Q4 2024 Bank OZK Earnings Call
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Good day, and thank you for standing by.
Come to the bank or Z K fourth quarter 2024 earnings conference call.
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Speaker Change: Today's conference is being recorded I'll now hand, the conference over to your first speaker today, Jay Staley managing director of Investor Relations. Please go ahead.
Speaker Change: Good morning, I'm, Jay Staley, managing director of Investor Relations and corporate development for <unk>. Thank you for joining our call. This morning and participating in our question and answer session.
Speaker Change: In today's Q&A session. We may make forward looking statements about our expectations estimates and outlook for the future.
Speaker Change: Please refer to our earnings release management comments and other public filings for more information on the various factors and risks that may cause actual results or outcomes to vary from those projected in or implied by such forward looking statements.
Speaker Change: Joining me on the call to take your questions are George Gleason, Chairman and CEO Brannon Hamblen, President, Tim Hicks, Chief Financial Officer, Cindy Wolfe, Chief operating Officer, and Jake Martin President corporate and institutional banking.
Speaker Change: We will now open up the lines for your questions. Let me now ask our operator, Marvin to remind our listeners how to queue in for questions.
Speaker Change: Thank you at this time, we will conduct a question and answer session.
Speaker Change: A reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: Okay.
And our first question comes from the line of Stephen Scouten of Piper Sandler. Your line is now open.
Stephen Scouten: Yeah, good morning, everyone.
I wanted to talk a little bit about Brooke trends and kind of how you guys are thinking about this.
Stephen Scouten: The result of the Handoffs kind of more to the CIB.
Stephen Scouten: Marine and RV and the growth gross diversification kind of planned it feels like you guys are a little bit ahead of schedule at least as I was kind of thinking about it and as I look at figures three and four it looks like the trends in CIB in particular are pretty good.
Stephen Scouten: Wondering if you could talk more about that and I.
Stephen Scouten: I know youre growth kind of guidance for 25 is the same as it was last quarter, but.
Stephen Scouten: Again, just kind of how you are feeling and how you think those trends could could play out through the next couple of years as you continue to build out their team.
Steven: Hi, it's Steven Thanks for the question.
Steven: I would tell you that yeah, we're we're pretty much on plan and.
Steven: In line with where we had hoped for you would be with that and try and not very executive summary, let me ask Jack to.
Jack: Comment on that.
Jack: See I bet, that's probably going to be the largest contributor to our growth.
Jack: In 2020, I'm in 2020 six so Jake.
Speaker Change: Talk about that Stephen good to hear from you in Georgia I appreciate that CIB really check off this last quarter. It wasn't necessarily surprised to us by any means we're happy with the results that came through but 2024 for CIB was really laying the foundation getting the policy procedures the underwriting terms.
Jack: <unk>.
Jack: Our portfolio management operations Foundation in place to start to really build and scale CIB as a whole across all those various originating business units and so we were successful in doing so partnering with our credit and risk partners and getting everything up and running and with that we saw some great originations in the fourth quarter, we had enough.
Jack: Strong deals that actually slipped in the first quarter that were excited about here on the horizon as well but.
Jack: We view this as being relatively on target for what we were planning on it we're excited about the future.
Jack: Optimistic about continued growth across those respective CIB business lives.
Jack: Got plans next year to really look out into the market and continuing to grow we're well positioned in our existing footprint from Arkansas, and Texas, Florida, and Georgia. The Carolinas, We view the banks truth footprint to help your hometown married strong manufacturing and distribution of industrial banking opportunities.
Jack: Driven really by a growing workforce there in favorable economic and pro business tailed lines.
Jack: Tie that to a rifled approach of prospecting and are focused on finding the best and the brightest talent from across the region and we feel very optimistic going into 2025 about continued growth.
Jack: Across CIBC.
George: George frame anything to add there.
George: Thank you covered it well Brandon your IP comments.
Speaker Change: No I would just say, yes, I would agree with George and shakes that we are on target and just tell you that.
Speaker Change: Jake and the Guy says he's brought over are really top shelf individuals' phenomenal fit with our culture and the way that they dovetail Dan I think as part of the reason we've been so successful, but they're very well connected in the marketplace. The bank has been a.
Speaker Change: Very focused on adding all the top talent that we can.
Speaker Change: We're you know as we've guided you'll you'll you'll see expense growth next year around a lot of different areas you know whether it would be send.
Speaker Change: Cindy in the world of raising.
Speaker Change: It's really no additional retail branches to fund what what will be a growth of Jacobs cheese with with it.
Speaker Change: A good number of additional employees and additional business lines. So we're extremely excited about the handoff that we have achieved and where it's going to go in the future.
Speaker Change: Got it really helpful. And then just as I'm thinking about the accounting of this handoff isn't it kind of a natural what we saw this quarter as as the unfunded book becomes I think it was like 12% CIB and our USG. The unfunded book percentage goes down that that could have kind of a benefit on the loan loss reserves from an unfunded perspective.
Speaker Change: It could continue to see that dynamic play out just kind of Permian accounting perspective.
Speaker Change: Okay.
Speaker Change: Stephen This is Tim I mean, certainly thats one component.
The ACL.
Bill: Bill that we've had our growth in both funded and unfunded otherwise say.
Speaker Change: Say 10 quarters.
Speaker Change: Our view on the macro conditions.
Speaker Change: There's also a very very big component of that as well so.
Speaker Change: Multi factor.
Speaker Change: Okay.
Speaker Change: Many factors go into the cause of the ACO provision and build.
Speaker Change: That is one of them.
Speaker Change: And I would think I would add Matt that our CIBC.
Speaker Change: Our community banking group our indirect.
Speaker Change: Marine group.
Speaker Change: All of our business lines have the same intense focus on.
Speaker Change: Credit quality that has been a hallmark of our ESG and all of them operate under the philosophy credit is the top priority nonnegotiable.
Speaker Change: <unk> developed a as the secondary consideration and growth as a tertiary consideration.
Jake: And Jake and his team pair at that all the time back to us in.
Jake: Their pipeline calls and their credit meetings, and so forth and compete.
Jake: Completely.
Jake: Embraced that concept or credit quality is paramount profitability is an important secondary and if we get the growth rate down.
Jake: That said.
Speaker Change: Golar <unk>.
Jake: Over the next.
Jake: Number of years is to build a unit comparable and non real estate spikes to what we've built.
Jake: <unk> J.
Jake: Both in quality profitability and size so.
Speaker Change: You commented, while we had a really good quarter of growth in CIB, Yes, we bet, but these guys. They're just on the first steps of the journey.
Jake: Early in that unit.
Jake: An equal partner with our ESG.
Jake: And our company.
Jake: We expect our ESG to continue to grow in future years, So that means <unk> got a long runway and they're just getting started.
Speaker Change: Yeah, that's great that's helpful George and that kind of point me to my other question here is the focus on credit I mean, you had some really good update kind of quarter over quarter on.
Speaker Change: Special mentioned substandard and one of the things I like you guys lay out of this figure 11 kind of where youre talking about the modifications and extensions on some of the enhancements that you've gotten.
Speaker Change: I mean, I know look in a perfect World you probably would love to not have to modify any loan but thats just the reality of it. So can you kind of talk about that mindset and why that's just a good business practice and kind of how that process works with your equity and capital partners there.
Speaker Change: Well we.
Speaker Change: Patients, we view as a positive.
If you're if you're modifying the loan.
Speaker Change: Youre collecting phase, we're not modifying the loans in a negative sense and there were not lowering spreads were not advancing additional credit we're not expanding our commitments.
Speaker Change: Not lowering our floors.
Speaker Change: We don't do any of those negative things better concessions to customers. Our modifications are the customers.
Speaker Change: Plenish reads are the customers might pay down if we.
Speaker Change: I believe that's absolutely essential.
Speaker Change: Two alone the customers pay a fee for those modifications. So we view modifications as as a positive thing not a negative thing and you can say in a little tables that a company that we had some.
Speaker Change: Significant unscheduled paydowns in Q4 $52 million.
Dollars.
Speaker Change: In connection with modifications, where we reduced 41 8 million in unfunded commitments collected $8 4 million in these some of those phase were on short term modifications that went straight to income some of those phase wrong, one year or longer modifications centered.
Speaker Change: Third over the lack of alone.
Speaker Change: We collected $38.8 million of additional reserves all of that 58 modifications.
Speaker Change: View those as is very positive.
Speaker Change: The numbers as far as.
Speaker Change: Sure.
Speaker Change: Additional reserves and so forth will look even better probably this quarter.
Speaker Change: From this quarter's profit of modifications in Q1, so we view that as positive.
Speaker Change: Yeah.
Speaker Change:
Speaker Change: There's been a lot of effort and guys that are taking a negative basis on our story to go out and try to do a map.
Speaker Change: Uh huh.
Speaker Change: Projects that have been completed in.
Speaker Change: Study the leasing on that project those projects and that is certainly.
Speaker Change: A valid piece of information, but it's not the most controlling most important piece of information we've been super clear on this since the first time that pad.
Speaker Change: Started rising rates in the cycle.
Speaker Change: Net.
Speaker Change: We have made the statement that we expect our ESG sponsors and their capital partners. We will continue to support their properties if needed.
Speaker Change: Three times of economic stress that it's higher interest rate until business and economic conditions in property performance normalized and that's certainly been the case. So the question is not gosh did the building get built and do you have lasers are not that's relevant affirmation, but that's not the important.
Speaker Change: Consideration the important consideration is where sponsors continue to.
Speaker Change: Support that project.
Speaker Change: The actress private carrier cost work releasing work the sales whatever and get that project to a successful conclusion and we.
Speaker Change: We just had.
Speaker Change: Hundreds of examples of that in the portfolio.
Speaker Change: Relative handful of examples where the customers have.
Speaker Change: Have not done so.
Speaker Change: We're very happy with the performance of our portfolio. We continue to expect in the vast majority of credits. The sponsor is going to do what they need to do to get to a successful outcome and our business model is designed to make that happen.
Speaker Change: Low leverage.
Speaker Change: We reappraised the vast majority of the portfolio now and the current interest rate are higher interest rate environment. So we've taken into account higher cap rates and so forth.
Speaker Change: <unk>.
Some folks make a big deal out of a factory why our loan to values on a lot of those loans from a reprise mcgown up yes, but block.
Speaker Change: A comment was made in our life science portfolio went up 10% or something well it went from 45% loan to value to 55% loan to value.
Dale: Dale why.
Dale: While we do there's a lot of leverage loans as we allow for adverse scenarios to occur that could affect valuations and still be super deep in the money Super well covered.
Dale: By the value of the collateral and that fact that we're deep in the money means that the sponsor and their capital partners are still well in the money and Theyre going to continue to defend these assets.
Dale: Very simple element.
Dale: If you apply it with gas supply and has a very beneficial effect for the portfolio and we continue to say.
Dale: Benefits of that.
Dale: Our strategy our strategy is.
Dale: Certainly proven out in this cycle.
Speaker Change: Yes, that's great color George Thanks, so much and congrats to you and the team on a great 'twenty 'twenty four I appreciate it. Thank you.
Speaker Change: Thank you Amit for next question.
Catherine Mealor: And our next question comes from the line of Catherine Mealor of <unk>. Your line is now open.
Speaker Change: Thanks, Good morning.
Catherine Mealor: Good morning.
Catherine Mealor: So as we think about the current rate environment. I mean, clearly there is less rate cuts is better for you in terms of the margin and potentially less paydowns in.
Thank you you just answered the question on on what the incremental credit risk is it still feels like.
Catherine Mealor: We feel really comfortable with that even any kind of a higher rate environment, but can you maybe comment a little bit on that and just what higher rates could mean for credit risk.
Catherine Mealor: And then secondly is just on the new origination volume if rates we.
Catherine Mealor: Don't get any more rate cuts. This year, how you think that might impact your origination volume at our ESG and then some of your new initiatives initiatives at CMT.
Catherine Mealor: Okay.
Catherine Mealor: Jake less tape outs in reverse order if.
Catherine Mealor: If we don't get any more rate cuts.
Catherine Mealor: What does that do to say out base volume.
Catherine Mealor: Okay.
Stephen Scouten: And the beauty of the position that we're in Catherine its a good question is that.
Stephen Scouten: We are absorbing in sharing picking new clients in the current environment. So we don't necessarily have a large amount of baggage or what have you from from clients that haven't gone through the ups and downs of the current market environment and so as we look out and we start to cherry pick and move forward across <unk> and Cvs App.
And our fund finance groups and other potential expansion groups that we're toying with.
Stephen Scouten: Overall from an impact on <unk>.
Stephen Scouten: Interest rate.
Stephen Scouten: We believe we'll be in a good position there pricing, we're getting across the board still remains a pretty good from a spread standpoint.
Georgia: Our Cvs App group, which is our fastest growing group buy continues to kind of carry the flag with the best spread across those business units too. So we feel like we're in a pretty good position, Georgia any thoughts here.
Stephen Scouten: Brandon.
Stephen Scouten: Talk about what no cuts are higher rates does <unk> volume.
Brandon: Sure Catherine happy to answer the question so.
Brandon: From where we stand today and we noted that in.
Brandon: In the environment. We are in we are cautiously optimistic that we can achieve a higher a more typical level of originations in 2024.
Brandon: You have noted that our mindset has been around zero to two cuts during the year, but if if they stick where they are what we're seeing is.
Brandon: Even with the two that we've had.
Brandon: In September and December and the increase in the deal flow. So.
Brandon: We've.
Brandon: Our guys have done a great job staying in touch with the market and watching what deals are out there and staying in touch with the developers and what they're seeing is the incremental benefit that they're getting from from the recent cuts and really beyond that I mean these these high rates of.
Brandon: Hum.
Brandon: Halted.
Brandon: Provided substantial headwinds to deal flow that flows down into the other input to the process.
Brandon: Land being one of them and we're starting to see those valuations.
Brandon: <unk> down so one of the inputs and the project is is that a more attractive place. So you get incremental impact.
Brandon: The benefit from declining land values get benefit from from from interest rates being off a little bit.
Brandon: And we've seen that start to induce.
Brandon: More of the deals coming off the shelf and moving forward.
Brandon: So.
Brandon: We're seeing the market adjust to.
Brandon: What could be as we all know are longer term.
Brandon: <unk> rate environment cap rates are adjusting we're seeing valuations bottom out and come back up so.
Brandon: We obviously love the benefit to our bottom line to the revenue we generate on these loans that we have on book.
Brandon: In a flat to up environment, but we think the market is adjusting to.
Brandon: I don't know if this is a new normal but if it is we think we could still see strong deal flow now again, if it if it's massive moves up that could change the needle, but we are seeing an adjustment.
Brandon: That would tell us that.
Brandon: Even where we are we're going to see more volume in the pipeline for our ESG, we certainly.
Brandon: In the quarter just ended saw improved volume we saw improved conversion in.
Brandon: In terms of our guys getting executed term sheets going going into the year here. We've got we've got a good pipeline for the quarter still have to close them.
Brandon: But we come into the year with that thought that even if things sort of stick, where they are we ought to be able to to improve over last year.
Catherine Let me provide one other comment Brian and correct me, if I'm wrong, but I think our <unk> originations.
Brandon: Fourth quarter.
Brandon: Our lowest originations in 2027 quarters. So you named it <unk>.
Speaker Change: You could look at that and say Wow gosh.
Speaker Change: That's a horrible origination quarter in SaaS that theres not a lot of new deals percolating you.
Speaker Change: You sort of have to.
Speaker Change: Factor and the lag effect.
Speaker Change: <unk>.
Speaker Change: Projects. It takes a long time to can safer project and get it to closing so that.
Speaker Change: Really low.
Speaker Change: Yeah.
Speaker Change: Quarter origination volume probably reflects the mindset of sponsors two or three quarters rollout before that.
Speaker Change: At the same time, we had the lowest origination environment 27 quarters.
Speaker Change: <unk> pipeline.
Speaker Change: <unk>.
Speaker Change: Signed term sheets at year end.
Speaker Change: Yes.
Speaker Change: Brian and describe that.
Speaker Change: I don't want to misstate. It so you describe it.
Speaker Change: Brian in your own it was it was actually.
Speaker Change: One of our best and maybe I want to say.
Speaker Change: Four to six quarters.
Speaker Change: The term sheets executed so it was definitely stood out on the map.
Speaker Change: And I think what you're saying.
Speaker Change: There is the <unk>.
Speaker Change: Fact that 100 basis points lower right.
Speaker Change: Have sponsors excited about investing now some project signing a term sheet and getting them ready to move forward.
Speaker Change: And frankly I think the election.
Speaker Change: Has.
Speaker Change: Stimulated.
Speaker Change: Thursday, Azzam and excitement about the U S economy with the expectation that we're headed into.
Speaker Change: A more pro business.
Constructive.
Speaker Change: Environment, that's going to be.
Speaker Change: Good for economic growth. So we're getting those lives from our customers and saying that so we're failing.
Speaker Change: Cautiously optimistic about loan growth and 2025.
Speaker Change: Even though we're going to still be dealing with a big bunch of headwinds from our ESG payoffs for Carlos.
Speaker Change: 2025 is the third year following the record 22 origination year in our ESG. So Ci base momentum. The fact that we're getting some new term sheets and a higher volume term sheets coming through our ESG makes us pretty optimistic about our ability to grow NEP.
Speaker Change: Last year.
Speaker Change: Now your question on margin. Yes go ahead, yes, let me just ask one thing on the Paydowns.
Speaker Change: On the pay Downs can you do you think even if rates are higher we still I mean to your point you on the third year. So that when you naturally see it do you still think you see as many <unk>.
Speaker Change: As we've been seeing in the past or because we're kind of in a more normalized rate environment and maybe theres not the belief that we will get so many cuts.
Speaker Change: A lot of these lines just go ahead and go into permanent financing.
Speaker Change: Questions.
Speaker Change: Probably it's probably fair to believe that in that or what would your rates paydowns should still be pretty high this year.
Speaker Change: Yes.
The last three quarters, we've seen.
Speaker Change: Elevated levels of prepayments or repayments not guidance, but elevated levels or prepayments on IRR SGD labs, and I think that reflects the fact that sponsors are.
Speaker Change: Valley Nat on the fact that we're probably in the right environment, we're going to be more or less going forward and the waiting for rates to go back to zero as it is no longer a reality in People's minds, and Theyre going ahead, and and dealing with the reality of where we are there.
Diarrhea, or where they think we're going to be next quarter.
Speaker Change: Making plans and actions to move these.
Speaker Change: Projects too.
Speaker Change: More permanent or bridge financing.
Speaker Change: <unk> from our construction loan.
Speaker Change: Because I think we're getting where we are so I think that's been one factor and the.
Speaker Change: Doc.
Speaker Change: Elevated level of repayments for the last three quarters I think that continues.
Speaker Change: Sure.
Speaker Change: In the coming year now.
Speaker Change: Will will that.
Speaker Change: Result in a lower level of modifications.
I don't know that it will we might still see a high level of modifications. For example, we've got a sponsor on a project <unk> got.
Speaker Change: Got a term sheet blind from.
Speaker Change: Bridge lender to take them out of our project.
Speaker Change: To give them more time that was approved in committee, but.
Speaker Change: They needed.
90 day extension on that to get that closed our guess is that it will take them. Its a complex project. It will take a more than 90 days. So we've pre approved a second 90 day extension if they made it. So we can say that loan payoff Golar bridge lender in the second quarter.
Speaker Change: It might be the first quarter of this year and say one or two extensions brookdale matters are resolved, so I think youre going to see.
Speaker Change: A high level of expansions.
Speaker Change: This year, but I also think you are going to continue to see a high level of repayments as we've seen over the last four quarters.
Speaker Change: Very helpful. Thank you.
Speaker Change: Alright, thank you.
Speaker Change: Thank you one moment for next question.
And our next question comes from the line of Matt <unk> of Morgan Stanley. Your line is now open.
Matt: Hi, good morning, all.
Speaker Change: Good morning.
Speaker Change: I wanted to ask about.
Speaker Change: On the appraisal front it.
Speaker Change: It looks like the number of loans Youre getting appraisals for has gone up quite meaningfully over the past couple of quarters.
Speaker Change: I wanted to ask what's driving that is it more normal cause is that thought of or more.
Concerted effort to go through the book and Seaway, you need sponsors to bring in more equity.
Speaker Change: It really I think is a reflection of the fact that there's been a lot of questions guys should urea price.
Speaker Change: Portfolio, what are those appraisals kind of look like we have pretty good.
Speaker Change: Hi, there is on that ourselves so.
Speaker Change: We're not as concerned about that as perhaps some of the folks sitting in Europe.
Speaker Change: Chair or your investors chairs are so we just made a decision to kind of go at the Max pace that our appraisal services function can engage review and validate.
Speaker Change: Third party appraisals, where guests we're going as fast as we can.
Speaker Change: Brandon you were telling me rates in late we have.
Speaker Change: I can't remember the number of ESG owns that are pre 2012.
Speaker Change: December 2022 appraisals.
Speaker Change: Yes.
Speaker Change: We've got I think 68 of those left.
Speaker Change: We're pre dated December 15, 2022 and of that 68, we're probably going to have between $40 and 45 of those.
Speaker Change: Reappraise this quarter end and then we will have others beyond that so our count our total count this quarter, we will will be probably in and around where it was last quarter, but and then we will have some loans.
Speaker Change: And that vintage we're talking about that that will pay off as well.
Speaker Change: We've made a lot of progress there, but getting close to the end of those older appraisals getting them updated.
Speaker Change: By the end of Q1 and.
Speaker Change: We should have just a handful of.
Speaker Change: Loans in our ESG that.
Speaker Change: Have not been reappraised and the current interest rate environment or a higher interest rate environment.
Speaker Change: Starting from December 2022 forward so.
Speaker Change: Yes.
Speaker Change: We wanted to we're not.
Speaker Change: Not terribly concerned about these various prices I mean, we know that our property is probably going to price in many cases for a little higher loan to value or a lower valuation than it did three years ago.
Speaker Change: I don't know where cap rates have gone in.
Speaker Change: Time periods to stabilize so that has an impact on the price value is and we're seeing that.
Speaker Change: But we wanted to get.
Speaker Change: We wanted to get the essentially the full portfolio reappraised as quickly as we could so that.
Speaker Change: Everyone. That's interested in our numbers, what I understand where those numbers are.
Speaker Change: We're really proud of that and expected.
Speaker Change: To occur is even though we've reappraised hardier 90 something percent of the portfolio.
Speaker Change: Our loan to value in the last year on the portfolio only went from 43% to 44% a lot's.
Speaker Change: <unk> had a few loans that went up 20 or 30% loan to value or more and you had a botched they went up 10% loan to value or more but our portfolio at the portfolio level and managing our portfolio our weighted average loan to value is 44% and.
Speaker Change: That reflects the fact that even though we're reprising a majority of the appraisals are showing a higher loan to value.
Speaker Change: The new product that we are originating is below average.
Speaker Change: Loan to values of new originations are working that down.
Speaker Change: And we continue to get a lot of pay downs.
Speaker Change: On previous loans, both at modifications in subsequent two modifications, we're getting some very accretive partial releases.
Speaker Change: On projects, where.
Okay.
Speaker Change: One part of it is.
And the other parts for time, and we'd get an accretive pay down on that and.
Speaker Change: Our condo projects, we have a pretty big project condos satisfying sell out that was loan to values go down because every.
Speaker Change: Every unit sale is highly accretive to our loan to value. So they are a result of all those moving parts is that.
Speaker Change: We've continued to keep the portfolio at.
Speaker Change: Very very conservative at 44% weighted average loan to value.
Got it very helpful.
Speaker Change: And maybe pivoting over to.
Speaker Change: The NIM and the loan floors.
Speaker Change: What behavior have you seen from clients, who have hit their floors now that we're a 100 basis points lower than where we started.
Speaker Change: <unk> been looking to replace their lawns are.
Speaker Change: Have there been any trends that you've noticed.
Speaker Change: Launched.
Speaker Change: Brandon.
Speaker Change: I'm not aware of any anything you want to comment on that.
Speaker Change: No.
Speaker Change: The only trend that can positively identify as they pay their debt service.
But I'll.
Speaker Change: All seriousness, there really hasn't been I mean look.
Speaker Change: The other trend is in these modifications. We've noted that we haven't we haven't lowered those floors we've increased.
Speaker Change: Quite a number of those floors, it's a negotiated heavily negotiated item.
Speaker Change: Both on the front end the deals we're closing in the models that were that were negotiating but.
Speaker Change: Our guys do.
Speaker Change: We do a great job there and.
Speaker Change: The evidence of that is very clear in our in our report.
Speaker Change: <unk>.
Speaker Change: But no we don't typically see an exit and based on the floor again.
Speaker Change: It's part of the picture, but the bigger picture is in terms of the project and the takeout market is a much bigger piece of that.
Speaker Change: Yeah.
Speaker Change: So as we think about.
Speaker Change: Loan yields from here.
Speaker Change: Do you think there's been about a 60% beta on.
Speaker Change: Loan yield so far and I think part of that is also just coming from the loan mix changing so now as more loans hit their floor is is it fair to expect that the.
Speaker Change: The loan yield beta is on the downside would be slower from here or do you just how should we think about that from here.
Speaker Change: That's a good question I would point you to figure 27 in our management comments.
Speaker Change: 14% of our loans were at their floor rate, 14% of our variable rate loans were at their floor rate at.
Speaker Change: December.
Speaker Change: 31, and I emphasize at 14% because.
Speaker Change: One of our commentators got that wrong and so we had 7% of our allowance floor right that was that was only half right.
And you say if you go down 50 basis points here at 42% of allowance at their floor right. So the guidance that we've given.
Speaker Change: And they are.
Speaker Change: Okay.
Speaker Change: Assumptions that we've used while I think they are the most likely case no rate cuts to two rate cuts this year.
Speaker Change: Obviously, one rate cut.
Speaker Change: We're going to be at 26 or more percent of our allowance of their flow rate to rate cuts 42. So if we had three or four or five rate cuts.
Speaker Change: Once you get into that four days your loan by a really slows down our deposit betas of course continue to speed up if we approve private lines. So are both R. R.
Speaker Change: Provision expense would benefit from three or four or five cuts and our NIM would have a significant expansion opportunity from three or four or five or six cuts because we would we would benefit from those flaws.
Speaker Change: Your rights kicking in and as Brandon said.
Just not we don't get paid off you usually because of floor rates.
Speaker Change: That's a rare issue.
Speaker Change: <unk> negotiated customers know it.
Speaker Change: They hit the floor that hit the floor like live with it because that was part of the deal.
Speaker Change: Flip side of that is it pretty went higher.
Speaker Change: Our variable rate loan portfolio would generate significantly more net interest income we would give back part of that with higher provision expense because of the elevated stress that I.
Speaker Change: Rising rate environment would put on our customers.
Speaker Change: The guidance, we've given in the assumptions. We've made are actually the worst case scenario zero rate cuts to 50 basis points and rate cuts. This year is the worst case scenario for us and yet.
Speaker Change: Were coming out was pretty darn good results.
Speaker Change: Even in that worst case scenario, so more rate cuts is better.
Speaker Change: Rate increases net net are better even though.
Speaker Change: Our higher margins would would be partially given back by higher provision expense, but the worst case scenario is where we are which is zero to 50 basis points. When we've given you guidance based on that.
Speaker Change: Yeah.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Speaker Change: Your next question.
Speaker Change: And our next question comes from the line of Matt Olney of Stephens. Your line is now open.
Matt Olney: Hey, Thanks for taking the question guys.
Matt Olney: Wanted to ask more of a bigger picture question and it's more around the longer term aspirations of the company with respect to both loan growth and investment spend.
Matt Olney: For 2025, you've been clear about the loan growth expectations mid to high single digits with that handoff from <unk> to the other growth segments and you've also talked about the expense growth of around 10% because of these various growth initiatives in all of these new hires I guess, if we look beyond 2025, just trying to appreciate.
Matt Olney: The longer term loan growth aspirations of the company.
Matt Olney: And what type of investments do you think will be required to maintain those aspirations.
Matt Olney: Well I would.
Speaker Change: Let me take that Matt and then I'll give you.
Speaker Change: Jake and Brandon.
Speaker Change: Chance to comment on that.
Speaker Change: Sure.
Speaker Change: We have.
Speaker Change: Yeah.
Speaker Change: Traditionally been a very growth oriented company.
Speaker Change: <unk> have had a lot of success.
Speaker Change: Couple of months I'll celebrate my 46 year here.
Speaker Change: Our balance sheet is about 1400 times.
Speaker Change: SaaS balance sheet that we were when we started.
Speaker Change: I expect to be here.
Speaker Change: And of the future and expect to continue to see solid solid growth.
Speaker Change: As far as the expenses to achieve that growth.
Speaker Change: There'll be incremental expenses as we.
Speaker Change: Add more lenders I had more loans add more customers, but I think we have incurred.
Speaker Change: A huge amount of the expense.
Speaker Change: This year and last year to achieve.
Speaker Change: Some really important growth elements for us and obviously <unk> getting a lot of attention because it's become.
Speaker Change: The dominant engine for loan growth, but Jay mentioned.
Speaker Change: They came in and started building say abbe and built the credit and the service same and the risk and compliance and all the governance things around that really.
Speaker Change: Rock solid.
Speaker Change: To have a foundation to originate.
Speaker Change: Their first loans and they took.
Speaker Change: The IV LG in equipment finance and <unk>.
Speaker Change: <unk> finance businesses, we had wrap them into a much more rigorous.
Speaker Change: Servicing and asset management.
Speaker Change: Governance structure that has already been created and is clearly in the run rate of our numbers. So so yes.
Speaker Change:
Speaker Change: Growth going forward, which.
Speaker Change: I think it will rival our ESG.
Speaker Change: And in future years, whether that story or five or seven years, who knows but I think it will be.
Speaker Change: And five to 10 years as big a part of our company is our ESG and the structure for that is is in place and it's paid for it's in our run rate of expenses now incremental growth you'll have incremental expenses, but that unit is.
Speaker Change: To get more and more efficient.
Speaker Change: As I go forward, because the foundational expenses or line.
Speaker Change: Same thing with our mortgage division, we've been losing money in mortgage.
Speaker Change: All year, along in 2024, as we built that and ramped it up but it's been built right that infrastructure is there those monthly and quarterly.
Speaker Change: Negative number are getting smaller and smaller and I think that unit becomes a positive contributor next year.
Speaker Change: The same thing in our consumer elements of our book, we've ramped up.
In tandem, but partnership between Sandys retail banking units.
Speaker Change: Alan Jessup community banking units originating consumer and small business loans and so forth.
Speaker Change: We've put a lot of the infrastructure in place over the last two years and those guys are just beginning to hit some meaningful strides in growth.
Speaker Change: Sure.
Speaker Change: Trust and wealth unit, we've really built up a much more significant infrastructure buyer.
Speaker Change: That infrastructure is in place, we're getting some real positive growth buyer and I think you'll really see that next year. So.
Speaker Change: I think.
Speaker Change: I think we will have expenses ramp, but I would expect to maintain.
Speaker Change: And industry, leading efficiency ratio.
Speaker Change: As.
Speaker Change: As we have seen.
Speaker Change: Charles we expect revenues to ramp faster than expenses.
Speaker Change: I would expect us to continue to be in that sort of mid thirty's low 30 sort of efficiency ratio going forward.
Speaker Change: And I'll just piggyback opex.
Georgia guidance, there specific to the CIB.
Speaker Change: <unk> is a key factor in so if you look at 2024 to his point it was really the foundational bill of our portfolio management and operations team to ensure that we maintain a very healthy and clean book of business.
Speaker Change: We're best in class across our peers in that aspect and so when you look at it as it relates to the future Bill that's really going to be a little bit more focused on the origination side and again, we take a little bit different view here.
Speaker Change: Between George and Brandon and I.
Speaker Change: A lot of our competitors might go out and start a market or get in and launch a Cvs app team in Nashville, or Atlanta, or wherever it might be and higher $10 15 people out of the gate and then just hope the business comes in hope that thing repays itself with entities in timeline and it's really not that.
Speaker Change: The approach we take we take a much more level headed pragmatic approach, where we challenge our business had leads within CIB, So where thats mark over Cvs App approval of our finance or Jim over our FCS Tim over our loan syndication corporate services from Mr. Chef over our ABL group.
Speaker Change: It really asking them to prepay for the next person before we bring the next person.
Speaker Change: And so to Georges point before hiring as high quality tailwind, we're actively chunk that team to generate additional new business. So that when that person comes on even if they were not to contribute in the worst case scenario. The business is already there and the revenue is already there to prepay for that person. So that we can keep our efficiency.
Speaker Change: <unk> really best in class.
Speaker Change: Okay. Thanks for the commentary very comprehensive.
I guess when I switch gears to also ask about any potential regulatory changes.
Speaker Change: We've got the new administration coming in the Whitehouse.
Speaker Change: The market had some anticipation there could be more favorable changes for the industry would love to hear your perspective about any potential regulatory changes for the industry and how this could impact the bank.
Speaker Change: Yes, we're very hopeful that.
Speaker Change: The change in administration is going to lead to a more constructive regulatory environment I mean, certainly the banking industry and because of FDIC insurance, there is a level of safety and soundness regulation.
Speaker Change: Other regulation that is appropriate, but the regulatory environment has just gotten increasingly.
Speaker Change: More and more and more <unk>.
Speaker Change: <unk> for the industry I'm, not telling anybody here anything it's not wildly now and.
Speaker Change: You're seeing that push lots of business that the banking industry are used to do out too.
Speaker Change: Profit credit.
Speaker Change: Non bank.
Speaker Change: Financial firms and there was a lot of risk to the economy.
Speaker Change: And to consumers and business customers with that private credit and non bank financial firms. So.
Speaker Change: What we would hope to say Oh, we do I'll, just say as I.
Speaker Change: A right sizing of our regulatory restraint on the industry, which led to more and more of the credit needs of the country being met by the banking industry as opposed to <unk>.
Speaker Change: Nonregulated Noncontrolling sources of credit that I think pose a lot more risk to the to the economy.
Speaker Change: And.
Speaker Change: Customers.
Speaker Change: Uh huh.
Speaker Change: So we are hopeful and we're advocating fiercely for that.
Speaker Change: And.
Speaker Change: To the people we are advocating that tell you that seems to be being met with a very.
Speaker Change: A very favorable response.
Speaker Change: The president elect saying.
Speaker Change: Soon to be president on Max.
Speaker Change: Next week.
Speaker Change: Has.
Speaker Change: Declared that he wants to extend the previous the existing.
Speaker Change: Tax regime, and maybe even cut that tax regime and get the federal deficit down too.
Speaker Change: To achieve that combination of lower taxes, and a reduced deficit. The U S economy has got to grow.
Speaker Change: I don't think the <unk>.
Speaker Change: And the administration incoming are going to be able to achieve the needed growth in the U S economy without removing the unnecessary regulatory burdens on the U S banking industry the industry.
Speaker Change: Has the capital and has the scale and the ability to contribute to this next golden age of.
Speaker Change: American economic growth as it's being called but the industry has got to be unfettered from the excesses.
Speaker Change: Regulation, and we're making that point.
Speaker Change: Repeatedly.
Speaker Change: Two.
Speaker Change: People in Washington, and again, I think that's been well received so its a big job.
Speaker Change: Okay.
Speaker Change: There's got to be a lot of resistance from entrenched.
Speaker Change: Rocker site too.
Speaker Change: Giving up some of those.
Speaker Change: Unnecessary regulations im restraints on the industry, but if we're going to have the economy of the president envisions, it's got to be done.
Speaker Change: Yes.
Speaker Change: Okay, well I appreciate hearing your perspective, and congrats on a great year.
Speaker Change: Alright, thank you.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: For next question.
Speaker Change: And our next question comes from the line of Nick <unk> of UBS. Your line is now open.
Nick <unk>: Hi, good morning.
Speaker Change: Morning.
Speaker Change: Thanks for all the update this morning.
Speaker Change: Thinking about your commentary around potential for greater originations as well as we're progressing from here.
Speaker Change: Are there any specific types of properties or geographies, but she was a highlight.
Speaker Change: Somewhere you'd highlight for a potential pick up in activity maybe on the other side of that obviously everything is kind of on a case by case basis, but are there any either property types of regions of the country that you're specifically specifically looking to avoid adding exposure at this point.
Brian: Yes, Brian.
Brian: I appreciate it.
Brian: Yes, absolutely.
Nicolas: Nicolas I appreciate the question so I would tell you that.
Nicolas: Most recently, our origination volume, which is obviously an indicator of where we see opportunity.
Nicolas: Has been fair.
Nicolas: Fairly heavily weighted towards multifamily.
Nicolas: And industrial.
But also.
Nicolas: Condominium developments are.
Nicolas: A significant part of our current pipeline.
Nicolas: The.
Nicolas: And a lot of that.
Nicolas: It has some regional emphasis as well.
Nicolas: Our highest.
Nicolas: Geographic concentration continues to be.
Nicolas: In Miami and the team there I mean, obviously the economic activity in.
Nicolas: That that round the world has been phenomenal.
Nicolas: The in migration driving demand, we have a long history of successful lending there and that continues to be the case. So we still are very.
Nicolas: Bullish on that particular property type and that particular geography.
Nicolas: We're fortunate to have.
Nicolas: A lot of experience and a lot of great originating firepower in some of the healthier markets across the south.
Nicolas: Southeast southwest.
But also.
Nicolas: New York continues to be.
Nicolas: Active perhaps not as.
Nicolas: Active as it has been earlier in <unk> history, but that economy continues to two.
Nicolas: To move.
Nicolas: Move up into the right. If you will post post COVID-19 and the ensuing.
Nicolas: Sort of challenges that came out of that.
So we would like some good opportunities there as well.
Nicolas: Geographically, we continue to diversify our guys.
Nicolas: Our focus on the.
Nicolas: The more household name markets, but some of the others that don't get mentioned as much in it.
Nicolas: If you refer to our geographic diversity.
Nicolas: Figure 14.
Nicolas: You'll know some are noticed some some new adds to that list.
Nicolas: For example, we've.
Speaker Change: <unk> increased our our presence in Utah Mason Ross out of our San Francisco Office.
Nicolas: Been a lot of <unk>.
Nicolas: So great press about San Francisco, and Seattle, those are markets that Mason cover so he's been working very diligently to uncover opportunities in other markets within his regions and successfully so so.
Nicolas: We have always said that quality is job number one and so our guys.
Nicolas: We're working to address those quality opportunities with with new sponsorship, adding to the fold in terms of.
Nicolas: Customers that we have not yet done business with and where we're seeing success there and some of these markets.
Nicolas: That you.
Nicolas: You wouldn't have seen previously.
Speaker Change: There's been a lot of and we will continue to be a lot of industrial development, along our border with Mexico and Victor Reynoso here in our Dallas Office is.
Speaker Change: You've done a great job of originating some industrial along the border in different markets. There. So.
Speaker Change: On the.
Speaker Change: Those are just some examples where we're seeing some some good economic activity some good.
Speaker Change: Sponsorship that in some cases, we've done business with in other markets or we have not yet done business with before and have great track record.
Speaker Change: But.
Speaker Change: Again, the what is continues to be a good bit of multifamily.
Speaker Change: We're we're picking our spots there because there has been a fair amount of construction, but.
Speaker Change: You have to remember when we originated multifamily loan today, that's going to open in three years and there is.
Speaker Change: The supply buildup.
Speaker Change: That we saw.
Speaker Change: Especially sort of coming into 'twenty. Two is has dropped off significant significantly absorption continues to.
Speaker Change: To sort of mop up that excess supply.
Speaker Change: And when you look three years out we will actually deliver some of that multifamily product.
Speaker Change: There it looks to be a real opportunity for our sponsors to capitalize on favorable market conditions. So.
Speaker Change: Yes that is.
Speaker Change: The what and the where around our ESG as originations currently.
Speaker Change: Perfect. Thank you for that.
Speaker Change: Then just thinking a little bit more about the handoff strategy for this year and unpacking some of the growth there.
Speaker Change: In the quarter, just like fund finance was a big part of the growth.
Speaker Change: I'm curious if that's an area where you think you took advantage of some resurgence in activity levels or if it was more just idiosyncratic as youre starting to win new business there.
Jake: Jake that's yours.
Jake: That's a good question I appreciate it.
Speaker Change: Some of it is just timing.
Speaker Change: As we've reshaped the CIB and brought fund finance, adding and we're blessed that Peru will join us in markets just to there.
Speaker Change: <unk> been able to kind of turn up the heat that book, but beauty.
Speaker Change: <unk> as a whole.
Speaker Change: And that connectivity to some really good sponsors around the country, a lot of which were rather untapped pre.
Speaker Change: Previously and so under this kind of rework CIB.
Speaker Change: Organization that is allowing us to kind of hone in and really kick start that fund finance group once again and improve originations as a whole from an actual deal counts UBS app, our corporate banking in sponsor finance, which you can view as more of our general C&I team.
Speaker Change: Which also achieved the average highest yield.
Speaker Change: The book.
Speaker Change: The fourth quarter from an actual loan count surpassed the other business units such as typically smaller.
Speaker Change: One sizes.
Speaker Change: Great question, we expect CSF on finance, the FCS ABL G. All to continue to grow.
Speaker Change: In the coming quarters. So we're excited about that and we're excited to look at other opportunities that might be in the market for additional.
Speaker Change: Kind of.
Speaker Change: Business lines that could also benefit our growth.
Speaker Change: Future and that we are equally as happy with Tim.
Speaker Change: <unk>, New house, and Rachel and Derek and everyone else on our.
Speaker Change: And Ryan in our loan syndications and corporate services team as they've really.
Speaker Change: Things up and started our gas, which allowed us to lead deals and generate additional fee income our interest rate hedging solutions, we've been blessed where we have that up and running and we've actually executed on some caps and swaps.
Speaker Change: Generate some additional fee income.
Speaker Change: As well as our real estate capital markets and other like business services.
Alice: Under Alice Yes, so we're on a roll and we're looking forward to the next year and we're optimistic.
Alice: Perfect. Thanks for taking my questions.
Alice: Thank you.
Alice: Thank you Amit for next question.
Speaker Change: Hello, and your next question comes from the line of Michael Rose of Raymond James Your line is now open.
Michael Rose: Hey, good morning, guys. Thanks for taking my questions. Just the first one I don't think its been asked about the buyback I guess the way the management comments reads it looks like.
Michael Rose: The way I read it as it looks like Youre going to see an increase in repurchase I just wanted to get a sense for what the.
Michael Rose: Updated parameters could look like that would cause yourself to buy back some more stock.
Michael Rose: Thanks.
Speaker Change: Im not yours.
Michael Rose: Yes, Michael.
Michael Rose: As we said in the comments.
Michael Rose: Our planning on increasing the parameters in which.
Michael Rose: Or tranches as we have them for which we buy.
Michael Rose: Buyback.
Michael Rose: Now how many we buyback is dependent on our stock price so that may.
Michael Rose: They are not result in more share repurchases as well but.
Michael Rose: We're really close to to buying some in Q4, we just didnt quite hit our tranche.
Michael Rose: And.
Michael Rose: And even early January saying same thing but.
Michael Rose: We do plan to.
Michael Rose: Increase the parameters, which may or may not result in more repurchases.
Michael Rose: Alright, and maybe just one follow up a lot of questions today about the handoff between <unk> and.
Michael Rose: CIB.
Speaker Change: George as you think about the kind of intermediate to long term interplay can the company be as profitable as it has been because CIB loans are going to inherently have.
Speaker Change: Lower lower yields than rescue loans, but also will come with deposits, which are being offset so just trying to get a sense for.
Speaker Change: Is like a 2% ROA or above where you've historically operated or is that still on the cards or should we kind of level set expectations is that the mix of business shifts. Thanks.
Speaker Change: Yes.
Speaker Change: Good question.
Speaker Change: There are elements with an R.
Speaker Change: CIB group that.
Speaker Change: Generate comparable.
Coupon rates to our ESG lines and.
Speaker Change: Sure.
Speaker Change: Jay mentioned.
Possibly bolting on additional business line or two to that unit, where Andy mentioned, we're toying with it <unk>, probably a little of wake word where.
Speaker Change: We're pretty deep in looking at that and some of these additions could also generate comparable or even better yields.
Speaker Change: With the low risk profile were looking forward so.
Speaker Change: I'd tell you across the board in the CIB, yes. The premise is correct, even though some units will add higher yielding premises correct.
Speaker Change: The average coupon is probably going to be less than the average coupon.
Speaker Change: We got on loans in our ESG, but we do get.
Speaker Change: Treasury management fees and collateral inspection feeds and used.
Speaker Change: Used fees and various other fee elements.
Speaker Change: Both loan and treasury function related fees that will come from the CIB portfolio, and we will get a higher.
Speaker Change: Volume of deposits as a percent of loans coming from that so I think.
Speaker Change: When you.
Speaker Change: Factor all of that and.
Speaker Change: Overall return on assets return on equity is pretty comparable.
Speaker Change: We hold extra capital today because of our CRE concentration.
Speaker Change: As <unk> grows.
Speaker Change: Our ESG grows but becomes less of a concentrated part of our balance sheet than it is today over time, we can begin to work those capital ratios too.
Speaker Change: A little more typical for the industry sort of capital ratio level and that should actually allow us to maintain or even enhance our return on equity as a result of Ari.
Speaker Change: <unk> Bey, the loading and the concentration of our ESG.
Speaker Change: So I think that ROI.
Speaker Change: Not too much difference I think in the short run not too much difference.
Speaker Change: But as we get to three five years out and can be more efficient with our capital allocations.
Speaker Change: Because of the diversity of our balance sheet I think it will actually improve our Roe.
Speaker Change: That's the that's the working premise in Antioquia.
Speaker Change: Got it and maybe just one quick follow up just as it relates to kind of what a typical CIB credit looks like in terms of size because when you start out in resi right you were doing smaller loans and you eventually scaled up and now you're doing the largest some of the largest construction projects in the country is that a similar goal with CIB.
Speaker Change: Because you would get larger in CIB, though the coupon would inherently the last one I think we see that with kind of large corporate lending versus small and mid sized corporate lending.
Jake: No, but I'm going to let J gave you the real color on that so Jake.
Jake: Talk about what you think our loan size diversification profile within the <unk> base.
Jake: Yes.
Jake: It's a great question to ask.
Our loans are going to be.
Jake: Noticeably smaller than than our ESG on the average.
Jake: On average if you look at fourth quarter average loan size variant between call it $30 and $60 million on the on the CIB side versus our ESG, which can be a bit more sizable I think the key element to think about in the CIB as what relationship focused banking. So we're following the footsteps of our ESG.
Jake: All of the other legacy business lines.
Jake: And so with that within the CIB, we're going to commit the dollars necessary to have the relationship with the customer where we've got a seat at the table.
Jake: We're helping to design the structure and the terms of the deal where we can cross sell some of those needed products as George alluded to whether that's treasury or interest rate services are fantastic private banking and private client services, whatever that might be that our customers need our relationship focused.
Jake: And so that dollar amount per deal is really going to depend on that and so if you look at the broader book $92 95, plus percent of our deals are going to be a single lender. They are going to be two bank club deals with 100% voting rights and direct access to management work their broader indications there are opportunities, where we're either leading or where the <unk> or another <unk>.
Jake: <unk> title and so we're not here within the CIB too.
Jake: Just by painfully, but not what we're doing that's not what we're going to do our relationship focus and so those dollars that will come in.
Jake: Are going to be dictated by the overall relationship and so.
Jake: As a whole most of the CIB loans are going to be well under 200, most likely at well over under $150 million to $100 million holds.
Jake: But at the end of the day, we're going to do what's needed to believe theres opportunity to harvest the best economics for US, but also provide the best services products and customer service for our clients and end users.
Jake: And our I would remind you also that we announced a quarter or two ago.
Jake: The action with the activation of our capital markets desk, and say you have a in our ability to.
Jake: Syndicate loans buy and sell and so for that.
Jake: We've announced that going forward, our single project, how old limit. Our ESG is is $500 million, where you've only originated at a handful of loans ever over that we only have two over that threshold now and.
Jake: Don't really consider that to be a restraint to our business, but actually an opportunity to do even larger transactions in our ESG, but to do them on a syndicated basis, so that capability of our capital markets desk.
Jake: Within CIB is really going to help us.
Jake: Achieve I think greater growth in our ESG, even though we've put that.
Jake: Fairly on restrictive SaaS alignment on our ESG single credit transactions.
Speaker Change: Perfect I appreciate all the color thanks, guys.
Speaker Change: Thank you Juan for next question.
Speaker Change: Our next question comes from the line of.
Speaker Change: Brian Martin of Janney. Your line is now open.
Speaker Change: Hey, good morning, everyone.
Speaker Change: Morning, Brian.
Brian Martin: Hey, most of my things have been answered George just maybe a couple of minor things.
Brian Martin: Comments about the yields within the <unk> and the <unk>.
Brian Martin: CIB group this quarter can you give any commentary on just.
Brian Martin: Now that we've got a nice quarter under our belt, just kind of looked at it.
Brian Martin: Between the yield difference between those two this quarter I know its general given all the different types of particularly in the both units.
Brian Martin: Any kind of commentary on just how to think about what the yields look like this quarter.
Brad: Yes, Brad.
Speaker Change: Ryan I would tell you that I.
Speaker Change: I am not going to get specific in our numbers, there and honestly I don't have those weighted average origination yields for each portfolio in front of me, but.
Speaker Change: It's been consistent with our commentary so <unk> been a little lower spread than our ESG, but augmented with.
Speaker Change: Various fees and deposit opportunities.
Speaker Change: I think that the general direction has certainly been borne out in the most recent quarter's results.
Speaker Change: Gotcha, Okay, and then should we expect any.
Speaker Change: Lumpiness, if you will within.
Speaker Change: The CIP group as you kind of look forward I mean should it be pretty consistent by quarter. There is is there lumpiness, we should expect it.
Speaker Change: With the different business units within within CIB.
Speaker Change: Yes, I think it will be less lumpy than our ESG is bad.
Speaker Change: Two youre dealing with.
Speaker Change: A single sector of the economy.
Speaker Change: <unk> dealing with multiple teams working across multiple sectors of the economy.
Speaker Change: <unk>.
Speaker Change: And our ESG, you've got a bigger average deal sizes Jade did a good job of describing probably by a multiple of two versus CPI based so the smaller deal size.
Speaker Change: More.
Speaker Change: Significant number of originations, but probably we'll have more originations in CIB than our ESG.
Speaker Change: I think in time as they get their full momentum going so.
Speaker Change: No.
Speaker Change: All of that I think leads to less lumpiness in more kind of things leveling that averaging out with the CIB portfolio.
Speaker Change: Gotcha, Okay, and then just the last two for me was just the the opportunities on the.
Speaker Change: On the fee income side can you give any I mean, it looks like the fees have kind of stepped up a little bit here. The last couple of quarters here.
Speaker Change: Should we be thinking about continued gradual ramp as you.
Speaker Change: As you get more traction on the CIB group and kind of the initiatives there and as we think into 'twenty five.
Speaker Change: Yeah, but that's certainly our hope and expectation.
Speaker Change: As Jay sort of alluded to it and say it this way right.
Speaker Change: I think you can draw the conclusion permanence comments that those guys are just getting started and.
Speaker Change: So yes I.
Speaker Change: I would expect.
Speaker Change: Elements from that too.
Speaker Change: Steadily ramp up.
Speaker Change: At a slow rate, but steadily climbing as they grow their business.
Speaker Change: Got you, Okay, and then the last one I don't know if anyone asked.
Speaker Change: Oreo property and just kind of a delay there can you give any commentary on how you're thinking about that is it likely just to go back to re marketing at this point or is there still hope that the <unk>.
Speaker Change: Sure.
Speaker Change: It's back.
Speaker Change: Our prospective buyer on that property.
Speaker Change: Paid a $6 million in either phase or are non refundable earnest money, but now we can.
Speaker Change: Captured when we cancel that contract and applied after the end of the quarter, we applied the capture of that $30 million of non refundable money and applied it to the loan.
Speaker Change: The sponsors are busy guy.
Speaker Change: This perspective Parcher serves a busy guy and he's got his focus on a lot of different things.
Speaker Change: They saw.
Speaker Change: Same to casually sort of wander past the December 31 deadline.
Speaker Change: Yes.
Speaker Change: Mike.
Speaker Change: <unk> payments.
Speaker Change: On our loan.
Speaker Change: Not folks who deal with things casually so.
Speaker Change: We notify them of that base.
Speaker Change: We'll deal with it we are working on this and this and they didn't deal with it. So we just send them a notice to us.
Speaker Change: The notice.
Speaker Change: Notice to the title company to close the escrow incentives the earnest money.
Speaker Change: We're continuing to have discussions.
Speaker Change: With them about reinstating that contract.
Speaker Change: We're open to that.
Speaker Change: We're obviously going to get equal or better economics there.
Speaker Change: We had and theyre going to have to do.
Speaker Change: Demonstrate to us there.
Speaker Change: Yeah.
Speaker Change: Got to be respectful and serious about the timelines and their obligations there staking on if they do that if that happens that's fine if it doesn't we're worried market property.
Speaker Change: Too soon to know exactly which way that's going to go.
Speaker Change: Okay understood.
Speaker Change: Thanks for taking the questions and congrats on a great year.
Speaker Change: Thank you so much pretty excited.
Speaker Change: Thank you. This concludes our question and answer session I will now turn it back to George Gleason for closing remarks.
George Gleason: Let me close with one closing remark as we noted at the end of our management comments next quarter, we're going to change the time of our quarterly earnings call. So that it is outside of market trading hours.
George Gleason: As we get to be a bigger company and have more shareholders in.
George Gleason: Fourth we just think we probably need to get the call outside of trading hours. So we're going to do that I don't want to we're telling you about it now so no one read anything into that.
George Gleason: For next quarter, we're just that's kind of become a regular normal time to be outside of trading hours.
Speaker Change: I'll announce the details of that when we announce the earnings call and time to release earnings next quarter. Thank you so much Greg.
George Gleason: Thanks for joining today's call that concludes our call.
Speaker Change: Thank you for your participation in today's conference does this conclude the program you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Hi.