Q4 2024 First Financial Bancorp Earnings Call
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Thank you for standing by and welcome to the first financial Bancorp fourth quarter 2024 earnings conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
Speaker Change: If you would like to withdraw your question again press the star one. Thank you I'd now like to turn the call over to Scott Crawley you may begin.
Speaker Change: Yeah. Thank you Rob good morning, everyone and thank you for joining us on today's conference call to discuss first financial Bancorp's fourth quarter and full year financial results.
Speaker Change: Participating on today's call will be Archie Brown, President and Chief Executive Officer, Jamie Anderson, Chief Financial Officer, and Bill Harrod, Chief Credit Officer.
Speaker Change: Both the press release, we issued yesterday and the accompanying slide presentation are available on our website at Www Dot bank at first Dot com under the Investor Relations section, we will make reference to the slides contained in the accompanying presentation during today's call.
Speaker Change: Additionally, please refer to the forward looking statement disclosure contained in the fourth quarter 2024 earnings release as well as our SEC filings for a full discussion of the Companys risk factors.
Speaker Change: The information we will provide today is accurate as of December 31, 2024, and we will not be updating any forward looking statements to reflect facts or circumstances. After this call I'll now turn the call over to Archie Brown.
Scott Crawley: Scott Good morning, everyone and thank you for joining us on today's call.
Speaker Change: Yesterday afternoon, we announced our financial results for the fourth quarter and full year 2024.
Speaker Change: Before I turn the call over to Jamie I would like to provide some highlights from the most recent quarter recap this year of exceptional performance.
Speaker Change: I'm very pleased with our strong fourth quarter.
Speaker Change: Earnings per share were <unk> 71, leading to return on assets of one 7%.
Speaker Change: And our return on tangible common equity ratio of 19, 9%.
Speaker Change: As expected due to decreases in short term rates by the fed.
Speaker Change: Decline in asset yields outpaced the decline in deposit costs, leading to a reduction of our net interest margin to 394%.
Balance sheet trends were very strong for the quarter with loan growth exceeding 7% on an annualized basis and total deposits surging by approximately 16% on an annualized basis.
Speaker Change: Noninterest income was robust in the fourth quarter with leasing foreign exchange and wealth management income all increasing by double digit percentages from the linked quarter.
Speaker Change: While expenses increased by 5% from the linked quarter. The increase was driven by higher incentive compensation tied to the strong fee income and overall company performance.
Speaker Change: Our workforce efficiency initiatives continued during the quarter. We've eliminated 145 positions to date, we expect to complete this work in 2025.
Speaker Change: Asset quality was relatively stable for the quarter nonperforming assets were flat compared to the linked quarter at three 6% while classified assets increased by seven basis points to 121%.
Speaker Change: The increase in classified assets was driven by the mutually agreed upon termination of a foreign exchange trade, resulting in a 45 million to our obligation from the customer, which we believe is fully collateralized.
Speaker Change: We expect the customer to pay this obligation in 2025.
Speaker Change: Net charge offs were slightly elevated due to the resolution of three loans that have been longer term workouts.
Speaker Change: We believe that overall credit trends are improving and as a result, we anticipate lower credit costs going forward.
Speaker Change: 2024 was an excellent year for our company on an adjusted basis, we earned $249 million or $2 61 per share while return on assets was one 4% and return on tangible common equity was 19, 9%.
Speaker Change: While the net interest margin declined from four 4% to four 5% due to declining short term rates strong loan growth offset most of the impact with net interest income declining by only two 5%.
Speaker Change: Noninterest income increased by more than 13% to a record $241.8 million led by growth in leasing.
Speaker Change: Wealth management income.
Speaker Change: It was record revenue for the company of approximately $854 million, which was a 2% increase over 2023.
Speaker Change: I am very pleased with our balance sheet growth for the year total loans increased by seven 6% to $11 8 billion.
Speaker Change: And total deposits increased by seven 2% to $14 3 billion.
Speaker Change: Additionally, tangible common equity increased by 56 basis points to 773%.
Speaker Change: And tangible book value per share increased from $12 38 to $14 15.
Speaker Change: Which was a 14% increase.
Speaker Change: Similar to fourth quarter asset quality was relatively stable for the year net charge offs as a percentage of average loans declined three basis points to 30 basis points and.
Speaker Change: And nonperforming assets as a percent of total assets declined by two basis points to 36%.
With that I'll now turn the call over to Jamie to discuss these results in greater detail. After Jamie's discussion I will wrap up with some additional forward looking commentary and closing remarks Jamie.
Jamie Anderson: Thank you Archie and good morning, everyone slides four five and six provide a summary of our most recent financial results. The fourth quarter was highlighted by strong earnings and our net interest margin that exceeded our expectations as well as both loan and deposit growth.
Jamie Anderson: Our net interest margin remains very strong at 394, despite a decline of 14 basis points from the linked quarter deposit costs declined 13 basis points during the period.
Jamie Anderson: Loan yields decreased 37 basis points.
Jamie Anderson: Loan growth exceeded our expectations during the quarter coming in at 7% on an annualized basis the.
Jamie Anderson: The growth was not concentrated in one particular area.
Jamie Anderson: Ni ICR, a mortgage and leasing all having strong quarters.
Jamie Anderson: Average deposit balances increased $543 million or 16% on an annualized basis.
Jamie Anderson: We had broad based growth across all product types, excluding savings accounts and high cost brokered Cds.
We maintained 21% of our total balances and noninterest bearing accounts and are strategically focused on growing lower cost deposit balances.
Jamie Anderson: Turning to the income statement fourth quarter fee income was solid led by foreign exchange leasing and record wealth management income.
Jamie Anderson: Noninterest expenses increased slightly from the linked quarter due to higher incentive compensation, which was tied to fee income and our overall company performance.
Jamie Anderson: However, the impact from our efficiency initiative is becoming more meaningful and we expect to see further benefits in the coming periods.
Jamie Anderson: Our ACL coverage decreased four basis points during the quarter to 133% of total loans.
Jamie Anderson: This resulted in $9 $4 million of provision expense during the period, which was driven by loan growth and net charge offs.
Jamie Anderson: Overall asset quality trends were stable NPA is as a percentage of assets were relatively flat at 36 basis points, while fourth quarter net charge offs were 40 basis points on an annualized basis.
Jamie Anderson: This put our year to date total in line with expectations at 30 basis points.
Jamie Anderson: Assets increased seven basis points to 121% of total assets at a single asset offset an otherwise strong quarter of resolution efforts.
Jamie Anderson: From a capital standpoint, our ratios are in excess of both internal and regulatory targets.
Jamie Anderson: Tangible book value was $14 15, while our tangible common equity ratio was seven 730%.
Jamie Anderson: Slide seven reconciles our GAAP earnings to adjusted earnings highlighting items that we believe are important to understanding our quarterly performance adjusted.
Jamie Anderson: Adjusted net income was $67 $7 million or <unk> 71 per share for the quarter.
Jamie Anderson: Noninterest expense adjustments exclude the impact of efficiency cost tax credit investment write downs and other expenses not expected to recur.
Jamie Anderson: As depicted on slide eight these adjusted earnings equate to a return on average assets of 147% a return on average tangible common equity of 20% and our pretax pre provision ROA exceeding 2%.
Jamie Anderson: Turning to slides nine and 10 net interest margin declined 14 basis points from the linked quarter to 394%.
Jamie Anderson: Asset yields declined 31 basis points compared to the prior period.
Jamie Anderson: As loan yields declined 37 basis points and the yield on the investment portfolio increased four basis points.
Jamie Anderson: Offsetting these increases total funding costs declined 17 basis points from the linked quarter as deposit cost declined 13 basis points, while average deposit balances increased 4%.
Jamie Anderson: Slide 11 outlines our various sources of liquidity and borrowing capacity. We continue to believe we have the flexibility required to manage the balance sheet through the expected economic environment.
Jamie Anderson: Slide 13 illustrates our current loan mix and balance changes compared to the linked quarter.
Jamie Anderson: Loan balances increased 7% on an annualized basis with growth in almost every portfolio.
Jamie Anderson: As you can see on the right growth was driven by C&I leasing I CRE and mortgage.
Jamie Anderson: Slide 14 provides detail on our loan concentration by industry. We believe our loan portfolio remains sufficiently diversified to protect us from deterioration in any particular industry.
Jamie Anderson: Slide 15 provides detail on our office portfolio.
Jamie Anderson: Similar to last quarter about 4% of our total loan book is secured by office space and the overall portfolio metrics remained strong.
Jamie Anderson: One office relationship was downgraded to non accrual during the quarter and our total non accrual balance for this portfolio is approximately $26 million subsequent to year end the remaining balance of this relationship of $9 million paid off.
Jamie Anderson: Slide 16 shows our deposit mix as well as a progression of average deposits from the linked quarter.
Jamie Anderson: In total average deposit balances increased $543 million during the quarter with increases in most core product types.
Jamie Anderson: There was a seasonal increase in public fund balances while on the consumer side growth was concentrated in money markets and retail Cds.
Jamie Anderson: Slide seven illustrates trends in our average personal business and public fund deposits as well as a comparison of our borrowing capacity to our uninsured deposits.
Jamie Anderson: On the bottom right of the slide you can see our adjusted uninsured deposits were $3 $7 billion. This equates to 26% of our total deposits.
Jamie Anderson: We remain comfortable with its concentration and believe our borrowing capacity.
Jamie Anderson: <unk> sufficient flexibility to respond to any event that would stress our larger deposit balances.
Jamie Anderson: Slide 18 highlights our non interest income for the quarter total fee income was $70 million during the quarter with Bannockburn and summit, having strong quarters, while wealth management posted record results.
Jamie Anderson: Noninterest expense for the quarter as outlined on slide 19 core expenses increased $6 million. During the period. This was driven by higher incentive compensation, which is tied to fee income and the company's overall performance as.
Jamie Anderson: As I mentioned earlier, we are recognizing more of the expected benefit from our ongoing efficiency initiatives and expect to complete this work in 2025.
Jamie Anderson: Turning now to slides 20, and 21, our ACL model resulted in a total allowance, which includes both funded and unfunded reserves of $174 million and $9 $4 million of total provision expense during the period.
Jamie Anderson: This resulted in an ACL that was 133% of total loans.
Jamie Anderson: Provision expense was primarily driven by loan growth and net charge offs, which were 40 basis points for the period. However, about half of those charge offs have been reserved for in prior periods.
Jamie Anderson: Additionally, our NPA to total assets held steady at 36 basis points.
Jamie Anderson: And other credit trends classified asset balances increased to $1 two 1% of total assets. The largest driver of this increase was related to a single asset that was recorded following the mutually agreed upon termination of a foreign exchange transaction exclude.
Jamie Anderson: Excluding this item classified assets declined $27 million during the quarter.
Jamie Anderson: Our ACL coverage decreased slightly however, we continue to believe that we have modeled conservatively debello reserve that reflects the losses, we expect from our portfolio.
Jamie Anderson: We anticipate our ACL coverage will remain relatively flat or increase slightly in future periods as our motto responds to changes in the EMEA and the macroeconomic environment.
Jamie Anderson: Finally, as shown on slides 22, and 'twenty three capital ratios remain in excess of regulatory minimums and internal targets.
Jamie Anderson: The impact on OCI, the TCE ratio would've been 939% compared to 773% as reported and our tangible book value decreased slightly to $14 15.
Jamie Anderson: Our total shareholder return remains strong with 35% of our earnings returned to our shareholders during the period through the common dividend.
Speaker Change: We maintain our commitment to provide an attractive return to our shareholders and we continue to evaluate capital options that support that commitment I'll now turn it back over to Archie for some comments on our outlet Archie thank.
Archie Brown: Thank you Jamie.
Archie Brown: Before we end our prepared remarks, I want to comment on our forward looking guidance, which can be found on slide 24.
Archie Brown: Loan pipelines remain healthy and we expect loan growth to moderate as we approach seasonal lows and activity and be in the low single digits on an annualized basis for the first quarter.
Archie Brown: The securities we expect the portfolio to remain relatively stable.
Archie Brown: Deposit growth has been very strong the last several quarters. So we expect some of the seasonal flows that came in this past quarter.
Archie Brown: <unk> in the first quarter, causing public funds and business balances to be slightly down.
Archie Brown: Our net interest margin continues to be strong.
Archie Brown: And industry, leading and assuming no additional rate cuts, we expect it to be in the range between $3, 85% and three 9% over the next quarter.
Archie Brown: We expect our credit costs to be modestly lower over the next quarter with the net charge offs lower than the current period ACL coverage as a percentage of loans is expected to be stable to slightly increasing.
Archie Brown: On fee income, we expect to be between $63 $65 million, which includes $11 million to $13 million of for foreign exchange of $19 million to $21 million for leasing business revenue.
Archie Brown: Noninterest expense is expected to be between 128 $130 million and stays stable, excluding the leasing business and fee based incentive expense.
Archie Brown: Related to capital our capital ratios remained strong and we expect to maintain our dividend at the current level.
Archie Brown: During the year, we are excited to add the agile team and I want to thank them for making an immediate contribution to our company.
Archie Brown: We continue to gain momentum in our expansion markets of Chicago, Evansville, Cleveland, Ohio, and at the beginning of 2025, we expanded into Grand Rapids, Michigan with our commercial banking team wed.
Archie Brown: We look forward to the continued growth and success of our expansion strategies.
Archie Brown: Performing at a consistently high level requires an engaged team that is committed to its clients and that's what <unk> described the team here at first financial I want to thank our associates for their outstanding work in 2024.
Archie Brown: We'll now open up the call for questions.
Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad you raise your hand and joined the queue. If you would like to withdraw your question simply press Star one again.
Speaker Change: Your first question today comes from the line of Daniel <unk> from Raymond James Your line is open.
Speaker Change: Thank you good morning, guys.
Speaker Change: Hey, Dan anything so.
Speaker Change: Yes, maybe.
Speaker Change: First you know you you guys.
Speaker Change: Gave guidance for the first quarter I appreciate that on loan growth.
Speaker Change: But it's kind of down from what you did in 2024. So just curious if thats a theres some seasonality in the first quarter number or something unusual there that you expect you would expect.
Speaker Change: To pick up as the year goes on or just.
Speaker Change: Your comments on loan growth throughout the year, but if you have something thanks.
Archie Brown: Yes, David this is Archie we've seen some pickup in payoffs.
Speaker Change: Primarily in the commercial real estate side.
Speaker Change: Now rates dipped a little bit in the mid fourth quarter and the payoffs kind of accelerated and of course, you know rates backed up some by the end of the year.
Speaker Change: But we've got a little bit higher expectation for payoffs on that side of our book.
Speaker Change: Loan activity is good seasonally it's a little bit lower in Q1.
Speaker Change: So it's kind of a combination of those two things, but overall overall pipelines are healthy as we said an outlook from our clients' overall is I think generally positive.
Speaker Change: Okay terrific.
Speaker Change: And I guess, then shifting over to the margin one for Jamie.
Speaker Change: Similar type of question you gave the.
Speaker Change: The range of 385 to 390 in the first quarter, just curious how youre thinking about the rest of the year and how are you.
Speaker Change: The fed funds.
Speaker Change: Cuts would play into that.
Speaker Change: Yes.
Speaker Change: So we have when we gave that guidance for the first quarter and then so in our forecast for 2025 at this point we have a.
Speaker Change: <unk> built into the forecast in June.
Speaker Change: So one cut during the year and our margin essentially remains in that in that $3 85 to $3 90 kind of band so as.
Speaker Change: As we get into the first part here of 25, where we just had to cut deposit costs continue to come down then obviously with the June cut that we have built into the forecast we get an immediate impact from that which will bring the margin down slightly just due to the.
Speaker Change: Due to the contractual nature, obviously, the loan book, where those will come down than deposit costs start to pick back.
Speaker Change: Start to decline again and catch back up in our margin again stays relatively tight within that range of the.
Speaker Change: And that mid <unk> call it.
Speaker Change: Okay.
Speaker Change: Helpful. Appreciate Jamie.
Speaker Change: And then I guess, just a quick last one year for your Chi.
Speaker Change: You guys have been expanding into new markets as you pointed out with the Grand Rapids the latest.
Speaker Change: Here in 2025.
Speaker Change: Just curious kind of the depth of those.
Speaker Change: Investments that youre, making in those markets.
Speaker Change: How how quickly you think they may turn into.
Speaker Change: Meaningful growth for the bank and if theres any other markets that you've got your eye on for for de Novo.
Sandy: Yes, thanks Sandy.
Once we have.
Sandy: I guess opened up in the last year to year and a half I think are performing well both on the loan and deposit side I wouldn't call them rapid growth there steady growth, which is appropriate we want to build relationships not just build assets. So they are going.
Sandy: Well, we've got teams probably in those markets anywhere from if.
Sandy: Chicago was I think around five to seven peoples, Cleveland, maybe just a little bit less four or five people to date.
The team in Grand Rapids, initially is for.
Sandy: They were part of a bank that had a lot of market share. So I think they're hitting the ground running we tend to look at these more opportunistically. So we've got a range of markets that are kind of in or adjacent to the first finished footprint.
We made contact opportunity win when something comes up that provides an opportunity to bring a team and that's I think that's when we we sort of act. So that's how we think about it we don't really have a certain number that we're going to add this year is just again when an opportunity presents itself that makes sense to us we will we'll do that we'll take out.
Sandy: Take the opportunity to capitalize on it.
Sandy: Yes.
Sandy: Alright, great well, thank you for all the color.
Danny: Thanks Danny.
Speaker Change: Our next question comes from the line of Terry Mcevoy from Stephens, Inc. Your line is open.
Hi, good morning, everybody.
Speaker Change: Hey, Terry Terry.
Speaker Change: Maybe just make sure I understand on the expense guide is the FX is in the midpoint of C 12, and leasing is $20 million in the first quarter that trend that's baked into the $120 million to $130 million.
Speaker Change: Of total noninterest expense.
Speaker Change: Yes, that's correct, yes, we get it.
Speaker Change: And so it just kind of working through a little bit of the dynamics there on the expense side from the from the fourth quarter to the first quarter, we get about 1 million and a half or so of increase in expenses was just all the payroll taxes starting over so that's that's part of why you see a little bit of that.
Speaker Change: Increase in the AR and you're not seeing the expenses go down even when we have some of the variable costs going down so that that plays into that fourth quarter to first quarter expense trend.
Speaker Change: But yes. It is included in the $1 28 to 130 correct.
Speaker Change: Okay. Thanks, and then.
Speaker Change: And as a follow up the classified asset it was a.
Speaker Change: Kind of an FX transaction and I guess my question is is there credit risk in there can you talk about the credit risk in that business and do.
Speaker Change: Do you have a specific reserve.
Speaker Change: For that business and just provide a little bit more insight we appreciate it.
Speaker Change: Yes, good morning.
Speaker Change: Yes, the trade itself, we entered into a series of forward contracts.
Speaker Change: With a company that had changes in the value between the USD and CAD.
Speaker Change: And then the macroeconomic conditions in respect to the respective interest rate policies of the central banks.
Speaker Change: Canada and the U S are resolved and CAD depreciation versus the U S D, which has created the negative mark.
Speaker Change: Based on the size, we jointly decided to terminate the trade to lock in a negative position and are recorded as a receivable we have collateral to fully support the receivable, including cash on deposits.
Speaker Change: Mortgages on real estate pledges acquirer, including all of the company's equity.
Speaker Change: Personal guarantees.
Speaker Change: As we do expect to be repaid in 2025.
Speaker Change: Okay.
Speaker Change: I appreciate it thanks for all the color there.
Thanks Terry.
Speaker Change: Your next question comes from the line of Christopher Mcgratty from key BW. Your line is open.
Christopher McGratty: Alright, good morning.
Speaker Change: Okay graphic Chris.
Christopher McGratty: So jamie or RGD.
Speaker Change: The 30 basis, I think you mentioned 30 basis points of charge offs.
Speaker Change: In your prepared remarks is that how you think about normalized losses through the bank.
Speaker Change: I'm sorry is that how we think 30 basis points of charge offs here, yes, I mean, when we look if we look ahead.
Speaker Change: Over a longer window I think if we said to you 25% to 30 basis points feels kind of a kind of a norm.
Speaker Change: The last two years I think 33 was two years ago 30 was last year.
Christopher McGratty: The way, we're starting out this year, we feel like it could be a little bit less than that but if you said over the long term, Chris kind of in that range I'd say, it's right.
Okay. Thanks, and then.
Christopher McGratty: Any kind of comment you can provide us.
Christopher McGratty: Inorganic growth, there's a lot of optimism in the banks for deregulation and you do have a multiple strong capital thoughts on incremental M&A.
Christopher McGratty: M&A.
Christopher McGratty: Yes.
Christopher McGratty: Well I think we all have a little more optimism for lots of reasons, Chris here at least in the next year or two that.
Christopher McGratty: There'll be more opportunities.
Christopher McGratty: I think the windows, So a little more open certainly seems like.
Christopher McGratty: Getting deals approved will be a little bit quicker than maybe in the basketball provides more certainty we're having more active discussions with banks that we think fit our profile and kind of things. We're looking for generally banks in that 1% to $5 billion space and are adjacent to our footprint. So we are having active discussions.
Christopher McGratty: <unk>, but theres really I can't provide any more color than that in terms of the likelihood of something happening.
Christopher McGratty: Alright, perfect. Thank you.
Christopher McGratty: Yep.
Christopher McGratty: Your next question comes from the line of John Armstrong from RBC Capital markets. Your line is open.
John Armstrong: Thanks, Good morning.
Speaker Change: Hey, John.
Christopher McGratty: Okay.
Can you guys talk a little bit about Europe.
Christopher McGratty: Overall noninterest income growth expectations, I mean, you had a good great year in 'twenty four across categories.
Christopher McGratty: Just curious what you think might be possible for 25 on fee income.
Speaker Change: Yeah, John I'll start Jamie make may have something to say here too may generally it's <unk>.
Speaker Change: Excluding leasing business income for a moment I think it's more gradual kind of steady growth.
Speaker Change: If more of the traditional service charge categories wealth continues to do well I.
Speaker Change: I think they will continue to grow at a pace that's been similar to the last couple of years.
Speaker Change: Our swaps has probably been one of the areas has been slowed down so with more activity I think that has an opportunity to improve but I think our.
Speaker Change: Outside of <unk>.
Speaker Change: Leasing business income those numbers feel pretty much like a steady kind of a steady growth kind of trend line leasing business has come of course can move up a little bit more just based on the.
Speaker Change: The amount of operating leases that we add to the to the balance sheet sure. John the only thing that I would add I mean, just on the on the foreign exchange side.
Speaker Change: And then in that capital markets group, we just get.
Speaker Change: There is some volatility to the to that revenue from quarter to quarter I mean, we might.
Speaker Change: But we average roughly.
Speaker Change: And that $15 million to $15 $16 million range, where we get we'll get some chunky quarters. We're at 17 and whatnot, so, but we feel like that business is when you look at it over a over a three or four quarter window, it's just steadily growing 10 or 15% a year.
Speaker Change: Okay. Good thank you.
Speaker Change: And then you guys you prevent a nice slide on agile.
Speaker Change: It's more than doubled can you just talk a little bit about that business and how long you think the runway is in terms of your balance sheet capacity for them.
Speaker Change: Yes.
John Armstrong: John when we when we bought that I think we only brought over around.
John Armstrong: A little over $1 billion and receive a $100 2 million in receivables at the time. So we knew the production numbers, we're going to drive a lot of growth, especially in the first year, but again, even this year I think we're expecting.
John Armstrong: But thats, probably going to grow 25%.
John Armstrong: Year over year.
John Armstrong: Production, probably being a little healthier than last year's production because we got we get first we haven't for the whole year last year, we added for 10 months.
John Armstrong: So production is going to go up a little bit more.
John Armstrong: Two.
John Armstrong: Okay, what exactly the numbers at this point of $2 $52 50 ish for for originations and Thats kind of where we think the balances are going to end.
Over the over the end of the year.
John Armstrong: Okay.
John Armstrong: Okay. Good.
John Armstrong: John Hey, John Hey, John Real quick on that the one thing.
John Armstrong: That on the on the agile side.
John Armstrong: There is some seasonality to their business as well that's why you saw the balances decline in the fourth quarter a.
John Armstrong: A little bit thats not anything that we.
John Armstrong: We purposefully did or anything like that or it was essential that just the seasonality of their business and so we get a.
John Armstrong: A run up in originations really in the middle of the year in the second quarter, and then and then it kind of bleeds off a little bit but they are they are heavy.
John Armstrong: In the second quarter, so thats why youll youll see that more here in 2025 as the.
As the business has stabilized a little bit and we're not ramping up the balances remotely by.
John Armstrong: Okay that makes sense.
John Armstrong: And then and then Bill one for you just on the classified.
John Armstrong: If you take out the FX issue.
Speaker Change: Pretty big step down in classifieds and I'm, just curious how youre feeling about that and do you think we may have hit a peak or is there anything new that you're seeing there concerning.
John Armstrong: Yes, a great question John I appreciate it.
Speaker Change: The Q4, we.
Speaker Change: Finalize resolution on a number of credits that were sitting in the bucket classified buckets for awhile.
Speaker Change: Outside of the trade as you imagine.
We did not have significant inflows.
Speaker Change: And as we take a step back step up and look at our criticized.
Speaker Change: We did have some small increases there.
Speaker Change: But I feel much better about the trajectory based on what we our intake into the substandard and classifieds.
Speaker Change: Positive.
Speaker Change: Okay. Okay. Good alright, thanks, guys I appreciate it.
Speaker Change: Shutdown.
Speaker Change: Again, if you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Okay.
Speaker Change: And there are no further questions at this time I will now turn the call back over to Archie Brown for closing remarks.
Archie Brown: Thank you Rob I want to thank everybody for joining us today.
Speaker Change: Hearing about our quarter and our year.
Speaker Change: We're excited about 2025, and we look forward to talking with you again in a few months have a good day.
Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.