Q1 2025 Civista Bancshares Inc Earnings Call
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Before we begin I would like to remind you that this conference call may contain forward looking statements with respect to the future performance and financial condition of service the Bancshares, Inc.
Vault risk and necessary piece, sorry, yes factors could cause actual results to be materially different from any future results expressed or implied by such forward looking statements. This fosters I discussed in the company's S. E C filings, which are available on the company's website the company disclaims.
Any obligation to update any forward looking statements made during the call.
Additionally, management may refer to the non-GAAP measures, which are intended to supplement but much substitute the most directly comparable GAAP measures.
The press release also available on the company's website contain stuffy Nashville, and other quantitative information to be discussed today as well as their a constellation of the GAAP to non-GAAP metrics. This call will be recorded and made available on should be stopped bancshares' website. That's a triple double you thought the C. I V b.
Dot com.
Schafer: The conclusion of Mr. She first remarks, he and Mr Management team will take any questions. You may have no I will turn the call over to Mr. Schafer.
Thank you. Good afternoon. This is Joe Shafer, who's the president and CEO. So this the bankshares and I would like to thank you for joining us for our first quarter 2025 earnings call.
Rich Dutton: I'm joined today by Rich Dutton SVP of the company and Chief operating Officer debate.
Rich Dutton: SVP of the company and Chief Financial Officer of the Bank and other members of our executive team.
Chuck Parcher: Well, Chuck Parcher SVP of the company and Chief lending Officer.
Rich Dutton: Bank is as long as vacation.
Rich Dutton: This morning, we reported net income for the first quarter of $10.2 million or <unk> 66 cents per diluted share, which represents a $3.8 million or 60% increase over our first quarter of 2024 and a 275.
Rich Dutton: With our increased over a weak quarter.
Rich Dutton: This is this also represents an increase in pre provision net revenue of $4 $3 million or 47% over our first quarter in 2024 and at $1.4 million or 11, 9% increase over linked quarter.
Core deposit funding continues to be a priority and we were pleased that our deposit funding excluding broker deposits grew organically by over $67 million during the quarter, which allowed us to continue reducing our reliance on brokered funding. We believe this shift.
Rich Dutton: Toward more relationship funding contributes to the overall value of our core deposit franchise.
Rich Dutton: I continue to be encouraged by our ability to remain disciplined in pricing, both our deposits and loans through this interest rate cycle.
Rich Dutton: Net interest income for the quarter was $32 $8 million, which represents an increase of $1.4 million for four and a half per cent compared to our linked quarter. The increase was attributable to our earning asset yield increasing six basis points to 547 one.
Rich Dutton: And our overall funding costs decreasing by 11 basis points to 2.31%.
Rich Dutton: Our decline in funding costs was largely attributable to a $150 million and brokered Cds that matured in late December that I mentioned on our last call. They carried a rate of five point over 8%.
Rich Dutton: Able to replace it reduced them by elaborate $125 million in brokerage Cds over the subsequent 12 months at a blended rate of 443, 7%, representing a savings of 71 basis points.
Rich Dutton: Similarly, we had $850 million in brokered Cds that matured in March that carried a rate of 5.18%. We were also able to replace and reduce these deposits was $145 million of Cds flatter over the next 12 months and it wasn't.
Rich Dutton: Right.
Rich Dutton: Wait two 6%.
Rich Dutton: Representing a savings of 92 basis points, while this had little impact on our first quarter results. We anticipate that it will further reduce our overall funding cost and lead to further margin expansion.
Rich Dutton: We have solid loan demand in each of our markets. However, we continue to be disappointed in our approach to loan and lease pricing, which has had the intended impact of muting growth our loan and lease portfolio.
Rich Dutton: Annualized rate of 2.8% during the first quarter, we anticipate continuing to an old loan and lease rates higher as we work to maintain our loan to deposit ratio ideally within a range of 90% to 95%.
Rich Dutton: The result of our continued discipline in managing both our loan and lease pricing as well as our funding cost was the continued expansion of our margin, which grew by 15 basis points during the quarter the 3.51%.
Rich Dutton: Our ROA for the quarter was 1% continuing our spring of improving our away each of the past four quarters, our ROE for the quarter was $10 three 9%.
Rich Dutton: Earlier this month, we announced the renewal of our stock repurchase program. The program authorizes management to repurchase up to 13, and a half million dollars in outstanding shares and expires on April 15 2026.
Rich Dutton: While we have not been active in repurchasing shares and remain committed to increasing our tangible common equity. We feel it is important to have the ability to repurchase shares should it become prudent to do so.
Rich Dutton: Last week, we also announced a quarterly dividend of 17 cents per share based on the corner end market close of $19 54 says this represents an annualized yield of 348%.
Rich Dutton: During the quarter, our non interest expense was $27 $1 million, which represents a $1.2 million or four 1% decline on a linked quarter and as a result of improvement in nearly every non interest expense category. We continue to focus on.
Rich Dutton: Controlling those expenses that are within our control the largest decline was in compensation related expenses and was primarily due to five fewer ftes a reduction in benefit costs and an increase in the amount of compensation deferred related to loan origination.
Rich Dutton: Compared to the prior year's first quarter noninterest expense declined $315000 or one 1% while the improvement did not include as many categories. The resolve study similar impact.
Rich Dutton: The largest decline in comparison to the first quarter of the prior year was also attributable to 19 fewer ftes reduction and benefit costs and an increase in the amount of compensation deferred relating to loan origination. This reduction in expense was partially offset by an increase in professional services.
Rich Dutton: Related to projects and the conversion of our lease accounting and servicing system.
Rich Dutton: Noninterest income declined 1.2 million or 12, 8% in comparison to the linked quarter and 396000.
Rich Dutton: 8% in comparison to the first quarter of the prior year.
Rich Dutton: The primary drivers of the decrease from a linked quarter were a $655000 decline in gains on the sale of loans, which were made up of mortgages and loans and leases originated by our leasing division due to typically less mortgage and leasing originations during the first quarter, coupled with the impact of hirings.
Rich Dutton: First rates paid.
Rich Dutton: $314000 decline in ATM and interchange revenue due to the shift from pre holiday the post holiday debit card use.
Rich Dutton: $124000 of chlorine and won't manage disease due to market declines during the quarter as assets under management decreased <unk> $384000 decline in Bohai revenue as we received $314000 in proceeds from a death benefit in the prior year.
Rich Dutton: These declines were offset by an increase of $616000 in lease revenue and residual income generated by our leasing division.
Rich Dutton: The primary drivers for the decline from the prior year's first quarter were attributable to a $396000 decline in gains on the sale of loans due to the same seasonality and high interest rates previously mentioned and lower lease rate related fees, which are included in other income.
Rich Dutton: The combination of increased revenues and disciplined expense control resulted in an efficient efficiency ratio of 64, 9% for the quarter compared to 68, 3% for the linked quarter and 73, 8% for the prior year's first quarter.
Okay.
Rich Dutton: Turning our focus to the balance sheet.
Rich Dutton: For the quarter total loans and leases grew by $22 $8 million. This represents an annualized growth rate of two 8%, while we experienced increases in commercial and I, both owner occupied and non owner occupied commercial real estate and residential real estate.
Rich Dutton: Saw small declines in all other loan categories as we shared on previous calls we continue to price commercial and AG loan opportunities aggressively and are being more conservative in how we priced commercial real estate opportunities as we try to manage the overall mix in our loan portfolio.
Rich Dutton: Hello, we originate for our portfolio are virtually all adjustable rate loans and our leases all have maturities of five years or less.
Rich Dutton: New and renewed commercial loans were originated at an average rate of 7.16% during the quarter, which is similar to our origination rate during the linked quarter.
Rich Dutton: Loans secured by office buildings sneak up 5.25% of our total loan portfolio.
Rich Dutton: As we have stated previously these loads are not secured by high rise Metro office buildings, rather they are predominantly secured by single or two story offices located outside of central business districts.
Rich Dutton: Along with year to date loan production, our pipelines are solid and our Undrawn construction lines were 226 million at March 31st.
Rich Dutton: We continue to see loan opportunities in each of our markets and we anticipate loan growth to be in the mid single digit range for the balance of 2025.
Rich Dutton: However, loan demand may be impacted longer the economic uncertainties persist.
Rich Dutton: On the funding side total deposits increased $27 million or an annualized growth rate of three 2%.
Rich Dutton: However, if we back out broker deposits our deposit balances grew by $67 1 billion or two 5% for the quarter, which we believe is the result of our focus on deepening customer relationships we.
Rich Dutton: We did see some migration from non interest bearing accounts into higher rate deposit accounts during the quarter, but our cost of deposits. Excluding brokered deposits declined 12 basis points from the linked quarter.
Rich Dutton: Our deposit base remains fairly granular with our average deposit account, excluding Cds approximately $28000.
Rich Dutton: With respect to FDIC insured deposits, excluding serviced as older deposit accounts, 13.1% or $419 $8 million of our deposits were in excess of the FDIC limits at quarter end, our cash and Unpledged Securities at March 31.
Rich Dutton: We're $523 7 million, which more than covers these uninsured deposits.
Rich Dutton: Other than $568 million of public funds, which are primarily operating accounts with the various municipalities across our footprint. We had no deposit concentration at March 31.
Rich Dutton: At quarter end, our loan to deposit ratio was 95, 8%, our commercial bankers and Treasury management officers private bankers and retail staff continue to have success gathering additional deposits from our commercial small business and retail customers as evidenced by orders.
Rich Dutton: Deposit growth.
Rich Dutton: We believe our low cost deposit franchise is one of them. So this is the most valuable characteristics contributing significantly to our solid net interest margin and overall profitability.
Rich Dutton: At March 31st our security portfolio was $648 $5 million, which represents 15, 6% of our balance sheet.
Rich Dutton: The interest rate environment continues to put pressure on portfolios at March 31st all of our securities were classified as available for sale and had $16 million of unrealized losses associated with that.
Rich Dutton: This represented a decrease in unrealized losses of two and a half million dollars since December 31 2024.
Rich Dutton: We ended the quarter with our tier one leverage ratio at 866%, which is being well capitalized for regulatory purposes.
Rich Dutton: Our tangible common equity ratio was 6.59% at March 31, an increase from $6 four 3% at December 31 2024.
Rich Dutton: So this is earnings continue to create capital and our overall goal remains to grow our capital pretty level are adequate to support organic growth. We did increase our dividend in the prior quarter and although we have not purchased any shares during the past five quarters. We continue to believe our stock is a value.
Our capital levels remained strong we recognize our tangible common equity ratio still screened screened slope our previous guidance remains that we would like to rebuild our TCE ratio back to between 70 and 77 in between seven and 7.5% to that.
Rich Dutton: And we will continue to focus on earnings it will balance the payment of dividends and any stock repurchases with building capital to support our growth.
Rich Dutton: During the quarter, we made a $1.6 million provision we had charge offs of 976000 of which 800000 was related to one of the nonperforming credits we discussed in the fourth quarter that loan is expected to pay off today.
Rich Dutton: Balance of the provision was attributable to loan growth and the impact historically.
Rich Dutton: In fact, historically low prepayments in our loan portfolio have had older Cecil model.
Rich Dutton: Our ratio of the allowance for credit losses to total loans is one point, 300% at March 31, 2025, which is consistent with 1.29% at December 31 2024.
Rich Dutton: Other than a general concern over the impact of macroeconomic uncertainties, the economy across Ohio, and South Eastern Indiana is showing no signs of deterioration in our credit quality remained strong.
Rich Dutton: In summary, we were very pleased with the continued expansion of our net interest margin and our ability to control non interest expense during the quarter. We are pleased with our team's success in attracting more lower cost funding and anticipate low to mid single digit loan growth for the balance of 2020.
Rich Dutton: As we temper loan growth to match, our ability to fund that growth at a reasonable cost overall 2025 is off to a solid start and our focus continues to be on creating shareholder value.
Rich Dutton: Thank you for your attention this afternoon, and your and your investment and now we will be happy to address any questions that you may have.
Rich Dutton: Yeah.
Speaker Change: Thank you ladies and chapel menu will now conduct the question and answer session. If you have a question. Please press star keys, followed by one on your Touchtone phone, even though he had a one time pop acknowledging your request.
Rich Dutton: <unk> will be Paul is in the order they are with Steve if he would like to decline from the calling process. Please press the pound key please ensure you lift the handset and if you.
Rich Dutton: You are using a speaker phone before Betsy.
Rich Dutton: One moment for your questions. Please.
Rich Dutton: Yeah.
Speaker Change: Our first question comes from the line of Justin <unk> from Piper Sandler Your line is open.
Speaker Change: Hey, good afternoon, guys Hi.
Speaker Change: Hi, Justin.
Speaker Change: Just wanted to start on some of the margin and plus obviously a lot of success in moving core deposit costs lower in the quarter was some of that broker and repricing I guess outside of the brokered you'd mentioned repricing in the quarter down to the 4243 range how much opportunity.
Speaker Change: He is there left in the back book to see funding move lower Yeah is that largely run through at this point and then how does that counteract against how aggressive you need to be on an incremental funding.
Yeah, I think there's still there's still opportunity there just in the on the deposit book you know, we do in Chesapeake, maybe four to five basis points again, this coming quarter.
Speaker Change: Large expansion of this week, we you know we pretty much have been able to on the higher interest rate and stuff that we just organically had other than the brokered we have been pretty much. That's almost been is finished.
Speaker Change: That has got it right we've cut them immediately to almost all of 100% beta on a lot of that stuff.
Speaker Change: We also have opportunity on the low side, there's $110 million that will reprice over the next two quarters.
Speaker Change: So those rates you know, we should pick up a couple of hundred basis points as those loans reprice.
Speaker Change: And then the new loan yields are still going on as I said it like all in the you know 715 716 725 range. So we think there's opportunity. There. So we think there's opportunity to continue to expand the margin here in the near term over the next quarter or two.
Speaker Change: Okay. So you mentioned that four to five basis points of a perhaps and then pick up in the second quarter. So you think that you know that type of acceleration could sort of continue through the balance of the year at least for the next couple of quarters and then you know does it maybe stabilize.
I'll just throw a number out there that 360 level. How are you thinking about that if it does start to stabilize as we get deeper into the year I think third quarter. You know we have a little calculator that we try to run different scenarios all of it I think you know we're anticipating maybe four to five basis points in the second quarter in two to three.
Speaker Change: Basis points in the third quarter right now that's just if rates stay fairly.
Speaker Change: No.
Speaker Change: Well you know I forget.
Speaker Change: Similar to get over to where they're at today.
Speaker Change: Okay.
Speaker Change: Okay, and so how sensitive would that be too.
Speaker Change: You know potential cuts out of the fed.
Speaker Change: Is that all of a sudden we can model. It cuts I guess, we bottomed in any way speak to that or yeah. Just go see them and see them went up so.
Speaker Change: So we factored in a cut in June and another one in September and some of the numbers that Dennis referenced include those.
Speaker Change: So it's in that range of about four to five basis points second quarter, an additional two to three basis points of expansion in the third quarter.
Okay. That's super helpful. I appreciate that and then just moving over to expenses.
Speaker Change: Believe you talked about an elevated spend last quarter tied to some staff turnover.
Speaker Change: And then the leasing conversion project you had mentioned did a lot of that or did most of that normalized back down in the first quarter and if so how should we think about further investment into areas like digital you know potentially.
Speaker Change: Potentially offsetting the decline in the base that you saw this quarter.
Speaker Change: No that was for.
Speaker Change: Sexual fees did not then they'll they'll go away going into the second quarter some of them.
Rich Dutton: But as we gave you alluded to we do our investing back into a couple you know some technology things that and other investments and we generally sometimes use consultants for those projects. So you know rich you want to touch more on the expense side, Yeah happy to Louisiana.
So from where we were in Q4 in the fourth quarter, we added.
Rich: Some adjustments within accruals Boca incentive accruals as well as just other accruals that are related to FDIC expense that made Q4, a little bit higher than normal Q1, we started to normalize we still have some seasonal or one time type expenses and professional fees as well as items related to annual audits.
Rich: And annual meeting expenses. So we expect the second quarter to come in around the same level as the first quarter.
Speaker Change: It'll offset the reduction in professional fees that Dennis just mentioned, but also include our annual merit increases that we get to our in place. So that'll keep us about flat from where we are now maybe up a little bit and then the third and fourth quarter.
Speaker Change: That additional expense coming in for the reinvestment into the company.
Speaker Change: And software expenses professional fees and some marketing expense.
Speaker Change: As we started to do that did show online account opening and Justin just to give some color around some of the expense reductions that we had they were attributable to the.
Speaker Change: The elimination of our after our call center and our call Center. So you know we save some costs there well I think that we were spending for the after hours now and you know some employee costs. We also closed a branch in the fourth quarter.
Speaker Change: So we really saw that impact of some FTE saves in there. We are we renegotiated our reinsurance you really kept the same level of coverage and picked up $160000 and it was something like that we did a record purge.
Speaker Change:
Speaker Change: And eliminated some accounts that we were paying for all of our Jack Henry system. So that that's where all of that expense reduction a lot of it came from.
Speaker Change: In the first quarter and we're going to continue to look for those things. The team has done a really good job of identifying things. So we've identified a few more things.
Speaker Change: But also where we need to do that because we're investing back into the company.
Speaker Change: Okay.
Speaker Change: Okay, and then I guess just from a budgeting standpoint is putting that altogether I'm. You know is there a scenario, where you're able to keep costs for the full year of flat I'm just for the full year when I compare it to 'twenty 'twenty four is that within the realm of possibility. If I think about maybe kind of stable expenses next quarter and then.
Speaker Change: Maybe a tick higher back closer to a you know call it 28 million a quarter for the back half is that realistic.
Speaker Change: It is yeah, we expect us to be.
Speaker Change: Less than 28 million in the second half.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Okay Merit increases usually.
Speaker Change: It happened in the second quarter, so, but we got some things that we think can help offset that as well.
Speaker Change: Okay great.
We are making are focused on revenue generating investments.
Speaker Change: Okay I appreciate the color there I will step back thanks, so much guys.
Brad: Thanks, Brad.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Brendan I'll. So I'll have him off because your line is open.
Speaker Change: Okay.
Brendan: Hey, good afternoon, maybe Fox hope you're doing well.
Speaker Change: And whenever you're good.
Speaker Change: Good.
Speaker Change: Thanks for all the detail you you just offered on margin and expenses that's super helpful. Maybe turning to the fee base.
Speaker Change: It seemed like it was a bit lighter than I was thinking for the quarter.
Speaker Change: And down a bit year over year.
Speaker Change: Can you just kind of walk through the outlook for the various line items and kind of wrap it into an overall expectation for fee income in the near term. Thank you.
Speaker Change: Yeah, we do think there'll be a bounce back here coming in the second quarter. You know mortgages see you know is is usually light for us in that in their first quarter was a little bit lighter than the first quarter a year ago, but it was a way off.
Speaker Change: And we do expect that to pick up pipelines appear to be pretty good.
Speaker Change: So we do expect that to pick up so and then the leasing has been you know it's it's been a little choppy you know trying to get a handle on.
Speaker Change: All that said, so, but we do expect that that was a little bit lighter than we and they are also anticipated and we do expect that volume to pick back up.
Speaker Change: As we go into the into the next into this.
Speaker Change: As we're into the second quarter.
Speaker Change: Yeah, I mean does he and just adding to that I thought that would be the wealth management fees that are still behaving as we would expect to accept the a L. M is dropping because of the market volatility right.
Speaker Change: Yeah.
Speaker Change: Yeah, Yeah of course that makes sense, okay excellent maybe sticking to the topic of fees just.
Speaker Change: More of a modeling question here.
Speaker Change: Do you folks happened it has the.
Speaker Change: The gain on sale split between mortgage and.
Speaker Change: C L off for the quarter, both in terms of volumes and seek revenue.
Speaker Change: Yes, I have that in front of me.
Speaker Change: So I'd see a $600000 gain on sale in the first quarter, a 45% of that was from the leasing and finance business 55 per cent for mortgage.
Speaker Change: Works out to be about 270000.
Speaker Change: For CLS and $330000 per mortgage.
In terms of the volume that was sold on mortgages about $19 million.
Speaker Change: On the volume that we're selling or the leasing about $7 6 million. So mortgage is comparable to the first quarter of 'twenty 'twenty four.
Speaker Change: Which was $20 million time 19 million for this quarter and the leasing was $7 6 million a little bit less than this time last year, which was $12 6 million in the first quarter of last year.
Speaker Change: Well, we did see everybody's seeing gain on sale on the mortgage side softening.
Speaker Change: We saw an average of 175% from the gain on sale in the first quarter of this year compared to 2.1 out in the first quarter of last year.
Speaker Change: Okay. That's that's helpful color I appreciate it thanks for taking the questions.
Speaker Change: Thank you Brendan.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of my Friends Defense. Your line is open.
Speaker Change:
Speaker Change: Hi, good afternoon guys.
Speaker Change: Okay.
Speaker Change: The.
Speaker Change: Loan yields increase in the loan yields up nine basis points really nice to see and I'm. Just wondering were there any interest recoveries or anything contributing to that or was that just new loans repricing higher and then kind of fixed rates do at doing the same thing.
Speaker Change: Now just remember there was nothing unusual in there. So it is just new loans re pricing higher.
Speaker Change: The team is really staying disciplined in their pricing so.
Speaker Change: They've really done a nice job there.
Speaker Change: And so.
Speaker Change: So we think we'll get continue to get some benefit there.
Speaker Change: You know as I mentioned 110 millions of loans repricing over the next two quarters, and then new stuff going on.
Speaker Change: You know what those rates are.
Speaker Change: We think there's room for improvement.
Speaker Change: Yeah.
Speaker Change: Yeah, No real nice to see and then last quarter. There was the two loans the multifamily loan under contract in the C&I loan that was going to be back in compliance. Dennis you mentioned, one of them, which one of the two loans was gonna be resolved tomorrow and then what's the status on the other one.
Speaker Change: The multifamily should be resolved today, all today with their Laura we shouldn't say, we were pretty confident that's going to go through it was that we had thought it might be cleared up at the end of the first quarter, but the the buyer wanted to extend that is a participation loan the banks got together and said well exceed.
Speaker Change: Send it but you got to put all our significant deposits down to do that and they went hard with a significant amount of money to be able to extend that so we're real confident on that and and you know I I was hoping to have.
Speaker Change: Yesterday, we had paid off before this call.
Speaker Change: Other loan.
Speaker Change: It's more of that as well.
Speaker Change: On the last call, it's more like a community loan and were not at all concerned with it. It's a it's just taking a little bit of time to work through some of their issues.
Speaker Change:
Speaker Change: The project was bonded so we're waiting to hear from the.
Speaker Change: The bonding company, and then and hopefully will continue.
Speaker Change: Just kind of continue to work with greater clarity on that hopefully in the next three or four weeks.
Speaker Change: Okay.
Speaker Change: And then maybe one more Dennis what are you hearing from kind of commercial borrowers are real estate developers any.
Speaker Change: Sensus.
Speaker Change: Kind of cautiousness, and putting things on pause given the the tariffs and the trade situation.
Speaker Change: So we've been reaching out to different customers.
Speaker Change: Really the you know it's very been very enlightening. There are some businesses that view it as a positive and others you know view it as a negative I would say the sentiment has been kind of a wait and see type of attitude for most of our borrowers at least as to what the law.
Speaker Change: Long term effect will be I do think it will slow some of the capex spending from some of our business, but you know from some of our business borrowers and the first Oh here in the near near term this quarter, maybe next quarter.
Speaker Change: They just wait to see what happens, but so yeah, we think it impacts maybe.
Speaker Change: People that are you know are showing kind of the finished product more so than those that are you know selling a piece or apart you know.
Speaker Change: Those customers seem like whereas we've talked to they're able to pass on that cost so the.
Speaker Change: First one so that N N piece.
That finished product to the end user.
Speaker Change: They seemed a little bit more concerned whether they're going to be able to pass that on or not but overall I. Just think it's you know it's more of a wait and see type of approach and I do think it'll slow some capex spending.
Speaker Change: Great. Thanks for your insight.
Terry: Thanks Terry.
Speaker Change: Our next question comes from the line of Monroe now that's from D. A Davidson David <unk>. Your line is open.
David Davidson: Hey, I appreciate the color on kind of sentiment.
David Davidson: Is that evident in current pipeline you said, there's a little bit of Capex spending is slowing a bit is that already is that already showing up near term in the second quarter and then he can.
David Davidson: Talk about the range of growth.
David Davidson: What could drive to the high end of your guide and what could drive the low end of your guidance.
David Davidson: On the on the loan book are you talking to me well, yes, yes, yes.
David Davidson: Okay. Okay. I don't think it's anything you know the current pipeline I don't think it has much impact at $231 million I think most people are far enough along in there they're not stopping all of a sudden so I don't think it is but I think you know from this point on may slow a little bit of that too that that capex spending.
David Davidson: You know as far as what are the.
David Davidson: You know our economies are pretty good here in Ohio, and South Eastern Indiana, Theres, just a lot of activity still going on.
David Davidson: Most of the you know the the Central Ohio, and then you know the Cincinnati market and stuff. So you still are getting a lot of technology driven companies, Microsoft has announced a significant you know.
David Davidson: Our investment into central, Ohio, Google and Amazon.
David Davidson: So they're all building the building.
David Davidson: Facilities down there and then you got in the role of the defense contractor and stuff. So as those things take hold I think it's going to continue to you know.
David Davidson: Fuel the economy as the housing demand you're going to see a pick up you know there's a lot more we see builders.
David Davidson: You know bill.
David Davidson: Building products and stuff. So I think things like that will continue to fuel things and it benefits really the whole state because you know as you have companies like banderole or Intel or something they've got suppliers lose suppliers tend to locate closer to where they are there.
David Davidson: Building out and that's that helps.
David Davidson: It may not be in that exact market, but it could be three.
David Davidson: Three or four counties away, which benefits you know what our footprint covers really the whole state and south Eastern Indiana. So I think those things will help us as we move forward in our North East, Ohio market. That's been a really good market for us and Sherwin Williams just completed.
David Davidson: You know they're building downtown building, the new headquarter building, where they're moving into in and they'll.
David Davidson: Add a few jobs to that and it's things like that I think that just won't continue to help our overall economy here for the for the short term.
Speaker Change: And well this is rich I know Dennis talked about last call and I think on this call too I mean, the governor for us will be the thing that kind of gauge whether it be more loans are less loans is really our ability to fund those loans and whether or not we can attract low cost deposits couldn't success. If we continue to have that success and if we're able to implement that.
Speaker Change: Digital or online account opening successfully like we intend to in the back half of the year I mean that that really would I think allow us to kind of hit the upper levels of kind of the projections rideshare right.
Speaker Change: Alright, that's helpful. In your nose Guy write down is it only gets better.
Speaker Change: Well, we have had three consecutive quarters of pretty good deposit growth, even though if you look at just the deposit growth. We had this quarter remember that we can reduce those broker deposits by $56 million.
Speaker Change: Mhm.
Speaker Change: What what is.
Speaker Change: What is contemplated from the lease business and your growth guide.
Speaker Change: And the fee guide I know, there's a little bit of a bounce back would be that this is also a seasonally slower please.
Leasing quarter.
Speaker Change: Just kind of talk through kind of expectations for the year for some reason.
Speaker Change: Well, Lisa I think we're projecting about $115 million of total originations and I think through the first quarter that was the slowest quarter for them.
Speaker Change: So I think you know I think with.
Speaker Change: Well, what do we do with leasing revenue production 16, 17 go either 20 million.
Speaker Change: Yeah, we don't have that number but that would've been their slowest quarter. So we do anticipate that that to pick up as the year goes on if that gives you any.
Speaker Change: We don't have the exact numbers, but I hope that gives you any sense.
Speaker Change: Feel for that.
Speaker Change: Okay.
Speaker Change: Telling about half.
Speaker Change: About half, okay that that was the other piece okay.
Speaker Change: All four of them.
Speaker Change: A lot of my other questions have been kind of asked and answered. So I appreciate the commentary today.
Okay. Thank you.
Speaker Change: And then if you would like to ask a question. Please press star followed by one. Our next question comes from the line of Emily Lee from K B W. Your line is open.
Emily Lee: Hi, everyone. This is Emily stepping in for Ken, but Sir Thank you for taking my call.
Speaker Change: Are you.
Speaker Change: So I wanted to ask about deposit repricing.
Speaker Change: Your expectations for deposit repricing, if we were to get a scenario with no.
Speaker Change: No rate cuts I know you mentioned that and factored in two rate cuts since you got it. So just curious on your thoughts there.
Speaker Change: Yeah. So we have I don't see it that way. So we have in terms of retail Cds that are coming up for maturity.
Speaker Change: Somewhere in the neighborhood of about $100 million to $140 million a quarter.
Speaker Change: That are coming up for bid.
Speaker Change: Maturing a wish.
Speaker Change: Shouldn't be picking up maybe 10 to 15 basis point in time in each of those just the comfort with the renewals we.
Speaker Change: We have.
Speaker Change: But our Irish range on the shorter term so our highest rate right now is on the seven month CD.
Speaker Change: We plan on keeping it that way just with all the uncertainty and volatility.
Speaker Change: I'll keep us protected from that standpoint, I'm also with our online account opening software.
Speaker Change: A solution that will be launching in July.
Speaker Change: We expect our deposit cost would go up slightly but our total cost of funding should decline.
Speaker Change: So so well raise we'll raise our own deposits organically through probably some Cds and stuff and pay off that more expensive borrowed money or a broker deposits.
Speaker Change: Yeah.
Speaker Change: Okay, great. Thank you and.
Speaker Change: Our credit metrics improved this quarter can you give some details on your expectations for credit going forward, especially given the macro uncertainty.
Speaker Change: Yeah, we still feel good about our.
Speaker Change: Loan book, I mean, delinquencies are actually down quarter over quarter and.
Speaker Change: They're still at pretty close to historically low levels are you know there's always some one offs and stuff we've had some repricing of Oh, the email list some of the.
We have repriced higher and that's caused some loans to be downgraded.
Speaker Change: Because of you know the.
Speaker Change: The rates are higher and the cash flow as you know it doesn't quite meet our standards, but it looks that significantly below thresholds and then the same regard. So we will although we would so credits in we're moving credit child. So.
Speaker Change: We feel good where the credit is your allowance is really healthy.
Speaker Change: We have Oh, you know 1.30 per cent and the Ada and the allowance and we we could charge off where we have a we basically could you know we always 11 years of Oh, we took our charge offs.
Speaker Change: We got a 11 year run on.
Speaker Change: If we took out all of those took out is that the criticized because that's a net charge offs. The net charge off for the last 12 months.
Speaker Change: So you take the net charge offs over the last 12, but if you took what those words Wheres Theres 11 years in Atlanta.
Speaker Change: That's great. Thanks, so much.
Speaker Change: Oh geez.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: There are no further questions at this time Mr. <unk>. Please continue.
Speaker Change: Yeah.
Okay, well, thank you everyone.
Speaker Change: Okay.
Speaker Change: I just want to recap kind of in summary, just to tell you how pleased.
Speaker Change: Pleased I am with just starting with the quarter.
Thank you everyone for joining the call you know our fourth quarter results were really attributable to the hard work that all of our team put in over the past several months and continues to put in.
Speaker Change: While we're pleased with the results for the first quarter. So we are confident that our strong core deposit franchise that are proven disciplined approach to managing the company really positions us well for future success. So I just to thank you again for joining the call and look forward to talking to everyone.
Speaker Change: Few months to share our second quarter results. So thank you for your time today.
Speaker Change: Ladies and gentlemen, this concludes the conference call for today. Thank you for participating you may now disconnect.
Speaker Change: [noise].