Q4 2024 SB Financial Group Inc Earnings Call
Good morning and welcome to the S&P Financial fourth quarter 2024 conference call and webcast. I would like to inform you that this conference call is being recorded and that all participants are in a listen only mode. We will begin with remarks by management and then open the conference up to the investment community for questions and answers.
Today's presentation may contain forward looking information cautionary statements about this information as well as reconciliations of non-GAAP financial measures are included in today's earnings release materials as well as our SEC filings.
These materials are also available on our website.
Participants to refer to them for a complete discussion of risk factors and forward looking statements.
These statements speak only as of the date made and SB financial undertakes no obligation to update them.
Speaker Change: I will now turn the call over to Mr. Klein.
Klein: Thank you Sarah and good morning, everyone welcome to our fourth quarter 2024 conference call and webcast.
Klein: And it's 24 was definitely a year of expansion one of some resilience.
Klein: Disciplined execution of our company, despite a challenging economic environment marked by rising funding cost and evolving market dynamics, we delivered solid results underscoring the strength of our diversified revenue business model and our commitment to our key strategic initiatives.
Let me begin by highlighting some of our key achievements for the quarter and for the full year.
However, before I begin I would like to congratulate the SB financial in Marblehead teams on successfully closing on the acquisition of the Marvell had bank debt.
Klein: <unk> this past Friday.
We look forward to a very productive 2025, where we can provide the marblehead clients and employees with all of that state bank team and our business lines have to offer.
Klein: Highlights for the quarter include net income of $3 6 million with diluted EPS of <unk>, 55, which is down slightly compared to the prior year.
Klein: However, when we adjust for the servicing rights impairment in the visa B shares sale in 2023, EPS would be up 7% over the prior quarter or 16, 7%.
Klein: Tangible book value per share ended the quarter at $16 up from 14, 98, or a 7% increase.
Klein: Net interest income totaled $10 9 million, an increase of 13, 7% from the $9.6 million in the fourth quarter of 2023.
Klein: From the linked quarter margin revenue accelerated at a 28% annualized pace.
Klein: Loan growth for the full quarter was $46 5 million up four 7% in this quarter Mark the third.
Klein: Second quarter of sequential loan growth.
Klein: Our Columbus region led by our newer regional President Russell delivered the bulk of that growth or $57 million and ironically, 113% of our net growth.
Klein: Deposits were stable to the linked quarter and were up over 82 million to 1.15 billion.
Klein: Growth in our deposit base was consistent with 80% of our office reporting higher deposit levels as compared to the prior year.
Klein: This growth demonstrates the benefit of our relationship driven approach and our ability to attract and retain clients in a highly competitive rate environment.
Klein: Mortgage originations for the quarter were $73 million for the year, we originated $261 million.
Klein: Northwest, Ohio area of $74 million, or Indiana market 70 million Columbus $114 million in our new Cincinnati market three months.
Klein: The $261 million growth, while still arguably well below our capacity was an increase over 2023 by $45 million or 21% as the second half of 'twenty 'twenty four delivered over 55% of our total 'twenty 'twenty four volume.
Klein: The servicing portfolio improved to 143 billion, which was up from both the prior year by four 4% handle next quarter by 6%.
Klein: Operating expenses were flat to the linked quarter and up six 1% compared to the fourth quarter of 2023.
Klein: And finally, well charge offs.
Klein: Levels were slightly elevated in the quarter of seven basis points, our remaining asset quality metrics were consistent with prior quarter.
Klein: Our strategic path forward remains hinged on those five key strategic strategic initiatives as we mentioned in prior quarters, that's growing and diversifying revenue.
Klein: More scale for efficiency more scope for more households, more services in those households, certainly operational activity.
Klein: And finally asset quality.
Klein: Looking a little closer at revenue diversity.
Klein: The mortgage business line into 2024 on a relatively high note delivering volume as I mentioned, the $73 million higher than the linked quarter and up substantially from the prior year.
Klein: Most importantly, as I mentioned, we were able to deliver 21% higher volume down 2023, and what was still a fairly tough year for this business line stroke.
Klein: Strategically in 2024, we achieved several milestones with our Indiana team nearly becoming our second highest volume region and just five years.
Klein: And are well underway to delivering a $100 million year in 2025.
And our newest region of Cincinnati was able to generate 12 loans or $2 6 million and volume and just a very few short months.
Klein: We expect to add originators originators and that market and generate substantial volume.
Klein: In 2025.
Klein: Noninterest income was up slightly from the linked quarter and $4 6 million when we adjust the prior year for the sale of our visa B shares year over year increase was 479000 or 11, 8%.
Klein: The wealth and title businesses have improved throughout 2024 as they've been the beneficiary of our internal referral process.
Klein: We've seen commercial title revenues to plant the reduced residential volume in our peak title to remain flat to the prior year as residential volume reflected stress.
Klein: Yeah.
Klein: Likewise positive results from our brokerage business, which realized a great deal on the client and internal referrals.
Klein: Delivered an increase in brokerage revenue of over 73% compared to the prior year.
Klein: Let's go to scale.
Klein: A key highlight for the year was the successful acquisition as I mentioned, the Marblehead Bancorp that we completed January 17th.
Klein: This all cash acquisition expands our presence into Ottawa County, Ohio, strengthening our market positioning and a higher growth area, while creating new opportunities to deepen marblehead existing client relationships and deliver a more diverse pallet of tailored financial solutions for their existing and new clients.
Klein: This milestone reflects our deep commitment to serving our growing customer base and driving long term shareholder value.
Klein: I'm proud of our team as we were able to close on this transaction very quickly given the execution of the merger agreement.
Klein: Just August.
Klein: Again as I indicated earlier deposits from the linked quarter were stable and were up substantially from the prior year by over $82 million or ability of this past year are to quickly pivot and expand our client deposit relationships via the state of Ohio, Homebuyer, plus program was certainly meaningful to our results.
Klein: <unk>.
Klein: We anticipate 2025 to be another solid year of deposit growth.
Klein: As we add the 50 plus million from Marblehead and returned to more intentional C&I base growth.
In both our legacy markets as well as our new growth markets.
Klein: Overall loan growth for 2024 was.
Klein: Below our pre COVID-19 traditional levels of approximately 8% when we saw the second half of the year improve dramatically, especially in our newer Columbus market.
Klein: Since June of 'twenty 'twenty, four total loans have improved by $41 million or an eight 2% on an annualized basis.
Klein: Also to note we are consciously place less emphasis on growing residential real estate portfolio loans, instead, concentrating on a higher saleable strategy and allow portfolio amortization two bedroom mature.
Klein: In fact for the year, the residential portfolio was down nearly $10 million.
Klein: Normalizing our portfolio to exclude residential real estate would result in our loan growth rising from 47 million to over $57 million again, and adjusted eight 3% growth rate.
Klein: We continue to balance capital needs for growth and the return of capital via dividends and share buybacks to our stockholders.
Klein: This quarter, we were fairly aggressive on our buyback with over 130000 shares being repurchased.
Klein: For all of 2024, we returned nearly $8 5 million daus.
Klein: Dollars to our shareholders via buyback and dividend or approximately 74% of our net income.
Klein: In terms of deeper relationships more scope.
Klein: As we have discussed in our prior quarters, our expanded contracts that contact center is up and fully operational.
Klein: For all of 2024, we had more than 105000 client interactions.
Klein: Long term, we think this strategy will build both brand awareness and greater brand loyalty.
Klein: Organic expansion was a key part of the conversation for us in 'twenty 'twenty four we added the MLR was in several of our legacy Marsh to take advantage of competitors, leaving the business line and we also added six MLR rose and our growth regions of Indianapolis and Cincinnati.
Klein: We expect that the did the addition of the two offices of Marvell had this year will provide additional opportunities to deliver even greater organic balance sheet growth and saleable mortgage originations.
Klein: Operational excellence.
Klein: As we discussed total mortgage volume was 21% higher compared to 28, 23 and $261 million.
Klein: And equally important to the success of our business model, we sold 83% of the volume in the secondary market.
Klein: The purchase market was the dominant player again this year like 2023 as.
Klein: As we saw purchase and construction volume encompass 88% of our total down slightly from 92% in 2023.
Klein: In addition, our internal refinance volume was just three 4% of our 2020 for production.
Klein: Finally asset quality.
Klein: Charge offs spiked a bit in the quarter to seven basis points, but we're still quite low for the year at just two basis points overall.
Klein: We also expect that the three commercial credits that increased our nonperforming loan levels beginning in the third quarter will resolve themselves in the first half of 2025.
Klein: Our current expert expectations are for those credits to be unwound with minimal financial impact.
We continued also to see significant improvement in our criticized and classified loans, which were down to $6 4 million from 9 million in the prior year or a reduction of $2 6 million or <unk> 29 per cent.
Speaker Change: I'll now ask Tony Cosentino, our CFO to give us a little more information on our quarterly performance and annual performance Tony.
Tony Cosentino: Thanks Mark.
Tony Cosentino: And again good morning, everyone. Let me outline some additional highlights of our fourth quarter and full year results first let's take a look at the income statement, our net interest income.
Tony Cosentino: In the fourth quarter net interest income was $10 9 million up $1 3 million or 13, 7% compared to the same quarter last year.
Tony Cosentino: This growth reflects the higher loan balances and improved asset yields.
Tony Cosentino: Even that is funding costs rose slightly.
Tony Cosentino: For the full year net interest income totaled $39 9 million at 1.7% increase over 2023.
Tony Cosentino: The stabilization of funding costs and to a lesser extent loan growth, that's driven that margin improvement.
Tony Cosentino: For the quarter cost of interest bearing liabilities was 2.36% up just three basis points from the prior year and from the linked quarter was down 17 basis points.
Tony Cosentino: And our deposit cost of funds is likewise improved to 1.78% down 16 basis points from the linked quarter, However, up 16 basis points from the prior year.
Tony Cosentino: As we look at noninterest income for the quarter. It was $4 6 million down from $5 5 million in the prior year, but up 10, 5% from the linked quarter.
Tony Cosentino: I would note that results for the fourth quarter last year included $1 5 million in gains on the sale of securities, which did not occur in the fourth quarter of 2024.
Tony Cosentino: Gains on mortgage loan servicing rights and wealth management fees contributed to the sequential improvement.
Tony Cosentino: Reinforcing the value of our diversified revenue streams.
Tony Cosentino: For the full year noninterest income declined by 4% compared to the prior year, but still accounted for 29, 5% of total revenue.
Tony Cosentino: This performance was supported by wealth management and other fee based business lines. Despite challenges in the mortgage SBA entitled insurance sectors.
Tony Cosentino: As we look at the provision for credit losses.
Tony Cosentino: We reported an actual credit of 76000 in the fourth quarter due to the reduction in our unfunded commitments.
Tony Cosentino: See some model is reflective of the improvement in the economic factors, which drove no increase in our allowance level this quarter.
Tony Cosentino: And our nonperforming levels continue to include no Oreo R O a L and as Mark indicated we believe this level is the high watermark, we will experience for the coming three to six quarters.
Tony Cosentino: On efficiency the efficiency ratio for the quarter was 71.1% slightly up from 68, 4% last year.
Tony Cosentino: Due to the rising funding costs.
Tony Cosentino: However, operating expenses remain well controlled totaling $42 9 million for the year, just slightly higher than the 23 levels.
Tony Cosentino: This reflects our commitment to balancing growth investments with disciplined expense management.
Tony Cosentino: As we turn to the balance sheet on loans as Mark mentioned total loans ended the year at 1.15 billion.
Tony Cosentino: And with 20% of our portfolio set to reprice over the next 12 months, we anticipate that our yield on earning assets will improve along with the higher anticipated new loan volume and pricing.
Tony Cosentino: Deposits deposit growth followed suit and grew to 1.15 billion on a granular basis low cost transactional deposits accounted for 100% of this growth.
Tony Cosentino: As higher cost time deposits were level to the prior year.
Tony Cosentino: Even with that deposit growth, we managed to increase our loan to deposit ratio to nearly 91%.
Tony Cosentino: And is that and as a result of our growth our overall cost of deposits at 1.86% was well maintained.
Tony Cosentino: Going forward I would expect that the liquidity coming from the Marblehead acquisition and the scheduled amortization of our bond portfolio will fund the majority of our 2025 loan growth.
Tony Cosentino: On capital management during the quarter as Mark indicated we repurchased 130000 shares at an average price of 21, just slightly above the adjusted tangible book value.
Tony Cosentino: For the full year, we repurchased over 250000 shares which was on par with what we have done over the last three years.
Tony Cosentino: <unk> book value per share increased to $16 up six 8% year over year, reflecting the strength of our capital position and our strategic capital deployment.
Tony Cosentino: On asset quality, and taking a little future look.
Tony Cosentino: Nonperforming loans remained low at 53 basis points of total loans with net charge offs of just seven basis points for the quarter.
Tony Cosentino: The allowance for credit losses provided coverage of 274% of nonperforming loans underscoring the robustness of our risk management framework.
Tony Cosentino: And as we look forward you know net interest margin improved in the fourth quarter to $3 three 5% up 18 basis points from the linked quarter.
Tony Cosentino: With a substantial portion of the loans repricing in 2025 and funding costs continuing to moderate we anticipate gradual margin expansion throughout the year, even with some anticipated fed rate decreases at the short end of the curve.
Mark: I'll now turn the call back over to Mark.
Mark: Thank you Tony this has been a bit of a challenging year, but in many ways very satisfying as we've expanded our asset and client base in a number of our regions leading to organic balance sheet growth.
Mark: Made the acquisition, we discussed with significant liquidity increased book value and delivered market appreciation to our shareholders.
Mark: We announced the dividend this past week out 14 half cents per share equating to a 2.83% approximate yield.
Mark: Our total shareholder dividend in 2024 was 56 cents or 33% of our earnings.
Mark: In closing I want to again welcome all the Marblehead clients community stockholders and staff to our company, we remain quite pleased with the potential to grow our new region and a largely untapped market.
Mark: We intend to leverage our higher performance business model into organic balance sheet growth for Marblehead in 2025, and beyond and now we'll open the call up for Investor questions Sir.
Mark: Thank you we are now ready for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Mark: At this time, we will pause momentarily to assemble our roster.
Mark: Yeah.
Brian Martin: The first question comes from Brian Martin with Janney Montgomery. Please go ahead.
Mark: Right good morning, guys.
Speaker Change: Yeah, Brian right.
Speaker Change: Just thanks for the commentary Yeah, just a couple of areas just to touch on you just get some clarification on the mark it sounds like just higher level or Tony on the mortgage.
Speaker Change: You know the investments in both Indiana and Cincinnati it sounded like they should pay some pretty nice dividends here as you look into 'twenty, five with new talent and obviously, the new markets, but just.
Speaker Change: We don't see any change in rates can you just kind of talk about what you think you can add in terms of production just with you know.
Speaker Change: Bringing on new talent in these markets just to kind of get a lower of what we think has potential on the mortgage this year and then if we do get some benefit elsewhere, even even better performance, but just kind of how you're thinking about a floor in terms of originations 425.
Speaker Change: Yeah. Thanks, Brian as you know, we've grounded out in 24 with $260 million to $70 million, which really again, we think is at the trough of the conversation.
Speaker Change: Certainly as I'm sure we've indicated somewhere around where we're looking for something near the 400 million dollar Mark in 25. So we have two producers in Cincinnati and we're looking to build that team down there with two to four additional well we now have nine in Cincinnati and if each of those individuals' do tend to.
Speaker Change: 11 million on average, which is kind of about the watermark today for MLR was up given our traditional portfolio of products as well as salable products.
Speaker Change: So I would say Brian that that 400, Mark is kind of what we're shooting for we certainly know and we all know about how tight that is to the you know the 10 year Treasury and you know where rates are but we've been able to compete though we've been nicely competitive in the construction phase in.
Speaker Change: Those roll into potentially portfolio deals and sold deals.
Speaker Change: We're trying to make sure that now there are we competitive on putting.
Speaker Change: Putting loans on our books, but more importantly to.
Speaker Change: Move those out of construction and the like and moved to a salable product or that is the emphasis for 2025, but 400 number would be a nice place for us to be in 2025.
Speaker Change: Gotcha, and then people youre going to hire Mark what you said, primarily that is gonna be in the Cincinnati market, that's where you're adding staff or any other markets, you're adding adding folks in.
Speaker Change: Well, we're adding some up in northwest, Ohio here. Some high producers that were very familiar with so right on the cusp of that.
Speaker Change: But going from two to six or so in Cincinnati. It certainly is plausible and as I mentioned, we've gone from.
Speaker Change: Like five and six to nine and that and the market and they're.
Speaker Change: They're they're high producers and they've got a great team and we're at we're expecting.
Speaker Change: As I imagine that $100 million kind of thing out of any of the almost ramped up the number two behind Columbus This year and.
Speaker Change: We're pretty optimistic about where they're at and were pretty optimistic about the two individuals that we have as the nucleus for Cincinnati.
Speaker Change: Got you Okay. That's helpful and then.
Speaker Change: Just in terms of loan growth.
Speaker Change: It sounds as though your the shift maybe a little bit that continues in terms of if we think about 'twenty five the residential portfolio likely continues to still come down a bit and the the commercial.
Speaker Change: You know traditional organic commercial growth is going to be what drives growth. So just kind of how are we thinking about pipeline today and then just organic growth throughout 25. It is that seem right the fill a little bit more.
Speaker Change:
Speaker Change: Reduction in mortgage and then grow up elsewhere, and kind of what that where that nets out to as you think about big picture for the year.
Speaker Change: Yeah.
Speaker Change: Residential real estate arena on P. C. G still exists and survives knowingly that when we do those there's a high probability that they may get refinanced or something else happens to them. We are getting some amortization on that portfolio as we speak.
Speaker Change: But clearly when I'm optimistic about Brian is our current run rate and trajectory of the second half of 'twenty. Four if you look at what we've done in Columbus, a second half 'twenty for virtually all of our growth came in the second half of 2024 and as I mentioned nearly.
Speaker Change: Nearly net all from the Columbus market and right now Steve can give us some numbers, but we booked a fair amount of volume of which has been has been.
Speaker Change: Drawn, but yet we're probably talking a half of it remains yet to be drawn which would give us really.
Speaker Change: Quite honestly, a full half of year of growth just what's already been closed and on the books and Steve has probably got some additional data for US sure Yeah, Brian just piggyback on what Mark's, saying there we are certainly.
Brian Martin: Certainly encouraged on what we see in the Central Ohio region to Mark's point, we have a bit of a tailwind on approved and closed loans with about $30 million yet to draw that we obviously expect to see in the first half to three quarters of the year that doesn't include some loans, we have already approved here in January.
Brian Martin: That will add to that so certainly central Ohio, We remained very bullish on our prospects there and we're seeing you know we'd like to see broader participation of all of our markets. We have seen a couple of participating already in January. So we are certainly encouraged by the momentum. We're seeing this early start to the year, Yeah, I would like to thank Brian we're going to get back to that.
Brian Martin: High single digit 8% as Steve mentioned, we've got four 5% are currently in the bag absent others paying off which always happens, but certainly the run rate. It gives us a pause for optimism in the first half of 'twenty five and beyond.
Speaker Change: Gotcha and.
Brian Martin: And I guess in terms of you know Tony just on the margin and kind of layering in Marvell had I think he talked about I mean, the combination of this loan growth.
Speaker Change: You know some stability or further reduction in funding.
Speaker Change: Maybe we're kind of at a floor at the margin here and it's it's upward from here and then maybe just remind us the.
Speaker Change: The benefit from from Marblehead here, how to think about.
Speaker Change: That as we go into 'twenty five deals closed.
Speaker Change: Right, Yeah, I think you.
Speaker Change: 335 was our was our margin number here in the fourth quarter and I think you know I would say you know that was.
Speaker Change: More positive than I had anticipated you know our ability to reduce funding costs was a little bit better than I anticipated.
Speaker Change: We really didn't lose clients when we were pretty aggressive on moving down rates when when the fed moves. So I thought that was a positive.
Speaker Change: I concur with you I think the 335 is probably our baseline and it it it certainly not going to go up you know kind of double digit.
Speaker Change: Percentage per quarter I would suspect it's going to go up a few basis points here in Q1, and then kind of you know move up a little bit more to that so I would anticipate by the time we finish.
Speaker Change: 25, we're probably at a 350 to $3 55 range in Q4 of 25.
Speaker Change: On Marblehead, you know theyre going to bring 22 million of loans at loan pricing higher than what we have on our books today, probably in the high sixes low sevens on average.
Speaker Change: Their portfolio, which is a pretty pretty strong portfolio.
Speaker Change: We've successfully executed on on liquidating their bond portfolio.
Speaker Change: You know their average cost of funds on the deposit side is call. It 180, 590, <unk> and so we're going to immediately move that into into.
Speaker Change: Overnight at a minimum and we'll and as Steve said, we have a pretty strong loan pipeline that we think is going to drive you know call. It 300 5400 basis points.
Speaker Change: We're still extremely confident.
Speaker Change: In the model and the metrics that we put forward that we're going to be able to have pretty strong EPS accretion from from the transaction you know.
Speaker Change: 15 to 20 cents a share here in 'twenty five, especially since we were able to close it call. It two months earlier than we originally anticipated.
Speaker Change: I hope that kind of leads up some data.
Speaker Change: Yeah.
Much liquidity, Tony I mean, what's the size of that bond portfolio that you redeploy is kind of what was the size of that today.
Speaker Change: Yeah. So you know.
Speaker Change: Total assets for them 60 million, but you know net net they their deposit base is call. It 52 million. So after we kind of clean up everything that's really going to be the liquidity that comes over.
Speaker Change: And and you know they've got $22 million of loans on the books that are going to come over we don't anticipate doing anything with them no liquidation or movement of those so we're gonna have call it 30 million $31 million to $32 million of fresh liquidity to redeploy.
Speaker Change: I think we'll be patient here, given our loan pipeline and in and just anticipate that.
Speaker Change: Because as Steve said most of these have been booked and are going to fund.
Speaker Change: Yeah and.
Speaker Change: Fed funds of $4 60 to five and a half on the short end, we're going to be just fine on on at least being above our current 335 margin at a minimum.
Speaker Change: But we wanted to accelerate that EPS, a recapture as quickly as we can.
Speaker Change: Yep Gotcha, Okay, and then in terms of.
Speaker Change: Credit quality I think.
Speaker Change: I heard the comment that the.
Speaker Change: I guess, there's some potential resolution here of the credit So I guess what was the commentary on the call and maybe I missed it. This was the high watermark kind of on that front and we ought to see a little more.
Speaker Change: Movement down the next couple of quarters is that with pretty minimal loss content.
Speaker Change: Yeah, Brian I think the the credits as referenced earlier that.
Speaker Change: <unk> that nonperforming number in 'twenty four they weren't a surprise to us necessarily these are credits we had been monitoring we have a very robust internal loan review process. So not particularly surprised we do expect as noted resolution or at least a couple of those certainly by mid year had been hopeful frankly, a resolution or at least one.
Speaker Change: Prior to year end, but the court dockets didn't precisely play along.
Speaker Change: That said, we expect absent again that unforeseen shocks improvement in those numbers going forward. We think we've got a pretty good handle on on what's out there and where we are.
Speaker Change: And as we said our munis just to add on.
Speaker Change: We feel our collateral is very strong and we don't think we're going to have any further deterioration. We took some charge offs here in Q4, as we talked about but you know two basis points for the entire year, just kind of a high watermark. We've had for the last three or four years. So we don't anticipate any further declination out of those couple of credits.
Speaker Change: Gotcha.
Speaker Change: I Gotcha, and then in terms of I guess, the the funding of the loan growth Tony It sounds like not much snow, we had deposit growth to expect this year I guess, given the liquidity and you know.
Speaker Change: You know some potential cash flow from the bond portfolio is that fair how to think about the.
Speaker Change: The balance sheet.
Yeah, I mean, I think I I think we have you know call it 55 million of Av.
Speaker Change: Oh funding kind of locked in between the bond amortization and and the Marvel had net liquidity I think.
Speaker Change: You know I'd be disappointed if we don't if we don't grow loans call. It 80 to $85 million to $90 million. This year on a year over year basis that includes you know the $22 million of Marblehead, So call it $70 million or so from where we are so that means we're still gonna have to come up with I'll call. It a 30 million dollar deposit raise.
Speaker Change: Throughout our network, which I think is eminently doable and we do we do all of those.
Speaker Change: We're a little cautious on the homebuyer in a year or two that some of that is going to kind of matriculate. Its way out of this are not the full pool, but a portion of that 50 million will decline by the time, we sit here a year from now and Brian just to tag on to that obviously, we don't want to go generated deposits above the current.
Speaker Change: But if we can do with C&I loans that we have now a greater emphasis on across the board, including incentive plan we.
Speaker Change: We need to generate more of those are lower cost transactional accounts as we all know it will take all of those we can get.
Speaker Change: Certainly Marblehead gives us some greater opportunity because they've been in a defensive mode.
Speaker Change: As we speak but we're going to go on offense, there just like the other markets, but clearly if the market. If the deposits are below the margin. We're gonna go find it but I agree with Tony if we don't need it we're certainly not going to pay.
Speaker Change: A four and a half and 5% for it.
Speaker Change: Gotcha, Okay, and then just the last one for me was just on.
Speaker Change: The expense outlook kind of we layer in Marblehead can you just talk about kind of the that's the run rate expenses kind of starting <unk> and then.
Speaker Change: Yeah, just how that you know the U S.
Speaker Change: When you guys have had has been great. So just trying to understand you know kind of how that run rate trend as you kind of go through 2020 five.
Speaker Change: Yeah. So you know we.
Speaker Change: We did 43 million for the full year and you know if we extrapolate fourth quarter, we're kind of on a $44 million run rate.
Speaker Change: You know I think.
Speaker Change: We've.
Speaker Change: We've spent.
Speaker Change: Fair amount on resources technology and in those kinds of things I think a lot of that is in our rearview mirror, we do have some some.
Speaker Change: Projects, we're still contemplating obviously marblehead is going to bring on an expense base, but it's relatively inexpensive you know.
Speaker Change: For for the size of their structure that you know they don't have a great amount of expenses thats going to cause us outside of our conversions and all those kinds of things, which will take care of but I would think we're you know we're kind of on that.
2.5% to 3.5% growth rate over.
Speaker Change: Kind of where we were here in in Q4.
Speaker Change: But you know we have made it extremely a plane to all of our teams are that the growth in revenue part of the equation is the first thing we're going to talk about it in 2025, we kind of got behind the eight ball in the first part of 'twenty four.
Speaker Change: Expenses rose faster than revenue and we have got to get back to positive operating leverage of one two to one 5% a 1.5 times sorry, because I think that that clearly is the structure, we should be in a given our past reliance on revenue growth.
Speaker Change: Gotcha, Okay, perfect. That's helpful and congrats on a nice quarter here and nice end of the year and then Marvel ideal clothing.
Speaker Change: Yeah. Thanks, Brian Thanks, Brian we're looking forward to a really good 2025 on a number of fronts not the least switches.
Speaker Change: Positive sloping yield curve, which should drive margins a little bit wider than what we have now all things being equal so thanks for joining.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Mr. Klein for any closing remarks.
Speaker Change: Once again, thanks for joining us we certainly look forward to chatting with you again in April in delivering our results for first quarter 2025 optimism remains high and I'm looking forward to reporting results in April thanks for joining and Goodbye.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.