Q2 2025 Texas Capital Bancshares Inc Earnings Call
Unnamed Moderator: Q2 2025 Earnings Call My name is Brika and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
Good morning, and thank you all for attending the Texas, Capital Bank shares Inc, Q2 2025 earnings call.
Speaker Change: My name is ba and I will be your moderator for today.
Jocelyn Kukulka: I would now like to pass the conference over to your host, Jocelyn Kukulka, Head of Investor Relations at Texas Capital Bankshares. Thank you. You may proceed.
Speaker Change: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end.
Choice link: I would now like to pass a conference over to your host Choice link a cooler head of investor relations at Texas, Capital Bank shares, thank you. You may proceed.
Jocelyn Kukulka: Good morning, and thank you for joining us for TCBI's second quarter 2025 earnings conference call.
Jocelyn Kukulka: I'm Jocelyn Kukulka, head of investor relations. Before we begin, please be aware this call will include forward-looking statements that are based on our current expectations of future results or events. Forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from these statements. Our forward-looking statements are as of the date of this call, and we do not assume any obligation to update or revise them.
Good morning and thank you for joining us for tbi's second quarter 2025 earnings conference call. I'm joining kukula head of investor relations.
Choice link: Before we begin, Please be aware this call will include forward-looking statements that are based on our current expectations of future results or events.
Jocelyn Kukulka: Today's presentation will include certain non-GAAP metrics, including but not limited to Adjusted Operating Metrics, Adjusted Earnings Per Share, and Return on Invested Capital. For reconciliation of these non-GAAP measures to the corresponding GAAP measures, please refer to our earnings release and our website.
Jocelyn Kukulka: Statements made on this call should be considered together with the cautionary statements and other information contained in today's earnings release, our most recent annual report on Form 10-K, and subsequent filings with the SEC.
Choice link: Forward, looking statements are subject to both known and unknown risks, and uncertainties that could cause actual results to differ materially from these statements. Our forward-looking statements are as of the date of this call and we do not assume any obligation to update or revise them. Today's presentation will include certain non-gaap metrics including, but not limited to adjusted operating metrics adjusted earnings per share and return on invested capital for reconciliation of these. Non-gaap measures to the corresponding gaps measures. Please refer to our earnings release and our website.
Jocelyn Kukulka: We will refer to slides during today's presentation, which can be found along with the press release in the Investor Relations section of our website at TexasCapitalBank.com.
Choice link: Statements made on this. Call should be considered together with the cautionary statements. And other information contained, in today's earnings release, our, most recent annual report on form 10K and subsequent filings with the SEC.
Jocelyn Kukulka: Our speakers for the call today are Rob Holmes, Chairman, President, and CEO, and Matt Scurlock, CFO.
Operator: At the conclusion of our prepared remarks, our operator will open up the call for Q&A.
Rob Holmes: I'll now turn over the call to Rob for opening remarks. Good morning. Our strong quarterly performance is the result of continued execution on our multi-year roadmap, which is delivering structurally higher and more sustainable earnings across a broad set of products and services, with an operating model that is only beginning to deliver on its potential for future scale. Year-over-year quarterly earnings growth accelerated materially during the quarter, with adjusted total revenue increasing 16%, adjusted net income to common up 100%, adjusted earnings per share expanding 104%, and adjusted return on average assets of 1.02%, nearing the 1.1 goal we set out for 2025.
Speaker Change: We will refer to slides during today's presentation, which can be found along with the press release in the investor relations section of our website at Texas Capitol bank.com, our speakers for the call today are Rob Holmes, chairman president, and CEO and Matt Scurlock CFO at the conclusion of our prepared. Remarks are operator, will open up the call for Q&A. I'll now turn over the call to Rob for opening remarks.
Choice link: Good morning.
Rob Holmes: Our now multi-quarter trends of significant new client acquisition again resulted in targeted balance sheet expansion.
Scale, year-over-year, quarterly earnings growth accelerated materially during the quarter with adjusted total revenue, increasing 16% adjusted. Net income to comment up, 100% adjusted earnings per share expanding 104% and adjusted return on average assets of 1.02% nearing. The 1.1 goal we set out for 2025
Rob Holmes: consistent with our strategic areas of focus. Commercial Loans Group 5% Link Quarter enter up 13% year-over-year as we continue to effectively compete for and win holistic client relationships which define the firm and for whom we can be relevant over the duration of their personal and business life cycle. This growth did not come at the expense of our peer-leading capital ratios, as the firm continues to build Tangible Common Equity to Tangible Assets, finishing the quarter at 10.04%, alongside Tangible Book Value per share of $70.14, an all-time high for the firm.
Our. Now, multi-quarter trends of significant new client acquisition. Again resulted in targeted, balance sheet expansion.
Consistent with our strategic areas of focus.
Choice link: Commercial loans, grew 5% link quarter and are up 13% year-over-year as we continue to effectively compete for and win holistic client relationships, which Define the farm. And for whom we can be relevant over the duration of their personal and business life cycles.
Choice link: This growth did not come at the expense of our peer-leading Capital ratios as the firm continues to build tangible, common Equity to tangible assets. Finishing the quarter at 10.04% alongside tangible book, value per share of $70.14 and all-time high for the firm.
Rob Holmes: Significant investments in building our areas of focus have and will continue to drive increasingly elevated and granular revenue contributions. Earning the right to be our client's primary operating bank remains a foundational component of our company. with sustained success again displayed by another quarter of peer-leading growth in Treasury product fees, which increased 37% year-over-year to a record high for the firm. Quarterly Treasury product fees have now increased eight of the last twelve quarters, demonstrating the sustainability of our trajectory and commitment to being a premier payments bank. Early and substantial investments in these products and services have returned the expected outcomes, which, as they scale, will continue to enhance profitability.
Choice link: Significant investments in building our areas of focus have and will continue to drive, increasingly elevated, and granular Revenue contributions.
Choice link: Earning the right to be our clients primary operating Bank remains a foundational component of our company.
Choice link: With sustained success again, displayed by another quarter of peer leading growth and treasury product fees, which increased 37% year-over-year to a record high for the firm.
Choice link: Quarterly treasury product fees have now increased 8 of the last 12 quarters demonstrating, the sustainability of our trajectory and commitment to being a premier payments Bank.
Rob Holmes: In addition to focusing on core operating account growth, our treasury platform is also contributing to expansion in longer duration, less rate-sensitive, interest-bearing deposits. again evidenced this quarter by a 16 basis point increase in linked quarter net interest margin. Our unique and focused client service models continue to gain scale, making it easier for our clients to bring more of their business to us through tech-enabled connectivity and same-day account opening. Despite portions of the capital markets being essentially closed in April and early May, investment banking and trading income increased 43 percent quarter-over-quarter and 4 percent year-over-year, led by a rebound in capital markets activity and our steadily growing sales and trading platform.
Choice link: Early and substantial investments in these products. And services have returned the expected outcomes, which as they scale will continue to enhance profitability.
Choice link: In addition to focusing on core operating account growth, our treasury platform is also contributing to expansion in longer duration less rate system interest bearing deposits.
Choice link: Again evidence, this quarter by a 16 basis. Point increase in link quarter net, interest margin.
Choice link: Our unique and focused client service models, continue to gain scale, making it easier for our clients to bring more of their business to us through Tech, enabled connectivity and same day account opening.
Rob Holmes: During the quarter, we also continue our equities build-out, further expanding our research coverage to 72 companies, adding key talent in equity capital markets, corporate access, and industry investment banking coverage, while also commencing trading operations near the end of the quarter.
Choice link: Despite portions of the capital markets being essentially closed in April and early May Investment Banking. And trading income increased 43% quarter over quarter and 4% year-over-year led by a rebound in capital markets activity and are steadily growing sales and trading platforms.
Rob Holmes: Our breadth of product offerings and integrated client solutions provided by industry experts aligned with client needs continues to be a competitive advantage driving pipeline growth, which will be further enhanced as these capabilities begin to scale during the second half of the year.
Choice link: During the quarter, we also continue our equities build out further, expanding our research coverage to 72 companies adding key talent and Equity Capital markets, corporate access and Industry Investment Banking coverage. While also commencing trading operations near the end of the quarter,
Choice link: Our breadth of product offerings and integrated Client Solutions.
Rob Holmes: As we close out this quarter, I want to take a moment to reflect on how far we have come. Over the past four years, we have executed a bold and deliberate transformation. reshaping our firm into a more agile, diversified, and client-centric institution. Through purposeful actions, scaling value-accretive businesses, enhancing client journeys, and driving operational efficiency. We have built a platform that is resilient, relevant, and positioned to perform through any market or rate cycle. This quarter's results are a testament to the strength of the platform. We have delivered solid performance across our businesses, maintained risk discipline, and continue to invest in innovation and talent, all of which engender confidence we will deliver the risk-adjusted returns consistent with our published targets.
Choice link: Provided by industry experts. Aligned with client, needs continues to be a competitive Advantage driving pipeline growth, which will be further enhanced as these capabilities begin to scale during the second half of the year as we close out this quarter. I want to take a moment to reflect on how far we have come.
Choice link: over the past 4 years, we have executed a bold and deliberate transformation
reshaping our firm into a more agile Diversified and client Centric Institution.
Choice link: Through purposeful actions.
Scaling value, accretive businesses, enhancing client Journeys, and driving operational efficiency.
We have built a platform that has resilient relevant and position to perform through any Market or rate cycle.
Choice link: This quarter's results are a testament to the strength of the platform. We have delivered solid performance across our businesses, maintain risk discipline and continue to invest in Innovation and talent.
all of which engender confidence, we will deliver the risk adjusted returns
Rob Holmes: None of this would be possible without the dedication and hard work of our employees. Their commitment, creativity, and resilience have been the driving force behind our transformation and will ensure our future success.
Choice link: consistent with our published targets.
Rob Holmes: Thank you again for your continued support and trust.
Matt Scurlock: I'll turn it over to Matt to discuss the financial results. Matt. Thanks, Rob, and good morning. Starting on slide five. Second quarter adjusted total revenue increased 42.3 million, or 16%, relative to Q2 of last year. Supported by 17% growth in net interest income and 11% growth in adjusted fee-based revenue. Late Quarter Adjusted Total Revenue grew by $28.9 million, or 10% for the quarter. A $17.4 million increase in net interest income was augmented by an $11.5 million improvement in adjusted non-interest revenue. The adjusted total non-interest expense decreased $14.1 million quarter-over-quarter.
Continued support and Trust, I'll turn it over to Matt to discuss the financial results. Matt.
Matt Scurlock: Thanks Rob. And good morning. Starting on slide 5, second quarter, adjusted total revenue increased, 42.3 million, or 16% relative to Q2 of last year supported by 17% growth in net interest income and 11% growth in adjusted fee based Revenue.
Speaker Change: Late quarter, adjusted total revenue, grew by 28.9 million or 10% for the quarter as a 17.4 million increase in net interest, income was augmented by an 11.5 million Improvement and adjusted non-interest Revenue.
Matt Scurlock: As first-quarter financials are impacted by seasonal payroll and compensation expenses, realized structural efficiencies enable continued repositioning of the expense base in support of defined capability builds. Taken together, year over year, adjusted pre-provision net revenue increased 52%, or $41.4 million to $120.5 million, a record level since the announcement of the strategic transformation. This quarter's provision expense of $15 million resulted from continued growth in gross LHI, $13 million in net charge-offs against previously identified problem credits, and our continued view of the uncertain macroeconomic environment, which remains decidedly more conservative than consensus expectations. The firm's allowance for credit loss increased $2 million to $334 million, finishing the quarter at 1.79% of LHI when excluding the impact of mortgage finance, allowance, and related loan balances.
Speaker Change: Adjusted total non-interest, expense decreased 14.1 million quarter of a quarter. His first quarter financials are impacted by seasonal. Payroll, and compensation expenses realized structural efficiencies enabled continued repositioning of the expense base and support of defying capability build.
Speaker Change: Taken together year-over-year, adjusted pre-provision that Revenue increased 52% for 41.4 million to 120.5 million, a record level since the announcement of the Strategic transformation.
Speaker Change: This quarter's provision expense of 15 million resulted from continued growth. In Gross LHI, 13 million, in net, charge offs against previously, identified problem credits, and our continued view of the uncertain macroeconomic environment, which remains decidedly more conservative than consensus, expectations,
Matt Scurlock: As Rob noted, adjusted net income to common was $75.5 million, an increase of 100% compared to adjusted net income to common in Q2 of last year. This continued financial progress, coupled with a consistently disciplined multi-year share repurchase approach, contributed to a 104% increase in quarterly adjusted earnings per share compared to adjusted earnings per share from a year ago. The firm continues to operate from a position of financial strength, with balance sheet metrics remaining exceptionally strong. Ending period cash and securities comprise 23% of total assets, as the firm continues to onboard and expand client relationships while supporting their broad needs.
Speaker Change: the firms allows for credit loss, increased 2 million to 334 million finishing, the court at 1.79% of LHI, when excluding the impact and mortgage Finance allowance and related loan balances
As Rob noted adjusted, net income to common with 75.5 million, an increase of 100% compared to adjusted net, income to common in Q2 of last year.
This continued Financial progress coupled with a consistently disciplined. Multi-year, share repurchase approach contribute to 104% increase in quarterly, adjusted earnings per share compared to adjusted earnings per share from a year ago.
Speaker Change: The Firm continues to operate from a position of financial strength with balance sheet metrics, remaining exceptionally strong.
Matt Scurlock: which again this quarter included an increase in credit demand. Focused routines on target client acquisition continue to deliver risk-appropriate and return accretive loan portfolio expansion, with ending period gross LHI balances excluding mortgage finance growing $387 million, or 9% annualized, during the quarter. Average commercial loan balance has increased 4%, or $399 million during the quarter, with broad contributions across areas of industry and geographic coverage. with ending period balances up approximately 1.4 billion or 13% year over year. As expected, real estate loans declined slightly during the quarter, decreasing $159 million, including a $53 million reduction in previously criticized assets, to the lowest level in over two years.
Speaker Change: Ending period cash and securities comprise 23% of total assets as the firms. Continues to onboard and expand client relationships while supporting their broad needs. Which again, this quarter included an increase in credit demand. Focus routines On Target client acquisition, continue to deliver risk, appropriate, and return a creative loan, portfolio expansion.
Speaker Change: With ending period, gross LHI, balances excluding mortgage Finance growing 387 million or 9% annualized during the quarter.
Speaker Change: Average commercial loan balance is increased 4% for 399 million. During the quarter with broad contributions across areas of industry and Geographic coverage with ending period, balances up approximately 1.4 billion or 13% year-over-year.
Matt Scurlock: Despite a modest increase in clients' new business volume, should the current rate outlook hold, our expectation remains that payoffs will outpace originations over the duration of the year, causing current quarter trends to continue at a comparable pace. As anticipated, Average mortgage finance loans increased 34% late quarter to $5.3 billion. A seasonal home buying activity hits its annual high during the summer months. We remain cautious on the mortgage outlook for the remainder of 2025 with continued expectation for a 10% increase in full-year average balances predicated on a $1.9 trillion origination market. As Rob noted, sustained success winning high-quality deposit relationships continues to allow for select reduction of higher-cost deposits where we are unable to earn an adequate return on the aggregate relationship.
Speaker Change: As expected, real estate loans declined slightly during the quarter, decreasing 159 million, including a 53 million reduction, previously, criticized assets, to the lowest level in over 2 years.
Speaker Change: Despite a modest increase in clients new business volume. Should the current rate Outlook? Hold our expectation remains that payoffs will outpace originations over the duration of the year.
Speaker Change: Causing current quarter Trends to continue at a copper, will pace.
As anticipated, average mortgage financial loans increase 34% link quarter to 5.3 billion, a seasonal home, buying activity hits its annual High during the summer months.
Speaker Change: We remain cautious on the mortgage outlook for the remainder of 2025, with continued expectation for 10% increase in full year, average balances predicated on a 1.9 trillion, origination Market.
Matt Scurlock: These trends are evidenced in part by our continued ability to effectively grow client interest-bearing deposits, which are up $2.8 billion, or 19% year-over-year, while effectively managing deposit betas, which increased to 81% in the quarter, and maintaining decade-low levels of broker deposits. This is also observed in the ratio of average mortgage finance deposits to average mortgage finance loans, which improved by 91 percent this quarter, down significantly from 120 percent in Q2 of last year. positively affecting margin while also improving liquidity value. We expect this ratio to remain near 90% during the third quarter as loan volumes peak seasonally and deposit balances predictably build.
Speaker Change: As Rob noted sustained, success, winning high-quality deposit relationships continues to allow for select reduction of higher cost deposits. Or we are unable to earn an adequate return on the aggregate relationship.
Speaker Change: These Trends are evidenced in part by our continued ability to effectively grow client interest bearing deposits, which are up 2.8 billion or 19% year-over-year while effectively managing the positive betas, which increase to 81% in the quarter and maintaining decade low levels of broker deposits.
Speaker Change: This is also observed in the ratio of average mortgage Finance deposits to average mortgage Finance Loans which improved a 91% this quarter down significantly from 120% in Q2 of last year.
Speaker Change: Which is positively affecting margin while also improving liquidity value.
Matt Scurlock: Our model earnings at risk were relatively flat quarter over quarter, with current and prospective balance sheet positioning continuing to reflect a business model that is intentionally more resilient to changes in market rate. In April, we took advantage of significant tariff-driven rate volatility to sell 282 million of relatively short-duration AFS securities with a book yield of 3.1 percent. reinvesting the proceeds into securities yielding 5.4%, resulting in approximately four month earn back and improvement in rates fall protection. In addition to the small repositioning, we continue to effectively manage duration and anticipation of upcoming swap maturities, adding $221 million of additional securities yielding 5.6%, along with $100 million in forward-starting received fixed swaps that will become active on October 1st.
Speaker Change: Expect this ratio to remain near 90% during the third quarter as loan, volumes Peak seasonally and deposit balances. Predictably build.
Speaker Change: Our model earnings at risk were relatively flat quarter over quarter with current, and prospective balance sheet, positioning continues to reflect a business model as intentionally more resilient to changes in Market rates.
Speaker Change: In April, we took advantage of significant tariff driven rate volatility to sell 282 million of relatively short duration, AFS Securities with the book yield of 3.1%
Matt Scurlock: We currently have 1.5 billion of received fixed SOFR swaps maturing in the third quarter at a blended receive rate of 292 basis points, of which 250 million matured earlier this month. Partially offsetting this reduction, $300 million of previously added forward-starting SOPR swaps with a blended receive rate of 388 basis points become active later in the third quarter. We do still anticipate future interest rate derivative or securities actions over the course of 2025 as we look to augment potential rates fall earnings generation at materially better terms than available during our deliberate pause through the mid part of last year.
Speaker Change: In addition to the small repositioning, we continue to effectively manage duration and anticipation of upcoming swap, maturities adding 221 million of additional Securities. Yielding 5.6% along with a 100 million. In Ford starting receive fixed swaps. It will become active on October 1st.
We currently have 1.5 billion of receive fixed sulfur swaps, maturing in the third quarter at a blended receiver rate of 292 basis points at which 250 million matured earlier this month.
Partially offsetting this reduction 3 million, 300 million of previously. Added forward starting soaper swaps with a blended receiver rate of 388 basis, points become active later in the third quarter.
Matt Scurlock: Net interest margin expanded 16 basis points this quarter as a $17.4 million increase in net interest income was driven by improvements in funding costs, growth in loan balances, and improvement in the mortgage finance self-funding ratio, partially offset by lower cash income associated with seasonally smaller balances. Quarterly adjusted non-interest expense decreased $14.1 million off a seasonally elevated Q1, while year-over-year adjusted levels were up only $900,000 as we continue to reposition the expense base in support of consistently defined growth initiatives in areas of focus. The allowance for credit loss, including off-balance sheet reserves, increased to $334 million, an all-time high for the firm.
Speaker Change: We do still anticipate future interest rate derivative or Securities actions over the course of 2025. As we look to augment potential rates fall earnings generation at materially better terms than available during our deliberate Pros through the mid part of last year.
That interest margin expanded 16 basis points. This quarter as a 17.4 million increase in net. Interest income was driven by improvements and funding costs growth and Loan, balances and Improvement in the mortgage Finance self-funding ratio partially offset by lower cash income. Associated with seasonally smaller balances,
Speaker Change: How do we adjust it? Not interest expense decreased, 14.1 million off a seasonally elevated q1 while year-over-year adjusted levels were up only 900,000 as we continue to reposition the expense base and support of consistently defined growth initiatives in areas of focus.
Matt Scurlock: When excluding the impact of mortgage finance allowance and related loan balances, reserves are 1.79% of total LHI, in the top decile among the peer group, and up over $20 million relative to Q2 of last year. Special mission loans decreased $144.3 million quarter-over-quarter, while total criticized loans decreased $222 million, or 26% year-over-year. Criticized loans, the total LHI decreased to 2.66%, the lowest level since 2022, with broad-based improvements across both C&I and CRE. The reserve coverage ratio remained strong at 2.9 times non-accrual loans, which experienced a modest increase of $20 million this quarter, to levels in line with those experienced over the last 12 months.
Speaker Change: The allowance for credit loss, including off-balance sheet, reserves increased to 334 million and all-time high for the firm.
Speaker Change: When excluding the impact of mortgage Financial voluntary, related loan, balances reserves are 1.79% of total LHI, and the top decile among the peer group and up over 20 million relative to Q2 of last year.
Speaker Change: Special Mission loans, decreased 1444.3 million quarter over quarter while total criticized loans, decreased, 222 million or 26% year-over-year.
Speaker Change: Is the total LHI decreased to 2.66% the lowest level since 2022 with broad-based improvements across both cni and cra.
Matt Scurlock: Despite continued notable portfolio improvements, we remain focused on proactively assessing the credit impact of a wide range of macroeconomic and portfolio-specific scenarios. This consistent, forward-looking approach reinforces our ability to adapt to evolving credit conditions while preserving balance sheet strength and supporting long-term value creation.
Speaker Change: The reserve coverage ratio remains strong at 2.9 times non-accrual loans which experienced a modest increase of 20 million this quarter to levels in line with those experienced over the last 12 months.
Despite continued notable portfolio. Improvements we made focused on proactively assessing the credit impact of a wide range of macroeconomic and portfolio specific scenarios.
Matt Scurlock: Consistent with prior quarters, capital levels remain at or near the top of the industry. Total regulatory capital remains exceptionally strong relative to both the peer group and our internally assessor's profile. CET1 finished the quarter at 11.45%, an 18 basis point decline from prior quarter, as strong capital generation was offset by robust loan growth. By quarter end, approximately 30% of our mortgage finance loan portfolio had migrated to the enhanced credit structures discussed over the last few quarters, bringing the blended risk weighting to 79%. Our continued client dialogue suggests that another 10% of funded mortgage loan balances could migrate into the structure during the third quarter, further improving both our credit positioning and return on allocated capital.
This consistent forward-looking approach, reinforces our ability to adapt to evolving credit conditions, while preserving balance sheet strength and supporting long-term value creation.
Speaker Change: Consistent with pride, quarters Capital levels remain at or near the top of the industry. Total regulatory Capital remains exceptionally strong relative to both the peer group and our internally assess risk profile.
Speaker Change: Ct1 finished the quarter at 11.45% and 18 basis point decline from prior quarter as strong Capital generation was offset by robust loan growth.
Speaker Change: By quarter end approximately 30% of our mortgage finance loan portfolio, had migrated to the enhanced credit structures discussed over the last few quarters.
Speaker Change: Bringing the Blended risk weighting to 79%.
Speaker Change: Our continued client dialogue, suggested another 10% of funded mortgage. Loan balances could migrate into the structure during the third quarter.
Matt Scurlock: We continue to deploy the capital base in a disciplined and analytically rigorous manner, focused on driving long-term shareholder value. During the quarter, we repurchased approximately 318,000 shares or 0.7% of prior quarter shares outstanding for a total of $21 million at a weighted average price of $65.50 per share or 96% of prior month tangible book value per share.
Speaker Change: For the improving, both our credit positioning and return on allocated capital.
Speaker Change: We continue to employ the capital base in a discipline and analytically rigorous manner focused on driving long-term shareholder value.
Matt Scurlock: Turning to the full-year outlook, we're reaffirming our revenue guidance of low double-digit percent growth, reflecting confidence in the durability of our diversified earnings platform and ability to drive consistent client engagement across a range of market conditions. we are decreasing our non-interest expense outlook to mid to high single-digit percent growth from high single-digit percent growth previously. This reduction is driven by a sustained realization of structural efficiencies, partially offset by continued platform build-out, including non-salaries and benefits-related costs associated with putting new capabilities into the market. Full year provision expense outlook remains 30 to 35 basis points of loans held for investment, excluding mortgage finance.
Speaker Change: During the quarter. We purchased approximately 318,000 shares or 7% of Prior quarter shares outstanding for a total of 21 million at a weighted, average price, 65 and 50 cents per share, or 96% of Prior month, tangible book, value per share.
Turning to the full year outlook, we're reaffirming our Revenue guidance of low double-digit percent growth reflecting confidence in the durability of our Diversified earnings platform and ability to drive consistent client engagement across a range of market conditions.
Speaker Change: We are decreasing, our non-interest expense Outlook to mid to high single-digit, percent growth from high single-digit percent growth. Previously,
Speaker Change: This reduction is driven by sustained, realization of structural efficiencies, partially offset by continued platform buildout, including non- salaries and benefits related costs, associated with putting new capabilities into the market.
Operator: Operator, we'd now like to open up the call for questions. Thank you. If you would like to ask a question, I do remind you to please press star followed by one on your telephone keypads now. If you change your mind and would like to remove that question, you can do so by pressing star 2. And as a reminder, that is staff followed by one to ask a question.
Speaker Change: The full year provision expense Outlook remains 30 to 35 basis points of loans, held for investment excluding mortgage Finance, which should enable the preservation of industry-leading coverage levels while effectively supporting clients growth needs taken together. This Outlook suggests continued, earnings momentum and quarterly 1.1% roaa in the second half of the Year operator. We'd now like to open up the call for questions. Thank you.
Speaker Change: Same keypads now.
Speaker Change: If you change your mind and would like to remove that question, you can do. So, by pressing star 2,
Operator: And when speaking, please ensure you pick up your handset before asking your question and that you unmute slowly.
Speaker Change: And as a reminder that is star followed by 1 to ask a question.
Speaker Change: And when speaking please ensure you pick up your handset before asking your question and that you unmute slowly.
Michael Rose: The first question we have comes from Michael Rose with Raymond James. Please go ahead. Hey, good morning, everyone. Thanks for taking my questions.
Operator: The first question we have comes from Michael rose with Raymond James. Please go ahead.
Matt Scurlock: Matt or Rob, just wanted to get a better view into kind of the pipeline for investment banking and trading. I know you've made a fair amount of hires here recently. And we've seen the deal activity pick up on your LinkedIn page. Just wanted to get a sense for where pipelines are, and you know, how we could expect that to trend. And then if you can dovetail that with, you know, the ongoing investments that are going to be needed to kind of support the growth. Of that business. I know you've launched on a couple sectors here within research and things like that.
Operator: Hey, good morning everyone. Thanks for taking my questions. Um,
Matt Scurlock: So just just trying to level set near term expectations. Thanks. You have to address that, Michael. Despite the fact that capital markets were essentially closed in April and through the first part of May, investment banking and trading income did come in above the guide, which was supported by strong capital markets, syndication fees, and then continued growth in sales and trading. Rob noted in his prepared remarks that the continued expansion of an integration of capabilities into existing coverage should support pretty strong fee growth in the back part of the year. So, the guide currently contemplates that total non-interest income moves to $60 to $65 million in the third quarter, which would be supported by $35 to $40 million in investment banking fees.
Speaker Change: Uh, matter Rob, just wanted to get a better uh view into kind of the the pipeline for Investment Banking and trading. I know you've made a fair amount of hires here recently and we've seen the uh, the the deal activity, pick up, uh, on your LinkedIn page. Um, just want to get a sense for, for where pipelines are and you know, how we could expect that the trend and then if you can dovetail that with, you know, the ongoing Investments that are going to be needed to kind of support the growth of that business. Um, I know you've launched a couple sectors here, um, within research and and things like that. So just just trying to level set, um, you know, near return expectations. Thanks.
Speaker Change: You're happy to address that Michael. So you know, the fact, despite the fact that Capital markets were essentially closed in April and through the first part of May and that's been making and trading income did come in above a guide, which was supported by strong Capital markets, syndication fees, and they continued growth in sales and trading.
Matt Scurlock: and that expectations for full year non-interest income have moved to about $230 to $240 million. On the expense side, we're proud to continue to find select opportunities to reposition the expense base against what have long been described as areas of focus. And we expect expenses are going to move to the mid-to-high 190s over the next couple of quarters. The salaries and benefits moves into the low-to-mid 120s, and then other non-interest expense moves above the $70 million number that we've cited for the last few quarters. Both of those moves are related to the capability build-out that you described, Michael, primarily in investment banking coverage and product rollout.
Speaker Change: Rob noted and his prepared remarks that the continued expansion of integration of capabilities into existing coverage should support pretty strong fee growth in the back part of the year. So the guy currently contemplates that total not interest income moves to 60 to 65 million in the third quarter, which would be supported by 35, to 40 million Investment Banking Investment Banking fees. Excuse me.
Speaker Change: And that expectations for full year. Non-interested income and move to about 230 to 240 million.
Speaker Change: On expensive side, we were proud. We continue to find so much opportunities to reposition, the expense base against what have long been described as areas of focus. And we expect expenses are going to move to the mid to high 190s, over the next couple of quarters, the sellers and benefits moves into the low to mid 120s and then other non-interest expense moves above the 70 million dollar. Number that we've cited for the last few quarters.
Rob Holmes: And it's not just the cost and benefits expense, it's the technology expense, occupancy expense, and the legal necessary to put those initiatives into the market.
Rob Holmes: I would just add one thing, which would be, I think it's really, really important to note how the platform, including investment banking, affects them as well. So there's just a better client journey, better advice, better dialogue with our clients. It's a more valuable banking relationship where they use an investment banking service or not, which makes them less demanding of rate, which obviously contributed to 42 BIPs improvement here today in Nome, which I think is sectorally. That's great, Colin. I appreciate all of it.
Speaker Change: Both, both of those moves are related to the capability buildout that you described, Michael primarily an investment banking coverage and product rollout. And it's not just the comp and benefits expense. It's the technology expense occupancy, expense, and the legal necessary to put those initiatives into the market.
Speaker Change: I would just add 1 thing, which would be, I think it's really, really important to note, um, how the platform including Investment Banking affects them as well. So there's a, there's just a high. There's a better client Journey, better advice better dialogue with our clients, it's a more valuable banking relationship where they use a pro, the investment.
Speaker Change: Banking service or not, which makes them less, uh, demanding of rate, which, uh, obviously contributed to 42 bips Improvement year to today in nil, which I think is sector leading.
Michael Rose: Maybe just one follow-up question. I've probably been a dead horse here on the ROA, but it seems like it's clearly within striking distance. I know maybe a little bit early, but just give an ongoing momentum in seizing of investments, positive operating leverage, all the above.
Rob Holmes: I mean, should we expect something higher as we contemplate next year? Thank you. Well, we didn't, we certainly our aspiration is not to achieve one one in stock. I mean, you know, it's pretty well, Michael, that's, that was a guidepost along the way of the transformation. And we have a long way to go. And we're super excited about it. What we're certain of is that the strategy works, the client acceptance of this strategy and our bankers is actually surprising, even to me. I'm super proud of the bankers, the clients we're onboarding. As we said, we want to be defined by our clients.
Uh that's great call. I appreciate all of it. Um, maybe just 1, follow-up question. Um, has probably been a dead horse here on the the Roa but it it seems like it's clearly within, you know, Striking Distance. I, I know maybe a little bit early but you know, just give it an ongoing momentum, um, in seizing of Investments positive, operating leverage all all the above. I mean, should we expect something higher as, as we contemplate, you know, next year, thanks.
Rob Holmes: We're proud of all of them. We've reallocated a lot of capital to get the right clients onto the platform.
Michael Rose: And one one is a is just a mere stop along the way. Appreciate it. Thanks for taking my questions. Thank you.
Speaker Change: Well we didn't, we certainly our aspiration is not to uh achieve 1 1 in stock. I mean you know it's pretty well Michael. That's that was a guideposts along the way of the transformation and we have a long way to go and we're super excited about it. What we're certain of is that the strategy works the client acceptance of this strategy in, our Bankers is actually surprising even to me. Um, I'm super proud of the bankers, the clients were on boarding. Uh, as we said, we want to be defined by our clients, we're proud of all of them. We've reallocated a lot of capital to get the right clients onto the platform and 1. 1 is a, is just a mere stop along the way.
Speaker Change: Appreciate it. Thanks for taking my questions.
Woody Lay: Your next question comes from Woody Lay with Keith Brunette and Woods. Your line is open. Any commentary on the restructuring charges in the quarter, and as I think about the low end versus the high end of the guide, is that really a reflection of the investment banking trends over the back half of the year?
Speaker Change: Thank you. Your next question comes from would delay with Keith.
Brunette and woods. Your line is open.
Keith: Is that really a reflection of um, the investment banking Trends over the back half of the year?
Matt Scurlock: I'm not sure if there was a beginning part of that question that we may have missed. The first thing we heard was the restructuring charges to address that. We continue to find opportunities to drive what we term as real structural efficiencies. We're able to take expense from what we think of as less productive sources and match it up against the fee-income areas of focus that we've been describing really since 2021. So that's a trend that we hope to continue and think has become a core competency for the firm.
Matt Scurlock: And then can you ask the second question again? Yeah, and just on the guide of sort of mid to high single digits for expense growth, you know, the low end versus the high end, does that, does that really come down to how investment banking fees trend in the back half of the year? Yeah, good question. I really like about 6% full year non-interest expense growth. I think mid to high 190s, the next two quarters supports $240 million of fee generation, as well as the outlook for full year earnings. Got it. That's helpful.
Keith: Yeah, well I'm not sure if there was a beginning part of that question that we may have missed. So the first thing we heard is the restructuring charges to address that. So we continue to find Opportunities to drive. A lead term is real structural efficiencies, we're able to take expense from what we think of as less productive sources and match it up. Against the fee income areas of focus that we've been describing really since 2021. So that's that's a trend that we hope to continue. I think has become a core competency for the firm I think. Can you can you ask the second question again?
Keith: Yeah. And just to on the guide of sort of mid to high single digits for expense growth, you know, the low inverse, the high end is that does that really come down to how Investment Banking fees Trend in the back half of the year?
Yeah, good good question. I I really like about 6% for your non-interest, expense growth. I think mid to high 1 900 is the next 2 quarters supports 240 million dollars of heat generation as well as the outlook for full year earnings.
Matt Scurlock: And then maybe last for me on capital and just given sort of the shift in the regulatory tone, how does it impact your view on excess capital and that CET1 target of above 11%? doesn't affect us whatsoever. As you know, we are super happy to have what you would call excess capital, we call it strategic advantage in the market, which allows us to onboard a record number of clients each of the last three years. And we don't see it as anything but of a competitive advantage. We have lots of uses for it. We're great stewards of capital.
Keith: Got it, that that's helpful. Um, and then maybe last for me on Capitol and just giving sort of the shifts in the regular regulatory tone. How does it impact your view on excess capital and that C1 Target of above 11%?
Keith: Doesn't doesn't affect us whatsoever. As you know, we, we are, uh, super happy to have, uh, what you would call excess capital or we call a strategic advantage.
Woody Lay: As you know, we have a traditional data driven capital allocation model. And we've proven to be good stewards of it. And it the regulatory outlook has no bearing. Got it. Thanks for taking my question. Thank you.
Keith: In the market which allows us to onboard a record number of clients, each of the last 3 years and we don't see it as anything, but of a competitive Advantage. We have lots of uses for it, we're great stewards of capital. As you know, we have a traditional data driven Capital allocation model and we've proven to be good stewards of it. And um, it the regulatory Outlook has no bearing
Keith: got it. Thank you for taking my question.
Stephen Scouten: We now have a question from Stephen Scouten with Piper Sander. Hey, good morning. Thanks. So revenue trends were extremely strong in the quarter, which is great.
Keith: Thank you. We now have a question from Steve and with Piper Sandler,
Steve: Good morning. Thanks. Um,
Matt Scurlock: And I know the guide is maybe a fairly wide band here at low double-digit percent growth, but I'm curious what would lead you to maybe raise that guidance, given what appears to be maybe some revenue trends that are ahead of schedule, or maybe what would take us to the highest end of what is low double-digit growth. Yeah, we think at 230 a fee, so the low end of the fee guide, we've got enough NII momentum, Stephen, to move to the high end of the current guide. And maybe to walk through that a bit, as Rob alluded to, for us, NII really begins with deposit repricing, which we were clearly able to push past that 70% interest-bearing deposit beta that we targeted during the second quarter, and are now at 81% since the beginning of the easing cycle.
Steve: So Revenue Trends were were extremely strong in the quarter which is great. Um and I know the guy is you know maybe a fairly wide band here at low double digit percent growth. But I'm curious, what would lead you to maybe raise that guidance, given what appears to be maybe some, some Revenue trends that are ahead of schedule or maybe what would take us to the highest end of what is low double digit growth.
Speaker Change: Yeah, we we think it 230 of fees. So the low end of the fee guide, we've got enough nii momentum Stephen to move to the high end of the current guide.
Matt Scurlock: Rob and I both noted in our prepared remarks that we've done that while effectively growing non-brokered, non-indexed interest-bearing deposits by $3 billion, or 22% year-over-year, which, to Rob's point, we think highlights improved client relevance and a sustained value proposition. Exporting those results, we did have CDs repriced, so $986 million of CDs that matured in the quarter at $475 million and came back on at closer to $425 million, and we've got another billion one that's going to mature this quarter, an average rate of 4.62% relative to posted rates of 4.2%. Given the balance sheet momentum and multitude of relationship touchpoints with those consumers, we expect the majority of those CDs to be replaced at current market pricing.
Speaker Change: And maybe to walk through that a bit, is Rob alluded to for us. And I, I really begins with deposit repricing, which we were clearly able to push past that 70% in Spring deposit data that we targeted during the second quarter and are now at 81% since the beginning of the easing cycle Rob. And I both noted, our prepared remarks that we've done that while effectively growing, non bar brokered non-indexed. Interest bearing. Deposits by 3 billion dollars or 22% year-over-year, which drops point we think highlights improved client, relevance in a sustained value proposition.
Speaker Change: Supporting those results, we did have CDs repriced at 986 million of CDs that matured in the quarter at 475 and came back on it closer to 425. And we've got another billion 1 that's going to mature this quarter and average rate of 4.62% relative to postage rates of 4.2%.
Matt Scurlock: We don't necessarily think that we're going to see, other than the CD repricing, additional success passing on marginal decreases in interest-bearing deposit costs up to and until the Fed moves. But we do think there's enough momentum to support an increase in net interest income of roughly $10 million late quarter. carry that out for the duration of the year, I think you can pretty easily deliver the high end of the revenue guide on 2.30. Okay, that's very helpful and specific. Appreciate that Matt.
Speaker Change: Given the balance sheet momentum and multitude of relationship touch points with those consumers. We expect the majority of those CDs to be replaced at current market pricing. We, we don't necessarily think that we're going to see other than the CD repricing. Uh, additional success passing on marginal decreases and interest bearing deposit costs up to and until the FED moves, but we, we do think. There's enough momentum to support an increase in net interest income of roughly
Speaker Change: 10 million bucks link quarter. And if you carry that out for the duration of the year, I think you can pretty easily deliver the high end of the revenue, guide on 230th fees.
Matt Scurlock: Um, I guess as it as it pertains to the mortgage finance business and expected yields, if the The related deposits stay in this 90% range. Would you think that the mortgage finance yields could actually continue to tick up higher as that kind of drags from the deposit waiting lessons relative to what it's been in the past? Yeah, the guide incorporates a cut in September, which would suggest that the mortgage financials moved down into the mid-430s. Absent a cut, I think you sit relatively flatly in court.
Speaker Change: Okay. That's very helpful and specific appreciate that man. Um I guess as it as it pertains to the mortgage Finance business and expected yields. Um if the
Speaker Change: The related deposits, stay in this 90% range? Would you think that the, um, mortgage condensed yields could actually continue to tick up higher as that um, you know, kind of dragged from the deposit waiting lessons relative to what it's been in the past?
Speaker Change: Mortgage Financial yields moved down into the mid 430.
Speaker Change: Accent a cut. I think you sit relatively flat like quarter.
Speaker Change: Okay, great. And then maybe just lastly on the on the expense Trends. I know last quarter you called out about 14 million in seasonal uptick that wouldn't repeat, um, but obviously didn't see seemingly relative to that Delta. A lot of other growth was there anything that maybe surprised you guys in terms of your ability to keep expenses, lower than would have been expected or anything of note. Um, in terms of larger scale savings, that that occurred this quarter
Matt Scurlock: No, I think that, I think we've made multiple years of investments in technology across the platform that's allowing for efficiencies and greater expense management and discipline that you will see going forward as we built the platform with the ability to scale with efficiency. Thanks for all the color. Appreciate the time. Great quarter. You bet. Thanks. Thank you.
Speaker Change: No, I think that.
Speaker Change: I think we've, uh, made multiple years of Investments and Technology across the platform. That's allowing for efficiencies and greater expense management and discipline that you will see going forward as we built, the platform with the ability to scale with efficiency.
Speaker Change: Pay attention. Thanks for all the color, appreciate the time, great quarter.
Speaker Change: Okay, thanks.
Operator: Just a reminder, if you would like to ask any further questions, you can do so by pressing star followed by one on your telephone keypads now.
Matt Olney: And your next question comes from Matt Olney with Stephen Inc. Thanks for taking the question guys. Good growth on the commercial lending front. I'm curious what you saw from your commercial customer behavior from April and then of course into June. I mean you mentioned it was a volatile quarter from a macro perspective. So just curious as you move through the quarter, did you see any change of behavior, change utilization from your commercial type customers?
Speaker Change: Thank you, just a reminder. If you would like to ask any further questions you can do so by pressing star, followed by 1 on your telephone keypad now.
Speaker Change: Until next question comes from, Matt only with Stevens Inc.
Rob Holmes: Yeah, thanks, Matt. So I think we've noted on every single call since this management team's been in place that we're trying to create what we think is a pretty, pretty unique offering to provide capital to our clients really across any continuum, which includes facilitating access to bank debt. This quarter for us generally played out as anticipated, with continued strong client acquisition resulting in 20% annualized growth in C&I, which was partially offset by, I think, well-telegraphed payoffs in CRE, of which about a third of that was related to criticized assets. The pipeline suggests that those client acquisition trends should remain intact heading into the third quarter and we haven't seen really any change in line utilization linked quarter and are down about 2% year-over-year.
Matt: Thanks for taking the question, guys, uh, good growth on the commercial lending front. I'm curious what you saw from your commercial customer behavior from April and then, of course, end of June. I mean, you you mentioned, it was a Volvo quarter from the macro perspective. So just curious as you move through the quarter, did you see any change of behavior change utilization from where your commercial type customers?
Yeah, thanks Matt. So I think we've noted on every single call since this management team has been in place that we're trying to create. We think so pretty. Pretty unique offering to provide Capital to our clients really across any Continuum which includes facilitating access to Bank debt. This quarter for us generally played out as anticipated with continued continued, strong client, acquisition resulting in 20%. Annualized growth in cni, which was partially offset by, I think, well, telegraphed to pay off since CRA of which about a third of that was related to criticized assets.
Rob Holmes: I would just add to that. I see continued growth activity and the balance sheet form is extremely high for new clients with a demand on loans going forward, on bank debt, not just other types of debt. And I think you'll see continued growth as the reinvestment and the balance sheet continues to slow. Okay, appreciate the color on that, Rob.
Matt: The pipeline suggests that those client acquisition Trends should remain intact heading into the third quarter. And we haven't seen really any change in line. Utilization linked border and are down about 2% year-over-year. I would just add to that. Um
Matt: What the the I see continued growth.
Matt: Uh, activity. And the balance sheet form is extremely high for new clients, uh, with with a demand on loans. Um, going forward on Bank debt, uh, not just other types of debt, uh, and I think you'll see continued growth as the um, uh, the reinvestment and the balance sheet continues to slow.
Rob Holmes: And then, I guess going back to the mortgage finance commentary, I'm a little bit surprised you're maintaining that guidance of the 10% year growth given industry expectations a little bit softer now than a few months ago. It sounds like you could be getting some market share. Any color you can share on that? We think we bank really great clients in that space, Matt, and continue to try to provide a broader set of products and services to that client base. Our expectation for the market hasn't changed since the beginning of the year. So we've got a $1.9 trillion origination market that sits on top of 30-year fixed-rate mortgages between 6, 8, and 7, and if that continues, we expect 10% growth in full-year average balances.
Okay, appreciate the color on that Rob and then I guess going back to the more Finance commentary, I'm a little bit surprised. You're maintaining that guidance of the 10% year-over-year growth, given industry expectations, a little bit softer now than uh, a few months ago. Because it sounds like, it could be getting some market, share any color you can share on that.
We think we Bank really great clients in that space, Matt and continue to try to provide a broader set of products and services to that client base.
Matt Olney: I think it's important to note also, we're not trying to gain market share in that sector. We're trying to bank the select few, what we think are the best clients in that sector, and no more. Okay, thanks for taking my questions. You bet.
Our expectation for the market hasn't changed since beginning of the year. So we've got a 1.9 trillion dollar origination Market that sits on top of 30 year, fixed rate, mortgages, between 68 and 7. And if that continues, we expect 10% growth in full year average balances. I would, I think it's important to note. Also, we're not training trying to gain market, share in that sector. We're trying to bank.
The select few, what we think are the best clients in that sector and and know more.
Speaker Change: Okay, thank you for taking my questions.
You bet, thanks.
Operator: Thank you.
Jon Arfstrom: That is star 1 to ask a question, and your next question comes from Jon Arfstrom with RBC Capital Markets. Hey, thanks. Good morning.
Speaker Change: Thank you.
Speaker Change: Bye. 1 to ask a question and your next question comes from John Iran. With RBC Capital markets.
Matt Scurlock: Hi Jon, just a couple cleanups here. Matt, can you comment on the higher end PL balance? Obviously not concerning, but just curious what was behind that. Yes, a couple of C&I credits, not industry specific, no direct impact from tariffs. I'd say just in general, on credit, I think we're really proud of how the team continues to practically manage that portfolio. I think we would view that as a pretty underappreciated portion of the transformation. So there was a minor move up in NPAs, but the ratio is consistent with what we've seen over the last few years.
John Iran: Hey, thanks. Good morning.
Speaker Change: Um,
Speaker Change: Hey um just a couple cleanups here. Um, Matt, Matt can you comment on the higher end? PL balance, obviously not concerning but just curious what was behind that.
Yeah, it's a couple of cni credits. Not industry specific. No, direct impact from tariffs.
Matt Scurlock: We added a couple million dollars to the reserve, which nominally is now at the highest level in the firm's history. It did result in a slight reduction in the ACL coverage ratio, but the trends to the left of NPA are quite strong. saw a 26% reduction in year-over-year criticized loans. 59% reduction in year-over-year criticized loans related to commercial real estate, which are the lowest level in two years, and then our reserve continues to be underpinned by an economic outlook that's significantly more conservative than consensual.
Speaker Change: You guys are pretty underappreciated portion of the transformation. So there was a minor move up in mpas but the ratio is consistent with what we've seen over the last few years. We added a couple million dollars to reserve which nominally is now at the highest level in the firm's history.
Speaker Change: And did result in a slight reduction in the ACL coverage ratio but the the trends to the left of NPA are quite strong.
So, we saw 26% reduction in year-over-year. Criticized loans.
Speaker Change: 59% reduction in year-over-year. Criticized loans related to commercial real estate, which are the lowest level in 2 years and then
Rob Holmes: I would just add that I think we'll continue to perform well in credit because of our client selection as well, and our bankers do a great job at that today, which I think is manifested in the stats that Matt just relayed, and we feel really good about where we are at reserve levels and the performance of the credit portfolio. So I'm good, fair enough on that.
Speaker Change: Our Reserve continues to be underpinned by an economic Outlook, that significantly more conservative than consensus estimates.
Speaker Change: Yeah, I would just add that I think we'll continue to perform well in credit because of our clients selection as well. And our Bankers, do a great job at that today which I think is manifested in the stats that not just relayed. Uh and we feel really good about where we are Reserve levels of the the
Speaker Change: Performance of the credit portfolio.
Rob Holmes: Rob, where are you on in your wealth management build out progress? It feels like maybe that's the last leg here. And just curious how you feel about that. Yeah, I feel I feel really good about it. So you're right, it is the last leg. We're a little behind on that. We've spoken about it. Thanks for bringing it up. We went on to the new platform in the fourth quarter of last year. That's a dramatically improved client journey. If you look at our allocated portfolios that we put our clients in, we perform as well or better than other wealth managers.
Speaker Change: Okay, so a good fair enough on that. Um,
Speaker Change: Rob.
Speaker Change: where are you on in your
Speaker Change: Progress. It feels like maybe that's the last leg here and just curious how you feel about that.
Rob Holmes: So it's not the performance of that. It's more the client journey. And then getting the team on the field, if you will, we think, coupled with all the new client onboarding that we've had across the commercial space and investment banking, our ability and our team in that space is really unbelievable. I think you'll see great growth in that in the in the coming quarters and years. That's a slow growth business, as you know, but it's highly durable and we're really excited about it. And I think you're you're about to see the first legs of it.
Speaker Change: Yeah, I feel, I feel really good about it. So, um, you're right. It is the last leg. We're a little behind on that. We've spoken about it. Thanks for bringing it up. We went on to, uh, the new platform in the fourth quarter of last year, that's a dramatically improved client Journey. If you look at our allocated portfolios, that we put our clients in. Uh, we perform as well or better than uh, other wealth managers. So it's not the performance of that. Um, it's more the client journey and then, uh, getting the team on the field if you will. We think, uh, coupled with all the new client onboarding that we've had across the commercial space, and Investment Banking, our ability, and our Tim in that space is really unbelievable. I think you'll see great growth in that in the, in the coming, quarters and years. Um, that's a slow growth business, as you know, but it's highly durable, and we're really excited about it. And I think you're you're about to see the first
Speaker Change: legs of it.
Jon Arfstrom: All right, thank you very much. I appreciate it. Thanks, Jon. Thank you.
Speaker Change: Um, all right, thank you very much. I appreciate it.
Thanks John.
Speaker Change: Thank you.
Rob Holmes: I can confirm we have no further questions, so I would like to hand it back to Rob for some final closing comments. Thanks everybody for your interest in the firm and we look forward to speaking to you next quarter.
Speaker Change: I can confirm we have no further questions so I would like to hand it back to Rob force and final closing comments.
Speaker Change: if you're interested in the firm and we look forward,
to speaking to you next quarter,
Speaker Change: thank you for dialing in. I can confirm that does conclude today's conference call with Texas, Capital Bank shares, you may now disconnect. Thank you all for your participation and please enjoy the rest of your day.