Q1 2024 Southside Bancshares Inc Earnings Call
His presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone you will then hear an automated message you're dividing your Hana race to withdraw your question. Please press star one again.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today Lindsey Bailes, Vice President of Investor Relations. Please go ahead.
Thank you Marvin and good morning, everyone and welcome to Southside Bancshares' first quarter 2024 earnings call.
Good day, and thank you for standing by.
Today's call will be posted on Southside dot com under Investor Relations.
To Southside Bancshares' fourth quarter 2024 earnings call at this time, all participants are in listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone you will then hear an automated message advising organics race to withdraw your question. Please press <unk>.
During today's call and another disclosures and presentations I will remind you that any forward looking statements are subject to risks and uncertainties factors that could materially change. Our current forward looking assumptions are described in our earnings release and our Form 10-K.
Star One again please.
Joining me today are Lee Gibson, President and CEO and Julie Shamburger CFO.
Please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today Lindsey Bailes, Vice President of Investor Relations. Please go ahead.
Firstly, we will share his comments on the quarter and then Julie will give an overview of our financial results I will now turn the call over to Lee.
Lindsey Bailes: Thank you Marvin and good morning, everyone and welcome to Southside Bancshares' first quarter 'twenty 'twenty four earnings call a transcript of today's call will be posted on the dot com under Investor Relations during today's call and in other disclosures and presentations I will remind you that any forward looking.
Thank you Lindsey and good morning, everyone and welcome to Southside Bancshares' first quarter 2024 earnings call.
This morning, we reported first quarter net income of $21 5 million earnings per share of 71.
Lindsey Bailes: Statements are subject to risks and uncertainties factors that could materially change. Our current forward looking assumptions are described in our earnings release and our Form 10-K.
Our return on average tangible common equity of 15, 7% and continued strong asset quality metrics.
Linked quarter loans increased an annualized four 7% just slightly below our projected 5% loan growth for 2024.
Lee R. Gibson: Joining me today are lead Gibson, President and CEO and Julie Shamburger CFO. Firstly, he will share his comments on the quarter and then Julie will give an overview of our financial results I will now turn the call virtually.
Our loan pipeline is solid and the markets, we serve remain healthy and continue to grow and perform well.
Lee R. Gibson: Thank you Lindsey good.
Lee R. Gibson: Morning, everyone and welcome to Southside Bancshares' first quarter 2024 earnings call.
Linked quarter, our net interest margin decreased 13 basis points.
Lee R. Gibson: This morning, we reported first quarter net income of $21 5 million earnings per share of 71 cents a return on average tangible common equity of 15, 7% and continued strong asset quality metrics.
During the quarter three of our lower interest rate cash flow swaps totaling $120 million matured and the rate for that funding increased over 4%.
Our BT FTE funding renewed at a higher rate for an additional year and we continue to experience deposit pricing pressures we.
Lee R. Gibson: Linked quarter loans increased an annualized four 7% just slightly below our projected 5% loan growth for 2024.
We do not have any additional swaps maturing during 2024.
While we anticipate ongoing deposit pricing pressure and the absence of the fed cutting interest rates. We believe anticipated loan growth will help partially mitigate any further NIM can put compression.
Lee R. Gibson: Our loan pipeline is solid and the markets, we serve remain healthy and continue to grow and perform well linked.
Lee R. Gibson: Linked quarter, our net interest margin decreased 13 basis points.
During the quarter, we implemented several initiatives associated with our new five year strategic plan.
Lee R. Gibson: During the quarter three of our lower interest rate cash flow swaps totaling $120 million matured and the rate for that funding increased over 4%.
One of the initiatives is to carefully examine additional revenue as well as cost containment opportunities.
Lee R. Gibson: <unk> FP from being renewed at a higher rate for an additional year and we continue to experience deposit pricing pressures we.
Their retirements reduction in workforce and attrition during the first quarter of 2024, we currently anticipate.
Lee R. Gibson: We do not have any additional swaps maturing during 2024.
Annualized cost savings of approximately $3 $5 million 80.
Lee R. Gibson: While we anticipate ongoing deposit pricing pressure and the absence of the fed cutting interest rates. We believe anticipate loan growth will help partially mitigate any further NIM complex compression.
Sent a which should be reflected beginning in the third quarter of this year and 100% in 2025.
During the quarter, we expensed approximately $618000 associated with these expense reductions.
Lee R. Gibson: During the quarter, we implemented several initiatives associated with our new five year strategic plan.
We continue to evaluate expenses as well as revenue opportunities and we will update you on any further progress in future quarters.
Lee R. Gibson: One of the initiatives is to carefully examine additional revenue as well as cost containment opportunities.
I look forward to answering your questions. Following <unk> remarks, I will now turn the call over to Julie.
Lee R. Gibson: Their retirements reduction in workforce and attrition during the first quarter of 2024, we currently anticipate.
Thank you Lee good morning, everyone and welcome to our first quarter call. We began the year with first quarter net income of 21 5 million, an increase of $4 2 million or 24, 2% and diluted earnings per share of <unk> 71.
Lee R. Gibson: Annualized cost savings of approximately $3 $5 million, 80% of which should be reflected beginning in the third quarter of this year and 100% in 2020.
Lee R. Gibson: During the quarter, we expensed approximately $618000 associated with these expense reductions were.
An increase of 24, 6% linked quarter.
So in the first quarter, we had loan growth of $52 9 million or one 2% linked quarter and four 7% annualized.
Lee R. Gibson: Continue to evaluate expenses as well as revenue opportunities and we will update you on any further progress in future quarters.
The growth was driven primarily by increases at $244 9 million in commercial real estate loans, partially offset by decreases in construction loans of $190 3 million.
Lee R. Gibson: Look forward to answering your questions. Following <unk> remarks, I will now turn the call over to Jay.
Jay: Thank you Lee good morning, everyone and welcome to our first quarter call. We began the year with first quarter net income of 21 5 million.
The interest rate of loans funded during the quarter with an average of approximately seven 8%.
Jay: An increase of $4 2 million or 24, 2% and diluted earnings per share of 71 cents, an increase of 24, 6% linked quarter.
As of March 31st our loans with oil and gas industry exposure were $114 million or two 5% of total loans.
Our allowance for credit losses decreased by 229000 for the linked quarter to $46 4 million.
Jay: So in the first quarter, we had loan growth of 52, 9 million or one 2% linked quarter and 4.7% annualized.
Asset quality metrics remained strong, although our nonperforming assets increased to $8 million from $4 million or 10% of total assets on March 31, compared to point out 5% at year end.
Jay: The growth was driven primarily by increases at $244 9 million in commercial real estate loans, partially offset by decreases in construction loans of $190 3 million.
Jay: The interest rate O'brien standard during the quarter with an average approximately seven 8%.
The increase in nonperforming assets was primarily related to two larger relationships, one commercial real estate and one commercial relationship and not specific to any particular market or industry in our portfolio.
Jay: As of March 31st our loans with oil and gas industry exposure, well 114 million or two 5% of total loans.
Jay: Our allowance for credit losses decreased by 229000 for the linked quarter to 46 $4 million.
Since March 31, 2024, we have received approximately $1 6 million.
Combined of payments on the commercial loan relationship and the pay off of a larger existing residential real estate loan on non accrual status.
Lee R. Gibson: Asset quality metrics remained strong, although our nonperforming assets increased to $8 million from 4 million or 10% of total assets on March 31st compared to point <unk>, 5% at year end.
On March 31, our allowance for loan losses as a percentage of total loans was nine 5% a slight increase compared to nine 4% on December 31.
Lee R. Gibson: The increase in nonperforming assets was primarily related to two larger relationships, one commercial real estate and one commercial relationship.
Our securities portfolio increased $108 8 million or four 2% on a linked quarter basis, driven by purchases of mortgage backed securities during the first quarter.
Lee R. Gibson: Specific to any particular market our industry and our portfolio.
Lee R. Gibson: Since March 31, 2024, we have received approximately one $6 million combined of payments on the commercial loan relationship in the pay offs and a larger existing residential real estate loan on non accrual status.
There were no transfers in Iff's securities during the first quarter.
And as of March 31, we had a net unrealized loss in the securities portfolio of $48 8 million compared to $36 2 million last quarter.
Lee R. Gibson: On March 31st our allowance for loan losses as a percentage of total loans was nine 5% a slight increase compared to nine 4% on December 31.
As of March 31, the unrealized gain on the fair value hedges on municipal securities with approximately $20 4 million compared to $13 6 million linked quarter.
Lee R. Gibson: Our securities portfolio increased $108 8 million or four 2% on a linked quarter basis, driven by purchases of mortgage backed securities during the first quarter.
Unrealized gain partially offset the unrealized losses in the <unk> securities portfolio.
Our Aoc on March 31, 2024 was a net loss of $110 9 million compared to a net loss of $113 5 million on December 31 2023.
Lee R. Gibson: There were no transfers in Iff's securities during the first quarter.
Lee R. Gibson: As of March 31st we had a net unrealized loss in the securities portfolio of $48 8 million compared to $36 2 million last quarter.
Net loss was comprised of net losses on our securities and swap derivatives of $92 2 million and $18 7 million related to our retirement plans.
Lee R. Gibson: As of March 31st the unrealized gain on the fair value hedges on municipal securities with approximately 24 million compared to $13 6 million linked quarter. This unrealized gain partially offset the unrealized losses in the a F S securities portfolio.
As of March 31, the duration in the securities portfolio with nine one years and the duration of the <unk> portfolio was six nine years.
An increase from eight four years and five eight years, respectively on December 31st.
Lee R. Gibson: Our Aoc on March 31, 2024, with a net loss of $110 9 million compared to a net loss of 113 5 million on December 31st 2023.
At quarter end, our mix of loans and securities changed slightly to 63% and 37%, respectively compared to 64% and 36% on December 31.
Lee R. Gibson: The net loss was comprised of net losses on our securities and swap derivatives, and $92 2 million and $18 7 million related to our retirement plans.
Deposits decreased slightly by <unk>, 6% or $3 9 million on a linked quarter basis.
Our capital ratios remained strong with all capital ratios, well above the capital adequacy and well capitalized threshold threshold.
Lee R. Gibson: As of March 31, the duration in the securities portfolio with nine one years and the duration of the <unk> portfolio was six nine years.
Liquidity resources remains solid with $2 3 billion in liquidity lines available as of March 31.
Lee R. Gibson: An increase from April four years, and five eight years, respectively on December 31st.
Our tax equivalent net interest margin decreased 13 basis points on a linked quarter basis to $2 86 from 299.
Lee R. Gibson: At quarter end, our mix of loans and securities changed slightly to 63% and 37%, respectively compared to 64% and 36% on December 31st.
The tax equivalent net interest spread decreased for the same period by 10 basis points to 216% down from two 6% percent.
Lee R. Gibson: Deposits decreased slightly by <unk>, 6% or $3 9 million on a linked quarter basis.
For the three months ended March 31, net interest income decreased by $1 1 million or two 1% compared to the linked quarter.
Lee R. Gibson: Our capital ratios remained strong with all capital ratios, well above the capital adequacy and well capitalized threshold threshold.
The purchase loan accretion recorded this quarter was $42000.
Lee R. Gibson: Liquidity resources remains solid with $2 3 billion in liquidity lines available as of March 31st.
Noninterest income excluding the net loss on the sales of HFF Securities decreased $30 1 million or 24, 4% for the linked quarter, primarily due to the decrease in Bowie income of $1 8 million due to a death benefit realized in the fourth quarter of law.
Lee R. Gibson: Our tax equivalent net interest margin decreased 13 basis points on a linked quarter basis to $2 86 from $2 99.
Lee R. Gibson: Equivalent net interest spread decreased for the same period by 10 basis points to 216% down from two 6% percent.
It's on sale of loans and.
The decrease in deposit services income and a loss in fair value of equity Securities.
Lee R. Gibson: For the three months ended March 31st net interest income decreased by $1 1 million or two 1% compared to the linked quarter.
Noninterest expense increased $1 7 million on a linked quarter basis to $36 $9 million driven by increases in salaries and employee benefits, which included approximately 618000 associated with future cost reductions.
Lee R. Gibson: Purchase loan accretion recorded this quarter was $42000.
Lee R. Gibson: Noninterest income excluding the net loss on the sales of ASF securities decreased $31 million or 24, 4% for the linked quarter, primarily due to the decrease in income of $1 8 million due to a death benefit realized in the fourth quarter.
During last quarter's earnings call I reported our budget of $37 9 million quarterly for noninterest expense in 2024.
As a result of the cost containment initiatives, we expect to realize approximately 400000 of savings in the second quarter and 700 to 800000 in the third and fourth quarters of the year.
Lee R. Gibson: Loss on sale of loans.
Lee R. Gibson: A decrease in deposit services income and a loss in fair value of equity Securities.
Lee R. Gibson: Noninterest expense increased $1 7 million on a linked quarter basis to $36 9 million driven by increases in salaries and employee benefits, which included approximately 618000 associated with future cost reductions.
Our fully taxable equivalent efficiency ratio increased to 50, 554% as of March 31 from 58, 6% as of December 31.
We recorded income tax expense of $4 6 million, an increase of $2 4 million compared to the fourth quarter. The increase in tax expense was driven by a higher effective tax rate an increase in pre tax income.
Speaker Change: During last quarter's earnings call I reported our budget of $37 9 million quarterly for noninterest expense in 2024.
Lee R. Gibson: As a result of the cost containment initiatives, we expect to realize approximately 400000 of savings in the second quarter and 700 to 800000 in the third and fourth quarters of the year.
Our effective tax rate increased to 17, 7% for the first quarter up from 11, 3% in the previous quarter due to a decrease in tax exempt income as a percentage of pretax income.
Lee R. Gibson: Our fully taxable equivalent efficiency ratio increased to 50, 554% as of March 31 from 58, 6% as of December 31.
We currently estimate an annual effective tax rate of 17, 7% for 2024.
Yes.
Lee R. Gibson: We recorded income tax expense of $4 6 million, an increase of $2 4 million compared to the fourth quarter.
I will now turn the call over for questions.
Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one telephone and wait for your name to be amounts to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Lee R. Gibson: Increase in tax expense was driven by a higher effective tax rate an increase in pretax income.
Lee R. Gibson: Tax rate increased to 17, 7% for the first quarter up from 11, 3% in the previous quarter due to a decrease in tax exempt income as a percentage of pretax income.
Our first question comes from the line of Brett Robinson of Husky.
Line is now open.
Lee R. Gibson: We currently estimate an annual effective tax rate of 17, 7% for 2024.
Hey, good morning, everyone.
Good morning, Brett.
Wanted to ask a first.
While you are individually on the expense reductions were those all personnel related or are there other things that.
Lee R. Gibson: Okay.
Speaker Change: Thanks, Tom.
Speaker Change: I will now turn the call over for questions.
You made an adjustment to in them.
Speaker Change: Yeah.
This is kind of the end of taking a look at that in terms of potentially reducing expenses.
Speaker Change: Thank you at this time, we will conduct a question and answer session.
Speaker Change: As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be amounts to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
These were largely in fact, it's not all personnel related.
Reductions we are continuing to.
Evaluate other other areas in the expense area.
Speaker Change: Our first question comes from the line of Brett Robertson of Hockey Group. Your line is now open.
And.
As we as we come to further conclusions will report on that in future quarters, but.
Brett D. Rabatin: Hey, good morning, everyone.
Brett D. Rabatin: Good morning, Brad.
So far these are these are the.
Brett D. Rabatin: Wanted to ask a first.
The personnel reductions at this point.
Brett D. Rabatin: While you are maybe Julie on the expense reductions were those all personnel related or are there other things that you maintenance Joseph too and then.
Okay.
And then Lee you have always been very.
Good.
The bond portfolio and I'm, just curious what the 10 year here in force over 470 kind of what's your what's your thinking about in terms of.
Brett D. Rabatin: This is kind of the end of.
Brett D. Rabatin: Taking a look at that in terms of potentially reducing expenses.
Brett D. Rabatin: Okay.
Additional securities in your restructuring.
Brett D. Rabatin: These were largely in fact, it's not all personnel related.
Thinking about the current level or tariff structure of interest rates.
What you might see from year on year in your view.
Brett D. Rabatin: The actions we are continuing to.
Brett D. Rabatin: Evaluate other other areas in the expense area.
Thanks.
Terms of the fed which is not I think there.
Speaker Change: <unk>.
Speaker Change: Yeah.
Speaker Change: As we as we kind of further conclusions will report on that in future quarters, but.
Their view of higher for longer is probably correct.
We're really not anticipating any more than one cut the rest of this year at this point in time I think initially we had.
Speaker Change: So far these are these are the <unk>.
Speaker Change: Personnel reductions at this point.
Speaker Change: Okay.
Speaker Change: And then Lee you have always been very.
Factored in the three cuts.
And.
Speaker Change: Good with with the bond portfolio and I'm, just curious with the 10 year here in force over 470 kind of what's your what's your thinking about in terms of.
Unless the economy changes significantly.
In terms of the bill.
The long term rates.
Feel like they could they could go even just a little bit higher, but I think cresting, 5% on the 10 year would.
Speaker Change: Additional securities in our restructuring.
Speaker Change: What are you thinking about the current level or tariff structure of interest rates.
The equivalent to where it got to last year and that might put some some additional pressure on the economy that.
Speaker Change: Where you might see from here on your in your view.
Speaker Change: I think in terms of the fed which is not.
It allow the fed to begin to decrease rates. So in terms of the bond portfolio will look for opportunities.
Speaker Change: Hey, there.
Speaker Change: Their view of higher for longer is probably correct.
Speaker Change: We're really not anticipating any more than one at the rest of this year at this point in time I think initially we had factor.
We found a few minor ones in the in.
In the first quarter, but.
With these higher rates in <unk>.
Speaker Change: Factored in three cuts.
<unk> or bond prices.
Speaker Change: And.
There may be some additional opportunities.
Speaker Change: Unless the economy changes significantly.
As we as we take a look at those but right now we don't have anything.
Speaker Change: In terms of.
Speaker Change: The long term rates.
We're planning on doing at this point in time.
Speaker Change: Feel like they could they could go even just a little bit higher but I think.
Okay.
That's helpful.
I could sneak in one last one just around the margin Julien if I heard you correctly.
Speaker Change: <unk>, 5% on the 10 year would.
Speaker Change: The equivalent to where it got through last year and that might put some some additional pressure on the economy that could allow the fed to begin to decrease right. So.
You feel like there's offsets to additional pressure from here, but I didn't quite.
<unk>.
The full body language there the comment around.
The positives for the margin from here and then if.
If I heard you correctly, maybe a little bit more pressure from your own stabilization on the margin is that fair.
Speaker Change: In terms of the bond portfolio will look for opportunities.
Speaker Change: Found a few minor ones in the in the first quarter, but.
Yes, I think Thats fair.
The swaps that rolled off in the first quarter.
Speaker Change: With these higher rates.
Speaker Change: Cheaper bond prices.
Speaker Change: There may be some additional opportunities.
Were pretty significant.
Speaker Change: As we as we take a look at those but right now we don't have anything.
We'll see a little bit of that in the second quarter, but I think it'll be pretty much on par with what we saw in the first quarter.
Speaker Change: We're planning on doing at this point in time.
Speaker Change: Okay.
The DTF the funding re priced a little bit higher.
Speaker Change: That's helpful and if I could sneak in one last one just around the margin Julien if I heard you correctly, you feel like there's offsets to additional pressure from here, but I didn't quite get.
And thats locked in for a year or so.
We won't have that pressure and but yes in terms of the margin going forward.
Speaker Change: The full body language there the comment around.
We're thinking that the anticipated loan growth.
Speaker Change: The positives for the margin from here and then.
At least partially mitigate any further deposit pressures.
Speaker Change: If I heard you correctly, maybe a little bit more pressure from euro and a stabilization on the margin is that fair.
A large part of that.
The funding pressures in the first quarter were due to the swap ETF and then to some extent the deposit pressure.
Julien: Yes, I think Thats fair.
Julien: The swaps that rolled off in the first quarter.
Okay.
Julien: Were pretty significant.
That's helpful. Thanks for all the color.
Got it.
Julien: We'll see a little bit of that in the second quarter, but I think it'll be pretty much on par with what we saw in the first quarter.
Thank you our next question.
Our next question comes from the line of.
Julien: The DTF the funding re priced a little bit higher.
Only from Stephens. Your line is now open.
Hey, Thanks, guys good morning.
Julien: And thats locked in for a year or so.
Good morning, Matt.
Julien: We won't have that pressure and but yes in terms of the margin going forward.
Wanted to ask about fees I think the core fees took a step down in the first quarter.
Julien: We're thinking that the.
Anything to call out there as far as the step down and then with the road look like to return to where we were for most of 2023 and that.
Julien: Anticipated loan growth will at least partially mitigate any further deposit pressures that a large part of that.
Julien: The funding pressures in the first quarter were David swaps ETF, and then to some extent the deposit pressure.
Oh call it $10 $8 million range.
For the core fees per quarter.
Julien: Okay.
The deposit fees were down $320000 and around 200000 of that was due to.
Speaker Change: That's helpful. Thanks for all the color.
Julien: Alright.
Speaker Change: Thank you our next question.
Debit card income.
Overdraft fees and service charge fees were down a little the difference in that decrease.
Julien: Our next question comes from the line of Matt Olney from Stephens. Your line is now open.
But most of it was debit card income.
Matthew Covington Olney: Hey, Thanks, guys good morning.
And then we did have a.
Matthew Covington Olney: Good morning, Matt.
Loss on.
Matthew Covington Olney: Wanted to ask about fees I think the core fees took a step down in the first quarter.
Sale of available for sale loan.
Of about 500000.
So that.
Matthew Covington Olney: Thing to call out there as far as the step down and then what's the road look like to return to.
That caused the decrease there you see the negative 436.
That loan we haven't like I say, a charge off of around 500000, we don't anticipate that in the future and.
Matthew Covington Olney: Where we were for most of 2023 and that.
Matthew Covington Olney: Oh call it $10 $8 million range.
Matthew Covington Olney: For the core fees per quarter.
Extra 100000 in.
In fact, we're going to recover another 100000 in the second quarter on the on that loan.
Matthew Covington Olney: The deposit fees were down $320000 and around 200000 of that was due to.
Trust fees should be back more in line with what we've seen on a quarterly basis going forward.
Matthew Covington Olney: Debit card income.
Matthew Covington Olney: Overdraft fees and service charge fees were down a little the difference in that decrease.
As Julie mentioned the debut.
Card income and the overdrafts were down.
Matthew Covington Olney: But most of it was debit card income.
I would anticipate the debit card income would come back, but the overdraft fees.
Matthew Covington Olney: And then we did have a.
Matthew Covington Olney: A loss on a.
We've made some changes.
Matthew Covington Olney: Sale of available for sale loan.
Along the lines of things that have come out from the CFPB.
Speaker Change: I have about 500000.
Associated with that and so.
Matthew Covington Olney: So that.
Matthew Covington Olney: That caused the decrease there you see the negative 436.
Overdraft fees, probably wont come back significantly first quarter, they're typically down because of tax returns so that they should come back maybe.
Matthew Covington Olney: That loan and we haven't like I say, a charge offs around 500000, we don't anticipate that in the future.
The 150000 per quarter, but.
Matthew Covington Olney: Extra hundred thousands in.
Other than that.
Of the major things so I think I think we could get back up.
Matthew Covington Olney: In fact, we're going to recover or another 100000 in the second quarter on that loan.
Closer to that.
Tim maybe $10 $5 million range.
Matthew Covington Olney: Trust fees.
Matthew Covington Olney: Shouldnt be back more in line with what we've seen on a quarterly basis going forward.
Moving forward.
Thanks for the color on that and on the overdraft fees kind of a shift there any color on just the overall impact we'll see.
Matthew Covington Olney: As Julie mentioned.
Matthew Covington Olney: Card income and the overdrafts were down.
Matthew Covington Olney: I would anticipate the debit card income would come back, but the overdraft fees.
From the from the change in pricing that you mentioned.
Well you are saying that we made these changes.
Matthew Covington Olney: We've made some changes.
Matthew Covington Olney: Along the lines of things that have come out from the CFPB.
Last year.
I think it was third quarter. Some happened late 'twenty two and then some happened in 'twenty early 2023.
Matthew Covington Olney: With that and so.
Matthew Covington Olney: The overdraft fees, probably wont come back significantly first quarter, they're typically down because of tax returns. So that they should come back maybe 100 to 150000 per quarter.
So you are saying it and.
And we have we did increase.
The amount you have to be overdrawn in order to have an overall overdraft fee.
Matthew Covington Olney: Other than that those are the major things. So I think I think we could get back up.
Pretty significantly so I think I think youre seeing the full result of any of that and then like I say the first quarter is typically is less because of tax returns.
Speaker Change: Closer to that Tim.
Matthew Covington Olney: Maybe $10 5 million range.
Speaker Change: Moving forward.
Refunds that come in and people arent overdrawn as much.
Speaker Change: Thanks for the color on that and on the overdraft fees kind of shift there any color on just the overall impact we'll see.
Sure Okay.
Okay. Thanks for that and then on the credit on the credit front. There was some commentary in prepared remarks about some about two large relationships during the quarter.
Speaker Change: From the from the change in pricing that you mentioned.
Speaker Change: Well you are saying that we made these changes.
Matthew Covington Olney: Last year.
<unk>.
Matthew Covington Olney: I think it was third quarter. Some happened late 'twenty two and then some happened in 'twenty early 2023.
I think you mentioned that there were some payoffs.
Or you received partial payments on some of those loans can you just.
Matthew Covington Olney: So you are saying that in.
Go over that again as far as the kind of post the movements post March 31.
Matthew Covington Olney: And we have we did increase.
Sure. So one of the relationships the commercial relationship was about 1 million and a half.
Matthew Covington Olney: The amount you have to be overdrawn in order to have an overdrawn overdraft fee.
And it was securing equipment and that particular client is going out of business and has been liquidating Ed.
Matthew Covington Olney: Pretty significantly so I think youre seeing the full result of any of that and then like I say the first quarter is typically is less because of tax returns.
Better prices.
Matthew Covington Olney: Refunds that come in and people arent overdrawn as much.
And then the appraisals that we were expecting at the end of the quarter and today that that relationship is down to around $880000. So just in the last few weeks as late as yesterday received some payments on that and then there was a one to four.
Speaker Change: Sure Okay.
Speaker Change: Okay. Thanks for that and then on the credit on the credit front. There was some commentary in prepared remarks about some about two large relationships during the quarter.
Speaker Change: <unk>.
Speaker Change: I think you mentioned that there were some payoffs.
In the non accrual status that was around 800, and I believe $69000 that paid off.
Speaker Change: Or you received partial payments on some of those bonds can you just.
During April.
Speaker Change: Go over that again as far as a kind of a post the movements post March 31.
So those are two of the large things I was referring to in the $1 6 million.
Speaker Change: Sure. So one of the relationships the commercial relationship was about 1 million and a half.
Nonperforming assets, we've had pay downs of about $1 million six.
Speaker Change: And whereas securing equipment and that particular client is going out of business and has been liquidating Ed.
The one commercial loan Julie mentioned.
And a lot better about it right now than we did.
At quarter end based on the sales that have occurred.
Matthew Covington Olney: <unk>.
Matthew Covington Olney: Better prices.
Matthew Covington Olney: And then the appraisals that we were expecting at the end of the quarter.
Okay.
Alright.
That and then just lastly, I think you mentioned in prepared remarks.
Matthew Covington Olney: And today that that relationship is down to around $880000. So just in the last few weeks as late as yesterday received some payments on that and then there is a wonderful are in the non accrual status that was around $869000 that paid off.
The five year strategic plan.
It resulted in some of those cost containment measures.
Anything else notable in the five year strategic plan.
That we should appreciate as you think about kind of the longer term.
Matthew Covington Olney: During April.
Direction of the of the bank.
Matthew Covington Olney: So those are two of the.
Yeah.
Where we're looking at it.
Matthew Covington Olney: Large things I was referring to in the $1 6 million.
Different revenue opportunities and I hope to.
Matthew Covington Olney: Nonperforming assets, we've had pay downs of about $1 million six and the one commercial loan Julie mentioned.
Report on something.
Either either July or October related to additional revenue that we anticipate.
Matthew Covington Olney: We're feeling a lot better about it right now than we did.
Saving in noninterest income.
Matthew Covington Olney: At quarter end based on the sales that occurred in April.
And then it's just a lot of.
A lot of things that we're going to be moving more towards.
Matthew Covington Olney: Okay.
Matthew Covington Olney: Alright.
Speaker Change: I appreciate that and then just lastly, I think you mentioned in prepared remarks.
It related.
Issues and software in the future and what we need the bank to look like.
Matthew Covington Olney: Yeah.
Matthew Covington Olney: Five year strategic plan.
Matthew Covington Olney: It resulted in some of those cost containment measures.
Where what markets, we want to be in and potentially expand into and so.
Matthew Covington Olney: Anything else notable in the five year strategic plan.
Those are those are initiatives that are being kicked off and discussed.
Matthew Covington Olney: We should appreciate as we think about kind of longer term.
Matthew Covington Olney: The direction of the of the bank.
And at this point, we don't have anything significant to report.
Matthew Covington Olney: Where we're looking at it.
Matthew Covington Olney: Different revenue opportunities and I hope to.
We will update on a quarterly basis as we move forward.
Speaker Change: Report on something.
Okay.
Matthew Covington Olney: Either either July or October related to additional revenue that we anticipate.
Alright, guys. Thank for taking my questions.
You bet.
Thank you for next question.
Matthew Covington Olney: Saving in noninterest income.
Our next question comes from the line of <unk> Lee of <unk>. Your line is now open.
Matthew Covington Olney: And then it's just a lot of a lot.
Matthew Covington Olney: A lot of things that we're going to be moving more towards.
Hey, good morning, guys.
Good morning.
I wanted to hit just real quick on that on that cash flows swap so when exactly did that.
Matthew Covington Olney: It related.
Matthew Covington Olney: Issues in software in the future and what we need the bank to look like and where what markets, we want to be in and potentially expand into and so.
Mature in the quarter.
There were three of them that matured two of them were in February and one was in March.
Matthew Covington Olney: Those are those are initiatives that are being kicked off and discussed and at this point, we don't have anything significant to report.
On March 11th.
The overall rate that we had on those swaps was a little below.
Matthew Covington Olney: Yes.
1% I think it was like nine eight or somewhere in that range.
Matthew Covington Olney: We will update on a quarterly basis as we move forward.
Matthew Covington Olney: Okay.
So when that when those rolled off.
Speaker Change: Alright, guys. Thanks for taking my questions.
On that $120 million.
Speaker Change: You bet.
We had to re price.
Speaker Change: Thank you Juan Monroy for next questions.
At today's rate, which is closer to $5 40.
Speaker Change: Yeah.
And so thats that was a pretty significant on that $120 million.
Juan Monroy: Our next question comes from the line of <unk> Lee of <unk>. Your line is now open.
Alright thats helpful color.
Lee R. Gibson: Hey, good morning, guys.
And then last for me, if we didn't get any buybacks in the quarter, but if you look at where the stock is trading today.
Lee: Good morning.
Lee: Wanted to hit just real quick on that on that cash was swap so when exactly did that.
Hello, the range on where you bought back in 2023 is it fair to expect that buyback could pick up again in the second quarter.
Lee: Mature in the quarter.
Lee: There were three of them that matured to having more in February and one was in March.
We're going to be evaluating that and.
We'll take a look at it and make an appropriate decision in conjunction with the board.
Lee: On March 11th.
Lee: The overall rate that we had on those swaps was a little below.
Got it alright, thanks, guys.
Lee R. Gibson: 1% I think it was like nine eight or somewhere in that range.
Alright, thank you.
Thank you. This concludes the question and answer session I would now like to turn it back to Lee Gibson, President and CEO for closing remarks.
Lee R. Gibson: So when that when those rolled off.
Lee R. Gibson: $120 million.
Thank you everyone for joining us today, we appreciate your interest in SaaS side Bancshares, along with the opportunity to answer your questions. In closing we are looking forward to our prospects during 2024 and reporting our second quarter results to you during our next earnings call in July. Thank you again.
Lee R. Gibson: We had to re price that.
Lee R. Gibson: At today's rate, which is closer to $5 40.
Lee R. Gibson: And so that's that was pretty significant on that $120 million.
Speaker Change: Alright thats helpful color.
Lee R. Gibson: And then last for me, if we didn't get any buybacks in the quarter, but if you look at where the stock is trading today.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Lee R. Gibson: Hello, the range on where you bought back in 2023 is it fair to expect that buyback could pick up again in the second quarter.
Speaker Change: We're going to be evaluating that and.
Speaker Change: We'll take a look at it and make an appropriate decision in conjunction with the board.
Speaker Change: Got it alright, thanks, guys.
Speaker Change: Alright, thank you.
Speaker Change: Thank you. This concludes the question and answer session I would now like to turn it back to Lee Gibson, President and CEO for closing remarks.
Lee R. Gibson: Thank you everyone for joining us today, we appreciate your interest in SaaS side Bancshares, along with the opportunity to answer your questions in closing, we're looking forward to our prospects during 2024 and reporting our second quarter results to you during our next earnings call in July. Thank you again.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Lee R. Gibson: Okay.
Lee R. Gibson: Yes.
Lee R. Gibson: Yeah.
Lee R. Gibson: Yes.
Lee R. Gibson: [music].
Lee R. Gibson: Okay.
Lee R. Gibson: Okay.
Lee R. Gibson: [music].
Lee R. Gibson: Okay.
Lee R. Gibson: Yeah.