Q4 2024 South Plains Financial Inc Earnings Call
Speaker Change: Good morning, ladies and gentlemen, and welcome to the South Plains Financial, Inc. Fourth Quarter 2024 Earnings Conference Call.
Speaker Change: During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time.
As a reminder, this conference call is being recorded.
Speaker Change: I would now like to turn the call over to Steve Crockett, Chief Financial Officer and Treasurer of South Plains Financial. Please go ahead.
Speaker Change: Thank you, Operator, and good morning, everyone. We appreciate you joining our earnings conference call. With me here today are Curtis Griffith, our Chairman and CEO, Cory Newsom, our President, and Brent Bates, the Bank's Chief Credit Officer.
Speaker Change: The related earnings press release and earnings presentation are available on the News and Events section of our website, spfi.bank.
Speaker Change: Before we begin, I'd like to remind everyone that this call may contain forward-looking statements and are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated future results.
Speaker Change: For the full year, we delivered return on average assets of 1.17% and an efficiency ratio of 65, 1%.
Speaker Change: Looking ahead, we also believe that we continue to be in a strong position to capitalize on opportunities to drive growth as the bank and the company each significantly exceed the minimum regulatory capital levels necessary to be deemed well capitalized at December 31 2024.
Speaker Change: Our consolidated common equity tier one risk based capital ratio was 13.53% and our tier one leverage ratio was 12.04%.
Speaker Change: Additionally, our loans held for investment to deposit ratio stood at 84% at year end.
Speaker Change: Given our capital position, we remain focused both growing the bank. While also returning a steady stream of income to our shareholders through our quarterly dividend.
Speaker Change: As previously announced this week our board of directors authorized a 15 cents per share quarterly dividend, which will be our 20 <unk> consecutive quarterly dividend.
Speaker Change: We also have a $10 million stock repurchase program in place, which will expire no later than February 26 2025.
Speaker Change: Our board will consider authorizing another share repurchase plan next month as we generally believe its important to have a buyback in place. So we have flexibility during volatile market environments.
Speaker Change: As we commented last quarter, we expect our buyback activity to remain more muted as we balance liquidity for growth as well as being mindful of the continued economic uncertainty that exists.
Speaker Change: Looking forward, we still expect community bank M&A activity to pick up in the coming quarters with the growing optimism that deals can now be completed much quicker under the new presidential administration, and despite unrealized securities losses on bank balance sheets growing.
Speaker Change: We expect to be even more diligent looking at potential acquisitions in this environment, but we have not yet seen an opportunity that meets our high hurdle for our team to pursue.
Our acquisition criteria remains focused on having a strong cultural fit with minimal dilution to our shareholders a reasonable earn back.
Speaker Change: While making a real sense for the bank and our shareholders.
Speaker Change: As activity picks up we will remain disciplined while also way any deal against the economics of buying back our own shares.
Speaker Change: We see substantial organic growth ahead and are comfortable staying on the sidelines and benefiting from any disruption that does occur in our markets from competitor transactions much like what we have experienced over the last few years now.
Corey: Now, let me turn the call over to Corey.
Corey: Thank you Curtis and good morning, everyone starting on slide six our loan portfolio increased $17 $7 million to $3 $6 billion in the fourth quarter as compared to the linked quarter.
Corey: We experienced loan growth in commercial owner occupied real estate, which more than offset the payoffs and pay downs, but we continue to experience through the fourth quarter combined with the typical seasonal decline in agricultural balances.
Corey: The yield on our loan portfolio was $6 six 9% in the fourth quarter and was essentially unchanged from the prior quarter.
Corey: We were able to keep that constant despite the decline in short term rate that occurred in September through December.
Corey: Looking forward, we could experience a slight decline in the yield on our loan portfolio as we continue to have maturities and repayments across a wide range of interest rate segments.
Corey: Skipping to slide eight loans in our major metropolitan markets of Dallas, Houston, and El Paso increased by $9 million in the fourth quarter to one point I was $6 million a mitral metro markets also experienced elevated loan payoffs again, this quarter, which impacted growth.
Corey: That said underlying loan demand has been strong across El Paso in Houston, as well as in our Permian markets Midland and Odessa.
Corey: At quarter end, our major Metro loan portfolio represented 34, 6% of our total loan portfolio continued to demonstrate not only the scale that our lenders have achieved but also the opportunity that lies ahead for organic loan growth.
Corey: Skipping to slide 10.
Corey: Our indirect auto portfolio held relatively steady at $236 million at the end of the fourth quarter as compared to $235 million at the end of the linked quarter.
Corey: We carefully manage the portfolio through the year with a focus on maintaining its credit quality as competitors have been more aggressive at the higher or better end of the credit spectrum, while volumes have declined.
Corey: This has resulted in $15 million decline in loan balances through 'twenty 'twenty, four and while we anticipated this decline and it's been a significant headwind to loan growth importantly, we are confident that the portfolio can stabilize at current levels given the recent decline in rates combined with improved volumes and more rational pricing.
Corey: Stabilization will allow our strong underlying CRE and CNI loan demand that we're seeing and began to translate to growing loan balances.
Corey: I would also add that the credit quality of our indirect auto portfolio has remained strong through the cycle with 30 plus days past due at 47 basis points.
Modest rise from the 34 basis points in the third quarter.
Corey: Looking ahead to the first quarter, we expect our loan growth to be relatively flat because we typically see agricultural loans continue to pay off seasonally early in the year, while loan payoffs could be continued at an elevated pace and importantly, the underlying momentum in our business continues to build as our customers are becoming more optimistic and activity is accelerating.
Corey: It can also be seen in our new business pipeline, which continues to be at the highest level since the middle of 'twenty to 'twenty two.
Corey: Turning to slide 11, we generated $13 $3 million of noninterest income in the fourth quarter as compared to $10 $6 million in the linked quarter.
Corey: This was primarily due to an increase of $3 $1 billion in mortgage banking revenues, resulting mainly from an increase of $3 $5 billion and a fair value adjustment of mortgage servicing rights as interest rates that affected the value increase in the fourth quarter.
Corey: The growth in the mortgage income was partially offset by approximately $700000 of nonrecurring insurance proceeds received for the property damage and a third quarter of 2024.
Corey: Overall, we have effectively managed the decline in mortgage volumes haven't kept the business profitable at the trough of the cycle through disciplined expense management.
Corey: We believe our mortgage business is well positioned to take advantage of the eventual pick up in residential purchase volumes when rates gradually decline and we're optimistic looking to the spring selling season.
Corey: For the fourth quarter noninterest income was 26% of bank revenues as compared to 22% in the third quarter continued to grow our noninterest income remains a focus heart team now.
Steve Crockett: Now I'd like to turn the call over to Steve.
Steve Crockett: Thanks, Cory for the fourth quarter diluted earnings per share was <unk> 96 cents compared to 66 cents from the linked quarter.
Steve Crockett: Of note our fourth quarter earnings were positively impacted by seven cents per share after tax for the fair value adjustment of the mortgage servicing rights assets as mortgage interest rates rose in the fourth quarter.
Steve Crockett: Turning to slide 13, net interest income was $38 $5 million for the fourth quarter as compared to $37 $3 million for the linked quarter.
Steve Crockett: A rise in net interest income was largely due to a $1 $6 million decline in interest expense, partially offset by a decrease of $243000 in loan interest income.
Steve Crockett: Our net interest margin calculated on a tax equivalent basis.
Steve Crockett: 375% in the fourth quarter as compared to $3 six 5% in the linked quarter.
Steve Crockett: The 10 basis point increase to our NIM was primarily due to an 18 basis point decline in our cost of deposits in the quarter.
Steve Crockett: As compared to the prior quarter as we effectively repriced our interest bearing deposits as the fed reduce their short term interest rate.
Steve Crockett: At year end, our noninterest bearing deposits decreased 25, 8% of total deposits as compared to 26, 9% in the linked quarter.
Steve Crockett: Largely due to the seasonal decline in mortgage escrow balances.
Steve Crockett: As outlined on slide 14 deposits decreased by $94.8 million to $3 six $2 billion at December 31st.
Steve Crockett: Our cost of deposits was 229 basis points in the fourth quarter, a decrease of 18 basis points from the linked quarter.
Steve Crockett: Turning to slide 15, our ratio of allowance for credit losses to total loans held for investment was 114% at December 31, 2024, an increase of one basis point from the end of the prior quarter.
Steve Crockett: We recorded a $1.2 million provision for credit losses in the fourth quarter, which was largely attributable to net charge off activity and by increased loan balances during the quarter.
Steve Crockett: Our nonperforming loans totaled $24 million at the end of the fourth quarter, a slight decrease from $24 $7 million in the third quarter.
Steve Crockett: Skipping ahead to slide 18, our noninterest expense was $29 $9 million in the fourth quarter as compared to $33 $1 million in the linked quarter.
Steve Crockett: The $3 $2 million decrease from the third quarter only 24. It was largely a result of a decline at $1.4 million in personnel expenses.
Steve Crockett: Merely from decreased health insurance costs of approximately $675000 as annual rebates were received in the current quarter.
Steve Crockett: Additionally, we had a $400000 reduction in mortgage commissions as well where is your activity slowed in the current quarter given the rising mortgage interest rates.
Steve Crockett: Looking ahead to the first quarter of 2025, we expect noninterest expense to be more in line with the third quarter's level given the number of one time benefits that we experienced in the fourth quarter and including annual salary adjustments.
Steve Crockett: Moving to slide 21, we remain well capitalized with tangible common equity to tangible assets at 9.92% at the end of the fourth quarter, an increase of 15 basis points from the end of the third quarter.
Steve Crockett: Tangible book value per share decreased to $25.40 as of December 31st 2024.
Steve Crockett: Compared to $25.75 as of September 30th 'twenty 'twenty four.
Steve Crockett: The decrease was primarily driven by an $18 $2 million decrease in accumulated other comprehensive income as the fair value of available for sale securities decreased partially offset by a $14 million of net income after dividends paid.
Curtis Griffith: I'll give the call back to Curtis for concluding remarks.
Curtis Griffith: Thank you Steve to conclude and as I said I am very proud of our financial results. We have effectively managed our liquidity to optimize profitability and returns while taking proactive steps to ensure that we maintain the credit quality of our loan portfolio.
Curtis Griffith: Importantly, we are experiencing strong underlying long term demand, which we believe will begin to come through as our payoffs began to return to more normal levels.
We remain optimistic that economic growth is set to accelerate under the new administration and are well positioned to drive organic growth across both our community and metropolitan markets as we focus on expanding the bank and delivering value to all of our stakeholders.
Curtis Griffith: I would also like to thank our employees for their hard work over the last year.
Curtis Griffith: Are the key to our success and I am grateful for their continued commitment to our bank and our customers. Thank you again for your time today operator, please open the line for any questions.
Curtis Griffith: Thank you we will now be conducting a question and answer session.
Speaker Change: He would like to ask a question. Please press star one on your telephone keypad.
Curtis Griffith: Confirmation tone will indicate your line is in the question queue.
Curtis Griffith: You May press Star two if you would like to remove your questions on the queue.
Speaker Change: So participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Speaker Change: Thank you. Our first question comes from the line of Woody lay with K B W. Please proceed with your question.
Woody Lay: Hey, good morning, guys.
Speaker Change: Hey, good morning.
Speaker Change: Wanted to start with the loan yield in the fourth quarter.
Speaker Change: Pretty impressive to see that the relatively flat quarter over quarter given.
Speaker Change: The rate cut.
Speaker Change: Any color on what what allowed the loan yield to remain stable. There were there was there wasn't any sort of onetime insurance benefit was there.
Speaker Change: Hey, what do you see there there was a little bit less in less than $200000 of.
Speaker Change: Non accrued interest that we got not necessarily out of line with what we see another.
Speaker Change: Other quarters, you know really yeah.
Speaker Change: Between that and just having having loans pay off you know we had some loans paying off that rent at those at.
Speaker Change: Lower rates quite frankly wish we were.
Speaker Change: Glad to see even some of the four 5% loans pay off and then some of the new loans are being booked at Red hat.
Speaker Change: Rates higher than than what the averages. So overall again, we were very pleased with where that ended up but no no real one big time nonrecurring item.
Speaker Change: Got it that's that's helpful and then any expectations near term for the margin do you think it can remain stable.
Speaker Change: Stable around the 375 level or is there a chance that it could even move higher.
Speaker Change: Uh huh.
Speaker Change: We've had a lot of discussion about that we're gonna.
<unk>.
Be more conservative as you as you know and what we would what we would say I mean, I would I would hope we could.
Speaker Change: Keep it where it's at and hopefully incrementally.
Speaker Change: <unk> improved but a lot of that's really going to depend on an on loan growth and where.
Speaker Change: Where that where that kind of ends up I mean, you'll you'll see us.
Speaker Change: Deposit costs will will still come down just just a little bit as you know we.
Speaker Change: Flush out the rate cuts that were done midway through the quarter and things like that and then in loan yields may may trend down slightly just depending on where how all of that ends up for a full quarter after those cuts but.
Speaker Change: We overall, we win with with the ride loan growth I think we could see it stabilize and maybe maybe grown incrementally. We do this is Cory I think the one thing that's going to help US do that is the fact that our liquidity position is where it is it just gives us some opportunities to.
Speaker Change: Make sure we're not over pricing on the cost side.
Yeah.
Speaker Change: Yeah, that's right.
Speaker Change: Yeah, and like for everybody you know theres, a lots going to depend on what the fed decides to do.
Speaker Change: If they move forward with more rate cuts in the Bourbon resident indicated he sure like to see that you know, we'll see where we go but certainly rate cuts in our case a wheel.
Speaker Change: <unk>.
Speaker Change: Likely help R&M.
Speaker Change: It may not be you know again, one for one but I think we would continue to gain by a lower short term rates, but we'll just have to see where that goes but I kind of agree with Korean Steve. We've got a lot of things in place that we should still see minor improvements are in the mail, but may not be quite as strong as what we saw in the fourth.
Speaker Change: But I think we'll continue to get some improvements through the year.
Speaker Change: Right well you all have been consistently been beating the NIM guide them. So we'll see how it turns out.
Speaker Change: Lastly on the loan pipeline I mean, it's great to hear.
Speaker Change: All of the color around the the new customer activity just is that concentrated in any one segment and then is it is it a reflection of new hires or is it just you.
Speaker Change: Now a reflection of hardware.
Brent Bates: Yeah. This is Brent.
Brent Bates: You know it it's a combination I think of all those factors we have a good production from new hires but that's really I think we've got a lot of optimism, we're seeing from our clients and and capital outlays, if they're there they're planning to make in.
Brent Bates: Our pipeline is much better than it was this time last year or so we feel optimistic about it too.
Brent Bates: Alright, that's all for me thanks for taking my questions.
Thanks.
Brent Bates: Thanks.
Speaker Change: Our next question comes from the line of Brett Rabid him we'd have the group. Please proceed with your question.
Speaker Change: Hey, guys good morning.
Speaker Change: Hey, Eric.
Speaker Change: Wanted to start on the pay offs, you talked about it quite a bit but if you gave it I missed the number but the.
Speaker Change: The number of our dollar amount of pay offs that.
Speaker Change: But you guys had in the quarter and then it sounds like the you know the pipeline continues to build.
Speaker Change: I guess I'm, a little surprised you're you're being a little conservative in saying.
Speaker Change: Low to mid single digit loan growth I thought that number might be more mid to high single digits. So it was just open for some additional color on that.
Speaker Change: Hey, Brett Youre surprised we're being conservative.
Speaker Change: [laughter] well.
Speaker Change: Yeah.
Speaker Change: Yeah, Brett I mean.
Speaker Change: We we are striving to over deliver on that but payments were higher in the fourth quarter and and frankly some of that's nothing to apologize for our clients had experienced.
Speaker Change: Experienced some liquidity events, we had several that have had liquidity events either decided to a.
Speaker Change: So their real estate.
Speaker Change: State or had a significant excess liquidity and decided to reduce debt and that's good for them and and and we're fine with that I remember when our share of clients exceed succeed in what they do so yeah, we may see a little bit more of that with with customers selling assets and and and that could be.
Speaker Change: I think were thinking that right.
Speaker Change: That could be repeated in the first maybe second quarter, but we still feel confident in our pipeline and an ability to that that production, while I suppose if that makes sense.
Speaker Change: One of the things that I was also pleased to see on them on a number of the payoffs that we had I mean youre going to have the seasonal stuff that comes along you're going to have the stuff that we have no control over but what was really nice to see some of the transactions. We had that were lots of events that actually happen to people that converted into investment opportunities for us on the other side the state here and it goes back to the relationship aspect of what we fought hard.
Speaker Change: Daily.
Speaker Change: Okay.
Speaker Change: And then the other thing I wanted to ask about was just M&A and your capital ratios gotten pretty healthy.
Speaker Change: I you know I don't know if you're thinking about using the buyback more at some point, but just you briefly mentioned M&A and in and talking about that can you talk maybe a little bit more about.
Speaker Change: What you're seeing from maybe potential partners in.
Speaker Change: Is there a lot of interest from from community banks at this point you know what's what's your outlook is for the <unk>.
Speaker Change: Central acquisition market.
Curtis Griffith: This is curtis.
Curtis Griffith: We continue to see an increase I think in the number of ideas that are pitched to us by the investment bankers are there they're looking at this as a real opportunity if you will.
Curtis Griffith: I'll now with a couple of pretty lean years.
Curtis Griffith: So far we haven't really seen anything that we liked quite well enough to.
Curtis Griffith: Get down to.
Curtis Griffith: Really trying to negotiate pricing on it indications are that you've got a lot of sellers of good banks that are still expecting probably a higher multiple than the market's ready to give right now.
And as we keep saying we want the right deal, we'd rather not do anything at all rather than new one that's it's not going to benefit our shareholders long term and that's something that bears I must not just banking, but if you look at it.
Curtis Griffith: So many businesses out there make a larger acquisition.
Curtis Griffith: And their stock suffers for quite a while and so we see no point in doing that we wanted to do something that everybody's been all I can say the real value of the acquired institution would be very happy to be joining our volt. So we're going to keep our eyes out and we do continue to see more and more opportunities out there most now.
Curtis Griffith: Part of the state in other parts of Texas as well so.
Curtis Griffith: My Guesstimate is we'll probably have something to talk about maybe later in the year, but we don't know until we really see it.
Curtis Griffith: The the environment for doing something is certainly better than one in Japan.
Curtis Griffith: Brett This Corey I think the one thing that I would tell you though is if you look at it I don't think we've.
Speaker Change: Ever been as well positioned as we are to date to do an acquisition and that's we just had about the red one in but we're very very much focused on it.
Curtis Griffith: Okay.
Speaker Change: I appreciate all the color guys.
Curtis Griffith: Thanks, Brent spread.
Speaker Change: Our next question comes from the line of Stephen Scouten with Piper Sandler. Please proceed with your question.
Stephen Scouten: Yeah, good morning, everyone.
Stephen Scouten: I'm not sure Steve If you gave this data earlier, it's one of the questions I might have missed it but can you give us a feel for where new loan yields are coming on versus maybe some of the where the.
Portfolio yields are rolling off at.
Stephen Scouten: Yeah, I would say you know they are in the in the in the seven range you know it could be.
Stephen Scouten: All all over in the Sevens, but generally probably in the low to mid some there'd be some in the high but that lower end probably.
Stephen Scouten: Yeah.
Stephen Scouten: Got you and that's that's coming off the books, where is some of the fixed rate loans repriced on the average.
Stephen Scouten: Okay.
Stephen Scouten: Yeah.
Stephen Scouten: Yeah, I think so.
Stephen Scouten: I mean help me understand your question again.
Stephen Scouten: Yeah. So I mean, what is it you're at total average yield is like 669, but I imagine some of the fixed rate loans that are coming off the books and repricing in that 7% range, you're probably more in the <unk>.
Stephen Scouten: 45% range I would guess that there's probably some five year old loans that are in that range, but just trying to get a feel for that kind of on off yield dynamic.
Stephen Scouten: Yes, we believe we've got some there but quite frankly, we've had some you know we've had some payoffs of.
Stephen Scouten: Of loans that are at the higher yields is as well so but yeah. The fixed the fixed rate stuff generally is he's going to be in the <unk>.
Stephen Scouten: The upper fours and fives that have been coming off.
Stephen Scouten: Okay, there's still still potentially getting a 150 200 basis point pick up on some of that fixed rate loan book is at repricing.
Stephen Scouten: Yes, and I think what they say, but keep in mind.
Stephen Scouten: A look at the quality of our portfolio, it's never going to be the highest portfolio out there because the credit quality is good and so we we really tried to stay competitive we try to price it to market and I.
Stephen Scouten: I really do feel good about the stuff that we're seeing are coming in whether it's the spreads around prime.
Stephen Scouten: That's what we've really perhaps a lot of our stuff off though.
Yeah, no for sure and I'm, just kind of thinking about the NIM dynamics I know, obviously I think your your name would respond best with some lower rates given supply light liability sensitivity, but with the fixed rate loan book I would think you could still see some NIM expansion throughout the year and a stable rate environment would you agree with that.
Curtis Griffith: Oh, Yes. This is Curtis I, absolutely would Oh, my <unk> I still feel confident we'll get some NIM expansion are moving through 25, because again, just keep rights exactly where they are and if our business pipeline moves as we think it will you'll you'll see a moderate increase in there.
Curtis Griffith: Nothing dramatic, but we will continue to move up probably not down and if we got slightly lower short term rates. It should move a little more in our favor I think.
Speaker Change: Yeah, Yeah, no that's great.
Speaker Change: Okay, and maybe just to me I, you know and in all honesty have been getting most of my Texas economic information from the show landmass.
Speaker Change: Would love to get kind of your thoughts on what.
Speaker Change: What what the potential drilling activity down in the Gulf of America could do for in your view.
Speaker Change: Economies.
Speaker Change: It's kind of I mean, how that price of oil could could affect your economies and overall loan demand how youre thinking about that.
Speaker Change: Read everybody's having about more insurance for these well blow outs that are happening apparently now so.
Speaker Change: And it's probably going to impact it.
Speaker Change: Absolutely were always right now we're seeing our service guys are I mean, they were very optimistic about what their future is right now.
Speaker Change: Yeah, I would add 100% agree with that I think there there's a lot of optimism.
Speaker Change: And in the Permian and then our markets just impart because of just energy prices you know that.
Speaker Change: This region is probably the lowest cost to produce area in the country and and and obviously, that's the highest volume.
Speaker Change: So there is a lot of activity and you see it when you drive dropped down there. That's just so I I think we will have opportunities around that and and and frankly, that's that's part of our part of the reason why our our pipeline has expanded so much I think is just optimism.
Speaker Change: Around general economies I think if you look at this I mean, if you look at the size of the bank you look at the size of the customers that we actually bank in those markets. There are a lot of times, the lower cost provider and they're seeing good opportunities.
Speaker Change: And the markets right now I mean, we're continuing to see good lending opportunities as a result of it as well.
Speaker Change: On a more micro scale.
Speaker Change: No nobody wants to see well price down in the fifties at least in our parks, Texas.
Speaker Change: So I don't think we will see that but as we know our honor Mr. Trump's new your good friends, apparently he's going to get our arms race to do it first.
The World right now so we'll see where it goes but realistically if oil prices stay about where they are the sums.
Speaker Change: Somewhat relaxed regulations will see more drilling than what we've seen and you make a good point well, we don't lend into that market and as such are you could really see offshore drilling to pick up on.
Speaker Change: And for the next two to four years and for places like Houston generally that's a good macro event for that that economy. It will really help.
Speaker Change: Drive overall business in the Houston market.
Stephen Scouten: Stephen just one last thing just just know that we underwrite to a much cheaper all yes.
Speaker Change: Got it got it yeah. That's that's helpful and that's kind of what I was hoping to hear is in it and that's helpful. It sounds like the Permian maybe.
Speaker Change: In and of itself is an area code could do a little bit better given its lower cost.
Speaker Change: To produce so they let's say drilling activity it hasn't happened yet, but it does take down the price per barrel in the sixty's or whatever the Permian should be more insulated from any negative impacts in other parts of the country is what I hear you, saying.
Speaker Change: Yes, absolutely sure.
Speaker Change: Got it that's super helpful. Thank you guys for the color congrats on a great 24.
Speaker Change: Thanks.
Speaker Change: Okay.
Speaker Change: As a reminder, if you would like to ask a question press star one on your telephone keypad.
Speaker Change: Our next question comes from the line of Joe Yeah, Kudos with Raymond James. Please proceed with your question.
Joe Yeah: Good morning.
Speaker Change: So here you go.
Speaker Change: Oh I'm doing great.
Speaker Change: So I wanted to start you know on loans here for a moment I appreciate the detail on the deck on the loans coming up for renewal.
Speaker Change: But as they come up for renewal will give a sense kind of historically speaking.
Speaker Change: For how much of these loans, he definitely retained versus what's being rolled off.
Speaker Change: Just trying to get a.
Speaker Change: Little deeper substance about repricing opportunity with how much stays with the bank.
Before I mean, the good thing Bristow as we have a lot to come up for repricing that are that are not up for renewal, which plays a big role in what we do with ran all the chips. That's right. Yeah. That's that's repricing those aren't all maturing I mean, we've we've so far been a pretty successful retention of of repricing loans.
Speaker Change: Of course, you know there there are times and that's part of the pay off our experience. We've had in the fourth quarter were or are customers. They just decided to take advantage of gains and recapture equity in projects and that's okay too I mean, we retain those relationships.
Speaker Change: They had lost alone, but retain the relationship. So it's it's kind of tough to predict who's going to decide to do that but as far as the ones that we wanted to retain we've retained them yeah and Joe one thing that helps US is the ones that are up for repricing and not necessary maturity. The rethought penalties still states. So that's that's always on the table.
Speaker Change: At least have that try to help us from an administration standpoint.
Speaker Change: We don't wait until these things have run at maturity, we're working on way early.
Yeah.
Speaker Change: Wow.
Speaker Change: Very helpful. And then just kind of shifting over to credit in the prior quarters.
Speaker Change: Yeah, you'd discuss optimism around resolving no rather chunky multifamily problem problem you know can.
Speaker Change: Can you provide an update on how that process is progressing.
Speaker Change: Yeah. It's.
Speaker Change: It's painting and it's where we're working the plan just like we said we'd expected. So I mean, I I still feel really good about our credit quality and the trends and direction I mean, we're not unique in the fact that I mean, well we will see other challenges I'm sure and we'll work through those as we get them.
Speaker Change: And but that's as far as where we're at today and kind of I'm optimistic it once was.
Speaker Change: Not only what we've done but what I expect will do in the future.
Speaker Change: Yeah.
Speaker Change: I think we've done a good job of trying to identify what challenges. We think we're gonna have and start working them early.
Speaker Change: Yeah.
Speaker Change: Understood.
Speaker Change: That's all for me. Thank you for taking my questions.
Speaker Change: Thanks, Joe Thanks, Joe.
Speaker Change: Thank you Mr. Griffith, we have no further questions at this time I would like to turn the floor back over to you for closing comments.
Speaker Change: Thank you operator.
Speaker Change: Because we've said today South plains financial is well positioned for many opportunities and for what we believe multiple economic scenarios. Our customer optimism is the best in a long time I've seen some material I'll give credit to Mister Tom Brown newsletter up with last week, a national survey data showed.
Speaker Change: Is that a small business optimism.
Speaker Change: At its highest since 2018, and we do think that's going to translate into strong growth for us and just better economic conditions all over so our credit quality remains strong. We're always aware of the risks are out there we're going to continue to work on that we will continue to focus on controlling expenses are increasing them and will be.
Speaker Change: Right.
I deal comes along.
Speaker Change: We will continue to be looking for opportunities in all of our sectors. We thank you for your time today and look forward to visiting with you. If you ever have any questions for us. Thank you.
Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.