we have not seen any specific concerns in our operating market. The March 31 coverage of ACL loans is 1.28%. I'll stop here for a moment and let Krzysztof talk through our asset quality for the quarter.
Chris: Our GAAP net income included a provision for credit loss of $1 1 billion.
Chris: The provision for the quarter is entirely attributable to the day, one adjustment to reflect the acquisition of the bank of America portfolio.
Chris: We continue to hold reserved for potential economic challenges. However to date, we have not seen any specific concerns in our operating markets.
Chris: Our March 31 coverage of ACL alone this 128%.
Chris: Ralph here for a moment, but christophe talked through our asset quality for the quarter.
Christophe: Thanks, Chris asset quality metrics continued to scream at historically low levels with total classified loans closing the quarter at $39 million or $6, 65% of total bank regulatory capital the acquisition of bank of currency had a negligible impact on the bank's problem asset position.
Krzysztof P. Slupkowski: Thanks, Chris. Asset quality metrics continue to be at historically low levels, with total classified loans closing the quarter at 39 million, or 6.65 percent, of total bank regulatory capital. The acquisition of Bank of Kirksville had a negligible impact on the bank's problem asset position, and non-accrual loans as a percentage of total loans remain below 70 basis points. Net charges analyzed were eight basis points for the quarter. Recognized charges have been reflective of specific circumstances on individual credits and not related to broader concerns in the markets in which we operate.
Christophe: Non accrual loans as a percentage of total loans remained below 70 basis points net charge offs annualized were eight basis points for the quarter.
Chris: Nice charge offs have been reflect difficult specific circumstances on the individual credits and not related to broader concern in the markets in which we operate under.
Krzysztof P. Slupkowski: Under the current interest rate environment, we have updated our portfolio stress test and completed a full cycle of annual reviews and renewals, incorporating the latest operating results of our borrowers. These evaluations continue to affirm the resiliency of the portfolio and highlight the strength of local economies, as evidenced by our credit quality trends. Nevertheless, we acknowledge that risk remains, and through the end of the first quarter, we have not seen specific deterioration in any of our portfolios.
Chris: Under the current interest rate environment, we have updated our portfolio stress test and completed a full cycle of annual reviews than renewables and incorporating the latest operating results of our borrowers. These evaluations continue to affirm the resiliency of the portfolio and highlight the strength of local economies as evidenced by our credit quality.
Chris: Nevertheless, we acknowledge that risk remains.
Through the end of the first quarter, we have not seen specific deterioration in any of our portfolios as.
Krzysztof P. Slupkowski: As mentioned previously, we benefited in the quarter from the resolution of specific assets totaling 2.7 million, and this positive result is primarily driven by recovery on two credits from the Almena State Bank acquisition and the efforts of our legal and special assets.
Chris: As mentioned previously we benefited in the quarter from the resolution of specific assets totaling $2 7 million and reflected in other income.
Chris: This positive result was primarily driven by recovery in two credits from the Illumina State Bank acquisition and the effort of our legal and special assets team led by Brett Rieber Engineering personnel Chris.
Unknown Speaker: Thanks, Krzysztof. Average loans increased during the quarter at an annualized rate of 11.1%, excluding the impact of the Bank of Kirksville, which added $67.6 million in average balances into the quarter. During the quarter, the coupon yield on loans increased to 6.83% from 6.71%. Overall, loan yields improved 23 basis points during the quarter to 6.85%, as the headwinds impacting Q4 2023 results were not repeated. Our bond portfolio yield improved to 3.84% from 2.73%.
Chris: Thanks Christoph.
Chris: Average loans increased during the quarter at an annualized rate of 11, 1%, excluding the impact of the bank of <unk>, which added $67 6 million in average balances in the quarter.
During the quarter to coupon yield on loans increased to $6, 83% from $6, 71% overall loan yields improved 23 basis points during the quarter to 685% as the headwinds impacting Q4 of 2020 results were not repeated.
Chris: Our bond portfolio yield improved to 384% from 273% the positive China was driven by the bond repositioning during the fourth quarter. In addition to the purchase accounting marks on a bank of America portfolio.
Unknown Speaker: The positive trend was driven by the bond repositioning during the fourth quarter, in addition to the purchase accounting marks on the Bank of Kirksville portfolio. Cost of Interest Bearing Deposits increased 19 basis points to 2.77% in the quarter, while the contribution of average non-interest bearing deposits to the average deposit mix declined to 21.7% from 22.8%.
Chris: Cost of interest bearing deposits increased 19 basis points to 277% in the quarter, while the contribution of average noninterest bearing deposits. So the average deposit mix declined to 21, 7% from 22, 8%.
Unknown Speaker: The Bank of Kirksville transaction was accreted to this number, and we closed the quarter with a period end ratio of 22.5%. That interest income totaled $44.2 million during the quarter, up $4.7 million in the fourth quarter, as our earnings stream benefited from previous period strategic decisioning and continued well-paced rising funding costs. We continue to carry excess cash balances, which are offset by wholesale borrowing. We are currently earning a positive spread on these positions, though it does have the effect of reducing margin. We calculate that the excess liquidity has the effect of reducing margin by 8 basis points for the current quarter. Non-interest expense during the quarter was $35.5 million, excluding $1.6 million in realized merger charges.
Chris: Thank you Kirk still transaction was accretive to this number we closed the quarter with a period end ratio of 22, 5%.
Net interest income totaled $44 $2 million during the quarter up $4 7 million in the fourth quarter as our earnings streams benefitted from previous periods strategic Decisioning and continued to outpace rising funding costs.
Chris: We continue to carry excess cash balances, which are offset by wholesale borrowings.
Chris: We are currently earning a positive spread on these positions. So it does have the effect of reducing margin, we calculate that the excess liquidity has the effect of reducing margin by eight basis points for the current quarter.
Chris: Noninterest expense during the quarter was $35 5 million, excluding $1 6 million in realized merger charges.
Unknown Speaker: Salaries and benefits increased $1.4 million due to annual compensation adjustments, the addition of Kirkskill team members, and footnoted payroll tax impact. As previously disclosed, the integration of systems following the Bank of Kirkskill transaction will take place in Q2, after which cost days will be fully realized. Our outlook slide includes a forecast for the second quarter as well as full year 2024. We do not include future rate changes, though our forecast still includes the effects of lagging repricing in both our loan and deposit portfolios. Our provision is forecast to be approximately 12 basis points to average loans. Right?
Chris: Salaries and benefits increased $1 $4 million due to annual compensation adjustments. The addition of critical team members and Frontloaded payroll tax impact as previously disclosed the integration of systems. Following the bank of America called transaction will take place in Q2, after which cost saves will be fully realized.
Chris: Our outlook side includes the forecast for the second quarter as well as full year 2024, we do not include future rate changes, though our forecast still includes the effect of lagging repricing in both our loan and deposit portfolio.
Chris: Provision is forecasted to be approximately 12 basis points to average loans right.
Brad S. Elliott: I'm pleased with our start to 2024 and all that we are positioned to accomplish moving forward, as we continue to emphasize value creation in our markets. Our team was able to successfully close a merger transaction in 67 days following the announcement, an incredible accomplishment in the current environment. I need to give Julie Huber and her entire team a big shout out.
Speaker Change: I am pleased with our start to 2024 and all of that we are positioned to accomplish moving forward as we continue to emphasize value creation in our markets.
Speaker Change: Our team was able to successfully close the merger transaction and 67 days following announcement, an incredible accomplishment in the current environment I need to give julia humor and her entire team a big Shadow. This result is only possible with the full leadership team working together.
Brad S. Elliott: This result is only possible with the full leadership team working together. While working through the transaction, our legacy, customer base, and markets remained in focus. We started the quarter strong, but have seen some of our expected Q1 loan closings move to Q2. In addition, we continue to take advantage of opportunities to exit certain credits and low-yielding loans.
Speaker Change: While working through the transaction our legacy customer base end markets remains in focus we started the quarter strong.
Speaker Change: But I've seen some of our expected Q1 loan closings moved to Q2. In addition, we continue to take advantage of opportunities to exit certain credits and low yielding loans with that said, we believe our prospects remained strong for the remainder of the year.
Brad S. Elliott: With that said, we believe our prospects remain strong for the remainder of the year. As we close the quarter, pipelines remain strong, increasing 15% from year end, and we look to build on our culture of sales as we move forward. As we drive a culture of sales, we have hired a managing director of sales and training, a seasoned executive, Betty Burquist. Betty will be aligning our team with the primary focus of organic growth. During the quarter, customer deposit balances, excluding Bank of Kirksville accounts, trended consistently with expectations as excess municipality dollars that were added in Q4 were moved out. Total deposits closed the quarter at $4.4 billion.
Speaker Change: As we closed the quarter pipelines remained strong increasing 15% from year end and we look to build on our culture of sales as we move forward as we drive a culture of sales we have hired a managing director of sales and training seasoned executive Betsy Bergquist, Betty will be aligning our team with the primary focus.
Speaker Change: Organic growth.
Speaker Change: During the quarter customer deposit balances, excluding bank of Kirksville accounts trended consistently with expectations as excess municipality dollars that were added in Q4 were moved out total deposits closed the quarter at $4 4 billion.
Unknown Speaker: Loans as a percentage of deposits closed at 79.7%, positioning our bank to be a capable lender for new and current customers in our footprint. Our teams are focused on value creation through deepening relationships, identifiable expertise, and application of a high operating tempo that ensures our customers receive the high level of service they have come to expect of our bank. This focus, coupled with the opportunity provided by our balance sheet position and growing marketplaces, has me excited about our outlook for the remainder of the year.
Speaker Change: Loans as a percentage of deposits closed at 79, 7% positioning our bank to be a capable lender for new and current customers in our footprint.
Speaker Change: Our teams are focused on value creation through deepening relationships identifiable expertise and application of our high operating tempo that ensures our customers receive the high level of service they have come to expect of our bank.
Speaker Change: This focus coupled with the opportunity provided by our balance sheet position and growing marketplaces have me excited for our outlook over the remainder of the year partnering with the bank of Clarksville and Theyre committed team of banking professionals provide added scale and market expansion, which will contribute to our growth goes through.
Unknown Speaker: Partnering with the Bank of Kirksville and their committed team of banking professionals provides added scale and market expansion, which will contribute to our growth goals throughout 2024. Early feedback shows an engaged team exceeding expectations. As indicated on our Outlook slide, we continue to expect to drive mid to high single-digit organic loan growth in 2024. We have the strategy, discipline, tools, and people in place to realize this expectation. I look forward to assisting the team in execution. Service revenues improved quarter over quarter, including increasing contributions from CARD, trust, and wealth management, service charges, and mortgage.
Speaker Change: 2024 early feedback shows an engaged team exceeding expectations.
Speaker Change: As indicated in our outlook slide we continue to expect to drive mid to high single digit organic loan growth in 2024, we have the strategy discipline tools and people in place to realize this expectation I look forward to assisting the team and execution.
Speaker Change: Service revenues improved quarter over quarter, including increasing contributions from card Trust and wealth management service charges and mortgage our teams are focused on enhancing customer value and 2024 and beyond which we expect to drive expansion of business lines moving forward.
Speaker Change: Finally, I am pleased to announce the addition of Craig done regional CEO in our community east market, including Western and North Central Missouri, Craig joins us with extensive experience in the markets. He will now be overseen I look forward to partnering with Craig as we look to continue to build in these markets.
Brad S. Elliott: Our teams are focused on enhancing customer value in 2024 and beyond, which we expect to drive expansion of business lines moving forward. Finally, I am pleased to announce the addition of Craig Dunn, Regional CEO, to our Community East Market, including Western and North Central Missouri. Craig joins us with extensive experience in the markets he will now be overseeing. I look forward to partnering with Craig as we look to continue to build in these markets.
Speaker Change: Our company is well capitalized our asset quality metrics continue to be the best they have been in the history of equity.
Speaker Change: Our balance sheet structure is positioned for times like this.
Speaker Change: Our team is experienced and we have a widespread granular deposit base.
Brad S. Elliott: Our company is well positioned, and our asset quality metrics continue to be the best they have been in the history of equity. Our balance sheet structure is positioned for times like this.
Speaker Change: Our strategic directives for 2024 have me more excited than I have been since the beginning of 2020.
Brad S. Elliott: Our team is experienced, and we have a widespread granular deposit base. Our strategic directives for 2024 have me more excited than I have been since the beginning of 2020. Our team has taken the board's strategic initiatives and is hitting the ground running. We look forward to continuing to redeploy assets into customer relationships that build franchise value. We continue to see momentum on the M&A front and expect that to continue. We've had several positive conversations, and we feel the distressed market will begin to resolve itself as well. Equity will remain disciplined in our approach to assessing these opportunities, emphasizing value while controlling delusion and the earn-back timeline. With that, we are happy to take your questions.
Speaker Change: Our team has taken the board's strategic initiatives.
Speaker Change: And are hitting the ground running.
Speaker Change: We look forward to continuing to redeploy assets into customer relationships that build franchise value.
Speaker Change: We continue to see momentum on the M&A front and expect that to continue.
Speaker Change: We've had several positive conversations and we feel the distressed market will begin to resolve itself as well.
Speaker Change: Equity will remain disciplined in our approach to assessing these opportunities <unk>.
<unk> value, while controlling dilution and the earn back timeline.
Speaker Change: With that we're happy to take your questions.
Speaker Change: If you would like to ask a question. Please press star followed by one on Youll tend to think keep that now if you change your mind I'd like to withdraw yourself from the queue. Please don't start too.
Operator: If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind and would like to withdraw yourself from the queue, please dial star two. And when preparing to ask your question, please ensure that your phone is unmuted locally.
Speaker Change: And when comparing to ask a question. Please ensure that you will find us on mute locally.
Speaker Change: Our first question today is from the line of Terry Mcevoy Stephens Terry.
Operator: Our first question today is from the line of Terry McEvoy of Stevens. Terry, your line is not open. Please go ahead. Terry McEvoy, your line is now open if you'd like to proceed with your question. My apologies, Terry. If you could just repeat your question, that would be great. Thank you.
Speaker Change: Sir Your line is now open. Please go ahead.
Speaker Change: Okay. Terry Mcevoy. Your line is now open if you'd like to proceed with your question.
Terence James McEvoy: My apologies Terry if you could just repeat your question that would be great. Thank you.
Terence James McEvoy: Yes, sorry about that good morning, everybody I'm, Chris how.
Terence James McEvoy: How are you thinking about a higher for longer rate environment in terms of where and when deposit rates will peak in your forecast.
Terence James McEvoy: Sorry about that. Good morning, everybody.
Chris M. Navratil: Chris, how are you thinking about a higher for longer rate environment in terms of where and when deposit rates will peak in your forecast?
Terence James McEvoy: Yes so.
Chris M. Navratil: Yeah, so, Terry, our forecast currently isn't including any kind of change in interest rates. So we're not factoring in any reductions or increases. So it's holding flat to where we are today. I think, you know, as we look at peaking out deposits
Chris: Jerry our forecast currently isn't including any kind of changes in interest rates. So we're not factoring any reductions or increases. So it's holding flat to where we are today I think as you look at peaking out deposit rates, we've been thinking about between 40 and 50 of the maximum data we're still sub 40 today sorry about that.
Chris M. Navratil: We've been thinking about between 40 and 50 as the maximum beta. We're still sub-40 today, so about 36% is our beta thus far. I expect that it is going to get above 40, but I'm optimistic we're not going to get to that.
Chris: 36% as our beta thus far.
Chris: I expect that is going to get above 40%, but I'm optimistic we're not going to get to the high levels that we talked about previously which is that kind of 50 beta perspective.
Chris M. Navratil: but I'm optimistic that we're not gonna get to the high levels that we talked about previously, which is that kind of 50 beta perspective. We're continuing to see opportunities with deposits, and because we have a meaningful aspect of our portfolio that's already out there at kind of what I consider the high ends of the market, we have opportunities to reposition some as well. So we're still thinking about the gap; we expect to hit 40 on an all-in beta and potentially creep above it, but I think we'll stay below the 50 overall, even in the higher for longer world.
Chris: We're continuing to see opportunities with deposits and because we have it.
Chris: Meaningful aspect of our portfolio that's already out there at kind of what are considered high ends of the market, we have opportunities to reposition some as well so.
Chris: We're still thinking about between we expect to hit 40 on and all of that data and potentially creep above it but I think we'll stay below the 50 overall, even higher for longer world.
Speaker Change: It seems like once you're asked the question on fee income can you just remind me, where you've made investments and where you see incremental growth in fees. This year.
Chris M. Navratil: Seems like once you're asked the question on fee income, can you just remind me where you've made investments and where you see incremental growth in fees this year? Yeah, so I think we're seeing incremental growth on the treasury management side of our service revenues. And then we're also seeing it in our wealth management area. So we just kind of rolled out a new, new product set with some bundles on the business side. So we continue to expect to see, you know, growth in that area.
Chris: Great.
Yes, so I think we're.
Speaker Change: We're seeing incremental growth on the Treasury management side and our service revenues and then we're also seeing it in our in our wealth management area. So.
Speaker Change: And we're just kind of rolled out a new product set with some bundles on the business side. So we continue to expect to see.
So growth in that area.
Speaker Change: And our if you remember two or a couple of years ago, We started our corporate credit card.
Chris M. Navratil: If you remember, Terry, a couple years ago, we started our corporate credit card business, and that is still not mature enough, so I think we still have lots of room for expansion, which generates interchange income off of that corporate credit card business.
Speaker Change: Business and that is still not mature yet and so I think we have still lots of room for expansion.
Speaker Change: Interchange income.
Speaker Change: After that corporate credit card business.
Speaker Change: And then maybe I'll squeeze one last one Brad.
Brad S. Elliott: And maybe I'll squeeze one last one in, but Brad, the 67 days from announcement to close, so many other deals have been delayed much, much longer and extended. I guess my question is, you know, what's the special sauce? What's working for you to announce a deal, get it closed, get it converted, and move on to your next one because others just haven't been a success.
Speaker Change: 67 days from announcement to close.
Speaker Change: So many other deals are just have been delayed much much longer than extended I guess my question is whats the special sauce, what's working for you to announce a deal get it closed get it converted and move on to your next one because others just havent been as successful.
Speaker Change: Well I think some of that is just communication.
Brad S. Elliott: Well, I think some of that is just communication with the regulators on, you know, what you're working on, what fits their box and our box, and having it be something in our footprint that doesn't have lots of issues around it. And so, I think it has to do with delegated authority outside of Washington, D.C., which really helps those transactions. You know, let's not tell everybody in the world that that happened so that somebody doesn't figure out how to squash that, so we're crossing our fingers that it's happening that way.
Speaker Change: With.
Speaker Change: The regulators on.
Speaker Change: What you are working on what fits their.
Speaker Change: Their box and our box.
Speaker Change: And having it be something in our footprint doesn't have lots of issues around it.
And so.
I think it has to do with delegated authority.
Outside of Washington D C.
Speaker Change: What really helps those transactions and so.
Speaker Change: We're still tell everybody in the world does that happen, so that somebody who isn't.
Speaker Change: Figure out how to squash that so.
Speaker Change: We're crossing our fingers.
Speaker Change: And it just happens that its happening that way.
Speaker Change: Perfect. Thanks for the insight I appreciate it.
Brett D. Rabatin: Perfect. Thanks for the insight. I appreciate it. Our next question today is from the line of Brett Rabatin of Hovda Group. Brett, your line is open if you'd like to proceed with your question.
Speaker Change: Our next question today is from the line of Brett Robinson, a pump degree.
Brett Robinson: Your line is open if you'd like to proceed with your question.
Richard M. Sems: Good morning. I wanted to start with the commercial real estate portfolio and just what the repricing on that is this year and next year, and just how much opportunity might you have to reset the bar, so to speak, on some of the loan portfolio from a yield perspective?
Brett Robinson: Hey, guys good morning.
Brett Robinson: I wanted to start with this with the commercial real estate portfolio and just what's your pricing on that this year and next year and just how much opportunity much you have to reset the bar so to speak on some of the loan portfolio from a yield perspective.
Brett Robinson: Yes. This is Rick so we're repricing every single month, I mean, roughly on average kind of a $100 million or so and all of those are at.
Richard M. Sems: Yeah, this is Rick. So we're repricing, you know, every single month. I mean, roughly on average, you know, kind of $100 million or so. And all of those are at, you know, as the rates stay longer, we still have quite a bit. And I'll get you the exact number as far as, I don't know, Chris, if you have that for us, what's actually coming up. But about 100 million each month, it looks like we've been on, and we're putting those on, on average, around eight and a half, 8.3 to eight and a half each month.
Brett Robinson: As the rates stay longer we still have quite a bit and I have to get you. The exact number as far as I don't know, Chris if you have that for.
Brett Robinson: Or what's actually coming out, but but but about $100 million each month. It looks like we put on it we're putting those on an average around $8 583 to $8 five each month.
Richard M. Sems: So there's still room to go on that piece of repricing. So we can get you some, the exact numbers for, we look at it each quarter, how much is getting, and coming due. So that's all available. And what we've been doing is, on some of those, we choose, then if we can't get that rate, we choose to exit those relationships. If it's not, if there's not enough people, and business.
Brett Robinson: So there is still room to go on that.
Brett Robinson: <unk>.
Brett Robinson: And that piece of repricing so.
Brett Robinson: We can get you the exact numbers for when we look at it each quarter. How much is getting is coming due so that's all of what we've been doing is on some of those we choose and if we can't get that right we choose to exit.
Brett Robinson: Those relationships.
Brett Robinson: If it is not.
Brett Robinson: If that's not enough.
<unk> business.
Brett Robinson: We started the cycle okay.
Unknown Speaker: We started the cycle, though, over 50% of our portfolio was floating. And so, you know, That's two years ago now, and we didn't go longer on commercial deals. We didn't go longer than five years, and most of the time we were in three years or less. So I don't know the dollar amount that's left in there, but it's not as significant. Yeah, I think.
Brett Robinson: Our portfolio was floating.
Brett Robinson: And so.
Brett Robinson: That's two years ago, now and we didn't go longer on commercial on commercial deals we didn't go longer than five years and most of the time, we were three years or less so I don't know the dollar amount that's left in there, but it's not.
Brett Robinson: As significant.
I think in total.
Brett Robinson: We talked about last quarter I can't remember the exact that will get you that.
Speaker Change: Yes, okay.
Unknown Speaker: Yeah, I think in total, I can't remember. We talked about it last quarter. But I can't remember the executive.
Speaker Change: I appreciate that.
Speaker Change: And then just on the on the loan pipeline. It sounds like you guys are pretty optimistic on growth. This year, maybe relative to some peers and just wanted to hear maybe how much of that was just organic.
Unknown Speaker: We'll get you that. Yeah, go ahead. Yeah.
Unknown Speaker: I appreciate that. And then just on the loan pipeline, it sounds like you guys are pretty optimistic about growth this year, maybe relative to some peers, and I just wanted to hear, you know, maybe how much of that was just organic. Growth with your existing customers versus maybe some opportunities to take market share from maybe some other banks that you're pulling back from, given their balance sheet constraints, you know, etc.
Speaker Change: Growth with your existing customers versus maybe some opportunities to take market share from maybe some other banks that are pulling back given their balance sheet constraints et cetera. So yeah.
Speaker Change: Yeah. So I mean, we're really pushing on getting added calling calling on <unk>.
Speaker Change: Prospects, so we're seeing that.
I think we kind of started that in the fourth quarter and we're starting to see some benefit from that especially on the C&I side. So we had a low growth in the first quarter in C&I, we want to see more of that as we move into the second half of the year.
Unknown Speaker: Yeah, so I mean, we are really pushing on getting out and calling on prospects. So we're seeing that. I think we kind of started that in the fourth quarter, and we're starting to see some benefit from that, especially on the C&I side. So we had a little growth in the first quarter in C&I. We want to see more of that as we move into the second half of the year. So that aspect of it that we're looking at, a lot of that is new, new business.
Speaker Change: So that aspect of it that we're that we're looking at a lot of that is new.
Speaker Change: New business so.
Speaker Change: Again, with new business, though and when it is on the pipeline as you know that there is an absolute guarantee that thats going to close but.
Speaker Change: And more looks we get the more opportunity for this year for next year and the following year.
Speaker Change: Okay, and if I can.
Speaker Change: Sneak in one last one.
Speaker Change: Two on the deals that you guys are looking at is there a benchmark or a way for us to think about.
Unknown Speaker: So again, with new business, though, and when it's in the pipeline, as you know, there's absolutely a guarantee that that's going to close. But the more looks we get, the more opportunities for this year, for next year, and the following year.
Speaker Change: Accretion levels that you would consider with transactions from here.
Speaker Change: Maybe a little bit of detail on that Brian in terms of accretion level. What are you referring to like what we're looking for in terms of running rate accretion versus what we're willing to accept on dilution.
Unknown Speaker: Okay, if I could sneak in one last one, too, on the deals that you guys are looking at, is there a benchmark or a way for us to think about? You know, accretion levels that you would consider with transactions from here.
Speaker Change: Sure.
Speaker Change: Okay.
Unknown Speaker: Maybe a little bit of detail on Brett and Jerry.
Speaker Change: Yes.
Unknown Speaker: He's on the, in terms of accretion levels, what are you referring to, like what we're looking for in terms of running rate accretion versus what we're willing to accept in terms of dilution or
Speaker Change: The typical parameters around if youre looking at transactions and my guess is that any deals youre looking at.
Unknown Speaker: Yeah, just, you know, the typical parameters around, you know, if you're looking at transactions and, you know, my guess is that any deals that you're looking at, a bank's balance sheet might, might have some underwater assets. And so the pricing might be relatively attractive. And so to some extent, you're fixing someone's balance sheet that's underwater. And so just thinking about those opportunities as they come. You know, what your parameters might be for tangible payback and accretion from an EPS perspective, what you'd be looking for, you know, those sort of things.
Thanks balance sheet, Mike might have some underwater.
So the pricing might be relatively attractive and so to some extent youre fixing someone's balance sheet.
Speaker Change: Your water and so just thinking about those opportunities.
Speaker Change: As they come.
Speaker Change: As your parameters might be for tangible payback and accretion from an EPS perspective, what you'd be looking for those sorts of things.
Speaker Change: So I would say, we haven't changed our parameter on earn back so.
Speaker Change: If accretion.
Waters down equity, we would I mean, it still has to be less than a three year earn back or maybe even less than that because there is some risk in that.
Unknown Speaker: So, I would say we haven't changed our parameters on earn-back, so if accretion waters down equity, we would still have to be less than a three-year earn-back or maybe even less than that because there is some risk of that accretable yield going away quicker, but we haven't changed any of our parameters on what we're looking at from a transaction standpoint.
Speaker Change: Accretable yield going away quicker, but.
We we haven't changed any of our parameters on what we're looking at it from a transaction standpoint.
Speaker Change: Okay. So the thing I would say Brad as we think about those transactions. We're trying to look at diamond terms of the fair value of that balance sheet. After we're done so in the marks are kind of all the way through the process. So.
Unknown Speaker: Brad, as we think about those transactions, we're trying to look at them in terms of the fair value of that balance sheet after we're done, so when the marks are kind of all the way through the process. So as we look at pricing, as we look at a lot of the conversations we're having, it's focused more on what the balance sheet is worth versus what the tangible book value today. So they are willing to accept a little bit less dilution typically just because of the way we're looking at structuring those transactions.
Speaker Change: As we look at pricing has really been a lot of the conversations were having its focus more on on what does the balance sheet worth versus what is tangible book value today.
Speaker Change: So willing to accept a little bit less dilution typically just because of the way we're looking at structuring those transactions.
Speaker Change: Okay.
Speaker Change: That's helpful. Thanks, guys.
Speaker Change: Our next question today is from the line of Andrew Liesch of Piper Sandler Andrew. Your line is open if you would like to proceed with your question.
Unknown Speaker: Okay, that's helpful. Thanks, guys.
Speaker Change: Thanks.
Andrew Brian Liesch: Our next question today is from the line of Andrew Liesch of Piper Sandler. Andrew, your line is open if you'd like to proceed with your question.
Andrew Brian Liesch: Hey, guys sorry, just.
Andrew Brian Liesch: A question now with the bank at Brooksville deal closed has the asset sensitivity of the balance sheet shifted much at all.
Andrew Brian Liesch: Thanks. Good morning, guys. Say just a question now that the Bank of Kirksville deal closed: has the asset sensitivity of the balance sheet shifted much at all?
Speaker Change: Not meaningfully Andrew.
Speaker Change: Sure.
Andrew Brian Liesch: <unk> assets are relatively short, but theres, a little bit of duration in there. So there you are still looking at kind.
Andrew Brian Liesch: Kind of two to three years overall, they don't have a lot of fixed long term on the loan side.
Unknown Speaker: Not meaningfully, Andrew; the Kirksville assets are relatively...
Unknown Speaker: are relatively short, but there's a little bit of duration in there. So you're still looking at kind of two to three years overall. They don't have a lot of fixed long-term liabilities on the long side. And then their liabilities are predominantly non-time-based. So, in theory, completely flexible, but it just kind of depends on how the market moves and competition behaves.
Andrew Brian Liesch: And then their liabilities are predominantly non time base. So.
In theory completely flexible, but just kind of depends on how the market moves and competition.
Andrew Brian Liesch: Okay. So it's still pretty neutral to rate changes.
Andrew Brian Liesch: Yes.
Andrew Brian Liesch: You might talk about some of the positive we're already seeing it we're seeing deposit growth.
Andrew Brian Liesch: Right now, we're seeing a really engaged group of folks and so.
Unknown Speaker: Okay, so it's still pretty neutral on the rate change.
Andrew Brian Liesch: It continues to be a really good source of deposits for us and what we're able to do is in that market, bringing a lot of the digital products that we have and so there's actually a.
Unknown Speaker: Yeah, you might talk about some of the positives we're already seeing up there. Yeah, I mean, we're seeing deposit growth right now. We're seeing a really engaged group of folks, and so it continues to be a really good source of deposits for us. And what we're able to do is, in that market, bring in a lot of the digital products that we have. And so there are actually, from the clientele side, really liking what we're doing.
Andrew Brian Liesch: From the clientele side really liking, what we're doing and as a result I.
Andrew Brian Liesch: I think we're going to continue to see maybe a little bit.
Andrew Brian Liesch: We're kind of pointed to just hold serve there on deposits I think we might continue to see.
Andrew Brian Liesch: Decent growth there through the end of the year.
Speaker Change: Got it that actually kind of leads into our next question is from funding the loan growth for this year is it going to come from client deposit growth or is there any remixing of assets that might be funded as well.
Unknown Speaker: And as a result, I think we're gonna continue to see maybe a little bit, you know, we were kind of wanting to just hold serve there on deposits. I think we might continue to see some decent growth there through the end of the year.
Speaker Change: I think the answer to that is both Andrew and then <unk>.
Speaker Change: Optimistically, we will get all the loan growth that we could hope for and then you can see it.
Speaker Change: The funding via wholesale borrowing as well because we have the capacity to do it.
Unknown Speaker: That actually kind of leads into my next question, which is on funding the loan growth for this year. Is it going to come from client deposit growth, or is there any mixing of assets that might fund it as well? I think the answer to that is both.
Speaker Change: Our bond portfolio, especially the character of our portfolio is very short so youre going to see some cash flow coming in that gives us opportunities to reposition into.
Speaker Change: Loans, we also have some cash as we kind of as you mentioned the phone call that excess liquidity, we're carrying that can be repositioned into loans. So we have opportunities today to redeploy assets ideally in the customer relationships.
Unknown Speaker: I think.
Unknown Speaker: Given the discipline that we've had on cost of funds, it just gives us dry powder to make a decision, you know, as things move in the market. So I think we're on a real strong point there, as Chris has said, to do either one.
Speaker Change: Those cash flows to continue to come through the year.
Speaker Change: And I would add that given given the discipline that we've had on cost of funds. It just gives us dry powder to make a decision.
Andrew Brian Liesch: Got it. That's all really helpful. I'll step back. Thanks for taking the question.
Speaker Change: As things move in the market so.
Speaker Change: I think we're in a restaurant point there as Chris has said to do either one.
Speaker Change: Got it.
Speaker Change: That's all really helpful. I'll step back thanks for taking the question.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Thank you. Our next question is from the line of Jeff <unk> of da Davidson, Jeff. Your line is open. Please go ahead.
Jeffrey Allen Rulis: Thank you. Our next question is from the line of Jeff Rulis of DA Davidson. Jeff, your line is open. Please go ahead.
Jeff: Thanks, just a couple credit questions if I could.
Jeffrey Allen Rulis: Thanks, just a couple of credit questions, if I could, you know, some encouraging link order statistics. Maybe going back to the last quarter, that primary residence mortgage credit that was brought on or identified, any movement on that specifically?
Jeff: Some encouraging linked quarter statistics.
Jeff: Maybe going back to that last quarter that primary residence mortgage credit that was brought on or identified any any movement on that specifically.
Jeff: Yes, we were able to get that.
Unknown Speaker: Yeah, we were able to get that. We actually sold the note and moved that credit on.
Speaker Change: We actually sold the note.
Speaker Change: And move that credit on.
Speaker Change: Okay.
Jeffrey Allen Rulis: Okay. And then a broader question on the, I guess, the balance of existing NPAs or even classifieds that were acquired versus. I know that blurs the lines, but as we've talked about, I think you've been successful in chasing down sort of gains from, or recoveries from, you know, acquired loans, just trying to get a sense for the bucket of NPAs or, or classifieds, what if that is, is acquired and what was, Underwritten Legacy.
Speaker Change: And then a broader question on that.
Speaker Change: I guess the balance of existing NPA or even classifieds.
Speaker Change: <unk>.
Speaker Change: What.
Speaker Change: Were acquired versus kind of legacy I know that blurs the lines, but as.
Speaker Change: As we've talked about I think you've been successful in chasing down sort of.
Speaker Change: Gains from four recoveries from.
Speaker Change: Acquired loan.
Speaker Change: I was just trying to get a sense for the bucket of NPA is or where classifieds what of that is is acquired and what was underwritten.
Speaker Change: Legacy.
Speaker Change: Yes, so if you look back.
Krzysztof P. Slupkowski: Yeah, so if you look back on the last few years on a historical basis, you're going to find that the majority of our problem assets are acquired loans. So, more than half, more than half of what you see is actually acquired, and that's been the case for the last few years, and you know, as you can tell, our assets, our problem assets are going down quarter by quarter, seems like it, and part of it is due to kind of slow down in an M&A space, but also on our, you know, our app, special assets teams and our legal team is just focused on resolving some of these issues and execute on the contracts that we have in place and better our positions.
Speaker Change: The last few years on a historical basis youre going to find that majority of our problem assets are acquired loans.
Speaker Change: So more than half more than half of <unk>.
Speaker Change: What you see is actually acquired then.
Speaker Change: And that's been the case for the last few years.
Speaker Change: And.
Speaker Change: As you can tell our assets our problem assets are going down quarter.
Quarter by quarter, it seems like it and.
Speaker Change: Part of it is due to kind of a slowdown in M&A.
Speaker Change: Space, but also one more.
Speaker Change: Our special assets teams in.
Speaker Change: Our legal team is just focused on on resolving some of these issues and execute on the contracts that we have in place and better our positions.
Speaker Change: And Christophe of those.
Jeffrey Allen Rulis: and Krzysztof of those, you know, acquired that you're sort of going after. I don't know if there's a, if we're in the seventh inning of all that has been acquired, do you think you've chased down all of them?
Speaker Change: <unk> acquired that Youre going after.
Speaker Change: I don't know if there is that if we're in the seventh inning of.
Speaker Change: All that had been acquired do you think you chase down.
Recoveries is zero percent of that just trying to get a sense for it sounds like maybe there is potential for further.
Krzysztof P. Slupkowski: Recoveries and their own percent of that. Just trying to get a sense for it sounds like maybe there's potential for further recoveries, any any way to position where you are in that process of at least what you know of. What have you acquired?
Speaker Change: Recoveries any any way to position where you are in that process.
Speaker Change: What you know of what you've acquired to date.
Krzysztof P. Slupkowski: Yeah, I would say the big wins have already been won. And whatever, there's a little bit of it left, not much. But I would say, on the recovery side, there's probably less opportunity going forward. I would say that our problem assets loans today are well reserved. And, you know, I don't see any further losses or recoveries in that space. We do have a large recovery that we are still chasing out there, so it is a substantial one. It's still out there,
Speaker Change: Yes, I would say the big wins have already been won.
Speaker Change: And.
Speaker Change: Whatever there is a little bit of all of it left.
Mark: Mark what I would say on the recovery side. There is there's probably less opportunity going forward I would say that are probable of assets loans today, they are well reserved and.
Mark: I don't see any further losses or recoveries in that space.
Mark: We do have and.
Mark: Do you have a large.
Mark: We do have a large recovery that we are still chasing out there.
So.
Mark: Substantial.
Speaker Change: Got it.
Speaker Change: You're still out there.
Jeffrey Allen Rulis: got it. And Brad, I appreciate the M&A, pivoting to the buyback. I mean, can we view that as you can kind of do both or more specifically, you know, I think shares are trading kind of around the kind of average price you had last quarter. Just checking in on the appetite for buybacks, does that wane or increase with M&A opportunities, or do you feel like that's going to be, at least for the short term, going to be a pretty steady level or maybe even greater from your perspective?
Speaker Change: Got it and Brad.
Speaker Change: I appreciate the M&A.
Speaker Change: Thoughts.
Speaker Change: Pivoting to the buyback I mean could we view that as you can kind of do both or more specifically.
Speaker Change: Shares are trading kind of around where kind of the average price you add last quarter.
Speaker Change: Just checking in on the appetite of buyback.
Speaker Change: Wayne or increase with M&A opportunities or do you feel like that's going to be.
Speaker Change: With the short term going to be a pretty steady level or maybe even greater from your perspective.
Wayne: Yes, I think we will still remain active in the M&A or in the buyback market.
Brad S. Elliott: Yeah, I think we'll still remain active in the M&A or in the buyback market. And, you know, we don't have anything imminent like a couple quarters ago. We knew we had Kirksville that was coming that hadn't been announced yet. But so we stopped the buybacks as we were building cash to be able to make sure we had enough cash to transact that. You know, on the M&A front, we do have conversations going on, but we don't have any of those conversations that would have as big a need for cash as that one did. So I think we will continue to be opportunistic in the buyback market.
Sure.
Speaker Change: <unk>.
Speaker Change: We don't have anything imminent that like a couple of quarters ago. We knew we had <unk> that was coming.
Speaker Change: They haven't been announced yet.
Speaker Change: So we stopped the buybacks as we were building cash to be able to make sure we have enough cash to transact that.
Speaker Change: On the M&A front.
Speaker Change: We do have conversations going but we don't have those conversations that would have as big a need for cash is that we did.
Speaker Change: No.
Speaker Change: I think we will.
Speaker Change: Continue to be opportunistic in the buyback market.
Speaker Change: Okay. Thank you.
Speaker Change: As a reminder, if you'd like to ask any further questions. Please don't stop on mobile telephone keypad now.
Damon Paul DelMonte: As a reminder, if you'd like to ask any further questions, please dial star 1 on your telephone keypad now. And our next question today is from the line of Damon DelMonte from Stiefel. Damon, your line is open. Please go ahead.
Speaker Change: Question today is from the line of Damon Delmonte from Stifel.
Damon Paul DelMonte: Your line is open. Please go ahead.
Damon Paul DelMonte: Hey, Good morning, everyone Hope you guys are all doing well.
Damon Paul DelMonte: Hey, good morning, everyone. I hope you guys are all doing well.
Damon Paul DelMonte: A question first question regarding the margin. So this quarter's margin Chris was $3 75.
Damon Paul DelMonte: My first question is regarding the margin. So this quarter's margin, Chris, was $375. How much fair value accretion was included in that?
Damon Paul DelMonte: Much fair value accretion was included in that.
Chris M. Navratil: The total fair value accretion is when you combine all of our transactions, so not just BOK.
Damon Paul DelMonte: Okay.
Damon Paul DelMonte: The total fair value accretion there as well.
Damon Paul DelMonte: When you combine all of our transactions so not just specifically there was $150000 and loans as well as <unk>.
Chris M. Navratil: In transactions, so not just BOK specifically, there was $150,000 in loans as well as less than half a million dollars in bonds.
Damon Paul DelMonte: Less than half a million dollars in.
Chris M. Navratil: Okay, and how should we think about kind of a projected fair value accretion going forward?
Damon Paul DelMonte: Our bonds.
Okay.
Speaker Change: How should we think about.
Speaker Change: Kind of a projected fair value accretion going forward.
Chris M. Navratil: The portfolio we acquired was $5 million underwater, so we're going to create $5 million on the bond portfolio over a two to two and a half year life, which is relatively well in line with what we disclosed as we went through the deal mechanics to begin with. The fair value mark on the loan book is just north of $3 million, and that $3 million will come in over, we're currently projecting a life of between three and a half and four years, so that's just going to be realized over that time horizon.
Speaker Change: Yes, so the bond portfolio, we acquired was $5 million under water. So we're going to create $5 million on the bond portfolio over.
Speaker Change: Two to two and a half year life.
Speaker Change: Which is relatively well in line with what we disclosed as we went through the deal mechanics to begin with.
Speaker Change: The fair value Mark on the loan book.
Speaker Change: Is just north of $3 million of that $3 million will come in over we are currently projecting a life of between three five and four years. So I was just going to be realized over that over that time horizon.
Speaker Change: Got it Okay, and then does the guidance that you guys provided in the slide deck incorporate the projected fair value or is that excluding that.
Unknown Speaker: And then does the guidance that you guys provided in the slide deck incorporate the projected fair value, or is that excluding that? Unknown Speaker Okay, great.
Speaker Change: It includes it.
Speaker Change: It doesn't okay, great and then with regards to the C&I growth.
Unknown Speaker: And then, with regard to C&I growth.
Speaker Change: I'm sorry.
Unknown Speaker: I'm just saying that it's reflective. It'll be okay.
Speaker Change: I would just say it's reflected it would be okay.
Okay, great. Thank you and then with regards to the C&I growth this quarter, how much of that was increase in line utilization versus new credits coming on the books.
Unknown Speaker: Okay, great, thank you. And then, with regard to the C&I growth this quarter, how much of that was increased line utilization versus new credits coming on the book?
Unknown Speaker: It was new credits.
Speaker Change: Okay.
Speaker Change: New credits.
Unknown Speaker: Do you have an idea of where the line utilization stands today and kind of how that's fared more recently?
Speaker Change: It was all new credits, Okay, and do you do.
Speaker Change: You have.
A level of where the line utilization stands today and kind of how that's fared more recently.
Unknown Speaker: I don't have that right in front of me, but we can get that for you.
Speaker Change: I don't have that right in front of me, we can get that for you.
Speaker Change: Yes.
Unknown Speaker: Yeah, we got great. Yeah, we don't have that calculator.
Speaker Change: Okay great.
Speaker Change: Yes, we don't have a calculator.
Unknown Speaker: Okay, no problem. And then, just lastly, on the CRE, thanks for the color on some of the expected maturities that are forthcoming. From a broader perspective, you know, are you guys kind of having proactive conversations with the borrowers that are on tap to mature, have their rates reset, so you can kind of, you know, be in position to know whether or not you're going to have to move them off the books or, you know, come up with a different solution just so that there's not a, you know, You have a handful of credits one quarter that have to Are you having those initial conversations with folks?
Speaker Change: Okay No problem and then just lastly on the CRE.
Speaker Change: Thanks for the color on kind of the expected maturities that are forthcoming.
Speaker Change: From a broader perspective are you guys kind of having proactive conversations with with the borrowers that are on tap to mature have the rates reset so.
Speaker Change: You can kind of be in position to know whether or not youre going to have to move them off the books or come up with a different solution just so that there's not a.
Speaker Change: Yes, but a handful of credits one quarter that have to exit and it kind of impacts the overall growth because you're having those initial conversations with folks.
Speaker Change: Yes, yes, we're absolutely being proactive on looking at that I mean, thats why we try to work ahead at least at a minimum a quarter ahead.
Unknown Speaker: Yeah, yeah, we're absolutely being proactive in looking at that. I mean, that's why we try to work ahead, at least a minimum, a quarter ahead, to have those conversations. And then as we're, as we bring them into credit, the credit committee, we have those discussions on yield, and then also on ones in which there might be something that we just don't like to credit.
To have those conversations and then as we're bringing them into credit card committed we have those discussions on on yield and then also on ones in which there might be something that we just don't like the credits and as Christophe has done and his team has done I mean, we're doing a lot of stress testing on it to understand if rates are being reset what thats going to look like so that.
Unknown Speaker: And as Krzysztof has done, and his team has done, I mean, we're doing a lot of stress testing on it to understand if rates are being reset, what that's going to look like. So, you know, we're working well ahead of that. We know that now, we know that in advance, for those ones that are at very low rates being raised, based on what their performance has been, if they can handle it or not. So yes, we're absolutely doing that proactively. I got it.
Speaker Change: We are working.
Speaker Change: Working well ahead of that we know that now we know that in advance for those ones that are at very low rates being being raised up.
Speaker Change: Based on what their performance has been if they can handle it or not so yes, we're absolutely doing that.
Speaker Change: It proactively.
Damon Paul DelMonte: Got it. Okay, great. That's all that I had. Thank you very much.
Speaker Change: Okay.
Speaker Change: Got it okay, great. That's all that I had thank you very much.
Operator: Thank you. And we have no further questions in the queue at this time. So this will bring us to the end of the Equity Bancshares Incorporated Q1 2024 earnings conference call. Thank you all for joining us. You may now disconnect your lines.
Speaker Change: Thank you we have no further questions in the queue. At this time. So this will bring us to the end of the equity Bancshares incorporated Q1 2024 earnings conference call.
Speaker Change: Thank you all for joining you may now disconnect your lines.
Speaker Change: [music].
Speaker Change: Okay.