Q4 2024 Bridgewater Bancshares Inc Earnings Call
Speaker Change: Thank you Rocco and good morning, everyone. Joining me on today's call are Jerry Bach, Chairman and Chief Executive Officer jokes about E President and Chief Financial Officer, Nick place, Chief Banking Officer, and Geoff Culbert, Chief Credit Officer.
Speaker Change: Just a few moments we will provide an overview of our 'twenty 'twenty four fourth quarter financial results, we will be referencing a slide presentation that is available on the Investor Relations section of Bridgewater website investors that Bridgewater Bank and then dotcom.
Speaker Change: Following our opening remarks, we'll open the call for questions. During today's presentation, we may make projections or other forward looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. Please.
Speaker Change: Please see the forward looking statement disclosure in the slide presentation, and our 2020 for fourth quarter earnings release for more information about risks and uncertainties, which may affect us.
Speaker Change: The information we'll provide today is as <unk> for the quarter ended December 31, 2024, and we undertake no duty to update the information.
We may also disclose non-GAAP financial measures. During this call. We believe certain non-GAAP financial measures. In addition to the related GAAP measures provide meaningful information to investors to help them understand the company's operating performance and trends and to facilitate comparisons with the performance of our peers. We caution the disclosure should not be viewed as a substitute for operating lease.
Speaker Change: <unk> determined in accordance with GAAP. Please see our slide presentation in 2020 for fourth quarter earnings release for reconciliations of non-GAAP disclosures to the comparable GAAP measures I would now like to turn the call over to Bridgewater, as chairman and CEO Gary Buck.
Speaker Change: Thank you Justin and thank you everyone for joining us this morning.
Speaker Change: Pleased to finish 2024 with a strong quarter, we saw a robust balance sheet growth a return to net interest margin expansion and superb asset quality.
Speaker Change: In addition, we were excited to close our acquisition of first Minnetonka, Citibank, which was completed in mid December.
Speaker Change: Quick turnaround thanks for the efforts of our incredibly talented team.
Speaker Change: We reported adjusted earnings of 27 cents per share, which excludes merger related expenses.
Speaker Change: Or deposit growth momentum continued in the fourth quarter as balances increased $211 million or 31% annualized excluding the deposits acquired from first Minnetonka Citibank.
Speaker Change: Our renewed focus on core deposit growth over the past two years has paid off as our teams continued to expand relationships and onboarding new ones.
On the loan side the pickup in demand we saw in the back half of 'twenty 'twenty four translated into a rebound in loan growth as balances increased 7% annualized in the fourth quarter again. This is excluding the loans acquired from first Minnetonka Citibank.
Speaker Change: We always aim to align core deposit growth with loan growth over time in 2024, including the acquisition, we generated total core deposit growth of 22%, which exceeded loan growth of 4% ultimately, reducing our loan to deposit ratio to 95% the lower end of our range.
Speaker Change: This is important as we look ahead to 2025 after being more defensive minded from a growth perspective over the past couple of years due to challenging market conditions and reduced demand are strong.
Speaker Change: Core our strong core deposit growth combined with the acquisition of first minutes first met a pocket Citibank, having improved our liquidity profile, putting us in a position to be more offensive minded moving forward exactly where we wanted to be.
Speaker Change: As the interest rate environment improves we were pleased to see net interest margin expand eight basis points in the fourth quarter after remaining steady throughout much of 'twenty 'twenty four.
Speaker Change: Contributed to total revenue growth of nearly 9% in the fourth quarter.
Speaker Change: Asset quality also remains superb after net charge offs and nonperforming assets briefly ticked higher in the third quarter due to one central business District office loan both metrics came back down in the fourth quarter. When the office property was sold in December.
Speaker Change: We continue to feel good about the quality of our loan portfolio and the strength of our credit team.
Speaker Change: Perhaps the most impactful thing that happened this quarter was welcoming the new team members and clients. Following the closing of the first Minnetonka Citibank.
Speaker Change: The on boarding process was very smooth and overall response from clients and team members has been positive.
Speaker Change: The lessons, we learned and the processes, we developed through this transaction positions us well as we think about executing on future acquisitions.
Speaker Change: It is worth noting that we received regulatory approval in just 55 days and close the transaction and just the 107 days following the announcement.
Speaker Change: A testament to our relationship with our regulators and the efforts taken to prepare for the deal in advance.
Speaker Change: Turning to slide four over the past few years, we've highlighted our ability to consistently grow tangible book value.
Speaker Change: Key value driver of our strategy.
Speaker Change: After 31 consecutive quarters of tangible book value growth, we saw a modest decline of 3% in the fourth quarter due to the acquisition.
Speaker Change: But still saw a 5% growth for the year.
Speaker Change: Our focus on consistently building tangible book value continues to be an important part of our story and we expect to resume girls in 2025.
Joe: With that I'll turn it over to Joe.
Joe: Thank you Gary turning to slide five returned a steady net interest income growth, it's been a big focus for us.
Joe: We've now seen this for three quarters in a row, including an increase of $1 4 million or five 3% from the third quarter.
Joe: This was the result of strong average, earning asset growth as well as the eight basis point expansion of the net interest margin to $2 30 to the.
Joe: The margin expansion was driven by declining deposit costs and a steady loan yield following fed cuts in late 2024.
Joe: There was a two basis point impact related to first Minnetonka Citibank stub periods net interest income following the deal closed in mid December as well as a one basis point impact from purchase accounting accretion for.
Joe: For the past several quarters, we've been talking about how our balance sheet is well positioned for rate cuts. We were pleased to see that play out in the fourth quarter.
Joe: Slide six provides a closer look at the margin drivers with a large portion of our funding base tied to short term rates. We saw immediate repricing following the rate cuts in 2024.
Joe: We've since begun to reduce rates on other deposit accounts as well.
Joe: We've also seen a positive mix shifts through a reduction in higher cost broker deposits, resulting in deposit costs declining 18 basis points to 340.
Joe: Loan yields held relatively stable during the fourth quarter, Georgia due to our larger fixed rate portfolio, while yields on our smaller variable rate portfolio repriced lower following a 100 basis points of rate cuts.
Joe: New loan originations with a weighted average yield in the high sixes ramped up in the fourth quarter, but we won't see the full impact until the first quarter.
Joe: Given the composition of our portfolio, we would expect to see the loan yield continue to slowly increase going forward. Even if short term rates continue to fall, we still have $680 million of fixed and adjustable rate loans maturing or repricing over the next 12 months at yields below new origination levels overall, we have.
Joe: Expect modest net interest margin expansion in 2025, the magnitude of which will be dependent on future fed moves and the shape of the curve.
Joe: Turning to slide seven you can see that total revenue and pre provision net revenue continued to increase.
Joe: Much of this was due to margin expansion and the increase in net interest income noninterest income was also very strong in the fourth quarter up $1 million or 66%.
Joe: This was driven by higher letter of credit fees due to elevated construction activity and over 500000 of swap fees as swaps made more sense for borrowers relative to other structures given the shape of the curve.
Joe: Looking ahead to 2025.
Joe: Letter of credit fees will likely return to more normalized levels. We may see some additional swap fee income as well as we continue to leverage the product and educate borrowers. However, it is very transaction specific so it is likely to be sporadic.
Joe: The first minute sockets Citibank acquisition did not contribute materially to fee income in the fourth quarter as the acquisition closed in mid December.
Joe: On slide eight expenses continued to be well controlled and track in line with expectations.
Joe: Total fourth quarter noninterest expense of $16 8 million included 488000 of merger related expenses.
Joe: Excluding this the majority of the quarter the increase was related to salary and benefit expense.
Joe: With the acquisition closing in mid December we saw approximately 200000 of stub period expenses during the fourth quarter.
Joe: We've also been pleased to see our adjusted efficiency ratio trend from the high <unk> into the mid fifties over the past couple of quarters.
Nick: With that I'll turn it over to Nick.
Nick: Thanks, Joe.
Nick: Turning to slide nine core deposit growth was a highlight for US again, this quarter as balances increased $211 million or 31% annualized.
Nick: This excludes $217 million of core deposits from the first minute Taco Citi Bank acquisition.
Nick: For the year, we were able to grow core deposits, 13%, excluding the acquired deposits.
Nick: The strong growth during the quarter was a result of bringing on new clients expanding existing relationships and leveraging a new online high yield savings products, we launched in the back half of the year.
Nick: There's a positive mix also improved as we pushed out 75 million of broker deposits in the fourth quarter and nearly $200 million over the course of 2024.
Nick: This was part of a deliberate strategy to optimize the balance sheet for longer term profitable growth.
Nick: As we have said core deposit growth is not always linear from quarter to quarter due to the nature of our deposit base, but we have shown an ability to steadily grow core deposits overtime.
Nick: We expect 2025 core deposit growth to track in line with loan growth keeping in mind that we could see some quarters with larger inflows or outflows.
Nick: Loan growth was also strong this quarter as you can see on slide 10 with balances up 7% annualized excluding $117 million of acquired deposits acquired loans.
Nick: In total we saw full year loan growth of nearly 4% in line with our low to mid single digit target for the year.
Nick: The fourth quarter growth was a result of the increased loan demand we have seen in recent quarters, which translated into a nice uptick in new originations.
Nick: This strong demand has continued as borrowers remain interested in new projects. Following the recent rate cuts as.
Nick: We sit here today, our loan pipeline remains near two year highs.
Nick: That said competition remains stiff and is resulting in tighter spreads while the potential of higher for longer rates and the shape of the yield curve may impact demand moving forward.
Nick: Overall, the strong deposit growth over the past few quarters, including the acquisition of first Minnetonka Citibank has put us in a better liquidity position as our loan to deposit ratio dropped below 95%.
Nick: Couple this with a more favorable environment and we feel we can be more aggressive in 2025, returning to more normalized levels of profitable growth as we target mid to high single digit loan growth for the full year of 2025.
Nick: Yeah.
Nick: Slide 11 provides a closer look at our origination and payoff activity.
Nick: You saw a reversal during the fourth quarter.
Nick: As I mentioned, we saw a large increase in new originations after slowing over the past few quarters. We also saw a seasonal increase in line advances in the fourth quarter, which could create an early growth headwind in 2025 as these balances likely run off.
On the other hand remained elevated but declined from third quarter levels.
Nick: It just means that there continues to be a liquidity in the market, which we can redeploy into new loans at higher yields.
Nick: Overall net loan growth will continue to be dependent upon the levels of new originations and payoffs given the current rate environment.
Slide 12 looks at the mix of the loan portfolio now, including the loans from Philips Minnetonka, Citibank, which made up all of the growth in leases and the majority of the growth in the one to four family mortgages during the fourth quarter.
Nick: We saw strong growth in our non owner occupied CRE and multifamily portfolios.
Nick: Spice to grow the overall mix of multifamily declined slightly due to the acquisition.
Nick: While migration out of the construction portfolio continued we have seen an increase in new construction projects.
Nick: Structuring commitments in the fourth quarter were the highest we've seen since the fourth quarter of 2022, we would expect these to find and translate into balance sheet growth over the next year or so we.
Nick: We remain very comfortable with the overall mix of the loan portfolio, especially with the additional diversification from the acquisition.
Nick: Looking ahead to 2025, we expect to see additional growth across CRE and C&I as well as multifamily where we continue to leverage our expertise in the affordable housing space.
Jeff: With that I'll turn it over to Jeff.
Jeff: Thanks, Nick.
<unk> 13 highlights are multifamily and office exposure.
Jeff: Positive multifamily market trends in the twin cities have continued with vacancy rates well below peak levels as demand has remained elevated.
Jeff: And construction has slowed.
Jeff: The strong labor market and their nation, leading affordability has led to improved absorption levels, all of which suggests a favorable outlook for future occupancy and rent growth.
Jeff: We have also started our 2025 covenant testing for multifamily and non owner occupied CRE portfolios, which we expect to complete about 75% by the end of the first quarter.
Jeff: As in prior years, we will have action plans in place for any issues identified.
Jeff: We remain bullish on multifamily in the twin cities, given the improved market trends and our track record and expertise in this space.
Jeff: Our non owner occupied CRE office exposure remains quite limited at just 5% of total loans.
Jeff: This includes three office properties located in central business districts totaling $26 million.
Jeff: One of these loans is currently rated special mention cash flows today, but has lease rollover risk, which we are monitoring.
Jeff: The other two loans are performing well.
Jeff: You may recall that we took a $935000 charge off on a central business District office one during the third quarter. We mentioned that was under purchase agreement to be sold which was completed in December.
Jeff: We took another $300000 cleanup charge off from this credit in the fourth quarter, whether that's now off our books.
Jeff: The total loss on this loan was about 15% of the principal balance which is reasonable given today's environment.
Jeff: While we feel comfortable with our office portfolio overall, there is still market stress in this asset class for properties, depending on their characteristics characteristics, which is reflected in our risk ratings.
Jeff: Turning to slide 14, our overall credit metrics remained very clean in the fourth quarter with only three basis points of net charge offs and one basis point of nonperforming assets.
Jeff: We recorded a $1 5 million provision in the fourth quarter, which included $950000 for non PCB loans acquired from first Minnetonka Citibank.
Jeff: We also had a $725000 provision for off balance sheet credit exposure related to unfunded commitments.
Jeff: We remain well reserved at 1.35% of gross loans, which is well in excess of peer levels.
Jeff: On slide 15, we are including our first special mentioned rated loan with our watch list loans we.
Jeff: We did see an uptick in watch and special mention bucket due to one multifamily loan, which we were keeping an eye on it.
Jeff: And the addition of first Minnetonka, Citibank watchlist loans subs.
Jeff: Substandard loans declined due to the sale of the Central business District office property I mentioned earlier.
Jeff: We continue to monitor the loan book as well as the interest rate and economic environments, but overall, we feel good about the quality of the portfolio as we head into 2025 and.
Jeff: I'll now turn it back over to Joel.
Joel: Thanks, Jeff Slide 16 highlights our strong capital ratios, which had been steadily building over the past several quarters as loan growth slowed given.
Joel: Given the acquisition completed in the fourth quarter, we saw a modest decline in the ratios. However, <unk> remained above our 9% target.
Joel: Going forward, we expect to continue modestly building capital keeping in mind that we anticipate the pace of loan growth to increase in 2025.
Joel: Given the acquisition, we did not repurchase any shares during the fourth quarter and we still have $15 3 million remaining under the current share repurchase authorization.
Joel: We will continue to evaluate future repurchases based on a variety of factors, including capital levels growth opportunities and other uses of capital.
Joel: Turning to slide 17, I'll recap our expectations for 2025 to.
Joel: To start I would say that all of our assumptions from the first Minnetonka Citibank acquisition remain on track. This includes a 30% cost savings, we expect to realize in 2025 as well as the total merger related expenses.
Joel: And the purchase accounting marks actually came in a bit more favorable than expected, resulting in less goodwill with.
Joel: With the additional liquidity from the deal we expect full year loan growth in 2025 to be in the mid to high single digit range, while maintaining a loan to deposit ratio between 95 and 105.
Joel: We expect continued modest net interest margin expansion in 2025, the pace of which will depend on the rate outlook and the shape of the yogurt.
Joel: As a higher for longer and flat yield curve environment could mute some of the upside.
Joel: We anticipate that purchase accounting accretion will contribute an additional one to two basis points to the margin per quarter in 2025.
Joel: Regardless with some margin expansion and a pickup in loan growth. We believe we will see continued net interest income and revenue growth.
We expect noninterest expense growth, excluding merger related expenses to be in the high teens range for the full year of 2025 supporting the additional assets from the acquisition and anticipated increase in our pace of loan growth.
Joel: Expense growth will be driven by continued investments in our people and technology as well as some redundant expenses until we reach systems conversion.
Joel: Provision will remain dependent on the pace of loan growth and the overall asset quality of the portfolio. We could also see additional provision for unfunded commitments as new construction activity continues.
Joel: I'll now turn it back over to Gerry.
Gerry: Thanks, Joe finishing on slide 18, I want to provide an overview of our strategic priorities for 2025.
Gerry: First and foremost we look forward to returning to a more normalized level of profitable loan growth, we think ramping back up to the mid to high single digits is certainly feasible, especially given the improved market conditions and our stronger liquidity position and we believe we can do this without compromising on credit.
Gerry: Second we aim to continue gaining loan and deposit market share obviously with our growth aspirations. This is a key priority for us every year, but now we have an expanded branch network, adding two new branches through the acquisition and a new de Novo branch scheduled to open in the East Metro later this year.
Gerry: This is an expansion into a growing part of the twin cities with very little competition, and a nice concentration of current and potential clients.
Gerry: We also continue to make inroads in targeted verticals, such as our women's network and affordable housing we have plenty of room to grow in the affordable housing space as we leverage our expertise on national level that.
Gerry: There is an opportunity we are well suited for Eric excited about their commitment to this space.
Gerry: Also over the past several years, we have been the beneficiary of market disruption in the twin cities as several local banks were acquired by out of state buyers.
Gerry: With more of this likely coming in 2025, we know we will see opportunities to add talent and win new client relationships.
Gerry: Third is leveraging our technology investments to support growth.
Gerry: Client experience and efficiencies across the bank.
Gerry: This includes expanding the scope of recent investments.
Gerry: As well as rolling out a new online banking solution for retail and small business clients.
Gerry: It will enable us to expand our product offering making us even more attractive to the client base, we already serve and beyond.
Gerry: Finally, we will focus on the systems conversion of our recent acquisition, which we expect to occur in the third quarter. We are in a great position to ensure a smooth transition.
Gerry: We also want to be ready to execute on any additional M&A opportunities that may become available and make strategic sense for us.
Gerry: Overall I'm excited about the outlook for 2025.
Gerry: The team would support an engaged leadership to continue moving the bank forward. Our team takes time to plan and has proven it can execute independent market forces.
Gerry: We have plenty of opportunities that we intend to take advantage of that will enable us to drive value for the organization and ultimately our shareholders.
Gerry: With that we'll open it up for questions.
Gerry: Thank you well now begin the question and answer session.
Gerry: A question you May Press Star then one on your telephone keypad.
Gerry: Your question. Please press Star then two.
Brendan Nosal: Today's first question comes from Brendan Nosal with coffee. Please go ahead.
Brendan Nosal: Hey, good morning, everybody I hope you're doing well.
Brian: Hi, Brian.
Brian: Maybe just starting off here on the improved growth outlook for 2005, it certainly seems like you've cleaned but more growth than you saw in 2024 can you just talk about how much of that is an increase in credit supply on your part versus an increase in loan demand and the underlying market and then tie that into how that is.
Brian: Due to the funding complexion over the next 12 months. Thanks.
Nick: Hey, Brian This is Nick.
Nick: You know we've always felt that our growth engine is there an operating you know as we mentioned in the prepared remarks, we were very intentional throughout 'twenty for about.
Nick:
Nick: Trying to align our loan growth with our deposit growth and I think we did a good job to do that but exceed in that category. You know as we think about 25.
Momentum that we had in core deposit growth through the fourth quarter and as we've seen that.
Nick: Continuing with our teams and then you layer in the addition of first Minnetonka Citibank I think we feel like we're really positioned to be able to take advantage of the opportunities in our market.
Nick: Pullback in rates did help some some some deals to trend to some transactions to pencil a bit easier in the fourth quarter.
Nick: But that said we continue to get a lot of looks at a lot of transactions that we've been selected by it in the past or in some cases.
Nick: A wider margin on our quotes just to make sure that those transactions were as profitable as we needed them to be given our balance sheet composition and.
Nick: Given the more favorable structure of our balance sheet today, I think we're really positioned well to be able to.
Nick: <unk> be aggressive on the really great deals in the market that we continue to get in front of which should translate to fuel future growth. So we're really feel great about our position and what the process prospects look like for next year.
Nick: Okay awesome. Thanks, Nick.
Nick: Maybe turning to the expense outlook.
Nick: Just pairing up the high teens expense outlook versus the mid to high single digit organic loan growth I mean is that discrepancy just due entirely to.
Nick: The first one coming on to the cost base and I guess in other words is that correlationship between your asset growth and your cost growth still intact.
Speaker Change: Yeah. Good question. Good question Brendan Yes, so I think.
Speaker Change: The the high teens guide like you said, it's if.
Speaker Change: If you if you see the the high single digit loan growth translate which we're confident will.
Speaker Change: Obviously, that's where you get our legacy Bridgewater guide in terms of expenses.
Speaker Change: Yeah, and the other half of that to your point is really just assuming the first minute chocolate city operation I think when we look at it you know there there were 5% of our assets, but 10% of our expense base. So I think you know what.
Speaker Change: We'll spend 25.
Speaker Change: Going through and really trying to rationalize those expenses feel good about the cost saves.
Speaker Change: But obviously, there's certainly some redundancies and duplication that we.
Speaker Change: Worked through throughout 25, so to your point, that's how you get how you back into that at high teens guide.
Speaker Change: Yes, Okay that makes sense, Joe let me sneak one more in I'm, Joe for you I'm going to try and Peggy down on the on the margin outlook, a little a little more here. So core margin was up 90 basis points for the quarter without really any help from earning asset yield side of the equation. So I guess as we look ahead.
Speaker Change: Deposit pricing should still lay down a little more and then you get that more powerful back book loan repricing, which should help to the left side of the balance sheet yields. So what does what does modest margin expansion guide per quarter mean relative to this quarter's nine basis points of expansion.
Speaker Change: Yeah, I mean, it's a good question I think when we think about <unk> I mean, we anticipate.
Speaker Change: Debate similar traction that we saw in the fourth quarter. When we think about the expansion that translated so I think you've you've laid out exactly the dynamics of the balance sheet.
Speaker Change: For context cost to deposits in December was a $3 31, so that's down nine basis points from the quarterly average of $3 40. So I think that will provide some insight on how to think about it.
Speaker Change: But I think overarching I mean, it's yes.
Speaker Change: The rate outlook is obviously very uncertain Paul's pretty noncommittal yesterday in terms of cuts and so we only have one cut baked into 'twenty, five and obviously that explicitly drives.
Speaker Change: The funding side, which we have a significant amount of deposits tied to short term rates and so if you only have one cut in 25, Theres theres less there, but I think for US we continue to look at the rest of the deposit base and really.
Speaker Change: Rationalized expense or deposit costs across the deposit portfolio and we see continued opportunity there and then obviously whiskey the pickup in loan growth.
Speaker Change: While the loan yields.
Speaker Change: We continue to expand I think more importantly, when you put all that together, we're really trying to drive net interest income and I feel like with this return to growth I mean, that's what we're most focused on.
Speaker Change: So the modest guide on the NIM side obviously.
Speaker Change: I think you kind of put that altogether.
Speaker Change: We're confident with and.
Speaker Change: I feel like.
Speaker Change: <unk>.
Speaker Change: Should look similar to two <unk>.
Speaker Change: Okay Fantastic. Thank you for taking my questions.
Jeff: And our next question comes from Jeff <unk> with D. A Davidson. Please go ahead.
Jeff: Thanks, Good morning.
Speaker Change: Joe just.
Speaker Change: To circle back to the margin do you have the December average for the for the margin itself.
Speaker Change: Yes, $2 36 in December.
Speaker Change: Gotcha.
Speaker Change: And the modest growth does that exclude.
Speaker Change: The accretion the one to two basis points is modest in its own right but.
Speaker Change: Does that include the accretion as well or is that accretion would be on top of modest margin expansion.
Speaker Change: No. That's included so full year accretion is right around 3 million Bucks, that's how we get to the one to two basis points per quarter.
Speaker Change: That's included in the modest guide.
Speaker Change: Okay.
Speaker Change: Hum.
Speaker Change: Fair enough.
Speaker Change: And maybe mix on the loan growth guide just attacking the other piece of this would be.
Speaker Change: I would assume there is some assumption of a ring fencing pay off.
Speaker Change: Activity for the year anything to glean in terms of expectations of.
Speaker Change: You expect sustained levels more or less anything on.
Speaker Change: It's a tough number to nail down but anything on payoffs.
Speaker Change: Yes, it's a tough number to pin down I mean.
Speaker Change: As we model forward I think we're expecting sort of similar levels to what we saw in Q4, I think thats, probably a good run rate for us for a little while.
Speaker Change: We feel really good though about our ability to continue to put out.
Speaker Change: Replace those with our with new originations, our Q4, new origination levels.
Speaker Change: Hi, as they've been since the summer of 2022 so.
Speaker Change:
Speaker Change: Even with the elevated levels of path that we've seen over the last couple of quarters I think this.
Speaker Change: <unk> returned to a more normalized level the origination should should allow us to continue to face.
Speaker Change: That headwind and push forward with it for growth.
Speaker Change: Got it.
Speaker Change: And then just a housekeeping.
Speaker Change: On.
Speaker Change: The mapping the merger costs were those largely professional fee.
Speaker Change: Fees and other expenses just trying to line item.
Speaker Change: Where those might come out.
Speaker Change: Yes, that's exactly right.
Speaker Change: 700 Grand was primarily that.
Speaker Change: And then obviously the more operational will translate.
Speaker Change: And 25.
Speaker Change: Okay, Great that's still on track for that.
Speaker Change: Still on track for onetime expenses that we.
Speaker Change: Outlined when the deal was announced.
Speaker Change: Thank you.
Speaker Change: As a reminder, if you'd like to ask a question. Please press star one on your calling from key pad.
Speaker Change: Our next question comes from Nathan race with Piper Sandler. Please go ahead.
Nathan Race: Hey, guys. Good morning, Thanks for taking the questions.
Nathan Race: I'm looking at slide 21 with the roughly.
Nathan Race: 2014, and 15% of your funding base that can reprice lower over the next 12 months.
Nathan Race: Coming off at $4 50, just curious kind of what youre seeing in terms of kind of the replacement rate on that funding based on kind of where your price down Cds today in which you can see in wholesale channels as well.
Nathan Race: The question was on.
Nathan Race: Loan yield on that.
Nathan Race: Deals roll off.
Nathan Race: Oh I'm sorry, it was on the right side of the balance sheet looking at Slide 21, you have about 14% of your funding base is going to reprice lower. This this year. So just curious kind of what the incremental replacement rate. It on the funding based on kind of where your price on Cds today and kind of what you can see in wholesale channels as well.
Nathan Race: Yes. This is Joe So I think we're seeing obviously.
Nathan Race: Better opportunities to reprice their stuff.
Nathan Race: It is now in the high threes, if you want to replace on on a short term Cds.
Nathan Race: Money market opportunities.
Nathan Race: Are somewhat linked to fed funds, but we're able to actually price you know with somewhat of a.
Nathan Race: Fed funds minus on the on the money market side. So continue.
Nathan Race: Continue to also have optionality to call.
Nathan Race: The brokerage CD portfolio, and so I think we've been really mindful with that.
Nathan Race: Always and I think this year, we called almost $200 million of broker deposits, you know north of 5%.
Nathan Race: We're able to call and reissue in some cases or in cases like this last quarter, where we certainly had strong core growth were able just call and not replace and obviously, bringing in la.
Nathan Race: Lower cost core deposit money so.
Nathan Race: <unk> seen opportunities.
Nathan Race: Outside of that that's explicitly tied to fed funds to also reprice deposits.
Speaker Change: Okay, Great. That's very helpful and just going back to the margin discussion kind of put it in the context of NII growth expectations for this year, if we do get that one fed cut and maybe the middle part of the year. Just curious if you can kind of speak to the magnitude of NII growth that you expect based on kind of what we've discussed from a loan and deposit growth outlook.
Nathan Race: <unk>.
Nathan Race: Yeah, I mean, I think it's it's one of those when you put it all together that we we expect.
Nathan Race: From an NII perspective.
Nathan Race: Two two to roll in place, which with with asset growth. So I mean, if you're.
Nathan Race: Hi high single digit.
Nathan Race: Asset growth.
Nathan Race: Something like that to translate on the.
Nathan Race: The net interest income side I think it's hard given.
Nathan Race: Given the timing of all that but I think when you look about the composition of the balance sheet and the growth that we anticipate on the loan side continued repricing higher with what's rolling off.
Nathan Race: I think we feel good about that and.
Nathan Race: Net interest income growth.
Nathan Race: Okay, but not necessarily just in the high single digit range correct.
Nathan Race: No I think it I think.
Nathan Race: I think in the low double digit range I think is how we think about NII just given those components.
Nathan Race: Okay got it.
Speaker Change: Jerry in your remarks, you mentioned some opportunities to benefit from some of the disruption going on in the twin cities of late So just curious you know, maybe where youre looking to add talent I believe you guys picked up a small wealth management operation with the recent.
Speaker Change: But just curious maybe kind of where youre looking to add talent across the organization going forward.
Speaker Change: It's really continues to be across all all of our departments, whether that'd be in.
Speaker Change: And risk or in our Treasury department or.
Speaker Change: Our loan portfolio.
Speaker Change: There has been.
Speaker Change: The disruption with Brammer being sold is certainly positive for us and we've talked to some people over there.
Speaker Change: And from other banks too so it's a we love.
Speaker Change: Theres some good talent out there loves to be picked up that's for sure.
Speaker Change: Alright, guys I appreciate all the color. Thank you.
Speaker Change: Thank you and this is a question and answer session I would like to turn the conference back over to Jerry Brown.
Speaker Change: Remarks.
Speaker Change: Well I just wanted to thank everybody for joining the call today, we're very pleased with the strong finish to our.
Speaker Change: 2024, and the momentum we have going here in 2025, I also want to shout out that and welcomed our first minute Ponca City bank team members and their client base.
Speaker Change: And of course.
Speaker Change: That we've had here for a long time so it's.
Speaker Change: Continue to be very optimistic about 2025, and I appreciate everybody joining the call today.
Speaker Change: Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines have a wonderful day.
Speaker Change: [music].