Q2 2025 Bridgewater Bancshares Inc Earnings Call
As Vince had been placed in listen only mode. After Bridgewater is opening remarks, there will be a question and answer session to ask a question. Please press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
Speaker Change: Please note that today's call is being recorded at this time I would like to introduce Justin Horstman, Vice President of Investor Relations to begin the conference call. Please go ahead.
Justin Horstman: Thank you Chad and good morning, everyone. Joining me on today's call are Jerry Bach, Chairman and Chief Executive Officer, Joe It's about E President and Chief Financial Officer, Nick placed Chief Banking Officer, and Jeff Shelburne, Chief Credit Officer in just a few moments we will provide an overview of our 2025 second quarter financial results, we will be referencing a slide.
Justin Horstman: Presentation that is available on the Investor Relations section of Bridgewater Web site investors that Bridgewater Bank and then dot com following our opening remarks, we will open the call for questions.
Chad: 2025 Second Quarter Earnings Call. My name is Chad and I will be your conference operator today. All participants have been placed in listen-only mode.
Good morning and welcome to the Bridgewater Bank shares 2025 second quarter earnings call.
Chad: My name is Chad and I will be your conference operator today.
Chad: After Bridgewater's opening remarks, there will be a question and answer session. To ask a question, please press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. Please note that today's call is being recorded.
Justin Horstman: During today's presentation, we may make projections or other forward looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. Please see the forward looking statement disclosure in the slide presentation, and our 2022nd quarter earnings release for more information about risks and uncertainty.
Justin Horstman: <unk>, which may affect us the information we will provide today is as of and for the quarter ended June 32025, and we undertake no duty to update the information.
Justin Horstman: At this time I would like to introduce Justin Horstman, Vice President of Investor Relations to begin the conference call. Please go ahead. Thank you, Chad, and good morning, everyone.
Chad: To ask a question. Please press star then 1 on your touchtone phone. If you're using a speaker-phone please pick up your handset before pressing the keys to withdraw your question. Please press star. Then 2 please note that today's call is being recorded at this time. I would like to introduce Justin Horsemen vice president of investor relations to begin the conference call. Please go ahead.
Justin Horstman: We may also disclose non-GAAP financial measures. During this call. We believe certain non-GAAP financial measures. In addition to the related GAAP measures provide meaningful information to investors to help them understand the company's operating performance and trends and to facilitate comparisons with the performance of our peers. We caution that these disclosures should not be viewed as a substitute for operating results.
Justin Horstman: Joining me on today's call are Jerry Baack, Chairman and Chief Executive Officer, Joe Chybowski, President and Chief Financial Officer, Nick Place, Chief Banking Officer, and Jeff Shellberg, Chief Credit Officer. In just a few moments, we will provide an overview of our 2025 second quarter financial results. We will be referencing a slide presentation that is available on the Investor Relations section of Bridgewater's website, investors.bridgewaterbankmn.com.
Justin Horstman: Terminal in accordance with GAAP.
Speaker Change: Please see our slide presentation in 2025 second quarter earnings release for reconciliations of non-GAAP disclosures to the comparable GAAP measures I would now like to turn the call over to Bridgewater, as chairman and CEO Jerry box.
Justin Horstman: Following our opening remarks, we will open the call for questions. During today's presentation, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. Please see the forward-looking statement disclosure in the slide presentation and our 2025 second quarter earnings release for more information about risks and uncertainties which may affect the company.
Justin Horsemen: Thank you, Chad and good morning everyone. Joining me on today's call are Jerry Bock chairman and chief executive officer. Joe chabowski president and Chief Financial Officer. Nick Place. Chief banking officer and Jeff shellberg Chief credit officer in just a few moments. We will provide an overview of our 2025 second quarter Financial results. We'll be referencing a slide presentation, that is available on the investor relations section of Bridgewater's website. Investors Bank mn.com.
Chad: Following our opening remarks, we will open the call for questions.
Jerry Box: Thank you Justin and thank you everyone for joining us. This morning, Bridgewater reported another strong quarter highlighted by impressive revenue and balance sheet growth trends, well controlled expenses and strong asset quality all driving the consistent tangible book value growth that we are known for.
Justin Horstman: The information we will provide today is as of and for the quarter ended June 30th, 2025, and we undertake no duty to update the information. We may also disclose non-GAAP financial measures during this call. We believe certain non-GAAP financial measures, in addition to the related GAAP measures, provide meaningful information to investors to help them understand the company's operating performance and trends, and to facilitate comparisons with the performance of our peers. We caution that these disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP. Please see our slide presentation and 2025 second quarter earnings release for reconciliations of non-GAAP disclosures to the comparable GAAP.
Chad: During today's presentation, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results May differ materially. Please see the forward-looking statement disclosure in the slide presentation, and our 2025 second quarter earnings release for more information about risks and uncertainties, which may affect us
Jerry Box: We have been very pleased with the revenue growth trends, we have seen over the past several quarters and especially here in the second quarter as expected our loan portfolio continues to reprice higher in the current rate environment, which helped net interest margin expand by 11 basis points.
Chad: The information we will provide today is as of and for the quarter ended, June 30th 2025 and we undertake no duty to update the information.
Jerry Box: Meanwhile, the momentum we have seen in core deposit growth over the past year has allowed us to ramp up loan growth to more normalized levels, including a 12, 5% annualized.
Jerry Box: Right in the second quarter, we continue to see opportunities across CRE multifamily C&I and construction.
Chad: We may also disclose non-gaap Financial measures during this call. We Believe certain non-gaap Financial measures in addition to the related Gap measures, provide meaningful information to investors to help them understand the company's operating performance and Trends. And to facilitate comparisons with the performance of our peers. We caution that these disclosures should not be viewed as a substitute for operating results. Determined in accordance with gaap.
Jerry Baack: I would now like to turn the call over to Bridgewater's Chairman and CEO, Jerry Baack. Thank you, Justin, and thank you, everyone, for joining us this morning. Bridgewater reported another strong quarter highlighted by impressive revenue and balance sheet growth trends, well-controlled expenses and strong asset quality, all driving the consistent, tangible book value growth that we are known for. We have been very pleased with the revenue growth trends we have seen over the past several quarters, and especially here in the second quarter. As expected, our loan portfolio continues to reprice higher in the current rate environment, which helped net interest margin expand by 11 basis points.
Jerry Box: As a result net interest income grew $2 2 million during the quarter.
Chad: Please see our slide presentation in 2025 second quarter earnings release for reconciliations of non-gaap disclosures to the comparable. Gaap measures. I would now like to turn the call over to Bridgewater's chairman and CEO Jerry bock.
But it wasn't just net interest income that drove total revenue growth in fact, we generated record fee income even when excluding the gain on sale of securities and plug prepayment income both of which were onetime in nature.
Jerry Bock: Thank you, Justin. And thank you everyone for joining us this morning.
Jerry Box: We brought in nearly $1 million of swap fee income during the quarter and saw over $200000 of investment advisory fees related to the platform. We acquired from first Minnetonka Citibank.
Jerry Bock: Bridgewater reported another strong quarter highlighted by impressive revenue, and balance sheet growth Trends, well-controlled expenses and strong asset quality, all driving the consistent tangible Book, value growth that we are known for
Jerry Box: This growth in fee income has allowed us to enhance our overall revenue diversification.
Jerry Box: Asset quality remains strong as we saw another quarter with no net charge offs, while nonperforming assets remained steady at 0.19% about half of peer levels.
Jerry Baack: Meanwhile, the momentum we have seen in core deposit growth over the past year has allowed us to ramp up loan growth to more normalized levels, including a 12.5% annualized rate in the second quarter. We continue to see opportunities across CRE, multifamily, C&I and construction. As a result, net interest income grew $2.2 million during the quarter. But it wasn't just net interest income that drove total revenue growth. In fact, we generated record fee income, even when excluding gain-on-sale securities and flub prepayment income, both of which were one-time in nature. We brought in nearly $1,000,000 of swap fee income during the quarter, and saw over $200,000 of investment advisory fees related to the platform we acquired from First Minnetonka City Bank.
Jerry Bock: We have been very pleased with the revenue growth Trends. We have seen over the past several quarters and especially here in the second quarter as expected our loan portfolio, continues to reprice higher in the current rate environment, which helped net interest margin expand by 11 basis points.
Jerry Box: We didn't see a modest uptick in classified loans, which Jeff will talk more about in a few minutes, but we remain very pleased with the overall quality of our loan portfolio, which has a long track record of being among the best in the industry.
Jerry Bock: Meanwhile, the momentum we have seen in court deposit girls over the past year, has allowed us to ramp up loan growth to more normalized levels, including a 12 and a half percent annualized.
Jerry Bock: Rate in the second quarter.
Jerry Box: When we pull all of these results together, we produced another quarter of tangible book value per share growth as you can see on slide four.
Jerry Bock: We continue to see opportunities across CRA multifamily, cni and construction.
Jerry Bock: As a result net interest income grew 2.2 million during the quarter.
Jerry Box: After a we're a rare quarterly decline in the fourth quarter of 24 due to our acquisition of first Minnetonka Citibank tangible book value per share has resumed its consistent growth trend in 2025 up nearly 11% annualized year to date.
Jerry Bock: But it wasn't just that interest income that drove total revenue growth. In fact we generated record fee income even when excluding gain on sale of Securities and flood prepayment income both of which were 1-time in nature.
Jerry Box: In addition, we opportunistically repurchased $1 6 million of common stock early in the second quarter.
Jerry Baack: This growth in fee income has allowed us to enhance our overall revenue diversification. Asset quality remained strong as we saw another quarter with no net charge-offs, while non-performing assets remained steady at 0.19%, about half of peer levels. We did see a modest uptick in classified loans, which Jeff will talk more about in a few minutes, but we remain very pleased with the overall quality of our loan portfolio, which has a long track record of being among the best in the industry. When we pull all of these results together, we produce another quarter of tangible book value per share growth, as you can see on slide four.
Jerry Bock: We brought in nearly a million dollars of swap fee income during the quarter and saw over $200,000 in investment advisory fees related to the platform. We acquired from first minute of Toca City Bank,
Speaker Change: Before I turn it over to Joel I wanted to take a moment to talk about a few other initiatives we have going on.
Jerry Bock: this growth in the income has allowed us to enhance our overall Revenue diversification.
Speaker Change: First market disruption in the twin cities has returned following the old National's recent.
Speaker Change: Acquisition of Brummer Bank.
Speaker Change: Historically this type of M&A disruption has been a significant contributor to Bridgewater is growth both through talent and client acquisition. We don't expect this wave to be any different we are actively having conversations and marketing the bank to ensure we are viewed as a bank of choice for those looking to continue banking law.
Speaker Change: Asset quality remains strong. As we saw another quarter with no net charge offs, while non-performing assets remain steady at 0.19% about half of peer levels. We did see a modest uptick in classified loans which Jeff will talk more about in a few minutes. But we remain very pleased with the overall quality of our loan portfolio which has a long track record of being among the best in the industry.
Speaker Change: <unk>.
Jerry Baack: After a rare quarterly decline in the fourth quarter of 24 due to our acquisition of First Minnetonka City Bank, tangible book value per share has resumed its consistent growth trend in 2025, up nearly 11% annualized year to date. In addition, we opportunistically repurchased $1.6 million of common stock early in the second quarter.
Speaker Change: We have already seen solid traction in this area.
Speaker Change: We have two other long term initiatives that we expect to complete in the third quarter.
Speaker Change: The first is the rollout of our enhanced retail and small business online banking platform.
Speaker Change: The second is a systems conversion of our first Minnetonka Citibank acquisition, which is right on track.
Speaker Change: Line in the fourth quarter of 24, due to our acquisition of first minute Toca City Bank tangible book. Value per share has resumed its consistent growth Trend in, 2025, up, nearly 11% annualized, year to date.
Speaker Change: It's also worth mentioning the strong deposit retention, we have seen as part of the acquisition as current balances remained within 3% of acquired balances.
Speaker Change: In addition, we opportunistically repurchase 1.6 million of common stock early in the second quarter.
Jerry Baack: Before I turn it over to Joel, I want to take a moment to talk about a few other initiatives we have going on. First, market disruption in the Twin Cities has returned following Old National's recent acquisition of Bremer Bank. Historically, this type of M&A disruption has been a significant contributor to Bridgewater's growth, both through talent and client acquisition. We don't expect this wave to be any different. We are actively having conversations and marketing the bank to ensure we are viewed as a bank of choice for those looking to continue banking local. We have already seen solid traction in this area.
Speaker Change: Before I turn it over to Joel, I want to take a moment to talk about a few other initiatives, we have going on.
Speaker Change: I appreciate it and the various teams across the bank that have been working diligently to get these projects to the finish line.
Speaker Change: First Market disruption in the Twin Cities has returned following Old Nationals, recent acquisition of Bremer Bank.
Speaker Change: Lastly, one of our biggest differentiators for Bridgewater is our unconventional culture, while I often don't feel like our culture gets enough credit for the impact that has on the overall success of our business. We were pleased to be again recognized as a 2025 top workplace by the Star Tribune.
Speaker Change: Historically, this type of m&a, disruption has been a significant contributor to Bridgewater's growth, both through talent and client acquisition.
Joe: With that I'll turn it over to Joe.
Joe: Thank you Gerry slide five highlights the strong noninterest income growth and net interest margin expansion trends, we have seen over the past several quarters. This includes 38 basis points of margin expansion since the third quarter of 2024 after.
Speaker Change: We don't expect this wave to be any different. We are actively having conversations and marketing. The bank to ensure we are viewed as a bank of choice. For those looking to continue banking local, we have already seen solid Traction in this area.
Jerry Baack: We have two other long-term initiatives that we expect to complete in the third quarter. The first is the rollout of our enhanced retail and small business online banking platform. The second is a systems conversion of our first Minnetonka Citibank acquisition, which is right on track. It's also worth mentioning the strong deposit retention we have seen as part of the acquisition, as current balances remain within 3% of acquired balance. I'm so appreciative to the various teams across the bank that have been working diligently to get these projects to the finish.
Joe: After net interest margin increased by 19 basis points in the first quarter, our expectation was that the pace of expansion would begin to slow as we got further away from the rate cuts late in 2024. This is exactly what we saw in the second quarter margin expanded 11 basis points to $2 62 knots.
Speaker Change: We have 2 other long-term initiatives that we expect to complete in the third quarter. The first is the rollout of our enhanced retail and Small Business Online Banking platform.
Speaker Change: The second is the systems conversion of our first manataka City Bank acquisition, which is right on track.
Speaker Change: it's also worth mentioning the strong deposit retention, we have seen as part of the acquisition, as current balances remain within 3% of acquired balances
Joe: Not surprisingly, we saw predominantly fixed rate loan portfolio continue to reprice higher in the current environment, while our deposit costs began to stabilize.
Speaker Change: I'm so appreciative to the various teams across the bank that have been working diligently to get these projects to the finish line.
Jerry Baack: Lastly, one of our biggest differentiators for Bridgewater is our unconventional culture. While I often don't feel like our culture gets enough credit for the impact it has on the overall success of our business, we were pleased to be again recognized as a 2025 Top Workplace by the Star Tribune.
Joe: In addition loan fees increased this quarter as payoffs ticked up.
Joe: We also saw continued we also continued to have some benefit from accretion, which contributed five basis points to the margin in the second quarter down from eight basis points last quarter.
Joe: Looking ahead, our portfolio is positioned to see ongoing net interest margin expansion in future quarters due to continued loan portfolio repricing. However.
Joseph Chybowski: With that, I'll turn it over to Joe. Thank you, Jerry. Slide five highlights the strong net interest income growth and net interest margin expansion trends we have seen over the past several quarters. This includes 38 basis points of margin expansion since the third quarter of 2024. After net interest margin increased by 19 basis points in the first quarter, our expectation was that the pace of expansion would begin to slow as we got further away from the rate cuts late in 2024. This is exactly what we saw as the second quarter margin expanded 11 basis points to 262.
Speaker Change: Lastly, 1 of our biggest differentiators for Bridgewater is our unconventional culture. While I often don't feel like our culture gets enough credit for the impact, it has on the overall success of our business, we were pleased to be again recognized as a 2025 top workplace by the Star Tribune.
Joe Chabowski: With that, I'll turn it over to Joe.
However, we expect only slight margin expansion in the third quarter due to a couple of specific headwinds.
Joe: First is the $80 million of subordinated debt at seven and five eights, we issued in June, which we used to redeem $50 million of outstanding sub debt at five in a quarter.
Joe Chabowski: Thank you, Jerry slide 5, highlights the Strong, net interest income growth and net interest margin expansion Trends. We have seen over the past several quarters. This includes 38 basis points of margin expansion since the third quarter of 2024
Joe: We expect this tradeoff to create a seven basis point net drag on margin in the third quarter.
Joe: Keep in mind that if we had left the outstanding sub debt roll it would've reprice to well over 9% in July so we feel good about the earnings impact of new issuance and the enhanced capital position.
Joseph Chybowski: Not surprisingly, we saw our predominantly fixed-rate loan portfolio continue to reprice higher in the current environment while our deposit costs began to stabilize. In addition, loan fees increased this quarter as payoffs ticked up. We also continue to have some benefit from accretion, which contributed five basis points to the margin in the second quarter, down from eight basis points last quarter. Looking ahead, our portfolio is positioned to see ongoing net interest margin expansion in future quarters due to continued loan portfolio reprices. However, we expect only slight margin expansion in the third quarter due to a couple of specific headwinds.
Joe Chabowski: After 9 interest margin increased by 19 basis points in the first quarter. Our expectation was at the pace of expansion would begin to slow. As we got further away from the rate Cuts late in 2024, this is exactly what we saw. As the second quarter margin expanded 11 basis points to 262.
Joe Chabowski: Not surprisingly. We saw our predominantly fixed rate loan portfolio, continue to repricer in the current environment. While our deposit costs began to stabilize
Joe: The second headwind is that we expect the accretion benefit to continue to diminish going forward.
Joe Chabowski: in addition loan fees increased this quarter as payoffs ticked up.
Joe: As a result, we could see net interest margin up slightly in the third quarter with more expansion resuming in the fourth quarter dependent on the interest rate environment.
Joe: Any future rate cuts would certainly be a net benefit to margin.
Joe Chabowski: We also saw continued or we also continue to have some benefit from accretion which contributed 5 basis points to the margin in the second quarter down from 8 basis points, last quarter,
Joe: Overall, we've been pleased with the net interest income growth, we have seen in recent quarters with our margin outlook and strong loan pipelines. We believe we can continue this momentum going forward.
Joe Chabowski: Looking ahead our portfolio is positioned to see ongoing net interest, margin expansion in future, quarters due to continued loan, portfolio repricing.
Joe: Turning to slide six you can see the impact of the loan repricing I mentioned is the portfolio loan yield increased 13 basis points to $5 74 in the second quarter with.
Joe Chabowski: However, we expect only slight margin expansion in the third quarter due to a couple of specific headwinds.
Joseph Chybowski: First is the $80 million of subordinated debt at seven and five-eighths we issued in June, which we used to redeem $50 million of outstanding sub-debt at five and a quarter. We expect this trade-off to create a seven-basis point net drag-on margin in the third quarter. Keep in mind that if we had let the outstanding sub-debt roll, it would have repriced to well over 9% in July, so we feel good about the earnings impact of new issuance and the enhanced capital position. The second headwind is that we expect the accretion benefit to continue to diminish going forward.
Joe: With $590 million of fixed rate loans scheduled to mature over the next 12 months and a weighted average yield of $5 65, and another $141 million of adjustable rate loans repricing or maturing at $4 43, we still have more loan repricing upside ahead of us as new originations in the second quarter were in the mid to high.
Joe Chabowski: First is the eighty million dollars of subordinated debt at 7 and 58. We issued in June, which we use to redeem 50 million of outstanding sub debt at 5 and a quarter.
Joe Chabowski: We expect this trade-off to create a 7 basis point that drag on margin in the third quarter.
Joe Chabowski: Keep in mind, that, that if we had let the outstanding subnet roll, it would have repriced to well, over 9% in July. So, we feel good about the earnings impact of new issuance and the enhanced Capital position.
Joe: Upper sixes.
Joe: Deposit costs on the other hand, our stabilizing down just two basis points in the second quarter. We would expect to see continued stabilization absent additional rate cuts. If we do get rate cuts. Later this year, we have $1 6 billion of funding tied to short term rates, including $1 3 billion of immediately adjustable deposits.
Joseph Chybowski: As a result, we could see net interest margin up slightly in the third quarter, with more expansion resuming in the fourth quarter, dependent on the interest rate environment. Any future rate cuts would certainly be a net benefit to March. Overall, we have been pleased with the net interest income growth we have seen in recent quarters.
Joe Chabowski: The second headwind is that we expect the accretion benefit to continue to diminish going forward.
Joe Chabowski: As a result, we could see net interest margin up slightly in the third quarter with more expansion, resuming in the fourth quarter, dependent on the interest rate environment.
Joe Chabowski: Any future rate Cuts would certainly be a net benefit to margin.
Joe: It should allow deposit costs to decline further.
Joseph Chybowski: With our margin outlook and strong loan pipelines, we believe we can continue this momentum going forward. Turning to slide 6, you can see the impact of the loan repricing I mentioned as the portfolio loan yield increased 13 basis points to 574 in the second quarter. With $590 million of fixed-rate loans scheduled to mature over the next 12 months at a weighted average yield of $565 million, and another $141 million of adjustable-rate loans repricing or maturing at $443 million, we still have more loan repricing upside ahead of us, as new originations in the second quarter were in the mid-to-upper 60s.
I also wanted to mention that the size of our securities portfolio decreased in the second quarter as we sold $58 $5 million of securities from the first Minnetonka Citibank portfolio, we acquired last year, taking a gain of 474000.
Joe Chabowski: Overall, we have been pleased with the net interest income growth. We have seen in recent quarters with our margin Outlook and strong loan pipelines. We believe we can continue this momentum going forward.
Joe Chabowski: Turning to slide 6, you could see the impact of the loan repricing. I mentioned as the portfolio loan yield increased 13, basis points to 574 in the second quarter.
Joe: When we announced the acquisition last August we mentioned the balance sheet Optionality. It created selling a portion of the securities portfolio was one of our options and we are pleased with the execution.
Joe: Turning to slide seven you can see that profitability trends continued to increase primarily due to strong revenue growth.
Joe: In addition to net interest income we have also seen meaningful growth in.
Joe Chabowski: With 590 million of fixed rate loans scheduled to mature over the next 12 months at a weighted average yield of 565 and another 141 million of adjustable rate, loans repricing or maturing at 443. We still have more loan repricing. Upside ahead of us as new originations. In the second quarter were in the mid to Upper sixes.
Joseph Chybowski: The deposit costs, on the other hand, are stabilizing, down just two basis points in the second quarter. We would expect to see continued stabilization absent additional rate cuts. If we do get rate cuts later this year, we have $1.6 billion of funding tied to short-term rates, including $1.3 billion of immediately adjustable deposits that should allow deposit costs to decline further. I also wanted to mention that the size of our securities portfolio decreased in the second quarter as we sold $58.5 million of securities from the first Minnetonka Citibank portfolio we acquired last year, taking a gain of $474,000.
Noninterest income, which has historically made up only about 5% of our revenue.
Joe Chabowski: The deposit costs. On the other hand are stabilizing down, just 2 basis points in the second quarter.
Joe: Even when backing out the 474000 securities gain and 301000 of <unk> prepayment income noninterest income increased 773000 or 37% during the quarter.
Joe: This was primarily driven by 938000 of swap fee income as our bankers have begun to more actively offer the swap product to clients. We have now generated swap fee income each of the past four quarters.
Joe Chabowski: If you do get ray Cuts later this year, we have 1.6 billion of funding tied to short-term rates, including 1.3 billion of immediately adjustable deposits, that should allow deposit costs to decline further.
Joe: While these fees have been lumpy, we expect to see additional swap fees going forward.
Joseph Chybowski: When we announced the acquisition last August, we mentioned the balance sheet optionality it created. Selling a portion of the securities portfolio was one of our options, and we are pleased with the execution. Turning to slide 7, you can see that profitability trends continue to increase, primarily due to strong revenue growth. In addition to net interest income, we have also seen meaningful growth in non-interest income, which has historically made up only about 5% of our revenue. Even when backing out the $474,000 securities gain and $301,000 of FHLB prepayment income, non-interest income increased $773,000, or 37% during the quarter.
Joe Chabowski: I also wanted to mention that the size of our Securities portfolio decreased in the second quarter as we sold 58.5 million of Securities from the first mitaka City Bank portfolio, we acquired last year, taking a gain of 474,000,
Joe: We also saw investment advisory fees, which came over in the first Minnetonka Citibank acquisition settle in around 200000 per quarter.
Joe: On slide eight noninterest expense remained well controlled and continued to track in line with our expectations salaries occupancy and technology expenses. All remained relatively flat in the second quarter. The majority of the linked quarter increase came from higher FDIC insurance costs charitable contributions and marketing.
Joe Chabowski: When we announced the acquisition last August, we mentioned the balance sheet, optionality it created selling a portion of the Securities. Portfolio, was 1 of our options and we are pleased with the execution
Joe Chabowski: Turning to slide 7. You can see that profitability Trends continue to increase primarily due to strong Revenue growth.
Joe Chabowski: in addition to net interest income, we have also also seen meaningful growth
Joe Chabowski: in non-interest income, which has historically made up only about 5% of our Revenue.
Joe: Expense.
Joe: The IC insurance cost returned to a more normalized level of 750000, which should be a good run rate in the near term.
Joe: We also had about 200000 of charitable contributions related to our partnership with the federal home loan Bank of des Moines to support affordable housing and community development efforts.
Joseph Chybowski: This was primarily driven by $938,000 of swap fee income, as our bankers have begun to more actively offer the swap product to clients. We have now generated swap fee income each of the past four quarters. While these fees have been lumpy, we expect to see additional swap fees going forward. We also saw investment advisory fees, which came over in the first Minnetonka Citibank Act. settle in around $200,000 per quarter. On slide 8, non-interest expense remained well-controlled and continued to track in line with our expectations. Salaries, occupancy, and technology expenses all remain relatively flat in the second quarter.
Joe Chabowski: Even when backing out the 474,000 Securities, gained and 301,000 of fhlb prepayment income non-interest income, increased 773,000, or 37% during the quarter.
Joe: Finally, we would expect marketing expenses to remain elevated as we have initiatives in place to take advantage of the M&A disruption in the twin cities.
Joe Chabowski: This was primarily driven by 938,000 of swap fee income as our Bankers have begun to more actively offer the swap product to clients.
Joe Chabowski: We have now generated swap fee income. Each of the past 4 quarters.
Joe: Overall with well controlled expenses and strong revenue growth, we've been able to steadily drive our adjusted efficiency ratio back into the low <unk> at 51, 5%.
Joe Chabowski: While these fees have been lumpy, we expect to see additional swap fees going forward.
Joe Chabowski: We also saw investment advisory fees, which came over in the first mitaka City Bank acquisition settle in around 200,000 per quarter.
Nick: With that I'll turn it over to Nick.
Nick: Thanks, Joe Slide nine highlights the continued strong run of core organic deposit growth, we have seen over the past year.
Joe Chabowski: On Friday, non-interest expense remained well controlled and continue to track in line with our expectations.
Speaker Change: During the second quarter total deposits increased $74 million or 7% annualized while core deposits increased $16 million or 2% annualized we were pleased with the continued growth in the second quarter, which is typically seasonally low due to tax season and industry cyclicality.
Joseph Chybowski: The majority of the linked quarter increase came from higher FDIC insurance costs, charitable contributions, and marketing expenses. FDIC insurance costs returned to a more normalized level of $750,000, which should be a good run rate in the near term. We also had about $200,000 of charitable contributions related to our partnership with the Federal Home Loan Bank of Des Moines to support affordable housing and community development efforts. Finally, we would expect market expenses to remain elevated as we have initiatives in place to take advantage of the M&A disruption in the Twin Cities.
Joe Chabowski: Salaries occupancy, and Technology expenses all remain relatively flat in the second quarter. The majority of the link quarter increase came from higher FDIC Insurance costs, charitable contributions and marketing expense.
Speaker Change: While we always remind you that our core deposit growth is not always linear from quarter to quarter, given the nature of our deposit base. We have seen a nice extended period of relatively linear growth, which is a credit to the hard work of our teams and the strong Bridgewater brand in the market. We are encouraged by our strong deposit pipeline, especially with the additional opportunities related to the <unk>.
Joe Chabowski: FDIC Insurance costs returned to a more normalized level of 750,000 which should be a good run rate in the near term.
Joe Chabowski: We also had about 200,000 of charitable contributions related to our partnership. With the federal Home Loan Bank of De Moine to support affordable Housing and Community Development efforts,
Joseph Chybowski: Overall, with well-controlled expenses and strong revenue growth, we have been able to steadily drive our adjusted efficiency ratio back into the low 50s at 51.5%.
Speaker Change: Any disruption in the twin cities.
Joe Chabowski: Finally, we would expect marketing expenses to remain elevated. As we have initiatives in place to take advantage of the m&a, disruption in the Twin Cities.
Speaker Change: Turning to the loan portfolio on slide 10, we saw another quarter of robust growth with balances up 12, 5% annualized and 14, 5% year to date the pace. It has exceeded our expectations for the mid to high single digits for 2025.
Nicholas Place: With that, I'll turn it over to Nick. Thanks Joe. Slide 9 highlights the continued strong run of core organic deposit growth we have seen over the past year. During the second quarter, total deposits increased $74 million, or 7% annualized, while core deposits increased $16 million, or 2% annualized. We were pleased with the continued growth in the second quarter, which is typically seasonally low due to tax season and industry cyclicality. While we always remind you that our core deposit growth is not always linear from quarter to quarter, given the nature of our deposit base, we have seen a nice extended period of relatively linear growth, which is a credit to the hard work of our teams and the strong Bridgewater brand in the market.
Joe Chabowski: Overall with well-controlled expenses and strong Revenue growth, we have been able to steadily Drive our adjusted efficiency ratio back into the low 50s at 51.5%.
Speaker Change: This has really been a function of the strong and consistent run of core deposit growth I, just mentioned, which is simply allowed us to be more offensive minded on the loan front and.
Speaker Change: In fact, even with this level of loan growth our loan to deposit ratio remains in the lower half of our target range at 97, 9%.
Joe Chabowski: It's increased 16 million or 2% annualized.
Speaker Change: One thing that has always been a differentiator for Bridgewater is our ability to generate robust loan growth when we want it.
Joe Chabowski: We were pleased with the continued growth in the second quarter which is typically seasonally low due to tax season in industry cyclicality.
Speaker Change: Historically periods of slower loan growth, such as 2023 and 2024.
Speaker Change: We're more a result of slower funding growth and a lack of lending opportunities with.
Speaker Change: With strong core deposit trends in our loan pipeline that remains near three year high we are optimistic about our ability to continue to produce strong loan growth in the near term.
Nicholas Place: We are encouraged by our strong deposit pipeline, especially with the additional opportunities related to the M&A disruption in the Twin Cities.
Joe Chabowski: While we always remind you, that our core deposit growth is not always linear from quarter to quarter given the nature of our deposit base. We have seen a nice extended period of relatively linear growth, which is a credit to the hard work of our teams and the strong Bridgewater brand in the market.
Speaker Change: Beyond growth going market disruption from old National's acquisition of Brammer Bank continues to create additional growth opportunities for us. In addition, we have not seen a material impact from tariffs on loan demand. So far something we were more cautious about a few months ago.
Joe Chabowski: We are encouraged by our strong deposit pipeline specialist with the additional opportunities related to the m&a, disruption in the Twin Cities.
Nicholas Place: Turning to the loan portfolio on slide 10, we saw another quarter of robust growth with balances up 12.5% annualized and 14.5% year-to-date, a pace that has exceeded our expectations for the mid-to-high single digits for 2025. This has really been a function of the strong and consistent run of core deposit growth I just mentioned, which has simply allowed us to be more offensive-minded on the loan front. In fact, even with this level of loan growth, our loan-to-deposit ratio remains in the lower half of our target range at 97.9%. One thing that has always been a differentiator for Bridgewater is our ability to generate robust loan growth when we want it.
Speaker Change: On the other hand, the market has become more competitive since last quarter with spreads getting tighter.
Joe Chabowski: Turn into the loan portfolio on slide 10. We saw another quarter of robust growth with balances up 12.5%, annualized, and 14.5% year to date a pace that has exceeded our expectations for the mid to high single digits for 2025.
Speaker Change: Given our growth engine, we will likely be more selective going forward as we don't need to stretch on price in order to grow.
Joe Chabowski: This is really been a function of the strong and consistent run of core deposit growth. I just mentioned which is simply allowed us to be more offensive. Minded on the loan front.
Speaker Change: Looking ahead, while we were able to outperform our growth expectations in the first half of the year. We believe mid to high single digit growth remains a good target for us in the back half of the year. This will of course be dependent on the pace of core deposit growth as well as loan payoffs, which can be difficult to predict.
Joe Chabowski: In fact, even with this level of loan growth, our loaner deposit ratio remains in the lower half of our target range at 97.9%.
Joe Chabowski: 1 thing that has always been a differentiator for Bridgewater is our ability to generate robust loan growth when we want it.
Nicholas Place: Historically, periods of slower loan growth, such as 2023 and 2024, were more a result of slower funding growth than a lack of lending opportunities. We are optimistic about our ability to continue to produce strong loan growth in the near term. The ongoing market disruption from Old National's acquisition of Bremer Bank continues to create additional growth opportunities for us. In addition, we have not seen a material impact from tariffs on loan demand so far, something we were more cautious about a few months ago. On the other hand, the market has become more competitive since last quarter with spreads getting tighter.
Speaker Change: Slide 11 shows how our strong loan pipeline has translated into elevated levels of new originations over the past few quarters, including second quarter originations more than doubling from a year ago.
Joe Chabowski: Historically periods of slower, long growth, such as 2023 and 2024.
Joe Chabowski: Were more a result of slower funding growth than a lack of lending opportunities.
Speaker Change: Loan payoff activity on the other hand has fluctuated quite a bit over the past year.
Joe Chabowski: With strong core deposit, Trends and a loan pipeline that remains near a 3-year High. We Are optimistic about our ability to continue to produce. Strong loan growth in the near term.
Speaker Change: We expect payoffs to have an impact one way or the other on the overall pace of loan growth going forward.
Joe Chabowski: The ongoing Market disruption from Old Nationals, acquisition of Bremer Bank, continues to create additional growth opportunities for us.
Speaker Change: Turning to slide 12, the majority of the loan growth in the second quarter was driven by non owner occupied CRE, which is spread across various property types, including senior housing industrial and retail.
in addition, we have not seen a material impact from tariffs on loan demand so far something we we were more cautious about a few months ago
Speaker Change: We also saw continued growth in multifamily in C&I.
Nicholas Place: Given our growth engine, we will likely be more selective going forward as we don't need to stretch on price in order to grow.
Joe Chabowski: On the other hand, the market has become more competitive since last quarter with spreads getting tighter.
Speaker Change: Last quarter, we mentioned our increased focus on the affordable housing vertical we continue to expect this to be a driver of growth going forward.
Given our growth engine. We will likely be more selective going forward as we don't need to stretch on price in order to grow.
Nicholas Place: Looking ahead, while we were able to outperform our growth expectations in the first half of the year, we believe mid-to-high single-digit growth remains a good target for us in the back half. This will of course be dependent on the pace of core deposit growth as well as loan payoffs, which can be difficult to predict.
Joe Chabowski: Looking ahead.
Speaker Change: Construction is another area, where we could have additional balance sheet growth in future quarters. We started seeing an increase in new construction projects in the back half of 2024 and these projects are now starting to fight.
Speaker Change: Overall, we remain very comfortable with the mix of the loan portfolio, especially given our expertise in the multifamily space.
Joe Chabowski: While we were able to outperform our growth expectations in the first half of the year, we believe mid to high single-digit growth remains a good Target for us. In the back half of the Year. This will, of course be dependent on the pace of core deposit growth as well as loan payoffs, which can be difficult to predict.
Nicholas Place: Slide 11 shows how our strong loan pipeline has translated into elevated levels of new originations over the past few quarters, including second quarter originations more than doubling from a year ago. Loan payoff activity, on the other hand, has fluctuated quite a bit over the past year. We expect payoffs to have an impact, one way or the other, on the overall pace of loan growth going forward. Turning to slide 12, the majority of the loan growth in the second quarter was driven by non-owner occupied CRE, which is spread across various property types, including senior housing, industrial, and retail.
Speaker Change: With that I'll turn it over to Jeff.
Jeff Shelburne: Thanks, Nick Slide 13 provides a closer look at our multifamily and office exposure.
Slide 11 shows how our strong loan pipeline has translated into elevated levels of new originations over the past few quarters, including second quarter originations more than doubling from a year ago.
Jeff Shelburne: The positive multifamily trends that we've talked about over the past several quarters have continued throughout 2025.
Joe Chabowski: Loan payoff. Activity on the other hand has fluctuated quite a bit over the past year.
Jeff Shelburne: These trends include lower vacancy rates, which recently dropped under six 5%.
Joe Chabowski: We expect payoff to have an impact 1 way or the other on the overall pace of loan growth going forward.
Jeff Shelburne: <unk> absorption and fewer deliveries all of which suggests a favorable outlook for higher levels of net operating income.
Jeff Shelburne: In addition, we have a strong track record in this space with only $62000 of net charge offs at multifamily since the bank was formed in 2005.
Nicholas Place: We also saw continued growth in multifamily and C&I. Last quarter, we mentioned our increased focus on the affordable housing vertical. We continue to expect this to be a driver of growth going forward. Construction is another area where we could have additional balance sheet growth in future quarters. We started seeing an increase in new construction projects in the back half of 2024, and these projects are now starting to fund. Overall, we remain very comfortable with the mix of the loan portfolio, especially given our expertise in the multifamily space.
Joe Chabowski: Turning to slide 12, the majority of the loan growth in the second quarter was driven by non-owner occupied CRA which is spread across various property types, including senior housing, industrial, and Retail.
Joe Chabowski: We also saw continued growth in multi family in cni.
Vic: As Vic mentioned, we continued to expand our affordable housing both locally and national basis.
Joe Chabowski: Last quarter, we mentioned our increased focus on the affordable housing growth. We continue to expect this to be a driver of growth going forward.
Vic: The portfolio has grown 15% over the past year to $581 million with 24% being located outside of Minnesota.
Joe Chabowski: Construction is another area where we could have additional balance sheet growth in future quarters. We started seeing an increase in new construction projects in the back half of 2024 and these projects are now starting to fund.
Vic: Our non owner occupied CRE office exposure remains limited at just 5% of total loans. This includes four central business District office loans, only one of which we have any concern about.
Jeffrey Shellberg: With that, I'll turn it over to Jeffrey. Thanks, Nick. Slide 13 provides a closer look at our multifamily and office exposure. The positive multifamily trends that we have talked about over the past several quarters have continued throughout 2025. These trends include lower vacancy rates, which recently dropped under 6.5 percent, strong absorption, and fewer deliveries, all of which suggest a favorable outlook for higher levels of net operating income. In addition, we have a strong track record in this space with only $62,000 of net charge offs at multifamily since the bank was formed in 2005. As Nick mentioned, we continue to expand our affordable housing, both locally and on a national basis.
Joe Chabowski: Overall we remain very comfortable with the mix of the loan portfolio. Especially given our expertise in the multi family space with that. I'll turn it over to Jeff.
Vic: This is a loan that we moved the substandard and non accrual in the first quarter due to vacancy issues caused by a major tenant not renewing its lease.
Vic: We continue.
Vic: We continue we expect to this to be a longer term workout and we have agreed to give the borrower more time to stabilize this property over.
Vic: <unk>, we feel good about our office portfolio.
Vic: Turning to slide 14, our overall credit profile remains very strong the provision for the quarter increased to $2 million, which was primarily growth driven but also included an additional specific reserve for the central business District office on that I previously mentioned.
Joe Chabowski: These Trends include lower vacancy rates which recently dropped under 6.5%, strong, absorption, and fewer. Deliveries, all of which suggests a favorable outlook for higher levels of net operating income.
Jeff Shellberg: In addition, we have a strong track record in this space with only 62,000 of net charge loss in multifamily. Since the bank was formed in 2005.
Vic: We remain well reserved at 135% of loans.
Jeff Shellberg: As Nick mentioned, we continue to expand our affordable housing, both locally and in a national basis.
Jeffrey Shellberg: The portfolio has grown 15% over the past year to $581 million, with 24% being located outside of Minnesota. Our non-owner-occupied CRE office exposure remains limited at just 5% of total loans. This includes four central business district office loans, only one of which we have any concern about. This is a loan that we moved to substandard and non-accrual in the first quarter due to vacancy issues caused by a major tenant not renewing its lease.
Vic: Nonperforming assets declined slightly to just 0.19% of total assets well below peer levels, but we also had another quarter of no net charge offs.
Jeff Shellberg: The portfolio has grown 15% over the past year to 581 million with 24%, being located outside of Minnesota.
Vic: While overall asset quality remained strong we did have some modest credit migration into watch special mention and substandard during the quarter as you can see on slide 15.
Jeff Shellberg: Our non-owner occupied CRA office, exposure remains Limited at just 5% of the total loans. This includes 4 Central business district office loans, only 1 of which we have any concern about
Vic: The increase in special mentioned was due to a multifamily property that is now under a letter of intent and moving towards the purchase agreement.
Jeffrey Shellberg: We continue. We continue, we expect this to be a longer term workout, and we have agreed to give the borrower more time to stabilize this property. Overall, we feel good about our office portfolio.
Jeff Shellberg: this is a loan that we moved to a substandard and non-accrual in the first quarter due to vacancy issues caused by a m, major tenant not renewing its lease.
Jeff Shellberg: We continue.
Vic: We expect this to be off the books by the end of the year with no loss to the bank.
Vic: The increase in substandard was due to one relationship consisting of a multifamily property and other smaller loans across various asset classes.
Jeff Shellberg: We continue, we expect to this to be a longer term workout and we have agreed to give the borrower more time to stabilize his property overall. We feel good about our office portfolio.
Jeffrey Shellberg: Turning to slide 14, our overall credit profile remains very strong. The provision for the quarter increased to $2 million, which was primarily growth-driven, but also included an additional specific reserve for the Central Business District office loan I previously mentioned. We remain well-reserved at 1.35% of loans. Non-performing assets declined slightly to just 0.19% of total assets, well below peer levels. But we also had another quarter of no net charge-offs.
Vic: Credit weaknesses in these relationships were identified through our risk management processes, and we are actively working with our clients on resolutions.
Vic: Importantly, we do not see these migrations of systemic credit issues as our overall portfolio was performing well in the multifamily sector continues to show favorable trends.
Jeff Shellberg: Turning the slide 14, our overall credit profile remains very strong. The provision for the quarter, increased to 2 million, which was primarily growth-driven but also included in additional specific reserved for the central business district office on our previously mentioned.
We remain. Well, reserved at 1.35% of loans.
Joel: Turn it back over to Joel.
Joel: Thanks, Jeff Slide 16 highlights our capital ratios, which held steady in the second quarter, including our CET, one ratio, which remained at 9.0% to 3%.
Jeffrey Shellberg: While overall asset quality remains strong, we did have some modest credit migration into watch, special mention, and substandard during the quarter, as you can see on slide 15. The increase in special mention was due to a multifamily property that is now under a letter of intent and moving towards a purchase agreement. We expect this to be off the books by the end of the year with no loss to the bank. The increase in substandard was due to one relationship consisting of a multifamily property and other smaller loans across various asset classes. Credit weaknesses in these relationships were identified through our risk management processes, and we are actively working with our clients on resolutions.
Joel: You can also see the impact of the refinance and upsize of our subordinated debt as total risk based capital increased 55 basis points.
Joel: During the quarter, we repurchased $1 6 million of common stock in April at an average price of $12 80.
Joel: We will continue to evaluate future repurchases based on a variety of factors, including valuation capital levels growth opportunities and other uses of capital.
Joel: As of quarter end, we still had $13 $1 million remaining under our current share repurchase authorization.
Joel: Our board has also extended the expiration date of our current share repurchase authorization from August 22025. So August 26, 2026 in the near term, we expect capital levels to hold relatively stable given earnings retention and our stronger growth outlook.
Jeffrey Shellberg: Importantly, we do not see these migrations as systemic credit issues as our overall portfolio is performing well and the multifamily sector continues to show favorable trends.
Joel: Turning to slide 17, I'll recap, our near term expectations when.
Jeffrey Shellberg: Thanks, Jeff. Slide 16 highlights our capital ratios, which held steady in the second quarter, including our CET1 ratio, which remained at 9.03%. You can also see the impact of the refinance and upsize of our subordinated debt as total risk-based capital increased 55 basis During the quarter, we repurchased $1.6 million of common stock in April at an average price of $1280.
Joel: While we saw stronger than expected loan growth in the first half of the year, we feel that mid to high single digit growth in the back half of the year remains a good run rate.
Joel: This is a function of our strong pipelines and opportunities we are seeing in the market. However, it will also be dependent on the pace of core deposit growth and our ability to remain within our target loan to deposit ratio range of 95 to 105.
Jeffrey Shellberg: We will continue to evaluate future repurchases based on a variety of factors including valuation, capital levels, growth opportunities, and other uses of capital. As of quarter end, we still have $13.1 million remaining under our current share repurchase authorization. Our board has also extended the expiration date of our current share repurchase authorization from August 20, 2025 to August 26, 2026.
Joel: We expect to see additional net interest margin expansion in future quarters due to the ongoing repricing of the loan portfolio, but likely only slight expansion in the third quarter due to the seven basis point net headwind related to the subordinated debt issuance if.
Joel: If we do get any rate cuts later this year, we would likely see additional margin expansion overall, we feel good about our ability to continue driving net interest income growth.
Jeffrey Shellberg: In the near term, we expect capital levels to hold relatively stable given earnings retention and our stronger growth outlook. Turning to slide 17, I'll recap our near-term expectations. While we saw stronger-than-expected loan growth in the first half of the year, we feel that mid-to-high single-digit growth in the back half of the year remains a good run rate. This is a function of our strong pipelines and opportunities we are seeing in the market. However, it will also be dependent on the pace of core deposit growth and our ability to remain within our target loan-to-deposit ratio range of 95 to 104.
Joel: From an expense standpoint, we remain on track for full year 2025, noninterest expense growth in the high teens, excluding merger related expenses.
Joel: As a reminder, this higher than normal pace in 2025 is to help support the larger asset base. Following the acquisition as well as some redundant expenses until we reach systems conversion in the third quarter we.
Joel: We also feel we are well reserved at current levels and would expect provisions remain dependent on the pace of loan growth in the overall asset quality of the portfolio.
Gerry: Now I'll turn it back over to Gerry.
Gerry: Thanks, Joe finishing up on slide 18, I want to provide a quick update of our 2025 strategic priorities.
Jeffrey Shellberg: We expect to see additional net interest margin expansion in future quarters due to the ongoing repricing of the loan portfolio, but likely only slight expansion in the third quarter due to the seven basis point net headwind related to the subordinated debt issue. If we do get any rate cuts later this year, we would likely see additional margin expansion. Overall, we feel good about our ability to continue driving net interest income growth.
Gerry: During the first half of the year, we have certainly returned to a more normalized level of loan growth as we put some of the strong core deposit growth to work, including the deposits from our recent acquisition.
Gerry: Gaining market share remains a focus and continued market disruption in the twin cities as an opportunity for us both from a client and talent standpoint.
Jeffrey Shellberg: From an expense standpoint, we remain on track for full year 2025, non-interest expense growth in the high teens, excluding merger-related expenses. As a reminder, this higher-than-normal pace in 2025 is to help support the larger asset base following the acquisition, as well as some redundant expenses until we reach systems conversion in the third quarter. We also feel we are well-reserved at current levels and would expect provision to remain dependent on the pace of loan growth and the overall asset quality of the portfolio.
Gerry: We have already started seeing some early wins on both fronts. We also continue to gain traction in the affordable housing and C&I spaces.
Gerry: Finally, our teams remain on track for two significant technology initiatives in the third quarter, including an upgraded retail and small business online banking platform and the systems conversion of our recent acquisition.
With that we'll open it up for questions.
Speaker Change: Thank you at this time, we will begin our question and answer session. As a reminder to ask a question. Please press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our.
Jerry Baack: I'll now turn it back over to Jerry. Thanks, Joe.
Jerry Baack: Finishing off on slide 18, I want to provide a quick update of our 2025 strategic priorities. During the first half of the year, we have certainly returned to a more normalized level of loan growth as we put some of the strong core deposit growth to work, including the deposits from our recent acquisition. Gaining market share remains a focus and continued market disruption in the Twin Cities is an opportunity for us, both from a client and talent standpoint. We have already started seeing some early wins on both fronts. We also continue to gain traction in the affordable housing and C&I space.
Gerry: Oster.
Gerry: And the first question will be from Jeff <unk> from D. A Davidson. Please go ahead.
Gerry: Thanks, Good morning, just a.
Gerry: Question on the margin.
Gerry: You guys have a June average.
Gerry: For the margin I know that we've got some headwinds in the third quarter, but it's always a good jump off point.
Jerry Baack: Finally, our teams remain on track for two significant technology initiatives in the third quarter, including an upgraded retail and small business online banking platform and the systems conversion of our recent equity.
Speaker Change: Yes, Jeff It was $2 65 Standalone in June.
Speaker Change: And Joe just.
Speaker Change: On the security sales could you remind us of the kind of.
Chad: With that, we'll open it up for questions. Thank you. At this time, we will begin our question and answer session. As a reminder, to ask a question, please press star, then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2.
Speaker Change: The rate that that was that relative to the.
Speaker Change: Securities portfolio.
Speaker Change: It'll right.
Speaker Change: Yeah, Yeah. So it was primarily treasuries and mortgage backed securities in the low fours.
Speaker Change: So obviously, we had marked that.
Chad: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Upon acquisition.
Speaker Change: Below the blended securities portfolio yield so I think we felt not only that but also just given.
Jeffrey Rulis: And the first question will be from Jeff Rulis from D.A. Davidson. Please go ahead. Thanks. Good morning. Just a question on the margin. Do you guys have a June average for for the margin. I know that we've got some headwinds in the third quarter, but it's always a good jump off point. Yeah, Jeff, it was $2.65 stand-alone in June. Thanks.
Speaker Change: To redeploy that into any sort of loan growth in the mid to high sixes definitely was a good trade.
Speaker Change: I think we had always planned on doing that.
Speaker Change: If the opportunity arose.
Speaker Change: And certainly that did and in early April with all the rate volatility.
Speaker Change: Gotcha and then.
Speaker Change: On the on the swap fees I know these are these.
Joseph Chybowski: And Joe, just on the security sale, could you remind us of the kind of the the rate that that was at relative to the securities portfolio, total rates. Yep, yeah, so it was primarily treasuries and mortgage backed securities in the low fours. So obviously, you know, we had marked that upon acquisition. So it's a, you know, below the blended securities portfolio yield. So I think we felt not only that, but also just given to redeploy that into any sort of loan growth in the mid to high sixes, you know, definitely was a good trade. And, you know, I think we had always planned on doing that if the opportunity arose.
Speaker Change: Seem like Theyre going to be lumpy.
Jeff Shellberg: On the security sale could you remind us of the kind of.
Speaker Change: But it does feel like you know.
Speaker Change: More of a recurring Lumpiness I guess is there.
Jeff Shellberg: The rates that that was that relative to the.
Speaker Change: Any season.
Jeff Shellberg: Securities portfolio total right.
Speaker Change: Seasonality.
Speaker Change: Do you expect by quarter with these and then.
Speaker Change: Yeah, Yeah. So it was primarily treasuries and mortgage backed securities in the low fours.
Speaker Change: I don't know if theres any kind of range bound expectations for for going forward other than maybe these might be more recurring or not.
Jeff Shellberg: So obviously you know we had marked that.
Jeff Shellberg: Upon acquisition.
Jeff Shellberg: It said.
Nick: Hey, Jeff This is Nick yes.
Jeff Shellberg: Below the blended securities portfolio yield. So I think we felt not only that but also just given to redeploy that into any sort of loan growth in the mid to high sixes definitely was a good trade and you know.
Jeff: Had a strategic focus internally too.
Jeff: Drive swaps as a tool that we're leveraging more as we originate.
Jeff: Loans to the balance sheet.
Jeff: We've trained staff.
Jeff Shellberg: I think we had always planned on doing that.
Jeff: We've put sort of incentive plans in place we've educated clients about it so.
Jeff Shellberg: If the opportunity arose.
Joseph Chybowski: And certainly that did in early April with all the rate volatility. Gotcha.
Jeff Shellberg: And certainly that did in in early April with with all the rate volatility.
Jeff: It's really difficult to predict.
Jeff: When those transactions will actually close with swaps on them. We had some that closed right at the end of the quarter, which could have easily slid into Q3.
Jeff Shellberg: Got you and then.
Nicholas Place: And then, on the swap fees, I know these seem like they're going to be lumpy, but it does feel like, you know, more of a recurring lumpiness. And I guess, is there, first, any seasonality that you expect by quarter with these? And then, I don't know if there's any kind of range-bound expectation for going forward, other than maybe these might be more recurring than not.
Jeff Shellberg: On the on the swap fees I know these.
Jeff Shellberg: Seem like Theyre going to be lumpy.
Jeff Shellberg: But it does feel like you know more of a recurring lumpiness I guess is there first any.
Jeff: So I.
Jeff: I think it should be a more consistent part of the of the business long term.
Jeff Shellberg: Seasonality.
Jeff: Quarter over quarter, though it's really hard to predict.
Jeff Shellberg: Do you expect by quarter with these and then.
Jeff: What that level should be.
Jeff: But we feel good about the continued momentum that we're having it isn't just one of our bankers. It's doing it I think it's really spread across a big chunk of our bankers. So.
Jeff Shellberg: I don't know if theres any kind of range bound expectation for for going forward other than maybe these might be more recurring than not.
Jeff: As we continue to have a pipeline that's strong I would expect that we're going to continue to use that as a tool.
Jeff Shellberg: Hey, Jeff This is Nick yeah.
Nicholas Place: Hey, Jeff, this is Nick. Yeah, I mean, we've we've had a strategic focus internally to you know, drive swaps as a tool that we're leveraging more as we originate, you know, loans to the balance sheet. You know, we've trained staff, you know, we've put sort of incentive plans in place, we've educated clients about it. So, you know, it's really difficult to predict when those transactions will actually close with swaps on them. We had some that closed, you know, right at the end of the quarter, which, you know, could have easily slid into Q3. So, you know, I think it should be a more consistent part of the of the business long term.
Jeff Shellberg: We've had a strategic focus internally too.
Jeff Shellberg: You know drive swaps as a tool that we're leveraging more as we originate.
Jeff: Not only from a noninterest income perspective, but from a.
Jeff: Margin sort of defensive perspective on increasing the volume of variable rate transactions on our balance sheet long term. So there's a lot of positives us doing it and I think we're as a team really committed to using that tool more going forward.
Jeff Shellberg: Loans to the balance sheet.
Jeff Shellberg: We've trained staff.
Jeff Shellberg: You know, we've put sort of incentive plans in place we've educated clients about it so.
Jeff Shellberg: It's really difficult to predict.
Jeff Shellberg: When those transactions will actually close with swaps on them. We had some that closed right at the end of the quarter, which could have easily slid into Q3.
Jeff: And maybe just the last one just the competitiveness in that.
Jeff: Line item.
Jeff: When you reach out to customers and you push it more.
Jeff: Facing competition kind of with that landscape like.
Jeff Shellberg: So.
Jeff Shellberg: I think it should be a more consistent part of the of the business long term.
Jeff: Yes, I mean, we've talked in prior quarters, I mean is a lot of the liquidity concerns.
Nicholas Place: You know, quarter over quarter, though, it's really hard to predict, you know, what that level should be, you know, but but we feel good about the continued momentum that we're having. It isn't just one of our bankers that's doing it. I think it's really spread across a big chunk of our bankers. So, you know, as we continue to have a pipeline that's strong, I'd expect that we're going to continue to use that as a tool, you know, not only from a non-interest income perspective, but but from a, you know, margin sort of defensive perspective on increasing the volume of variable rate transactions on our balance sheet long term.
Jeff Shellberg: Quarter over quarter, though it's really hard to predict.
Jeff Shellberg: What that level should be.
Jeff: Banking spaces.
Jeff Shellberg: But we feel good about the continued momentum that we're having it isn't just one of our bankers. It's doing it I think it's really spread across a big chunk of our bankers. So.
Jeff: Somewhat subsided over the last 12 six to 12 months, we've seen more banks that were on the sidelines kind of get back in the market. So.
Jeff: That has driven.
Jeff: Spreads to tighten a bit here I think we mentioned it in the prepared remarks, our pipeline is.
Jeff Shellberg: As we continue to have a pipeline that's strong I would expect that we're going to continue to use that as a tool.
Jeff: Really at a at a three year high we feel really good about the opportunities that we're getting in front of.
Jeff Shellberg: Not only from a noninterest income perspective, but from a.
Jeff Shellberg: Margin sort of defensive perspective on increasing the volume of variable rate transactions on our balance sheet long term. So there's a lot of positives to us doing it and I think we're as a team really committed to using that tool more going forward.
Jeff: No.
Jeff: Trying to be selective on.
Jeff: Opportunities that we're moving forward on and trying to find ones, where we can garner a little bit of a wider margin to them I think that that.
Nicholas Place: So there's a lot of positive stuff doing it. And I think we're as a team really committed to using that tool more going forward.
Jeff: The swap I mean, these two things are related to I mean, we are leveraging the swap product as an opportunity to win the good business that we want to have because the client is able to trade into a more competitive fixed rate than what we would predominantly hold on balance sheet. So.
Speaker Change: And Nick maybe just the last one just the competitiveness in that.
Nicholas Place: And Nick, maybe just the last one, just the competitiveness in that line item is when you reach out to customers, you push it more. facing competition, kind of what that landscape like. Yeah, I mean, we've talked in prior quarters, I mean, as a lot of the liquidity concerns in the in the banking space have somewhat subsided over the last 12, you know, six to 12 months, we've seen more banks that were on the sideline kind of get back in the market. So, you know, that has driven as well as a wide audience. The swap, I mean, these two things are related to I mean, we are leveraging the swap product as an opportunity to win the good business that we want to have, because the client is able to trade into a more competitive fixed rate than what we would predominantly hold on balance sheets.
Jeff Shellberg: Mine item.
Jeff Shellberg: When you reach out to customers and you push it more.
Jeff Shellberg: Facing competition kind of what that landscape like.
Jeff: I think these two things work well together in the sense of.
Jeff Shellberg: Yeah, I mean, we've talked in prior quarters.
Jeff: The increase competition does sort of incentives by our client and our bankers to think more about that swap product as a way to get.
Jeff Shellberg: A lot of the liquidity concerns.
Jeff Shellberg: Banking space.
Jeff Shellberg: Somewhat subsided over the last 12 six to 12 months, we've seen more banks that were on the sideline and kind of get back in the market. So.
Jeff: The client to the lower fixed rate that theyre looking for.
Jeff: Great appreciate it thank you.
Jeff: Yep.
Jeff Shellberg: That has driven.
Speaker Change: Thank you and the next question will be from Adam <unk> from Piper Sandler. Please go ahead.
Jeff Shellberg: Spreads to tighten a bit here I think we mentioned it in the prepared remarks, our pipeline is.
Speaker Change: Hi, Good morning. This is Adam <unk> on for Nate race, Thanks for taking my questions.
Jeff Shellberg: Really at a at a three year high we feel really good about the opportunities that we're getting in front of so.
Speaker Change: Alright.
Speaker Change: Yes. So you guys, obviously had really strong growth during the quarter and especially within CRE. So just curious do you expect CRE to be the primary driver.
Jeff Shellberg: We're trying to be selective on the opportunities that we're moving forward on and trying to find ones, where we can garner a little bit of a of a wider margin to them I think that the.
Speaker Change: A driver of growth in the back half and just wondering if you could expand on what youre seeing in terms of competition and if spreads have compressed at all.
Jeff Shellberg: The swap I mean, these two things are related to I mean, we are leveraging the swap product as an opportunity to win the good business that we want to have because the client is able to trade into a more competitive fixed rate than what we would predominantly hold on balance sheet. So.
Speaker Change: Yes, Hi, this is Nick.
Speaker Change: I would say that in the back half of the year, we expect.
Nicholas Place: So, you know, I think these two things work well together in the sense of, you know, the increased competition does sort of incentivize our client and our bankers to think more about that swap product as a way to get, you know, get the client to the lower fixed rate that they're 1 I appreciate it.
Jeff Shellberg: I think these two things work well together in the sense of that.
Speaker Change: Our growth to just be in line with all of our.
Jeff Shellberg: Increased competition does sort of incentives by our client and our bankers to think more about that swap product as a way to get you know get the client to the lower fixed rate that theyre looking for.
Speaker Change: Typical verticals, so Q2 saw a little bit of a higher increase in our CRE balances versus our multifamily portfolio.
Jeff Shellberg: Great appreciate it thank you.
Speaker Change: Quarter over quarter, I think those two buckets.
Nicholas Place: Thank you.
Jeff Shellberg: Yep.
Speaker Change: There isn't any real seasonality or direction as to why one would increase more than the other it's really just sort of opportunity dependent so as we think about where we're going to grow in the back half of the year I think it's sort of commensurate with all of our <unk>.
Speaker Change: Thank you and the next question will be from Adam <unk> from Piper Sandler. Please go ahead.
Adam Kroll: And the next question will be from Adam Kroll from Piper Sandler. Please go ahead. Hi, good morning.
Speaker Change: Hi, Good morning. This is Adam <unk> on for Nate race, Thanks for taking my questions.
Nicholas Place: This is Adam McRoll on for Nate Race, and thanks for taking my questions. Yeah, so you guys obviously had really strong growth during the quarter, and especially within CRE. So I was just curious, do you expect CRE to be the primary driver of growth in the back half? And just wondering if you could expand on what you're seeing in terms of competition and if spreads have compressed at all?
Speaker Change: Legacy business lines, we did touch on we're seeing a lot more opportunities within the affordable housing space those transactions do land in.
Speaker Change: Alright.
Speaker Change: Yeah. So you guys, obviously had really strong growth during the quarter and especially within CRE social just curious do you expect CRE to be the primary.
Speaker Change: Various buckets and our portfolio from multifamily to C&I.
Speaker Change: So.
Speaker Change: Driver of growth in the back half and just wondering if you could expand on what youre seeing in terms of competition and if spreads have compressed at all.
Speaker Change: That.
Speaker Change: That vertical continues to grow as we expand our client base nationally in that footprint area in that vertical so where opportunities are.
Nick Place: Yeah, Hey, this is Nick.
Speaker Change: Pleased that we're seeing opportunities there and expect that to continue to drive balance sheet growth for us.
Nicholas Place: Yeah, hi, this is Nick. Um, you know, I, I would say that in the back half of the year, we expect, you know, our growth to just be in line with all of our typical verticals. So, you know, Q2 saw a little bit of a higher increase in our CRE balances versus our multifamily portfolio. You know, quarter over quarter, I think those two buckets, you know, there isn't any real seasonality or direction as to why one would increase more than the other. It's really just sort of opportunity dependent. So, as we think about where we're going to grow in the back half of the year, I think it's, you know, sort of commensurate with all of our legacy business lines.
Speaker Change: You know what.
Speaker Change: I would say that in the back half of the year, we expect.
Speaker Change: On the competitive side I touched on it briefly with Jeff's comments, but.
Speaker Change: Our growth to just be in line with all of our typical vertical so Q2 saw a little bit of a higher increase in our CRE balances versus our multi family portfolio.
Speaker Change: We continue to see competition from local players in the market that are back.
Speaker Change: From being on the sidelines in past quarters.
Speaker Change: The M&A or the.
Speaker Change: Quarter over quarter, I think those two buckets.
Speaker Change: There isn't any real seasonality or direction as to why one would increase more than the other it's really just sort of opportunity dependent so as we think about where we're going to grow in the back half of the year I think it's sort of commensurate with all of our <unk>.
Speaker Change: Acquisition of Brammer Bank from old National I mean, I think that those are two very active players in our market. So we are.
Speaker Change: We're keenly watching what will happen as those two institutions merged together I mean, we do think that should shake lose more opportunities for us as.
Speaker Change: Legacy business lines, we did touch on we're seeing a lot more opportunities within the affordable housing space you know those transactions do land in.
Nicholas Place: We did touch on, we're seeing a lot more opportunities within the affordable housing space, you know, those transactions do land in various buckets in our portfolio from multifamily to C&I. So, you know, that, that vertical continues to grow as we expand our client base nationally in that footprint or in that vertical. So, we're pleased that we're seeing opportunities there and expect that to continue to drive balance sheet growth for us. You know, on the competitive side, I touched on it briefly with Jeff's comments, but, you know, we continue to see competition from local players in the market that are back from being on the sidelines in past quarters.
Speaker Change: I don't think that the combined production of those two legs.
Speaker Change: Various buckets and our portfolio from multifamily to C&I.
Speaker Change: Our legacy businesses will equate to what the ongoing production will be for the combined organization. So.
Speaker Change: So that.
Speaker Change: We do think that with the client overlap of those two banks and.
Speaker Change: That vertical continues to grow as we expand our client base nationally in that footprint.
Speaker Change: <unk>.
Speaker Change: That should drive some additional opportunities for us in the long term to them. So that's certainly something we're keeping an eye on.
Speaker Change: Vertical so where opportunity or please.
Speaker Change: Pleased that we're seeing opportunities there.
Speaker Change: That to continue to drive balance sheet growth for us.
Speaker Change: Got it.
Speaker Change: Competitive side I touched on it briefly with Jeff's comments, but we.
Speaker Change: Helpful.
Speaker Change: So I guess another one from me is just as you convert FMC be over to your systems, just curious what youre hearing and seeing on the M&A front. These days and if youre seeing any similar opportunities.
Speaker Change: We continue to see competition from local players in the market that are back.
Speaker Change: From being on the sidelines in past quarters.
Jerry Baack: You know, the M&A or the acquisition of Remer Bank from Old National, I mean, I think that those are two very active players in our market. So, we're, you know, keenly watching what will happen as those two institutions merge together. I mean, we do think that should shake loose more opportunities for us as I don't think that the combined production of those two legacy businesses will equate to what the ongoing production will be for the combined organization. So, we do think that with the client overlap of those two banks and, you know, that that should drive some additional opportunities for us in the long term too.
Speaker Change: The M&A or the that.
Speaker Change: Our acquisition of Brammer Bank from all National I mean, I think that those are two very active players in our markets. So were.
Jerry Box: This is Jerry.
Jerry Box: Similar to what I've said in past quarters, we're always talking to other bankers out there other ceos and owners or banks.
Speaker Change:
Speaker Change: He only watching what will happen as those two institutions merged together.
Jerry Box: We continue to have conversations certainly nothing thats eminent but.
Speaker Change: Do think that.
Speaker Change: Should shake lose more opportunities for us as.
Jerry Box: I'll say that organic growth is first and foremost what we're looking for and what the opportunities out there right now.
Speaker Change: I don't think that the combined production of those two.
Speaker Change: Legacy businesses will equate to what the ongoing production will be for the combined organization. So.
Jerry Box: That's what we're focusing on but it doesn't mean that we haven't had conversations.
Speaker Change: We do think that with the client overlap of those two banks and.
Speaker Change: Got it I appreciate the color and thanks for taking my questions.
Speaker Change: You know that that should drive some additional opportunities for us in the long term to them. So that's certainly something we're keeping an eye on.
Jerry Box: Thank you.
Speaker Change: And again, if you would like to ask a question. Please press Star then one.
Jerry Baack: So, that's certainly something we're keeping an eye on. got it. That's super helpful.
Speaker Change: The next question will be from Brendan Nosal from Harvey Group. Please go ahead.
Speaker Change: Got it that's super helpful.
Jerry Baack: Um, so I guess another one for me is just as you convert FMCB over to your systems, um, just curious what you're hearing and seeing on the M&A front these days and if you're seeing any similar opportunities. This is Jerry. Similar to what I've said in past quarters, we're always talking to other bankers out there, other CEOs and owners of banks, and continue to have conversations. Certainly nothing that's imminent, but You know, I always say that organic growth is first and foremost what we're looking for and with the opportunities out there right now, that's what we're focusing on, but it doesn't mean that we haven't had conversations.
Speaker Change: Another one from me is just as you convert FMC be over to your systems I'm, just curious what youre hearing and seeing on the M&A front. These days and if youre seeing any similar opportunities.
Speaker Change: Hi, This is <unk> on for Brian I, just had two questions.
Speaker Change: Leaping back on the NIM I understand in your prepared remarks, you talked about the impact of taking out some debt.
Jerry Bock: This is Jerry.
Jerry Bock: Similar to what I've said in past quarters, we're always talking to other bankers out there other Ceos and owners of banks.
Speaker Change: We are wondering.
Speaker Change: How we should think about NIM thereafter, and if there is any benefit that will be seen from the lung.
Jerry Bock: Continue to have conversations certainly nothing thats eminent but.
Speaker Change: Pricing.
Joe: Yes. This is Joe.
Jerry Bock: I always say that organic growth is first and foremost what we're looking for and what the opportunities out there right now.
Joe: Yes, I think as we called out in prepared remarks, we really wanted to highlight just a sub debt dynamic in the third quarter, but I think generally as we think about the NIM expansion dynamics, which have translated over the last couple of quarters, we still think.
Jerry Bock: That's what we're focusing on but it doesn't mean that we haven't had conversations.
Speaker Change: Got it I appreciate the color and thanks for taking my questions.
Jerry Baack: Got it.
Chad: I appreciate the cover, and thanks for taking my questions. Thank you. And again, if you would like to ask a question, please press star then 1.
Joe: Those are well underway in the loan repricing as we've highlighted continues to translate we feel really good about that.
Jerry Bock: Thank you.
Speaker Change: And again, if you would like to ask a question. Please press Star then one.
Joe: And then deposit portfolio, albeit stabilized, we still see opportunities to grow in deposit costs, lower even without a rate cut.
Speaker Change: The next question will be from Brendan Nosal from Hardie Group. Please go ahead.
Chad: The next question will be from Brendan Nosal from Hovde Group, please go ahead.
Dan: Hi, This is Dan.
Aneera Bohan: Hi, this is Aneera Bohan on for Brendan. I just had two questions. Looping back on the NIM, understanding your prepared remarks, you talked about the impact of taking out sub-debt. But we were wondering how we should think about NIN there after and if there's any benefit that will be seen from the loan repricing.
Joe: So I think the underlying dynamics, we feel really good about continued margin expansion, but we just wanted to highlight kind of the.
Speaker Change: On for Brian.
Dan: Two questions.
Dan: Looping back.
Dan: I understand in your prepared remarks, you talked about the impact of taking out some debt.
Joe: The dynamics in the third quarter, just given the upsize of the sub debt.
Joe: And just the impact that that has specifically the NIM, but I think over the long haul. We're we're bullish on continued margin expansion.
Dan: We are wondering.
Dan: How we should think about and then thereafter and if there is any benefit that will be seen from the log pricing.
Joe: Yeah.
Joe: And the other question has to do with your funding side is there any downward repricing you can still squeeze out of funding cost or is it really dependent on fed rate cuts I know you said you can do it.
Joe Chabowski: Yeah. This is Joe so.
Joseph Chybowski: Yeah, this is Joe. So I... Yeah, I think as we called out in prepared remarks, we really wanted to highlight just the sub-debt dynamic in the third quarter, but I think generally as we think about the NIM expansion dynamics, you know, which have translated over the last couple of quarters, we still think, you know, those are well underway. In the loan repricing, as we've highlighted, continues to translate. We feel really good about that. And the deposit portfolio, you know, albeit stabilized, we still see opportunities, you know, lower even without a rate cut. So I think the underlying dynamics, we feel really good about continued margin expansion, but we just wanted to highlight, you know, kind of the dynamics in the third quarter just given the upsides of the sub-debt and just the impact that that has specifically to NIM.
Speaker Change: Yeah, I think as we called out in prepared remarks, we really wanted to highlight just the sub debt dynamic in the third quarter, but I think.
Joe: Most likely you would operate attached but is there any other color that you can add.
Speaker Change: <unk> as we think about the NIM expansion dynamics, which have translated over the last couple of quarters, we still think.
Joe: Yes, I think we we continue to look at opportunities across our deposit portfolios.
Speaker Change: We are well underway in the loan repricing as we've highlighted continues to translate we feel really good about that.
Joe: All of our bankers our asset liability committee goes relationship by relationship looking at opportunities, where we could rationalize costs lower so it's an ongoing effort I think its relationship by relationship.
Speaker Change: And then deposit portfolio, albeit stabilized, we still see opportunities to grind deposit costs lower even without a rate cut.
Speaker Change: So I think the underlying dynamics, we feel really good about continued margin expansion, but we just wanted to highlight kind of the.
Joe: And so we still see opportunities there.
Joe: Also say.
Joe: In the second quarter, just given the volatility kind of early on around April we found a lot of opportunities to call. Some more wholesale funding on the brokered CD side and reissue lower so I think we're always looking for those opportunities on the wholesale side, just given the efficiency in those markets.
Speaker Change: The dynamics in the third quarter, just given the the upsides of the sub debt.
Speaker Change: And just the impact that that has specifically to NIM, but I think over the long haul. We're we're bullish on continued margin expansion.
Joseph Chybowski: But I think, you know, over the long haul, we're, you know, we're bullish on continued margin expansion.
Aneera Bohan: Thank you.
Speaker Change: Yeah.
Joseph Chybowski: And the other question is just to do with your funding side. Is there any downward repricing you can still squeeze out of funding costs or is it really dependent on for the rate cuts? I know you said you could do it most likely without the rate cuts, but is there any other color that you can add? Yeah, I think we, you know, we continue to look at opportunities across our deposit portfolios. All of our bankers, our asset liability committee, you know, goes relationship by relationship, looking at opportunities where we could, you know, rationalize costs lower.
Joe: To continue to push funding costs lower.
Speaker Change: The other question has to do with your funding side is there any down her great price and you can still squeeze out of funding cost or is it really dependent on fed rate cuts I know you said you can do it.
Speaker Change: Okay. Thank you that's all my questions.
Speaker Change: Thank you and ladies and gentlemen. This concludes our question and answer session I would now like to turn the conference back over to Jerry <unk> for any closing remarks.
Speaker Change: Most likely the patch that is there any other color that you can add.
Speaker Change: Yes, I think we you know we continue to look at opportunities across our deposit portfolios.
Speaker Change: Thank you everyone for joining the call today I just wanted to reiterate how excited we are about the recent trends and opportunities we're seeing in the marketplace.
Speaker Change: All of our bankers our asset liability committee goes relationship by relationship looking at opportunities, where we could rationalize costs lower so it's an ongoing effort I think its relationship by relationship.
Speaker Change: I'd also like to thank all of our team members and the energy they provide each day.
Joseph Chybowski: So it's an ongoing effort. I think it's relationship by relationship. And so we still see opportunities there. You know, I'd also say, you know, in the second quarter, just given the volatility kind of early on around April, you know, we found a lot of opportunities to call some more wholesale funding on the brokered CD side and reissue lower. So I think we're always looking for those opportunities on the wholesale side, just given, you know, the efficiency in those markets, you know, to continue to push funding costs lower.
Speaker Change: And I will leave it at that thanks, everyone.
Speaker Change: And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: And so we still see opportunities there you know I'd also say.
Speaker Change: In the second quarter, just given the volatility kind of early on around April we found a lot of opportunities to call. Some more wholesale funding on the brokered CD side and reissue lower so I think we're always looking for those opportunities on the wholesale side, just given the efficiency in those markets.
Speaker Change: You know to continue to push funding costs lower.
Speaker Change: Okay. Thank you that's all my questions.
Aneera Bohan: Thank you, that's all my questions.
Speaker Change: Thank you and ladies and gentlemen. This concludes our question and answer session I would now like to turn the conference back over to Jerry Bok for any closing remarks.
Chad: Thank you, and ladies and gentlemen, this concludes our question and answer session.
Jerry Baack: I would now like to turn the conference back over to Jerry Baack for any closing remarks. Thank you everyone for joining the call today. I just want to reiterate how excited we are about the recent trends and opportunities we're seeing in the marketplace. I'd also like to thank all of our team members and the energy they provide each day. And I will leave it at that. Thanks, everyone. Bye. Thank you, sir.
Speaker Change: Thank you everyone for joining the call today.
Jerry Bock: To reiterate how excited we are about the recent trends and opportunities we're seeing in the marketplace.
Speaker Change: I'd also like to thank all of our team members and the energy they provide each day.
Jerry Bock: And I will leave it at that thanks, everyone.
Speaker Change: And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Chad: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].