Q3 2024 USCB Financial Holdings Inc Earnings Call
Got it.
Speaker Change: Good day and welcome to the third quarter 'twenty 'twenty four U S. C. B Financial Holdings, Inc Earnings Conference call.
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.
Speaker Change: After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.
Speaker Change: I would now like to turn the conference over to.
Speaker Change: Luis Staebler Aguilera, Chairman and CEO. Please go ahead.
Speaker Change: Good morning, and thank you for joining us for U S. C. B financial Holdings third quarter 2024 earnings call with me today, reviewing our Q3 highlights as CFO, Rob Anderson, and Chief Credit Officer, Bill Turner, who will provide an overview of the bank's performance the highlights of which commenced on slide three.
Speaker Change: We're very pleased to report another consecutive record quarter, our fully diluted earnings per share reaffirming the soundness of our strategic initiatives and operational performance supported by the strength of Florida's economy, you FCB continued posting strong growth in assets deposits diversified quality loans and profitability. These.
Speaker Change: So let's reflect the steady execution of our business plan that focuses on organic growth supported by diversified commercial banking initiatives designed to deepen existing relationships and develop new ones.
Speaker Change: In reviewing our Q3 highlights I will comment on a select few data points, our CFO Anderson, who will further detail our growth profitability and capital and liquidity positions supported.
Supported by our various deposit aggregating business verticals deposits increased 206 million to $2 1 billion or 10, 7% compared to the third quarter of 2023. These business lines, which include both association and correspondent banking as well as our focus on developing the deposit rich return.
Speaker Change: Any client market have grown to represent 31% of total deposits as of the end of the third quarter. These business verticals also contributed to the continued diversification of quality loan production generating non CRE relationship focused launch.
Speaker Change: Average loans increased 267 million or 16, 6% compared to the third quarter of 2023, our loan growth has moved in line with consecutive quarter over quarter improvement in average loan coupon rates contributing to profitability to this term loan yields increased 16 basis points compared to the prior quarter.
And 79 basis points compared to the third quarter of 2023 this will be detailed shortly.
Speaker Change: And speaking of our loan portfolio I am pleased to report that the bank experienced minimal effects from the damage caused by Hurricane Milton which on October 9th made landfall along the west coast of Florida as a category three hurricane.
Speaker Change: And early preparation for this storm our credit Department identified all the banks exposure along the projected path of the storm and the Tampa Orlando and our Ocala markets, where the bank had identified $169 million in exposure prior to the storm, we confirm that all insurance policies were current.
Speaker Change: And active all clients were immediately contact that after the storm site visits initiated and only one multifamily building, having a loan exposure of $1 6 million had reported damage repairs are underway and the loan is current.
Speaker Change: As we look at profitability net income was $6 9 million or <unk> 35 per diluted share an increase of $3 1 million or <unk>, 82% compared to the third quarter of 2023.
ROA was 1.11% for the third quarter of 2024 compared to 67% for the third quarter of 2023, while Roy was $13 three 8% for the past quarter again as compared to $8. One nine for Q3 2023.
Speaker Change: Also the company's board of directors declared a cash dividend of <unk> <unk> per share of the company's class a common stock on October 28, 2020 for the dividend will be paid on December 5th of this year. The cash dividend program is an important driver to shareholder value.
Speaker Change: And the board of directors is committed to return capital to our investors, while maintaining a strong balance sheet.
Speaker Change: The following page is self explanatory directionally, showing nine select circle trends since recapitalization, the disciplined execution of our business plan focused on developing the best people products and processes is consistently deliver efficient profitable performance guided by conservative risk management practices. So.
Speaker Change: Now, let's turn our attention to our specific financial results and key performance indicators, which will be reviewed by our CFO Rob Anderson.
Okay. Thank you Lou and good morning, everyone Q3, with the second quarter in a row, where we posted record earnings as you look at pages five and six you'll see results that reflect crisp execution from a well oiled uscb machine and positive trends that we believe are sustainable as we enter Q4 and into 2025.
Speaker Change: First net income was $6 9 million and fully diluted earnings per share was <unk> 35 per share that's up from 31 per share last quarter and 19 per share last year as it relates to the balance sheet loans deposits and total assets were all up double digits from the prior year tangible book value per share was $10.
Speaker Change: 90, <unk> and then if you exclude Aoc I tangible book value per share would be $12.84 profitability metrics exceeded the prior quarters with return on average assets at 1.11% and return on average equity of <unk>.
Speaker Change: 13.38%. We also saw improvements in both the net interest margin and the efficiency ratio this quarter credit remains clean and all capital ratios improves so with that overview, let's discuss discuss specifics starting with deposits on the next page.
Speaker Change: The deposit book stayed steady throughout the quarter as we used excess liquidity to fund loan volume in the quarter, probably the most noteworthy item was the fed's action to cut rates by 50 basis points in September Accordingly, we were ready for this move and while the deposit costs was flat quarter to quarter. The September cost of deposits was too.
Speaker Change: Five 7% representing the efforts the team took and repricing the money market book, we feel confident that we can reduce our deposit cost with any rate cuts. Some specific actions that we are currently taking include the following reducing money market rates across the board, we anticipate the deposit beta for this deposit book.
Speaker Change: Specifically to be between 40, and 50% beta in Q4, we have $147 million in Cds repricing at a weighted average rate of 478.
Speaker Change: If we went out six months, we would have 100 or $213 million in Cds repricing at a weighted average rate of four point or 3%. Currently we are repricing the Cds anywhere between 20 to 100 basis points lower based on the tenor. Furthermore, we are not offering any Cds BR.
Speaker Change: On one year as we are looking to keep liabilities short as the market is anticipating fed rates to continue.
Speaker Change: With that let's discuss our loan book.
Speaker Change: The loan book continues to grow at double digits, whether you look at it from a linked quarter perspective or year over year. Additionally, as we book new loans at yields above the portfolio average our overall loan portfolio yields continue and will drive higher as a reminder, we book all loans with with floors and prepayment penalties, which should protect.
If rates begin to drop as for guidance, we expect loan growth to continue in the high single to low double digits going forward.
Speaker Change: Turning to page nine you can see that for the past five quarters, we have originated $728 million in new loans with a weighted average loan coupon at 798%. This past quarter is the first time, we had our first time, we've seen loan coupons below 8% and while the loan coupon take that ticked down this quarter.
Speaker Change: Which lowers the five quarter average we are still originating loans 143 basis points above the portfolio average. This will help ensure our loan portfolio yield continues to grind higher also worth noting is that the loan book has transitioned over time and is more diversified as of quarter end non real.
Speaker Change: State loans are at 28% of the total loan portfolio.
Speaker Change: Go to the next page and look at the margin.
Speaker Change: While the margin improved nine basis points in the quarter. The net interest income increased 798000, or eight teen 3% annualized compared to the prior quarter. The drivers include a larger balance sheet higher loan yields and an improvement in our earning asset mix, while holding deposit costs stable we.
I believe the NIM can improve from here as September NIM was 3.19% buoyed by loan yields that continue to go higher and stabilization in our deposit costs.
Speaker Change: According to our a L. M model on the banks balance sheet is close to neutral as we have made changes in the last couple of quarters to prepare for a lower rate environment. Most notably we have favored money market retention rates over CD rates. This will allow us to reprice liabilities faster going forward. As previously mentioned, we are not booking CD booking.
Speaker Change: <unk> any Cds beyond one year as we prefer to stay short on the liability side.
Speaker Change: During the quarter, we unwound 200 million notional pay fixed interest rate swaps. These swaps while beneficial in a period of rising rates and an inverted yield curve. We're at a point, where they were not as appealing with the change in fed policy and the 50 basis points of rate cuts.
Speaker Change: While these swaps will have a small negative drag in the coming quarters, we have reduced our asset sensitivity with minimal impact on profitability.
Speaker Change: We expect to receive $13 5 million from the securities portfolio in Q4 at current rates and $49 2 million in 2025.
Speaker Change: These cash flows will support loan growth or debt repayment.
Speaker Change: If rates drop 100 basis points, we expect to receive $52 9 million in 2025. These rates the rates attached to these cash flows are between $3 two 2% to $3 three 9% offering us an opportunity to reinvest at much higher rates as mentioned on earlier calls.
Speaker Change: We have also pruned the balance sheet from rate sensitive public funds and single service product clients with these changes we believe our NIM performance will improve from this level, especially if the yield curve steepens. So with that let me turn it over to bill to discuss asset quality.
Bill Turner: Thank you Rob Please turn to page 12, as you can see from the first graph the allowance for credit losses increased $23 million in the third quarter. This was due to an $837000 provision to the rates and the ratio remained unchanged an adequate 119%. The provision was driven by the 62 million.
Bill Turner: Net orderly increase in the loan portfolio.
Bill Turner: Net losses were zero for the quarter.
Bill Turner: The remaining graphs on page 12 show the nonperforming loans at quarter end increased $2 million and represented one 4% of the portfolio. This increase was driven by one consumer loan relationship consisting of two loans, which are in the process of collection no loss is currently expected.
Bill Turner: Classified loans improved nine basis points from the second quarter to three 6% of the portfolio as a large substandard commercial real estate loan paid off with no loss to the bank.
Bill Turner: Classified loans represent less than 3% of capital. The bank continues to have no other real estate.
Bill Turner: On page 13.
Bill Turner: This graph shows the loan portfolio mix at 934.
<unk> increased to $62 million on a net basis in the third quarter to a little more than $1 9 billion.
Bill Turner: The composition continued to be well diversified commercial real estate represents 57% of the portfolio or $1 1 billion segmented between retail multifamily owner occupied and office properties. The second graph is a breakout of the commercial real estate portfolios for the non owner occupied and owner occupied loans.
Bill Turner: Which also demonstrates their diversification.
Bill Turner: The table to the right of the graph shows the weighted average loan to values and commercial of the commercial real estate portfolio at 60% or less and debt service coverage ratios adequate for each portfolio segment.
Bill Turner: The loan portfolio in payment performance are good for all segments in the past due loan ratio remains at less than one half of 1% with an below peer banks.
Bill Turner: On page 14, we discuss the bank office portfolio.
Bill Turner: Our portfolio at quarter end consists of 120 loans totaling 80 $182 million with almost all property is being class B and C.
Bill Turner: Quality of the office portfolio is good with all loan paying as agreed but no classified loans now.
Bill Turner: <unk>, 95% of the properties are in Florida, and over 75% are in South, Florida with adequate debt service coverage.
Bill Turner: The average loan amount is $1 5 million with an average loan to value of 56% and average debt service coverage at almost two times.
Bill Turner: The first chart shows the owner occupied August is making up 36% of that segment with 64% of those loans being occupied for occupied by professional and medical businesses.
Bill Turner: Second chart is the non owner occupied office loans, comprising 64% of the office portfolio with 85% of those being multi tenant and medical.
Bill Turner: We are especially vigilant of the upcoming 2024, and 2025 loan repricing and maturity schedules for all portfolio segments and monitor.
Bill Turner: We monitor in mono and models the loan portfolio repayment ability.
Bill Turner: <unk> annual reviews to respond proactively if needed overall quality and performance of the loan portfolio remains good rock.
Speaker Change: Thank you Bill as we look at our fee businesses. The standout this quarter is the team's performance with interest rate swaps. Since Q1 of this year, we have seen an uptick in clients managing their debt obligations with interest rate swaps. We anticipate Q4 will have a similar performance as the pipeline remains robust.
Speaker Change: With other line items in line are straightforward, let's look at expenses are.
Speaker Change: Our total expense base was $11 5 million and down slightly from the prior quarter salaries and benefits decreased 153000 compared to the prior quarter due to higher incentives paid out in the second quarter of 2024.
Speaker Change: Also worth noting is that the overall head count has been stable for some time, allowing us to leverage our fixed costs over a larger earning asset base and this is evident in the efficiency ratio and noninterest expense to average assets ratio, both of which benchmark wealth peers with other line I'm straightforward, let's turn to capital.
Speaker Change: <unk> capital levels remain comfortably above well capitalized guidelines all ratios improved with strong earnings and the Aoc I improved to negative $38 million also worth noting is the company repurchased 10000 shares of common stock at a weighted average price of $12 <unk> per share during the quarter.
Speaker Change: So with that let me turn it back to Luke for some closing comments. Thank you Rob <unk>.
Speaker Change: <unk> century bank's performance throughout the year has consistently met or exceeded managements 2020 for budget expectations and the team is keenly focused on delivering the quarter ahead without a doubt the strength of the Florida economy provides the fuel that runs our engine as the state passed the midyear point with strong job growth historically low unemployment and.
Speaker Change: <unk> strong wealth migration.
Speaker Change: Florida is creating one in every 11 jobs in the U S and adding approximately 750 net new residents daily the state leads the nation with $36 billion in net income migration, which is greater than the rest of the top 10 states combined.
Speaker Change: Florida State wide unemployment is three 3% and has been lower than the national average for 47 consecutive months.
Speaker Change: <unk> is also ranked number one this year as the best to start a small business due to a low corporate tax rate of five 5% and the continued migration of consumers and companies. These factors are among a few that offer Florida continued economic resiliency on which we will continue to grow the bank strong profitability metrics.
Speaker Change: Balance sheet growth and operating efficiency gives us confidence in our ability to achieve financial targets in 2024 and beyond with that said I would like to open the floor for Q&A.
Yeah.
Speaker Change: We will now begin the question and answer session.
Speaker Change: Ask a question you May press Star then one on your telephone keypad.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: Is that any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question comes from Woody lay with <unk> W. Please go ahead.
Speaker Change: Hey, Thanks for taking my questions.
Wanted to start with the noninterest bearing deposit growth in the quarter. It was really impressive to see does it feel like the increase in that segment that is stickier, where theres seasonal aspects to that.
Speaker Change: <unk> that that segment.
Speaker Change: Yes, maybe I'll take a shot at that first Woody on average the DDA was kind of flat in the quarter, but we did see an uptick towards the end of the month. So a point to point growth was fairly strong we do see some businesses add some deposits that at.
Speaker Change: At quarter end from time to time, but I would tell you we have a lot of efforts with the sales team focusing on operating accounts and building relationships. So we anticipate to build our DDA going forward so that trend should continue.
Got it and then I mean, the overall deposit growth was also really strong could you just give some more specific color on were there certain deposit verticals that drove that growth in the quarter or was it pretty pretty broad based among the verticals.
Lou: Cody This is Lou I would say, it's fairly broad based but without a doubt there are three of our deposit aggregating verticals that really have done a great job our focus on the jurist advantage, which focuses on the attorney client business has been strong our HOA business has also been very strong.
Speaker Change: And and.
Speaker Change: And in General I think we're going to continue seeing that and.
Speaker Change: And our association banking also has been very very strong we have grown really really nicely on the HOA side.
Speaker Change: If we if we like I said earlier.
Speaker Change: 31% of our total deposits.
Speaker Change: R R.
Speaker Change: Or have been contributed by those deposit aggregating verticals that just.
Speaker Change: To put it in perspective.
Speaker Change: Have grown almost $100 million in the last three quarters. So those are kind of the leaders in the overall, but.
Speaker Change: Like Rob said the entire team is focused on deposits deposits deposits and.
Speaker Change: And they are delivering.
Speaker Change: Definitely and then just shifting over to the loan side.
Speaker Change: You printed sustainable double digit levels over the past couple of quarters. How is the pipeline entering the fourth quarter and do you think that double digit range is sustainable going forward.
Speaker Change: Yes, I attend the pipeline meetings every single week as those Robyn does bill we interact with our.
Speaker Change: Division had our team leaders they keep us very much informed of what's happening with the competition and the Q4 pipeline is right on line with budget. So we feel very comfortable that that's the same momentum will continue.
Speaker Change: Great to hear Alright, I'll hop back in the queue. Thanks for taking my questions.
Speaker Change: Wood.
Speaker Change: The next question comes from Michael Rose with Raymond James. Please go ahead.
Michael Rose: Hey, good morning, everyone. Thanks for taking my questions I just wanted to go back to your comment at the beginning of the call.
Michael Rose: Our specialized verticals now are about 31% of deposits can you just remind us where that was maybe a year or two ago.
Michael Rose: And is there any sort of limiter.
Michael Rose: That you would look to may be put in place some of those those verticals because I would expect that there could be some.
Michael Rose: Some seasonality or lumpiness, depending on business trends.
Some of those verticals I'm, just trying to get a better sense of what the what the growth potential is there and then on the just the core.
Speaker Change: Can you just remind us again some of the sure incentive structures that you have in place to kind of drive.
Speaker Change: Our traditional relationship growth. Thanks.
Speaker Change: The three main deposit aggregating verticals, if I go back to two.
Speaker Change: For 2020 totaled $312 million.
Speaker Change: In 2022, there were $446 million.
Speaker Change: In the first quarter of this year, there were $554 million and in the third quarter were at $644 million. So you can see the trend is as non seasonal it is.
Speaker Change: Is continuous and again, we have in each area.
Speaker Change: Product, let's put it this way a product expert that their job is really over time to work with the.
Speaker Change: With the business development officers and with the lenders to share the knowledge and then leverage the team. So it's not just one person.
Bringing in the specialized the dip.
Speaker Change: Deposits and loans that go with them I.
Speaker Change: I think they've done a great job on that and at the same time, we're doing it not by adding additional staff per se we're very.
Speaker Change: Tactical we do that.
Speaker Change: As far as incentive programs, we have and it's we have an incentive program that.
Speaker Change: Both.
Speaker Change: Both rewards for our loans and deposits paid semi annually.
Speaker Change: And it is also.
It is also very much.
Speaker Change: How can I say focus on asset quality. So all all three things have to be in play. It's your asset quality. It's your loan growth through deposit growth and on top of that it's your portfolio maintenance. So there is a big.
Speaker Change: Big.
Speaker Change: Risk management component to that.
Speaker Change: Very helpful and then.
Speaker Change: I know you kind of mentioned at the end of the quarter the margin I think.
Speaker Change: Thank you said around 309, and you gave some great statistics around both the loan repricing in the deposit.
Speaker Change: Repricing as well as we think about the next couple of quarters with the <unk>.
Speaker Change: Obviously the rate sensitivity has come down a little bit here I mean should we expect the margin off of that 309 to kind of grind higher based on the dynamics or do you think that competition on at least on the loan side ramps up and could offset.
Speaker Change: A portion of that over the next couple of quarters. Thanks, Yeah. Good question. So a couple of data points on the deposit side. The end of September was <unk>.
Speaker Change: Total cost of deposits was $2 five 7%.
Speaker Change: We didn't get the full month of the cuts going in the NIM on the month of September was three 9% and if you look at the slide on the loan loan slide.
Speaker Change: We're improving our loan yields about 16 basis points every quarter on the portfolio. So we anticipate the impact of all that to have a positive impact on our margin and that will continue to grind higher so that could be you know.
Speaker Change: 309, 310 somewhere around there I think in the fourth quarter and if we get cut the first place we're going to look to is the $1 billion money market book that we have and if we can hold betas between 40 and 50% and.
Speaker Change: We will tell you how we're performing youll be able to see that in the coming quarters with additional rate cuts.
Speaker Change: That will be beneficial so again, we're still originating loans 143 basis points above the portfolio average so I anticipate the total loan portfolio to grind higher as well.
Okay, and then you had talked about some by debt repayment opportunities could you just remember remind us what those are when the maturities are in.
Speaker Change: It seems like there that would probably be a pretty good likelihood all else equal that you would probably look to pay some of that down. Thanks, yes. So we have only FHL be some FHL b borrowings at quarter end. There. There are some terms in there we had some staged out when interest rates were really low I think we have a couple in 'twenty five we have some.
Speaker Change: Six months ought to have to get the specifics, but we're looking at.
Speaker Change: Either loaning, it out or and keeping a small cash balances are paying off.
Speaker Change: <unk> borrowings when we can there is not a significant amount there at quarter end I can get you the specifics on the maturities and.
Speaker Change: And that will certainly be an SKU.
Speaker Change: Perfect Great and if I just squeeze one last in you guys to your point had been running.
Speaker Change: Noninterest expenses to average assets.
Speaker Change: Sub 2% for for a while now.
Speaker Change: Any sort of larger expenditures reached thanks to kind of keep the balance sheet growth momentum moving forward or is that kind of.
Speaker Change: A target that we should.
Speaker Change: We continue to think about <unk> as we move forward kind of in that one high <unk> low <unk> range.
I think that that will hold.
Michael Rose: As we move forward Michael.
Speaker Change: We have not made significant hires.
Speaker Change: Over the past year, we typically I just look back at it.
Speaker Change: Yes, probably the last month or two we've probably hired maybe four to five people a year and we're able to leverage those individuals' are predominantly on the sales side and we continue to.
Speaker Change: Get some new salespeople and performance manage others, but in terms of the efficiency ratio, we're certainly targeting the low fifty's and the expense to average assets below two and I think at the 180 to 190 is a good modeling range.
Speaker Change: Okay, great. Thanks for taking my questions I'll step back.
Speaker Change: The next question comes from studies Jacqueline with have D Group. Please go ahead.
Speaker Change: Hey, good morning, guys.
Just wanted to start on swap fee senior I think they'd likely remain.
Speaker Change: Relatively stable at this $1 2 million or so level in the fourth quarter.
I mean should we expect that to start to step down a bit normal 25, as you sort of work through.
Speaker Change: Customer basis I.
Speaker Change: <unk> taken on that product.
Speaker Change: It could I mean right now the fourth quarter is is I would say robust and I would say we should be at that level. I mean, we're closing in on October right now and just looking at October's numbers was very strong so I feel comfortable about the near term on the swap fees.
Speaker Change: But certainly as.
Speaker Change: Rates continue to go down maybe clients it could moderate a bit but for near term I would say the next six months.
Speaker Change: Think that levels are good modeling number.
Speaker Change: Gotcha.
Speaker Change: Yes, the dividend now and you've been active on the buyback with that in mind can you just talk about priority in terms of capital deployment and how you rank Wilson opportunities going forward.
Yeah, first and foremost I mean, the capital is there to support our growth, but we if were growing our earnings faster than the assets and we're going to build capital and we'll probably look at the dividend and we also have other tools in place such as the buyback. So when the stock is lower compared to where we feel it should be trading at certainly where we're going to repurpose, but I.
Speaker Change: We will look at the dividend level as we enter into kind of the fall.
Speaker Change: Planning cycle, and budgeting and stuff like that for next year in more detail, but those would be the three areas that I would point to for capital, but first and foremost is to support our growth.
Speaker Change: Gotcha and just one last one for me just generally speaking it doesn't sound like there's really been any product slowdown are negative.
Speaker Change: And that change among your customer base right and in your <unk>.
Speaker Change: Loan pipelines seem pretty strong so that would imply an EBIT.
Speaker Change: Things are still proceeding along at a pretty quick pace down there.
Speaker Change: I would say it's at a steady pace. We there is a lot of deals ready that we pass arm, we're very selective and asset quality and the overall relationship is really how we make our choices and the fact that we have a pretty diversified suite of products to to pick from.
Speaker Change: Keeps the business growing.
Speaker Change: Growing very steadily this bank used to be very concentrated on commercial real estate and over the years I think the management team has done a really good job and introducing different business lines that are non CRE and they've all contributed over time and are very steady in their delivery. So I foresee.
Our.
Good continuity in that.
Speaker Change: Low low double digit.
Speaker Change: Target.
Speaker Change: Yes, I would agree if Betty.
Speaker Change: Great. Thanks for taking my questions Robin.
Certainly.
Speaker Change: The next question comes from Stephen Scouten with Piper Sandler. Please go ahead.
Stephen Scouten: Hey, good morning, everyone. Thanks for the time.
Stephen Scouten: So the loan growth trends, obviously looks phenomenal in a time when we're not seeing such strength from the industry as a whole.
Stephen Scouten: Probably most of the other banks that reported this quarter.
Speaker Change: How do you think about growth in the 25 I mean, the message we are hearing in general from the industry has had growth has been slower we think it could pick up after the election or into 'twenty five but you guys are already kind of stay in the low double digit growth. So could we see an additional uptick or do you kind of want to manage to that level of growth irrespective of the environment or just.
Help me help me think about that if you could.
Speaker Change: Well, we're modeling into that low double digit and.
If we surprise you, we'll let you know alright, but the Florida market is as I ended my.
Speaker Change: Hi.
Speaker Change: Quantum I talk here.
Speaker Change: Really is about as strong as it gets Texas, and Florida, and I'd say over the last decade, we've seen enrollments were there may be a dip.
Speaker Change: But it adds have been very steady for us we go back eight or nine years, and we see that it's that year over year delivery and again.
Speaker Change: Fact that we have developed all these diversified business lines adds to that.
Speaker Change: Add to that that growth of that consistency so into 2025, I would still say that what we're projecting is.
Speaker Change: It's what we're going to deliver and it's going to be really based on a strong economy in the state.
Speaker Change: Makes sense I appreciate that.
Speaker Change: And along with that.
Speaker Change: To drive this pace of growth in the future do you feel like you have to.
Speaker Change: Continue to grow your teams or do you feel like the team you have on the field here can continue to grow at this pace for some for some good period of time.
Speaker Change: We are always looking for talent as a matter of fact.
Speaker Change: Interviewed somebody this morning, Okay that we've been talking to for a while the person is ready to go and I believe they're going to be joining us shortly but again, we're we're being very selective of the individuals I think Rob made it a point of talking about how we how we've grown the bank.
Speaker Change: Over $1 billion in assets over the last three years, and we're still under 200 and our head count.
Speaker Change: We've been very good at doing is upgrading the quality of the.
Speaker Change: The production person of the staff person that comes in and so we've trimmed on the non performers and we have been very focused on bringing in talent and we will continue to do that so it's not an exponential hiring craze that needs to be done to continue our numbers, it's bringing the right people and support.
Speaker Change: The ones we have.
Speaker Change: Fantastic and then just maybe last thing for me you guys not only has seemingly bucked the industry trends to the positive on loan growth, but also.
Speaker Change: On the direction of your NIM since let's.
Speaker Change: Let's see.
Speaker Change: Third quarter 'twenty three so you screen is asset sensitive, but directionally youre seeing great improvement. So I'd like to think about that is it really just the progress you've made on the deposit side or is it more of that.
Speaker Change: Youll be able to see NIM expansion as the fed is not moving but maybe we see some volatility.
They are actually cutting rates and then.
Speaker Change: Again, we see the same level of stability improvement we've seen in the last few quarters Wednesday Wednesday pause, how can I think about that.
Speaker Change: In reality versus.
Speaker Change: And the modeling and the asset sensitivity.
Speaker Change: Yes, it's a great question, Steve and I talk to my Treasurer about this all the time, because we do screen, probably slightly asset sensitive to neutral, but as you know those models are loaded with assumptions in there based on some historical pieces, but what.
Speaker Change: What I would say is that we've been able to outperform the model, especially on repricing our money market book like the models that have a 39%.
Speaker Change: Deposit beta well, if we perform at 40% to 50% on that book, then we're going to outperform that model and we're going to have margin expansion. So that would be one example.
We are very focused on the deposit side I think we've proven over.
A good period of time that the loan engine is working here growing at.
Speaker Change: Double digit pace, so the real challenge for US as we move forward is how do we continue to fund that loan growth at low cost deposits. So the hires that we have made recently.
Speaker Change: Recently last year and into this year the one that.
Speaker Change: <unk> interviewed this morning is all around deposit gathering and good solid bankers that have deposit books that can bring over relationships. So we will look to outperform our model and we anticipate more margin expansion as we go further into the 2025.
Speaker Change: Perfect very helpful. Rob Congrats on a great quarter, guys and all the continued progress.
Speaker Change: Thanks, Steve and thank you Steve.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Luis <unk> for any closing remarks.
Speaker Change: Well. Thank you everybody so on behalf of U S century.
Luis Staebler: The team at <unk> century Bank I would like to thank you all for your attendance and look forward to meet again in our next earnings call have a great day.
Speaker Change: Yeah.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.