Q2 2025 Bank7 Corp Earnings Call

Unknown Executive: For access to the presentation, management is going to discuss certain topics that contain forward-looking information, which is based on management's beliefs, as well as assumptions made by and information currently available to management. Although management believes that the expectations reflected in such forward-looking statements are reasonable, they can give no assurance that such expectations will prove to be correct. Such statements are subject to certain risks, uncertainties, and assumptions including, among other things, the direct and indirect effect of economic conditions on interest rates, credit quality, loan demand, liquidity, monetary and supervisory policies of banking regulators. Should one or more of these risks materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expected.

Of the investor presentation for those who do not have access to the presentation management is going to discuss certain topics that contain forward-looking information, which is based on Management's beliefs, as well as assumptions made by and information currently available to management.

Although management believes that the expectations reflected in such forward-looking statements are reasonable. They can give no assurance that such expectations will prove to be correct. Such statements are subject to certain risks uncertainties and assumptions including among other things. It's the direct and indirect effect of economic conditions on interest rates credit quality loan demand liquidity, monetary and supervisory policies of banking regulators.

Unknown Executive: Also, please note that this conference call contains references to non-GAP financial measures. You can find reconciliations of these non-GAP financial measures to GAP financial measures in an 8K that was filed this morning by the company.

Should 1 or more of these risks materialize or should underline assumptions. Proved incorrect, actual results May Vary materially from those expected.

Unknown Executive: Representing the company on today's call, we have Tom Travis, President and CEO, JT Phillips, Chief Operating Officer, Jason Estes, Chief Credit Officer, Kelly Harris, Chief Financial Officer, and Paul Timmons, Director of Accounting. With that, I'll turn the call over to Tom Travis. Thank you. Welcome to the call. We obviously had a great quarter, as you can see in the results.

Also, please note that this conference call contains references to non-gaap financial measures. You can find reconciliations of these non-gaap Financial measures to get financial measures in an 8K. That will file this morning by the company.

[Unnamed Introducer]: Representing the company on today's call. We have Tom Travis president and CEO. JT Phillips Chief, Operating Officer. Jason Estes Chief credit officer Kelly Harris, Chief Financial Officer, and Paul Timmons, director of accounting with that. I'll turn the call over to Tom Travis.

Tom Travis: Thank you, welcome to the call. Um,

Tom Travis: Before we get to that, a couple of weeks ago today, there was a really bad flood in my hometown of Kerrville, Texas. And so anyone on the call that has money left in their budgets for relief fund, there's a great organization, the Kerr County Relief Fund. They really need support. So consider that when you're looking at your expenditures in that area. I'm sure that the people down there will put it to good use.

Tom Travis: Back to the call, it was one of our best quarters ever. And we always have to recognize that those results happen because of our talented group of bankers. They drove strong loan and deposit growth and we thank them very, very much. As you can see, we maintained our NIM on the higher end of our historical range and we also continue to benefit from that low efficiency ratio. And when you put those factors together with the solid loan growth, we experience nice, strong core earnings.

Tom Travis: We obviously had a great quarter as you can see in the results before we get to that a couple of weeks ago today. There was a really bad flood in my hometown of Kerrville Texas. And so anyone on the call that has money left, in their budgets, for Relief Fund, there's a great organization, their Kirk county Relief Fund, um, they really need support. So consider that when you're looking at your expenditures in that area, I'm sure that the people down there will put it to good use.

Uh, back to the call. Um, it was 1 of our best quarters ever.

Tom Travis: We're very comfortable with our asset quality and I always give a shout out to Jason Estes and his team. They've done an excellent job of maintaining a high quality credit book while at the same time growing that portfolio. So we're very proud of our results. We're pleased to continue to provide shareholders with excellent top tier results.

Tom Travis: And um, we always have to recognize that those results happen because of our talented group of Bankers, uh, they drove strong loan and deposit growth and we thank them very, very much. Um, as you can see, we maintained our Nim on the higher end of our historical range. And we also continue to benefit from that low efficiency ratio. And when you put those factors together, uh, with the solid loan growth, we experience nice, strong core earnings

Unknown Executive: And without further ado, I guess we're standing by for any questions you may have. Thank you. We'll now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing any keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

Tom Travis: We're very comfortable with our asset quality and always give a shout out to Jason Estes and his team. They've done an excellent job of maintaining a high quality credit book uh while at the same time growing that portfolio so we're very proud of our results. We're pleased to continue to provide shareholders with excellent top tier results and uh without further Ado, I guess, uh we're standing by for any questions, you may have thank you.

We'll now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone, if you are using a speaker-phone please pick up your handset before pressing any keys.

Unknown Executive: At this time, we will pause for just a moment to assemble our roster.

if at any time your question has been addressed and you would like to withdraw your question, please press star then 2

Tom Travis: At this time, we will pause for just a moment to assemble our roster.

Woody Lay: And your first question today will come from Woody Lay with KBW. Please go ahead. Hey, good morning, guys. Wanted to start on loan growth, obviously a really strong quarter on the growth front and it's been a really successful first half of the year when many other in the industry have kind of flagged in growth. You know, I know your growth can be a little bit lumpy quarter to quarter, but how are you thinking about the growth momentum in the back half of the year? Always depends on the lumpy paydowns, you know, I think our deal pipeline, it looks solid right now, you know, I think we've signaled that the last couple quarters in a row that, you know, things in Oklahoma, things in Texas, economically, or they're just in a really good spot.

Speaker Change: And your first question today will come from Woody lay with KBW. Please go ahead.

Woody Lay: Hey, good morning, guys.

Speaker Change: all right, what

Speaker Change: 1 in to start on loan growth. Obviously a a really strong quarter on the growth front and it's been a really successful first half of the year when many other in the industry have kind of flagged in growth, you know, I I know you're growth can be a little bit lumpy quarter to quarter but how, how are you thinking about the growth momentum in the back half of the year?

Woody Lay: We're thankful to do business where we do business. And so, you know, going into Q3, again, pipeline looks strong. But you just never know on the chunky paydowns, you know, what's really coming. I think it was fourth quarter of last year, you know, we just had a big wave of companies selling, people selling assets, various things that lead to a little bit of unpredictability there in the payoff side. But from the origination side, Q1 was strong, Q2 was stronger, slightly, you know, and I think Q3 is lining up to be similar, but we'll see. And then how do you how do you think about the NIM outlook, given the growth, you know, deposit costs were relatively stable in the quarter, just given the expectation for strong growth?

Speaker Change: Uh, always depends on the the lumpy pay Downs. You know, I I think our deal pipeline, it looks solid right now. You know, I think we've signaled that the last couple quarters in a row that you know things in Oklahoma things in Texas uh economically or they're just in a really good spot. We're thankful to do business where we do business and so, you know, going into Q3 again pipeline looks strong, um, but you just never know on the chunky pay Downs. You know, what's really coming? Um, I think it was fourth quarter of last year, you know, we just had a big wave of companies selling people selling assets. Various things that lead to a little bit of unpredictability there in the in the payoff side. But from the origination side q1 was strong Q2 was Stronger slightly um you know, and I think Q3 is lining up to be similar but we'll we'll see.

Woody Lay: Could we see deposit costs start to move up to fund the growth? And how does that impact the NIM? Yeah, I think that's a fair way to. In our state, what we see real-time is that, you know, to keep up on the deposit side, it does cost a little bit more money. We're always focused on, you know, offsetting some of that higher-priced money with the transaction accounts, you know, the zero-cost accounts. And so bankers have done a really nice job of dragging that business in. And, you know, hopefully we can continue to do so. But I think we've been talking for a few quarters in a row about, yeah, we expect a slight degradation, but we do expect to remain in our historical ranges.

Speaker Change: And then how do you how do you think about the Nim Outlook? Given the growth? Um, you know, deposit costs were relatively stable in the quarter just given the expectation for strong growth. Could we see deposit costs start to move up to fund the growth and and how does that impact the them?

Speaker Change: Yeah, I think that's a fair uh, way to uh,

Woody Lay: And that holds true today. Got it.

Speaker Change: State. What what we see real time is that, you know, to keep up on the deposit, side, it it does cost a little bit more money. Um, we're always focused on, you know, offsetting some of that higher price money with the transaction accounts. You know, the zero cost accounts. And so Bankers have done a really nice job of dragging that business in. Um, and you know, hopefully, we can continue continue to do so, but I think we've been talking for a few quarters in a row about. Yeah, we expect a slight degradation, but we do expect to remain in our historical ranges and, and that holds true today,

Woody Lay: And then last for me, you know, we've seen deal activity pick up in your backyard.

Speaker Change: Got it. And then last for me, you know we've seen

Woody Lay: Just any update on on the M&A front for y'all? You know, Woody, we've come close a couple of times over the last 12 months, we've actually, you know, had a couple of signed LOIs and, you know, we're very disciplined in our approach and for various reasons, those didn't happen. We continue to meet with various potential Thank you. Partners, we're very focused on, we'd love to do an MOE, but we just continue to have a lot of meetings and do a lot of evaluations. I think the tendency for people now is they've improved their AOCIs somewhat, which is going to loosen up the market.

Speaker Change: Deal activity. Pick up and and and your backyard. Just any update on on the m&a front for y'all.

Speaker Change: You know, what do we come close a couple times over the last 12 months? We've actually, you know, uh, had a couple of signed Louis and then, you know, we're very disciplined in our approach and for

Speaker Change: Various reasons. Uh, those didn't happen. We continue to meet with.

Speaker Change: Uh, various potential.

Speaker Change: Partners. Um, we're very focused on

um, we'd love to do an Moe but um, we just continue to have a lot of meetings and do a lot of evaluations and, um,

Speaker Change: uh, I think the

Woody Lay: But we're going to just continue to... Evaluate opportunities in what we consider to be dynamic markets and common cultures. It's just hard to predict when one of those might break loose.

Speaker Change: The the tendency for people now is they've improved their aoci and somewhat uh which is going to loosen up the market. Um, but we're going to just continue to

Speaker Change: Uh, evaluate opportunities in what we consider to be dynamic, markets and common cultures. And uh,

Speaker Change: It's hard to predict when 1 of those might break loose.

Woody Lay: All right, that's all for me. Thanks for taking my questions.

Speaker Change: All right. That's all for me. Thanks for taking my questions.

Thank you.

Nathan Race: And your next question today will come from Nathan Race with Piper Sandler. Please go ahead. Hey guys, good morning. Thanks for taking the questions. Morning Nate.

Speaker Change: And your next question today, will come from Nathan race. With Piper Sandler, please go ahead.

Nathan Race: Following up on the margin commentary, you know, curious, maybe Jason, if you can kind of touch on some of the competitive pricing dynamics you're seeing and just kind of where you're seeing new loans come on the portfolio relative to the 7.6% kind of core yield in the second quarter. Yeah, I think it would be slightly lower than the 7.6, but, you know, still... I think, you know, if you go back a year ago. Two years ago, there were fewer banks really aggressively looking for loans, especially after March of 23. I would consider today's environment very historically normal from a pricing standpoint.

Nathan Race: Hey guys, good morning. Thanks for taking the questions.

Speaker Change: Up on the margin commentary. You know, curious maybe Jason if you can kind of touch on some of the competitive pricing Dynamics, you're seeing and just kind of where you're seeing new loans. Come on the portfolio, relative to the um 7.6% kind of core yield in the second quarter.

Speaker Change: yeah, I think it would be slightly lower than the 7.6 but, you know, still

Speaker Change: I think, you know, if you go back a year ago

Speaker Change: or 2 years ago, there were fewer.

Nathan Race: Within the competitive set here in Texas and Oklahoma, it just seems pretty benign. That's nice to see some return to normalcy. So yeah, there's always pricing pressure, Nate. But right now, feels like people have kind of settled in on the deposit and the loan side. Which is part of what led to the results. Got it. That's helpful.

Speaker Change: Banks really aggressively looking for loans, especially after March of 23 and I would consider today's environment. Very historically, normal from a pricing standpoint, you know, within the competitive set, you know, here in Texas and Oklahoma, it

Speaker Change: It just seems pretty benign, you know. And and

Speaker Change: That's that's nice to see some return to normaly. So yeah, there's always pricing pressure, Nate. But right now feels like people have kind of settled in on the deposit and the loan side.

Speaker Change: Which is part of what led to the results.

Nathan Race: And then just kind of thinking about the appetite to maybe add some producers going forward. There's obviously been some M&A announcements within two of your key MSAs recently. So just curious kind of what the appetite is, maybe add some talent, maybe relative to the existing capacity across the team.

Speaker Change: Got it, that's helpful. Um and then just kind of thinking about the appetite to maybe add some producers going for it. There's obviously been some uh m&a announcements within, you know, 2 of your key um msa's recently. So just curious kind of what the appetite is. Maybe add some Talent, maybe relative to the existing capacity across the teams

Nathan Race: Nate, I met with a person in Dallas on Monday, and we've looked at a few lift-out possibilities, and those are delicate things, as you can imagine, and You know, I think the dynamic when you look at a lift out or people coming out of those situations is always the credit comes first and then the deposits to help fund that growth seems to be a slower dynamic and so we evaluate those and you may see us do something in the But I don't, I don't know that it's going to be that anything that materially dynamic at first.

Speaker Change: hey, I met with a a person in Dallas on Monday and we, um, you know, we've looked at a few lifts out possibilities and those are

Speaker Change: Those are delicate things as you can imagine. And um,

Speaker Change: uh, you know, I think the

Speaker Change: the dynamic, when you look at a lift out or people coming out of those

Speaker Change: Situations is always.

Speaker Change: North Texas region. Um,

but I don't, I don't know that it's going to be that anything that's

Nathan Race: You know, we're very, very careful and culture is very, very important to us and so we'll see how that goes in the next couple of Okay, great.

Speaker Change: materially Dynamic at first, you know, we're we're very, very careful and culture is very, very important to us. And so, um, we'll we'll see how how that goes in the next couple of months.

Nathan Race: Maybe one last one for me for Kelly, you know, if I strip out some of the oil and gas impacts within expenses, I think you're running around 8.8 million come out of the quarter. So just curious how you're thinking about kind of expense run rate over the back half of this year. Yeah, Nate, I believe Q2 is probably a solid guide. Internally, we are showing a little bit of expense creep. So you could increase that slightly, but it's probably a good start. Think from a Q3 perspective.

Speaker Change: Okay, great. Maybe uh 1 last 1 for me for Kelly. You know, if I strip out some of the oil and gas impacts within expenses, I think you're going around. 8.8 million coming out of the quarter. So just curious how you're thinking about kind of the expense run rate over the back half of this year.

Speaker Change: Yeah, dude, I believe Q2 is probably a solid guy. Um, internally. We are showing a little bit of expense creep, so you could increase that slightly but it's probably a good start. Um,

Speaker Change: I think from a Q3 perspective.

Nathan Race: $2 million split evenly with oil and gas and core, and then on the expense side, we're using $10 million with $1 million in oil and gas and $9 million on the expense side. But I don't think it's had a real meaningful impact to our efficiency ratio. It's, you know, we're still in that core 36 or 37, 38 percent core. Right, and so I guess I would argue it's probably splitting hairs at this point, Nate. Right.

Fees.

Uh, 2 million, split evenly with oil and gas and core. And then on the expense side, we're using 10 million with a million in oil and gas and 9 million on the expenses.

Speaker Change: Okay, but I don't think it's had a real meaningful impact to our efficiency ratio, correct?

Speaker Change: You know, we're still in that core. 36 or 37 38% core core, right? And so,

Nathan Race: And then can you just remind us what the remaining life is on the oil and gas assets? Should that largely run off by the end of, or should the recovery pretty much conclude by the end of next year or before then? I think when I read your piece, you said that we had recovered 75% of our cash outlay. Is that what you said in your piece this morning, Nate? Correct. Versus I think 68% at the end of last quarter. Right, right. And I think that's pretty accurate.

Nathan Race: Uh, I guess I would argue, it's probably splitting hairs at this point, Nate.

Right. And then can you just remind us what the remaining life is on the oil and gas assets? Should that largely run off by the end of or should the recovery pretty much conclude by the end of next year before then,

I think I, when I read your piece, you said that we had

Nathan Race: Yeah, we should recover fully cash on cash middle of next year, I think is what we're projecting. So three to four more quarters. We've achieved our goal there, Nate. It's working really, really well. And we've achieved our goal on that. And so it's going to.

Nathan Race: Recovered 75% of our cash. Outlay, is that what you said in your piece? This morning, Nate correct. Versus, I think 68% at the end of the last quarter, right? Right. And I think that's pretty accurate. Yeah. We we should recover fully cash on cash, uh, middle of next year, I think is what we're projecting. So, uh, 3 to 4 more quarters,

Nathan Race: Just continue to perform that way and become, it's really not material anymore, and that's It's a good thing, so. Right, got it. I appreciate all the color. Congrats on a great quarter guys. Thank you.

Nathan Race: we we've, we've achieved our goal there, Nate. It's working really, really well. And, uh, We've achieved our goal on that. And so it's going to

Nathan Race: Just continue to perform that way and become it's really not Material anymore. Um,

and that's

Nathan Race: a good thing. So,

Speaker Change: Right. Got it. I appreciate all the color. Congrats on great quarter, guys. Thank you.

Nathan Race: Thank you.

Matt Olney: Again, if you have a question, please press star and then one and your next question today will come from Matt Olney with Stevens. Please go ahead. Yeah, thanks for taking the question, guys. Just a few follow ups here.

Speaker Change: Again, if you have a question please press star and then 1 and your next question today will come from Matt only with Stevens. Please go ahead.

Kelly Harris: Kelly, I think I missed your commentary you just made about the fees for the third quarter with and without the oil and gas revenue. Can you just go over that again? Yeah, we're internally projecting $2 million in fees, Matt, split evenly between the oil and gas and the core. Got it. Okay, that's helpful. Thank you, Kelly.

Yeah, thanks for taking the question, guys. Just a few follow-ups here. Uh, Kelly. I think I missed your, your commentary. You just made about the, the, the fees for the third quarter with and without the oil and gas Revenue, can you just go over that again?

Kelly: Yeah, we're we're internally projecting 2 million in fees. Matt split evenly between the oil and gas and the core.

Got it.

Matt Olney: And then going back to the loan growth discussion, it looks like a portion of that growth was within energy lending, just looking for any more color and kind of the opportunities you see on that side. And then just overall growth that you're seeing in 2Q and the pipeline, just any color on the overall granularity of these loans. I think some of these loans can be smaller, singles and doubles, but I think also you're open to some larger, chunkier loans. Just any more color on the granularity of what you're seeing these days. Sure. Matt, it's always a mix with us, you know, and I would say going back to the first of this year, you know, I think if you look, our, our, Production loans, you know, that's really where we're up, you know, 30, 35 million in that energy bucket.

Okay, that's helpful. Thank you Kelly and then going back to the lawn growth discussion. Uh it looks like a a portion of that growth was within um, energy lending. Just looking for any more color and kind of the opportunities you see uh, on on, on that side. Uh, and then just overall growth, uh, that you're seeing in, in 2 Q in the pipeline, just any color on the overall granularity of these loans. I think some of these loans can be smaller singles and doubles, but I think also you've, you're open to some some larger chunkier loans. So, just any more color on the the granularity, what you're seeing these days?

Speaker Change: Here, Matt, it it's always a mix with us, you know. And and I would say going back to the first of this year, you know, I think if you look our our

Jason Estes: And what's what's happened in our energy portfolio, really, since we went public is, you know, just this shift away from service. The service deals we're in are big fund deals, typically. And. It shifted a lot more to production, you know, just think hedged oil and gas production. And so, you know, that's kind of the story for this first half of the year as well. And then, you know, from a C&I standpoint, there's some strength there this year that's getting a little bit clouded by some exits within that portfolio. And so we've really had a nice origination year in the C&I portfolio.

Speaker Change: Production loans, you know, that's really where we're up. You know, 30, 35 million, uh, in that energy bucket and what's what's happened in our our energy portfolio really? Since we went public is, you know, just this shift away from service. Um, the service deals were in a big fund deals. Typically, um,

Speaker Change: and,

Jason Estes: And then You know, owner-occupied real estate, we've had a good year there. We're up, you know, about $19 million net-net. And then a little bit of growth in our dollars outstanding in the hospitality portfolio. But again, that's another one, like energy and like CNI, those in the hospitality, between those three portfolios, there's just a lot of churn. And so, lots of exits, lots of asset sales, and then, you know, we're constantly trying to reload that customer base. And so, you know, we're benefiting from some of these exits on the deposit side. And so, we like to stay real active in those three books because it's really helped us grow the company here over the last 10 years.

Speaker Change: It's shifted a lot more to production, you know, just think hedged oil and gas production. Um and so you know that that's kind of the story for this first half of the year as well. And then, you know, from a cni standpoint, um, there's some strength there. Uh, this year that's getting getting a little bit clouded by some exits within that portfolio. And so, we've really had a nice origination uh, year in the cni, uh, portfolio. And then

Speaker Change: um,

Jason Estes: I would add to Jason's comment that if you look at a long-term horizon, going back to for the last seven or eight years, the energy exposure today is almost half what it was seven or eight years ago. And because of the growth in the other segments, and the other, the hospitality segment is down exposure-wise from a percentage basis. And so, we haven't expanded those verticals. And in fact, in the energy, it's come down quite a bit. And I really, as Jason said, it doesn't have anything to do with us exiting a segment. It has everything to do with the ability to grow the other parts of the portfolio, and specifically in the Dallas-Fort Worth region.

Speaker Change: Real estate. We've had a good year there. Uh we're up. You know, about 19 million net net uh and then a little bit of uh growth in our uh dollars outstanding in the hospitality portfolio. But again that's another 1 uh like energy and like cni th those and the hospitality between those 3 portfolios, there's just a lot of churn. And so uh lots of exits, lots of asset sales. And then, you know, we're constantly trying to reload that customer base. And so, you know, we're benefiting from some of these exits on the deposit side. And so we like to stay real active in those 3 books because it's really helped us grow the the company here, over the last 10 years. I would add to Jason's comments that if you look at a long-term Horizon going back to for the last

Speaker Change: 7 or 8 years, the energy exposure today is almost half what it was 7 or 8 years ago and because of the growth in the other segments and the the other the hospitality segment is down um exposure Wise from a percentage basis. And so we haven't expanded those verticals and in fact, in the energy it's it's come down quite a bit. Um, and I really as Jason said, it doesn't have anything to do with us exiting a segment. It has everything to do with the

Jason Estes: So, I think it's important to remember the long-term dynamics that are in play there. Yep. Okay. Well, I appreciate the color on that.

Speaker Change: To grow the other parts of the portfolio and specifically in the Dallas Fort Worth region. Um so um, I think it's important to remember the long-term dynamics that are in play there.

Matt Olney: And then I guess going back to the margin discussion, I think you kind of hit on some a little bit of pressure in the third quarter we already discussed.

Matt Olney: Just remind us of your rate sensitivity, and I guess the market's currently expecting a September Fed Funds cut. And I guess with that on your balance sheet, I'm just now assuming there could be a little bit more incremental margin headwind in the fourth quarter if that's the case. But just remind me of your overall sensitivity to rates.

Speaker Change: Yep. Okay. Well appreciate the color on that and then I guess going back to the margin discussion. I think you kind of hit on some some a little bit of pressure in the in the third quarter we already discussed. Um just remind us of your rates and sensitivity and I guess the markets currently expecting us September headphones, cut and and I guess with that on your balance sheet, I'm I'm just now assuming there could be a little bit more incremental margin headwind uh in the fourth quarter if that's the case but just remind me if your overall sensitivity to to to to to rates

Kelly Harris: Hi Matt, this is Kelly. The first few rate cuts we were able to keep the loan beta and deposit beta one-for-one. We anticipate more of the same for the next couple rate cuts, and as floors kick in, we'll definitely help out on the liability side. I think you can see some of that dynamic on page 10. We tried to illustrate the floors and what the dynamics are. I would say generally that We always talk about our NAM, and when we talk about NAM we're looking at the net NAM without loan fee income, and historically we're very close to the high end of our historical range.

Speaker Change: Yeah, Matt, this is Kelly the first few breakouts. We were able to keep the loan date in the positive beta 1 for 1.

Speaker Change: We anticipate more of the same for the next couple of rate cuts. Um, and as floors tick in, we'll definitely help out on the liability side.

Speaker Change: Okay, that's great. I can take you think you can see some of that Dynamic on page 10 and we tried to illustrate the floors and

What the, what the Dynamics are? I would say generally that,

Speaker Change: Uh, we always talk about our Nim and when we talk about Nim we're looking at the net Nim without loan, fee income. And historically we are um

Kelly Harris: And so I think it's a natural thing that the, we are very well positioned for when rates do come down and we're not concerned about it because we have so many floaters and floors and we're funding it on the other side properly.

Kelly Harris: But I think that it's important that we all remember the, you know, the long-term. We've got a lot of averages that we experience in that net NIM, and I'm delighted that we've been able to keep it where it is.

Speaker Change: Very close to the high end of our historical range. And so I think it's a natural thing that the we are very well positioned for when rates, do come down, and we're not concerned about it because we have so many flows and floors. Um, and we're funding it on the other side properly, but I think that it's important that we all remember the, you know, the long-term

Tom Travis: I mean, I got a little bit of bone to pick with Nate. I saw Nate. I didn't realize, Nate, last quarter that you had predicted us to be even higher than where we are. I feel like a pole vaulter that just pole vaulted 20 feet, and Nate's like, well, you should have done 21, but I'm half kidding, Nate. But seriously, I think when you look at NIM, it's really important to remember the long-term dynamics of the match balance sheet, the floors, and that, look, if we bleed down into the more typical historical range, that's okay, and it wouldn't surprise us.

Speaker Change: Averages that we experience in that net Nim and I'm delighted that we've been able to keep it where it is. I mean, I got a little bit of bone to pick with Nate. I saw Nate. So he's, he's, I I didn't realize Nate last quarter that you had predicted us to be even higher than where we are. I feel like a, I feel like a pole vaulter that just pole vault at 20 feet and they like, well, you should have done 21 but I'm half kidding they but seriously, I think, I think when you look at Nim, it's really important to remember the long term, dynamics of the match, balance sheet, the floors and that, um, look if we, if we bleed down, uh, into the more typical historical range, that's okay. And um, and it wouldn't it wouldn't surprise us.

Matt Olney: Okay, guys. Thanks for the color. Appreciate it.

Speaker Change: Okay guys, thanks for the color. Appreciate it.

Speaker Change: Thank you. Thank you.

Nathan Race: And your next question today will come from Nathan Race with Piper Sandler. Please go ahead.

Jason Estes: Unrelated question to your last comment, Tom, but just wondering if Jason could maybe just comment on what he's seen in terms of criticized classified migration in the quarter and just how you're thinking about, you know, credit quality and charge-offs over the bounce of this year and into next. I'd say, you know, if you go look back over the last several quarters, you know, it's just kind of this continuous path toward a little cleaner, you know, a little smaller MPA number. Really, nothing has changed, you know, over the last... I'd say six to nine months internally.

Nathan Race: And your next question today, will come from Nathan race. With Piper Sandler, please go ahead.

Nathan Race: unrelated question to your last comment Tom, but just wondering if, uh,

Nathan Race: Jason could maybe just comment on what he's seen in terms of criticized classified, migration in the quarter, and just how you're thinking about, you know, credit quality and charge offs over the

Nathan Race: bounce of this year and into next,

Nathan Race: So if you go look back over the last several quarters, you know it just kind of this continuous.

Nathan Race: Path toward a little cleaner, you know, a little smaller uh MPA number. Um really nothing has changed. You know, over the last

Jason Estes: Our past dues are very clean. Economic environment here is good. We stick to our underwriting fundamentals. We're not adding new business lines. It's just more of the same. There's a little bit of uncertainty, I think, in the economy, you know, if you just look at the headlines and see the tariffs and different things going on with immigration policy, and it's Pretty remarkable, you know, as we talk to our clients and these business owners and how they operate and, you know, you'll see someone have to deal with an issue here or there, but all in all, it's just been a really good, you know, run of multiple quarters here where we operate.

Nathan Race: I'd say 6 to 9 months internally, you know, our past dues are very clean, um,

Nathan Race: Economic environment here is good. Uh, we stick to our underwriting fundamentals, we're not adding new business lines. It's just more of the same and you know, it's

Nathan Race: There's a little bit of uncertainty, I think in the economy, you know, if you just look at the headlines and see the tariffs and different things going on with immigration policy. And it, it's

Nathan Race: Pretty remarkable. You know, as we talked to our clients and these business owners and how they operate and you know, you'll see someone have to deal with the issue here or there but

Nathan Race: All in all, it's just been a really good, you know.

Jason Estes: I mean, the economy is strong.

Nathan Race: Run of multiple Quarters here where we operate? I mean the the economy is strong.

Nathan Race: Great, that's helpful. And Tom, I'll be sure to set a low core margin bar for you in the future. Appreciate it. You know, we appreciate it, Nate. You know, it's easier to meet low expectations, you know that. Indeed, thanks guys.

Speaker Change: Okay, great, that's helpful. And um Tom I'll be sure to set a low core margin bar for you in the future. Appreciate it.

Speaker Change: You know, we appreciate it. Nate, you know, we it's easier to meet low expectations, you know that

Speaker Change: indeed. Thanks guys.

Speaker Change: Thank you.

Unknown Executive: This will conclude our question and answer session.

Tom Travis: I would like to turn the conference back over to Tom Travis for any closing remarks. Well, we're again, we're delighted with the quarter with the first half of the year, we're cautiously excited about the rest of the year, just the great markets that we operate in, and the great team of bankers that we have. And we're just delighted to continue to provide shareholders with absolute top tier results.

Speaker Change: This will conclude our question and answer session. I would like to turn the conference back over to Tom Travis for any closing remarks.

Tom Travis: And, and we're going to Keep doing what we've always done, and so thank you, bye-bye.

Well, we're again we're delighted with the quarter with the first half of the Year. We're cautiously excited about the rest of the year. Just the great markets that we operate in and the great team of Bankers that we have. And we're just delighted to continue to provide shareholders with absolute top tier results. And uh, and uh, we're going to

Speaker Change: keep doing what we've always done and so thank you.

Bye, bye.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

Unknown Executive: You may now disconnect.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect