Q1 2025 Amerant Bancorp Inc Earnings Call
Greetings and welcome to the Ameren Bancorp's first quarter 'twenty twenty-five results at this time all participants are in a listen only mode.
Operator: Greetings and welcome to the Amerant Bancorp's first quarter 2025 results. At this time, all participants are in a listen-only mode.
Operator: The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
A question and answer session will follow the formal presentation.
If anyone would should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host Laura Rossi head of Investor Relations at Ameren Bank Corp. You may begin.
Laura Rossi: It is now my pleasure to introduce your host, Laura Rossi, Head of Investor Relations at Amerant Bancorp. You may begin. Thank you, Brock.
Speaker Change: Thank you Brad good morning, everyone and thank you for joining us to review <unk> Bancorp's first quarter 2021, 2025 results on today's call are Jerry Bush, our chairman and CEO and Mark <unk>, Our senior executive Vice President and CFO.
Laura Rossi: Good morning, everyone, and thank you for joining us to review Amerant Bancorp's first quarter 2021-2025 results.
Laura Rossi: On today's call are Jerry Plush, our Chairman and CEO, and Sharymar Calderon, our Senior Executive Vice President and CFO. As we begin, please note that discussions on today's call contain forward-looking statements within the meaning of the Securities Exchange Act. In addition, references will also be made to non-GAAP financial measures.
Speaker Change: Again, please note that discussions on todays call contain forward looking statements within the meaning of the Securities Exchange Act.
Speaker Change: Additionally, references will also be made to non-GAAP financial measures.
Laura Rossi: Please refer to the company's earnings release for a statement regarding forward-looking statements, as well as for information on reconciliation of non-GAAP financial measures to GAAP measures.
Speaker Change: The company's earnings release for Steven regarding forward looking statements for information on reconciliation of non-GAAP financial measures to GAAP measures.
Jerry Plush: I will now turn it over to our Chairman and CEO, Jerry Plush. Thank you, Laura. Good morning, everyone. Thank you for joining us today to discuss Amerant's first quarter 2025.
Speaker Change: I will now turn it over to our chairman.
Speaker Change: Jerry.
Jerry: Thank you Laura good morning, everyone and thank you for joining us today to discuss first quarter 2025 results maybe.
Jerry Plush: We're implementing a change in our approach this quarter. This change is the result of our seeking investor and analyst feedback on the last several quarters. So while the deck continues to include all the slides, we... slide, we'll be commenting on significantly fewer slides than in the past. We're going to focus on results, on asset quality, and certain strategic updates as well, including changes to our mortgage business and on some significant personnel initiatives.
Peter: Maybe you can change our approach there Peter.
Peter: As a result of our seeking to investor feedback.
Peter: Sure.
Peter: Hello.
Peter: Engaged.
Peter: Slide <unk>.
Peter: So I will be commenting on significantly fewer slide in the past.
Peter: We're going to focus on results on asset quality, and certain strategic outbreaks as well, including changes to our mortgage business.
Peter: Yes.
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Jerry Plush: But before we dive into the details, I want to take a moment to acknowledge both challenges and significant achievements we delivered this quarter. Despite the uncertainty in this environment, we outperformed expectations in several key areas. Our net interest income and net interest margin were stronger than projected, driving a robust PPNR. We also saw excellent deposit growth, underscoring the continued trust clients placed in. But more importantly, we made the prudent decision to reserve for five specific loans and also to adjust their generics.
Speaker Change: But before we dive into the details I wanted to take a moment.
Peter: Challenges.
Peter: To achieve this.
Peter: Correct.
Peter: Despite the uncertainty in this environment, we outperformed expectations in several key areas.
Peter: Based on the net interest margin were stronger than projected.
Peter: Having a robust keeping it or we also saw excellent deposit growth.
Peter: Great.
Peter: Shop space.
Peter: Good morning.
Peter: Craig.
Peter: Eric.
Peter: And also the adjusted share reserves.
Jerry Plush: reflecting our commitment to transparency and risk management, taking decisive action is essential as we remain focused on the longer term and we believe the steps we take in this court are best positions.
Peter: Okay.
Peter: Transparency nationally.
Peter: Thanks, Joe.
Peter: Because from the longer term immediately, especially taken this quarter best positions.
Jerry Plush: So let's turn now to slide three, and here you'll see that our core business demonstrated solid deposit. Our total assets reached $10.2 billion as of the close of the first quarter, an increase from $9.9 billion in the fourth quarter. We expect to now stay above the $10 billion level and grow from there in 2025. We've been building out our infrastructure to support being a regional bank, and so we intend to keep moving in that direction. Total investments were $1.76 billion, up compared to $1.5 billion in the fourth quarter as we opted to purchase securities to protect the net interest margin, while our loan pipeline continues to grow.
Speaker Change: So, let's turn now to slide three in your area.
Peter: Our core business demonstrated solid deposit growth.
Speaker Change: The last history.
Peter: To.
Peter: In closing the first quarter, an increase of 9%.
Peter: We expect it.
Peter: Bill.
Peter: Broken down into 2020 got we've been building out our infrastructure to support being a regional bank.
Bill: We intend to fix that.
Peter: Correct.
Peter: Total investments were 176 billion compared to one 5 billion in the fourth quarter as we opted to purchase securities to protect net interest margin.
Peter: Our pipeline continues to grow.
Jerry Plush: Of note, at least half of these securities have fixed rates, protecting against a potential downward rate scenario. Our total gross loans were down by $52 million to $7.2 billion, down from $7.3 billion in the fourth quarter, primarily driven by increased prepayments, which offset loan production in the quarter, as well as some loan closings sliding into the second quarter. Our total deposits dropped by $300 million to $8.2 billion, compared to $7.9 billion in the fourth quarter. driven by ground and core deposits.
In the past these securities that phase III.
Peter: X gene Ballard our toe.
Peter: Gross loans.
Peter: Two two.
Peter: Yes.
Peter: 3 billion in the fourth quarter, primarily driven by increased prepayments, which offset lower production in the quarter as well as some low close in sliding.
Yeah.
Peter: Our total deposits were up by 300 million to $8 2 million compared to $7 9 billion in the fourth quarter.
Peter: Driven by profit reported in.
Jerry Plush: In this period, it's important to note that we manage the balance sheet to not only achieve strong P and R results and protect our map, but also to hedge the risk of a downward grade scenario.
Peter: In this period, it's important.
Peter: The balance sheet.
Peter: Strong <unk> results and to check there.
Peter: Also to hedge the risk of a downward rate scenario.
Jerry Plush: Looking at the income statement on slide 4, you'll see we had a strong pre-provisioned net revenue driven by higher than previously projected net interest income and net interest margin. Our diluted income per share for the first quarter was 0.28 compared to 0.40 in diluted income per share in the fourth quarter, with the primary difference being the higher level of provisioning expense we recorded this quarter in comparison to last. We're going to cover those details in just a few slides. Our net interest margin was flat at 3.75% compared to 4.2, but significantly better than previous years.
Peter: Looking at the income statement on slide four.
Peter: Just to give you guys pre provision background.
Peter: Higher than previously projected that interesting.
Peter: Sure.
Peter: Net income per share for the first quarter was 28 as compared to 40 days.
Peter: Sure in the fourth quarter.
Peter: With the primary difference being the higher levels of predict exactly required this weird comparison.
Peter: We're going to cover that because just a few slides our net interest margin was flat at 375%.
Peter: Compared to June, but significantly better than projected.
Jerry Plush: The name of the purse order reflects these positive impacts due to a patrol quarter back at the Houston Franchise Sale, which had a relatively higher cost above federal court requirements. A lower cost of deposits resulting from a full quarter effect of repricing deposits down after the rate cuts and length of the quarter queue. Lower promo rates for new deposits and the timing difference between the maturities of broken CDs and renewables at quarter price. And it was also a full period of tire-yielding security for the investment grant, we're calling it, after the repositioning that we did, we're calling it, in late June and early June.
Peter: Again first quarter reflects the positive impact due to control quarter back into Houston franchise sale, which had a relatively higher cost of funds.
Peter: Lower cost deposits, resulting from a full quarter impact of repricing deposits down there.
Peter: Okay.
Peter: Lower promo rates.
Peter: The timing difference between the maturing broker Cds.
Peter: Alright.
Peter: Also full period higher yielding securities.
Peter: Okay.
Peter: The repositioning that we did make reaching an early.
Peter: Thanks.
Peter: Net interest margin decreases were somewhat offset by the downward repricing of floating rate loans.
Jerry Plush: That interest margin increases were somewhat upset by the downward repricing of floating rate loans and the impact of securities that have been purchased this order, as the average yield on securities has clearly lowered. in comparison to our low production. Our net interest income was $85.9 million, and our $1.7 million from the $87.6 million in Q2. Primarily driven by lower average balances to yields on loans, and higher average balances on profits. Again, as I noted previously, we're regening at higher yields on new production, and the loads maturing. Provision for credit losses was $18.4 million, up $8.5 million, from the $9.9 million in the fourth quarter.
Peter: Securities purchased this quarter and the average yield on securities.
Peter: Okay.
Peter: In comparison, our loan production.
Peter: Net interest income would be fine.
Peter: One 7 million from $87 6 million.
Peter: Primarily driven by lower average balances and yields on bonds and higher.
Peter: Again as I noted previously originating at higher yields.
Peter: Sure.
Peter: Provision for credit losses was $18.
Peter: $8 5 million.
Peter: Right.
Peter: [laughter].
Jerry Plush: This increase was primarily driven by specific reserves, $3.35 million for individually evaluated specific reserves, and also for macroeconomic updates.
Peter: This increase was primarily driven by specific or service providers.
Peter: Got it.
Peter: Reserves and also for macroeconomic updates sharing is going to cover this more sure.
Jerry Plush: Shary's going to cover this more shortly. Non-interest income was $19.5 million, which included a net being of $2.8 million, primarily from a lone milk sale that was previously charged off. While non-interest expense was $71.5 million, when you exclude the REO valuation, you've recorded a $500,000, would have been $71 million. pre-provisioned net revenue, or otherwise known as PPR, was higher at $33.9 million in 1-2 compared to $27.9 million in 4-2, and in comparison with consensus, 1-2, 25, 31.3%.
Peter: Noninterest income was $19 5 million.
Peter: Yes.
Peter: Primarily.
Peter: Sale that was previously charged off.
Peter: Interest expense was 71 5 million when you exclude the Oreo valuation you've acquired it.
Peter: Hum.
Peter: 71 billion.
Peter: Pre provision net revenue otherwise known as <unk>.
Peter: $33 9 million compared with $27 $9 million in 14.
Comparison.
Peter: <unk> 25.
Peter: Okay.
Peter: Let's turn to slide five.
Jerry Plush: Let's turn to slide five. I'm going to cover a couple of the key items. We paid our quarterly cash dividend of $0.09 per common share on February 28th, 2025, and our board just approved the quarterly dividend of $0.09 per share paid on May 30th, 2025. Our assets under management increased $42 million to $2.93 billion, primarily driven by net new assets, although this was partially offset by market volatility, which resulted in lower market valuations. We continue to see this as an area of opportunity for us to look at going forward.
Peter: Other key items for the quarter, we paid a quarterly cash dividend per common share.
Peter: <unk>.
Peter: <unk>.
Peter: And our board just approved.
Peter: Sure.
Peter: 2025.
Peter: Assets under management increased to $92 three.
Peter: 3 billion, primarily driven by net new assets.
Peter: Obviously upset by far.
Peter: Yourself.
Peter: We continue to see this as an area of opportunity.
Peter: Sure.
Jerry Plush: And, as we previously announced, on April 1, 2025, the company redeemed $60 million in aggregate principal amount of its 5.75% senior notes due this year.
Peter: We had previously announced.
A lot of 2025, the company redeemed $60 million in aggregate principal amount of its 575% senior notes due this year.
Jerry Plush: So we'll move down to slide six, and here I want to provide you an update on our reconnection. We're implementing a strategic change in our operating model, and here's how. This is what we're going to do. While the mortgage business was built to create a new source of income in 2021 through the sale of conforming mortgage bridge nations that could then be sold into the secondary market, this would require continued investment in hiring business development personnel and technology for further expansion.
Speaker Change: So we'll move on to slide six and here I wanted to provide an update on our bad connection.
Peter: We're implementing it.
Peter: Strategic change in our operating model and yourself.
Peter: Okay.
Peter: Steve.
Peter: <unk> business is built to create a new source of fee income.
Peter: Sure.
Peter: Depreciation.
Peter: That would be sold into the secondary market is require continued investments in business development personnel technology.
Peter: Given our strategic decision late last year.
Jerry Plush: Given our strategic decision made last year to double down on our focus on Florida, and given the required capital that would be needed to scale the national mortgage business, and could otherwise be employed in foreign bank strategic growth initiatives, we've elected to transition from being a national mortgage agent to a Florida-focused model. So we're moving forward with a change to the operating model, where Amerant will continue to offer mortgage products, one of the primary topics of the bridge nations for income-primed customers. It's important to note that while we'll still follow income-primed customers outside of Florida if they choose to buy additional property, But you can see, as part of this downsizing, we expect our variable costs to be lowered, and it will result in a reduction in operating costs in the third and fourth quarters this year.
Florida and given the required capital.
Peter: They need it.
Peter: I appreciate that.
I would like to be weighted toward bank strategic growth initiatives, we've elected to transition from being a national appears to Florida.
Peter: So we're moving forward with the change the operating model where Andrew.
Peter: Our mortgage products.
Russell: Primary topics on originations breakup grant Russell, it's important to note while still.
Peter: And corporate costs.
Russell: Why did they choose to buy additional properties.
Russell: You can see as far as the least.
Russell: We used a comparable cost to be lower.
Russell: And a reduction in operating costs.
Russell: Sure.
Jerry Plush: We expect both non-interesting income and non-interesting expense to be lowered by approximately $2.5 million per quarter, starting in June. This should improve our operating efficiency by nearly 1% once all of the restructuring is complete. We'll transition this over the next 120 days, which will result in a reduced level of FTE for the market. This will allow for the release.
Russell: Non interest income and non interest expense by approximately $2 5 million per quarter, starting to get pretty good it should improve our operating efficiency by nearly 1% Y O y.
Russell: Restrictions.
Russell: Transition this accident.
Russell: Which will result in a good place.
Russell: This will allow for the Caribbean.
Russell: Uh huh.
Russell: So at this point I'll turn it over to Sherri remarks covered metrics again in.
Sharymar Calderon: So at this point, I'll turn it over to Sharymar to call the metrics and give him the credit. Thank you, Jerry, and good morning, everyone. I'll begin today by discussing our Keeper Funds metrics and their changes compared to that quarter on slide 7. Starting with the ratio of non-interest bearing deposits to total deposits, we can see that in the first quarter, it increased to 20.4% from 19.2% in the fourth quarter. A direct result from our relationship-focused strategy, which contributes to non-interest bearing deposits. Our efficiency ratio was 67.87% in the first quarter, compared to 74.91% in the fourth quarter.
Speaker Change: Greater detail, Thank you Jerry and good morning, everyone.
Speaker Change: I'll begin today by discussing our key performance metrics.
Speaker Change: What else.
Speaker Change: Firstly the ratio right are there any pockets.
Speaker Change: Yeah.
Speaker Change: Increases.
Speaker Change: 2%.
Speaker Change: Okay.
Speaker Change: Mr focused strategy.
On your guidance.
Speaker Change: Our efficiency ratio.
Speaker Change: 87% in the first quarter I'm very excited to work with any one person.
Speaker Change: Or do you keep it at a long.
Sharymar Calderon: More Q included a lot on security and loan choice, and no more correct sentences than what... Our ROAs in our latest quarter were 0.48% and 5.32%, compared to 0.67% and 7.38% respectively in the fourth quarter. The decrease in these metrics was primarily related to the increased information for credit losses and the 95% of the non-briefing items in each report. Lastly, the coverage of the allowance for credit losses to total loans increased to 1.37% compared to 1.18% in the fourth quarter, primarily due to the specific research for credits evaluated individually and certain impacts of macroeconomic factors.
Rudy: Thank you Rudy.
Speaker Change: And the work right.
Speaker Change: Keith.
Speaker Change: All right.
Speaker Change: I'm sorry.
Speaker Change: Great.
Speaker Change: Okay.
Speaker Change: And second.
Speaker Change: Sure.
Speaker Change: These metrics was primarily.
Speaker Change: Information regarding the office and then they are not.
Speaker Change: We've had before.
Lastly.
Speaker Change: For credit losses to come along.
Speaker Change: 1030 <unk>.
Speaker Change: Compared to 118% quarter, primarily.
Speaker Change: It doesn't start for <unk>.
Speaker Change: So they've really sort of impact of macroeconomic factors.
Sharymar Calderon: Now moving on to slide 8, which shows the drivers of the $13.3 million increase in the allowance for credit law. The provision for credit losses was $18.4 million in the first quarter. Excluding reserves for commitments, the provision was $17.2 million and was comprised of $13.9 million for specific reserves, $3.8 million to cover net charge-offs, $4.7 million due to model adjustments for macroeconomic factors, offset by revenues of $4.4 million due to credit quality and other macroeconomic updates, and $900,000 due to losses. During the first quarter of 2025, there were gross charges of $5.3 million related to $2.1 million purchased consumer loans, and $3.2 million were related to certain retail and business banking loans.
Speaker Change: Moving onto slide eight which shows the drivers of that.
Yeah.
Speaker Change: Mark.
Mark: The provision for credit losses was $18 4 million in the first quarter.
Mark: Depreciation was 17 one.
Mark: Alright.
Mark: Thank you.
Victor: Victor everybody millions to cover net charge offs for the.
Victor: The model adjustment for macroeconomic factor.
Victor: Okay.
Victor: Oregon, Virginia.
Victor: Quite a party and other macroeconomic choppy.
Victor: And I have just outlined.
Victor: Yeah.
During the first quarter of 2025.
Victor: And our gross charge offs of $5 3 million.
Victor: Yes.
Victor: Yeah.
Victor: Everybody convenient wherever they are constrained.
Victor: Yeah.
Sharymar Calderon: This was offset by $1.5 million in recovery. Please note, in April 2025, we sold a $6.9 million participation in a QSR Relay of Credit with a $4.8 million charge-off. This was fully reserved as of March 31st and will be reported in the future charges.
Victor: Yeah.
Victor: All right.
Victor: Please know that you gave us.
Victor: We saw that.
Victor: Got it.
Victor: All right.
Victor: 8 million.
Victor: But for sure as of March 31st.
Victor: Okay.
Victor: Information reported this quarter underneath there and it's not good for Rudolph.
Sharymar Calderon: The information recorded this quarter and the day reserved, and its coverage over lunch, reflect robust analysis in light of macroeconomic and geopolitical conditions. Turning to slide 9, you can see the roll forward of classified loans from the 4th quarter to the 1st quarter, showing a net increase of $39.6 million, or 24%, to $206.1 million, primarily due to one theory loan totaling $21 million, downgraded to substandard or plural, due to the loss of a large portion of the loan. and five loans totaling $33.7 million downgraded from VL based on receipts of year 2024 financials. Classified loans include three loans totaling $83.5 million that remain in a current status.
Victor: Perfect.
Victor: Macroeconomic and geopolitical conditions.
Victor: Turning to slide nine you can see that roll forward.
Victor: Sure.
Victor: Okay.
Victor: 101 million, primarily due to what you already know.
Victor: Yes.
Victor: This is remarkable.
Victor: And.
Victor: Pete.
Victor: Yeah.
Victor: Our Q4 financials.
Victor: I've long people $3.
Victor: 83, 5 million that would mean that growing.
Victor: Next slide.
Sharymar Calderon: Now on slide 10, we show the roll forward of non-performing loans from the fourth quarter to the first quarter of 2025, as well as a reconciliation to what we previously disclosed in our investor update in February, and I will provide color on the main drivers of these changes. The Divergence in Actual Results vs. Original Estimates Previously Disclosed resulted from numbers declassified in NCO primarily based on receipts of year-end 2024 financials. Additionally, an impressive payoff was related to Please note that two of our older properties are under letter of intent to sell.
Victor: Sure.
Victor: Number one.
Victor: For the first quarter.
Victor: As well as a reference.
Victor: The Asia.
Victor: Smoke our investor update in February.
Victor: Alright.
Victor: Driver Inc.
Victor: Okay.
Victor: All right.
This loss resulted from them.
Victor: Yeah.
Victor: Of your.
Victor: Additionally.
Victor: What it relates to Q3.
Victor: Oh, that's a motor or your property.
Victor: Yeah.
Victor: Oh no.
Sharymar Calderon: Of note, the genres that classified in MPO were primarily in the health care and restaurant industry.
Victor: We're primarily in the healthcare and restaurant industries.
Sharymar Calderon: Turning to slide 11, we show the roll forward of special mention loans from the first quarter to the first quarter, and provide fodder on the main drivers of these loans. Special mention though, increased by $97 million, primarily driven by three CRE New York City loans totaling $48.8 million. While certain milestones were made by the borrowers, there are accessible mitigants in place, such as adequate loans of value, injury reserves, or other structural enhancements. The increase in special mention loans was also due to five commercial loans in multiple industries, totaling $48.5 million, separated based on receipts of year-end 2024 financials.
Victor: Sure.
Victor: Sure.
Victor: Special mention loans.
Victor: In the first quarter and for my follow.
All right.
Victor: Special mentioned on some pretty funny.
Victor: Alrighty, driven factory ear to ear.
Victor: Totaling $48 8 million.
Victor: And last one for me I know Barbara.
Victor: Alright.
Victor: Okay.
Victor: There are other structural impact.
Victor: The increase in special mentioned.
Victor: Due to the five commercial going through multiple industry totaling $48 5 million calculated based on receipt of your question Jorge.
Sharymar Calderon: These increases were partially offset by $3 million in sales.
Victor: Yeah.
Victor: Partially offset by payoffs.
Victor: Okay.
Sharymar Calderon: Turning now to slide 12, I'd like to provide some color on our expectations for the second quarter of 2025. starting with a talk. As evidenced in the first quarter, we achieved net annualized growth in our 40 pockets, aligned with previous guidance of approximately 15%. This growth was met of the 185-minute reduction in tiger coffee pockets from United Cowboys. This demonstrates the strength of our 40-pocket growth capability.
Victor: Right.
Victor: Well I'd like to provide some color.
Victor: For the second quarter.
Victor: Yeah.
Victor: Firstly this pocket.
Victor: And evidenced in the first quarter, we achieved net.
Victor: In line with previous guidance.
Victor: With net.
Victor: <unk> 5 million reduction in prior calls.
Victor: Okay.
Victor: This demonstrates the strength of our 40 pocketbook.
Victor: Also as mentioned.
Sharymar Calderon: Also, as mentioned, post-corporate conversions, we anticipate that our new treasury management platform and our recently implemented digital account opening tool will be key drivers in achieving this goal. Also important to note is that we recently awarded a new head of treasury management, which Jared will comment on shortly. We continue to expect 15% annual growth by year 2025. On the lending side, we continue to see borrower interest through strong high winds, primarily for real estate procurement. Commercial borrowers seem to be more cautious until market and tariff uncertainty diminish. Therefore, while we expect loan production and growth in the 10-15% range by year-end, we could also see a temporary asset make-change through purchases of assets such as mortgage-backed securities purchases to offset any temporary shortfalls in funding due to the uncertainty in the macroeconomic environment in tariffs.
Victor: Yes, it does make our new Treasury management platform.
Victor: The digital camera.
Victor: He drives risky.
Victor: Yes.
Victor: Also important to note.
Victor: It does.
Victor: Nationally, which Jerry will comment on shortly.
Victor: Because he is right.
Victor: Hum.
Victor: I'm sorry.
Victor: On the lending side, we are.
Victor: Our interest is strong.
Victor: Yeah.
Victor: Correctional Barbara.
Victor: I am from market intelligence.
Victor: Therefore, while we expect loan production and growth.
Victor: But you're right. We could also do you guys have already changed.
Victor: Such as mortgage backed securities.
Victor: I'll say any operational.
Victor: Just any uncertainty in the macroeconomic environment.
Speaker Change: Let's not forget our ability we project our net interest Marty Martin said at the end of May.
Sharymar Calderon: Looking at profitability, we project our net interest margin to be in the mid 360s for the second quarter. Regarding expenses, we are projecting a comparable level to 1 Q in the second quarter. This reflects our continued strategic investments and expansion initiatives, being offset by cost reductions due to the strategic outlays in the mortgage phase. While we expect the efficiency ratio to be slightly higher than 60% given the investment in growth, we are prioritizing ROA and continue to expect to reach 1% in the second half, contingent on any significant macroeconomic outlays to be captured by the APL model in the last quarter of 2025.
Victor: Second quarter.
Victor: We are conducting a comparable level to the <unk>.
Victor: This reflects our continued strategic investment in expansion.
Victor: And also cost reduction.
Victor: Yes.
Victor: Yes, you're right.
Victor: B E.
Victor: Right.
Victor: Well we are for Europe.
Victor: And can be influenced by through each one of them.
Victor: Cognizant on anything negative macroeconomic all basically captured by a mile in the last quarter.
Victor: Hi.
Sharymar Calderon: Finally, with respect to capital management, our intention remains to execute a prudent approach. This involves carefully balancing the need to retain capital to support our growth objectives with bipartisan dividends to enhance returns, especially in light of the current uncertain environment.
Victor: Finally, with respect to capital actions I mentioned.
Victor: This involves carefully balancing the heat treating capital.
Victor: Okay.
Victor: And just what has at times, especially right okay.
Victor: And what about.
Jerry Plush: And with that, I pass it back to Jerry for additional comments and strategic outlook. Thank you, Shary. Before we move to Q&A, I'd like to cover a few slides on additions to our team, and then we'll cover strategic outlook. So first on slide 13, here you can see the significant strengthening we've done in our leadership team, particularly our risk management function. These strategic additions underscore our commitment to a robust and proactive risk management framework, which we believe is imperative to long-term success. This particular slide details the strong talent we've recently brought on board.
Victor: I figure threshold.
Victor: Thank you Sherry before we move to Q&A I'd like to cover a few slides on additions to our team and the whole cover strategic outlook. So first on slide three.
Victor: You can see the significant strengthening we've got in our leadership team, particularly our risk management philosophy.
Victor: Strategic additions underscore our commitment to robust and proactive risk trademark, which we believe is imperative to long term success.
Victor: This particular slide detail and show Count. We've recently brought on board. So first I'm delighted to welcome Jeff.
Jerry Plush: So first, we're delighted to welcome Jeff Tischler as our new chief credit officer. He recently started in March 2025. Jeff also joins our executive management committee, reflecting the critical importance of the credit function as a direct report to me as the CEO of our organization. He brings an impressive 24 years of experience in this role, most recently serving as the EVP and Chief Credit Officer for Citi National Bank in California, an RBC company. His extensive background also includes 19 years with the Third Bank and 2 years with Congress. Jeff's deep expertise has already proven invaluable as we navigate the current economic landscape and continue to grow our business response.
Victor: Chief Credit Officer. He recently started in March 2025, Jeff also joins our executive Management Committee, reflecting the critical importance of the credit function as a direct report to me.
Victor: However organization. He brings an impressive 2030 years of experience strong for most recently, serving that EVP and Chief Credit Officer City National Bank in California, and RBC company.
Victor: His extensive background also includes 19 years fifth third bank in Tunisia, and Chicago Mackenzie Jeff.
Victor: <unk> deep expertise and service improvement and value as we navigate the current economic landscape continue to grow our business responsibly.
Jerry Plush: Since joining us, you've hit the ground running, leading a focused assessment of our current credit function and credit quality overall. His experience from working at much larger regional banks has been invaluable in identifying key areas for optimization. We're already seeing opportunities emerge from this work, and we're in the process of implementing changes and capturing early ways to enhance both the efficiency and effectiveness of all of our current processes. In addition, we're actively uplifting our special assets group to enhance our focus on effective asset management. This includes both rehabilitating returning assets where appropriate while ensuring a more efficient and effective process for the exit and capital preservation of any problem assets.
Victor: Since joining us <unk> hit the ground running leading our focus assessment of our current credit function credit quality overall is experiential marketing a much larger regional banks has been invaluable.
Victor: Key areas for optimization, we're already seeing opportunities emerge.
Victor: We're in the process a bit more than changes in capturing early please.
Victor: As you can see the effectiveness of all of our credit processes.
Victor: In addition, we're actively uplifting our special assets group to enhance our focus on effective asset management. This includes both readability returning assets.
Victor: Appropriate, while ensuring a more efficient and effective process to the exit and capital preservation is a problem with that.
Victor: We intend to add to our special asset resources personnel with deep experience to help our team expeditiously prudently and proactively address great credits.
Jerry Plush: We intend to add to our Special Asset Resource personnel with deep experience to help our team expeditiously, crudely, and proactively address creating credit.
Jerry Plush: Our overarching objective is to ensure America remains strong through this economic cycle with the ultimate aim of making credit risk a true competitive advantage for our institutions.
Victor: Our overarching objective is to ensure they had.
Victor: Strong through this economic cycle with the ultimate aim of taking credit risk secured a competitive advantage for us.
Jerry Plush: We've also recently significantly bolstered our credit review capabilities with the appointment of Corey Valens, our new head of credit reviewing. He joined us in November of last year. Corey brings over 25 years of experience in credit risk management, most recently as a credit risk team manager at Citi National Bank of California. His solid track record in ensuring rigorous credit quality review is already proving to be an asset.
Victor: Also recently significantly bolstered our credit review capabilities with the appointment of corded out as sort of a new tenant credit review that he joined US in November of last year, great brings over 25 years of experience in credit risk management. Most recently as a credit risk team manager at city National Bank in California.
Victor: Solid track record and ensure a rigorous credit quality review is already proving to be an asset to us and finally, we're very pleased to have David I'd say joined us as our head of enterprise risk management.
Jerry Plush: And finally, we're very pleased to have Kavita Singh join us as our Head of Enterprise Risk Management, starting in September of last year. She brings over 20 years of experience in risk management. Most recently, as the Director of Operational Risk at Bank United, and prior to that with PWC.
Victor: September last year. She brings over 20 years of experience in risk management, most recently as a director of operational risk.
Victor: And prior to that with Pwc, our expertise in developing and implementing comprehensive enterprise risk management strategies are crucial as we continue with.
Jerry Plush: Our expertise in developing and implementing comprehensive enterprise risk management strategies are crucial as we continue to enhance our overall We're confident that Jeff, Corey, Kavita's leadership and experience will be instrumental in supporting our strategic objectives and delivering sustainable value.
Victor: Overall risk management framework.
Speaker Change: We're confident that Jeff is the leadership and experience will be instrumental in supporting our strategic objectives and delivering sustainable value.
Jerry Plush: So we'll turn now to slide 14, here we highlight some recent additions to our business development We're excited to welcome two seasoned leaders who will be instrumental in driving our growth conditions. First, we're pleased to announce the appointment of Brandon Smith as our new Chief Consumer Banking Officer. Brayden brings an exceptional 30 years of experience to this role. Many of you will recall Brayden initially joined us in November of last year in a new role here as our Chief Business Development Officer and his impact in already bringing in numerous new business opportunities has been significant.
Speaker Change: So we'll turn now to slide 14 here, we highlight some recent condition sort of business development team.
Speaker Change: Excited to welcome two season theaters.
Speaker Change: Driving our growth conditions. Firstly, we're pleased to announce the appointment of Brian Smith as our new chief.
Speaker Change: Awesome, great ratings and exceptional.
Speaker Change: Curious what the slope many of you will recall.
Speaker Change: He joined US in November of last year and of note new role here as our Chief business Development Officer.
Speaker Change: Its impact can already bringing a numerous new business opportunities.
Jerry Plush: Prior to joining us, Brayden served as Vice Chairman and Head of Private Banking for Wintrust Financial Corp, demonstrating a proven track record of building and leading successful consumer-focused businesses and fostering client relationships. In this new and expanded role, Brayden will leverage his extensive business development, private banking, and wealth management experience to further elevate our consumer banking strategy.
Speaker Change: Yeah.
Speaker Change: Prior to joining to aspirate and served as vice chair and head of private banking <unk> Financial Corp, demonstrating a proven track record of building and leading successful consumer focused businesses fostering deep client relationships.
Speaker Change: New and expanded role Ray will leverage its extensive business development private banking and wealth management experience to further elevate our consumer and stretch.
Jerry Plush: Also, we're delighted to welcome Stephen Putnam as our new head of Treasury Management, also a Packard Berman. Steve brings 21 years of experience in treasury management, most recently serving as SVP and Regional Sales Team Leader at Valley National Bank. His deep understanding of the treasury management space, his proven ability to build and lead high-performing teams will be critical as we look to expand our treasury management services, grow core deposit relationships, and provide even greater value to our commercial clients.
Speaker Change: Also we are delighted to welcome Stephen.
Speaker Change: Treasury management it also affects the birthday Steve.
Speaker Change: Steve brings 21 years of experience in Treasury management, most recently, serving as SVP and regional sales team leader at Valley National Bank.
Speaker Change: His deep understanding of the Treasury management space. He has proven ability to build and lead high performing teams will be critical as we work to expand our treasury management services, where our core deposit relationships and provide even greater value to our commercial clients.
Jerry Plush: These strategic additions to business development underscore our strong commitment to improved growth and to deepening of client relationships across all our lines of business. We're confident that their expertise and leadership will be significant drivers to our future success.
Speaker Change: Strategic additions to the business development underscore our strong commitment.
Speaker Change: Client relationships across all our lines of business.
Speaker Change: With their expertise and leadership will be submitted.
Speaker Change: Drivers for future success.
Jerry Plush: And so now, finally, we'll turn to our final slide, slide 15. Here you can see our commitment to continue to expand our presence in the private market. We continue to gain on that.
Speaker Change: Finally, we'll turn to our clients slide Slide 15 here you can see our commitment to continuing to expand our presence in the Florida market, we can see.
Speaker Change: The gating of that suggest they stopped in mid April we opened our new regional headquarters office or a new banking center in West Palm Beach. Looking ahead, we're excited to open at other key markets with two planned openings at Miami Beach later, this year and our second location in downtown Tampa in the coming months. We also remain actively engaged.
Jerry Plush: So just this month in mid-April, we opened our new regional headquarters office in our new banking center in West Palm Beach. Looking ahead, we're excited to open at other key markets, two planned openings in Miami Beach later this year, and a second location in downtown Tampa in the coming months. We also remain actively engaged in identifying additional strategic locations that align with our growth objectives, and we'll hopefully be announcing another location or two here in the coming weeks. To support this expansion, our hiring strategy remains focused on strategically adding to our business development teams within these key markets of Miami Beach, West Palm Beach, and Tampa Bay.
Speaker Change: Additional strategic location to align with our growth objectives.
Speaker Change: Will you be announcing another location or two here.
Speaker Change: To support this expansion of our hiring strategy or the focus on strategically I think our business development teams within these key markets at Miami Beach West Palm Beach.
Speaker Change: We're actively seeking talented individuals who can help us build and deepen client relationships in Houston.
Jerry Plush: We're actively seeking talented individuals who can help us build and deepen client relationships. And you can also anticipate that we'll make further select additions to our credits. These additions will ensure we remain or maintain a robust and scalable infrastructure as we continue to critically grow the business and support initiatives led by our leadership.
Speaker Change: And you can also anticipate they will be exposed select additions to our credit assumptions. These additions will ensure we remain or maintain a robust and scalable infrastructure as we continue to prudently grow the business and sports initiatives led by our peers.
Speaker Change: So before we open up for Q&A.
Jerry Plush: So before we open up for Q&A, I also want to acknowledge the ongoing discussions of potential shifts in the macroeconomic and geopolitical landscape. stemming from the current administration's tariffs of negotiations. While we do not know if unpredictability will go away in the short term, we're closely monitoring these developments and how the broader economy responds to any resulting changes. The ability and capability to plan through scenario building is key. Our team is actively analyzing different scenarios to have visibility for possible outcomes from changes in rates, demand for loans, and macroeconomic factors such as consumer safety. and we will adapt as appropriate to best position our bank for the evolving economic reality.
Speaker Change: The ongoing discussions for potential shifts in the macroeconomic and geopolitical landscape stemming from the current administration's tariffs negotiations, while we do not know if I'm taking.
Speaker Change: Stability will go away in the short term we're closely monitoring these developments and how the broader economy respond steady resulting in changes.
Speaker Change: <unk> capability to play out through scenarios buildings K. Our team is actively analyzing different scenarios that visibility possible outcomes from changes in rates, the batch reloads and macroeconomic factors such as consumer sake.
Speaker Change: We will adapt as appropriate the best positioned for the evolving economic reality, our priority of our Gainesville that are accruing to sustained growth and value for our shareholders, even with this macroeconomic backdrop.
Jerry Plush: Our priority remains to deliver imprudent and sustained growth in value to our shareholders, even with this macroeconomic backdrop.
Operator: So with that, I'll stop here and Sharymar will answer any questions. Please open the line for Q&A. If you would like to ask a question, please press star 1 on your telephone Confirmation Tone will indicate your line. Press star 2 if you would like to remove your... For participants using speaker equipment, it may be necessary to pick up your handset.
Speaker Change: So with that I'll stop here to share it with the answer to your question. Please open the line for Q&A.
Speaker Change: Thank you.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad a comp.
Speaker Change: Confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first question today is from Russell Gunther of Stephens. Please proceed with your question.
Russell Gunther: Our first question today is from Russell Gunther of Stevens. Please proceed with your question. Hi, good morning, guys.
Russell Gunther: Hi, good morning, guys.
Russell Gunther: Great Grath! Maybe just to start on the loan growth outlook, if you guys could touch on the puts and takes of the lowered guide, just how you're thinking about the impact of continued paydown headwinds and then balancing the tailwinds from recent commercial lender hires with headwinds from macro volatility and uncertainty, really just trying to get to the puts and takes of the growth guide and confidence in hitting double digits this year. Yeah, Russell, I'll start. I'm sure Shary will add some color.
Speaker Change: Great.
Speaker Change: Maybe just to start on the loan growth outlook. If you guys could touch on the puts and takes of the lowered guide just how you're thinking about the impact of continued paydown headwinds and then balancing the tailwind from recent commercial lender hires with headwinds from macro volatility and uncertainty really just trying to get to the puts and takes of the growth guiding cockpit.
Speaker Change: Ensign hitting double digits this year.
Speaker Change: Okay.
Russell Gunther: Yeah, Russell I'll start I'm sure Sherry will add some color I think the.
Russell Gunther: I think the prudent thing right now is, again, we saw some pullback, obviously, from commercial customers in the first quarter, so what we've adjusted when you refer to the pullback on guidance is that, given uncertainty, as we're here in the second quarter, our belief is it's better to say we're going to take a very prudent approach, right? We're going to be very selective, but as we said, loan demand remains pretty strong right now, so we still believe that as we see some volatility here, we still believe that you're going to see, as things work their way through, I'll call it maybe more late in the second quarter, the 3Q, 4Q, that we can still get back to the higher loan average balances that we originally expected.
Russell Gunther: Prudent thing right now as again, we saw some pullback obviously from commercial customers in the first quarter.
Russell Gunther: So what we've adjusted when you referred to the pull back on guidance.
Russell Gunther: Given the uncertainty.
Russell Gunther: Here in the second quarter.
Russell Gunther: Our belief is it's better to say, we're going to take a very prudent approach right, we're going to be very selective, but as we said loan demand remains pretty strong right. Now so we still believe that as we we see some volatility here, we still believe that youre going to see things worked your way.
Russell Gunther: True.
Russell Gunther: Sure I'll call. It may be more late in the second quarter to the third Q4, two that we can still get back to the the higher load average balances that we expect originally expected.
Russell Gunther: Right, Jerry. And aligned to what you're saying, we continuously monitor the pipeline. We see interest on the commercial and ERE side. But also, we want to be cautious, right, because when we looked at the repayment behavior that occurred in the first quarter, we saw some behavior as to repayments of lines, and that's representative of a combination of the still high rate environment, but it's also the uncertainty in terms of the macro factor. So, we want to make sure we're disciplined, we're selective as we move towards the pipeline that we have at hand.
Jerry: Hi, Jerry and align to what you're saying.
Jerry: We monitor the pipeline, we see interests are the commercial line side.
Jerry: But also we want to be cautious right because when we look at prepayment behavior.
Jerry: And in the first quarter, we thought we saw some behavior Astro repayments of lines and Thats representative of a combination of a still high rate environment, but also the uncertainty in terms of the macro factors something we want to make sure. We're disciplined we're selective as we look towards the pipeline that we have our hands. So that that's the driver of that.
Russell Gunther: So, that's the driver of the guidance we shared today. Yeah, and Russell, I guess the other comment I'd make, you know, I think between comments that I made and Shary made is our belief is, you know, we've got the deposit machine still cranking away, and frankly, with a new head of treasury management, with the efforts that we see across the board in all our lines of business, our view is, that's why we said we're not going to back down off of the, you know, go back below a $10 billion. We're going to continue to grow.
Jerry: Guidance for sure today, yes.
Speaker Change: So I guess the other comment I'd make I think between comments that I've made and Sherry.
Speaker Change: It is our belief is we've got the deposit machine.
Speaker Change: Still cranking away and frankly with the new head of Treasury management with the efforts that we see across the board in all our lines of business. Our view is that's why we said we're not going to back down off go back below that 10 billion, we're going to continue to grow and it's temporarily we need to add.
Russell Gunther: And if temporarily we need to add, you know, that cash into, as it comes in, into investment securities, we're fine with doing that. So, I mean, in terms of, yes, it is at a lower yield than some of the low production, but our view is that you're also seeing a greater proportion of the deposit production coming through and not interest bearing any quarter costs.
Speaker Change: That cash into as it comes in into investment Securities. We're fine with doing that so I mean in terms of yes. So it is at a lower yield than some of the loan production, but our view is that you're also seeing a greater proportion of the.
Speaker Change: So production coming through non interest bearing core deposits.
Okay got it no I understood I appreciate the color.
Russell Gunther: Okay, got it, understood, I appreciate the color.
Russell Gunther: And then last one's for me, just switching gears to asset quality and overall profitability. Given the inflow of the potential problem assets this quarter, what visibility do you guys think you have in terms of migration of these levels and potential realized losses? I think the prior guide was charge-offs in the 30, 35 basis point range. Like to get a sense that there's any change to that guide there.
Speaker Change: And then last one for me just switching gears to asset quality and overall profitability.
Speaker Change: Given the inflow of the potential problem assets this quarter, what visibility do you guys think you have in terms of migration of these levels and potential realized losses I think prior guide was charge offs in the 30 35 basis point range like to get a sense if there's any.
Speaker Change: Change to that Guy there.
Russell Gunther: And then if you could, just folding it all together from a P&L perspective, I think Shari, I caught you say 1% ROA in the back half of the year, but if you could just confirm that is the expectation and the main drivers would be helpful. Thank you guys. Sure, Russell. Let me first cover the question on the charge-off side. As you can see, this quarter we had close to 22 to 25 basis points on the charge-off level. We do expect that level to go slightly up in the second quarter as we announced that we had a loan with specific reserves that we charged off the first week of April after a sale of that asset.
Speaker Change: And then if you could just folding it altogether from a P&L perspective, I think Sherri I caught you say, 1% ROA in the back half of the year, but if you could just confirm that.
Speaker Change: That is the expectation and the main drivers would be helpful. Thank you guys.
Speaker Change: Sure Ross So let me first cover the question on the charge off side.
Speaker Change: Can see this quarter, we had close to 22 to 25 basis points on the charge off level.
Speaker Change: Do you expect that level slightly up in the second quarter as we announced that we had along with specific reserves that we charged off the first week of April after our sale of that asset so that number should be closer to the 55 I wouldn't say after that we do expect to see a normalized level as we got into first quarter and it's.
Russell Gunther: So that level should be closer to the 55, I would say. After that, we do expect to see a normalized level as we had in the first quarter, and it's reflective of both still a portion of indirect consumer and small balance retail and business banking loans. So that's on the charge-off side. In terms of the 1% ROA, there are a couple of things that were built into reaching that 1% ROA, and I think a contribution to that would be also the reduction in expenses that we expect in the second half of the year related to the mortgage business.
Speaker Change: And it's reflective of bullish still a portion of endeavour consumer and small balanced retail and business banking loans.
Speaker Change: So that's on the charge off side.
Speaker Change: In terms of the 1% of all the way there are a couple of things that weren't built into reaching back 1% of our way and I think our contribution to that would be also.
Speaker Change: Reduction in expenses that we expect in the second half of the year related to the mortgage business. So something that's important to clarify is that from the income perspective, when we say that we expect a drop of two 5 million is related to that original projections that we had for the year. However, when we look at the first quarter and then the volume that we had on the mortgage business. We believe it's roughly.
Russell Gunther: So something that's important to clarify is that from the income perspective, when we say that we expect a drop of $2.5 million, it's related to the original projections that we had for the year. However, when we look at the first quarter and the volume that we had on the mortgage business, we believe it's representative of what we're going to see from an income perspective for the rest of the year. However, the upside is from the expense side, where we expect a drop after we complete the plan that we have built into phases, and we get the benefit out of that expense reduction in the full second half of the year.
Speaker Change: We tend to think about what we're gonna see from an income perspective.
Speaker Change: For the rest of the year. However, the upside is from the expense side, where we expect a drop off after we complete the plan that we have built interfaces and we get the benefit out of that expense reduction and default that could help you.
Speaker Change: Okay very helpful. Thanks for clarifying thanks, guys.
Russell Gunther: Okay, very helpful. Thanks for clarifying. Thanks, guys. Sure.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: The next question is from Woody lay of K B W. Please proceed with your question.
Woody Lay: The next question is from Woody Lay of KBW.
Speaker Change: Hey, good morning, guys.
Woody Lay: Hey, good morning, guys. Good morning. A quick follow-up on the mortgage expense outlook. Do you expect those expense savings to drop to the bottom line or are they going to be reinvested into some of these other initiatives? No, our expectation is that it should be dropping to the bottom line. Got it.
Speaker Change: Good morning Lee.
Speaker Change: A quick follow up on the mortgage expense outlook do you expect those expense savings to drop to the bottom line or where are they going to be reinvested into some of these other initiatives.
Speaker Change: No our expectation is that it should be dropping to the bottom line.
Speaker Change: Got it.
Woody Lay: Um, and then just thinking about all the macro uncertainty and, and you know, the, who knows how long it could last, but you've got that throughout the year. Does there come a point where if the macro uncertainty persists, it, it might impact the timeline of some of these initiatives? Yeah, I think, you know, what we're doing, Woody, is, you know, when you refer to these initiatives, you know, our commitment to completing those three additional branch locations and hiring the personnel, we're already way down the path on all of that, you know, so, I mean, we're definitely going to go through and complete, we think, those three markets, plus, obviously, what we just opened in West Palm, Our location in Fort Lauderdale is well north of $100 million already.
Speaker Change: And then just.
Speaker Change: Thinking about all the macro uncertainty and the.
Speaker Change: Who knows how long it could last but you got that.
Speaker Change: Debt throughout the year.
Speaker Change: Does there come a point, where the macro uncertainty persists that it might impact the timeline of some of these initiatives.
Speaker Change: Yeah I think.
Speaker Change: What we're doing as you know when you referred to these initiatives.
Speaker Change: Our commitment to completing those three additional branch locations and hiring the personnel.
Speaker Change: We're already way down the path on all of that.
Speaker Change: So I mean, we're definitely going to go through and complete we think those three.
Speaker Change: Three markets plus obviously, what we just opened in west palm aren't going to be very very significant contributors on the business development side, particularly on the deposit gathering side.
Speaker Change: So we see those as strong positives.
Speaker Change: We haven't disclosed it this quarter like we did.
Speaker Change: Our investor update, but our branch downtown in.
Speaker Change: Miami is approaching 150 billion in deposits our location in Fort Lauderdale is well north of 100 million already.
Woody Lay: You know, we've had really, really good success, you know, in terms of incremental deposit generation from the locations, and again, we've been really selective. We're getting great people coming in, wanting to work with the organization, and, you know, we've been able to attract some really nice additions from a business development perspective. So, you know, but that's, you know, when we talk about commitments that, you know, additional that we'll make, they would be things that wouldn't be, you wouldn't see that flowing through in 2025, they're commitments that would probably be floored in the first to second quarter, if you see any incremental expense from, and obviously, additional business coming from.
Speaker Change: We've had really really good success.
Speaker Change: In terms of incremental deposit generation from the locations and again, we've been really selective we're getting great people coming in wanting to work with the organization and we've been able to attract some really nice additions from a business development perspective. So.
Speaker Change: But that's when we talk about commitments that you know additional that will make they would be saying it wouldn't be you wouldn't see that flowing through in 2025, there are commitments that would probably be for the <unk>.
Speaker Change: Second quarter did you see any incremental expense from and obviously additional business coming from.
Woody Lay: if we opened any additional locations. Got it. That's helpful.
Speaker Change: We opened any additional locations.
Speaker Change: Got it that's helpful.
Woody Lay: And then last for me, I wanted to touch on credit and the increase in special mentions in the quarter. Just any color you can share on those five commercial loans that were downgraded. Yeah, no, well, you know, the big thing, I think, in regards to all of those was updated financial information, right? There's no one industry, they're fairly spread. I don't think that, you know, you can say that it's a one-size-fits-all, it's really, I think, the pressure of 20, excuse me, of, you know, continued high interest rates, high costs, but it's all different industries. Yeah, this was on the five, you know, on the three in New York City, you know, again, I think they're just, you know, there's an individual case with each of those.
Speaker Change: And then last for me wanted to touch on credit and the increase in special mentioned in the quarter just any color you can share on those five commercial loans that.
Speaker Change: That were downgraded.
Speaker Change: Okay.
Speaker Change: Yeah no.
Speaker Change: The Big thing I think in regards to all of those was updated financial information right. There's no one.
Speaker Change: Industry their share lease spread.
Speaker Change: I don't think that you know you can say that it's a one size fits all it's really I think the pressure.
Speaker Change: 28.
Speaker Change: As many of you know continued high interest rates high costs.
Speaker Change: But it's all different industries.
Speaker Change: Yep.
Speaker Change: This was on the five.
Speaker Change: Three in New York City, you know again I think they're just.
Speaker Change: There is an individual case with each in each of those well I think the commentary that we've made though is.
Woody Lay: I think the commentary that we've made, though, is... You know, with each of those, these are all, you know, transitory, right? This is in and out, potentially, of this category. Yeah, there were some delays on some implementation of plans that they had shared as part of the process. And while we wait for those to pick up, then we're placing them on special mention to make sure we closely monitor. Yeah.
Speaker Change: With each of those these are all transitory right. This is in an out potentially.
Speaker Change: It's a tough category there were some delays on some implementation ultra plans that you had shared his part.
Speaker Change: The process and while we wait for that to pick up and we're replacing them on special mentioned to make sure we closely monitor.
Woody Lay: Hey, Woody, I think it's really important to know, too, you know, and I think a lot of this comes back around to, you know, you've heard me talk about the emphasis we're placing on significant upgrades in risk management. I think what you saw this quarter is really reflective of us being very proactive, timely identification of any type of blips. You know, so, you know, again, I mean, if you read the regulatory, you know, guidelines on what happens with a special mention, it does not necessarily mean it's going to translate into a problem asset. It means you've identified a weakness that, you know, in a lot of cases can get remediated, or it can be an early warning sign of something that is going to need extra attention.
Speaker Change: Everybody I think it's really important to know too.
Speaker Change: And I think that a lot of this comes back around to you.
Speaker Change: You heard me talk about.
Speaker Change: Do you have to just replace an odd significant upgrades in risk management I think what you saw this quarter is really reflective of us being very proactive timely identification.
Speaker Change: Of any type of lips.
Speaker Change: Again, I mean, if you read the regulatory guidance.
Speaker Change: Guidelines on what happens with a special mention it does not necessarily mean, it's going to translate into our problem asset.
Speaker Change: It means you have identified a weakness that you don't get a lot of cases.
Speaker Change: Mediated or it can be an early warning sign of something that is going to need extra attention and so I think you'll see it just got particularly with Jeff's guidance coming in from the experience that she has had I think that youll see probably a lot of in and out in this category on a go forward.
Woody Lay: And so, you know, I think you'll see, you know, again, particularly with Jeff's guidance coming in from, you know, the experience that he's had, I think that you'll see probably a lot of in and out in this category on a go-forward basis. But, you know, frankly, we're following what I think is the regulatory risk rating guidelines pretty appropriately at this point.
Speaker Change: Basis, but.
Speaker Change: Frankly, we're fine we're following changes to regulatory risk rating guidelines pretty.
Speaker Change: Pretty appropriately it's quick.
Speaker Change: Alright, thanks for taking my questions.
Woody Lay: Alright, thanks for taking my questions. Sure. Thanks.
Speaker Change: Sure.
Speaker Change: The next question is from Michael Rose of Raymond James. Please proceed with your question.
Michael Rose: The next question is from Michael Rose of Raymond James. Please proceed with your question. Hey, good morning, guys. Thanks for taking my questions. Just wanted to start on the buybacks that you guys bought a little bit of. of stock this quarter, just wanted to get a sense for the appetite here given you trade below tangible book. I know you still have some left and maybe the optionality of increasing that at this point. Thanks.
Michael Rose: Hey, good morning, guys. Thanks for taking my questions.
Speaker Change: Just wanted to start on the on the buybacks. So you guys bought a little bit of.
Speaker Change: Oh stock this quarter, just wanted to get a sense for the appetite here given your trade below tangible book I know you still have some some left in the maybe the.
Speaker Change: The optionality of of increasing that at this point thanks.
Michael Rose: Yeah, hey Michael, it's Shary. We were under a 10B51 in the first quarter, we remained under one, and here in the second quarter, we've bought back, I would say, Shary, probably at a limit of about 10,000 shares, depending on what happened with trading in a given day. And I think up yesterday, probably in total, we bought maybe 375,000 shares. You've got a pretty wide range of pricing. Obviously, you saw the volatility of what's happened in pricing. But the really important thing about that is, and we've talked about this with you guys and investors in the past, we did not want to introduce additional shares into the average outstanding share category.
Speaker Change: Yeah, Hey, Michael it's Gary.
Speaker Change: B, we were under a <unk> five one in the first quarter, we remained under one and share in the second quarter.
Speaker Change: Yes.
Speaker Change: We bought back you know I would say Sherri.
Speaker Change: There's a limit of about 10000 shares depending on what happens with trading in a given day and night.
Speaker Change: Pink up through yesterday, probably in total we bought maybe trader 75000 shares you've got a pretty wide range of pricing obviously you saw.
Speaker Change: The volatility of what's happened in pricing, but the really important thing about that is and we've talked about this with you.
Speaker Change: You guys and.
Speaker Change: And investors in the past, we did not want it or juice additional shares into the average outstanding share category and so we had about $8 million left and I think we've pretty much.
Michael Rose: And so, we had about 8 million left, and I think we pretty much have used all of that at this point. Michael, to add to that, we worked under the 10B51 in the two quarters, so the first quarter and a portion now in 2Q, but the amount that we set for these purchases was aligned with the expectation of stock grants during the year to avoid dilution, and that's the purpose of the buyback for this.
Speaker Change: We have used all of that at this point.
Speaker Change: Okay.
Michael Rose: Michael two actually that we weren't covenant under the Etame five one in the two quarters. So the first quarter and a portion narrowing enter to you, but the amount that will be set for these purchases was aligned with the expectation of soft brand strength that you are trying to avoid diversion and that's that's the purpose of the buyback furniture.
Russell Gunther: Okay, Great I appreciate the color.
Michael Rose: Okay, great. I appreciate the color.
Michael Rose: Maybe just on the margin outlook, can you just talk about kind of where new loan production yields are and then on the deposit side, you know, any sort of, you know, maturities over the next couple quarters and, you know, how much flexibility you have to bring deposit costs down while you're still growing deposits. I know some of that's going to be a treasury, so those should be lower costs, but just trying to better appreciate the puts and takes as it relates to the margin outlook from here. Thanks. Yeah, you know, I think the disclosure in the release was we dropped 16 basis points on the low yield side and 17 on the deposit side.
Michael Rose: Maybe just on <unk>.
Michael Rose: On the margin outlook can you just talk about kind of where new loan production yields are and then on the deposit side.
Michael Rose: Any sort of.
Michael Rose: Maturities over the next couple of quarters and how.
Michael Rose: How much flexibility you have to bring deposit costs down while you are still growing.
Michael Rose: Deposits and I know some of that's going to be a treasury. So there should be lower costs, but just just trying to better appreciate the puts and takes as it relates to the margin outlook from here. Thanks.
Michael Rose: Yeah, I think the disclosure in the release was we dropped 16 basis points on the loan yield side in 17 on the deposit side I think where the share is giving guidance in the mid three sixties, our expectations are that we can price down to continue.
Michael Rose: I think when Shary's given guidance in the mid 360s, our expectations are that we can price down to continue to manage that, you know, sort of in that range. And I think that that's, you know, a fairly conservative approach that we've taken to at this stage. Yeah, Michael, to walk you through expectations of the NIM, I think it's important to talk about the NIM in the first quarter, because there are items in there that are recurring. And there are items that are new in terms of the forecast. So if we think about the impact of the Houston franchise versus the fourth quarter, it's something that we expect to be recurring on a go forward basis.
Michael Rose: To manage that sort of been in that range and I think that that's you know.
Michael Rose: Fairly conservative approach that we've taken to this stage and Michael just to walk us through expectations on the NIM I think it's important to talk about the NIM in the first quarter because there are items in there that are recurring and there are items that are new in terms of the forecast. So if we think about the impact from the Houston franchise towards the fourth quarter.
Michael Rose: It's something that we expect to be recurring on a go forward basis.
Michael Rose: The securities portfolio repositioning, providing a contribution to the margin because we now had a full quarter.
Michael Rose: The securities portfolio repositioning provided a contribution to the margin because we now had a full quarter of a higher yield portfolio. And then as Jerry was mentioning, we did reprice our deposits pretty similar to how we saw the repricing of the loans. But we also had the impact of the asset mix change for a portion of the quarter related to the securities portfolio. So if we use that as a baseline and move towards the second quarter, we now expect to see, in the second quarter, the full quarter effect of the change in the asset mix.
Michael Rose: A higher yield portfolio and then in theory was mentioning we did reprice our deposits pretty similar to how we thought the repricing of the loan.
Michael Rose: When we also had the impact of the asset mix change for periods for a portion of the quarter related to the securities portfolio.
Michael Rose: Use that as a baseline and move towards the second quarter, we now expect to see that.
Michael Rose: Second quarter, a full quarter effect from the change in the asset mix and then as you may recall, we're asset sensitive so to the extent that we have rate changes, we expect the astrocytes reprice faster than the deposit side. Although we are trying to make that a hospital to be up one five as you can imagine with time deposits. The beta is it it's not like them.
Michael Rose: And then, as you may recall, we're asset sensitive, so to the extent that we have rate changes, we expect the asset side to reprice faster than the deposit side, although we're trying to make that closer to a beta of 1, but as you can imagine, with time deposits, the beta is lower than that. So from a yield perspective, I think you asked the question of the production. Yields during the first quarter were closer to 7%, but from a go-forward basis, we expect yields to be from $625 to $650. And I think you also asked the yield of the securities portfolio.
Michael Rose: So from a yield perspective, I think you asked a question about the production.
Michael Rose: You'll see we're in the first quarter were closer to 7%, but from a go forward basis, we expect yields could be from 625 to 650.
Michael Rose: And I think you also asked the yield on our securities portfolio, Yes, Youre right our yields on the assets are slightly lower than the lending side, but we still got very good yields and the purchases we made in the first quarter closer to 449.
Michael Rose: Yes, you're right. Yields on the AFS are slightly lower than the lending side, but we still got very good yields in the purchases we made in the first quarter closer to $549. 546, and Byron Cochran. Okay, so 625 to 650 on the one side. Is that just because competition is starting to pick up? I think we've heard that. I think there's a component of competition, but I think there's also an expectation from the borrower side of a forward-looking rate environment. So they're building that in terms of expectation of pricing discussion. Okay. Helpful. Yes. Michael. Michael, just let me add something, though.
Michael Rose: If I recall correctly.
Speaker Change: Okay. So 625% to 650 on the loan side is that just because competition starting to pick up.
Michael Rose: With that.
Michael Rose: I think theres a component of competition, but I think there's also an expectation for on the borrower side.
Michael Rose: Forward looking rate environment. So they're there they don't mean that in terms of expectation of pricing discussion.
Michael Rose: Okay helpful.
Michael Rose: And Michael just let me add something though and I think what you know the key takeaway though.
Michael Rose: I think what, you know, the key takeaway, though, of the way we're looking at things, and Shary's absolutely right, obviously, you know, the loan change, if there's a rate cut, is instantaneous, but one of the things we've been very, very actively doing is keeping what we've been raising on the deposit side short. So, if you look at our ability to, you know, generate new deposits, a lot coming from core, right? And if you're looking at what we're adding in time deposits, The only the only area that we've really emphasized is six months, so we've been very, I'll call it, proactively managing our ability to downward reprice our liabilities, you know, Obviously not thinking that, you know, I should say preparing for, you know, what we think is going to be eventual rate cuts.
Speaker Change: We're looking at things and Im sure he's absolutely right.
Michael Rose: The loan change if there's a rate cut.
Speaker Change: Yes.
Speaker Change: But one of the things we've been very very actively doing is keeping what we had been raised and go to the deposit side short. So if you look at our ability to generate new deposits a lot coming from core right and if youre looking at what were adding in time.
Speaker Change: The only the only area that we've really emphasized is six months. So we've been very I'll call. It.
Speaker Change: Proactively managing our ability to downward reprice our liabilities.
Speaker Change: Obviously not thinking that.
Speaker Change: Or I should say preparing for.
Speaker Change: There's going to be eventual rate cuts and even when that drops in great Jerry.
Michael Rose: And even with the drops in rates, Jerry, the retention rates over time, deposits have been very strong. So we're confident that on the deposit side, we're able to retain deposits of favorite price.
Speaker Change: The retention rates over time can you talk a testing has been very strong.
Speaker Change: And at that.
Speaker Change: Playbook, where April 13.
Speaker Change: Right.
Speaker Change: Very helpful.
Michael Rose: Very helpful.
Michael Rose: Maybe just one final one for me. Appreciate the slide on the additions to the credit side of the house and the risk side of the house. When you guys raised capital back in September to kind of accelerate the cleanup, are you today where you thought you were going to be? And I guess just holistically speaking, I think from the outside looking in, there's probably some frustration on where metrics are, on a relative basis. But is this where you wanted to be at this point? And then how long do you think it will be? I know it's hard to tell the future and what inflows could look like and the volatile backdrop and everything, but is this where you expected to be at this point?
Speaker Change: Maybe just one final one for me.
Speaker Change: I appreciate the slide on the additions to the credit side of the house and the risk side of the house.
Speaker Change: When you guys raise capital.
Speaker Change: Back in September.
Speaker Change: Kind of accelerate the clean up are you today, where you thought you were going to be and I guess, just holistically speaking I you know I think you know.
Speaker Change: From the outside looking in there, there's probably some frustration on where metrics are on a relative basis, but is this where you want it to be at this point and then how long do you think it will be I know, it's hard to tell the future and what inflows could look like in the volatile backdrop and everything but is this where you expect it to be at this point are you behind are you ahead.
Jerry Plush: Are you behind or are you ahead? Just trying to get a better sense of when we can get back to maybe some peer level credit metrics. Yeah, look, I think, you know, in my opening remarks, I think we are continuing to be proactive and aggressively go and rate, risk rate credits, reserve where we feel that we need to do so. And doing that is far more prudent to be upfront, transparent in comparison with, and you know, obviously there is no alternative in my mind. So, you know, Michael, to be to be very blunt, you know, I wish that we could be reporting here today, even, you know, more accelerated asset resolution.
Speaker Change: Just trying to get a better sense of when we can get back to you know maybe some some peer level.
Speaker Change: Credit metrics. Thanks.
Speaker Change: Yeah look.
Speaker Change: I think.
Speaker Change: In my opening remarks, I think we are continuing to be proactive.
Speaker Change: Aggressively go and rate risk rated credits reserve, where we feel that we need to so in doing that is far more prudent to be upfront transparent comparison, but obviously there is no alternative.
Speaker Change: So.
Speaker Change: Michael to be to be very blood, you know I wish that we could be reporting here today.
Speaker Change: You know more accelerated asset resolution.
Jerry Plush: Some of this stuff takes more time than, you know, we would like it to. But, you know, our view is still that we've got a great team, that we're being very proactive in trying to move things along. You know, there is obviously some real volatility in the marketplace that, you know, been a couple of things that extended into the next quarter. But, you know, our view remains the same. You know, I did reference that we're going to add more firepower, you know, here in mid-quarter to our special asset team. And, you know, obviously with Jeff on board with some of the other additions that we've made during not only just the quarter, but continue to make, we're going to continue to be very, very proactive and aggressively look for resolution in as many of these issues as we can.
Speaker Change: Some of this stuff takes more time than we would like.
Speaker Change: I like it to but our view is still that we've got a great team that we are being very proactive.
Speaker Change: They've been trying to move things along.
Speaker Change: There was obviously some real volatility in the marketplace.
Speaker Change: It's been a couple of things that extended into the next quarter, but our view remains the same and you did reference that we're going to add more firepower.
Speaker Change: Here is a big quarter to our special assets team.
Speaker Change: And obviously with Jeff on board with some of the other additions companies made towards not only just the quarter, but continue to make.
Speaker Change: Can it continue to be very very proactive and aggressively look for resolution and as many of these issues as we can.
Speaker Change: I appreciate all the color thanks for taking my questions.
Michael Rose: I appreciate all the color. Thanks for taking my question.
Speaker Change: Okay.
Speaker Change: The next question is from Stephen Scouten of Piper Sandler. Please proceed with your question.
Stephen Scouten: The next question is from... of Piper-Sandler. Please proceed.
Stephen Scouten: Hey, good morning, everyone.
Stephen Scouten: Hey, good morning, everyone. So, Jerry, I appreciated your comments about the risk rating changes and kind of feeling like you're being proactive. I guess one of my questions is, with Jeff coming on here mid-March, I mean, do you feel like some of these changes were a result of having new eyes on the portfolio and maybe a change in, I don't know, strategy or perception of how these things need to be rated? Whether that conveys that they should have been downgraded earlier or not, I guess, how much of that do you think is a change in kind of ideology?
Stephen Scouten: So Jerry I appreciated your comment about the risk rating changes and kind of feeling like you're being proactive I guess one of my questions is with Geoff coming on here mid March I mean, do you feel like some of these changes were a result of having new eyes on the portfolio and maybe a change in in I don't know strategy. Your perception of how these things need to be right.
Stephen Scouten: It.
Stephen Scouten: Whether that conveys that they should've been downgraded earlier or not I guess, how much of that do you think is it could change and kind of ideology around the credit review process.
Jerry Plush: Yeah, no, I think, you know, we've talked about this, Steve, in the, you know, the comments that we made today, that a lot of this is we received updated 2020 for financial information. And so, if you kind of drop back to, you know, and one of the things we wanted to do in the walk across in the NPL page that Shary covered was, look, we got a lot of updates in the March, you know, and, you know, so you might call it the 60 days versus 90 day timeframe post-year end. And, you know, the specifics that we're looking at is, you know, hey, you know, in one case, there was a loss of a tenant, in another case, they've missed some milestones.
Stephen Scouten: Yeah, No I think we've talked about this steven.
Stephen Scouten: The Mexican we made today that a lot of this is we received updated 2024 financial information and so if you kind of dropped back to one of the things we wanted to do when the walk across any NPL page that Sherri covered was but we got a lot of us.
Stephen Scouten: In the month of March.
Stephen Scouten: And so you might call it that.
Stephen Scouten: 60 days versus 90 day time frame post year end and the specifics that we're looking at is you know okay.
Stephen Scouten: In one case, there was a loss of a tenant in another case, they've missed some milestones that information happens to coincide.
Jerry Plush: That information happens to coincide with him coming on board, you know, so I hear you with that. But the reality is, is that a lot of it is, is really just the timing of when things get received of information post-year end.
Stephen Scouten: Jim coming on board.
Stephen Scouten: So I I assure you with that but the reality is is that a lot of it is really just the timing of when things are.
Stephen Scouten: Proceed of information post year end.
Stephen Scouten: Got it and how how frequently normally do you get updated financial statements from from your customers and do in light of these updates do you change the.
Jerry Plush: Got it. And how frequently normally do you get updated financial statements from your customers and do, in light of these updates, do you change the timing of those requests to customers or is that even feasible to get more, you know, more frequent updates from them in light of all the uncertainty? Yeah, look, I think it varies, sometimes some are quarterly, some are semiannual, some are full year. I think a lot of this comes back to very proactive and know your customers, visiting your customers, getting the updates. Some of it is obviously exposure-driven. You know, the bigger the exposure is, the more time that we're making sure that we're proactively out and getting updates.
Stephen Scouten: The timing of those requests to customers or is that even feasible to get more.
Stephen Scouten: No more frequent updates from them and in light of all the uncertainty.
Stephen Scouten: Yeah look I think it varies sometimes there's some are quarterly some are semiannual summer our full year I think a lot of this comes back to be very proactive in know your customers visiting your customers getting the updates.
Stephen Scouten: Some of it is all obviously exposure driven you know the bigger the exposure or some more time, but we're making sure that we're proactively and getting updates.
Jerry Plush: I think it's a combination of...
Stephen Scouten: I think it's a bad answer combination.
Stephen Scouten: Thanks.
Stephen Scouten: Got it and on.
Stephen Scouten: Got it. And on the, you know, on the shift kind of in what you guys thought was possible, kind of mid-quarter, with your mid-quarter update versus what actually transpired around loan growth, and you noted paydowns, repayments, but what, were there any, you know, specific large loans that paid down or any specific drivers? There's a pretty big delta there. And kind of within that, do you feel like the tariffs impact the South Florida markets maybe more than other parts of the country, given its international flavor, or is that not really as significant to your book of business there?
Stephen Scouten: On the shift kind of in what you guys thought was possible kind of mid quarter with your mid quarter update versus what actually transpired around loan growth.
Yes.
Stephen Scouten: Pay downs and repayments, but.
Speaker Change: What were there any specific large loans that pay down or any specific drivers, there's a pretty big delta there and kind of within that do you feel like the tariffs impact the south Florida market, maybe more than other parts of the country given its international flavor or is that not really.
Stephen Scouten: As significant to your book of business.
Speaker Change: No I think it's.
Jerry Plush: No, I think it's a, to be honest, I think it's a combination of people looking at uncertainty and pulling back. I think it's also continued high costs, right? What you can earn on your cash versus do you repay your debt? Again, I don't think we have a one size fits all on this one. But I think it's You know, we haven't really said in any one of these cases, though, I also think, to be candid, there's also some pruning that we did in the portfolio, you know, I think being proactive in making sure that, you know, we want customers in our portfolio that, you know, have their full relationship with our organization, and we want to make sure that that's, you know, our primary focus is, you know, I'm not a, we're not looking to be a financing arm.
Speaker Change: To be honest I think it's a combination of people locating and uncertainty and pulling back I think it's also continued high costs of what you can earn on your cash versus to repay your debt.
Speaker Change: Again, I don't think we have a one size fits all on this one.
Speaker Change: I think it's tough.
Speaker Change: We haven't really said in any any one of these cases. So I also think to be candid theres also some <unk>.
Speaker Change: Rooney that we did in the portfolio.
Speaker Change: I think being proactive and making sure that you know.
Speaker Change: Customers in our portfolio.
Speaker Change: Have their full relationship with our organization and we wanted to make sure that that's you know.
Speaker Change: Our primary focus.
Speaker Change: I'm not we're not looking to be a financing arm only.
Jerry Plush: I think that that's also a result. When I refer to pruning, that, you know, renewals on someone who's not bringing the totality of banking to us, or at least our fair share of it. We no longer have an interest in maintaining those kind of relationships.
Speaker Change: I think that that's also so.
Speaker Change: Okay.
Speaker Change: Pretty good.
Speaker Change: Levels on someone who's not bringing the totality of banking to us or at least our fair share of it.
Speaker Change: Yeah, I'll grab an interest in obtaining those kind of relationships.
Speaker Change: Got it makes sense and then just last thing for me I'm curious from a strategic perspective, how the experience with the mortgage expansion maybe.
Stephen Scouten: Got it makes sense.
Stephen Scouten: And then just last thing for me, I'm curious, you know, from a strategic perspective, how the experience with the mortgage expansion, maybe how that affects your ideology around future expansions, if you, you know, want to just be more focused on the core bank and adding lenders versus other verticals and just kind of, I don't know, it's got a high level how that makes you think about business expansion and additional work. I think from the mortgage business perspective, we definitely see it's complementary as we build the relationship approach. And rather than focusing on an approach of originations to sell and have that fee income, we want to make sure we already have the infrastructure to provide that complementary product for private banking or any other retail customers.
Speaker Change: That affects your ideology around future expansion with you.
Speaker Change: Wanted to just be more focused on the core bank and adding lenders versus the other verticals and just kind of I don't know.
Speaker Change: It's got a high level, how that makes you think about business expansion in additional verticals from here.
Speaker Change: No I think it's coming from the mortgage business perspective, we definitely see as complementary as we build that relationship approach.
Speaker Change: Focusing on our product shelf originations to sell and have that fee income I want to make sure. We already have the infrastructure to provide a complementary product for private banking or any other retail customers, but we want to make sure. We stay focused on our relationship approach.
Jerry Plush: But we want to make sure we stay focused on the relationship approach. Yeah, I guess I mean, you know, the decision to create mortgages and mortgage division a couple years ago, and obviously kind of paring back from there, which seems like the right financial decision, but does it make you think differently about? strategy moving forward in terms of business expansion versus just maybe core commercial lending. And I guess, I mean, obviously it didn't go how you wanted it to go with the national footprint. So how did that make you think about your business? Yeah, Stephen, I think, you know, and again, I'll emphasize, I've made a comment on this.
Speaker Change: Yeah.
Speaker Change: Yes, I guess I mean, you know the decision to create mortgages. The mortgage division a couple of years ago, and obviously kind of paring back from there, which seems like the right financial decision, but does it make you think differently about.
Speaker Change: The strategy moving forward in terms of business expansion versus just maybe core commercial lending and I get it I mean, obviously you didn't go how you wanted it to go with the national footprint. So how does that make you think about your business yes.
Stephen Scouten: Yes, Stephen I think you know and again Oh.
Stephen Scouten: I'll emphasize I've made a comment on that I think.
Jerry Plush: I think the decision really is more around what is a better return for our organization and shareholders is to deploy capital to really build up the scale necessary to make a national platform, a rich nation platform worthwhile versus us, you know, pulling back, focusing solely on footprint, primarily on private banking, but of course we will do retail in the footprint originations. You can see it's a substantial reduction in expense for us as an organization. And the decision was it's a very high efficiency business. You need a lot of scale. And I think for us with the double down on Florida, this is kind of more of a natural follow on to the decision we made to just focus on Tampa, St.
Stephen Scouten: <unk>.
Stephen Scouten: This issue really is more about what is a better return for our organization and shareholders is to deploy capital to really build up the scale necessary to make a national platform about origination platform worthwhile.
Stephen Scouten: Gosh, you know pulling back focusing solely on footprint, primarily on private banking, but of course, we will do retail in footprint originations.
Stephen Scouten: You can see it's a substantial reduction in expense trust as an organization and the decision was it's a very high efficiency business you need a lot of scale and I think for us with the double down on Florida. This is kind of more of a natural follow on to the decision.
Stephen Scouten: We have made to just focus on Tampa St. Pete focus on the three counties here focus on Florida only expansion.
Jerry Plush: Pete, focus on the three only expansion. And I think this ties in very nicely with that because I do think that we could add more people, you know, into these other areas. accomplish the mission that we've got set out, which is to be, you know, the bank of choice in the markets that we're in, right. And I think that that fits better. You know, in order to be a national player, I just think what we would have had to deploy to really scale that up, would have just taken away from our focus of what we needed to be, what we need to be focused on, you know, is sort of job wise.
Stephen Scouten: And I think this ties in very nicely with that because I do think that we could add more people.
Stephen Scouten: Into these other areas and.
Stephen Scouten: Accomplish the mission that we've got set out which is to be you know.
Stephen Scouten: The bank of choice in the markets that we're in right and I think that that fits better.
Stephen Scouten: In order to be a national player I, just think what we would've had to deploy to really scale that up.
Stephen Scouten: Would have just taken away from them.
Stephen Scouten: Our focus of what we needed to.
Stephen Scouten: What we need to be focused on.
Stephen Scouten: Sort of job one.
Stephen Scouten: Thank you. Got it. That makes sense.
Speaker Change: Got it that makes sense I appreciate all the time and the color. Thanks guys.
Operator: I appreciate all the time and the color here. Thanks. Thank you very much.
Stephen Scouten: Okay.
Speaker Change: This now concludes our question and answer session I would like to turn the floor back over to Mr. Plus for closing comments.
Operator: This now concludes our question and answer session.
Jerry Plush: I would like to turn the floor back over to Mr. Plush for closing comments. Thank you everyone for joining our first quarter earnings call. We appreciate your interest in Amerant and your continued support. Hope you all have a great day.
Thank you everyone for joining our first quarter earnings call. We appreciate your interest in Ameren and your continued support and hope you all have a great day.
Speaker Change: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference.
Operator: Ladies and gentlemen, thank you for your participation.
Operator: This does conclude today's teleconference. © BF-WATCH TV 2021 © BF-WATCH TV 2021
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