Q1 2025 Third Coast Bancshares Inc Earnings Call
Yes.
Speaker Change: Greetings and welcome to the third coast Bancshares first quarter 2025 earnings Conference call.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: A brief question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: It is now my pleasure to introduce your host Natalie Hairston Investor Relations for third coast Bancshares. Thank you you may begin.
Speaker Change: Thank you operator, and good morning, everyone. We appreciate you joining us for third Trust Bancshares Conference call and webcast to review our first quarter 2025 results with me today is Mark Caraway, Chairman, President and Chief Executive Officer, John Mcwherter, Chief Financial Officer, and our three Santana Chief Credit Officer.
Speaker Change: First a few housekeeping items, there will be a replay of today's call and it will be available by webcast on the investors section of our website at IR Dot third test don't think there will also be a telephonic replay available until may 1st and more information on how to access. These replay features were included in yesterday's earnings release.
Speaker Change: Please note that information reported on this call speaks only as of today April 24, 2025, and therefore, you're advised that any time sensitive information may no longer be accurate at the time of any replay listening or transcript reading.
Speaker Change: In addition, the comments made by management. During this conference call may contain forward looking statements within the meaning of the United States Federal Securities laws. These forward looking statements reflect the current views of management. However, various risks uncertainties and contingencies could cause actual results performance or achievements to differ materially from those expressed in the <unk>.
Speaker Change: <unk> made by management, the listener or reader is encouraged to read the annual report on Form 10-K that was filed on March 10, 2025 to better understand those risks uncertainties and contingencies the.
Speaker Change: The comments made today will also include certain non-GAAP financial measures additional details and reconciliation to the most directly comparable GAAP financial measures were included in yesterday's earnings release, which can be found on the third coast website now I would like to turn the call over to <unk>, Chairman, President and CEO, Mr. Bart Caraway Bart.
Speaker Change: Good morning, everyone and thank you Natalie I'll start by sharing the key points from our earnings release. Following my remarks, John will discuss the financials in Audrey will review our credit quality.
Speaker Change: I'll provide our outlook for the remainder of 2025.
Speaker Change: The results of the first quarter showcased the strength of our team and the effectiveness of our strategic planning. This is largely due to our well defined priorities, which include disciplined loan growth robust credit management practices improved operational efficiencies and the ongoing commitment to increasing shareholder value.
Speaker Change: First early in the second quarter, we announced that third coast had successfully executed a significant commercial real estate loan securitization. This.
Speaker Change: This transaction provides us with increased flexibility in managing our balance sheet and capital ratios and generate fee income that will possibly positively impact our net interest margin in the second quarter. We believe the securitization transaction exemplifies our forward thinking approach to capital management.
Speaker Change: By positioning the company to support future loan growth, while maintaining a prudent risk profile.
Speaker Change: By converting.
Speaker Change: A portion of our loan portfolio into marketable securities we have not only reduced our concentration in commercial real estate.
Speaker Change: A key focus for regulators and source of potential risk.
Speaker Change: But also improved our risk based capital ratios.
Speaker Change: As the securitization allows us to redeploy capital more effectively.
Speaker Change: <unk> new lending opportunities.
Speaker Change: This proactive step enhances our liquidity and enables us to manage our loan portfolio dynamically responding to shifts in loan demand or economic conditions without compromising our credit standards. Furthermore, the structure and ongoing management of the securitization ensure that we maintain rigorous oversight of our credit quality.
That's required by regulatory guidance.
Speaker Change: And that we continue to meet the evolving needs of our customers and communities.
Speaker Change: Additionally, our proactive asset management strategies.
Speaker Change: Just on reducing nonperforming loans and efficiently transitioning selected assets to other real estate owned.
Speaker Change: Continuing to deliver positive results as evidenced by the ongoing improvement in our already strong credit quality.
Speaker Change: While Audrey will provide more specifics I just want to emphasize our continued confidence in the company's credit risk strategies.
Speaker Change: We are committed to maintaining a healthy balance sheet, while promoting long term sustainable growth.
Speaker Change: Another high point as our net interest margin, which improved nine basis points in the first quarter to 380% John will provide more detailed financials I want to underline that our commitment to maximizing returns to inform decision, making cost awareness and adaptability.
John Mcwherter: Absolutely, but certainly not least.
John Mcwherter: We are committed to prioritizing enhance shareholder value, which is demonstrated by our continuous rise in book value and tangible book value, we achieved growth of four 4% and four 7% respectively over the prior quarter and when compared to the same period last year, we achieved a $14.
John Mcwherter: 3% and 15, 2% respectively.
John Mcwherter: Overall I am very pleased with the results of the first quarter. Our team has continued to show remarkable focus and discipline in executing the company's strategic priorities, which has allowed us to sustain this upward momentum.
John Mcwherter: With our clearly defined objectives and.
John Mcwherter: And such a talented team we are well positioned for future success I'm confident that we will continue to deliver exceptional value in the upcoming quarters with that I'll turn it over to John.
John Mcwherter: Thank you Bart and good morning, everyone. We provided the detailed financial tables in yesterday's earnings release. So today I'll provide some additional color around select balance sheet and profitability metrics from the first quarter.
John Mcwherter: We reported first quarter net income of $12 4 million essentially flat versus the fourth quarter of 2024.
John Mcwherter: This resulted in an ROA of 117, and a 12.4% return on equity.
John Mcwherter: Net interest income growth was 12, 4% for the year, but down slightly from the fourth quarter. The decline from the fourth quarter was primarily due to a decline in fed funds sold and other interest earning assets.
John Mcwherter: Noninterest expenses were up three 2% or 878000 in the first quarter.
John Mcwherter: And we're up 8.5% or $2 2 million from the same quarter last year.
John Mcwherter: Investment Securities were up 13.4 million to $397 million and a OCI improve to a gain of $10 3 million.
John Mcwherter: Deposits declined $62 million for the quarter, resulting in a loan to deposit ratio of 93, 9%, but also resulted in a net interest margin, which improved nine basis points to 380.
John Mcwherter: Period end loan growth was $21 6 million a quarterly average growth was slightly better at 42, and a half million dollars.
John Mcwherter: Payoffs were relatively high for the quarter, resulting in a modest scripts.
John Mcwherter: Loan growth has been better in April with loans up more than 50 million. Thus far. Additionally investment securities are up 78 million due to the securitization.
John Mcwherter: The bank collected an origination fee on the securitization, which will benefit second quarter net interest margin by approximately five basis points.
John Mcwherter: Noninterest expenses will be somewhat noisy in the second quarter with head count up 14.
John Mcwherter: Under going our core conversion and also incurring extra expense related to the securitization.
John Mcwherter: Lastly, we accreted capital for the quarter and are therefore, considering a share buyback program.
John Mcwherter: That completes the financial review and at this point I'll pass the call to Audrey for our credit quality review.
John Mcwherter: Thank you John and good morning, everyone I'm pleased to report that our ongoing efforts towards improving asset quality and maintaining a well diversified credit portfolio has led to a noticeable improvement in our already strong asset quality ratios in the first quarter nonperforming loans declined by nine point.
John Mcwherter: $3 million, resulting in the nonperforming loans to total loans ratio improving by 23 basis points from the prior quarter.
John Mcwherter: The decline in nonperforming loans was primarily due to the foreclosure and transfer to Oreo of three nonperforming loans in one relationship totaling $7.3 million to pay off and pay down of five nonperforming loans totaling $1 9 million in the charge off of one loan.
John Mcwherter: 810000, nonperforming assets to total assets declined by two basis points to 0.56%.
John Mcwherter: Net charge offs also declined improving by five basis points in the first quarter when compared to the prior quarter. Although we charged off one loan totaling 810000 recoveries of 412000 protocol resulted in net charge offs of just 398000.
John Mcwherter: Our loan portfolio continues to be well diversified.
John Mcwherter: C&I loans increased to 40% of total loans construction development and Landlines increased slightly to 21%.
John Mcwherter: While owner occupied declined slightly to 11% and non owner occupied CRE stayed the same at 16% of total loans.
John Mcwherter: Office represented three 4% of total loans with approximately 54% being owner occupied medical office was another 1.2% of total loans.
John Mcwherter: As I have stated previously the office portfolio generally consists of class b with some owner occupied C space and it's all located in our Texas footprint. The average LTV of our office and medical office portfolio is approximately 60%.
John Mcwherter: I'll tie family represented three 4% of total loans and has an average LTV of less than 65%.
John Mcwherter: Overall, our conservative credit culture has consistently yielded strong results.
Bart Barthes: We remain disciplined in our credit underwriting approach and foster a culture of prudent credit standards and disciplined practices that align with our strategic vision for sustainable growth with that I'll turn the call back to Bart Barthes.
Thank you Audrey first let me start our outlook by expressing my pride in our teams exceptional ability to navigate challenges and capitalize on opportunities with expert level of precision.
Bart Barthes: We consistently execute our strategic plan effectively.
Bart Barthes: Concentrating our efforts on initiatives and prioritize priorities that aligned with our company wide goals.
Bart Barthes: During our last earnings call, we outlined several key priorities first efforts to improve our efficiency ratio.
Bart Barthes: We remain optimistic that our ongoing success of our 1% improvement campaign will continue to deliver significant operational efficiencies and cost savings.
Bart Barthes: Our loan volumes continue to align with our targets remaining in the range of 50 million to 100 million per quarter.
Bart Barthes: Notably we have already surpassed 50 million in gross loan production for April one.
Bart Barthes: Fluctuations may occur month to month, we remain on track to achieve $325 million in loan growth translating to an 8% annual run rate when compared to the prior year.
Bart Barthes: Third deposits experienced the typical seasonal decline in the first quarter.
Bart Barthes: And we anticipate some additional seasonal roll off similar to loans deposits can vary significantly above two month lastly, we continue to evaluate additional securitizations as a tool to manage concentrations and support sustainable profitable growth.
Bart Barthes: Demonstrating our commitment to robust capital planning and risk management in conclusion, I'd like to emphasize our thorough pursuit of operational excellence and profitability with a highly effective strategic plan in place a strong capital foundation improved asset quality and disciplined execution third coast is well.
Bart Barthes: And to continue delivering value to our shareholders and to remain competitive in our dynamic Texas markets.
Bart Barthes: I would now like to turn the call back to the operator to begin the question answer session operator.
Bart Barthes: Thank you we will now be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Bart Barthes: Yeah.
Speaker Change: Our first question comes from the line of Woody lay with <unk>. Please proceed with your question.
Speaker Change: Hey, good morning, guys.
Speaker Change: Morning, Larry.
Speaker Change: Wanted to start on the securitization impact congrats on executing that in April.
Speaker Change: I think you'd called out an origination fee that will flow through the NIM.
Speaker Change: Next quarter is there also a noninterest impact that that we should see in the quarters are ahead or ahead or will it all flow through interest.
Speaker Change: It will all flow through the margin so for this next quarter.
Speaker Change: No I think it'll be about five basis point.
Speaker Change: <unk> to the margin and then it'll be less than that going forward. We do still have some fees that will amortize over time, but not as much.
Speaker Change: Got it.
Speaker Change: And then you know you you completed this one in April you said, you'll evaluate the potential for additional securitization from here like what's a realistic target is that you know execute on a couple every year just how should.
Speaker Change: How should we think about the opportunity.
Speaker Change: Yeah, it's going to be based on demand. So it's really hard to predict when it may be if our concentration ratios creep up we're certainly going to be more interested in doing one and they're not but it's dependent on.
Speaker Change: The loan demand that we see out there and our ratios are in good shape to today.
Speaker Change: Got it.
Speaker Change: And then maybe last for me just shifting over to one growth, it's pretty impressive to heal wounds are already up.
Speaker Change: 50 million this month, especially.
Speaker Change: Given all of the sort of macro uncertainty that's employees.
Speaker Change: You know talking to those borrowers what gave them the confidence to execute on the loans and.
Speaker Change: Now speaking with other deals in the pipeline does it feel like.
Speaker Change: They're looking to delay deals every day I'm open to executing in the near term.
Bart Barthes: Yeah, So maybe I'll start and let split Bart add to it.
Bart Barthes: Are the things that we have funded up in April and remember, we're a commercial bank. So there's a lot of revolving lines out there. So these werent necessarily new deals that were closed and funded during the month, it's more likely fundings on our revolving lines that had been outstanding for for a long period of time and you know.
Bart Barthes: Those those numbers go up and down every month, then you know for the first quarter. We had a lot of a lot of pay downs, we had some pay downs on revolving lines, but we had some big customers that sold out.
Bart Barthes: I think primarily sold out in just paid off completely and then yeah I think that kind of following up on what John is talking about as you know our our pipeline has been maybe a little bit more moderate in the past, but still pretty strong and it's been the pay downs that have kept our loan volumes from being higher.
Bart Barthes: So I think we hope that we're towards the tail end of that when I'm talking to the customers.
Bart Barthes: You know we're in really good markets in Texas, and you know a lot of them are even say Lee from if we hit a recession that tap the brakes and you know that's going to help some people fine you know labor sources, and keep costs down and regardless, whether we hit a little bit of a lull or go forward our economy I think there's.
Bart Barthes: Pretty optimistic I would say most of our borrowers are cautious, but optimistic on where theyre going with it so.
Bart Barthes: You know I'm not seeing anything that is extremely alarming.
Bart Barthes: Yes, other than the fact that Theres, just a lot of noise out there, but the core businesses that we're seeing in orders look through the portfolio.
Bart Barthes: Seem to be doing pretty well right now so we're just going to be very selective we're not going to have the the huge loan growth that we've had in past years, because we've just tightened up critical so much but at the same time, there's a lot of business coming to us and so many of this so much of this is coming from existing customers and other banks that are portable.
Bart Barthes: Moving their business to us so we feel pretty good about it right now.
Bart Barthes: That's great color thanks for taking my questions.
Speaker Change: Thank you. Our next question comes from the line of Bernard one.
Speaker Change: <unk> with Deutsche Bank. Please proceed with your question.
Bernard: Oh, Hey, guys. Good morning, I just my first question on the fee income it was really good to the $3 1 million and I think the biggest driver was in the service charges.
Bernard: Just wanted to know has there been any pricing changes what maybe you can just give some color on what drove the increase and if that's a most of it recurring trends.
Speaker Change: Trend from here.
Speaker Change: And Bernie we probably haven't talked about it in a couple of quarters, but our Treasury management division the fee income from that business ear before last was up a 100% last year was up 75%.
Speaker Change: It's coming off a relatively small base, but we've done a great job and move in commercial businesses over that has lots of fee income and some of that some of the billings on that our quarterly so after any quarter end, you'll you'll see a little bit of a pickup in and more core.
Speaker Change: I'm looking at I'm looking at it on a monthly basis, but particularly after a year and that'll be our largest billing cycle. So it wasn't an increase in fees or anything like that it was more of those customers that are on annual building.
Speaker Change: Okay got it thanks for that and then John maybe you know you mentioned.
John Mcwherter: You know the 14 head Count addition.
John Mcwherter: Some of the conversion expenses and I think some additional expenses to the securitization can.
John Mcwherter: Can you just help maybe size expectations for expenses, whether it's two key or for the rest of the year.
John Mcwherter: Yeah. That's a good question you know the the first quarter, we have all the extra expense related to payroll taxes, and I know everyone has that.
John Mcwherter:
John Mcwherter: Other than that in the new employees I mean, I think we did a great job on expenses holding the line on virtually everything it doesn't look like the pipeline for hiring new people is as material. So.
John Mcwherter: I think all the payroll tax stuff rolls off its may be replaced with some of the securitization expenses I mean kind of my best guess is noninterest expense is pretty flat in the second quarter versus where we were so I think right around that $28 million range is probably what you should expect.
John Mcwherter: Okay, great. Thanks for taking my question.
John Mcwherter: Yeah.
Speaker Change: Thank you. Our next question comes from the line of Michael Rose with Raymond James. Please proceed with your question.
Michael Rose: Hey, good morning, guys. Thanks for taking my question just wanted to go back to the puts and takes to the margin. So five basis point benefit from the securitization.
Speaker Change: You guys still have a fairly high.
Speaker Change: Cost of deposits, but I think you can kind of continue to bring down. Although you did have a step down in DDA. So would love some some color there.
Speaker Change: And then just on the loan side.
Speaker Change: Kind of where new production yields are trending obviously saw the average yield came down but just trying to get a sense for kind of what the all in margin could kind of look like puts and takes.
Speaker Change: With the securitization benefit and then how many.
Speaker Change: What's you know do.
Speaker Change: Do you have baked into those expectations.
Speaker Change: Sure. So if you remember last quarter, we said that our margin was was somewhat tamped down by all the extra cash that we had we had some seasonal deposits and for the most part we just left that money at the fed so our spread on that was was modest and if I remember I saw.
Speaker Change: Said that you know it was probably five basis points to the margin and instead, we went up nine so we did do a little bit better than I expected.
Speaker Change: All things being equal that kind of $3 75 to $3 80 on the margin I think is what you should expect and then adding to that is the securitization, which will be five basis points or roughly five basis points for the second quarter that'll be kind of a one time sure.
Speaker Change: As we pick up the origination fee income from the loan that we booked there.
Speaker Change: There is other amortized fee income, but it won't have a material effect on the margin I wouldn't say, so kind of in that $3 75 range.
Speaker Change: We've talked before about being pretty well matched assets versus liabilities in that if rates move whether it would be up or down that we feel well positioned to take care of it.
Speaker Change: We do expect rates to come down in at least a couple of times this year and if it does I think the margin will be flat to somewhat better.
Chris: Okay helpful. Chris.
Chris: Appreciate the color and then just maybe back to the loan growth outlook. If you are expecting a couple.
Chris: You know a rate cut this year I would assume that would kind of ramp up some of the paydown activity on the on the crude side.
Bart Barthes: But I think Bart you said, you're still kind of expect.
Bart Barthes: 325 ish million in growth in the next three quarters, that's about 110.
Bart Barthes: Or not.
Bart Barthes:
Does that.
Uh huh.
Bart Barthes: Office.
Bart Barthes: Oh man.
Bart Barthes: Maybe if you do a little bit better on the growth side.
Bart Barthes: Uh huh.
Bart Barthes: Yeah.
Bart Barthes: Yeah. So.
Bart Barthes: Yeah.
Bart Barthes: Growth.
Bart Barthes: It's kind of lumpy.
Bart Barthes: Sometimes a third quarter's biggest components for sometimes it moves around.
Bart Barthes: So we have a lot of corn.
Bart Barthes: Yes.
Bart Barthes: A lot of opportunities, we're seeing with it so I feel like it's just going to be.
Bart Barthes: And what are.
Absolutely you know, sometimes you slow down.
Bart Barthes: Customer service, you are able to move more customers easier.
Bart Barthes: And if rates come down.
Bart Barthes: You probably will see some payoffs but.
Bart Barthes: And does it also will help a little bit on the real estate lending side of it might be able to pick up some more deals. So you know theres opportunities all throughout the market if youre looking at it you know.
Bart Barthes: And that's why I feel confident that this team has a really good core group of customers continually.
Bart Barthes: With.
Bart Barthes: That I would just leave the backlog is strong enough.
Bart Barthes: Very strong that we're going to be somewhere in maybe maybe it's the lower end of that range, it's hard to tell with it.
Bart Barthes: 325.
Bart Barthes: This year.
Bart Barthes: Okay helpful. Appreciate the color Bart maybe just last one for me contemplation.
Bart Barthes: Buy back and I've always thought of you guys as the.
Bart Barthes: It's kind of a growth bank.
Speaker Change: Does that does that signal anything in your in your evolution.
Speaker Change: Paying a dividend right. So I mean does that signal any evolution of the company or are we still growth growth focus at this point I'm just trying to.
Speaker Change: You better understand the rationale around a buyback rather than just the.
Speaker Change: The where the stock is right because I mean, you guys have had such strong growth for a period of time. So just trying to better appreciate why you would even consider a buyback at this point. Thanks.
Speaker Change: Yeah, well, we are definitely having discussions around the board at this price level I think we're seriously considering that.
Speaker Change: I'll I'll bumped that till next quarter, but I will tell you that where we are now it is certainly such an attractive stock to the existing shareholders that we are having discussions about it.
Speaker Change: Yeah, I agree Michael I mean, you know the accretion of capital and the level of our stock prices what makes it appealing.
Speaker Change: Certainly we're somewhat biased.
Speaker Change: Don't think we should be trading at less than tangible book value either.
Speaker Change: Ah, yes totally got it interesting environment up there. Thanks for taking my questions guys. Appreciate it.
Michael Rose: Thank you Michael.
Speaker Change: Thank you. Our next question comes from the line of Matt Olney with.
Speaker Change: Stephens. Please proceed with your question.
Speaker Change: Yeah. Thanks. Good morning, just a few follow ups here and you you may have addressed some of these I'm, having a hard time I'm with the phone. So apologies if you already addressed some of these I guess on the on the deposit side. John I think you mentioned it briefly in your prepared remarks saw some deposit balance contraction a liquid levels came.
Speaker Change: Down just any color on the drivers of that.
Speaker Change: No I mean, we had the seasonal.
Speaker Change: More than one customer, but we do have seasonal deposits that primarily affect December and March. So there there was still a little bit of that in the March numbers, but the pipeline for deposit growth looks strong in the second quarter. So.
Speaker Change: Billy flattish on deposits I wouldn't expect a big increase because we do have.
Speaker Change: Some seasonal deposits yet to roll off that are kind of tax related.
Speaker Change: There may be gone now are gone in the next week or so.
Speaker Change: But nothing nothing out of the ordinary I think if you look back at our.
Speaker Change: Prior years you'd see the same thing in December and March that.
Speaker Change: I know you all aren't seeing the monthly numbers, but particularly just right at quarter end were getting some pretty big deposit 10.
Speaker Change: Okay.
Speaker Change: And back on the securitization just a few follow ups here I think you mentioned.
Speaker Change: This should obviously help improve the.
Speaker Change: Our commercial real estate and construction concentration levels, just just any color on that in terms of where we were march 31st and kind of what the pro forma.
Speaker Change: Yeah. So at December if I remember right our guidance.
Speaker Change: Production concentration ratio was 148 or 149% of capital somewhere thereabouts, and it's about 130% today low below 130% to 132% or somewhere thereabouts over the.
Speaker Change: The last couple of weeks are doing the securitization did free up a lot of room there and.
Speaker Change: Kind of a similar story on the 300 bucket that we were.
Speaker Change: I don't know 350 ish or something and it probably took us down 10 to 25 basis points.
Speaker Change: Okay.
Speaker Change: And then also on the securitization just trying to I appreciate maybe the any kind of off balance sheet exposure here what type of exposure.
Speaker Change: Is there remaining to to the bank all of that securitization.
Speaker Change: So we took back and investment securities of $78 million that we put in held to maturity that we consider to be investment grade it's lower yielding.
Speaker Change: Ed.
Speaker Change: Should be from a credit perspective.
Speaker Change: Very strong stronger than the original loan would have been because effectively where we're selling risk in doing a securitization.
Speaker Change: The assets that we take back the weather.
Speaker Change: We're calling it an investment security, we actually contemplated calling it alone, but it's you know obviously related to the original loan request. It's just that it doesn't have the same credit risk today, we don't have to put provisions against it nothing like that.
Speaker Change: Okay.
Speaker Change: And then John that same note any more color on the underlying assets of the securitization and and what type of <unk>.
Speaker Change: Our ration would that securities on your balance sheet look like.
Speaker Change: Yes, let alone had a three year maturity. So it is short term it is floating rate and.
Speaker Change: The underlying collateral is primarily construction loans.
Speaker Change: I assume single family construction.
Speaker Change: Correct, yes, okay.
Speaker Change: Okay, great. Thanks, guys I appreciate it.
Speaker Change: Thank you.
Speaker Change: Thank you as a reminder, ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone keypad. Our next question comes from the line of David storms with Stonegate. Please proceed with your question.
David Storms: Good morning, everyone and thank you for taking my questions apologies. If these have been asked and having a bit of an issue with the phone.
David Storms: But just wanted to start you know historically some chop in the market is providing you all with an opportunity to add.
David Storms: Some key bankers and other employees.
David Storms: Does the current macro environment provide a similar opportunity.
David Storms: Or does this one maybe a different flavor than in the past no. I mean, I think we've steadily built up a good reputation of being a talent magnet and quite frankly, there probably more people that want to join us and we have room on the payroll right now so we have been selected.
David Storms: <unk> and added a couple of acres here and there to fit needs, but I really think we've got a great culture that people want to join.
David Storms: However, we're also very mindful of expenses too. So we're just kind of layering in bankers to write positions when we need them.
David Storms: But certainly we have I think a very desirous culture to be a part of.
David Storms: Got it very helpful. And then just one more on the M&A environment, just curious as to what you're seeing there you know how generally you're focusing on it and it's all frozen up until we got a couple of rate cuts.
David Storms: All or you can provide there would be very helpful.
David Storms: Certainly well I mean, we've continued to talk to various people in and make sure that where you can now see some deals are coming through.
David Storms: At this point in time, it's just M&A is very very difficult to do but at some point the market will change and all of the legwork that we've been doing in foundation building.
Hopefully something will come to fruition.
Speaker Change: I think we have a great bank that we can grow organically and hit the numbers, we need to M&A is not something that we need to have with some other bank Steve So.
David Storms: Think we can continue on hitting our goals objectives through the normal course of business.
Speaker Change: But eventually there probably will be a unicorn out there that could be very interesting to us.
Speaker Change: Understood. Thanks for taking my questions you've been looking at.
Speaker Change: Thank you Dave.
Speaker Change: Thank you. This concludes today's question and answer session I'd like to turn the floor back over to management for closing comments.
Speaker Change: Thank you Devin and thank everybody for your continued support of <unk> Bancshares, we look forward to speaking to you next quarter. Thank you.
Speaker Change: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].