Q2 2024 Home Bancorp Inc Earnings Call

Good morning ladies and gentlemen and welcome to the Home Bancorp's second quarter 2024 earnings conference call.

Operator: Bancorp's second quarter, 2024, earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: Bancorp Second Quarter 2024 Earnings Conference Call All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the store key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Home Bancorp's Chairman, President, and CEO, John Bordelon, and Chief Financial Officer, David Kirkley. Mr. Kirkley, please go ahead.

Speaker Change: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

Speaker Change: After today's presentation, there will be an opportunity to ask questions.

Operator: I would now like to turn the conference over to Home Bancorp's Chairman, President and CEO, John Bordelon, and Chief Financial Officer, David Kirkley.

Speaker Change: Please note this event is being recorded. I would now like to turn the conference over to Home Bancorp's Chairman, President and CEO , John Bordelon and Chief Financial Officer, David Kirkley.

David Kirkley: Mr. Kirkley, please go ahead. Thank you, Kenneth. Good morning and welcome to Home Banc's second quarter 2024 earnings call. Our earnings release and investor presentation are available on our website.

Speaker Change: Mr. Kirkley, please go ahead.

David T. Kirkley: Thank you, Kenneth. Good morning and welcome to Home Bank's second quarter 2024 earnings call. Our earnings release and investor presentation are available on our website. I ask that everyone please refer to the disclaimer regarding forward-looking statements in the investor presentation and our SEC filing. Now I'll hand it over to John to make a few comments about the second quarter. John?

David T. Kirkley: Thank you, Kenneth. Good morning and welcome to Home Bank's second quarter 2024 earnings call.

David Kirkley: I ask that everyone please refer to the disclaimer regarding forward-looking statements and investor presentation and our SEC filings.

David T. Kirkley: Our earnings release and investor presentation are available on our website. I ask that everyone please refer to the disclaimer regarding forward-looking statements and investor presentation in our SEC filings.

David Kirkley: Now, I'll hand it over to John to make a few comments about the second quarter.

John Bordelon: John? Thanks, David.

David T. Kirkley: Now I'll hand it over to John to make a few comments about the second quarter. John ?

John W. Bordelon: Thanks, David. Good morning, and thank you for joining Home Bank's earnings call today. We appreciate your interest in HomeBank as we discuss our results, expectations for the future, and our approach to creating long-term shareholder value. We reported second quarter net income of $8.1 million, or $1.02 per share, and, most importantly, a slight improvement in our net interest margin, which appears to have stabilized. The NIM came in at 3.66%, which was two basis points higher than the first quarter.

John Bordelon: Good morning, and thank you for joining Home Banc's earnings call today. We appreciate your interest in Home Banc as we discuss our results, expectations for the future, and our approach to creating long-term shareholder value. We reported second quarter net income of $8.1 million, or $1.2 per share. And most importantly, a slight improvement in our net interest margin, which appears to have stabilized. The NIM came in at 3.66%, which was two basis points higher than the first quarter. We're cautiously optimistic that continued steady increases in asset yields and stabilization in our cost of funds will continue to support net interest income growth and improving margins, even without any Fed rate cuts.

John W. Bordelon: Thanks, David. Good morning, and thank you for joining Home Bank's earnings call today.

John W. Bordelon: We appreciate your interest in HomeBank as we discuss our results, expectations for the future, and our approach to creating long-term shareholder value.

John W. Bordelon: We reported second quarter net income of $8.1 million, or $1.02 per share, and most importantly, a slight improvement in our net interest margin, which appears to have stabilized.

John W. Bordelon: The NIM came in at 3.66%, which was two basis points higher than the first quarter.

John W. Bordelon: We're cautiously optimistic that continued steady increases in asset yields and stabilization in our cost of funds will continue to support net interest income growth and improving margins even without any Fed rate cuts. We added $39.7 million in loans in the second quarter, with growth in all sectors except for construction and land loans, which declined slightly. Given the strong loan growth we had in the first half of the year, we're still anticipating that 2024 loan growth will be between 4 and 6 percent.

John W. Bordelon: We are cautiously optimistic that continued steady increases in asset yields and stabilization in our cost of funds will continue to support net interest income growth and improving margins even without any Fed rate cuts.

John Bordelon: We added $39.7 million of loans in the second quarter, with growth in all sectors except for construction and land loans, which declined slightly. Given the strong loan growth we had in the first half of the year, we were still anticipating that 2024 loan growth will be between 4 and 6%. The duration of higher rates appears to now be negatively impacting our loan pipeline, but we're optimistic that forecasted rate cuts occur. We could see loan demand pick back up. The positives, including demand deposits, were stable from the last quarter after very strong growth in the fourth and first quarters.

John W. Bordelon: We added $39.7 million of loans in the second quarter with growth in all sectors except for construction and land loans, which declined slightly.

John W. Bordelon: Given the strong loan growth we had in the first half of the year, we're still anticipating that 2024 loan growth will be between 4 and 6 percent.

John W. Bordelon: The duration of higher rates appears to now be negatively impacting our loan pipeline, but we're optimistic that if forecasted rate cuts occur, we could see loan demand pick back up. Deposits, including demand deposits, were stable from the last quarter after very strong growth in the fourth and first quarters.

John W. Bordelon: The duration of higher rates appears to now be negatively impacting our loan pipeline. But we're optimistic that if forecasted rate cuts occur, we could see loan demand pick back up.

John W. Bordelon: Deposits, including demand deposits, were stable from the last quarter after very strong growth in the fourth and first quarters. We were pleased to see $12.6 million of core deposit growth in our Houston market as our teams there brought over the operating accounts of a number of new clients.

John W. Bordelon: We were pleased to see $12.6 million of core deposit growth in our Houston market as our teams there brought over the operating accounts of a number of new clients. We relocated another one of our Houston branches and continue to look for opportunities to improve our coverage of the markets we serve by adding bricks and mortar and talent. Despite all the negative headlines, we here at Home Bancorp are actually seeing improvements in credit.

John Bordelon: We were pleased to see 12.6 million of quarter positive growth in the Houston market, as our teens there brought over the operating accounts of a number of new clients. We relocated another one of our Houston branches and continued to look for opportunities to improve our coverage of the markets we serve by adding brick-and-mortar and talent.

John W. Bordelon: We relocated another one of our Houston branches and continue to look for opportunities to improve our coverage of the markets we serve by adding brick and mortar and talent.

John Bordelon: Despite all the negative headlines, we here at Homemaker are actually seeing improvements in credit. In the past few months, we have had a $5 million construction loan go from non-performing to performing with interest reserves. After we worked with the borough, we've known for years to manage through some delays and cost overruns. We also recently resolved a non-performing 3.4 million dollar multi-family loan without any principal loss. We feel very good about a non-performing $4.7 million lending relationship that has about $2 million of equity behind.

Speaker Change: Despite all the negative headlines, we here at Home Bancorp are actually seeing improvements in credit.

John W. Bordelon: In the past few months, we have had a $5 million construction loan go from non-performing to performing with interest reserves after we worked with the borrower, who we've known for years, to manage through some delays and cost overruns. We also recently resolved a non-performing $3.4 million multifamily loan without any principal loss. We feel very good about a non-performing $4.7 million lending relationship that has about $2 million of equity behind it. A year ago, David and I were in New York, and we were both struck by the number of high-rise buildings with empty floors.

Speaker Change: In the past few months, we have had a $5 million construction loan go from non-performing to performing with interest reserves after we worked with the borrower, who we've known for years, to manage through some delays and cost overruns.

Speaker Change: We also recently resolved a non-performing $3.4 million multifamily loan without any principal loss.

Speaker Change: And we feel very good about a non-performing $4.7 million lending relationship that has about $2 million of equity behind it.

John Bordelon: A year ago, David and I were in New York, and we were both struck by the number of high-rise buildings with empty floors. We just don't have that same problem in our markets, and I know most of our colleagues at other community banks feel the same way. We lend to people we know in markets we know. We're not making the loans that are being written about in the financial press.

Speaker Change: A year ago, David and I were in New York, and we were both struck by the number of high-rise buildings with empty floors.

John W. Bordelon: We just don't have that same problem in our market, and I know most of our colleagues at other community banks feel the same way. We lend to people we know in markets we know. We're not making the loans that are being written about in the financial press. Community banking is about providing our shareholders with an attractive, risk-adjusted return. We are not in the business of making loans that could result in huge losses on relationships that aren't the right fit.

David T. Kirkley: We just don't have that same problem in our markets. And I know most of our colleagues at other community banks feel the same way. We lend to people we know in markets we know. We're not making the loans that are being written about in the financial press.

John Bordelon: Community banking is about providing our shareholders with an attractive risk-adjusted return. We are not in the business of making loans that could result in huge losses on relationships that aren't the right fit.

David T. Kirkley: Community banking is about providing our shareholders with an attractive, risk-adjusted return. We are not in the business of making loans that could result in huge losses on relationships that aren't the right fit.

John Bordelon: Finally, before I turn it back over to David, I'd like to welcome Mark Herpon to the Home Bank team, where he joins as Senior Executive Vice President and Chief Operations Officer. Mark has had a long and successful career in community banking, and we look forward to his contributions at Home Bank. I'd also like to congratulate Natalie Lemoy and our Chief Administrative Officer, and John Zollinger, our Chief Banking Officer, on their promotions to Senior Executive Vice President of the Bank.

John W. Bordelon: Finally, before I turn it back over to David, I'd like to welcome Mark Herpin to the Home Bank team, where he will join as Senior Executive Vice President and Chief Operations Officer. Mark has had a long and successful career in community banking, and we look forward to his contributions at Home Bank. I'd also like to congratulate Natalie Lemoine, our Chief Administrative Officer, and John Zollinger, our Chief Banking Officer, on their promotions to Senior Executive Vice Presidents of the Bank. With that, I'll turn it back over to David.

Speaker Change: Finally, before I turn it back over to David, I'd like to welcome Mark Herpin to the Home Bank team, where he joins as Senior Executive Vice President and Chief Operations Officer. Mark has had a long and successful career in community banking, and we look forward to his contributions at Home Bank.

Speaker Change: I'd also like to congratulate Natalie Lemoine, our Chief Administrative Officer, and John Zollinger, our Chief Banking Officer, on their promotions to Senior Executive Vice Presidents of the Bank. With that, I'll turn it back over to David.

David Kirkley: With that, I'll turn it back over to David. Thanks, John. Net interest income totaled 29.4 million in Q2, up 492,000 from the previous quarter. Loan growth continued at a 6% annualized pace during the quarter, with new loans coming in at a rate of 8.25% compared to the 6.28% we earned on our total loan portfolio in Q2. Deposit to our essentially flat quarter over quarter, which increased our loan to deposit ratio to 97.7%. The pace of deposit migration has definitely slowed, and non-interest bearing deposits actually increased by 4.3 million in the second quarter. We did experience declines in interest bearing, checking accounts and savings accounts, which were down about 25 million dollars combined.

David T. Kirkley: Net interest income totaled $29.4 million in Q2, up $492,000 from the previous quarter. Loan growth continued at a 6% annualized pace during the quarter, with new loans coming in at a rate of 8.25%, compared to the 6.28% we earned on our total loan portfolio in Q2. Deposits were essentially flat quarter over quarter, which increased our loan to deposit ratio to 97.7%. The pace of deposit migration has definitely slowed, and non-interest-bearing deposits actually increased by 4.3 million in the second quarter.

David T. Kirkley: Thanks, John .

David T. Kirkley: Net interest income totaled $29.4 million in Q2 of $492,000 from the previous quarter.

Speaker Change: Loan growth continued at a 6% annualized pace during the quarter with new loans coming in at a rate of 8.25% compared to the 6.28% we earned on our total loan portfolio in Q2.

Speaker Change: Deposits were essentially flat quarter over quarter, which increased our loan-to-deposit ratio to 97.7%.

Speaker Change: The pace of deposit migration has definitely slowed, and non-interest bearing deposits actually increased by 4.3 million in the second quarter.

David T. Kirkley: We did experience declines in interest-bearing checking accounts and savings accounts, which were down about $25 million combined. This outflow is offset by an increase in money market and CD balances of $21 million. The outflows that we did see mostly occurred in April, coinciding with tax. The impact of the slowing deposit migration can be seen in the slower increases in the rates we are paying on our interest-bearing deposits, which increased by 17 basis points in the second quarter, after having increased by 28 basis points in the first quarter, 40 basis points in the fourth quarter, and 54 basis points in the third quarter last year. Pages 11 and 12 of our investor presentation provide some additional detail and credit, which John has already covered.

Speaker Change: We did experience declines in interest bearing checking accounts and savings accounts which were down about 25 million dollars combined.

David Kirkley: This outflow is offset by an increase in money market and CD balances of 21 million. The outflow is that we did see mostly occurred in April, coinciding with taxes. The impact of the slowing deposit migration can be seen in the slower increases in the rates we were paying on our interest-bearing deposits, which increased by 17 basis points in the second quarter. After having increased by 28 basis points in the first quarter, 40 basis points in the fourth quarter, and 54 basis points in the third quarter last year.

Speaker Change: This outflow is offset by an increase in money market and CD balances of $21 million.

Speaker Change: The outflows that we did see mostly occurred in April , coinciding with taxes.

Speaker Change: The impact of the slowing deposit migration can be seen in the slower increases in the rates we are paying on our interest bearing deposits, which increased by 17 basis points in the second quarter, after having increased by 28 basis points in the first quarter, 40 basis points in the fourth quarter, and 54 basis points in the third quarter last year.

David Kirkley: Pages 11 and 12 of our investor presentation provide some additional detail on credit, which John has already covered. Non-performing loans did decrease by 3.5 million in the second quarter, 16.8 million, or 0.63% of total loans. Provision expense for the quarter was 1.3 million, up 1.1 million from the prior quarter. Our allowance for loan loss ratio increased 1 basis point to 1.21% in the second quarter. There were no changes in our qualitative factors during the quarter, and we feel confident in our reserve levels. We did have 510,000 dollars or 8 basis points annualized and net chargeoffs in the second quarter.

Speaker Change: Pages 11 and 12 of our investor presentation provide some additional detail on credit which John has already covered. Non-performing loans did decrease by 3.5 million in the second quarter to 16.8 million or 0.63 percent of total loans.

David T. Kirkley: Non-performing loans did decrease by $3.5 million in the second quarter to $16.8 million, or 0.63% of total loans. Provision expense for the quarter was $1.3 million, up $1.1 million from the prior quarter. Our allowance for loan loss ratio increased by one basis point to 1.21% in the second quarter. There were no changes in our qualitative factors during the quarter, and we feel confident in our reserve level. We did have 510,000 dollars, or eight basis points annualized and net charge-offs, in the second quarter. These charge-offs were very much customer-specific issues and not industry-related.

Speaker Change: Provision expense for the quarter was $1.3 million, up $1.1 million from the prior quarter.

Speaker Change: Our allowance for loan loss ratio increased one basis point to 1.21% in the second quarter.

John W. Bordelon: There were no changes in our qualitative factors during the quarter and we feel confident in our reserve levels.

John W. Bordelon: We did have 510,000.

John W. Bordelon: dollars or eight basis points annualized and net charge-offs in the second quarter.

David Kirkley: These chargeoffs were very much customer-specific issues and not industry-related.

John W. Bordelon: These charge-offs were very much customer-specific issues and not industry-related.

David Kirkley: Slide 16 has some detail on our historic NIM and its components. As John mentioned, we're cautiously optimistic that NIM has bottomed out and should start to slowly increase from here. Lone yields have been steadily increasing due to a combination of loan growth and loan repricing, and with the reduced pace of increases in liability costs, our NIM has increased each month this quarter. We have approximately 490 million of CDs maturing in the next six months. The majority of these CDs are in specials at rates a little north of 5%. So if rates in deposit mix remain unchanged, we could see flat to marginal declines in CD costs, where we have opportunities for more meaningful cost reductions if we do see rate cuts.

David T. Kirkley: Slide 16 has some detail on our historic NIM and its components. As John mentioned, we're cautiously optimistic that NIM has bottomed out and should start to slowly increase from here. Loan yields have been steadily increasing due to a combination of loan growth and loan repricing, and with the reduced pace of increases in liability costs, our NIM has increased each month this quarter. We have approximately 490 million OCDs maturing in the next six months.

John W. Bordelon: Slide 16 has some detail on our historic NIM and its components.

John W. Bordelon: As John mentioned, we're cautiously optimistic that NIM has bottomed out and should start to slowly increase from here.

Speaker Change: Loan yields have been steadily increasing due to a combination of loan growth and loan repricing, and with the reduced pace of increases in liability costs, our NIM has increased each month this quarter.

Speaker Change: We have approximately 490 million of CDs maturing in the next six months. The majority of these CDs are in specials at rates a little north of 5%. So if rates and deposit mix remain unchanged, we could see flat to marginal declines in CD costs, but we have opportunities for more meaningful cost reductions if we do see rate cuts.

David T. Kirkley: The majority of these CDs are in specials at rates a little north of 5%. So if rates and deposit mix remain unchanged, we could see flat to marginal declines in CD costs, but we have opportunities for more meaningful cost reductions if we do see rates. Slide 18 of the presentation has some additional details on non-interest income and expenses. Non-interest income increased by about $200,000 to $3.8 million and should be between $3.6 and $3.8 million in the third and fourth quarters. Non-interest expense increased by $904,000 to $21.8 million due primarily to annual salary increases that took effect April 1st. This was at the low end of our expectations.

David Kirkley: So by 18 of the presentation has some additional details and non-interest income and expenses. Non-interest income increased by about 200,000 to 3.8 million and should be between 3.6 and 3.8 million in third and fourth quarters. Non-interest expense increased by 900,000 to 21.8 million due primarily to annual salary increases that took effect April 1st. This was at the low end of our expectations. We expect core non-interest expense to be between 22 and 22 and a half million and a third and fourth quarters. We were a little more aggressive with the buyback and repurchased about 77,000 shares at an average price of $37 per share in the second quarter, which equates to 92 percent of tangible book value excluding AOCI.

Speaker Change: Slide 18 of the presentation has some additional details on non-interest income and expenses.

Speaker Change: Non-interest income increased by about $200,000 to $3.8 million and should be between $3.6 and $3.8 million in the third and fourth quarters.

Speaker Change: Non-interest expense increased by $904,000 to $21.8 million due primarily to annual salary increases that took effect April 1st. This was at the low end of our expectations.

David T. Kirkley: We expect core non-interest expense to be between $22 and $22.5 million in the third and fourth quarters. We were a little more aggressive with the buyback and repurchased about 77,000 shares at an average price of $37 per share in the second quarter, which equates to 92% of tangible book value excluding AOCI. Slide 19 summarizes the impact our capital management strategy has had on Home Bank over the last few years. We've grown adjusted tangible book value per share by 58% since 2018, increased our dividend by 67% since 2016, and repurchased 14% of our shares, all while maintaining robust capital ratios, which positions us to be successful in any economic environment and take advantage of opportunities as they arise.

Speaker Change: We expect core non-interest expense to be between $22 and $22.5 million in the third and fourth quarters.

Speaker Change: We were a little more aggressive with the buyback and repurchased about 77,000 shares at an average price of $37 per share in the second quarter, which equates to 92% of tangible book value excluding AOCI.

David Kirkley: Slide 19 summarizes the impact of our capital management strategy has had on Home Bank over the last few years. We've grown adjustable adjusted tangible book value for share by 58 percent since 2018, increased our dividend by 67 percent since 2016, and repurchased 14 percent of our shares, all while maintaining robust capital ratios, which positions us to be successful in any economic environment and take advantage of opportunities as they arise.

Speaker Change: Slide 19 summarizes the impact our capital management strategy has had on Home Bank over the last few years.

Speaker Change: We've grown adjusted tangible book value per share by 58% since 2018, increased our dividend by 67% since 2016, and repurchased 14% of our shares, all while maintaining robust capital ratios.

Speaker Change: which positions us to be successful in any economic environment and take advantage of opportunities as they arise.

Operator: And with that operator, please open the line for Q&A. Thank you. We will now begin the question and answer session. To ask a question, you may press the star key, then one on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. To withdraw your question, please press the star key, then two. At this time, we will pause momentarily to assemble our roster.

Operator: And with that, Operator, please open the line for Q&A. Thank you. We will now begin

Speaker Change: And with that, Operator, please open the line for Q&A.

Speaker Change: Thank you. We will now begin the question and answer session. To ask a question, you may press the star key, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: Thank you. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press the star key, then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Fetty Strickland with the Hovde Group. Please go ahead.

Speaker Change: To withdraw your question, please press the star key, then 2.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Fettie Strickland: The first question comes from Fettie Strickland with Havd Group.

Speaker Change: The first question comes from Fetty Strickland with Hovde Group. Please go ahead.

Fettie Strickland: Please go ahead.

John Bordelon: Hey, good morning, John and David. I'm going to talk on this in your opening comments a little bit. I was just wondering if you can talk through a little bit more of the non-interpreting deposits. Obviously, a positive to see those grow. Is that really just success on the C&I side in Houston? Or was that more different wide? Well, I think that what we were referring to through there was mostly in Houston. We pulled out a team at the beginning of the year from another bank, and a lot of the efforts that happened in Houston came from that team.

Fetty Strickland: Hey, good morning, John and David. John, you touched on this in your opening comments a little bit. I was just wondering if you could talk through a little bit more of the non-interest-bearing deposits. Obviously, it's a positive to see those grow. But is that really just success on the C&I side in Houston, or was that more of a wider footprint?

Fetty Strickland: Hey, good morning, John and David.

Speaker Change: You touched on this in your opening comments a little bit. I was just wondering if you can talk through a little bit more the non-interest bearing deposits. Obviously a positive to see those grow. Is that really just success on the C&I side in Houston or was that more footprint-wide?

John W. Bordelon: Well, I think that, you know, what we were referring to there was mostly in Houston. We pulled out a team at the beginning of the year from another bank. And a lot of the efforts that happened in Houston came from that team. They're in a loan production office in the northwest section of Houston, and they've done a very good job of attracting new customers, and our focus has been on the deposit side. So they've attracted some that are on loan and deposit and some that are just deposits. So that was what we were highlighting there, the success of that new team.

Speaker Change: Well, I think that what we were referring to there was mostly in Houston. We pulled out a team at the beginning of the year from another bank, and a lot of the efforts that happened in Houston came from that team. They're in a loan production office in the northwest.

John Bordelon: They're in a loan production office in the Northwest section of Houston, and they've done a very good job of attracting new customers, and our focus has been on the deposit side, so they've attracted some that are loan and deposit and some that are just deposit. So that was what we were highlighting; there was the success of that new team. We've also seen some growth, and we've also seen some growth in the DDA space and the Katie on a market as that market has been focused more heavily on the CNI business as well. In a lot of the scene lines, I mean, as we think about the type of lung growth you're looking for going forward, it sounds like your focus on bringing in more CNI just given that it's more likely to come with deposits, correct.

Speaker Change: section of Houston and they've done a very good job of attracting new customers and and our focus has been on the deposit side so they've attracted some that are loan and deposit and some that are just deposit.

Speaker Change: So that was what we were highlighting there, was the success of that new team.

John W. Bordelon: We've also seen some growth in the DDA space and the Acadiana market, as that market has been focused more heavily on the C&I business as well.

Speaker Change: We've also seen some growth in the DDA space and the Acadiana market as that market has been focused more heavily on the C&I business as well.

John W. Bordelon: And along those same lines, I mean, as we think about the type of loan growth you're looking for going forward, it sounds like you're focused on bringing in more C&I, just given that it's more likely to come with deposits, correct? Are you cool with me?

Speaker Change: And along those same lines, I mean, as we think about the type of loan growth you're looking for going forward, it sounds like you're focused on bringing in more C&I, just given that it's more likely to come with deposits, correct?

Fettie Strickland: Yeah, absolutely, got it.

John W. Bordelon: Got it. And one last question for me, just on share repurchases. I mean, do you think we'll see that potentially slow down a little bit if, you know, the share price kind of keeps moving upwards here? Or do you think that, you know, you'll still have some level of repurchases going forward? Just keep in mind, some dry powder.

Fettie Strickland: And one last question from me just on Sherry purchases. I mean, do you think we'll see that potentially slow down a little bit if, you know, the share price kind of keeps moving upwards here? Or do you think that you'll still have some level of repurchases going forward and just keep in mind some drive powder. We'd probably slow it down at the elevated or the higher prices that we've experienced over the last week and keep the drive powder. Got it. Thanks for taking the questions. Thank you. Thanks again.

Speaker Change: Y'all come over here.

Speaker Change: got it and one last question for me just on share repurchases I mean do you think we'll see that

Speaker Change: potentially slow down a little bit if, you know, the share price kind of keeps moving upwards here, or do you think that, you know, you'll still have some level of repurchases going forward? And just keep in mind some dry powder.

John W. Bordelon: We'd probably slow it down at the elevated or higher prices that we've experienced over the last week and keep the dry powder.

Speaker Change: We'd probably slow it down at the elevated or the higher prices that we've experienced over the last week and keep the dry powder.

Graham Conrad Dick: Got it. Thanks for taking the question. Thank you, Graham.

Speaker Change: Got it. Thanks for taking the questions.

Operator: Thank you, Graham. Thank you. Again, if you have a question, please press the star key, then 1. The next question comes from Joe Yanchunis with Raymond James. Please go ahead, sir.

Speaker Change: Thank you. Thanks.

Operator: If you have a question, please press the store key, then one.

Speaker Change: Again, if you have a question, please press the star key, then 1.

Joe Yenchanus: The next question comes from Joe Yenchanus with Raymond James. Please go ahead, sir. Good morning. Morning. So with the name expansion, you know, appearing to occur, you know, a little bit ahead of schedule.

Speaker Change: The next question comes from Joe Yanchunis with Raymond James. Please go ahead, sir.

Joseph Peter Yanchunis: Morning. So with the NIM expansion appearing to occur a little bit ahead of schedule, can you provide some of the puts and takes on what will drive NIM in the second half of the year?

Joseph Peter Yanchunis: Good morning.

Joseph Peter Yanchunis: Morning. Hey, Joe.

Joseph Peter Yanchunis: So with the NIM expansion, you know, appearing to occur, you know, a little bit ahead of schedule, can you provide some of the puts and takes on what will drive the NIM in the second half of the year?

David Kirkley: Can you provide some of the puts and takes on what will drive the name in the second half of the year? So one of the driving factors is, of course, loan growth and loan repricings. You can see on our slide deck on slide 16, we've been consistently raising our loan yield by about 10 basis points each quarter and still expect that to continue as we still have, you know, a weighted average rate of our loan portfolio at 6.28% compared to what we're bringing on loans at eight quarter. So that's one component of it. Second component of it is you're really seeing a slow down in opportunities for deposits to reprice higher.

David T. Kirkley: So one of the driving factors is, of course, loan growth and loan repricings. As you can see in our slide deck on slide 16, we've been consistently raising our loan yield by about 10 basis points each quarter and still expect that to continue as we still have a weighted average rate of our loan portfolio at 6.28% compared to what we're bringing on loans at 8.25%. So that's one component of it.

Speaker Change: So, one of the driving factors is, of course, loan growth and loan repricings. You can see on our slide deck, on slide 16, we've been consistently raising our loan yield by about 10 basis points each quarter.

Speaker Change: and still expect that to continue as we still have, you know, a weighted average rate of our loan portfolio of 6.28% compared to what we're bringing on loans at 8.25%.

David T. Kirkley: The second component of it is you're really seeing a slowdown in opportunities for deposits to reprice higher. There is still some deposit migration, but the vast majority of our CD portfolio has already repriced higher. We touched upon it a little bit on the call when we said the CDs are already a little bit north of 5%, and our CD special rates are actually a little bit lower in some cases. So there's not as much repricing opportunities to occur in the CD and deposit space, so we think that the pace of loan yield increases is going to more than offset deposit cost increases. Not to mention, uh...

Speaker Change: So that's one component of it. Second component of it is you're really seeing a slowdown in opportunities for deposits to reprice higher. There is still some deposit migration, but the vast majority of our CD portfolio has already repriced higher.

David Kirkley: There is still some deposit migration, but the vast majority of our CD portfolio has already repriced higher. We touched up on a little bit on the call when we said, you know, the CDs are already a little bit north of 5%. In our CD special rates, they are actually a little bit lower in some cases. So there's not as much repricing opportunities to occur on the CD and deposit space. So we think that the pace of loan yield increases is going to offer more than offset deposit cost increases. Not to mention, any movement by the Fed this year will contribute to the ability to bring on these deposits or maintain these deposits at a little bit lower rate.

Speaker Change: We touched upon it a little bit on the call when we said, you know, the CDs are already a little bit north of 5% and our CD special rates are actually a little bit lower in some cases.

Speaker Change: So there's not as much repricing opportunities to occur on the CD and deposit space, so we think that the pace of loan yield increases is going to offset, more than offset deposit cost increases.

David T. Kirkley: Not to mention, any movement by the Fed this year will contribute to the ability to bring on these deposits or maintain these deposits at a little bit lower rate. So we feel very comfortable in the fact that our CD rates should stabilize or head downward based upon what the Fed does.

Speaker Change: Not to mention, any movement by the Fed this year will contribute to the

Speaker Change: The ability to bring on these deposits or maintain these deposits at a little bit lower rate. So we feel very comfortable in the fact that our CD rates should stabilize or head downward based upon what the Fed does.

David Kirkley: So we feel very comfortable in the fact that our CD rates should stabilize or head downward based upon what the Fed does.

John W. Bordelon: understood and You know, we've heard from your peers, you know, some increased competition on deposits. Is that something you've experienced? And kind of what should we think about the near-term trajectory of deposit costs? We haven't.

David Kirkley: You know, we've heard from your peers that some increased competition on deposits; is that something you've experienced and kind of has to be thinking about the near-term trajectory of deposit costs? We haven't seen that much pressure there, some one-offs here there that we obviously take care of, but for the most part most everyone in our market, I think there was one bank in the Houston market that was in, you know, five-and-a-quarter, five-and-three-eighths area. But for the most part we have not had any problem of tracking deposits.

Speaker Change: Understood. And, you know, we've heard from your peers, you know, some increased competition on deposits.

Speaker Change: Is that something you've experienced?

John W. Bordelon: We haven't seen that much pressure. There are some one-offs here and there that we obviously take care of, but for the most part, most everyone in our market, I think there was one bank in the Houston market that was in the five-and-a-quarter, five-and-three-eighths area, but for the most part, we have not had any problem attracting depositors.

Speaker Change: We haven't seen that much pressure. There are some one-offs here and there that we obviously...

Speaker Change: Take care of, but for the most part, most everyone in our market, I think there was one bank in the Houston market that was in the, you know, five and a quarter, five and three-eighths area, but for the most part, we have not had any problem attracting deposits.

David Kirkley: Okay, and then if I could just sneak in one more here. Yep, so ask the quality metrics and prove, you know, pretty nicely in the quarter, though you elected to increase your reserve ratio. Can you discuss what really drove this thought process? And secondly, perhaps it's too early to call, but, you know, if we get a couple rate cuts and the economy doesn't deteriorate, would it be fair to say that, you know, the credit slide that NTA might have already peaked? Let me take the Cecil question first. We really didn't decide to increase our allowance; it's just a mixture of the mixed change in our learn portfolio, quarter over quarter, and the duration, perhaps, of new loans. That's really yet that we didn't change any qualitative factors; we didn't adjust, make any adjustments with regards to any industry-specific qualitative factors, so it's just a function really of our learn portfolio changing.

John W. Bordelon: Okay, and then if I could just sneak in one more here. So asset quality metrics improved pretty nicely in the quarter. Though you elected to increase your reserve ratio, can you discuss what really drove this thought process? And secondly, perhaps it's too early to call, but... You know, if we get a couple of rate cuts and the economy doesn't deteriorate, would it be fair to say that, you know, criticizing NTAs might have already peaked?

Speaker Change: Okay, and then if I could just sneak in one more here.

Speaker Change: So, asset quality metrics improved, you know, pretty nicely in the quarter, though you elected to increase your reserve ratio. Can you discuss what really drove this thought process, and secondly, perhaps it's too early to call.

Speaker Change: You know, if we get a couple rate cuts and the economy doesn't deteriorate, would it be fair to say that, you know, criticize the NPAs might have already peaked?

John W. Bordelon: Let me take the Cecil question first. We really didn't decide to increase our allowance; it's just a mixture of the mixed change in our loan portfolio, quarter over quarter. The duration, perhaps, of new loans. That's really it. We didn't change any qualitative factors. We didn't make any adjustments with regard to any industry-specific qualitative factors. So it's just a function, really, of our loan portfolio changing.

Speaker Change: Let me take the Cecil question first. We really didn't decide to increase our allowance, it's just a mixture of the the mixed change in our loan portfolio quarter-over-quarter and

Speaker Change: The duration, perhaps, of new loans.

Speaker Change: That's really it, we didn't change any qualitative factors, we didn't make any adjustments with regards to any industry specific qualitative factors, so it's just a function really of our loan portfolio changing.

David Kirkley: As it relates to the remainder of the year, I'm very optimistic that there could be a little bit of issues as far as credit, but we're not really seeing it in any one particular industry or just individually. We've had a couple of one-offs here and there that have gone bad, had really nothing to do with the economy, had more to do with the operators themselves. So we're feeling as though the economy is going to actually improve possibly in 2025 because of a lower rate environment. All right, well, thank you for taking my questions. Thank you.

John W. Bordelon: As it relates to the remainder of the year, I'm very optimistic that there could be a little bit of issues as far as credit is concerned, but we're not really seeing it in any one particular industry or just individually. We've had a couple of one-offs here and there that have gone bad, had really nothing to do with the economy, and had more to do with the operators themselves, feeling as though the economy is going to actually improve, possibly in 2025, because of a lower rate environment.

Speaker Change: As it relates to the remainder of the year, I'm very optimistic that there could be a little bit of issues as far as credit, but we're not really seeing it in any one particular industry or just individually. We've had a couple of one-offs here and there that...

Speaker Change: have gone bad, had really nothing to do with the economy, had more to do with the operators themselves. So we're...

Speaker Change: Feeling as though the economy is going to actually improve possibly in 2025 because of a lower rate environment.

Joseph Peter Yanchunis: Alright, well, thank you for taking my questions.

Speaker Change: Alright, well thank you for taking my questions.

Speaker Change: Thank you.

Operator: This concludes our question and answer session.

Operator: This concludes our question and answer session. I would like to turn the conference back over to John for any closing remarks. Please go ahead.

John Bordelon: I would like to turn the conference back over to John for any closing remarks. Please go ahead.

Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to John for any closing remarks. Please go ahead.

John Bordelon: Once again, thank you all for joining us today. I'm very excited about the position the bank has gotten to at this point and looked forward to the rest of the year and speaking to many of you in the next day or so. Thank you very much for attending. Have a good day.

John W. Bordelon: Once again, thank you all for joining us today. I am very excited about the position the bank has gotten to at this point and look forward to the rest of the year and speaking to many of you in the next day or so. Thank you very much for attending. Have a good day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

John W. Bordelon: Once again, thank you all for joining us today. I'm very excited about the position the bank has gotten to at this point and look forward to the rest of the year and speaking to many of you in the next day or so. Thank you very much for attending. Have a good day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you very much. Thank you.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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