Q1 2025 SB Financial Group Inc Earnings Call
Yeah.
Operator: Good morning and welcome to the SB Financial first quarter 2025 conference call and webcast. I would like to inform you that this conference call is being recorded. and that all participants are in a listen-only mode.
Speaker Change: Good morning, and welcome to the SB financial first quarter 2025 conference call and webcast.
Speaker Change: I would like to inform you that this conference call is being recorded.
Speaker Change: And that all participants are in a listen only mode.
Operator: We will begin with remarks by the management and then open the conference up to the investment community for questions and answers.
Speaker Change: We will begin with remarks by the management and then open the conference up to the investment community for questions and answers.
Carol Robbins: I will now turn the conference over to Carol Robbins with SB financial.
Carol Robbins: I will now turn the conference over to Carol Robbins with SB Financial. Please go ahead. Thank you. Good morning everyone.
Speaker Change: Please go ahead.
Speaker Change: Thank you good morning, everyone I'd like to remind you that this conference call is being broadcast live over the internet and will be archived and available on our website.
Carol Robbins: I'd like to remind you that this conference call is being broadcast live over the internet and will be archived and available on our website at ir.yourstatebank.com.
Speaker Change: I R got your state they dot com.
Carol Robbins: Joining me today are Mark Klein, Chairman, President, and CEO, Tony Cosentino, Chief Financial Officer, and Steve Walz, Chief Lending Officer. Today's presentation may contain forward-looking information, cautionary statements about this information, as well as reconciliations of non-GAAP financial measures are included in today's earnings release materials, as well as our S.E.C. These materials are available on our website and we encourage participants to refer to them for a complete discussion of risk factors and forward-looking solutions.
Speaker Change: Joining me today are Mark Klein, Chairman, President and CEO, Tony Cosentino, Chief Financial Officer, and Steve Walsh, Chief lending Officer.
Speaker Change: Today's presentation may contain forward looking information cautionary statements about this information as well as reconciliations of non-GAAP financial measures are included in today's earnings release materials as well as our SEC filings. These materials are available on our website and we encourage participants to refer to that.
Speaker Change: For a complete discussion of risk factors and forward looking statements.
Carol Robbins: These statements speak only as of the date made and as SB Fincl undertakes new obligations.
Speaker Change: These statements speak only as of the date made and SB financial undertakes no obligation to update them.
Mark Klein: I'll now turn the call over to Mr. Thank you, Carol. And good morning, everyone. Welcome to our first quarter 2025 conference call webcast. We started the year with a continued focus on growth amid an economic environment with a fair amount of uncertainty. Despite current conditions, we executed on the growth plan closed on the Marblehead acquisition while delivering solid results. Underscoring the strength of our diversified revenue business model and solid efforts by our team.
Klein: I'll now turn the call over to Mr. Klein.
Mr. Klein: Thank you Carol and good morning, everyone welcome to our first quarter 2025 conference call and webcast.
Speaker Change: We started the year with a continued focus on growth amid an economic environment with fair amount of uncertainty. Despite current conditions, we executed on our growth plan closed on the Marblehead acquisition, while delivering solid results.
Speaker Change: Underscoring the strength of our diversified revenue business modeling solid efforts by our team I'd like to begin by giving a few highlights and key achievements for our company. This first quarter.
Mark Klein: I'd like to begin by giving a few highlights and key achievements for our company this first quarter. Net income was $2.7 million with diluted earnings per share of $0.42, up $0.09, or approximately 27% compared to the prior year quarter. When considering the $726,000 in acquisition-related costs for Marblehead and servicing rights recapture, EPS was $0.33 on a gap basis. Danville book value per share ended the quarter at $15.79, up from $14.93 last year, or a 5.8% increase. Net interest income totaled $11.3 million, an increase of approximately 23% from $9.2 million in the first quarter of 2024.
Speaker Change: Net income was $2 7 million with diluted earnings per share of 42 cents up nine cents or approximately 27% compared to the prior year quarter.
Speaker Change: When considering the 726000 and acquisition related costs for Marblehead and servicing rights recapture EPS was 33 cents on a GAAP basis.
Speaker Change: Tangible book value per share ended the quarter at $15.79 up from $14 93 since last year were a five 8% increase.
Speaker Change: Net interest income totaled 11.3 million, an increase of approximately 23% from $9 2 million in the first quarter of 2024.
Speaker Change: From the linked quarter margin revenue accelerated at a healthy 14% annualized pace.
Mark Klein: From the link order, margin revenue accelerated at a healthy 14% annualized pace. Loan growth for the quarter was right at 97 million up 9.8% from the prior year. And this marks the fourth consecutive quarter of sequential loan growth. Deposits grew over 10%, including Marblehead deposits of 56 million, excluding Marblehead, 5.4%. This group demonstrates the strategic benefits of the acquisition, as well as our relationship-driven approach to attract and retain clients in a fairly highly competitive rate environment.
Speaker Change: Loan growth for the quarter was right at 97 million up nine 8% from the prior year and this marks the fourth consecutive quarter of sequential loan growth.
Speaker Change: Deposits grew over 10%, including Marvel had deposits of 56 million, excluding Marblehead five 4%.
Speaker Change: This growth demonstrates the strategic benefits of the acquisition as well as our relationship driven approach to attract and retain clients and a fairly highly competitive rate environment.
Mark Klein: Mortgage origination for the quarter were $40 million down from the prior year and the length quarters. However, the pipeline is currently sitting at approximately $50 million, and we look for a more vigorous summer volume than in past years, particularly with our new expansion team of producers in the new Cincinnati market.
Speaker Change: Mortgage origination for the quarter were $40 million down from the prior year and the linked quarters. However, the pipeline is currently sitting at approximately 50 million and we look for a more vigorous summer volume than in past years, particularly with our new expansion team of producers.
Speaker Change: Cincinnati market.
Speaker Change: Operating expenses increased approximately three 5% from the linked quarter and finally charge offs levels return to more historical levels in the quarter at approximately three basis points and our remaining asset quality metrics were consistent with the linked quarter.
Mark Klein: Operating expenses increased approximately three and a half percent from the linked quarter, and finally charge-off levels returned to more historical levels in the quarter at approximately three basis points, and our remaining asset quality metrics were consistent with linked quarters.
Yeah.
Mark Klein: Our strategic path forward, as we've reported on in a number of quarters, remains our five key initiatives, growing and diversifying revenue, a broader footprint for more scale, more households and more services in those households for more scope, operational excellence, and of course, always asset quality. First, revenue diversity. Our mortgage group had a fairly slow start to the year, as I mentioned, closing this $40 million in volume. We were encouraged that we did see a bit of refinance value, and that current pipeline is now well in excess of that $40 million first quarter number. We remain committed to the residential real estate business line as it continues to provide us with a stronger foothold in the esteemed Columbus metropolitan market.
Speaker Change: Our strategic path forward as we've reported on and a number of quarters remains our five key initiatives growing and diversifying revenue.
Speaker Change: Our broader footprint for more scale more households, and more services in those households for more scope.
Speaker Change: Operational excellence and of course always asset quality.
Speaker Change: First revenue diversity.
Speaker Change: Our mortgage group had a fairly slow start to the year as I mentioned closing this $40 million of volume. We were encouraged that we did see a bit of refinance volume in that current pipeline is now well in excess of that $40 million first quarter number.
Speaker Change: We remain committed to the residential real estate business line as it continues to provide us with a stronger foothold in the steamed Columbus metropolitan market.
Mark Klein: In fact, we now service nearly one half of our 9,000 total mortgage households out of the central Ohio market. Over the past several years, we've reduced operating costs in this residential arena to better match resources with revenue.
Speaker Change: In fact, right now service nearly one half of our 9000 total mortgage households out of the central Ohio market.
Speaker Change: Over the past several years, we've reduced operating cost in this residential arena to better match resources with revenue.
Speaker Change: Also we continue to assess departmental efficiency and we intend to do like adding more support staff until valeant puts us closer to at least a $400 million production, Mark where approximately 80% of our processing capacity today.
Mark Klein: Also, we continue to assess departmental efficiency, and we intend to delay adding more support staff until volume puts us closer to at least the $400 million production mark, or approximately 80% of our processing capacity today. Non-nursed income was up 3.9% from the prior year quarter at 4.1 million, but down slightly from the link quarter. The increase from the first quarter of 2024 was driven by increased gains on sale of mortgage loans and significant commercial loan swap revenue. The title business had a very strong quarter, exceeding the prior year revenue by nearly 50%. We continue to expand Peek's title revenue business beyond traditional mortgage title policies.
Speaker Change: Yeah.
Speaker Change: Noninterest income was up three 9% from their prior year quarter at $4 1 million, but.
Speaker Change: Down slightly from the linked quarter.
Speaker Change: The increase from the first quarter of 2024 was driven by increased gains on the sale of mortgage loans and significant commercial loan swap revenue.
Speaker Change: The title business had a very strong quarter exceeding the prior year revenue by nearly 50%.
Speaker Change: We continue to expand peaks title revenue business beyond traditional mortgage title policies. In fact this quarter. We had several large commercial title policy referrals from the state Bank commercial team that helped drive their contribution percentage of peaks total revenue this quarter.
Mark Klein: In fact, this quarter we had several large commercial title policy referrals from the state bank commercial team that helped drive their contribution percentage of Peek's total revenue this quarter to 31%. The goal here is not only expand state banks' contribution level to peak, but also expand their third-party global revenue base. on scale.
Speaker Change: The 31%.
Speaker Change: The goal here is not only expand state bank's contribution level of peak, but also expand our third party global revenue base.
Speaker Change: On scale.
Mark Klein: A key highlight for the first quarter was the completion of the acquisition of Marblehead Bank Corp. on January 17th. As we've discussed in our annual meeting, this all-case acquisition benefits both entities as it expands our presence in Ottawa County, Ohio, and strengthens our market position in a higher growth area, while Marblehead will benefit from a more diverse pallet of tailored financial solutions, allowing them to deepen their longstanding relationships with their current client base. As we discussed in our annual meeting, this acquisition brought in an additional $56 million in low-cost deposits. as well as a $19 million loan book.
Speaker Change: The highlight for the first quarter was the completion of the acquisition of Marblehead Bank Corp. On January 17.
Speaker Change: As we discussed in our annual meeting this all cash acquisition benefits both entities as it expands our presence in Ottawa County, Ohio.
Speaker Change: It strengthens our market position and a higher growth area, while marblehead well benefit from a more diverse paolo tailored financial solutions, allowing them to deepen their long standing relationship with their current client base.
Speaker Change: As we discussed in our annual meeting this acquisition brought in an additional $56 million in low cost deposits.
Speaker Change: As well as a $19 million loan book.
Mark Klein: This expansion reflects our commitment to both serving and growing our client base and prospects to drive long term shareholder value. Again, as I noted earlier, deposits were up from the link quarter and year over year. For the length quarter, we saw balances rise by over $119 million, and for the prior year quarter, $159 million. Significant contributions were made and were accelerated by higher tax revenue from our public fund entities, as well as more traditional seasonal growth. As I mentioned, we added $56 million from Marblehead and adjusting for the acquisition deposit growth would have been $103 million from the prior year and $63 million to the length quarter.
This expansion reflects our commitment to both serving and growing our client base and prospects to drive long term shareholder value.
Speaker Change: Yeah.
Speaker Change: Again as I noted earlier deposits were up from the linked quarter and year over year.
Speaker Change: For the linked quarter, we saw balances rise by over $119 million for the prior year quarter of $159 million.
Speaker Change: Significant significant contributions were made and were accelerated by higher tax revenue from our public fund entities as well as more traditional seasonal growth.
Speaker Change: As I mentioned, we added 56, Marblehead and adjusting for the acquisition deposit growth would have been $103 million from the prior year and $63 million to the linked quarter.
Speaker Change: The Marblehead staff and the current client base have been extremely loyal and we're excited to bring a full slate of products to their clients and that community.
Mark Klein: The Marblehead staff and the current client base have been extremely loyal and we're excited to bring a full slate of products to their clients and that community. When we break down our deposit base to get to the core state bank retail presence, it is clear that we've made some meaningful progress in growing our deposit relationships in the company thus far in 2025. Specifically, when we exclude public funds, those homebuyer plus funds and the Marblehead book, the core deposit base has grown just under 5% this year for an annualized growth rate of 15%. As I mentioned, overall loan growth for the quarter was strong, with additional support from the Marblehead Acquisition.
Speaker Change: When we break down our deposit base to get to the core state Bank retail presence is clear that we've made some meaningful progress in growing our deposit relationships and the company thus far in 2025.
Speaker Change: Specifically when we exclude public funds that was home buyer plus funds and the Marblehead book the core deposit base has grown at just under 5% this year for an annualized growth rate of 15%.
As I mentioned overall loan growth for the quarter was strong with additional support from them are Marblehead acquisition.
Speaker Change: Our loan portfolio grew $97 million or nine 8% from the first quarter of 2024 and $42 million or 4%.
Mark Klein: Our loan portfolio grew 97 million or 9.8% from the first quarter of 2024 and 42 million or 4% from the length from the length quarter, 23 million or 2.2% from the length quarter. The Columbus lending team continues to provide the bulk of our loan growth and we fully expect a strong full year performance from our team of now four seasons commercial lenders in that market. Closing from the second half of 2024 have yet to be fully funded, and once complete we'll add nearly a third of our overall budgeted growth for all of 2025. Although pricing has become certainly more competitive, we've seen neither a pullback in this growth market, nor any of our other significant growth markets for our company.
Speaker Change: From the linked quarter.
Speaker Change: Adjusted for that Marvel had growth of $19 million loan growth would have been $78 million up seven 9% and up 23% or two 2%.
Speaker Change: From the linked quarter $23 million or two 2% from the linked quarter.
Speaker Change: Yeah.
Speaker Change: Our Columbus lending team continues to provide the bulk of our loan growth and we fully expect a strong full year performance from our team of now for seasoned commercial lenders in that market.
Speaker Change: Closings from that second half of 2024 have yet to be fully funded once complete will add nearly a third of our overall budget growth for all of 2025.
Speaker Change: Although pricing has become certainly more competitive we've seen either a pull back in this growth market, nor any of our other significant growth markets.
Speaker Change: For our company.
Speaker Change: In terms of deepening existing relationships more scope.
Mark Klein: In terms of deepening existing relationships, more scope.
Mark Klein: As we have commented on in prior webcasts, we understand that despite our size, our digital presence must keep us relevant to the offerings of the larger regional banks in our market.
Speaker Change: As we have commented on in prior webcast, we understand that despite our size our digital presence.
Speaker Change: Must keep us relevant to the offerings of the larger regional banks in our markets.
Mark Klein: In that vein, we recently identified a new position in our technology sector by naming a digital banking officer to drive our digital innovation, to identify new clients, expand cybersecurity practices, and forge a more intentional path forward. Our overarching goal is to ensure we customize our client care initiatives while accelerating the growth of each of our unique client segments 24-7. In addition, we have recently recommitted to our current core provider, Pfizer. As part of that contract negotiation, we will be heightening our data security measures, working to reduce client rub, and delivering a more intentional palette of banking services to include a broader offering of credit cards, while enhancing the client's online banking experience, to name a few.
Speaker Change: In that vein, we recently identified a new position in our technology sector by naming a digital banking officer to drive our digital innovation to identify new clients expand cyber security practices and forge a more intentional path forward.
Speaker Change: Our overarching goal is to ensure we customize our client care initiatives, while accelerating the growth of each of our unique client segments 24 seven.
Speaker Change: In addition, we have recently recommitted to our current core provider fiserv.
Speaker Change: As part of that contract negotiation, we won't be heightening, our data security measures working to reduce client rub and delivering a more intentional pal of banking services to include a broader offering of credit cards, while enhancing the client's online banking experience to name a few.
Speaker Change: On operational excellence commercial real estate loans grew 80 million C&I balances 7 million and consumer balances another $7 million.
Mark Klein: On operational election lists, commercial real estate loans grew $80 million, C&I balances $7 million, and consumer balances another $7 million. The efforts of our regional production teams in these areas help to offset softness within the mortgage market. By the lower mortgage originations, total loan production for all categories in our company in the quarter was $107 million, which was up nearly 40% from the prior year quarter.
Speaker Change: The efforts of our regional production teams in these areas helped to offset softness within the mortgage market.
Speaker Change: Fight the lower mortgage originations total loan production for all categories in our company in the quarter was $107 million, which was up nearly 40% from lead.
Speaker Change: The prior year quarter.
Speaker Change: Finally asset quality.
Mark Klein: Finally, asset quality. George Osfeld to just three basis points from the fairly level number in the fourth quarter. Non-performing assets total $6.1 million, representing 41 basis points of total assets, an increase of $600,000. compared to 5.5 million or 40 basis points. Total Assets reported in the linked quarter. We remain focused on maintaining strong asset quality, as demonstrated by the continued improvement in our criticized and classified loans, which declined to $7.1 million from $8.7 million in the prior year, a reduction of $1.5 million, or 18%. Our loans for credit losses remain robust at 1.41% of total loans, not providing 254% coverage of non-performing loans.
Speaker Change: Charge offs fell to just three basis points from the.
Speaker Change: Fairly.
Speaker Change: Level number in the fourth quarter non.
Speaker Change: Nonperforming assets totaled $6 1 million, representing 41 basis points of total assets an increase of 600000.
Speaker Change: Compared to $5 5 million or 40 basis points.
Speaker Change: Total assets reported in the linked quarter, we remained.
Speaker Change: Focused on maintaining strong asset quality as demonstrated by the continued improvement in our criticized and classified loans, which declined to $7 1 million from $8 7 million in the prior year, a reduction of $1 5 million or 18%.
Speaker Change: Our allowance for credit losses remained robust at 141% of total loans, not providing 254% coverage of nonperforming loans.
Speaker Change: Also by restructuring our asset quality department in the first quarter. We are now even better positioned in this arena to remain a high performer among our peer group.
Mark Klein: Also, by restructuring our asset quality department in the first quarter, we are now even better positioned in this arena to remain a high performer among our peer groups.
Tony Cosentino: Now I'd like to ask Tony Cosentino, our CFO, to give us a few more details, Tony, on our quarterly performance. Thanks, Mark.
Speaker Change: Now I'd like to ask Tony Cosentino, our CFO to give us some more details Tony on our quarterly performance.
Thanks, Mark Good morning, everyone. Let me just outline some additional highlights and details of our first quarter results.
Tony Cosentino: Good morning, everyone. Let me just outline some additional highlights and details of our first quarter results. starting with the income statement on net interest income. That was $11.3 million in the quarter, up $2.1 million or 22.9% compared to the same quarter last year. This growth reflects higher loan balances and improved asset yields, while overall funding costs eased slightly as a result of the interest rate cuts that began in September of 2020. A moderation of funding costs combined with loan growth was the primary driver for our margin improvement. for the quarter. The cost of interest-bearing liabilities was 2.32%.
Speaker Change: Starting with the income statement on net interest income.
Speaker Change: That was $11 3 million in the quarter up $2 1 million or 22, 9% compared to the same quarter last year.
Speaker Change: This growth reflects higher loan balances and improved asset yields while overall funding costs ease slightly as a result of the interest rate cuts that began in September of 2024.
Speaker Change: Moderation of funding costs combined with loan growth was the primary driver for our margin improvement.
Speaker Change: For the quarter.
Speaker Change: The cost of interest bearing liabilities was 232% down.
Tony Cosentino: down 23 basis points from the prior year, and from the late quarter was down 4 basis Our deposit cost of funds has likewise improved to 1.7% down 12 basis points from the prior year and down 4 basis from the late quarter.
Speaker Change: Down 23 basis points from the prior year and from the linked quarter was down four basis points.
Speaker Change: Our deposit cost of funds has likewise improved to one 7% down 12 basis points from the prior year and down four basis points from the linked quarter.
Speaker Change: Regarding noninterest income.
Tony Cosentino: regarding non-interest income. Although non-interest income rose from the prior year in the linked quarters, the percentage of our non-interest income to total revenue was below our historical average at 27%. due to the expanded margin revenue. We did see the gain on sale of mortgage loans, OMSR, title insurance, and other revenue contributing to the year-over-year improvement, illustrating the value of our diversified revenue. Operating expenses increased compared to both the linked and prior year quarters totaling 12.4 million in the quarters mark has indicated This includes $726,000 in merger-related expenses, as well as approximately $300,000 in ongoing operating expenses for Mar-a-Lago.
Speaker Change: Although noninterest income rose from the prior year and the linked quarters the percentage of our noninterest income to total revenue was below our historical average at 27%.
Speaker Change: Due to the expanded margin revenue.
Speaker Change: We did see the gain on sale of mortgage loans.
Speaker Change: Our title insurance and other revenue contributing to the year over year improvement illustrating the value of our diversified revenue streams.
Speaker Change: Operating expenses increased compared to both the linked and prior year quarters totaling $12 4 million in the quarter as Mark has indicated.
Speaker Change: This includes 726000 in merger related expenses as well as approximately 300000 in ongoing operating expenses for Marblehead.
Speaker Change: Adjusting for these expenses would reduce the operating expense growth to three five and 10, 7% from the linked and prior year quarter respectively.
Tony Cosentino: Adjusting for these expenses would reduce the operating expense growth to 3.5 and 10.7 percent from the length and prior year quarter The efficiency ratio for the quarter would be 76% and down from the prior year when excluding those acquisitions.
Speaker Change: The efficiency ratio for the quarter would be 76% and down from the prior year when excluding those acquisition costs.
Speaker Change: Now, let's do a balance sheet review starting with loans.
Tony Cosentino: Now let's do a balance sheet review, starting with loans. Total loans, end of the quarter, $1.09 billion. including the $19 million in loans from the Marblehead Acquisition. That interest margin improved in the first quarter, 3.4%, up five basis points from the link. For the remainder of 2025, we have approximately 90 million of loans that are contractually scheduled to reprice. On average, this scheduled repricing will drive loan yields higher by 140 basis points from their current. And when we review our current pipeline of commercial credits, we are encouraged as balances scheduled to close in the next 30 days are approximately 90 million.
Speaker Change: Total loans ended the quarter at $1 89 billion.
Speaker Change: Including the $19 million in loans from the Marblehead acquisition.
Speaker Change: Net interest margin improved in the first quarter's three 4% up five basis points from the linked quarter.
Speaker Change: For the remainder of 2025, we have approximately $90 million of loans that are contractually scheduled to reprice.
Speaker Change: On average the scheduled repricing will drive loan yields higher by 140 basis points from their current level.
Speaker Change: Yeah.
Speaker Change: And when we review our current pipeline of commercial credits. We are encouraged as balance is scheduled to close in the next 30 days or approximately $90 million.
Tony Cosentino: while the 60-day window reflects additions of approximately $18 million, and at 90 days, $22 million. These additions will go a long way to expanding our NIM and NIN interest income while helping to deploy liquidity from Fed funds to higher yielding. We continue to believe that rates generally will be lower for the remainder of the year, which will further drive our funding costs lower. We also anticipate that the lower forward curve will not impair. on Deposit. Deposits ended the quarter at $1.27 billion, the highest level in our company. The Marblehead Deposits are quite profitable, coming over with an average cost of $1.53 per With the acquisition, we saw a slight decrease in our loan to deposit ratio to nearly 86% from 89% a year ago.
Speaker Change: While the 60 day window reflects additions of approximately $18 million in.
Speaker Change: And at 90 days $22 million.
These additions will go a long way of expanding our NIM and net interest income, while helping to deploy liquidity from fed funds to higher yielding loans.
Speaker Change: We continue to believe that rates generally will be lower for the remainder of the year, which will further drive our funding costs lower.
Speaker Change: We also anticipate that these lower at the lower forward curve will not impair anticipated lower repricing.
Speaker Change: On deposits.
Deposits ended the quarter at $1 $2 7 billion the highest level in our company's history.
Speaker Change: The Marblehead deposits are quite profitable coming over with an average cost of 153%.
Speaker Change: With the acquisition, we saw a slight decrease in our loan to deposit ratio nearly 86%.
Speaker Change: 89% a year ago.
Tony Cosentino: Given that growth, our overall cost of deposits decreased modestly to 1.77% from 1.87% in the year ago quarter. With the added liquidity from the Marblehead acquisition combined with the scheduled amortization of our bond portfolio, we are well positioned to fund the majority of our 2025 bond portfolio. And additionally, when we break down that deposit base, we continue to see lower cost transactional deposits accelerating. In fact, this quarter we saw demand deposits expand by 8 million, or 3%, for an annualized number of 12%. And likewise, deposits in our regular savings and money market grew by $27 million, or 7% for the quarter, and 28% annually.
Speaker Change: Given that growth our overall cost of deposits decreased modestly to 177% from 187% in the year ago quarter.
Speaker Change: With the added liquidity from the Marvell had acquisition combined with the scheduled amortization of our bond portfolio, we are well positioned to fund the majority of our 2025 loan growth.
Speaker Change: And Additionally, when we break down that deposit base, we continue to see lower cost transactional deposits accelerate.
Speaker Change: In fact, this quarter, we saw demand deposits expand by $8 million or 3% for an annualized number at 12%.
Speaker Change: And likewise deposits in a regular savings and money market grew by $27 million or 7% for the quarter and 28% annualized.
Speaker Change: We continue to witness growth in our deposit base in nearly every market.
Tony Cosentino: We continue to witness growth in our deposit base in nearly every As to capital management, during the quarter we repurchased 26,500 shares at an average price of just under $21. roughly 130% of tangible books. In keeping with our internal capital models, we paused the buyback later in the quarter. and intend to reinstate it when we see an opportunity to repurchase shares at a lower price to tangible value. As Mark mentioned, our tangible book value per share was up 5.8% year over year. But from the late quarter, it was down $0.21 as the merger impact offset our net income and the positive mark to our AOC.
Speaker Change: As to capital management during the quarter, we repurchased 26500 shares at an average price of just under $21.
Speaker Change: 130% of tangible book.
Speaker Change: In keeping with our internal capital models, we paused the buyback later in the quarter.
Speaker Change: And intend to reinstate it when we see an opportunity to repurchase shares at a lower price to tangible book value.
Speaker Change: As Mark mentioned, our tangible book value per share was up five 8% year over year, but from the linked quarter was down 21.
As the merger impact offset our net income and the positive mark to our OCI.
Speaker Change: Specifically goodwill for the acquisition was $3 9 million with a deposit intangible of one seven.
Tony Cosentino: The specific goodwill for the acquisition was $3.9 million, with a deposit intangible of $1.6 million. This $5.6 million in dilution was right in line with our acquisition model and will be recaptured in line with our projection. when we combine the low-cost funding from the acquisition with our strong loan demand at market rate. The recapture of that dilution will accelerate.
Speaker Change: This $5 6 million in dilution was right in line with our acquisition model and we will be recaptured in line with our projections.
Speaker Change: When we combine the low cost funding from the acquisition with our strong loan demand at market rates.
Speaker Change: The recapture of that dilution will accelerate.
Speaker Change: Looking lastly at asset quality.
Tony Cosentino: Total delinquencies were lower from the late quarter and now stand at just 54 basis points.
Speaker Change: Delinquencies were lower from the linked quarter and now stand at just 54 basis points.
Speaker Change: Our total provision expense for the quarter of 387000 was comprised of a number of factors.
Tony Cosentino: Our total provision expense for the quarter of $387,000 was comprised of a number of factors. including 13,000 for unfunded commitments. 224,000 related to the Day 1 and Day 2 Marblehead transactions, and 150,000 for growth-related producers. Likewise, the allowance reconciliation from year end 2024 of $15.1 million to the current level of $15.4 million. included the $150,000 of growth-related provision above. offset by $85,000 in net charge-offs. And in addition, the merger-related CECL impact was a net increase to the allowance.
Speaker Change: Including 13000 for unfunded commitments.
Speaker Change: 224000 related to the day, one and day, two Marblehead transaction and 150000 for growth related provision.
Speaker Change: Likewise, the allowance reconciliation from year end 2024, a $15 1 million to the current level of $15 4 million.
Speaker Change: Included the 150000 of growth related provision above.
Speaker Change: Offset by 85000 in net charge offs and in addition, the merger related seasonal impact was a net increase to the allowance of 224000.
Mark Klein: I will now turn the call back over to Thank you, Tony. As we certainly look in the rearview mirror at the first quarter, we are encouraged by our prospects for strong performance over the next three quarters. From an expedited integration of Marblehead Bank to a very successful landing meeting, it certainly was a solid start to the year. Even with a merger that impacted tangible book value, year-over-year tangible book value per share was still up by 5.8%. Originally, we announced a dividend this past week of $0.15 per share, equating to approximately 3.16% yield and 45% of our earnings.
Mark Klein: I will now turn the call back over to Mark.
Speaker Change: Yeah.
Speaker Change: Thank you Tony as we certainly look in the rearview mirror at the first quarter. We are encouraged by our prospects for strong performance over the next three quarters.
Speaker Change: From an expedited integration of Marblehead bank to a very successful meeting it certainly was a solid start to the year.
Speaker Change: Even with the merger that impacted tangible book value year over year tangible book value per share it was still up by five 8%.
Speaker Change: Recently, we announced the dividend this past week of <unk> 15 per share equating to approximately $3 106 yield and 45% of our earnings. However, we do expect this payout ratio to normalize this year to something near our long term average of approximately 30%.
Mark Klein: However, we do expect this payout ratio to normalize this year to something near our long-term average of approximately 30%.
Mark Klein: In closing, we remain quite pleased with the potential to grow in our new region in an untapped market resulting from the addition of marbleheads. We intend to leverage our higher performance business model into organic balance sheet growth while maintaining our focus on operating efficiency and cost containment.
Speaker Change: In closing, we remain quite pleased with the potential to grow and our new region and an untapped market, resulting from the addition of Marblehead.
Speaker Change: We intend to leverage our higher performance business model into organic balance sheet growth, while maintaining our focus on operating efficiency and cost containment.
Speaker Change: Now well open it up to questions from our audience.
Operator: Now, we'll open it up to questions from our audience. Dora, when we're ready for questions, please. Certainly, we will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.
Sure when we're ready for questions. Please.
Speaker Change: Certainly.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If you were using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Operator: At this time, we will pause momentarily to assemble our roster.
Operator: The first question comes from Brian Martin with Janney Montgomery. Please go ahead.
Operator: The first question comes from Brian Martin with Johnny Montgomery. Please go ahead. Hey, good afternoon, guys. Hey, Brian. Morning, Brian.
Brian Martin: Hey, good afternoon guys.
Speaker Change: Hey, Brian It's Brian Good morning, Brian.
Brian Martin: Hey, maybe just, Tony, maybe one for you just to start on the on the loan growth in the quarter, and just more more forward looking on your pipelines. It sounds like the pipelines are still, you know, pretty healthy here, both with the 90 day and 60 day in terms of, you know, funding. Do you have any concerns on that with regard to the tariffs? Are you hearing any pushback from your clients that maybe they're looking to take a pause here just until some of the dust settles on the tariffs? Or are you pretty comfortable that the loan growth that's going to materialize is kind of what you're looking at the pipelines today?
Speaker Change: And maybe just Tony maybe one for you just to start on the on the loan growth in the quarter.
Speaker Change: More more forward looking at your pipelines it sounds like the pipelines are still pretty healthy here, both with the 90 day and 60 day in terms of.
Speaker Change: Fundings.
Speaker Change: You have any concerns on that with regard to the Paris are you hearing any pushback from your clients that maybe they're looking to take a pause here.
Speaker Change: Until some of the dust settles on the on the tariffs are pretty comfortable that the the loan growth is going to materialize as kind of what you are looking at the pipelines today.
Speaker Change: Yes.
Tony Cosentino: Yeah, so I'll add a little bit of color, then Mark can kind of comment, or Steve on the client side. So the $60 million in the 90-day pipeline, which is kind of, you know, about $20 million a month over the 30, 60, 90, we feel very confident on. Most of those have already closed and the clients are funding, you know, either their money has now been used in the project and now they're coming to So I feel very confident out kind of 90 days on that. We kind of meet on that pretty regularly and that feels pretty good.
Speaker Change: At a little bit of color, then mark can kind of comment on or Steve on the client side. So the $60 million in the 90 day pipeline, which is kind of about $20 million a month over the 30 60 90.
Speaker Change: We feel very confident on most of those have already closed and end clients or funding.
Speaker Change: Either their money has now been used in the project and now they're coming to us for funding. So I feel very confident it out kind of 90 days on that.
Speaker Change: We kind of meat on that pretty regularly and that feels pretty good.
Mark Klein: And I don't really have any concerns. later out the curve, I still think we have pretty strong calling efforts and pipeline going forward. So, Mark, kind of comment. Yeah, just real quickly, Brian, as we mentioned, Columbus, you know, continues to be the shining star in the operation. You know, we try to keep a governor on that location because we can probably grow as fast as we want. But we're starting to see some additional growth in the Lima market that we've got some coming from Toledo. And Steve can certainly speak to a little more of the details of that.
Speaker Change: And I don't really have any concerns.
Speaker Change: Later out the curve I still think we have pretty strong calling efforts and in our pipeline going forward. So mark can kind of comment yeah, just real quickly Brian.
Speaker Change: As we mentioned Columbus continues to be the shining star in the operation.
Speaker Change: We try to keep a governor on that location, because we can probably grow as fast as we want but we're starting to see some additional.
Speaker Change: Growth in the Lima market that we've got some coming from Toledo, and Steve can certainly speak to a little more of.
Speaker Change: The details of that but overall generally we've been encouraged with our level to compete and participate even at the 675% to seven level, which probably is up.
Steven Walz: But overall, generally, we've been encouraged with our level to compete and participate even at, you know, the 6, 7, 5 to 7 level, which probably is a pretty normal rate in our markets. Now, we do like some SBA lending, which is marginally higher, and those have ramped up dramatically. So, Steve, any additional comments? No, certainly, I don't think, Brian, to this point, we have seen a lot of concern on the tariff front. There's no doubt a lot of economic uncertainty from folks, but it hasn't driven any pullback yet. Certainly, that's a potential cloud for the second half of the year.
A pretty normal rate in our markets now we do like some SBA lending, which is marginally higher than those that have ramped up dramatically. So Steve any additional comments.
Speaker Change: Certainly I don't think Brian at this point, we have seen.
Steve Walsh: Lot of concern on the tariff front there is no doubt a lot of economic uncertainty from folks, but it hasn't driven any pullback yet certainly that's a potential cloud for the second half of the year, but at this point borrowers remain generally optimistic about the economy and their own situations.
Brian Martin: But to this point, borrowers remain generally optimistic about the economy in their own situation. Gotcha. And just as far as your outlook for loan growth this year, kind of, you know, upper single digits is kind of a reasonable, you know, take today, given, given what you know. Yeah, I would, you know, we, we budgeted kind of, you know, eight to not eight to 10%, you know, inclusive of the Marblehead, you know, they're 20 million, I would say we're still on board with that number. And, you know, I don't think we wavered off that as we sit here today.
Speaker Change: Got you and just.
Speaker Change: As far as how your outlook for loan growth this year and kind of upper single digits is kind of a reasonable.
Speaker Change: Take today, given given what you know.
Speaker Change: Yeah.
Speaker Change: We budgeted kind of.
Speaker Change: <unk> not 8% to 10%.
Speaker Change: Inclusive of the Marblehead, there are $20 million I would say we are still on board with that number and I don't think we've labored off that as we sit here today and Brian as you know our long term average is about $75 million to $100 million and of course, you don't Cobra to kind of backed off a little bit, but we like that $100 million.
Brian Martin: And Brian, as you know, our long term average is about 75 to 100 million. And of course, you know, COVID kind of backed off a little bit, but we like that 100 million, you know, 10% number. Gotcha. Okay, that makes sense.
Speaker Change: 10% number.
Speaker Change: Got you, Okay that makes sense.
Brian Martin: And maybe just on the mortgage side, you mentioned maybe a little slower start seasonally, but certainly, you know, some of the actions you took on on the staffing just to get to your capacity, but how are you thinking about, you know, how is the pipeline look today? And just, you know, if you think about, you know, full year, you know, what's, how should we kind of be thinking about the mortgage, the balance of the year? Well, as you mentioned, you know, we're at that in the low 50s current pipeline and got good, good demand. And, you know, we have now three individuals in the Sinson Addy market that now puts us up to 28 producers.
Speaker Change: Maybe just on the mortgage side.
Speaker Change: You mentioned, maybe a little slower start seasonally but certainly.
Speaker Change: Some of the actions you took on the staffing till you get to what your capacity but.
Speaker Change: How are you thinking about how is the pipeline look today and just if you think about full year.
Speaker Change: How should we kind of be thinking about the mortgage.
Speaker Change: The balance of the year.
Speaker Change: Well as you mentioned that the low Fifty's current pipeline and.
Speaker Change: Got good good demand and we have now three individuals in the Cincinnati market to now puts it up to 28 producers and so we're still pulling booked pretty bullish on what we can do not only from our sold Freddie Fannie perspective, but from a portfolio as well some marginally in that 113151 arena kind of thing but.
Brian Martin: And so we're still pretty bullish on what we can do, not only from a sold Freddie Fannie perspective, but from a portfolio as well. Some marginally in that 1-1, 3-1, 5-1 arena kind of thing. But we're still, you know, pretty, pretty optimistic that the, you know, 380 plus or minus that we have budgeted for 2025 is, you know, going to be certainly an attainable number. And as I mentioned, getting up to that 400, we certainly have excess capacity. So, you know, we can take on much more value without adding fixed costs. Gotcha. And the, and the gain on sale margins are holding up pretty well at this point.
Speaker Change: We're still pretty pretty optimistic.
Speaker Change: 380, plus or minus that we have budgeted for 2025 is going to be certainly an attainable number and as I mentioned getting up to that 400, we certainly have excess capacity. So we can take on much more volume without.
Speaker Change: Adding fixed costs.
Speaker Change: Got you.
Speaker Change: And the gain on sale margins are holding up pretty well at this point no no real change.
Brian Martin: No, no real change on how you're thinking about that. I think if we get 100-110 here in these next two quarters, and if you put the 40 million in the first quarter in the rear view mirror, we could be above 300-350 type range by the time we finish, which I think would be a pretty spectacular year given we did the 260 type range in 2025. Okay. And that's helpful.
Speaker Change: How are you thinking about that.
Speaker Change: No.
Speaker Change: I think.
Speaker Change: I think thats been in that kind of to $2 20 to 225 range fairly consistently and that seems to be holding up.
Mark Klein: I'll just I'll add just to add a comment to marks comment on volume.
Speaker Change: Did 33 million here in the month of April I think we got a real shot at a 100 million type quarter previously I've been kind of maybe.
Speaker Change: 75 ish kind of quarter. So I think if we get 100 to 110 here in these next two quarters.
Speaker Change: If you've kind of put the $40 million in the first quarter in our rearview mirror.
Speaker Change: We could be above 300 to 350 type range by the time, we finish which I think would be a pretty spectacular year. Given we did the two $2 60 type range and in 2024 so.
Speaker Change: Okay.
Tony Cosentino: And then, Tony, just on the, the deposits were really strong this quarter, just, you know, certainly Marble had helped, but just organically in all your comments about the, uh, the, the trends you're seeing there. I mean, do you expect some of the seasonality if there was some this quarter to kind of back off or just given the liquidity that you have and, you know, the loan pipeline, just trying to think about, you know, how we think about deposits here, the next couple of quarters, given the liquidity and the loan pipelines you have. Yeah, it is, you know, it's kind of one of those, you know, perfect storms, as it were.
Speaker Change: That's helpful and then Tony just on the deposits were really strong this quarter just.
Speaker Change: Marvell had help but just organically in all your comments about <unk>.
Speaker Change: The trends Youre seeing there I mean do you expect some of the seasonality. If there was some this quarter to kind of back off or just given the liquidity that you have in the loan pipeline just trying to think about how we think about deposit here. The next couple of quarters given the liquidity in the loan pipelines you have.
Speaker Change: Yes. It is.
Speaker Change: It's kind of one of those.
Speaker Change: Perfect storms as it were I mean, we do have a lot of liquidity.
Tony Cosentino: I mean, we do have a lot of liquidity. And we have had a lot of seasonality, we've been successful with the public entities that we've called on. You know, those are generally maybe a little bit higher on the curve in terms of where we're paying, but we're hopeful that you know, that long term relationship is going to get us into their operating accounts. Some of those, those monies are going to kind of move out of here over the next 60 to 90 days. So I would anticipate that, you know, call the second quarter is probably going to be a negative deposit level number.
Speaker Change: And we have had a lot of seasonality we've been successful with the public entities that we've called on.
Speaker Change: Those are generally maybe a little bit higher on the curve in terms of where we're paying but we're hopeful that that long term relationship is going to get us into their operating accounts.
Speaker Change: Some of those those monies are going to kind of move out of here over the next 60 to 90 days.
Speaker Change: So I would anticipate that come the second quarter is probably going to be a negative deposit level number on that I think our core deposit range is still going to be up 4% to 5% because I do think we still have some pretty good kind of business growth and retail growth.
Tony Cosentino: On that, I think our core deposit range is still going to be up four to 5%, because I do think we still have some pretty good kind of business growth and retail growth. But we'll see, you know, we haven't had to really compete. We've been able to move rates down and customers have stayed with us. Gotcha.
Speaker Change: But we will see we haven't had to really compete.
Speaker Change: Very strongly to stay where we are we have been able to move rates down and our customers have stayed with us and we'll see.
Speaker Change: Got you so the loan growth should be funded I guess think about that really primarily being funded by the liquidity on the short term here and kind of a pickup here youre getting on that Tony can you just as it relates to kind of your outlook on the margin.
Tony Cosentino: So the the loan growth should be funded, you know, I guess think about that really primarily being funded by the liquidity, you know, in the short term here and kind of the pickup you're, you're getting on that Tony can just as it relates to kind of your outlook on the margin, just I'm going to ask you a question. Is it fair to think that it's going to come from the current liquidity? Is that where you're going to fund it from at this point? Yeah, you know, I kind of look at it two ways. I mean, you know, call it we've got GoW hard to find by clicking the links.
Speaker Change: Yeah.
Speaker Change: If you can tie some of that together.
Speaker Change: What is the.
Speaker Change: The new rates on loans and then.
Speaker Change: Is it fair to think that it's going to come from the current liquidity, that's where you're going to fund it from at this point.
Speaker Change: Yes.
Speaker Change: I kind of look at it two ways I mean call. It we've got.
Speaker Change: 85% to $90 million liquidity at call it four and a half I do think we're going to fund.
Speaker Change: Let's say $30 million of that kind of goes away with natural kind of movement out of all those public deposits.
Speaker Change: So we're going to have $60 million of funding that pipeline.
Speaker Change: Call it adding.
Tony Cosentino: you know, 150 to 175 basis points on that 60 million. And then that's not going to include the 140 basis points we're going to reprice on the 90 million between now and the end of the year, which I don't think has an alternative source of funding anywhere in the marketplace, given where they're, what they're going to reprice at. They're going to reprice it, call it the high sixes, and I don't think they're going to be able to get in. So it's going to be kind of two ways. You're going to fund 60 million and call it 200 basis points higher.
Speaker Change: 150 to 175 basis points on that $60 million.
Speaker Change: And then that's not going to include the 140 basis points, we're going to reprice on the $90 million between now and the end of the year, which I don't think has an alternative source of funding anywhere in the marketplace given where they are what they are going to reprice that theyre going to reprice at call. It the high sixes.
Speaker Change: And I don't think they're going to be we're getting so it's going to be kind of two ways, you're going to fund $60 million at call. It 200 basis points higher and then we're going to reprice $90 million and 140 basis points higher and I do think funding cost as a general rule are going to continue to come down as those reprice.
Tony Cosentino: And then we're going to reprice 90 million at 140 basis points higher. And I do think funding costs as a general rule are going to continue to come down as those reprice. Okay, and directionally, the margin just up, you know, throughout the balance of the year, I guess, you know, I guess even I guess I don't know what your, what your assumptions are in terms of rate cuts, but if we get a couple of cuts here in the, in the back half of the year, along with what you just outlined, you know, the margin is just trending higher throughout the year.
Speaker Change: Okay.
Speaker Change: And Directionally the margin just up throughout the balance of the year I guess I guess even.
Speaker Change: I don't know what your what your assumptions are in terms of rate cuts, but if we get a couple of cuts here in the in the back half of the year along with what you just outlined.
Speaker Change: The margin is just trending higher throughout the year.
Speaker Change: How we should think about it.
Tony Cosentino: how we should think about. Yeah and you know I can let Mark kind of add some detail but you know we assumed two cuts that's current still our position as we sit here today I know lots of indication are four but I think two is probably the the appropriate assumption you know we didn't think we'd get to a 340 margin till probably fourth quarter this year so I think the the acceleration and speed of the repricing and the funding come down you know was a very positive surprise for us I do think it moves up four to five basis points a quarter and we're probably at maybe a 355 to 360 on the best case scenario in q4 of this year so Okay, that's helpful.
Yeah.
Mark Klein: Okay, let mark kind of add some detail, but we had assumed two two cuts.
Mark Klein: That's still our position as we sit here today I know lots of indications are for but I think two is probably the appropriate assumption.
Mark Klein: Didn't think we'd get to a $3 40 margin until probably the fourth quarter. This year. So I think the acceleration and speed of the repricing and the funding come down.
Mark Klein: It was a very positive surprise for us I do think it moves up four to five basis points a quarter and we're probably at maybe a $3 55 to $3 60 on the best case scenario in Q4 of this year. So we'll see.
Speaker Change: Got you Okay. That's helpful and maybe just the last one for me was on the.
Brian Martin: And maybe just the last one for me was on the, you know, just in terms of credit quality and reserves, things seem to be pretty healthy today. It doesn't sound like there's much concern, at least right now, until, I guess, maybe we get more details on the tariffs. But in terms of the reserve level now with Marblehead, you know, I guess, is your expectation, you know, all else equal, that you're going to kind of try and hold the reserve worth that? Could you see that drift a bit lower given the credit quality or just how are we thinking about, you know, reserve levels today?
Speaker Change: Just in terms of credit quality and reserves things seem to be pretty healthy today.
Speaker Change: Yeah. It doesn't sound like there's much concern at least right now until I guess, maybe get more details on the tariffs but.
Speaker Change: In terms of the reserve level now with Marblehead.
Speaker Change: Is your expectation.
Speaker Change: Equal that youre going to kind of try and hold the reserve where it's at because you see that drift a bit lower given the credit quality or just how are we thinking about reserve levels today.
Speaker Change: Well as we've said before Brian Tony and I pull different directions, I think 20 million is a good number Tony shows fifteens inadequate number but.
Mark Klein: Well, as we've said before, Brian, Tony and I pull different directions. I think, you know, 20 million is a good number. Tony says 15 is an adequate number, but more for me is always better. But, you know, we're pretty bullish on how we've done things, but it's all economic dependent and, you know, tariff is going to have some impact on it. And liquidity of our clients still remains fairly strong and performance is good. And we're pretty bullish on where we currently are at, unless Steve has some additional comments on. Yeah, I'll just say, Brian, before Steve has some comment on some specifics, you know, I would say, you know, 141 reserve level, you know, we had kind of previously indicated that kind of 140 is where we're extremely comfortable.
Speaker Change: More from me is always better, but we're pretty bullish on how we've done things but.
Speaker Change: It's all economic dependent and tariffs is going to have some impact on it and liquidity of our clients still remains fairly strong and our performance is good and we're pretty bullish on where we currently are at unless Steve has some additional comments on but I'll just say Bryan.
Steve Walsh: Steve Thats a comment on some specifics.
Speaker Change: I'd say $1 41 reserve level.
Steve Walsh: We had kind of previously indicated they'd kind of $1 40 is where we're.
Steve Walsh: Streaming comfortable I think we could move down a couple of basis points from that and still feel very good but I don't see it as dawn jewel of 120 reserve.
Mark Klein: I think we could move down a couple of basis points from that and still feel very good. But I don't see us going to a 120 reserve, you know, even with our level of loan growth. So I do think we're going to be provisioning every quarter to keep pace with our anticipated loan growth. But clearly, Tony, a bigger balance sheet and. A little bit of liability sensitivity where deposits are going to cost less and loans are rolling up. As you might expect, Brian, we're really bullish on not only the size of the balance sheet but also the margins that we're putting it on and how we're going to increase by just holding course.
Speaker Change: Even with our level of loan growth. So I do think we're going to be provisioning every quarter to keep pace with our anticipated loan growth clearly Tony a bigger balance sheet.
Steve Walsh: <unk>.
Steve Walsh: A little bit of liability sensitivity, where deposits are going to cost less and loans are rolling off.
Steve Walsh: As you might expect Brian we're really bullish on not only the size of the balance sheet, but also the margin that we're putting it on and how we're going to increase by just holding holding of course.
Steven Walz: And then Steve's comment on some of the non-performing that, you know, kind of spiked up there at the end of it. Yeah, Brian, I would describe our supply stable to improving on that front, as we've talked about in the past, we have a very robust loan review process. And we'd like to think we we don't get too many surprises. And right now, we feel like we've got a good handle on on those that are outstanding, and I would argue, resolving in a relatively positive way to what I would have expected, you know, three months ago, so continue to feel Got you.
Tom: And then Tom and I will make comment on.
Steve Walsh: On some of the nonperforming that kind of spiked up there at the end of last year.
Brian Martin: Yes, Brian I would describe our.
Brian Martin: That's quite a stable to improving on that front as we've talked about in the past we have a very robust loan review process and we'd like to think we don't get too many surprises.
Brian Martin: Right now we feel like we've got a good handle on those that are outstanding and I would argue.
Brian Martin: Resolving in a relatively positive way to what I would've expected.
Brian Martin: Months ago, So continue to feel pretty good.
Brian Martin: Got it got it thanks for that color and then maybe just I'm sorry, one last one if I could just on the.
Brian Martin: Thanks for that color.
Brian Martin: And then maybe just, I'm sorry, one last one, if I could just on the on the capital level is. Clearly, you talked about the buyback, Tony, and obviously the deal this quarter. Just what are the capital priorities here as we kind of look into the next couple quarters? Is this just kind of rebuilding at this point post-deal and getting the deal integrated? Or are there more M&A? Is there buyback? Just how are you thinking about higher level, just kind of the capital levels here? Yeah, I mean, obviously, capital levels move, you know, move down slightly, you know, I think we still feel very good at that CD1 level, you know, 12 plus.
Brian Martin: On the capital levels.
Brian Martin: Yes.
Speaker Change: Clearly you talked about the buyback Tony and obviously the deal this quarter just what are the capital priorities here as we kind of look.
Brian Martin: And so the next couple of quarters.
Brian Martin: Rebuilding at this point post deal in getting the deal integrated or are there more M&A is there a buyback just how.
Brian Martin: How are you thinking about a higher level, just because of the capital levels here.
Brian Martin: Yeah, I mean, obviously capital levels move move down slightly.
Brian Martin: I think we still feel very good that seed.
Brian Martin: CD one level.
Brian Martin: 12, plus.
Tony Cosentino: So, you know, I do think the buyback is still viable. I don't anticipate us, you know, doing anything different to our dividend policy, as Mark indicated, we'll continue to move that higher as the years go on. But I do think generally earnings, and I think the improvement in the AOCI generally in the forward curve is going to drive our capital levels stable to higher. Perfect.
Brian Martin: So I do think the buyback is still viable I don't anticipate us.
Speaker Change: Doing anything different to our dividend policy as Mark indicated we will continue to move that.
Brian Martin: Higher as the years go on.
Brian Martin: But I do think generally earnings and I think the improvement in iOS Aoc I generally and the forward curve as a driver of our capital levels stable to higher.
Brian Martin: Perfect. Okay, well. Thank you for the color it seems like a good report and good outlook here. So.
Brian Martin: Okay. Well, thank you for the caller. It seems like a good report and good outlook here. So best of luck the rest of the year, and we'll talk to you next quarter. Thanks, Brian. See you, Brian. Thank you.
Brian Martin: The rest of the rest of the year and we'll talk to you next quarter.
Brian Martin: Thanks, Brian Hey, Brian.
Brian Martin: Yeah.
Brian Martin: Thank you.
Operator: Again, if you have a question, please press star, then 1. We have no further questions at this time.
Again, if you have a question. Please press Star then one.
Speaker Change: We have no further questions at this time I would like to turn the conference back over to Mark Klein for any closing remarks.
Mark Klein: I would like to turn the conference back over to Mark Klein for any closing remarks. Thank you, sir. Once again, thanks for joining us this morning.
Mark Klein: Thank you Sarah once again, thanks for joining us. This morning, we look forward to speaking with you in July and reporting on our second quarter of 2025 results. Thanks for joining goodbye.
Operator: We look forward to speaking with you in July and reporting on our second quarter of 2025 results. Thanks for joining. Goodbye.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].