Q2 2025 SmartFinancial Inc Earnings Call
Ezra: Earnings Release and Conference Call. My name is Ezra and I will be your coordinator today.
Ezra: If you would like to ask a question, please press star followed by one on your telephone keypad. And if you change your mind, please press star followed by two.
Ezra: We will be taking questions after the prepared remarks.
Nathan Strall: I will now hand you over to the host, Nate Stroll, Director of Investor Relations to begin. Please go ahead. Thanks, Ezra.
Hello everyone and welcome to the Smart Financial second quarter 2025 earnings release and conference call. My name is Ezra, and I will be your coordinator today. If you would like to ask a question, please press star. Followed by 1 on your telephone keypad, and if you change your mind, please press star for by 2, we will be taking questions after the prepared remarks. I will now hand you over to the host Nate strolls director of investor relations to begin. Please go ahead.
William Carroll: Good morning, everyone, and thank you for joining us for Smart Financial's second quarter 2025 earnings conference call. During today's call, we will reference the slides and press releases that are available in the Investor Relations section on our website, SmartBank.com.
Nate: Thanks edra. Good morning, everyone and thank you for joining us for Smart Financial second quarter, 2025 earnings conference call.
William Carroll: Billy Carroll, our President and Chief Executive Officer, will begin our call, followed by Ron Gorczynski, our Chief Financial Officer, who will provide some additional comments. We will be available to answer your questions at the end of the call. Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially. We list these factors that might cause the results to differ materially in our press release and in our SEC filings, which are available on our website.
During today's call, we will reference the slide and press release that are available in the investor relations section on our website smartbank.com. Billy Carroll, our president and chief executive office will be get officer will begin our call followed by Ron ginski, our Chief Financial Officer who will provide some additional commentary.
William Carroll: We do not assume any obligation to update any forward-looking statements because of new information, early developments, or otherwise, except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance.
Nate: We will be available to answer your questions at the end of the call. Our comments include forward-looking statements, these statements are subject to risks and uncertainties and the actual results could vary materially. We lift these factors that might cause the results to differ materially in our press release and in our SEC filing, which are available on our website.
Nate: We do not assume any obligation to update any forward-looking statements because of new information, early developments or otherwise, except as may be required by law.
William Carroll: You may see the reconciliation of these measures in the appendices of the earnings relief and investor presentation filed on July 21st, 2025 with the FDC.
William Carroll: And now I'll turn it over to Billy Carroll to open our call. Thanks, Nate. And good morning, everyone. Great to be with you. And thank you for joining us today and for your interest in SMBK.
During the call, we will reference non-gaap Financial measures related to the company's performance. You may see the reconciliation of these measures in the appendices of the earnings release and investor presentation filed on July 21st, 2025 with the SEC. And now I'll turn it over to Billy Carroll to open our call.
William Carroll: I'll open our call today with some commentary and hand it over to Ron to walk through the numbers in some greater detail.
Billy Carroll: Thanks Nate. And good morning everyone. Great to be with you and thank you for joining us today. And for your interest in SMB k.
William Carroll: After our prepared comments, we'll open it up with Ron, Nate, Rhett, Mealor, and myself available for Q&A. So let's jump in. Another very nice quarter for us as we execute on what we've been messaging. You've heard us talk about execution over the last several quarters, and that's what we're doing. Our team has a keen focus on hitting the targets we've set out for our company this year in regard to revenue, returns, and proven expense growth. As you'll hear on this call, our company is performing very well, and we're remaining bullish on where we're headed.
William Carroll: For the quarter, we posted net income gap and operating of $11.7 million, or $0.69 per diluted share. I continue to be proud of our performance, and I'm excited to watch us gain operating leverage. This is five consecutive quarters of positive leverage.
Focus on hitting the targets we've set out for our company. This year in regard, to revenue returns and prudent expense growth. As you'll hear on this call, our company is performing very well and will remain bullish on where we're headed.
For the quarter, we posted net income gap and operating of 11.7 million or 69 cents per diluted share.
William Carroll: Jumping into the highlights, I'll be referring to the first few pages in our deck. First, and in my opinion, one of the most important metrics, we continue to increase the tangible book value of our company, moving up to $24.42 per share, including the impacts of AOCI, and $25.43, including that impact. That's growth of over 13% annualized quarter over quarter. Our balance sheet growth was strong. On the loan side, we grew at a 13% annualized pace for Q2, a little ahead of our expectations as our market teams are continuing to add outstanding new relations. On the deposit side, growth was sound at 5% quarter over quarter annualized.
I continue to be proud of our performance and I'm excited to watch US gain operating leverage. This is 5. Consecutive quarters of positive, Leverage.
Billy Carroll: Jumping into the highlights. I'll be referring to the first few pages in Our Deck first and in my opinion, 1 of the most important metrics, we continue to increase the tangible Book, value of our company, moving up to 2 4. 4, 4 2,
Billy Carroll: That's growth of over 13% annualized quarter over quarter.
Billy Carroll: Our balance sheet growth was strong on the loan side. We grew at a 13%, annualized pace for Q2, a little ahead of our expectations as our Market teams are continuing to add outstanding new relationships.
William Carroll: I continue to be very pleased with the deposit side of our balance sheet as we add outstanding new relationships there as well. We also continue to hold our non-interest bearing The second quarter is usually a little softer with some seasonality, but we held up well, and Ron will provide more details on that in a moment. Our history of strong credit continues with the metric at just 19 basis points in NPAs. Credit is always a focus for our company and I'm pleased to see these numbers continue at exceptionally low levels.
Billy Carroll: On the deposit side growth was sound at 5% quarter over quarter annualized. I continue to be very pleased with the deposit side of our balance sheet. As we add outstanding new relationships, there as well. We also continue to hold our non-interest bearing percentage. The second quarter is usually a little softer with some seasonality, but we held up well and Ron will provide more details on that in a moment.
William Carroll: Total revenue came in at $49.2 million as net interest income continued to expand as we had anticipated. We also had another very nice non-interest income. non-interest expenses also came in on target again at $32.6 million.
Our history of strong credit continues with the metric at just 19 basis points in NPA credit is always a focus for our company and I'm pleased to see these numbers continue at exceptionally low levels.
Billy Carroll: Total revenue came in at 49.2% income. Continue to expand as we had anticipated. We also had another very nice 9 interest income quarter.
William Carroll: Looking at the charts on pages 4 and 5, you'll see nice trends. We're building on our return metrics, and most importantly, growing total revenue, EPS, and as I mentioned earlier, tangible book value. All of those charts are great graphics to illustrate our execution, and I'm looking forward to and expecting these trends to continue. So a couple of additional high-level comments from me on growth, our growth was a direct result of the focus of our sales. We all we've hired well over the last several years, and we've also built an outstanding foundational process that includes aggressively going after new client relationships, growing existing ones, along with a diligent prospecting process.
Billy Carroll: 9 interest expenses also came in on target again at 32.6 million.
Billy Carroll: Looking at the charts on pages 4 and 5. You'll see nice Trends. We're building on our return metrics and most importantly, growing total revenue Epps. And as I mentioned earlier, tangible Book value, all of those charts are great graphics to illustrate our execution. And I'm looking forward to and expecting these Trends to continue.
Billy Carroll: So a couple of additional high-level comments for me on growth. Uh, our growth was a direct result of the focus of our sales teams.
William Carroll: As I stated, we grew our loan book at 13% annualized for the quarter, as sales momentum stayed strong and balanced across all of our regions. Our average portfolio yield, including fees and accretion, was up to 6.07%. And our new loan production continues to come onto the books accretive to our total portfolio yield low. In regard to deposits, I mentioned a moment ago, I'm very proud of where we've done, what we've done on the deposit front. Our loan to deposit ratio is 85%, which is still a nice spot for us. This strong position gives us continued flexibility to leverage our strong balance.
Billy Carroll: We all we've hired well over the last several years, and we've also built an outstanding foundational process that includes aggressively going after new client relationships. Growing existing ones along with a diligent prospecting process,
Billy Carroll: As I stated, we grew our loan book at 13%, annualized for the quarter, as sales, momentum, stayed strong, and balanced across all of our regions. Our average portfolio yield, including fees and accretion was up to 6.07%.
And our new Loan Production continues to come onto the books of creative to our total portfolio yield levels.
William Carroll: Our balance sheet pipelines continue to feel good.
Billy Carroll: In regard to deposits, I mentioned a moment ago of them, very proud of where we've done what we've done on the deposit front. Our loan to deposit ratio is 85%, which is still a nice spot for us. This strong position gives us continued flexibility to leverage our strong balance sheet.
William Carroll: I'll discuss this a little more in my closing comments, but all in all, a really nice way to wrap up the first half of 2025.
Ronald Gorczynski: I'm going to stop there and hand it over to Ron to let him let him dive into some details for us.
Ronald Gorczynski: Billings, and good morning, everyone. I'll start by highlighting some key depositors. Our deposit growth during the quarter was affected by typical seasonal outflows. including tax payments and the utilization of public funds. As a result, net balance non-broker deposit growth was $14 million. Offsetting these outflows was $116 million of new non-broker production generated at a weighted average cost of 3.24%. Total interest bearing costs rose by three basis points to 2.95% and were 2.96% for the month of June. Our loan-to-deposit ratio ticked up to approximately 85% with our deposit composition remaining stable and having non-interest bearing deposits at 90% of total.
Speaker Change: Our balance sheet pipelines, continue to feel good. I'll discuss this. A little more in my closing comments but all in all a really nice way to wrap up the first half of 2025. I'm going to stop there and hand it over to Rod, to let him. Let him dive into some details for us, Ron.
Well, thanks Billy. And good morning everyone. I'll start by highlighting some key deposit results.
Our deposit growth during the quarter was affected by typical seasonal outflows including tax payments and the utilization of public funds as a result, net balance. Non-brokered
Speaker Change: offsetting these outflows was 116 million of new. Non-b broker production generated at a weighted average cost of 3.24%
Speaker Change: Total interest, bearing the cost Rose by 3 basis points to 2.95% and were 2.96% for the month of June.
Ronald Gorczynski: Importantly, we saw very little account attrition or client loss throughout the quarter. Rather, we saw a continuation of last quarter. whereby clients continue to utilize excess deposit funding for projects and working capital. While the positive balance drawdowns are impactful, we expect to recoup balances as project investments slow and those seasonal outflows return. Our net interest margin increased to 3.29%, representing an improvement of eight basis points over the previous quarter, as higher loan yields more than offset the three basis point increase in the positive. The average rate on new loan production was 7.11%. resulting in a quarterly portfolio yield of 6.07%.
Speaker Change: Our loan to deposit ratio, ticked up to approximately 85% with our deposit composition remaining stable and having non-interest bearing deposits at 19% of total deposits.
Speaker Change: While deposit balance drill Downs are impactful. We expect to recoup balances as project Investments slow and those seasonal outflows return.
our net interest margin increased to 3.29% representing an improvement of 8 basis points over the previous quarter as higher loan yields more than offset the 3 basis point increase in deposit costs,
Speaker Change: The average rate our new Loan Production was 7.11%.
Ronald Gorczynski: As a result, net interest income expanded by $2.1 million, totaling $40.3 million for the current quarter.
Ronald Gorczynski: Looking forward, we are maintaining our previous quarter's guidance of 2 to 3 basis points of margin expansion per quarter for the second half of 2025. Although we anticipate an increase in overall deposit portfolio costs, primarily due to higher cost of new production, Our new loan originations along with the amortization maturities of lower yielding loans are expected to have a positive contribution in our margin expansion. Taking these into account and considering current market conditions, we are forecasting a third quarter margin and a 3.3 to 3.35% range. Our quarterly provision expense for credit losses reached $2.4 million, mainly from higher loan growth.
Resulting in a quarterly portfolio yield of 6.07% as a result. Net interest income expanded by 2.1 million, totaling 40.3 million for the current quarter.
Looking forward. We are maintaining our previous quarter's guidance of 2 to 3 business points of margin expansion per quarter for the second half of 2025.
Although we anticipate an increase in overall deposit portfolio costs, primarily due to higher cost of new production. Our new loan originations along with the along with the amortization maturities of lower, yielding loans are expected to have a positive contribution in our margin expansion.
Speaker Change: Taking these into account and considering current market conditions. We are forecasting, a third quarter margin and the 3.3 to 3.35% range.
Ronald Gorczynski: Net charge-offs to average loans stayed at 0.01% annual. Asset quality remains solid with non-performing assets at 0.19% of total assets and the allowance for credit losses remains steady at 0.96% of total loans. Operating Non-Interest Income rose by $300,000 to $8.9 million, exceeding our projection. Consistent with the previous quarter, this positive variance was largely attributable to higher than expected insurance and mortgage banking revenues, as well as sustained robust performance from our capital market. Moving on to operating expenses, we maintained our focus on expense containment, recording operating expenses of $32.6 million, the low end of our guided range, and a modest increase from the prior quarter.
Speaker Change: Our quarterly provision expense for credit losses, reached 2.4 million mainly from higher loan, growth, net charge offs, the average loans stayed at 0.1% annualized.
Speaker Change: Asset quality remains solid with non-performing assets at 0.19% of total assets. And the allowance for credit losses remain, steady at 0.96% of total loans.
Speaker Change: Operating non non instance income Rose by 300,000 to 8.9 million exceeding, our projections.
Speaker Change: Consistent with the previous quarter. This positive variance was largely attributable to higher than expected insurance and Mortgage Banking revenues, as well as sustained robust performance from our Capital markets group.
Ronald Gorczynski: The majority of this increase was attributable to the recognition of the first full quarter of merit increases and additional approvals for incentive-based compensation related to strong associate performance. Overall, we are satisfied that expenses remain at the lower end of our projected guidance range. For the third quarter, non-interest income is projected to be approximately $9 million, and non-interest expense is expected to be in the range of $33.8 and $34 million.
Speaker Change: Moving on to operating expenses, we maintained our focus on expense containment recording operating expenses of 32.6 million. The low end of our guided range, and a modest increase from the prior quarter.
Speaker Change: The majority of this increase was attributable to the recognition of the First full quarter of Merit increases and additional approvals. For incentive based compensation related to strong associate performance. Overall, we are satisfied that expenses remain at the lower end of our projected guidance range.
Ronald Gorczynski: Salary and benefit expenses are anticipated to range from $20.5 to $21 million, reflecting an increase from the previous quarter due to higher levels of variable compensation and anticipated costs associated with new hires.
For the third quarter, not interest income is projected to be approximately 9 million. And not interest expense, is expected to be in the range of 33.8 and 34 million.
Ronald Gorczynski: I'll conclude with capital. The company's consolidated TC ratio increased to 7.7%, and our total risk-based capital ratio remained well above regulatory well-capitalized standards at 11.1%. Overall, we believe our capital levels remain optimally balanced to continue to support growth while maximizing returns on equity.
Salary and benefit expenses are anticipated to range from 20.5 to 21 million reflecting, an increase from the previous quarter due to higher levels of variable compensation and anticipated costs. Associated with new hires,
William Carroll: With that said, I'll turn it back over to Bill. Thanks, Ron. I want to reiterate again, the value proposition with our company, drawing your attention back to page seven of our deck. We are successfully moving into the leveraging phase of growth for our company. We're seeing the inflection and the movement of our numbers. And now as we have clear vision of our return targets, we're building a great franchise. We're in arguably some of the most attractive markets in the country and have put together a team that is rapidly moving us forward. You've heard me say before, I believe we're one of the Southeast's brightest stories, outstanding markets, strong experienced bankers coupled with just as experienced and strong operational and support teams, along with some great complimentary business lines.
Speaker Change: I'll conclude with capital the company's Consolidated TC ratio increased to 7.7% and our total risk-based Capital ratio remained. Well above regulatory. Well capitalized standards at 11.1% overall. We believe our Capital levels remain optimally balanced to continue to support growth while maximizing Returns on equity.
Billy Carroll: With that said, I'll turn it back over to Billy.
Billy Carroll: Thanks Ron. I want to reiterate again the value proposition with our company. Drawing your attention back to page 7 of Our Deck.
Billy Carroll: We are successfully moving into the leveraging phase of growth for our company.
We are seeing the inflection in the movement of our numbers. And now, as we have Clear Vision of our return targets, we're building a great franchise, where an arguably, some of the most attractive markets in the country and have put together a team that is rapidly. Moving us forward, you, you've heard me say before, I believe we are 1 of the southeast by the stories outstanding markets, strong experienced Bankers, coupled with just his experienced and strong operational and support.
William Carroll: We expect the second half of 2025 to have a similar look to the first half, as we focused on continued growth in our EPS line and hitting our near-term revenue and return targets that are clearly in sight. As I mentioned, pipelines are solid, and I think we can continue growing at that mid-to-high single-digit pace.
Billy Carroll: Teams along with some great complimentary business lines.
Billy Carroll: We expect the second half of 2025 to have a similar look to the first half, as we focused on continued growth, and our EPS line and hitting our near-term revenue and return targets that are clearly in sight.
William Carroll: A couple of comments on talent acquisition. One of the areas where we are focusing and one that I continue to be very excited about is our ability to recruit outstanding new team members. The majority of the expense growth looking forward should be primarily talent related, along with some appropriate investment in our platform. We've either added or are in the process of adding 10 new revenue-producing team members during the first half of the year, primarily in commercial banking, private banking, and treasury management. I believe we are included in a very small handful of banks that have built a culture where outstanding regional bankers want to work.
Billy Carroll: As I mentioned pipelines are solid and I think we can continue growing at that mid to high single digits pace.
A couple of comments on Talent acquisition 1 of the areas where we are focusing in 1 that I continue to be very excited about is their ability to recruit outstanding new team members. The majority of the expense growth looking forward should be primarily Talent related along with some appropriate investment in our platform.
Billy Carroll: Treasury management.
William Carroll: We will continue to look for these organic growth opportunities and remain very focused on recruiting. On the culture front, we've been recertified as a great place to work this year, and our associates have created an outstanding positive energy around this company.
Billy Carroll: I believe we are included in a very small handful of banks that have built a culture where outstanding Regional Bankers want to work.
William Carroll: So, to summarize, I love where we are sitting. We are executing, growing our revenue line, EPS, and book value while staying prudent on expense. We remain optimistic around our margin as new production stays strong. And as we see the tailwind coming with great resets in our loan portfolio over the next couple of years, credit continues to be very sound. And we're seeing great new client acquisitions coupled with a great sales energy.
William Carroll: I appreciate the work of our SmartFinancial SmartBank team and the efforts of our 600 plus associates. And I'm very proud of what we've got going on here at SMBK.
William Carroll: So I'm going to stop there and we'll open it up for questions. Thank you very much.
We will continue to look for these organic growth opportunities and remain very focused on recruiting on the culture front. Uh, we've been re-certified as a great place to work this year and our Associates have created an outstanding positive energy around this company. So, to summarize, I love where we are setting. We are executing growing, our Revenue line Epps and Book value. While staying proven on expense growth. We remain optimistic around our margin, as new production, stays strong. And as we see the Tailwind coming with rate resets in our loan portfolio, over the next couple of years, credit continues to be very sound and we're seeing great new client Acquisitions. Coupled with a great sales energy, I appreciate the work of our Smart Financial smart Bank team and the efforts of our 600 plus Associates and I'm very proud of what we've got going on here at sndk. So I'm going to stop there and we'll open it up for questions.
Ezra: If you would like to ask a question, please press star followed by one on your telephone keypad now, and please ensure your device is unmuted locally. If you change your mind or your question has already been answered, please press star followed by two.
Stephen Scouten: Our first question comes from Stephen Scouten with Piper Sandler. Stephen, your line is now open. Please go ahead. Thanks. Good morning. Great quarter guys. So Billy talking about the loan growth and sounds like you know, pipelines are still solid. Kind of talking about mid single digits. What do you think keeps you at a level of like in this kind of low double digit range we've been seemingly operating at lately. Do you think that, you know, upside potential is still there, especially if new hires come to fruition?
Billy Carroll: Thank you very much if you would like to ask a question, please press star. Followed by 1 on your telephone keypad now and please ensure your devices unmuted locally. If you change your mind or your question has already been answered, please. Press star, followed by 2.
Speaker Change: Our first question comes from, Stephan scouten with Piper Sandler, Stefan your lines now open, please go ahead.
Thanks. Good morning, um, great quarter guys. Um so Billy talking about the loan growth and sounds like you know pipelines are still solid, kind of talking about mid single digits. What do you think keeps you at a level? Like in this kind of low double digit range? We've been
Speaker Change: Seemingly operating at lately. Um, do you think that? Yep, you know, upside potentially still there especially if you can use hires come to fruition.
William Carroll: Hey, Stephen. Yeah, I do. You know, we have, you know, the last few quarters, we've been able to kind of bring it in at that lower double digit level. I still think that is very feasible. I hedge a little bit, just because, you know, we've seen, you know, we've seen a lot of payoffs and paydowns around our space. We've been pretty fortunate that we have not been hit with kind of some of those unanticipated payoffs or paydowns. So, you know, I hedge a little bit just in the anticipation that you get a few, if you get a little bit more of that than we anticipate, that could drop us down into the high singles.
William Carroll: But I still think we're at that kind of that high singles, possibly low doubles if we get it. You mentioned the new production team members we're continuing to add. So I like our ability to grow. I think we've got the ability to continue to grow both sides of this balance sheet at a nice level. But I still lean a little bit more toward high singles. But yeah, we could potentially do low doubles as well. Got it.
Speaker Change: Hey Stephen. Yeah, I I do you know, we have, you know, the last few quarters. We've been able to kind of bring it in, at that lower double digits, uh, level, I still think that is very feasible. I, I hedge a little bit just because, you know, we we've seen, you know, we've seen a lot of payoffs and pay Downs around our space. We've been pretty fortunate that we have not been hit with kind of some of those unanticipated payoffs or paid outs. So, um, you know, I, I, I hedge a little bit, just in the anticipation that you get a few, if you get a little bit more of that than we anticipate, that could drop us down into the high singles. Uh, but I still think we're. We're at that kind of that high singles, possibly low doubles. If we get it. Um, you mentioned the new, uh, new production team members. We're continuing to add. So, um, uh, I like our ability to grow. Um, uh, I think,
Speaker Change: We've got the ability to continue to grow both sides of this balance sheet at a nice level. Uh, but but I, I still lean a little bit more toward High singles, but, uh, but yeah, we could, we could potentially do do uh, low doubles as well.
William Carroll: And with the new hires, is there any sort of geographic bent towards where those folks are coming from, or any verticals that you're targeting more so than others, or just give us a feel for, you know, where those people are coming, where they're going to be producing? Spread out really throughout our whole platform. We're just seeing some great opportunities with some bankers that we've recruited for a while. Some opportunities have just kind of popped up. But it's really not in any one specific region. We've added really throughout Tennessee, Alabama, and our Gulf Coast region over the course of the last few months.
Speaker Change: Got it. And and with the new hires is there any um, sort of geographic, bent towards where those folks are coming from or any verticals that you're targeting more so than others or just give us a feel for, you know, where those people are coming, where they're going to be producing.
William Carroll: As I mentioned in my commentary, we've also got, we're in the process of adding some other really nice team members as well. So things have been good. And we've been able to continue to attract the opportunity to add some great talent to the team. But it's pretty well spread out throughout the whole. Got it.
Speaker Change: For uh, spread out really throughout throughout our our, our our really our, our whole platform. Um, you know, we're just seeing some great opportunities, um, with some bankers that, that, you know, that we've been some that we've recruited for a while some opportunities of just kind of popped up and, uh, but you know, it it's really not in any 1 specific region. We've added really throughout Tennessee Alabama uh and our Gulf Coast region over the course of the the last few months. As as I mentioned in my commentary, we've also got we're in the process of adding some other really nice team members uh, as as well. So um uh things have have have been good. And we've we've been able to continue to attract the opportunity to have some great talent to the team, but it's it's pretty well spread out throughout the whole company.
Stephen Scouten: And then from a forward financial perspective, I mean, you guys have basically hit the guidance and kind of the bogey of operating revenue that you had laid out, you know, a number of quarters back, which is truly impressive. And not to like, you know, say you hit it and move right past it, but in a way, like, what's the next bogey for you guys? What's the next target? And how do you get there? Is it more just like, hey, we're in great markets, we got really good people, let's just deepen ourselves in the markets we're in?
William Carroll: Or do you start thinking about, you know, de novo expansion through team list outs? Or what's kind of the path to the to the next leg up from here after reaching this, this important milestone?
Speaker Change: Got it. And then from a Ford Financial perspective, I mean you guys have basically hit the guidance and kind of the the the bogey of operating Revenue that you had laid out, you know, a number of quarters back which is truly impressive. And, you know, not to not to like, you know, say you hit it and move right past it. But in a way like, what's, what's the next bogey for you guys, what's the next Target? And and how do you get there? Is it, is it more? Just like, Hey, we're in great markets. We got really good people, let's just deepen ourselves in the markets we're in. Or do you start thinking about, you know, denovo expansion through team list outs or what's kind of the path to the to the next leg up from here after reaching this, this important milestone
William Carroll: Great, great question. And yeah, it has been. We've knocked on the door of the targets that we have set out to hit in 2025. So, as I mentioned, you know, those targets are clearly in our sight, and we feel like we can hit and get those surpassed here in the near term. I think the next thing for us, and you said it, and I've said this on calls in the past, I think for us, you know, when you look at the way we built this company, and we built it from Tennessee to Alabama through this Gulf Coast region, we've got a phenomenal, we've got a phenomenal footprint.
William Carroll: We just need to get deeper, you know, and by design, we built the company kind of, as y'all heard me say, kind of mile wide, inch deep, because we wanted to get into these regions. We had these opportunities that we wanted to take advantage of. Well, now we just need to get deeper. You know, we're, you know, not that we wouldn't look at a market expansion, but that would be secondary. And if it would be, it would be something that would make some sense to us. I think we just need to double down, get deeper on what we're doing.
Speaker Change: And, um, great great question and, and yeah, it it has been we've, uh, we we've we're not knocking on the door of of the targets that we have set out, um, to hit in 25. So as I mentioned, you know, those targets are clearly in our site and we feel like we can hit and get those surpassed here in the near term. I think the next thing for us and and and you said it. I and I've I've said this on on calls in the past, I think for us, you know, when you look at the way we built this company and and we built it from Tennessee through Alabama, through this gulf coast region. We've got a phenomenal, uh, we've got a phenomenal footprint, we just need to get deeper, you know, and and by Design, we built the company, kind of, as y'all heard me say, kind of kind of my wide inch deep because we wanted to get into these regions. We had these opportunities that we wanted to take advantage of well now we just need to get deeper, you know, we're you know not that we wouldn't look it up at at at a a Market expansion. But that's that's that, that would be secondary and if it would be it would be something that would make some sense to us. I think.
William Carroll: To your point, we're already starting our 2026 planning. We're doing that now with our team and, you know, kind of looking at where we want to position that next set of goals for us. And so we'll be coming out with those over the next couple of quarters as we finalize our 2026 forecast. But, as I said, I love what we're setting. We can really move the, again, the revenue, the EPS, the tangible book, those pieces. That's what's driving the stock price. And that's what we want our investors to understand. That's where our focus is. And I think everything you'll see us do is going to be focused around those metrics moving forward.
We just need to double down and get deeper of what we're doing to your point. We're already starting our 2026 planning. Uh, we're doing that now with our team and, you know, kind of looking at where we want to, where we want to to position that next set of goals for us. Um, uh, and so, we'll be, we'll be coming out with those over the next couple of quarters. As we finalize, uh, are 26 forecast. But, um, as I said, I love when we're setting, we can, we can really move the
Stephen Scouten: Yeah, I think, you know, we're a branch like model. And I would say these single office locations that we have, in most of our markets, we have made a lot of progress, but we've got the opportunity to double or triple the size of most all of those markets in the coming near future. Got it. That's a good reminder. Great. Congrats on all the success. Keep up the good work. Appreciate it. Thanks, Steve.
Speaker Change: Again the revenue, the EPS, the tangible book, those pieces. Uh, uh, those those that's what's driving the stock price. And and that's what we want our investors to understand. That's where our focus is. Um, and um, I think everything you'll see us do is going to be focused around those metrics moving forward. Yeah, I think, you know, we're a branch like model and I would say these single office locations that we have uh, in most of our markets, we have made a lot of progress but we've got the opportunity to double or triple the size of most all of those markets. So I'm in the coming near future.
Speaker Change: Got it. That's a good reminder. Great. Congrats on all the success. Keep up the good work. Appreciate it.
ste: Thanks, Ste.
Catherine Miller: Our next question comes from Catherine Miller with KBW.
Catherine Miller: Catherine, your line is now open, please go ahead. Thanks. Good morning, everyone. Morning, Catherine. I wanted to just dig into the margin a little bit and I know you mentioned that deposit costs will probably come up a little bit moving forward just as growth picks up. Can you talk a little bit about where new deposit costs are coming on an average and then on the other side where new loan yields are coming and just kind of where that incremental margin is coming on right now? Ron, you want to you want to jump in and dive into those details?
Speaker Change: Our next question comes from Katherine Miller with KBW, Katherine, your line is now open. Please go ahead.
Katherine Miller: Thanks. Good morning, everyone.
Kevin: Good morning, Kevin Katherine.
Katherine Miller: I wanted to just dig into the margin a little bit and I know you mentioned that deposit costs will probably come up a little bit moving forward. Just as growth picked up. Can you talk a little bit about where new deposit costs are coming on an average? And then on the other side where where new deposit, I mean, excuse me where new loan yields are coming and just kind of where that incremental margin is, is coming on right now.
Ronald Gorczynski: Sure. For the second quarter, our total deposits cost came in at $239,000. Excuse me, that includes non-interest bearing. Overall, our new production for June was a little escalated, came in at $362,000, but we did have a larger relationship that we paid a little bit range. As far as the loans, for the quarter, we're at 7.11%. And for June, just slightly north of 7, 7.02%. So we're still maintaining the higher level above 7 for our loan size. And then in your guidance, where you still think we will have two to three bits of NIM expansion every quarter, what are you assuming for rate cuts within that?
Kevin: Ron, you want to you want to jump in and dive into those details. Sure. Um, for, for the second quarter, our new, our total deposits cost came in at 239. Uh excuse me, that includes not interest bearing. Um overall our new production for June was all it escalated it came in at 3625 as far as the loans. Uh, for the quarter. We're at 7 7.11% and for June just Slightly North of 7 7.02%. So we're still maintaining, um, the higher level above 7 for our our loan side.
Kevin: Okay, that's great.
Ronald Gorczynski: And I assume if we get rate cuts, that's going to make that number better. Yes, correct. We're at this point, we're assuming a 25 basis point in September, and then one in December, which really doesn't affect the guidance. It's so late in the year. And yes, being liability sensitive, we do expect to get probably around this point one to two basis points of additional lift from the rate cut. So we're in a really good spot with our margin at this point going forward. We're going to our margin will expand naturally with or without the rate.
Speaker Change: And then in your guidance where you still think we will have 2 to 3 bits of nim expansion. Every quarter, what are, um, where are you assuming for rate Cuts within that and I assume if we get rate Cuts, that's going to make that number better.
Speaker Change: Yes, correct. We're at this point, we're we're assuming a 25 basis point uh, in September. And then 1 in December, which really doesn't affect the guidance. It's so late in the year.
Um and yes, being liability sensitive we we do expect to get uh right around this point. 1 to 2 basis points of additional lift, ugh, from the rate Cuts. So we're we're in a really good spot um with our margin at this point going forward.
Speaker Change: We're going to our margin will expand naturally with or without the rate cuts.
Ronald Gorczynski: Okay, very helpful. Thank you. And then you may have mentioned it earlier, but I missed it. Can you remind us your expectations for expense growth in the back half of the year? Yes, we are looking to increase it to Sorry about that. We're increasing it to about the 33.8 to 34 million band. That's for Q3 and pretty much the same guidance for Q4. Again, the heavier lift was in the salary range going forward, but still keeping it tight for Q3 and Q4. Great.
Speaker Change: Great. Okay. Very helpful. Thank you. And then you may have mentioned earlier, but, um, I missed it. Can you, can you remind us your expectations for expense growth in the back half of the year?
Speaker Change: to increase it to, um,
Speaker Change: sorry about that. We're increasing it to about 38, 33.8 to 34 million band, uh, that's for Q3, and pretty much the same guidance for Q4. Again, the, the heavier lifts was in the salary range, uh, going forward, but, uh, still keeping it tight for for 2 or 3 and Q4,
William Carroll: And maybe one more just on that is, you know, you talked, Billy, about how you had five quarters of positive operating leverage. Do you, is that still a focus as we go into 26? As we look at 26, is it fair to keep, continue to look at revenue growth being faster than your Yes. Yeah, absolutely. You know, as we said a little bit in the call, you know, when you look at the way this balance sheet's positioned, you know, our ability, our continued ability to grow organically in these markets, Miller alluded to getting deeper. We're in so many just great markets where we've got relatively small share.
1 mortgage on that is in you, you talked Billy about how you had 5 quarters of positive operating leverage. Do you is that still a focus as we go into 26? As we look at 26? Is it fair to keep continue to look at Revenue growth being faster than your expense growth?
William Carroll: We've got some really nice share in several markets where we've got phenomenal share. And so, you know, our whole focus is going to be getting deeper. So I think, you know, that, that, that in itself is going to generate, I think, you know, out, out pay, outsized growth, layer in on top of that, Catherine, what Ron has alluded to with, with kind of the repricing of the loan book. So, you know, for us, we think we can hold these expense levels very reasonable. As we said, a lot of it's just going to be going to be talent related from a hiring standpoint, and then just continue to see that operating leverage continue over the next.
Yes, yeah, yeah absolutely. Um, you know is is is, is we've said a little bit in the, in the call. You know, when you look at the way this, this balance sheet position, you know, our ability, our continued ability to grow organically in these markets Miller. Alluded to get getting deeper. We're in so many just great markets, where, where we, we, we we've got relatively small share. We got some really nice are in several markets. We've got some expansion markets where we've got phenomenal, share growth opportunities and so you know are are hole. Focus is going to be getting deeper. So I think you know that that that in itself is going to generate I think you know out out pay outsized growth layer in on top of that Katherine. What Ron is alluded to
Speaker Change: Do with with kind of the, the repricing of the loan book. And so, you know, for us, uh, we think we can hold these expense levels very reasonable. Um, as we said, a lot of it's just going to be going to be Talent related from a hiring standpoint. Um, and then just continue to see that operating leverage continue over the next few quarters.
Catherine Miller: Okay, awesome. Thank you so much. Great quarter. Thanks. Thanks, Cat.
Speaker Change: Great. Okay.
Great quarter.
Russell Gunther: Our next question comes from Russell Gunther with Steffens Inc. Russell, your line is now open, please go ahead. Hey, good morning, guys. Just to quickly circle back to the loan growth discussion, you know, you really do have to go back to the first quarter of 24 to see a mid single digit result out of you guys. So hear you loud and clear on that kind of high single digit, maybe low double. And to that end, could you just give us a sense for where commercial pipelines stand today versus the linked quarter? And what if any sentiment shift you're getting from your commercial borrower?
Speaker Change: Thank you. Thanks. Catherine.
Speaker Change: Our next question comes from Russell Gunther with Stephen Inc. Russell your line is now open. Please go ahead.
Russell Gunther: Hey, good morning guys. Uh just to quickly Circle back to the loan growth discussion. You know, you really do have to go back to the first quarter of 24 to see a mid single digit result out of you guys. Uh, so here you loud and clear on that kind of high single digit, maybe low double.
William Carroll: Yeah, I'll make a couple of comments and I'll ask Rhett to jump in and talk a little bit about kind of what he's seen kind of coming through the pipeline. But you know, pipelines continue to be pretty solid. I would say they are probably at or as good as the levels that we've seen over the last couple of quarters. You know, and again, it goes back, I alluded to it in my comments, the focus that we have on the sales side of the house is I think it's as good as it's ever been in our company.
Russell Gunther: Uh and to that end, could you just give us a sense for where commercial pipelines, stand today versus The Links quarter? And what if any sentiment shift you're getting from your commercial Borrowers?
Speaker Change: Yeah, um, I'll, I'll make a couple comments and I'll ask Brett to to, to jump in and talk a little bit about kind of what he's seen, kind of coming through the pipeline. Uh, but, you know, pipelines continue to be pretty silent. I would say they are probably at or, or as good as, uh, the levels that we've seen over the last couple of quarters. Um, you know, and again it goes back, I alluded to it. My comments, the focus that we have.
Rhett Jordan: Team members get it, our division president leadership structure that we've moved to this year has really worked well. There's just a number one, we've got great team members, but there's also just a real intensive focus on bringing in new clients.
Rhett Jordan: And so that said, our pipelines are as good and then Rhett, maybe you'd have some color kind of what you're seeing, what those pipelines are looking like a little bit, maybe any other color that you've got on that side. Yeah, I mean, to Billy's point, I mean, our pipeline today really is positioned as strong as it has been pretty much throughout the course of the year. So it's, you know, here at the middle part of the year, we've still got, you know, basically a similar amount and opportunity sitting in our pipeline that we started the year off with.
Rhett Jordan: You've seen the results. As far as the format of that pipeline, the best way I know to put it is we look at the mix of what's in the pipeline, both geographically with product type, etc., and it is tracking extremely near the way our portfolio mix sets today. So the type of deals in the pipeline, the location of the deals in the pipeline, there's nothing in there that would give any indication that it would change any degree of concentration within our portfolio at all. So we are continuing to see a very broad mix across every market and every product type we generate.
On the sales side of the house is, is I think it's as good as it's ever been in our company. Um, uh, team members get it are, are are division. Uh, president leadership structure that we, we moved to this year, has really worked. Well, there's just a and what we've got great team members but there's also just a real intensive focus on on on bringing in new clients. And so I that said, our pipelines are as good and then re maybe you'd have some call and kind of what you're seeing, what those pipelines are looking like a little bit, maybe any other color that you've got on that side? Yeah, I mean, Bill to Billy's point, I mean, our pipeline today really is positioned as strong as it has been pretty much throughout the course of the year. So it's uh, you know, here at the at the middle part of the year. We've still got, you know, basically a similar amount and and opportunity uh, sitting in our Pipeline and we started the year off with and you've seen the results in the, in the growth, which seems thus far as far as the the the format of that pipeline. The best way I know to put it is, uh, we look at
The the mix of what's in the pipeline, both geographically with product type Etc, and it is tracking extremely near the way. Our portfolio mixed up today. So the type of deals in the pipeline. The
Speaker Change: Location of the deals in the pipeline. Um, there's nothing in there that would give any indication that it would change any degree of concentration within our portfolio at all. Um, so we are continuing to see a very broad mix across every market and every product type we uh we generate business in
Russell Gunther: Great. Thank you, guys.
William Carroll: And then you spoke about continuing to leverage the current platform organically, as well as continuing to recruit top talent. So could we get a sense for sort of where the recruitment pipeline stands today? And then as you work to get, you know, deeper, versus that mile wide inch deep, are there any particular markets where you're more focused than others? Yeah, yeah, yeah, I think we're focused everywhere. We said it a second ago, you know, when you look at our company, we've got a number of markets where, you know, where we've either grown, you know, from a legacy standpoint, or where we've acquired really good banks with larger legacy footprints.
Speaker Change: Great. Thank you guys. Uh, and then you spoke about um, continuing to leverage, the current platform organically
William Carroll: Then we've had a lot of these expansion markets that we've seen. So the expansion markets are where market share numbers have really tremendous upside. So we're going to probably focus a little more of the recruitment in those markets. And you take a look at whether it's Nashville MSA, Birmingham MSA, for example, you look down in our coastal region, with markets like Mobile, Alabama, great growth opportunities that we see. There are others as well. But just those in itself, I mean, those markets, we've got tremendous to bring in. We've already added some great bankers to look to bring in some additional bankers to our team in those markets.
Speaker Change: Yeah, yeah, yeah. I think. Yeah. We're we're focused everywhere. Yeah, and we, we set it a second ago, you know, when you look at are are company. We we've got a number of markets where you know, where we've either grown, you know uh from a legacy standpoint or whether we where we've required, really good banks with larger Legacy Footprints. Then we've had a lot of these expansion markets that we've seen. So the expansion markets are where a market share numbers have really tremendous upside. So we're going to probably focus a little more of the recruitment in in those markets. And in in, in, in you, take a look at whether it's Nashville. MSA Birmingham, MSA. Uh, for example, you look down in there coastal region, uh, with with, with markets like a, a Mobile Alabama, great growth opportunity that that we see there are others as well. But just those in itself, I mean those markets we've just got tremendous opportunity.
William Carroll: So when you look at just markets like those that I mentioned, my gosh, the market share upside and just those by themselves could fuel a lot of growth for us. So yeah, I think that's probably where our focus is going to be. But we'll look to figure out where we'll add talent wherever it fits.
Catherine Mealor: Yeah, this is Miller and I would add that we are ABR, always be recruiting. And we are consistently on it with the executive team spends a ton of time in the markets recruiting bankers, our division presidents are all over recruiting. That's as big a focus as and New Clients and New Relationships. great bankers we want on our team. Excellent.
Katherine Miller: To to, to bring in, we've already added some great Bankers to look to bring in some additional Bankers to our team, uh, in those markets. So, you know, when you look at it, just markets, like those that I mentioned. Um, my gosh, the market share upside and just those by themselves, uh, could could fuel a lot of growth for us. So, yeah, I think that's probably where our focus is going to be but we'll look to figure out where we'll add add Talent wherever it fits. Yeah, this is Miller and I would, I would add that we are
Katherine Miller: ABR always be recruiting and we are consistently on it with the executive team. Spends a ton of time in the markets. Recruiting Bankers our division presidents are all over at recruiting. That's as big a focus.
Katherine Miller: As new clients and new relationships. It's great Bankers. We want on our team.
Russell Gunther: All right. Thank you both.
Russell Gunther: And then last one for me would just be back to the revenue target. I appreciate kind of waiting a quarter or two to get the 26 outlook, but you did get where you needed to go, perhaps a quarter earlier than you otherwise might have. We're still shy of the 1% ROA target. So it would be helpful to get your sense as to whether that's something you still think you will be able to achieve in the back half of this year. Yeah, yeah, I think we'll be close, Russell. I think we'll be real close on the one.
Speaker Change: Excellent. All right. Thank you both. And then last 1 for me would just be, uh, back to the revenue Target, you know, appreciate kind of waiting a quarter or 2 to, to get the 26 Outlook. Uh, but you did get where you needed to go perhaps a quarter earlier.
Katherine Miller: than uh,
You otherwise might have, we're still shy of the 1% Roa Target. So it would be helpful to get your census to. Whether that's something you still think you will be able to achieve in the back half of this year.
William Carroll: I think, you know, when you take a look at the numbers, again, a little more of the expense side. If you take a look at the PP&R numbers, you know, a little more in reserve that we put in just because of growth this year. So I think as you normalize the growth a little bit, I think that, you should see that number kind of just move up into the mid-90s pretty easily over the next quarter or so. And then we'll be knocking on the door of that one. We've kind of targeted, as you've heard us talk about, kind of the one in 12 on the ROA and the ROE.
Russell Gunther: Yeah, yeah, I think we'll we'll be. We'll be closed Russell. I think we'll be real close on the 1. I think, you know, when you, when you take a look, when you take a look at at the numbers again, a little more, the expense side. If you take a look at the PPE and our numbers, uh, you know, the the little more little more in uh uh Reserve that we put in just because of growth uh this year. So I think as you normalize the growth a little bit, I think that you know we should you should see that that number kind of just move up into the mid 90s, pretty easily over the next quarter or so. And then we'll be knocking on the door of that 1. We've, we've, we've kind of targeted.
William Carroll: We're pretty much there on the ROE. The ROAs, maybe a couple of basis points behind that. But, you know, as we continue to execute, I think that one, the one, we'll move through that pretty quickly over the next several.
Russell Gunther: You've heard us talk about, kind of the 1 in 12 on the Roa and the Roa. We're we're we're we're pretty much there on the Roe, the roas, maybe a couple of basis points behind that but you know as as we continue to execute, I think that 1 that the the 1 we'll we'll move through that pretty quickly over the next several quarters.
Russell Gunther: All right. Very good, guys. I appreciate you taking my question. Thank you. Thanks, Russell.
All right, very good guys. I appreciate. Uh, you're taking my question. Thank you.
Thomas Hans: Our next question comes from Steve Moss with Raymond James. Steve, your line is open, please go ahead. Hey, good morning, guys.
Thanks Russell.
Speaker Change: Our next question comes from Steve Moss with Raymond James, Steve, your line is open. Please go ahead.
Thomas Hans: This is Thomas Hans for Steve. Thanks for taking my call. You know, most of my questions have been asked and answered at this point. But I mean, maybe just on credit, you know, credit metrics remain, you know, really strong here. Are you seeing, you know, any signs of weakness whatsoever? It looks like you have some, maybe some lower yielding fixed rate loans maturing in the fourth quarter this year at looks like 440 based on the slide deck. Have you stress tested those for the rate shock? And, and, you know, what do you just broadly speaking credit front?
Speaker Change: Hey, good morning guys. This is Thomas on for Steve, thanks for taking my call. Uh, you know, most of my questions have been asked and answered at this point, but I mean uh, maybe just on on credit, you know, credit metrics remaining, you know, really strong here. Are you, are you seeing, you know, any signs of weakness whatsoever? It looks like you have some, some maybe some lower yielding fixed rate loans, maturing and the fourth quarter this year. At looks like 440 based on the slide deck.
William Carroll: What are you thinking?
Rhett Jordan: Yeah, and I was all at Rhett, Rhett's like a Maytag repairman over here. So I will, we'll give him an opportunity to talk a little bit. But now credit's good, but I'll let him talk a little bit about what he's seeing on on that side, any potential weakness, I don't think we're seeing much there, but and then maybe also just talk about I know, I know, their team has done a lot of stress testing on on the loans as these renewals are coming up with different rates, but comment on that. Thomas, we have, we have first question as far as the book itself, we really have not.
Speaker Change: Have you stress tested those for the rate shock? And and you know what do you just broadly speaking credit front? What do you think? And
Rhett Jordan: Signs of weakness in any particular sectors as we're getting information in from our clients, both prior to year-end and year-to-date, still seeing consistent performance throughout our existing book in pretty much every area. So we are not forecasting or looking at anything specific right now that we have identified as, I would say, a primary area of concern as it relates to those lower-yielding assets that are going to be maturing. We started a project to do some forward-looking stress testing, performance stress testing, on that book really about 18 months, almost two years ago. And we have consistently done that sort of looking out in the 6-12-month window of those maturities.
Thomas Hans: And thus far, with what we're looking at, obviously, in a few cases, we may have a few that will show some tighter coverage numbers than they were at origination, but nothing that is any indication of inability to service a modified transaction. And so we're very optimistic about that and still feel like the book is positioned well to absorb it. That's all those rate increases for the borrower, which also. Okay, great. That's great to hear. That's all from me.
Speaker Change: Uh, both, you know, prior to your end and year to date. Um, still can see still seeing consistent performance, uh, throughout our existing book, um, in pretty much every every area. So, um, we are not forecasting or looking at anything specific right now that we have identified as a, I would say a primary area of concern as it relates to those um long those lower yielding assets that are going to be maturing. Uh, we have we start at a project uh to do some forward-looking um stress testing, performance stress. Testing on that book, really about 18 months, almost 2 years ago. Uh, and we have consistently done that sort of looking out in the 6 to 12 month window of those maturities. And you know thus far with what we're looking at uh you know, obviously in a few cases you may have a few that will show some tighter coverage numbers than they than they were at origination but nothing that is any indication of uh inability to service a modified transaction. And uh and so we're very optimistic about that.
That I am still feel like the the book is positioned well to absorb. Any any absorb those rate increases for the borrower, uh, which also benefits the bank.
Thomas Hans: Congrats on another great quarter, knocking the cover off the ball again, guys. Appreciate it. Thanks, Thomas.
Speaker Change: Okay, great. That's great to hear. That's all from me. Congrats on another great quarter. Knocking the cover off the ball. Again guys, appreciate it.
Speaker Change: Thanks Thomas.
Ezra: Just as a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad now.
Christopher Marinac: Our next question comes from Christopher Marinac with Janine Montgomery Scott. Your line is now open, please go ahead. Hey, thanks. Good morning. I wanted to ask about recruiting across state lines and pushing the geography, whether it's in the Carolinas or other states. I know you've got a lot to do in your existing footprint, as you've talked about a few times today, just curious on recruiting people or dislocations you see in other markets that could be an opportunity as time passes. Yeah, obviously, you know, as you see, see a little bit of change going on, obviously, you know, M&A comes into comes in play and some of that I think we We've demonstrated our ability to really execute on some nice lift outs when we've seen a little bit of market disruption.
Just a reminder, if you would like to ask a question please press star for by 1 on your telephone keypad now.
Speaker Change: Our next question comes from Christopher merignac with Jaime Montgomery, Scott.
Your line is now open. Please go ahead.
Speaker Change: Hey thanks. Good morning. Um, wanted to ask about, um, recruiting across state lines and pushing the this geography, whether it's in the Carolinas or other states. I know you got a lot to do in your existing footprint as, as you've talked about a few times today, just curious on recruiting people or dislocations. You see in other markets that could be an opportunity as time passes.
William Carroll: So Chris, I think for us, a lot of it is just kind of waiting and watching. I think we're all, and Miller alluded to this, I think the thing is we've really shifted to a stronger organic model over the last few years. Recruiting is really ramped up as far as kind of importance in our company. So Miller said, he and myself, our division presidents, we're all out just continuing to drip on talent that we think would be good culture fits for our company. And so I think that is first and foremost in the markets where we are.
Speaker Change: Uh, yeah. Oh, I obviously, you know, as, as, as you see, um, um, see a little bit of change going on, obviously. Um, you know, m&a comes into comes, into play in some of that. I think we, you know, we we, we, we've demonstrated our billing do really execute on some nice lift outs, when we've seen a little bit of Market disruption. So Chris, I think for us a lot of it is just kind of waiting and watching, I think we're all in Miller, alluded to this. I think you know the the thing is we really shifted to a a stronger organic model over the last few years. Recruiting is really ramped up as far as kind of importance in our company. So um uh Miller said Airfield, he myself are air division, presidents, we're all out. Um, you know,
William Carroll: I really don't, I don't see us looking to do any, what I would call major market moves from that standpoint, like we did several years back when we had the opportunity with all those Alabamas. That was such a unique opportunity that gave us an opportunity, gave us the chance to really just fill in the density. that was missing in our footprint. And so that was a big lift for us as we've talked about. It was a huge lift for us to all those de novo markets in a real, real short period of time. But for us, I think a lot of it, and again, I said it earlier, is just getting deeper.
William Carroll: I think we need to be focused on getting deeper in these great zones where we are. You know, we're always going to take a look at, you know, at opportunities, but we've got plenty on our plate, I think in front of us now. And so the recruiting I think you will see is probably just a really close to the zones where we are today. Yeah, if you think about it, Chris, the markets we're in these college towns, schools fixing to start back third quarter, there's this football season starting back the businesses in these zones we're in are all very optimistic about the third and fourth quarters that they have ahead.
Speaker Change: Just continuing to drip on on talent that we think would be good culture fits for our company. Um, and so I think that is first and foremost in the markets where we are, um, I I really don't, I don't see us looking to do any, what I would call Major Market moves. Um, uh, from from that standpoint. Like we did, you know, several years back when we had the opportunity with all those Alabama msas, that was such a unique opportunity that gave us an OP. Gave us the chance to really just fill in the density piece, that was missing in our footprint and so, you know, that was a big lift for us as we've talked about that, it was a huge lift for us to do all those to Novo markets in a real real short period of time. Uh, but for us I think a lot of it. And again, I said it earlier is just getting deeper. I think we need to be focused on getting deeper in these great zones where we are, um, you know, we're always going to take a look at at, you know, at at opportunities. But, but we've got plenty on airplanes.
Speaker Change: I think in front of us now and so the recruiting I think you will see is probably just a really close to the zones Where We Are.
William Carroll: And, you know, just people are excited about being in business. And I just think it's they want to be in a market that we get some bankers that want to move here, or We're glad to have them. We love where we are. We love doubling and tripling down on where we are.
Yeah, if you think about it, Chris the the markets were in these college towns, schools fixing to start back. Third quarter. There's this football season starting back the businesses in these zones we're in are all very optimistic about the third and fourth quarters that they have ahead. And, um, you know, just people are excited about being in business and I, I just think it's they want.
Speaker Change: To be in the markets if we get some bankers that want to move here or, um, we're we're glad to have them but we love where we are and we love doubling and tripling down on where we are.
William Carroll: Sounds good. Thank you both for that. And then just one curiosity, do you see the average loan size in the portfolio kind of pushing higher as the next, you know, several quarters develop? It's not just a near term questions kind of curious kind of where that's going to go over time. Yeah, and I'll ask Rhett, I don't have the stat in front of me on loan size. I think just as we got bigger, our loan size has moved up some, but I don't think it's really moved up materially. Rhett, would you comment on that? Yeah, I would say not from an average perspective.
Speaker Change: Sounds good. Thank you. Both for that and and just 1 curiosity. Do you see the average loan size in the portfolio? Kind of pushing higher as the next you know, several quarters developed. It's not just a, you know, near-term question. Its kind of curious kind of where that's going to go over time.
Rhett Jordan: And we certainly do, as we continue to get larger. We still focus, Chris, you know, I think we still do a lot of really nice work focusing on singles and doubles. I think when you look at a lot of these, these really nice, solid tier two MSAs that we're in, we're growing a lot, some of our larger ones. But you know, we're in a lot of these great tertiary MSAs, where we're just hit, we're, we're still kind of just hitting singles and doubles. And it's, it's, it's nice. And I like building the company that way.
Speaker Change: Bigger heirloom size has moved up some but but I don't think it's really moved up materially, right. Just anecdotally when you comment on that. Yeah, I would say not from an average perspective. I mean we certainly do
Rhett Jordan: I think it's, it's more sustainable, it's less, less impact to swings and, you know, whipsaw effects. And so, but the rest, you know, we're doing some larger credits, so it might move up a little bit, but I don't think the average is moving up a ton. Payoffs and paydowns don't sting as much. Good stuff.
As we continue to get larger, we you know, it has provided us the opportunity to look at and be uh, engaged in some larger transactions. But I would think from an average perspective, I don't really see that number moving, considerably. Yeah, we still Focus Chris. I, you know, I think we still do a lot of really nice work focusing on Singles and doubles. I think when you look at a lot of these, these really nice solid tier 2 msas that we're in. We're growing a lot, some of our larger ones. But you know, we're in a lot of these great tertiary msas where we're we're just we're we're still kind of just hitting singles and doubles and um, uh, it's, it's, it's nice and, and I like building the company that way, I think it's it's, it's it's it's more sustainable, it's less, uh, less impact to, to swings and, you know, whipsaw effects and and so, uh, but uh, to R's point, you know, we're doing some larger credits, so it might move up a little bit, but I don't think the average is moving up a ton. Pay off some pay down some Sting as much as it, but that's true. That's true.
Thomas Hans: Thanks, everybody. I appreciate you taking this morning. Yeah, thank you, Karina. Thanks. Thank you very much.
Speaker Change: Good stuff. Thanks everybody. I appreciate you taking this uh, this morning.
Speaker Change: Yeah, thank you, k.
Ezra: We currently have no further questions, so I'll hand back over to Miller for any closing remarks.
Katherine Miller: Thank you very much. We currently have no further questions so I will hand back over to Miller for any closing remarks.
William Carroll: Thank you, Ezra. And thank you all for being on the call today and for supporting Smart Bank as we work hard every day to grow this bank for our shareholders.
Ezra: Have a great day.
Speaker Change: Thank you, Ezra and thank you all for being on the call today and for supporting smart Bank. As we work hard every day to grow this bank, for our shareholders, have a great day,
Ezra: Thank you very much, Miller, and thank you to all our speakers on today's call. We appreciate everyone for joining.
Ezra: That concludes our call. You may now disconnect your lines.
Speaker Change: Thank you very much, Mr. And thank you to all our speakers on today's call. You appreciate everyone for joining that. Concludes our call. You may now disconnect your lines.