Q2 2024 Great Southern Bancorp Inc Earnings Call
Hello. Thank you for standing by. Welcome to Great Southern Bancorp Inc. Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode.
Operator: 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to turn the call over to Kelly Polonus. You may begin.
After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
Kelly A. Polonus: Well, good afternoon, and thank you for joining us for our second quarter earnings call. The purpose of this call is to discuss the company's results for the quarter ending June 30, 2024. Before we begin, I need to remind you that, during the course of this call, we may make forward-looking statements about future events and financial performance. These statements are subject to a number of factors that could cause actual results to differ materially from projected results. For a list of some of these factors, please see the forward-looking statements disclosure in our second quarter earnings release and our other public filings.
I would now like to turn the call over to Kelly Polonus. You may begin.
Kelly A. Polonus: Thank you.
Kelly A. Polonus: Well, good afternoon and thank you for joining us for our second quarter earnings call.
Kelly A. Polonus: The purpose of this call is to discuss the company's results for the quarter ending June 30th, 2024. Before we begin, I need to remind you that during the course of this call, we may make forward-looking statements about future events and financial performance.
These statements are subject to a number of factors that could cause actual results to differ materially from projected results. For a list of some of these factors, please see the forward-looking statements disclosure in our second quarter earnings release and our other public filings.
Kelly A. Polonus: President and CEO Joe Turner and Chief Financial Officer Rex Copeland are on the call with me. I'll now turn the meeting over to Joe. All right. Thanks.
Kelly A. Polonus: President and CEO Joe Turner and Chief Financial Officer Rex Copeland are on the call with me. I'll now turn the meeting over to Joe. All right. Thanks, Kelly. And good afternoon to everybody.
Joseph William Turner: All right. Thanks, Kelly, and good afternoon to everybody.
Joseph William Turner: Our second quarter results reflected improved earnings versus the first quarter of 2024, both on a reported basis and excluding non-recurring items as we continue to operate in a challenging economic environment. For the second quarter, we earned $1.45 per diluted common share, or $17 million, compared to $1.52, or $18.3 million, for the same period in 2023. Earnings were $1.13 per share, or $13.4 million, in the first quarter of 2024. Excluding the non-recurring items related to the terminated Corp Banking System conversion project and some compliance matters, earnings per diluted common share were $1.37 for the second quarter of 2024.
Joseph William Turner: Our second quarter results reflected improved earnings versus the first quarter of 2024, both on a reported basis and excluding the non-recurring items as we continue to operate in a challenging economic environment.
Speaker Change: For the second quarter, we earned $1.45 per diluted common share, or $17 million, compared to $1.52, or $18.3 million, for the same period in 2023. Earnings were $1.13 per share, or $13.4 million in the first quarter of 2024.
Joseph William Turner: Excluding the non-recurring items related to the terminated Corp Banking System conversion project and some compliance matters, earnings per diluted common share were $1.37 for the second quarter of 2014.
Joseph William Turner: Key drivers of our performance included modest increases in overall funding costs, continued significant competition for deposits, and lower loan origination volumes. The second quarter was also the first full period without the negative impact of one of our interest rate swaps, as we discussed in previous reports. Rex will provide more color on our results in his presentation.
Joseph William Turner: Key drivers of our performance included modest increases in overall funding costs, continued significant competition for deposits, and lower loan origination volume.
Speaker Change: The second quarter was also the first full period without the negative impact of one of our interest rate swaps, as we discussed in previous reports. Rex will provide more color on our results in his presentation.
Joseph William Turner: As far as capital and liquidity are concerned, the company's capital and liquidity positions remain strong. Total stockholders' equity was $568.8 million as of June 30, 2024, decreasing $3 million from the end of 2023 due to increases in unrealized losses on our available-for-sale securities portfolio as well as our portfolio of interest rate swaps. Our capital remained substantially above the regulatory well-capitalized threshold. Our TCE ratio was 9.4% at the end of June. The company declared a $0.40 per common share dividend during the second quarter and continued to repurchase shares of common stock from time to time, with approximately 237,000 shares repurchased so far in 2020.
Rex A. Copeland: As far as capital and liquidity, the company's capital and liquidity positions remain strong.
Rex A. Copeland: Total stockholders' equity was $568.8 million as of June 30, 2024, decreasing $3 million from the end of 2023 due to increases in unrealized losses.
Rex A. Copeland: on our available-for-sales security portfolio, as well as our portfolio of interest rate swaps.
Rex A. Copeland: Our capital remains substantially above regulatory well-capitalized threshold. Our TCE ratio was 9.4% at the end of June . The company declared a 40 cent per common share dividend.
Rex A. Copeland: during the second quarter and continued to repurchase shares of common stock from time to time, with approximately 237,000 shares repurchased so far in 2024.
Joseph William Turner: In terms of liquidity, the company had available secured funding lines through the Federal Home Loan Bank and Federal Reserve along with on-balance sheet liquidity totaling approximately $2 billion. Overall, our loan portfolio is diverse and performing well. We've seen some modest growth in our portfolio, with an increase of about $44 million since the end of 2023. The increases are primarily in the multifamily category, which is really happening as a result of construction loans, multifamily construction loans, finishing and being moved to the permanent multifamily category.
Rex A. Copeland: In terms of liquidity, the company had available secured funding lines through the Federal Home Loan Bank and Federal Reserve along with on-balance sheet liquidity totaling approximately $2 billion.
Rex A. Copeland: Overall, our loan portfolio is diverse and performing well.
Rex A. Copeland: We've seen some modest growth in our portfolio, with an increase of about $44 million since the end of 2023.
Rex A. Copeland: The increases are primarily in the multi-family category, which is really happening as a result of construction loans, multi-family construction loans finishing.
Joseph William Turner: At the end of 2024, the pipeline of loan commitments and unsubmitted lines decreased to $1.1 billion, leaving $571 million in the unfunded portion of construction. Overall, credit quality metrics remained strong during the quarter, with total non-performing assets remaining generally unchanged from the end of 2024. Non-performing assets, the total assets, were 34 basis points at the end of June versus 20 basis points at the end of the year. Compared to the end of 2023, non-performing assets increased $8.6 million to $20.4 million at the end of June.
Rex A. Copeland: and being moved to the permanent multifamily category. At the end of 2024, the pipeline of loan commitments and unfunded lines decreased to $1.1 billion, including $571 million in the unfunded portion of construction loans.
Rex A. Copeland: Overall, credit quality metrics remained strong during the quarter, with total non-performing assets remaining generally unchanged from 2024.
Rex A. Copeland: Non-performing assets, the total assets were 34 basis points at the end of June versus 20 basis points at the end of the year.
Rex A. Copeland: Compared to the end of 23, non-performing assets increased $8.6 million.
Joseph William Turner: Delinquencies in our loan portfolio remained at low levels, and net charge-offs were not significant in the second quarter or first half of 2004. For more information about our loan portfolio, you can find our quarterly portfolio presentation on our investor relations site under the presentations link, and it is also on file with the SEC. Our quarterly loan presentation provides a lot of helpful information regarding our loan portfolio broken by type and geography. That concludes my prepared remarks. I'll turn the call over to our CFO, Rex Copeland, at this time.
Rex A. Copeland: to $20.4 million at the end of June . Delinquencies in our loan portfolio remained at low levels and net charge-offs were not significant in the second quarter or first half of 2024.
Rex A. Copeland: For more information about our loan portfolio, you can find our quarterly portfolio presentation.
Rex A. Copeland: on our investor relations site under the presentations link and it is also on file with the SEC. Our quarterly loan presentation provides a lot of helpful information regarding our loan portfolio mix by type and geography.
Rex A. Copeland: That concludes my prepared remarks. I'll turn the call over to our CFO , Rex Copeland, at this time.
Rex A. Copeland: All right. Thank you, Joe. Net interest income for the second quarter of 2024 was $46.8 million, compared to $48.1 million for the second quarter of 2023 and versus $44.8 million in the first quarter of 2024. As we highlighted in our news release, we did see improved net interest income in the second quarter of 2024 compared to the first quarter due to the contractual termination of an interest rate swap. This swap reduced interest income by $1.9 million in the first quarter of 2024, with no financial impact from this swap in the second quarter.
Rex A. Copeland: All right. Thank you, Joe. Net interest income for the second quarter of 2024 was $46.8 million compared to $48.1 million for the second quarter of 2023, and versus $44.8 million in the first quarter of 2024.
Speaker Change: As we highlighted in our news release, we did see improved net interest income in the second quarter of 2024 compared to the first quarter due to the contractual termination of an interest rate swap.
Speaker Change: This swap reduced interest income by $1.9 million in the first quarter of 2024, with no financial impact from this swap in the second quarter.
Rex A. Copeland: While deposit interest expenses have increased compared to a year ago, the pace of the increase has moderated over the last few quarters and only increased modestly compared to the first quarter of 2024. Higher funding costs in the second quarter of 2024 were partially caused by lower deposit balances with increased borrowing. We detailed our upcoming time deposit maturities over the next 12 months in our earnings report. Based on time deposit market rates in June 2024, replacement rates for these maturing time deposits are likely to be somewhere in the range of 4% to 4.35%.
Speaker Change: While deposit interest expenses have increased compared to a year ago, the pace of the increase has moderated over the last few quarters and only increased modestly compared to the first quarter of 2024.
Speaker Change: Higher funding costs in the second quarter of 2024 were partially caused by lower deposit balances with increased borrowings.
Speaker Change: We detailed our upcoming time deposit maturities over the next 12 months in our earnings release.
Speaker Change: Based on time deposit market rates in June 2024, replacement rates for these maturing time deposits are likely to be somewhere in the range of 4% to 4.35%.
Rex A. Copeland: Net interest margin was 3.43% in the second quarter of 2024, compared to 3.56% in the same period of 2023, a decrease of 13 basis points. Net interest margin was 3.32% in the first quarter of 2024. When comparing the 2024 and 2023 second quarters, The average yield on loans increased 53 basis points, and the average yield on investment securities increased 23 basis points. And the average yield on other interest-earning assets increased 38 basis points. The margin contraction primarily resulted from increasing interest rates on all deposit types, as we discussed earlier.
Speaker Change: Net interest margin was 3.43% in the second quarter of 2024, compared to 3.56% in the same period of 2023, a decrease of 13 basis points.
Speaker Change: Net interest margin was 3.32% in the first quarter of 2024.
Speaker Change: In comparing the 2024-2023 second quarter period,
Speaker Change: The average yield on loans increased 53 basis points, the average yield on investment securities increased 23 basis points, and the average yield on other interest earning assets increased 38 basis points.
Operator: Police. The margin and contraction in primarily resulted from increasing interest rates on all deposit types, as we discussed earlier. The average rate on interest rate demand at the same as the deposits, time deposits, and broker deposits increased 51 basis points, around 23 basis points, and 28 basis points respectively.
Speaker Change: The margin contraction primarily resulted from increasing interest rates on all deposit types as we discussed earlier.
Rex A. Copeland: The average rate on interest-bearing demand at savings deposits, time deposits, and broker deposits increased 51 basis points, 123 basis points, and 28 basis points, respectively, in the three months into June 30, 24, compared to the three months into June 30, 2023. Joe mentioned our liquidity position in his remarks, but I'll restate that we do have substantial liquidity with readily available funding sources at about $2 billion at the end of June 2024, and with $1.1 billion of this availability at the Home Loan Bank.
Speaker Change: The average rate on interest bearing demand and savings deposits, time deposits, and broker deposits increased 51 basis points, earned 23 basis points, and 28 basis points, respectively, in the three months into June 30, 2024, compared to the three months into June 30, 2023.
Joseph Turner: In the three months into June 30, 24, compared to the three months into June 30, 23. Joe mentioned our liquidity position in history marks, but I'll restate that we do have substantial liquidity with readily available funding sources that about $2 billion at the end of June 2024, and with $1.1 billion in this availability at the home low bank with secure lives there. At June 30, 2024, total deposits were about $4.6 billion. During the three months into June 30, 2024, the company's total deposit did decrease $158 million. Interest bearing checking balances decreased to 104 million or about $4.6 per cent, primarily in certain money market in our accounts.
Speaker Change: Joe mentioned our liquidity position in his remarks, but I'll restate that we do have substantial liquidity with readily available funding sources at about $2 billion at the end of June 2024, and with $1.1 billion of this availability at the Home Loan Bank.
Rex A. Copeland: Secured Lies. At June 30, 2024, total deposits were about $4.6 billion. During the three months into June 30, 2024, the company's total deposits did decrease $158 million. Interest-bearing checking balances decreased $104 million, or about 4.6%, primarily in certain money market and current accounts, while non-interest-bearing checking balances decreased $6.4 million, or about 0.7%. Time deposits generated through the company's banking center and corporate services networks decreased $24 million, or about $2.7 billion, and Time Deposits Generated Through Internet Channels decreased by about $4.7 million. Total brokerage deposits decreased $15.5 million, or about 2.3%, through a variety of different sources.
Speaker Change: with secured lines there.
Speaker Change: At June 30, 2024, total deposits were about $4.6 billion. During the three months into June 30, 2024, the company's total deposits did decrease $158 million.
Speaker Change: Interest-bearing checking balances decreased $104 million, or about 4.6%, primarily in certain money market and now accounts, while non-interest-bearing checking balances decreased $6.4 million, or about 0.7%.
Joseph Turner: While interest-bearing checking balances decreased to 6.4 million, or about 0.7%. Time to deposit generated through the company's banking center and corporate services network decreased $24 million, or about 2.7%. And time deposits generated through internet channels decreased about $4.7 million. Total broker deposit decreased $15.5 million or about 2.3% through the variety of different sources there.
Speaker Change: Time deposits generated through the company's banking center and corporate services networks decreased $24 million, or about 2.7 percent.
Speaker Change: and time deposits generated through internet channels decrease.
Speaker Change: about $4.7 million.
Speaker Change: Total brokered deposits decreased 15.5 million dollars or about 2.3 percent through a variety of different sources there.
Joseph Turner: I've talked for a minute about not interest income. So for the quarter-ended June 30, 2024, net interest income increased $2.1 billion to $9.8 million. We compared to the quarter ended June 30, 2023. Really, it was in a few areas. So other income was the primary driver. Other income increased $2.6 million compared to the prior quarter. In the second quarter, 24, the company recorded $2.7 million of other income, net of expenses and write-offs related to the termination of the asteroid agreement between the company and the third-party software vendor for conversion of the company's core banking platform.
Rex A. Copeland: I'm going to talk for a minute about non-interest income. So for the quarter ended June 30, 2024, non-interest income increased $2.1 million to $9.8 million when compared to the quarter ended June 30, 2023. Really, it was in a few areas, so other income was the primary driver. Other income increased $2.6 million compared to the prior quarter. In the second quarter of 24, the company recorded $2.7 million of other income, net of expenses and write-offs related to the termination of the master agreement between the company and the third-party software vendor for the conversion of the company's core banking platform.
Speaker Change: Talk for a minute about non-interest income.
Speaker Change: So, for the quarter ended June 30, 2024, non-interest income increased $2.1 million to $9.8 million when compared to the quarter ended June 30, 2023.
Speaker Change: Really, it was in a few areas, so other income.
Speaker Change: was the primary driver. Other income increased $2.6 million compared to the prior quarter.
Speaker Change: In the second quarter of 24, the company recorded $2.7 million of other income, net of expenses and write-offs.
Speaker Change: related to the termination of the master agreement between the company and the third-party software vendor for the conversion of the company's core banking platform.
Rex A. Copeland: We previously disclosed this termination in our first quarter 10Q that was filed previously. The amounts represented the elimination of certain deferred credits and liabilities along with the write-off of certain capitalized hardware, software, and other assets that previously had been recorded in preparation for the conversion to the new banking platform. Net gains on loan sales increased $418,000 compared to the prior year quarter.
Joseph Turner: We previously disclosed this termination in the first quarter-tenth year that was filed previously. The amounts represented the elimination of certain deferred credits and liabilities, along with certain right off of certain capitalized hardware, software, and other assets that previously had been recorded in preparation for the conversion to the banking platform. Net gains on loan sales increased $418,000 compared to the prior year quarter. The increase was due to a couple of different things. We'll be able to increase in the relationships and sales that loans, but also a bigger premium that we were able to generate on these loans sales in the 2024 period as interest rates had, I kind of settled in and were more stable versus 2020-23.
Speaker Change: that we previously disclosed.
Speaker Change: this termination in the first quarter of 10-Q that was filed previously.
Speaker Change: The amounts represented the elimination of certain deferred credits and liabilities along with write-off of certain capitalized hardware, software, and other assets that previously had been recorded in preparation for the conversion to the new banking platform.
Rex A. Copeland: The increase was due to a couple of different things. A little bit of an increase in originations and sales of loans, but also a bigger premium that we were able to generate on these loan sales in the 2024 period as interest rates had kind of settled in and were more stable versus 2023. Overdraft and insufficient funds decreased $759,000 compared to the prior year quarter. The decrease was primarily due to the continuation of what we've described before as a multi-year trend whereby our customers are choosing to forego authorizing payments of certain items to exceed their account balances, resulting in fewer overdrafts in checking accounts and related, non-interest expense for the quarter ending June 30, increased $1.7 million to $36.4 million compared to the A few items generated that result.
Speaker Change: Net gains on loan sales increased $418,000 compared to the prior year quarter.
Speaker Change: The increase was due to a couple of different things, a little bit of increase in originations and sales of loans, but also a bigger premium that we were able to generate on these loan sales in the 2024 period as interest rates had
Joseph Turner: Overdrafted insufficient funds decreased $759,000 compared to the prior year quarter. The decrease was primarily due to the continuation of what we described before as multi-year trend for via our customers are choosing to forego, authorizing payments a certain height. It was to continue their account balances, resulting in fewer overdrafts in the checking in fees. Non-interest expense for the quarter ended June 30 increased 1.7 million to 36.4 million compared to the second quarter of 2023. Few items generated that. So other operating expenses we did have an increase of there at 466,000 from the prior year quarter to 2.6 million in the 2024 period.
Speaker Change: I kind of settled in and we're more stable versus 2023.
Speaker Change: Overdraft and insufficient funds decreased $759,000 compared to the prior year quarter.
Speaker Change: The decrease was primarily due to the continuation of what we've described before as a multi-year trend whereby our customers are choosing to forego authorizing payments of certain items to exceed their account balances, resulting in fewer overdrafts in the checking accounts and related fees.
Speaker Change: non-interest expense for the quarter into June 30.
Speaker Change: increased $1.7 million to $36.4 million compared to the second quarter of 2023.
Rex A. Copeland: So other operating expenses, we did have an increase there of $466,000 from the prior year quarter to $2.6 million. For the 2024 period, the company recorded expenses totaling $600,000 related to ongoing compliance matters. The company continually monitors its compliance programs, including matters that may arise from time to time, which could result in additional compliance expenses in future periods. Net occupancy expense increased $432,000 from the prior year quarter, various components of computer license and support expenses collectively increased by $476,000 in the 24 period compared to the 23 period, and then we had multiple other categories of non-interest expense that, in total, increased about another $900,000 compared to the prior year. None of those were individually large, but there were multiple categories.
Speaker Change: A few items.
Speaker Change: generated that. So other operating expenses, we did have an increase there of $466,000 from the prior year quarter to $2.6 million. In the 2024 period, the company recorded expenses totaling $600,000 related to ongoing compliance matters.
Joseph Turner: The company recorded an expense totaling $600,000 related to ongoing compliance matters. The company continuing monitors its compliance programs, including matters that they arise from time to time, which could result in additional compliance expenses in future periods. Net occupancy expense increased for $32,000 from the prior year quarter; various components of computer license and support expenses collectively increased by 476,000 in the 24 periods compared to the 23 periods. And then we had multiple other categories of non-interest expense that, in total, increased about another $900,000 compared to the prior year. None of those were individually large, but there were multiple categories there.
Speaker Change: The company continually monitors its compliance programs, including matters that may arise from time to time, which could result in additional compliance expenses in future periods.
Speaker Change: Net occupancy expense increased $432,000 from the prior year quarter.
Speaker Change: Various components of computer license and support expenses collectively increased by $476,000 in the 24-period compared to the 23-period.
Speaker Change: And then we had multiple other categories of non-interest expense that in total increased about another $900,000 compared to the prior year. None of those were individually large, but there were multiple categories there.
Joseph Turner: The company's efficiency ratio for the second quarter of 24 was 64.27 percent compared to 62.10 percent from the same quarter in 23. And the company's ratio of non-interest expense to average assets was 2.50 percent and 2.43 percent for the three most ended June 30, 2024, and 2023, respectively.
Rex A. Copeland: The company's efficiency ratio for the second quarter of 24 was 64.27% compared to 62.10% for the same quarter of 23, and the company's ratio of non-interest expense to average assets was 2.50% and 2.43% for the three months ended June 30, 2024 and 2023, respectively. Provision for credit losses. So during the quarters ended June 30, 2024, and June 30, 2023, the company did not record a provision expense on its portfolio of outstanding loans.
Speaker Change: The company's efficiency ratio for the second quarter of 24 was 64.27% compared to 62.10% for the same quarter in 23.
Speaker Change: and the company's ratio of non-interest expense to average assets was 2.50% and 2.43% for the three months ended June 30, 2024 and 2023, respectively.
Joseph Turner: Provisions for credit losses to drain the quarter quarters ended June 30, 2024, and June 30, 2023. The company did not record a provision on its portfolio of outstanding loans for the three months ended June 30, 2024. The company did record a negative provision for losses on unfunded commitments of $607,000 compared to a negative provision of $1.6 million for the three months ended June 30, 2023. Total net recoveries were 168,000 for the three months ended June 30, 2024, compared to net charge offs of 135,000 in the three months ended June 30, 2023. And then at the end of the second quarter, the allowance for credit losses at a percentage of total loans was 1.39 percent.
Speaker Change: Provision for credit losses, so during the quarters ended June 30, 2024 and June 30, 2023, the company did not record a provision expense on its portfolio of outstanding loans.
Rex A. Copeland: For the three months ended June 30, 2024, the company did record a negative provision for losses on unfunded commitments of $607,000 compared to a negative provision of $1.6 million for the three months ended June 30, 2023. Total net recoveries were $168,000 for the three months into June 30, 2024, compared to net charge-offs of $135,000 in the three months into June 30, 2023. And then, at the end of the second quarter, the allowance for credit losses as a percentage of total loans was 1.39%.
Speaker Change: For the three months ended June 30, 2024, the company did record a negative provision for losses on unfunded commitments of $607,000 compared to a negative provision of $1.6 million for the three months ended June 30, 2023.
Speaker Change: Total Net Recoveries
Speaker Change: were $168,000 for the three months into June 30, 2024, compared to net charge offs of $135,000 in the three months into June 30, 2023. And then at the end of the second quarter, the allowance for credit losses at the percentage of total loans was 1.39%.
Joseph Turner: And then lastly, I'll mention income taxes for the three most ended June 30, 2024, and 2023. The company's effective tax rate was 18.5 percent and 19.7 percent, respectively. These effective rates were nearer but in this case below the statutory federal tax rate of 21 percent due primarily to the utilization of certain investment tax credits and the company's tax-exempt investments and tax-exempt loans, which reduced the company's effective tax rate. The company currently expects its effective tax rate, both combined federal and state, will be approximately 18.5 to 20.0 percent in future periods, primarily due to additional investment tax credits utilized beginning in 2024.
Rex A. Copeland: And then lastly, I'll mention income taxes. For the three months ending June 30, 2024, and 2023, the company's effective tax rate was 18.5% and 19.7%, respectively. These effective rates were near, but in this case below, the statutory federal tax rate of 21%, due primarily to the utilization of certain investment tax credits and the company's tax-exempt investments and tax-exempt loans, which reduced the company's effective tax rate. The company currently expects its effective tax rate, both combined federal and state, will be approximately 18.5% to 20.0% in future periods, primarily due to additional investment tax credits utilized beginning in
Speaker Change: And then lastly, I'll mention income taxes.
Speaker Change: For the three months ended June 30, 2024 and 2023, the company's effective tax rate was 18.5% and 19.7% respectively.
Speaker Change: These effective rates were near, but in this case below, the statutory federal tax rate of 21 percent, due primarily to the utilization of certain investment tax credits and the company's tax-exempt investments and tax-exempt loans, which reduced the company's effective tax rate.
Speaker Change: The company currently expects its effective tax rate, both combined federal and state, will be approximately 18.5% to 20.0% in future periods, primarily due to additional investment tax credits utilized beginning in 2024.
Operator: That concludes our prepared remarks, and at this time we will entertain questions. Let me ask the operator to once again remind our attendees how to queue in for questions. Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.
Rex A. Copeland: That concludes our prepared remarks, and at this time, we will entertain questions. Let me ask the operator to once again remind our attendees how to queue up for questions. Thank you.
Speaker Change: That concludes our prepared remarks, and at this time we will entertain questions. Let me ask the operator to once again remind our attendees how to queue in for questions.
Operator: Ladies and gentlemen, as a reminder to ask the question, please press star 1 on your telephone and then wait to hear your name announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Andrew Liesch with Piper Sandler. Your line is open.
Speaker Change: Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 1-1 on your telephone and then wait to hear your name announced.
Speaker Change: To withdraw your question, please press star 11 again.
Speaker Change: Please stand by while we compile the Q&A roster.
Operator: Our first question comes from the line of Andrew Liesch with the pipe of Sandler. The line is open.
Andrew Brian Liesch: Hey guys, good afternoon. You know, question on the securities book this quarter. Looks like you added to it. I'm just curious what you purchased as far as type and then duration and yield.
Speaker Change: Our first question comes from the line of Andrew Liesch with Piper Sandler. Your line is open.
Andrew Liesch: Hey guys, good afternoon. You don't question on the securities book this quarter looked like you added to it. I'm just curious what you purchased as far as type and then duration and yield.
Speaker Change: Hey guys, good afternoon. You know, question on the securities book this quarter. Looked like you added to it. I'm just curious what what you purchased as far as type and then duration and yield.
Rex Copeland: Yeah, I'll go ahead and take that one.
Rex A. Copeland: Yeah, I'll go ahead and take that one. We did add some securities, probably around $80 to $85 million in securities during May and June. We were able to achieve in excess, we believe, of 5% yields on those securities. And it's going to be typically stuff like what we have. It's generally going to be there some single-family mortgage-backed pass-throughs, but there's also some multifamily product in there as well. So it's kind of a combination of a lot of things that we already have in the portfolio. All agency stuff, right, Rex?
Rex Copeland: We did add some securities, probably around 80 to 85 million dollars of securities during May and June. We were able to achieve in excess. We believe a 5% yields on those securities. It's going to be typically stuff like what we have. It's generally going to be there's some single family mortgage back passthroughs that there's also some multi family product in there as well. So it's kind of a combination of a lot of things that we already have in the portfolio. All agency stuff. Right. All agency got it. All right.
Speaker Change: Yeah, I'll go ahead and take that one. We did add some securities, probably around $80 to $85 million of securities during May and June .
Rex A. Copeland: Correct. All eight. Got it. All right, that's helpful.
Speaker Change: We were able to achieve, in excess, we believe, a 5% yield on those securities.
Speaker Change: And it's going to be typically stuff like what we have. It's generally going to be there's some single-family mortgage-backed pass-throughs, but there's also some multifamily.
Rex A. Copeland: product in there as well. So it's kind of a combination of a lot of things that we already have in the portfolio. All agency stuff, right, Rex? Correct, all agency.
Andrew Liesch: That's also short term borrowings were up.
Andrew Brian Liesch: Also, short-term borrowings were up. I suppose that kind of upset some of the deposit decline, but were those borrowings used to fund these purchases? I'm just curious about some of the dynamics on this balance sheet.
Andrew Liesch: I suppose that kind of upset some of the deposit decline. But were those borrowings used to fund these purchases.
Speaker Change: Got it, all right. That's helpful. Also, short-term borrowings were up. I suppose that kind of offset some of the deposit decline, but were those borrowings used to fund these purchases? I'm just curious to learn some of the dynamics on this balance sheet.
Rex Copeland: I'm just curious from some of the dynamics on this balance sheet. Yeah, so that was your right on both counts there. So it was used some to fund the purchases and also just to make up for some shortfall in deposit rental. Got it. All right.
Rex A. Copeland: Yeah, so that was, you're right on both counts there, so it was used some to fund the purchases and also just to make up for some shortfall in the deposit runoff.
Speaker Change: Yeah, so that was, you're right on both counts there, so it was used some to fund the purchases and also just to make up for some shortfall in the deposit runoff.
Rex A. Copeland: Got it. All right. Now, if you roll this on the security, some of these borrowings, and then the loan growth or towards the margin, do you think that the margin's got to come down from here taking on this leverage? How do you foresee it playing out here going forward?
Andrew Liesch: So I'm just going to be curious now if you roll this on the security, some of these borrowings and then the long growth or towards the margin. And do you think that there's that the margins got to come down from here, taking on this leverage.
Speaker Change: Got it. All right. So I'm just kind of so curious now if you roll this on the security, some of these borrowings.
Speaker Change: And then the loan growth or towards the margin, do you think that the margin's got to come down from here taking on this leverage? How do you foresee it playing out here going forward?
Rex Copeland: How do you foresee it playing out here going forward? Well, the securities he added on are probably going to yield somewhere in the 520 to 540 kind of range. So there's probably a little bit of negative carry. You know, in the immediate future here. We found it out of short. We found it. So, but it should, you know, if rates do what people are expecting, I guess, you know, the margins should. I mean, with respect to the security transaction, the margins should improve. Got it. Okay, especially then we would rate cuts as kind of locks and some higher cost or higher yielding assets.
Rex A. Copeland: Well, the securities we added on are probably going to yield somewhere in the 520 to 540 kind of range, so there's probably a little bit of negative carry, you know, in the immediate future here. We fund it outshore, Andrew. We fund it outshore. So, okay, but it should, you know, if rates do what people are expecting, I guess, you know, the margin should I mean, with respect to the securities transactions. Margin should have had...
Speaker Change: Well, the the securities we added on are probably going to yield somewhere in the
Speaker Change: 520 to 540 kind of range, so there's probably a little bit of negative carry.
Speaker Change: you know, in the immediate future here. We fund it outshore, Andrew. We fund it outshore.
Speaker Change: So, but it should, you know, if rates do what people are expecting, I guess, you know, the margin should... I mean...
Rex A. Copeland: Got it. Okay. Especially then with rate cuts, it kind of locks in some higher costs or higher yielding assets. Is that the right way to think about it? Correct. I think they were bought at a discount, too, so if they pay fast, our yields should be better, is that right, Rex? That's correct. I got it. Okay, that's helpful. And then, you know, you referenced ongoing compliance matters a couple of times on the call, and then also that was referenced in the release. Just curious if there's any more detail you can provide on that. I recognize that it might be sensitive if you can't, but just curious what you might mean by that.
Speaker Change: With respect to this securities transaction, margins should increase.
Andrew Brian Liesch: Got it. Okay. Especially then with rate cuts, it's kind of locked in some higher cost or higher yielding assets. Is that the right way to think about it? Yeah. Correct.
Andrew Liesch: Is that the right way to think about it? Yeah. Got it. Okay.
Andrew Liesch: Very helpful. I think they were bought at a discount. So if they pay back, our meals should be better. Is that right, Rick? That's correct. Got it. Okay. That's helpful.
Andrew Brian Liesch: I think they were bought at a discount too, so if they pay fast, our yields should be better, is that right, Rex?
Andrew Liesch: And then, you know, you referenced a couple of times on the calls. I'm going compliance matters. And then also that was referenced in the release.
Rex A. Copeland: That's correct.
Rex A. Copeland: Got it. Okay, that's helpful.
Speaker Change: And then, you know, you referenced a couple times on the calls, ongoing compliance matters, and then also that was referenced in the release. I'm just curious if there's any more detail you can provide on that. I recognize that it might be sensitive if you can't, but just curious what you might mean by that.
Rex Copeland: Just curious if there's any more detail you can provide on that. I recognize that it might be sensitive. If you can, but just curious what you might mean by that. No, we really can't say a lot more, Andrew, than is in the earnings release. You know, we don't have this sort of activity very often, and that's why we included it on recurring. I think if you look back through our earnings releases, you'll see that we don't have this that often. So, but I think, you know, we've given as much detail as we're comfortable giving. Got it.
Rex A. Copeland: No, we really can't say a lot more, Andrew, than what is in the earnings release. You know, we don't have this sort of activity very often, and that's why we included it as non-recurring. You know, I think if you look back through our earnings releases, you'll see that we don't have this that often. So, but I think, you know, we've given as much detail as we're comfortable giving. I got it.
Speaker Change: No, we really can't say a lot more, Andrew, than is in the earnings release. You know, we don't have this sort of activity very often, and that's why we included it as non-recurring.
Speaker Change: I think if you look back through our earnings releases, you'll see that we don't have this that often, but I think we've given as much detail as we're comfortable giving.
Andrew Brian Liesch: Got it. All right. Thanks for taking the questions. I will step back.
Andrew Liesch: All right. Thanks for your questions.
Operator: I will step back. Thank you. Please stand by for our next question.
Andrew Brian Liesch: Got it. All right, thanks for taking the questions. I will step back.
Operator: Please stand by for our next question. Our next question comes from the line of Damon DelMonte with KVW. Your line is open.
Damon Delmonte: Our next question comes from the line of Damon DelMonte with KVW. Yelana's open.
Speaker Change: Thank you.
Speaker Change: Please stand by for our next question.
Damon Paul DelMonte: Hey, good afternoon everyone. Hope you're all doing well today and thanks for taking my questions. So, first one, just wanted to circle back on the margin. With the SWOT that rolled off during the quarter, I guess, is the full benefit reflected here in the second quarter? And kind of how does that play into the outlook for the margin, you know, over the back half of the year?
Speaker Change: Our next question comes from the line of Damon DelMonte with KVW. Your line is open.
Rex Copeland: Hey, good afternoon, everyone. Hope you're all doing well today, and thanks for taking my questions. So, first one, just wanted to circle back on the margin with the swap that rolled off during the quarter. I guess the full benefit reflected this here in the second quarter and kind of how does that play into the outlook for the margin, you know, over the back half of the year. Yeah, the full benefit was in the second quarter that swap terminated on March 1st. So, we had two of three months of it in the first quarter, and then we had no zero months of it in the second quarter.
Speaker Change: Hey, good afternoon, everyone. Hope you're all doing well today, and thanks for taking my questions.
Speaker Change: So first one, just wanted to circle back on the margin. With the swap that rolled off during the quarter, I guess is the the full benefit reflected this here in the second quarter and and kind of how does that play into the outlook for the margin you know over the the back half of the year?
Rex A. Copeland: Yeah, the full benefit was in the second quarter. That swap terminated on March 1st, so we had two of three months of it in the first quarter, and then we had zero months of it in the second quarter, so it was fully impacting in the second quarter.
Speaker Change: Yeah, the full benefit was in the second quarter. That swap terminated on March 1st. So we had two of three months of it in the first quarter, and then we had zero months of it in the second quarter. So it was fully impacting in the second quarter.
Rex Copeland: So, it was fully impacting in the second quarter.
Rex A. Copeland: Okay, and then can you remind us, do you have another one that's rolling off in 24 or is it the spring of 25?
Rex Copeland: Okay. And then can you remind us you have another one that's rolling off in 24, or is it the spring of 25. Now, we don't have we don't have anything rolling off now for a little while and they're further out the there is the one that we terminated several years ago that is still providing income. That one goes, I think, through August of 25, something like that. Yeah, it's either it's either August of 25 or October of 25. Gotcha.
Speaker Change: Okay and then can you remind us do you have another one that's rolling off in 24 or is it the spring of 25?
Rex A. Copeland: Now, we don't have anything rolling off now for a little while, and they're further out. There is the one that we terminated several years ago that is still providing income that wouldn't go. I think through August of 25, something like that, I believe. Yeah, it's either August of 25 or October of 25.
Speaker Change: No, we don't have we don't have anything rolling off now for a little while and they're further out the There is the one that we terminated several years ago. That is still providing income That one goes
Speaker Change: I think through August of 25, something like that, I believe. Yeah, it's either August of 25 or October of 25.
Rex A. Copeland: Gotcha. Okay. So kind of from this quarter's level, do you think you can defend the margin over the back half of the year, just kind of given what you're seeing on loan pricing and kind of, you know, deposit pricing pressures?
Operator: Okay.
Rex Copeland: So, kind of from this quarter's level, I mean, do you think you can defend the margin over the back half of the year, just kind of given what you're seeing on loan pricing and kind of, you know, deposit pricing pressures. I'll take that and start. I think I think we can do a decent job of it. The life I just saying earlier that we think that what we have coming up, we've got, you know, fairly significant maturities of CDs come and do here in the next couple of quarters. And so we think that the new CDs that will go on to replace the maturing ones should be, you know, add, and maybe they could be a little bit lower rate than some of the ones that are going to roll off.
Speaker Change: Gotcha okay so kind of from this quarter's level I mean do you think you can defend the margin over the back half of the year just kind of given what you're seeing on loan pricing and kind of you know deposit pricing pressures?
Rex A. Copeland: I'll take that one to start. I think we can do a decent job of it. Like I was saying earlier, we think that what we have coming up, we've got fairly significant maturities of CDs coming due here in the next couple of quarters, and so we think that the new CDs that will go on to replace the maturing ones should be added, and maybe they could be a little bit lower rates than some of the ones that are going to roll off.
Speaker Change: I'll take that one to start. I think we can do a decent job of it.
Speaker Change: Like I was saying earlier, the
Speaker Change: We think that what we have coming up, we've got, you know, fairly significant maturities.
Speaker Change: of CDs come in due here in the next couple of quarters.
Speaker Change: We think that the new CDs that will go on to replace the maturing ones should be
Rex A. Copeland: It kind of depends on competition and where the Fed kind of starts to guide rates and things like that. So there's a little bit of uncertainty regarding that, but it appears right now that where we think we're going to put new CDs on would be at or below where these are going to mature. And we do continue to have the fixed-rate loans and just other loans that are in the portfolio that are repaying, and we're able to go in and put those back to work at higher levels.
Rex Copeland: Kind of depends on obviously competition and where the Fed kind of starts to guide rates and things like that. So, there'll be a little, I mean, there's a little bit of unsure, you know, uncertainty regarding that, but it appears right now that where we think we're going to put new CDs on with the add or or below, you know, kind of where these are going to mature. And we do continue to have, you know, the fixed rate loans and just other loans that are in the portfolio that are repaying, and we're able to go and, you know, put those back to work at higher levels.
Speaker Change: you know, add, and maybe they could be a little bit lower rate than some of the ones that are going to roll off.
Speaker Change: It kind of depends on...
Speaker Change: Obviously competition and, you know, where...
Speaker Change: where the Fed kind of starts to guide rates and things like that. So there'll be a little, I mean there's a little bit of unsure, you know, uncertainty regarding that, but it appears right now that where we think we're going to put new CDs on would be at or
Speaker Change: or below, you know, kind of where these are going to mature. And we do continue to have, you know, the fixed rate loans and just other loans that are in the portfolio that are repaying, and we're able to go in and put those back to work at higher levels. As we were saying before,
Damon Delmonte: As we were saying before, immediately the securities we put on the books are not, you know, providing much in the way of spread, obviously. If rates, if rate cuts happen, they will start to provide some more spread there, but those are, I mean, that we've added balances, you know, to the denominator that really there's not a lot of net, you know, net interest income generating from it just yet. So, that'll be a little bit, you know, kind of sideways on margin probably. Okay, and looking at the period and securities, I think there were like 740 million, and then the average securities were a little bit less than 700, so kind of got put on towards the end of the quarter, so we should probably expect some impact from that here in the third quarter.
Rex A. Copeland: As we were saying before, the securities we put on the books are not providing much in the way of spread, obviously. If rate cuts happen, they will start to provide some more spread there, but those are – I mean, we've added balances to the denominator so that really, there's not a lot of net interest income generating from them just yet. So that'll be a little bit kind of sideways on the margin, probably.
Speaker Change: immediately the securities we put on the books are not, you know, providing much in the way of spread, obviously. If rates, if rate cuts happen, they will start to provide some more spread there, but those are, I mean, we've added
Speaker Change: balances, you know, to the denominator, that really there's not a lot of net, you know, net interest income generating from it just yet. So that'll be a little bit, you know, kind of sideways on the margin probably.
Rex A. Copeland: Gotcha. Okay. And looking at the period end securities, I think there were like $740 million, and then the average securities were... a little bit less than 700. So kind of got put on towards the end of the quarter. So we should probably expect some impact from that here in the third quarter.
Speaker Change: Gotcha, okay. And looking at the period end securities, I think there were like 740 million, and then the average securities were.
Speaker Change: A little bit less than 700, so kind of got put on towards the end of the quarter, so we should probably expect some impact from that here in the third quarter. Yeah, maybe a little bit. We put most of those on in late May and early June , I believe.
Rex A. Copeland: Yeah, maybe a little bit. We put most of those on in late May and early June.
Damon Delmonte: Yeah, maybe a little bit. We put most of those on in late May and early June, I believe. Okay. That's helpful.
Damon Paul DelMonte: Okay, okay, that's helpful. Thank you. And then on the expense side of things, you guys have been carrying kind of extra expenses related to the expected conversion with the software provider, the systems provider, and now that that's not happening and that the agreement's been canceled, how do we think about kind of the expense run rate here from this quarter, you know, absent the $600,000 related to the compliance stuff?
Damon Delmonte: Thank you.
Damon Delmonte: And then on the expense side of things, you guys have been carrying kind of extra expenses related to the expected conversion with the software provider, the systems provider, and now that that's not happening and the agreement's been canceled, how do we think about kind of the expense run rate here from this quarter, absent the 600,000 related to the compliance stuff? Yeah, what were there, what were there, like 900,000 of expenses related specifically to the conversion? Yes. That kind of the ongoing stuff that we had there for several quarters, yes. So, should we expect them to decline by almost a million dollars in here in the next quarter?
Speaker Change: Okay.
Speaker Change: Okay, that's helpful. Thank you. And then on the expense side of things, you know, you guys have been carrying kind of extra expenses related to the expected conversion with the software provider, the systems provider, and now that that's
Speaker Change: Not happening and the agreement's been canceled. How do we think about kind of the expense run rate here from this quarter, you know, absent the $600,000 related to the compliance stuff?
Rex A. Copeland: Yeah, what were their, what were their, Rex, like 900,000 expenses related specifically to the conversion?
Speaker Change: Yeah, what were there, Rex, like $900,000 of expenses related specifically to the conversion? Yes, yes, that kind of the ongoing stuff that we had there for several quarters, yes.
Rex A. Copeland: conversion. Yes. Yes. That kind of ongoing stuff that we had there for several quarters. Yes.
Damon Paul DelMonte: So should we expect them to decline by almost a million dollars in the next quarter?
Speaker Change: Should we expect them to decline by almost a million dollars here in the next quarter?
Rex Copeland: I mean, you know, we do, we call the, I mean, the 900,000 is legal and professional non-recurring, you know, that occurred as a result of the conversion. So, those expenses, you know, should more or less be gone. There could be some trailing, you know, where we could have a few people associated with that still here, but those for the most parts to be gone, and, you know, the compliance expense shouldn't be like that again either. Got it. Okay. That's helpful.
Rex A. Copeland: I mean, you know, we do, we call the 900,000 is legal and professional non-recurring expenses that occurred as a result of the conversion. So those expenses, you know, should more or less be gone. There could be some trailing, you know, where we could have a few people associated with that still here, but those, for the most part, should be gone. And, you know, the compliance expense shouldn't be like that again either. I got it.
Rex A. Copeland: I mean, you know, we do, we call the, the, I mean, the $900,000 is...
Rex A. Copeland: is legal and professional, non-recurring, you know, that occurred as a result of the
Rex A. Copeland: conversion. So those expenses...
Speaker Change: you know, should more or less be gone. There could be some trailing.
Speaker Change: You know, where we could have a few people associated with that still here, but those for the most part should be gone. And, you know, the compliance expense shouldn't be like that again either.
Rex Copeland: And then, I think you noted in the release of the final resolution here with the, with the software provider was, you're sticking with your current partner and they're going to be able to accommodate, you know, new products and services to help you guys, is that correct? Right. Got it. Okay. All right.
Rex A. Copeland: Got it. Okay, that's helpful. And then I think you noted in the release that the final resolution here with the software provider was you're sticking with your current partner, and they're going to be able to accommodate new products and services to help you guys. Is that correct?
Speaker Change: Got it. OK. That's helpful.
Speaker Change: And then I think you noted in the in the release that the final resolution here with the software provider was you're sticking with your current partner and they're going to be able to accommodate you know new products and services to help you guys, is that correct? Right.
Damon Paul DelMonte: Right. Got it. Okay. All right. That's all that I have for now.
Damon Delmonte: That's all that I had for now. Thank you. Okay. Thank you.
Speaker Change: Got it. Okay. All right. That's all that I have for now. Thank you.
Operator: Please stand by for our next question.
Operator: We stand by for our next question. Our next question comes from the line of John Rodis with Janie. Your line is open.
Speaker Change: Thank you.
John Rodis: Our next question comes from the line of John Rodis with Janie. Your line is open.
Speaker Change: We stand by for our next question.
John Rodis: Hey guys. Good afternoon. Hey, John. Hope you guys are doing well.
Speaker Change: Our next question comes from the line of John Rodis with Janie. Your line is open.
John Lawrence Rodis: Hey guys, good afternoon. Hey, John. Hope you guys are doing well. Just back to the conversation about the securities portfolio. I guess, Rex, do you plan to add more to the securities portfolio right now?
John Rodis: Just back to the conversation on the security portfolio.
Rex A. Copeland: Generally, I'd say no, but we felt like there was a nice opportunity there. When rates had moved back a little higher, we could get some fairly attractive yields, and we thought we would take advantage of that. I don't know that I could go out today and replace that yield profile. So I would say probably not too much. I mean, there's always the chance we might do a little bit of stuff here and there if the opportunity arises. But generally, I don't think we have a big plan to go do that now.
Speaker Change: Hey guys, good afternoon. Hey John .
John Lawrence Rodis: Hope you guys are doing well. Just back to the conversation on the securities portfolio, I guess, Rex, do you plan to add more to the securities portfolio right now?
Rex Copeland: I guess Rex, do you plan any, do you plan to add more to the security portfolio right now? Generally, I'd say no. We felt like that there was a nice opportunity there when rates had moved back a little higher. We could get some fairly attractive yields, and we thought we would take advantage of that. I don't know that I could go out today and replace that yield profile. So I would say probably not too much. I mean, there's always the chance you might do a little bit of stuff here and there. If the opportunity arises, but generally, I don't think we have a big plan to go do that.
Rex A. Copeland: Generally, I'd say no. We felt like
Rex A. Copeland: that there was a nice opportunity there when rates had moved back a little higher we could get some fairly attractive yields and we thought we would take advantage of that.
Rex A. Copeland: I don't know that I could go out today and...
Rex A. Copeland: and replace, you know, that yield profile. So I would say probably not too much. I mean, there's always the chance we might do a little bit of stuff here and there if the opportunity arises, but generally, I don't think we have a big plan to go do that now.
Rex Copeland: now.
Rex A. Copeland: Okay, and then the short-term borrowings that were referred to earlier, were those FHLB advances, or what were they, and what sort of yield are you paying on that? Yeah, those are.
Rex Copeland: Okay, and then the short-term borrowings that were referred to earlier were those FHLB advances, or what were they, and what sort of yield are you paying on that? Yeah, those are mostly going to be overnight advances, and those will be in the low 550s probably as a rate right now. And then I assume you would expect to, once those roll off, to replace those with CDs or more core deposits or something like that. You know, to the extent that we generate some growth in the core deposits, we could just pay back those advances. We may just continue to roll the advances over.
Speaker Change: Okay, and then the short-term borrowings that were referred to earlier, were those FHLB advances or what were they and what sort of yield are you paying on that?
Rex A. Copeland: Yeah, those are mostly going to be overnight advances, and those will be in the low 550s, probably as a rate right now.
Speaker Change: Yeah, those are mostly going to be overnight advances, and those will be in the low 550s probably as a rate right now.
Rex A. Copeland: And then I assume you would expect to replace those with CDs or more core deposits or something like that?
Speaker Change: And then I assume you would expect once those roll off to replace those with CDs or more core deposits or something like that?
Rex A. Copeland: You know, to the extent that we generate some growth in the core deposits, we would just pay back those advances. Or we may just continue to roll the advances over. I mean, they're just overnight, and we can continue to roll them out. We've got plenty of capacity to do it. So, you know, we could just continue to roll it over overnight. We could do some broking as well, some short-term broking, and we do that from time to time. So we've got some options out there. It just kind of depends on the pricing that we see and what we think makes the most sense.
Speaker Change: You know, to the extent that we generate some growth in the core deposits, we would just pay back those advances. We may just continue to roll the advances over. I mean, they're just overnight.
Rex Copeland: I mean, they're just overnight, and we can continue to roll when we've got plenty of capacity to do it. So, you know, we could just continue to roll it over in overnight. You know, the we could do some brokerage as well, some short-term brokerage, and we do that from time to time. We've got some options out there, just kind of depends on the pricing that we see and what we think makes them a sense.
Speaker Change: to continue your roll when we've got...
Speaker Change: Plenty of capacity to do it.
Speaker Change: So, you know, we could just continue to roll it over.
Speaker Change: and overnight.
Speaker Change: We could do some brokered as well, some short-term brokered, and we do that from time to time. So we've got some options out there. It just kind of depends on the pricing that we see and what we think makes the most sense. And now, you know,
Rex A. Copeland: And now, you know, we kind of are. Maybe we are really close to a rate cut. I mean, we don't know, but it seems like the Fed is starting to send signals. And they may send us some more robust signals at their July meeting, who knows? But it seems like we may be getting closer to the point where we do get the first rate cut.
Rex Copeland: And now, you know, we kind of are maybe we are really close to a rate cut. I mean, we don't know, but it seems like the Fed is starting to send signals, and they may send us some more robust signals that their July meeting your dose, but it seems like we may be getting closer to the point where we do get the first rate cut. Yeah.
Speaker Change: we kind of are
Speaker Change: Maybe we are really close to a rate cut. I mean, we don't know, but it seems like the Fed is starting to send
Speaker Change: signals, and they may send us some some more robust signals at their July meeting or those, but it seems like we may be getting closer to the point where we do get the first rate cut.
John Lawrence Rodis: Just to circle back on expenses, so if we back out the compliance and the legal and consulting and stuff, that puts you around $35 million-ish. Is the $35 million area, is that sort of a good run rate?
John Rodis: Just a circle back on expenses. So, if we back out the compliance and the legal and consulting and stuff, that puts you around 35 million ish. Is the 35 million area? Is that sort of a good run rate? I would say pretty close, John. Like I said, there could be a few, you know, the trailing people that, you know, from the legal and extent associated with the conversion line. So, you know, that maybe that doesn't all drop off. The other thing, as we transition, you know, we've mentioned that there are new products and services that we'll be getting from our current provider.
Speaker Change: you know.
Speaker Change: Just to circle back on expenses, so if we back out...
Speaker Change: legal and consulting and stuff. That puts you around 35 million-ish. Is the 35 million area, is that sort of a good run rate?
Rex A. Copeland: Um, I would say... pretty close, John.
Rex A. Copeland: Like I said, there could be a few, you know, trailing people that, you know, from the legal and expense associated with the conversion line. So, you know, maybe that doesn't all drop off. The other thing as we transition, you know, we mentioned that there are new products and services that we'll be getting from our current provider. I mean, that's probably gonna cost us a little bit more money, which could be, you know, 100 or 125,000 a month.
Speaker Change: I would say...
Speaker Change: Pretty close, John . Like I said, there could be a few, you know, trailing people that, you know, from the from the legal and expense associated with the conversion.
Speaker Change: line. So, you know, that maybe that doesn't all drop off. The other thing as we transition, you know, we mentioned that there are new products and services that we'll be getting from our current provider. I mean, that's probably going to
Rex Copeland: I mean, that's probably going to, you know, cost us a little bit more money, which could be, you know, 100 or 125,000 a month.
Speaker Change: costs us a little bit more money, which could be $100,000 or $125,000 a month.
John Rodis: You know, it reminds me again, who's your current corporate provider? Yeah, you see. Okay, that's what I thought.
John Lawrence Rodis: Remind me again, who's your current core provider? Yeah, QC. Okay, that's what I thought.
Speaker Change: Thank you. Remind me again, who's your current core provider? Yeah, Q3.
Joseph William Turner: And just maybe, Joe, just one final question on the buyback. Obviously, stocks, you know, bank stocks have obviously had a nice move. Your stock's north of $60. How do you feel about the buyback today versus, you know, the levels you bought stock last quarter? I mean, we're sort of...
John Rodis: And this maybe, Joe, just one final question: you know, in the buyback, obviously stocks of, you know, bank stocks have obviously had a nice move; your stocks north of $60. How do you feel about the buyback today versus, you know, levels you bought stock last quarter? I mean, we're sort of, we're sort of, you know, we're sort of just rethinking it. You know, we really liked it when we were able to buy our stock back in the low 50s. And so, we'll just sort of rethink it, you know. If we, you know, what's the, what's the best thing to do at this point?
Speaker Change: Okay, that's what I thought. And just maybe, Joe, just one final question on the buyback. Obviously, stocks have, you know, bank stocks have obviously had a nice move. Your stocks...
Joseph William Turner: North of $60. How do you feel about the buyback today versus, you know, levels you bought stock last quarter?
Joseph William Turner: I mean, we're sort of, we're sort of, you know, we're sort of just rethinking it. We really liked it when we were able to buy our stocks back in the low 50s, and so we'll just sort of rethink it, you know, as we, you know, what's the best thing to do at this point? You know, we do have the sub-debt coming and due in And so it may make sense not to be as aggressive in buying our stock back and using the money to pay that off when it comes due.
Joseph William Turner: I mean, we're sort of, we're sort of, you know, we're sort of just rethinking it. You know, we really liked it when we were able to buy our stocks back in the low 50s. And so we'll just sort of rethink it, you know, as we, you know, what's the, what's the best thing to do at this point.
Joseph Turner: You know, we do have the sub that come and do in June. And so, it may make sense not to be as aggressive buying our stock back and use the money to pay that off. when it comes to. So we would be in pretty good shape to be able to do that. So, I mean, there's other uses for the money too. So, I mean, we're just going to kind of rethink it. The sub-dets next year, right? Yeah. Yeah, June of 25.
Joseph William Turner: You know, we do have the...
Joseph William Turner: Subdebt coming due in June , and so it may make sense not to be as aggressive buying our stock back and use the money to pay that off when it comes due.
Joseph William Turner: So we would be in pretty good shape to be able to do that. So, I mean, there's other uses for the money too. So, I mean, we're just going to kind of rethink it, the sub-debts next year. Yeah, yeah, June of 25. Those are good problems to have.
Joseph William Turner: We would be in pretty good shape to be able to do that, so, I mean, there's other uses for the money, too, so, I mean, we're just going to kind of rethink it.
Speaker Change: The sub-debt's next year, right?
John Rodis: Those are good problems to have.
John Lawrence Rodis: Those are good problems to have. So, thanks, guys.
Speaker Change: Yeah, yeah, June of 25, 25.
Joseph Turner: So, thanks guys.
Joseph Turner: Thanks, John.
Operator: Thank you.
Speaker Change: Those are good problems to have. So, thanks guys.
Operator: Ladies and gentlemen, I'm showing no further questions in the queue.
Joseph William Turner: Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to Joe Turner for closing remarks.
Joseph Turner: I would now like to turn the call back over to Joe Turner for closing remarks. All right. Thanks again to everybody for joining our call, and we'll look forward to talking to you at the end of the third quarter. Thank you.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, I am showing no further questions in the queue. I would now like to turn the call back over to Joe Turner for closing remarks.
Joseph William Turner: All right, thanks again to everybody for joining our call, and we'll look forward to talking to you at the end of the third quarter. Thank you.
Joseph William Turner: All right, thanks again to everybody for joining our call and we'll look forward to talking to you at the end of the third quarter. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.