Q1 2025 Hilltop Holdings Inc Earnings Call
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Speaker Change: And good morning, ladies and gentlemen, and welcome to the Hilltop Holdings first quarter 2025 earnings Conference call.
Webcast call.
Speaker Change: At this time all lines are in listen only mode and following the presentation, we will conduct a question and answer session.
Speaker Change: Any time during this call you require immediate assistance. Please press star zero for the operator.
Speaker Change: This call is being recorded on Friday April 25th 2025, I would now like to turn the conference call over to Mr. Matt done. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Before we get started please note that certain statements. During today's presentation that are not statements of historical fact, including statements concerning such items as our outlook business strategy future plans and financial condition.
Speaker Change: Risks and trends in credit allowance for credit losses liquidity and sources of funding funding costs dividends stock repurchases subsequent events and impacts of interest rate changes as well as such other items referenced in the purpose of our presentation are forward looking statements.
Speaker Change: These statements are based on management's current expectations concerning future events that by their nature are subject to risks and uncertainties.
Speaker Change: Results capital liquidity and financial condition may differ materially from these statements due to a.
Speaker Change: A variety of factors, including the precautionary statements referenced in the purpose of our presentation and those included in our most recent annual and quarterly reports filed with the SEC.
Speaker Change: Please note that the information presented his preliminary and based upon data available at this time.
Speaker Change: Except to the extent required by law, we expressly disclaim any obligation to update earlier statements as a result of new information. Additionally, this presentation includes certain non-GAAP measures, including tangible common equity and tangible book value per share a reconciliation of these measures to the nearest GAAP measure may be found in the appendix to this presentation, which is posted.
Speaker Change: On our website at IR hilltop Dot com.
Jeremy Ford: Now I'll turn the call over to Jeremy Ford.
Jeremy Ford: Thank you, Matt and good morning.
Jeremy Ford: For the first quarter Hilltop reported net income of $42 million or <unk> 65 per diluted share.
Jeremy Ford: Return on average assets for the period was one 1% and return on average equity was seven 8%.
Jeremy Ford: Plains capital Bank demonstrated its ability to maintain core customer balances, while repricing interest bearing deposits during the quarter.
Jeremy Ford: This enabled hilltop to produce stable net interest income despite modest compression to the overall balance in earning assets.
Jeremy Ford: Our broker dealer recognized a strong quarter from the wealth and public finance business units, while weathering a challenging fixed income market.
Jeremy Ford: As will be discussed further the mortgage origination segment continues to be weighed down by ongoing constraints in the mortgage market.
Jeremy Ford: Not show signs of subsiding during the first quarter.
Jeremy Ford: Hilltops robust capital and liquidity position did enable us to further compound tangible book value per share, while returning capital to our stockholders.
Jeremy Ford: During the quarter Plains capital Bank generated $40 million of pre tax income on $13 billion of average assets, representing a return on average assets of <unk>, 96%.
Jeremy Ford: Average loans at the bank remained relatively stable in the quarter as construction loans and non owner occupied CRE loans increased in balance, but this was offset by a decline in C&I lending.
Jeremy Ford: The bank continued to see strong development in its loan production pipeline as demand from core customers across our markets remains healthy.
Jeremy Ford: Average total deposit balances at the bank decreased during the quarter, primarily due to expected seasonal outflows and select large balance customers repositioning their excess liquidity.
Jeremy Ford: However, the trend of strong deposit growth did continue on a year over year basis as average core deposits at the bank increased by nearly $300 million.
Jeremy Ford: Results in the quarter at the bank included a $9 million provision for credit losses.
Jeremy Ford: <unk> expense was primarily due to negative risk rating migration within the portfolio as it was partially offset by an improvement in economic conditions within the quarter.
Jeremy Ford: It is going to provide further commentary on credit in his prepared remarks.
Jeremy Ford: The bank realized a one basis point compression in net interest margin from the fourth quarter to 297%. This.
Jeremy Ford: This relatively stable margin was primarily driven by a continued decline in the cost of interest bearing deposits.
Jeremy Ford: Alongside the repricing of longer duration, earning assets into today's relatively higher interest rate environment.
Jeremy Ford: Results at the Bank did include a onetime insurance recovery that reduced noninterest expense by $6 $5 million.
Jeremy Ford: Overall, the bank continued to show improvement in deposit pricing and loan pipeline growth, which illustrates the quality relationship based banking model at Plains capital Bank.
Jeremy Ford: Moving to prime lending for the company reported a pretax loss of $8 million during the first quarter.
Jeremy Ford: As interest rates remain elevated and affordability challenges to homebuyers persist across the country origination volumes remain under pressure.
Jeremy Ford: Prime lending did experience a modest increase in origination volume on a year over year basis to $1 7 billion during the seasonally slower first quarter home buying period.
Jeremy Ford: Gain on sale of loans to third parties, including broker fees.
Jeremy Ford: <unk> increased by six basis points, when compared to the fourth quarter. However, prime lending experience a continued downward trend in mortgage origination fees and other related income, which decreased by five basis points quarter over quarter, and 29 basis points year over year.
Jeremy Ford: Management at Prime lending continues to actively monitor operating expenses and has reduced the fixed expense base by 12% year over year.
Jeremy Ford: However, as interest rates remain volatile in the mortgage origination market continues to present headwinds towards increased volumes. We will look to further evaluate the fixed cost structure of prime lending to ensure efficient operations that align with the current environment.
Speaker Change: In the fourth quarter Hilltop Securities generated pretax income of $9 million on net revenue of $109 million for a pretax margin of 8% speaking to the business lines at hilltop Securities.
Speaker Change: Public Finance services produced a 34% year over year increase in net revenues on an increase in offerings of 11%.
Speaker Change: <unk> finance net revenues declined $8 million from the first quarter of last year.
Speaker Change: This decline was driven by a comparatively strong 2024 that was the result of mortgage related business activity within a single state market.
In wealth management net revenues increased by $1 million compared to last year's first quarter as an increase in retail and wealth production fees more than offset a modest decline and sweep revenue from the firm's FDIC sweep program.
Speaker Change: Finally, the fixed income business continued to be under pressure as demand for middle market buyers remains subdued and demand for municipal bond products was muted during the quarter.
Speaker Change: The business unit had a decline in net revenue of $7 million when compared to the first quarter of 2024.
Speaker Change: Overall hilltop securities realized strong results in the quarter from the public finance and wealth management as the slides, but experienced a material decline in net revenues with the fixed income services line of business.
Speaker Change: While the broker dealers net revenues declined 7% year over year pre tax income declined by 51% due to the mix shift in net revenues between the business lines.
During the quarter hilltop recognized two nonrecurring items that impacted consolidated results.
Speaker Change: First we announced in January our merchant bank realized a preliminary gain on the sale from its investment in <unk> energy solutions. This resulted in a positive impact on net income of $23 6 million or 37 per diluted share.
Speaker Change: Our merchant Bank team has worked hard over the past eight years cultivating a portfolio of attractive investments in building a strong track record.
Speaker Change: This business is institutional to hilltop and we plan to continue to invest in the platform.
Speaker Change: Second as I previously discussed when overview in the bank.
Speaker Change: Our results for the quarter the bank recognized an insurance recovery that resulted in a positive impact to net income of 5 million or <unk> <unk> per diluted share.
Speaker Change: Moving to page four.
Speaker Change: Hilltop maintains strong capital levels with a common equity tier one capital ratio of 21%. Additionally, our tangible book value per share increased from year end 2024 by 53 to.
Speaker Change: To $30 a share.
Speaker Change: During the period, we returned $12 million to stockholders through dividends and repurchased $333 million and shares.
Speaker Change: I will now turn the presentation over to will to discuss our financials in more detail.
Will: Thank you Jeremy I'll start on page five.
Speaker Change: As Jeremy discussed for the first quarter of 2025 Hilltop reported consolidated income.
Will: Attributable to common stockholders of $42 1 million.
Speaker Change: Equating to <unk> 65 per diluted share.
Speaker Change: Related to the transaction that we referenced in our fourth quarter call Hilltops merchant banking group did close on the sale of its ownership stake in the operations of Moser acquisition, Inc.
Speaker Change: On February 24th of 2025.
Speaker Change: As a result of this transaction hilltop recorded a preliminary gain during the first quarter of $23 6 million.
Speaker Change: Equating to 37 per diluted share.
Speaker Change: Okay is preliminary as hilltop continues to own equity shares from the purchaser.
Speaker Change: And those shares were not divested during the first quarter.
Speaker Change: In addition, we do expect that there will be customary closing and final settlement related items to be recorded during future quarters.
Speaker Change: Further during the first quarter hilltop did receive an insurance recovery that equated to $6 5 million.
Speaker Change: Recovery was recorded in professional services noninterest expense and impacted the quarter results by $5 million equating to <unk> <unk> per diluted share.
Speaker Change: Lastly, while not as not a first quarter item hilltop received a $9 $5 million settlement.
Speaker Change: Related to prior legal matters in early April this will be recorded in the second quarter's results.
Speaker Change: And will be disclosed as a subsequent event in the first quarters Form 10-Q filings.
Speaker Change: Turning to page six.
Speaker Change: During the first quarter hilltop increased allowance for credit losses by $5 million to $106 million.
Speaker Change: This increase is largely attributable to the negative migration of certain credit relationships in the portfolio.
Speaker Change: Most significant downgrade related to an office property that experienced a significant drop in occupancy as one of its key tenants was acquired and the acquiring company did not renew its prior to lease in the subject property.
Speaker Change: In addition, the increase reflects more modest increases in our allowance across a number of credits which are not concentrated in a particular industry or geography.
Speaker Change: Somewhat offsetting the impact of downgrades in the portfolio.
Speaker Change: The economic conditions forecasted and Moody's as five slower trend growth scenario, which youll talk continuing to utilize and seasonal modeling during the quarter.
Speaker Change: For a modest improvement versus the 12 31 scenario.
Speaker Change: As a result of this change in the economic outlook the allowance for credit losses related to economic conditions decline of $1 1 million.
Speaker Change: As of March 31 allowance for credit losses of $106 million yields an ACL to total loan <unk> ratio of 133%.
Speaker Change: As we've stated since the introduction of seasonal we continue to believe that the allowance for credit losses can be volatile in the future changes in the allowance will be driven by net loan growth in the portfolio credit migration trends and changes to the macroeconomic outlook overtime.
Speaker Change: Given the current uncertainties regarding inflation tariffs and potential reciprocal tariffs interest rates the future outlook for GDP growth and unemployment rates volatility could be heightened over the coming quarters.
Speaker Change: Moving to page seven.
Speaker Change: Net interest income in the first quarter equated to $105 million, including $1 million of purchase accounting accretion.
Speaker Change: Versus the prior year period, net interest income increased by $1 5 million or 144%.
Speaker Change: Driven by our efforts to lower deposit costs and short term market rates have declined.
Speaker Change: While our focus on growing deposits remains parallel to our go to market approach our team at the bank was able to achieve in interest bearing deposit beta from the current 100 basis points of reductions by the federal reserve of 64%.
Speaker Change: While we are pleased with this outcome, we recognize that the competitive intensity and pricing pressures could escalate in the future.
Speaker Change: As such we're not changing our model through the cycle deposit beta outlook of 55%.
Speaker Change: In addition to the improved interest bearing deposit beta outcome.
Speaker Change: The yield curve has steepened since last year and that benefited visited NII during the quarter, specifically versus the prior year period as higher yields on retained mortgages certain MBS securities and mortgage loans held for sale remained somewhat elevated while shorter term rates declined.
Speaker Change: Our estimates for future NII and NIM currently reflect our expectation that the fed will execute two additional rate reductions in 2025.
Speaker Change: Turning to page eight.
Speaker Change: First quarter average total deposits were approximately $10 9 billion and a.
Speaker Change: Aligned by approximately $89 million or 1% versus the fourth quarter of 2024.
Speaker Change: On an ending balance basis deposits declined $233 million or $2 8 billion from the prior quarter and a balanced level.
Speaker Change: The decline in deposit balances reflect the impact of hilltops pay off a $150 million of maturing senior debt during the first quarter.
Speaker Change: Coupled with the movement of certain customer funds from deposits and the treasury and other investment products in our private banking group.
Speaker Change: During the quarter total interest bearing deposit costs declined with the blended rate equating to 297 basis points as of March 31.
Speaker Change: Down from 327 basis points at December 31.
Speaker Change: Moving to page nine.
Speaker Change: Total noninterest income for the first quarter of 2025 equated to $213 $3 million.
Speaker Change: This reflects approximately $42 million related to the previously mentioned Bossier transaction.
Speaker Change: First quarter mortgage related income and fees increased by $1 million versus the first quarter of 2024, reflecting stable year over year origination volumes.
Speaker Change: While the mortgage market had begun to somewhat stabilize during the fourth quarter and the beginning of the first quarter of.
Speaker Change: The volatility created by concerns over tariffs and variability in overall market rates Hasnt picked it demand in the later part of the first quarter.
Speaker Change: As a result of the demand trends we've seen during recent weeks, we have reduced our mortgage production volume expectation to eight to $9 5 billion for the full year of 2025.
Speaker Change: In addition, we expect the gain on sale margins will remain relatively stable at the current levels given the environmental challenges.
Speaker Change: In addition securities and investment advisory revenues increased by $10 million versus the prior year.
Speaker Change: Period, driven primarily by improved activity in public finance and wealth management.
Speaker Change: The growth seen in these business segments was somewhat offset by ongoing challenges in fixed income trading.
Speaker Change: Growth in other noninterest income equated to $21 million was largely driven by the sale of Mojo.
Speaker Change: However, the impact of this transaction was somewhat offset by lower revenues in the structured finance business at Hilltop Securities.
Speaker Change: It remains important to recognize that both the fixed income services and structured finance businesses at hilltop securities can be volatile from period to period as they are impacted by interest rates overall market liquidity.
Speaker Change: Production trends, which may include any additional subsidies provided by states to support the downpayment assistance programs.
Speaker Change: Turning to page 10.
Speaker Change: Noninterest expenses remained relatively stable from the same period in the prior year.
Speaker Change: As noted next to the table in the upper right of the page most of your sales are impacted noninterest expenses by $11 $3 million.
Speaker Change: Which was somewhat offset by the impact of the legal recovery, which equated to $6 5 million and was recorded in professional services.
Speaker Change: Looking forward, we expect expenses other than variable compensation will remain relatively stable as the ongoing focus efforts related to streamlining our operations and improving productivity continue to support lower head count and improved throughput across our franchise.
Speaker Change: Turning to offset the ongoing inflationary pressures that persist in the market.
Speaker Change: Moving to page 11.
Speaker Change: First quarter average <unk> loans equated to seven 9 billion.
Speaker Change: Which was stable with fourth quarter levels.
Speaker Change: During the fourth quarter and carrying into the first quarter of 2025, we've seen improving activity across our commercial loan pipelines.
Speaker Change: Growth in the pipeline has been geographically dispersed centered in commercial real estate lending.
Speaker Change: Further while the most recent pipeline trends have been encouraging we do expect that the volatility, resulting from tariffs and the potential for reciprocal tariffs cause clients to pause.
Speaker Change: Reevaluate projects over the coming months and quarters.
Speaker Change: This expectation is captured in our current loan guidance representing growth of zero to 3%.
Speaker Change: For full year average loans.
Speaker Change: As noted in prior quarters, we continue to retain mortgages originated at prime lending and would expect to continue to do so in the coming quarters.
Speaker Change: Current expectation is that we will retain between 10 and $30 million per month.
Turning to page 12.
Speaker Change: The first quarter's results include $4 3 million and net charge offs, which should reduce nonperforming assets modestly from the year end 2024 levels.
Speaker Change: Net charge offs in the quarter represented a set of credits across multiple industries, including auto note financing.
Speaker Change: <unk> family construction.
Speaker Change: Non owner occupied real estate.
Speaker Change: Special mentioned loans depicted in the upper left chart on the page did increase during the quarter.
Speaker Change: Driven by the downgrade credits I discussed earlier in my comments.
Speaker Change: Regarding credit overall, we do not see any prevailing trends that cause undue concern and our portfolio. However, we continue to monitor all aspects of the portfolio very closely as higher interest rates potentially lower utilization rates in certain segments of commercial real estate and unexpected slowdown in economic activity.
Speaker Change: Ed and May continue to have a negative impact on our clients and our portfolio.
Speaker Change: Moving to page 13.
Speaker Change: As we move through the second quarter of 2025, there continues to be a lot of uncertainty in the market regarding interest rates inflation and the overall health of the economy.
Speaker Change: We're pleased with the current positioning of our balance sheet and the ongoing work that our team is executing each day to push our company forward through what has been a challenging operating environment.
Speaker Change: As noted in the table our outlook for 2025 reflects our current assessment of the economy and the markets where we participate.
Speaker Change: Further as the market changes and we adjust our business to respond we will provide updates to our outlook on future quarterly calls.
Speaker Change: Operator that concludes our prepared comments and we'll turn the call back to you for the Q&A section of the call.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question answer session.
Speaker Change: Do you have a question. Please press star followed by the one on your Touchtone phone.
Speaker Change: And then your prompt that European has been raised.
Speaker Change: Should you wish to declines on the polling process. Please press star followed by the Q.
Speaker Change: Are you seeing speakerphone, please with Dan Jaffee for party one moment. Please for your first question.
Speaker Change: And your first question comes from Wendy Lee from key BW. Please go ahead.
Wendy Lee: Hey, good morning, guys.
Speaker Change: Good morning.
Speaker Change: Wanted to start on criticized loans, there's a couple of follow ups there.
Speaker Change: How big was the office credit that was downgraded in the quarter and then it also looks like classified improved.
Speaker Change: Some quarter over quarter, what drove the improvement there.
Speaker Change: Yes, so the <unk>.
Speaker Change: All of this credit we referenced was about $18 million and $18 million credit.
Speaker Change: Some of the some of the positive migration in classified which is a series of kind of smaller credits that migrated nothing nothing of consequence there.
Speaker Change: Got it I appreciate that.
Speaker Change: And then maybe shifting over to deposit costs.
Speaker Change: A really strong quarter with deposit cost moving lower do you think there.
Speaker Change: Passenger you to move that lower and correspondingly do you think that the NIM, Ken can see some improvement.
Speaker Change: Yes, I think.
Speaker Change: Team has done to this point.
Speaker Change: Ben has been very good and I feel like we've taken advantage of the 100 basis points reduction that we've seen from the federal reserve were certainly looking across the portfolio with every opportunity too.
Speaker Change: Minimize overall deposit costs, but again that is being balanced with our focus on continuing to grow customer deposits continue to expand our relationships. So we're.
Speaker Change: We're doing both obviously is if the fed were to move. Additionally from here, we would expect to see we would expect to see deposit rates go lower but I would expect them to trend modestly lower from a deposit interest bearing deposit rate perspective from here, but again the largest portion of the work from our first 100 basis points has been completed.
Speaker Change: As that relates to NIM.
Speaker Change: NIM and NII.
Speaker Change: Been very pleased that ni has remained reasonably stable over the last over the last 12 months.
And again that reflects the strong strong work the team has done from a deposit beta perspective, but it also.
Speaker Change: Reflects the fact, the yield curve is kind of a naturally up upward sloping.
Speaker Change: Shape today and it didn't have that for over a long window of time, so that upward sloping curve does give us some confidence that.
Speaker Change: Is stabilized at these levels, albeit somewhat market dependent.
Speaker Change: We'll continue to watch that but we do feel.
Speaker Change: Comfortable today with a view that says stabilize at these levels.
Speaker Change: Yes.
Speaker Change: Your NII guide.
Speaker Change: Yes.
Speaker Change: 2% do you have the deposit beta assumption, you're using for that guidance.
Speaker Change: Two 5%.
Speaker Change: Alright, Thanks for taking my question.
Speaker Change: Sure.
Speaker Change: Thank you and your next question comes from.
Speaker Change: Andrew <unk> from Piper Sandler. Please go ahead.
Hey, good morning, everybody.
Speaker Change: Good morning morning.
Speaker Change: You know to seasonal commercial outflows.
Speaker Change: Deposits in <unk> 'twenty five should we expect any reversal of that in.
Speaker Change: <unk> 25.
Speaker Change: While there is.
Speaker Change: So this is will few things one.
Speaker Change: We do we always expect the seasonal outflow as you noted in Q1, just based on kind of activity.
Speaker Change: And customer activity, we see in the fourth quarter that said, we do also see a seasonal impact related to taxes tax season at April 15, so that carries into the second quarter and then after that.
Speaker Change: April 15th window has passed we generally start to see core customer deposits start to build.
Speaker Change: And rebuild through the through the balance of the year. So there while the first quarter clearly has a normal seasonal flow that carries into I'd say tax season.
Speaker Change: From there we expect to see again.
Growth from our customer deposit perspective, as both you'll get some rebuilding but you also get client acquisition and expansion that goes out through the balance of the year.
Speaker Change: Got it that makes sense I appreciate that and then.
Speaker Change: With Tpa lock volumes up quarter over quarter are you seeing any early signs that could support a rebound in structured finance this quarter.
Speaker Change: I think I think with with TBA hedge.
Speaker Change: It has been.
Speaker Change: A key factor in that has been some support that certain states have provided to their to the down payment assistance program over time.
Speaker Change: We generally hear about that that that incremental support as the state budgets start to be.
Speaker Change: <unk> generally in the middle of the year. So right now that would be the most significant driver of incremental activity otherwise. The team continues to work to support customers' everyday with their down payment assistance programs, but again, the most significant driver of uptick would be additional support which we are we will wait.
Speaker Change: And see how those states.
Speaker Change: Put forth their budgets for 2025 26.
Speaker Change: Got it thank you for taking my questions and congrats on the quarter.
Speaker Change: Thank you.
Unnamed Operator: Thank you and your next question comes from Tim Mitchell from Raymond James. Please go ahead.
Tim Mitchell: Hey, good morning, everyone.
Good morning.
Tim Mitchell: Two questions kind of on fees.
First just a follow up on the hilltop securities just given the volatility we've seen in the bond markets recently.
Tim Mitchell: How are your businesses were impacted by that and if we continue to see ongoing volatility.
Tim Mitchell: Yes.
Tim Mitchell: Are your expectations.
Tim Mitchell: And then secondly.
Tim Mitchell: Just some of your commentary on the mortgage business and right sizing that bidding environment.
Tim Mitchell: <unk> seen some other banks in your markets leaning more into mortgage. So I was just curious kind of the way you think about that.
Tim Mitchell: As we look ahead and if rates do come down.
Tim Mitchell: And the <unk>.
Tim Mitchell: Question improve.
Tim Mitchell: Thoughts on positioning and whatnot.
Tim Mitchell: This will take I'll.
Tim Mitchell: I'll take that in the order you provided is there so from a from a volatility perspective certainly.
Tim Mitchell: On the day of the tariff announcements to the market.
Tim Mitchell: <unk> to move pretty aggressively rates started to adjust I'd say.
Tim Mitchell: Most impacted was our municipal portfolio, which was I'd say reasonably well documented by a number of market participants publicly whether that'd be public journals or otherwise.
Tim Mitchell: And so we've <unk>.
Tim Mitchell: Managed through that it certainly had an impact in the April trading period, and we're continuing to work our way.
Tim Mitchell: Back from a from an overall trading perspective, there, but that volatility and valuation impact certainly impacted.
Tim Mitchell: The trading results in the first part of the second quarter, So a challenging.
Tim Mitchell: The environment in the first quarter persisted from our fixed income but related to the overall variability and volatility created from tariffs that really really took place in the first couple of weeks of April.
Tim Mitchell: As it relates to mortgage I'll start there again, we've what we've continued to say is we have seen a slow and steady improvement in the overall business over time.
Tim Mitchell: That seems to have taken based on what we're seeing in the last couple of weeks of March and the first couple of weeks of April.
Tim Mitchell: A little bit of a step back I think also related to some of the variability coming from tariff announcements and the like.
Tim Mitchell: As well as interest rates moved around the 10 year rallied under under four and then move back to $4 50. So there was a lot of activity there for customers to digest.
Tim Mitchell: Our view is that mortgage will continue to heal at a slow pace on the on a go forward basis, while variability here in the short run.
Tim Mitchell: Has been apparent in impacted impacted activity. We do believe it's generally on a trajectory of modest but slow improvement into our to the comments we've made.
Tim Mitchell: It's our objective to make sure we continue to work to rightsize the business for what we think the next 12 to 18 months will bring in in that business last thing I'll say is we've we are aggressively pursuing growing our loan officer.
Tim Mitchell: Loan officer pool, or those folks that are out originating loans and so that's we're on offense in that regard trying to attract new talent to our platform, but we're also being cautious.
Tim Mitchell: Round around how we how those expenses are incurred to ensure that again, we rightsize the business for what we believe the market to be.
Tim Mitchell: Got it thanks for the color.
Tim Mitchell: And then on the.
Tim Mitchell: On the loan growth outlook, which is reduced and it makes sense given all the uncertainty and whatnot.
Speaker Change: Can you talk a little bit more about your pipeline and what you are.
Tim Mitchell: You're getting from customers and then.
Speaker Change: I think obviously that.
Speaker Change: The monthly mortgage retention is higher this year versus last year.
Speaker Change: Growth is needed just how you think maybe lower versus higher end of that $10 million to $30 million range as we go through the year.
Speaker Change: I mean, I think that as far as just pipeline and customer activity, we still seeing that be relatively strong and we've had a couple of quarters of good fundings. So feel good about our clients and what we're doing.
Speaker Change: At the same time, we see our pull through rates are challenged and it's a very competitive environment.
Speaker Change: But we're really committed to trying to restore balance growth at the bank and will he can speak to that.
Speaker Change: Interplay with the prime purchases.
Speaker Change: So mortgage retention, we've guided $10 million to $30 million just as a perspective.
Speaker Change: We have about $10 million of runoff per month. So if we retain tend to balance would stay reasonably flat our expectation.
Speaker Change: <unk> will retain closer to the higher end of that $20 to $30 million per month.
Speaker Change: So you will see some modest growth in that.
One to four family portfolio.
Speaker Change: Certainly for the next couple of quarters, that's our expectation.
Speaker Change: Great. Thanks, guys sneak one last one in on the on the buyback, which you guys lean into this quarter obviously.
Speaker Change: Assuming the we don't see a significant rebound in the market is it fair to assume that you'll continue.
Speaker Change: Repurchasing stock.
Speaker Change: I mean I think.
Speaker Change: We have a $100 million.
Speaker Change: Authorization, we bought back 33, so we have $67 million available and we're certainly evaluating.
Speaker Change: Where we trade in value in.
Speaker Change: So it's certainly something that we're considering.
Speaker Change: Got it alright, thanks for taking my questions.
Speaker Change: Thank you Andy.
Jordan: Last question comes from Jordan <unk> from.
Stephen: Stephen Please go ahead.
Jordan: Hey, good morning, guys.
Jordan: I just had a question on expenses.
Speaker Change: So it looks like <unk>, you had the benefit from the insurance recovery.
Jordan: Now guidance proved debate.
Speaker Change: Flat to 2% growth.
Speaker Change: Much of that improvement was from the insurance recovery.
Speaker Change: Actually.
Speaker Change: Not a lot I mean, obviously thats certainly benefits but.
Speaker Change: Practically speaking I think if you look at look at our presentation, you can see that our expenses, excluding kind of variable compensation or other than variable compensation have been reasonably stable team has done a lot of hard work from an optimization perspective, and an efficiency perspective, both both of our mortgage company, but across the organization too.
Speaker Change: Keep expenses stable and so that continues to be our objective and our guidance reflects that but it's a lot of work across the organization.
Speaker Change: To continue to kind of offset what we've seen in inflation in the otherwise operating expense growth.
Speaker Change: Got it and then just kind of following up on that I know.
Speaker Change: You said that you expect expenses to be stable is there kind of a run rate you could give for the for the fixed side of it.
Speaker Change: Well I think yes, I think if you look at the if you look at page 10 of our chart you can see there we've been.
Speaker Change: In the 181.
Speaker Change: 185 to $1 90 range for the better part of a better part of four quarters.
Speaker Change: If you adjust the Q1 number there for the for the tax excuse me for the legal benefit Youll see that as well so that would give you a reasonable perspective of kind of where we where we expect to operate going forward.
Speaker Change: Got it thanks for taking my questions.
Speaker Change: Sure.
Unnamed Operator: Thank you and ladies and gentlemen, this does conclude your conference call for today. Thank you very much for your participation.
Speaker Change: Connect.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.