Q2 2026 ServisFirst Bancshares Inc Earnings Call
Speaker #1: And only mode. To require operator assistance during the conference, please press star, zero, on your telephone keypad. As a reminder, this conference is being recorded.
Speaker #1: I would now like to turn the conference over to Davis Mange, Director of Investor Relations. Thank you, Davis. You may begin.
Speaker #2: Good afternoon, and welcome to our second quarter earnings call. We will have Tom Broughton, our CEO, Jim Harper, our Chief Credit Officer, and David Sparacio, our CFO.
Speaker #2: Covering some highlights from the quarter, and then we'll take your questions. I'll now cover our forward-looking statements disclosure. Some of the discussion in today's earnings call may include forward-looking statements, actual results may differ from any projection shared today due to factors described in our most recent 10-K and 10-Q filings.
Speaker #2: Forward-looking statements, speak only as of the date they are made, and service-first assumes no duty to update them. With that, I'll turn the call over to Tom.
Speaker #3: Thank you, Davis. Good afternoon. Thank you for joining our second quarter earnings conference call. We are generally pleased with the results and I want to give you a few highlights of the quarter and I'll be followed by Jim Harper, our Chief Credit Officer, and Davis Sparacio, our Chief Financial Officer.
Speaker #1: Greetings, and welcome to the ServiceFirst Bancshares Q2 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Speaker #1: If anyone should require operator assistance during the conference, please press star, zero, on your telephone keypad. As a reminder, this conference is being recorded.
Speaker #3: On the loan side, we saw improved loan demand with annualized loan growth of over 15%, almost all of our 13 regions or segments had really solid loan growth.
Speaker #1: I would now like to turn the conference over to Davis Mange, Director of Investor Relations. Thank you, Davis. You may begin.
Speaker #2: Good afternoon, and welcome to our Q2 earnings call. We will have Tom Broughton, our CEO; Jim Harper, our Chief Credit Officer; and Davis Sparacio, our CFO.
Speaker #3: The best growth was in our two Florida regions and Tennessee. Though really no region contributed more than 15% of the total growth, and almost none of them were less than 10% of the total growth, so it really was very granular and was not due to several large credits which was really good, and we also saw some improvement in our CLI line utilization in the quarter and that was encouraging as well.
Speaker #2: Covering some highlights from the quarter, and then we'll take your questions. I'll now cover our forward-looking statements disclosure. Some of the discussion in today's earnings call may include forward-looking statements, actual results may differ from any projection shared today due to factors described in our most recent 10-K and 10-Q filings.
Speaker #3: Our loan pipeline did grow quarter over quarter and is now at a record level. Projected payoffs this quarter are 17%, which is roughly the same as last quarter, and is down from around 33% over the last two years in rough numbers, so we are seeing payoffs diminish and return closer to historical levels of typical payoffs.
Speaker #2: Forward-looking statements speak only as of the date they are made, and ServiceFirst assumes no duty to update them. With that, I'll turn the call over to Tom.
Speaker #3: Thank you, Davis. Good afternoon. Thank you for joining our Q2 earnings conference call. We are generally pleased with the results and I want to give you a few highlights of the quarter and I'll be followed by Jim Harper, our Chief Credit Officer, and Davis Sparacio, our Chief Financial Officer.
Speaker #3: On the loan side, we saw improved loan demand with annualized loan growth of over 15%, almost all of our 13 regions or segments had really solid loan growth.
Speaker #3: You know, you tend not to notice payoffs when you have robust loan demand, so hopefully we're seeing loan demand rebuild and begin to things normalize a bit on that side.
Speaker #3: The best growth was in our two Florida regions and Tennessee, though really no region contributed more than 15% of the total growth, and almost none of them were less than 10% of the total growth, so it really was very granular.
Speaker #3: Our Houston pipeline is beginning to build and we are seeing increased activity in Texas. On the deposit side, our growth rate was constrained by some large income tax payments due to sale of some properties and companies by our clients.
Speaker #3: It was not due to several large credits, which was really good, and we also saw some improvement in our CLI line utilization in the quarter, and that was encouraging as well.
Speaker #3: Our non-interest-bearing deposits grew 20% annualized in the quarter and 14% year over year, as we continue to emphasize our treasury management services and we benefit from continued trend of bank mergers.
Speaker #3: Our loan pipeline did grow quarter over quarter and is now at a record level. Projected payoffs this quarter are 17%, which is roughly the same as last quarter, and is down from around 33% over the last two years in rough numbers, so we are seeing payoffs diminish and return closer to historical levels of typical payoffs.
Speaker #3: As none of these bank mergers are done to improve customer service. On the new employee front, we added nine bankers in the quarter. We added two in the Piedmont region, three in Northwest Florida, and three in Houston.
Speaker #3: Including a new market president under the regional CEO in Houston. Our goal is never to set a numerical goal for new bankers, but we try to make our bankers more productive and successful and grow their loan and deposit portfolios.
Speaker #3: You know, you tend not to notice payoffs when you have robust loan demand, so hopefully we're seeing loan demand rebuild and begin to things normalize a bit on that side.
Speaker #3: And be very responsive to our customers' needs. With a name like service-first, customer service is our primary goal, and we want bankers who embraced the culture of service-first.
Speaker #3: Our Houston pipeline is beginning to build, and we are seeing increased activity in Texas. On the deposit side, our growth rate was constrained by some large income tax payments.
Speaker #3: I'll now turn it over to Jim Harper for credit update.
Speaker #4: Thanks, Tom. As mentioned, leading activity definitely picked up as we progressed through the quarter. As we experienced solid loan growth across most markets, while growth was granular, it was driven by CRE activity.
Speaker #3: Due to the sale of some properties and companies by our clients, our non-interest-bearing deposits grew 20% annualized in the quarter, and 14% year over year as we continued to emphasize our treasury management services and we benefit from continued trend of bank mergers.
Speaker #4: As a result, we experienced an uptick in our CRE outstandings relative to capital, moving from $298% of capital at $331 to $307% at $630.26.
Speaker #3: As none of these bank mergers are done to improve customer service. On the new employee front, we added nine bankers in the quarter. We added two in the Piedmont region, three in Northwest Florida, and three in Houston.
Speaker #4: That lending momentum and activity has continued into the early third quarter across our footprint and including Texas, where the team continues to grow and source new opportunities.
Speaker #3: Including a new market president under the regional CEO in Houston. Our goal is never to set a numerical goal for new bankers, but we try to make our bankers more productive and successful and grow their loan and deposit portfolios.
Speaker #4: With regards to NPAs, as noted following the first quarter, we did have successful resolution in several credits early in the second quarter, for the quarter we saw a net decrease of NPAs of just under $7 million on a net basis, and we don't see any systemic weakening in any particular sector of lending in our credit quality continues to be strong.
Speaker #3: And be very responsive to our customers' needs. With a name like ServiceFirst, customer service is our primary goal, and we want bankers who embrace the culture of ServiceFirst.
Speaker #4: On a related note, charge-offs for the quarter and year-to-date continue to be modest, totaling approximately $3.7 million for the quarter and total just over $12 million or 9 basis points for the first half of the year.
Speaker #3: I'll now turn it over to Jim Harper for a credit update.
Speaker #4: Thanks, Tom. As mentioned, lending activity definitely picked up as we progressed through the quarter. As we experienced solid loan growth across most markets, while growth was granular, it was driven by CRE activity.
Speaker #4: Lastly, the allowance for loan losses ended the quarter at $126 basis points versus $125 basis points at the end of the first quarter, with increases occurring both within the pooled portfolio and our loans assessed for individual impairment.
Speaker #4: As a result, we experienced an uptick in our CRE outstandings relative to capital, moving from $298% of capital at $331 to $307% at $630.26.
Speaker #4: That lending momentum and activity has continued into the early third quarter across our footprint and including Texas where the team continues to grow and source new opportunities.
Speaker #4: David will now provide a summary of our financial performance for the second quarter.
Speaker #5: Thank you, Jim. And good afternoon, everyone. I'll walk you through the financial details of our second quarter, and I'm pleased to report that the momentum we described in the first quarter continued into this quarter.
Speaker #4: With regards to NPAs, as noted following the first quarter, we did have successful resolution in several credits early in the second quarter, for the quarter we saw a net decrease of NPAs of just under $7 million on a net basis, and we don't see any systemic weakening in any particular sector of lending in our credit quality continues to be strong.
Speaker #5: Net interest margin expanded again. Loan growth reached its fastest pace in several quarters, credit metrics improved meaningfully, and capital continued to build. Taken together, this was solid financial performance for us.
Speaker #5: For the second quarter of 2026, we reported net income of $85.8 million or $1.57 per diluted share. That compares to $1.52 per share in the first quarter, up 3.4% on the linked quarter basis.
Speaker #4: On a related note, charge-offs for the quarter and year-to-date continue to be modest, totaling approximately $3.7 million for the quarter and total just over $12 million or 9 basis points for the first half of the year.
Speaker #5: And compared to $1.12 per diluted share in the second quarter, of last year. An increase of 40% year over year. On an adjusted basis, which excludes illegal matter accrual reversal and a loss on marketable securities that affected last year's results, diluted earnings per share grew 30% from $1.21 a year ago.
Speaker #4: Lastly, the allowance for loan losses ended the quarter at $126 basis points versus $125 basis points at the end of the first quarter, with increases occurring both within the pooled portfolio and our loans assessed for individual impairment.
Speaker #4: David will now provide a summary of our financial performance for the second quarter.
Speaker #5: For the first six months of 2026, net income was $168.8 million or $3.09 per diluted share, up 35% from $124.6 million or $2.28 per diluted share in the same period last year.
Speaker #5: Thank you, Jim. And good afternoon, everyone. I'll walk you through the financial details of our second quarter, and I'm pleased to report that the momentum we described in the first quarter continued into this quarter.
Speaker #5: Net interest margin expanded again, loan growth reached its fastest pace in several quarters, credit metrics improved meaningfully, and capital continued to build. Taken together, this was solid financial performance for us.
Speaker #5: Return on average assets was 1.91%, up from 1.89% in the first quarter and well above the 1.40% we delivered a year ago. Return on average common equity was 17.71% compared to 17.91% last quarter, and 15.68% on the adjusted basis in the same quarter of last year.
Speaker #5: For the second quarter of 2026, we reported net income of $85.8 million or $1.57 per diluted share. That compares to $1.52 per share in the first quarter, up 3.4% on the linked quarter basis.
Speaker #5: And compared to $1.12 per diluted share in the second quarter, of last year. An increase of 40% year over year. On an adjusted basis, which excludes illegal matter accrual reversal and a loss on marketable securities that affected last year's results, diluted earnings per share grew 30% from $1.21 a year ago.
Speaker #5: These returns continue to reflect the operating leverage in our model. Margin expansion, strong loan growth, and expense discipline all moving in the right direction together.
Speaker #5: Net interest income for the second quarter was $155.6 million, up from $148.1 million in the first quarter and from $131.7 million a year ago.
Speaker #5: For the first six months of 2026, net income was $168.8 million, or $3.09 per diluted share, up 35% from $124.6 million or $2.28 per diluted share in the same period last year.
Speaker #5: Net interest margin expanded to 3.63%, up 10 basis points on the linked quarter basis, and up 53 basis points year over year. I would note that during the quarter we were fully paid out of a large credit relationship that had previously been on non-accrual status, and we recovered $1.9 million of interest income as a result.
Speaker #5: Return on average assets was 1.91%, up from 1.89% in the first quarter and well above the 1.40% we delivered a year ago. Return on average common equity was 17.71% compared to 17.91% last quarter, and 15.68% on the adjusted basis in the same quarter of last year.
Speaker #5: That recovery accounted for 5 basis points of the improvement in loan yields and in total net interest margin. On the funding side, average interest-bearing deposit cost was $2.80%, essentially flat to the 2.79% we reported last quarter, but down 53 basis points from a year ago as last year's rate cuts worked through the deposit portfolio.
Speaker #5: These returns continue to reflect the operating leverage in our model. Margin expansion, strong loan growth, and expense discipline all moving in the right direction together.
Speaker #5: On the asset side, loan yields were 6.23%, up 5 basis points linked quarter, but 6.18% on a normalized basis. Investment yields were 3.81%, up modestly from 3.78% last quarter.
Speaker #5: Net interest income for the second quarter was $155.6 million, up from $148.1 million in the first quarter and from $131.7 million a year ago.
Speaker #5: Our average rate on federal funds purchased was 3.74%, unchanged from the linked quarter perspective and down from 4.49% a year ago which is a direct correlation to Fed funds rates.
Speaker #5: Net interest margin expanded to 3.63%, up 10 basis points on the linked quarter basis, and up 53 basis points year over year. I would note that during the quarter we were fully paid out of a large credit relationship that had previously been on non-accrual status, and we recovered $1.9 million of interest income as a result.
Speaker #5: In total, our net interest margin continues to expand, although we are seeing some slowdown in the pace. We expect to continue aggressive repricing on fixed-rate loans as they mature and disciplined pricing on deposits, which will continue our margin expansion.
Speaker #5: That recovery accounted for 5 basis points of the improvement in loan yields and in total net interest margin. On the funding side, average interest bearing deposit cost was $2.80%, essentially flat to the 2.79% we reported last quarter, but down 53 basis points from a year ago as last year's rate cuts worked through the deposit portfolio.
Speaker #5: Non-interest income was 12.9 million for the quarter. Up from 10.8 million in the first quarter, and up 43.5% from $9 million a year ago on an adjusted basis.
Speaker #5: Growth was broad-based, service charges on deposit accounts was 3.3 million, up 25% year over year, reflecting the Treasury management pricing changes we implemented last July and roughly flat linked to the quarter previously.
Speaker #5: On the asset side, loan yields were 6.23%, up 5 basis points linked quarter, but 6.18% on a normalized basis. Investment yields were 3.81%, up modestly from 3.78% last quarter.
Speaker #5: Mortgage banking revenue was 2.2 million, up 68% year over year and 17% linked quarter, driven by higher secondary market loan sales and the per-loan administrative fee increase we put in place earlier this year.
Speaker #5: Our average rate on federal funds purchased was 3.74%, unchanged from the linked quarter perspective, and down from 4.49% a year ago which is a direct correlation to Fed funds rates.
Speaker #5: Credit card income grew 18% year over year to 2.5 million, and bank-owned life insurance income was 4.1 million, up 94% year over year and 47% linked quarter, reflecting the 25 million of new BOLI contracts we purchased this quarter on top of the $150 million we added in the third quarter of last year.
Speaker #5: In total, our net interest margin continues to expand, although we are seeing some slowdown in the pace. We expect to continue aggressive repricing on fixed-rate loans as they mature and disciplined pricing on deposits, which will continue our margin expansion.
Speaker #5: Non-interest income was 12.9 million for the quarter. Up from 10.8 million in the first quarter, and up 43.5% from $9 million a year ago on an adjusted basis.
Speaker #5: Non-interest expense was $50 million for the quarter, up 5.4% linked quarter and 13% year over year. The linked quarter increase is primarily due to a negative adjustment recorded in the FDIC special assessment in the first quarter.
Speaker #5: Growth was broad-based, service charges on deposit accounts was 3.3 million, up 25% year over year, reflecting the Treasury management pricing changes we implemented last July, and roughly flat linked to the quarter previously.
Speaker #5: Despite that growth, our efficiency ratio came in at 29.65%, the third consecutive quarter below 30% and a meaningful improvement from 33.46% a year ago.
Speaker #5: Mortgage banking revenue was 2.2 million, up 68% year over year and 17% linked quarter, driven by higher secondary market loan sales and the per-loan administrative fee increase we put in place earlier this year.
Speaker #5: Salary and benefit expense was $26.3 million, up 16.4% year over year, primarily reflecting the full run rate impact of our Houston market expansion. Full-time equivalent headcount was 663 at quarter end, up 22 from a year ago and up 3 from the first quarter, very modest growth relative to the balance sheet expansion we're re generating.
Speaker #5: Credit card income grew 18% year over year to 2.5 million, and bank-owned life insurance income was 4.1 million, up 94% year over year and 47% linked quarter, reflecting the 25 million of new BOLI contracts we purchased this quarter on top of the $150 million we added in the third quarter of last year.
Speaker #5: Our effective tax rate was 19.94% for the second quarter, compared to 17.82% last quarter, and 19.82% a year ago. The linked quarter increase reflects timing of investment tax credits per purchases.
Speaker #5: Non-interest expense was $50 million for the quarter, up 5.4% linked quarter and 13% year over year. The linked quarter increase is primarily due to a negative adjustment recorded in the FDIC special assessment in the first quarter.
Speaker #5: We continue to actively pursue federal credits with carryback provisions and expect to realize more tax savings in the future. We expect to continue evaluating similar tax advantage investment opportunities as part of our current-year tax plan.
Speaker #5: Despite that growth, our efficiency ratio came in at 29.65%, the third consecutive quarter below 30%, and a meaningful improvement from 33.46% a year ago.
Speaker #5: Returning to the balance sheet, as Tom mentioned, this was a standout quarter for loan growth. Ending loans were 14.48 billion, up 533 million from the first quarter, or 15.3% annualized.
Speaker #5: Salary and benefit expense was $26.3 million, up 16.4% year over year primarily reflecting the full run rate impact of our Houston market expansion. Full-time equivalent headcount was 663 at quarter end, up 22 from a year ago and up 3 from the first quarter.
Speaker #5: Our fastest quarterly growth rate in some time. On an average basis, loans grew 440 million or 12.8% annualized on a linked quarter basis. Year over year, loans are up 1.25 billion or 9.4%, with our pipeline remaining at record levels and growth broad-based across markets, including a contribution from our Texas market.
Speaker #5: Very modest growth relative to the balance sheet expansion we're generating. Our effective tax rate was 19.94% for the second quarter, compared to 17.82% last quarter, and 19.82% a year ago.
Speaker #5: Deposit growth was more measured this quarter due to the competitive landscape, but remains healthy on a year-over-year basis. Ending deposits were 14.55 billion, up 62 million on the linked quarter basis and up 686 million or 5% from a year ago.
Speaker #5: The linked quarter increase reflects timing of investment tax credits per purchases. We continue to actively pursue federal credits with carryback provisions and expect to realize more tax savings in the future.
Speaker #5: Importantly, non-interest-bearing demand deposits are low-cost, most durable funding source, grew 3 to 3 billion dollars, up 5.6% linked quarter, and 13.8% year over year, which tells us our bankers continue to win core operating account relationships even as overall deposit growth moderated this quarter relative to loan growth.
Speaker #5: We expect to continue evaluating similar tax-advantaged investment opportunities as part of our current-year tax plan. Turning to the balance sheet, as Tom mentioned, this was a standout quarter for loan growth.
Speaker #5: Ending loans were 14.48 billion, up 533 million from the first quarter, or 15.3% annualized. Our fastest quarterly growth rate in some time. On an average basis, loans grew 440 million, or 12.8% annualized on a linked quarter basis.
Speaker #5: As Jim mentioned, net charge also were low at just 11 basis points annualized for the quarter, down sharply from 25 basis points last quarter and 20 basis points a year ago.
Speaker #5: Year over year, loans are up 1.25 billion, or 9.4%, with our pipeline remaining at record levels and growth broad-based across markets, including a contribution from our Texas market.
Speaker #5: With these low charge-offs, and our healthy loan growth, we recognize our quarterly provision for loan loss expense of 11.4 million dollars versus 10.6 million from the first quarter of 2026, and 11.3 million in the second quarter of 2025.
Speaker #5: Deposit growth was more measured this quarter due to the competitive landscape, but remains healthy on a year-over-year basis. Ending deposits were 14.55 billion, up 62 million on the linked quarter basis and up 686 million or 5% from a year ago.
Speaker #5: Our allowance for credit losses stood at 1.26% of total loans, essentially stable versus 1.25% last quarter. We remain comfortable with our reserve coverage given the current portfolio performance.
Speaker #5: Importantly, non-interest bearing demand deposits are low-cost, most durable funding source, grew 3 to 3 billion dollars, up 5.6% linked quarter, and 13.8% year over year.
Speaker #5: Capital continued to build meaningfully in the second quarter. Common equity Tier 1 capital risks to weighted assets reached 11.83% on a preliminary basis, relatively flat from 11.86% last quarter and up 45 basis points from a year ago.
Speaker #5: Which tells us our bankers continue to win core operating account relationships even as overall deposit growth moderated this quarter, relative to loan growth. As Jim mentioned, net charge also were low at just 11 basis points annualized for the quarter, down sharply from 25 basis points last quarter and 20 basis points a year ago.
Speaker #5: Total capital-to-risk weighted assets was 13.09%. Our Tier 1 leverage ratio was 10.93%, and tangible common equity to tangible total assets was 10.72%. We're generating capital organically at a pace that comfortably funds the loan growth we're seeing, while still building cushions.
Speaker #5: With these low charge-offs, and our healthy loan growth, we recognize our quarterly provision for loan loss expense of 11.4 million dollars versus 10.6 million from the first quarter of 2026, and 11.3 million in the second quarter of 2025.
Speaker #5: Our book value per share was $36.19 at quarter end, up from $34.99 last quarter and up nearly 15% from $31.52 a year ago. Tangible book value per share was $35.94, on liquidity we ended the quarter with 1.46 billion dollars in cash and cash equivalents, or about 8% of our total assets.
Speaker #5: Our allowance for credit losses stood at 1.26% of total loans, essentially stable versus 1.25% last quarter. We've remained comfortable with our reserve coverage given the current portfolio performance.
Speaker #5: Capital continued to build meaningfully in the second quarter. Common equity Tier 1 capital risks to weighted assets reached 11.83% on a preliminary basis, relatively flat from 11.86% last quarter, and up 45 basis points from a year ago.
Speaker #5: We have no FHLB advances and no brokered deposits. Our funding remains entirely core in relationship-driven. I'll now turn it back over to Tom for his closing comments.
Speaker #1: Thank you, David. We certainly were pleased with the quarter, but not satisfied. I really know how much we can improve from where we are today, so I think we can do much better than what we are doing today.
Speaker #5: Total capital-to-risk weighted assets was 13.09%. Our Tier 1 leverage ratio was 10.93%, and tangible common equity to tangible total assets was 10.72%. We're generating capital organically at a pace that comfortably funds the loan growth we're seeing, while still building cushions.
Speaker #1: We aren't hitting on all eight cylinders yet, to equate it to an automotive car. But I feel like we are getting closer to all eight cylinders than we have been in the last two years.
Speaker #1: While we're in the middle of our largest regional startup in our history in Houston, we still earned a 1.9% return on assets. I know reaching a 2% return on assets may be tough for the last 10 basis points, but it sure does seem like a worthy goal for us to strive for, even though our primary goal will always be to grow earnings per share.
Speaker #5: Our book value per share was $36.19 at quarter end, up from $34.99 last quarter and up nearly 15% from $31.52 a year ago. Tangible book value per share was $35.94, on liquidity we ended the quarter with 1.46 billion dollars in cash and cash equivalents, or about 8% of our total assets.
Speaker #1: Having more of our regions and markets perform at a higher level can get us to a consistently higher level of financial performance. On an industry level, we are seeing generally good bank earnings and improvement, modest loan losses, controlled expenses, and a decent growth outlook, coupled with a backdrop of a good economic outlook.
Speaker #5: We have no FHLB advances and no brokered deposits. Our funding remains entirely core in relationship-driven. I'll now turn it back over to Tom for his closing comments.
Speaker #1: Thank you, David. We certainly were pleased with the quarter, but not satisfied. I really know how much we can improve from where we are today, so I think we can do much better than what we are doing today.
Speaker #1: In addition, we see what appears to be a more favorable, or at least not as hostile, regulatory environment for banks. Overall, most banks have a favorable outlook for industry, but bank stocks continue to be priced well below historical benchmarks over the last decade.
Speaker #1: We aren't hitting on all eight cylinders yet, to equate it to an automotive car. But I feel like we are getting closer to all eight cylinders than we have been in the last two years.
Speaker #1: I guess only time can make the cloud dissipate over the banks, while we continue to perform at a high level every day. We'd be happy to answer any questions you might have.
Speaker #1: While we're in the middle of our largest regional startup in our history in Houston, we still earned a 1.9% return on assets. I know reaching a 2% return on assets may be tough for the last 10 basis points, but it sure does seem like a worthy goal for us to strive for, even though our primary goal will always be to grow earnings per share.
Speaker #2: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker #2: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue, or participants using speaker equipment, you may be necessary to pick up your handset before pressing the star keys.
Speaker #1: Having more of our regions and markets perform at a higher level can get us to a consistently higher level of financial performance. On an industry level, we are seeing generally good bank earnings and improvement, modest loan losses, controlled expenses, and a decent growth outlook.
Speaker #2: One moment, please, while we pull for questions. Thank you. Our first question comes from the line of David Bishop with HUBD Group. Please proceed.
Speaker #1: Coupled with a backdrop of a good economic outlook, in addition, we see what appears to be a more favorable, or at least not as hostile, regulatory environment for banks.
Speaker #3: Hey, good evening, Tom.
Speaker #1: Hey, Dave.
Speaker #3: Hey. Appreciate all the commentary and the preamble there. Just curious, in terms of the lending environment, obviously you said in-market consolidation is usually beneficial to you all.
Speaker #1: Overall, most banks have a favorable outlook for industry, but bank stocks continue to be priced well below historical benchmarks over the last decade. I guess only time can make the cloud dissipate over the banks, while we continue to perform at a high level every day.
Speaker #3: Just curious, maybe what the hiring pipeline looks like at this point? Is there line of sight into additional banker hires into the second half of the year?
Speaker #1: We'd be happy to answer any questions you might have.
Speaker #2: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker #1: I really can't give you a very good answer, Dave. We've talked to people all the time, and we're talking to a lot of different people from a lot of different banks and their there are mergers going on that you don't see because they're private banks, merging or a private bank selling to a public bank, and you don't notice that.
Speaker #2: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue, or participants using speaker equipment, you may be necessary to pick up your handset before pressing the star keys.
Speaker #1: So there's constantly, especially in Texas, I'd say there's a lot of movement in the Texas market in terms of mergers and integration. So I think it's a more active network than in terms of mergers than we've seen in a long time.
Speaker #2: One moment, please, while we pull for questions. Thank you. Our first question comes from the line of David Bishop with HUVD Group. Please proceed.
Speaker #3: Hey, good evening, Tom.
Speaker #1: From that standpoint, so we're optimistic we'll continue to get looks in, of course, in many cases, people have a they have stay pay and certainly for a year after a merger is typically sort of a point before they even think about making a change.
Speaker #1: Hey, Dave.
Speaker #3: Hey, appreciate all the commentary and the preamble there. Just curious, in terms of the lending environment—obviously, you said in-market consolidation is usually beneficial to you all.
Speaker #3: Just curious, maybe what the hiring pipeline looks like at this point? Is there line of sight into additional banker hires into the second half of the year?
Speaker #1: So we're constantly looking and talking to people, but I don't have a really good answer for you. I don't think. I know there's been some changes in the national market that didn't affect us, but any event, I'm sorry, I can't give you a better answer.
Speaker #1: I really can't give you a very good answer, Dave. We talk to people all the time, and we're talking to a lot of different people from a lot of different banks. There are mergers going on that you don't see, because they're private banks merging or a private bank selling to a public bank, and you don't notice that.
Speaker #3: Yeah, I do understand. And maybe talk about the state of loan demand. I think in the past, maybe it was a A minus B plus that sounds like the pipeline continues to hit record levels.
Speaker #1: So there's constantly—especially in Texas—I'd say there's a lot of movement in the Texas market in terms of mergers and integration. So I think it's a more active network in terms of mergers than we've seen in a long time.
Speaker #3: Just curious how would you characterize the loan demand environment at this point?
Speaker #1: I guess I have to call it an A. Because it's broad-based. It was granular. It's a lot of smaller loans. It's just things were and it's almost every region of our bank and segment had really good loan demand.
Speaker #1: From that standpoint, we're optimistic we'll continue to get looks in. Of course, in many cases, people have stay pay, and certainly for a year after a merger is typically sort of a point before they even think about making a change.
Speaker #1: So I've got to think it's getting much better and, of course, we all know Florida is strong and has been compared to the average.
Speaker #1: So we're constantly looking and talking to people, but I don't have a really good answer for you. I don't think—I know there's been some changes in the Nashville market.
Speaker #1: We've just had a lot of payoffs in Florida. Especially in our West Central Florida regions, have more payoffs than because of the heavy real estate concentration down there.
Speaker #1: Than normal. So but I'd say I'd give it an A now.
Speaker #1: It didn't affect us, but in any event, I'm sorry I can't give you a better answer.
Speaker #3: Got it. One final question I'll pop off and get back on. But the commercial real estate concentration ratio, it ticked a tad above 300%.
Speaker #3: Yeah, I do understand. And maybe talk about the state of loan demand. I think in the past, maybe it was an A minus, B plus. That sounds like the pipeline continues to hit record levels.
Speaker #3: Still comfortable with the ratio at this level, capacity to continue to grow that product?
Speaker #3: Just curious, how would you characterize the loan demand environment at this point?
Speaker #1: Yeah. Hey, David. Absolutely. So we have a ratio we're managing to. We've got lots of headroom before we get close to the ratio that would put us in territory we don't really want to be in.
Speaker #1: I guess I have to call it an A, because it's broad-based, it was granular, it's a lot of smaller loans—it's just the way things were. And almost every region of our bank and segment had really good loan demand.
Speaker #1: And I think we saw lots of really good opportunity. Even within the CRE asset class, it wasn't a particular it wasn't retail or office or one-to-four family.
Speaker #1: So, I've got to think it's getting much better and, of course, we all know Florida is strong and has been compared to the average.
Speaker #1: It was broad-based even within real estate. So we saw a little bit of everything in real estate. So but yeah, I don't think we have any concerns about where we are from a concentration standpoint.
Speaker #1: We've just had a lot of payoffs in Florida, especially in our West Central Florida region, which has had more payoffs because of the heavy real estate concentration down there.
Speaker #1: Than normal. But I'd say I'd give it an A now.
Speaker #4: Dave, we never want to get to the point where we have to tail a good customer that we cannot take care of their needs.
Speaker #3: Got it. One final question—I'll pop off and get back on. But the commercial real estate concentration ratio ticked a tad above 300%.
Speaker #4: So we always make sure that we have some dropout or for our good customers. No matter what sort of loan request it is. I mean, even a well, I mean, a car wash to be wouldn't be a good answer because we're not looking for car wash loans, but if a really good customer wants to do a car wash, we're going to do a car wash.
Speaker #3: Still comfortable with the ratio at this level? Capacity to continue to grow that product?
Speaker #1: Yeah, hey, David. Absolutely. So we have a ratio we're managing to. We've got lots of headroom before we get close to the ratio that would put us in territory we don't really want to be in.
Speaker #4: How about that?
Speaker #3: Sounds great. Appreciate the code.
Speaker #4: Thank you.
Speaker #2: Thank you. Our next question comes to the line of Stephen Scouten with Piper Sandler. Please proceed.
Speaker #1: And I think we saw lots of really good opportunity even within the CRE asset class. It wasn't a particular—it wasn't retail or office, or one-to-four family.
Speaker #5: Yeah, good afternoon, everyone. Great order here. Obviously, the NIM expansion in particular was really impressive. I know you noted there was a bit of a recovery there, maybe contributed five bips to the loan yield.
Speaker #1: It was broad-based, even within real estate. So we saw a little bit of everything in real estate. But yeah, I don't think we have any concerns about where we are from a concentration standpoint.
Speaker #5: So just kind of want to level set a little bit. And when you talk about expecting the margin to continue to expand from here, would that be off of this 363 NIM, or would that should we use maybe the June NIM or the 359 more as a starting point for continued expansion from here?
Speaker #4: Dave, we never want to get to the point where we have to tell a good customer that we cannot take care of their needs.
Speaker #4: So we always make sure that we have some drop out for our good customers, no matter what sort of loan request it is. I mean, even a—well, I mean, a car wash wouldn't be a good answer because we're not looking for car wash loans, but if a really good customer wants to do a car wash, we're going to do a car wash.
Speaker #6: Yeah, Stephen, this is David. Yes, when I'm talking about it, I would refer to the adjusted number, which is the 358, to your point, 359 was our spot rate for the month of June.
Speaker #6: And we still have over 2 billion dollars of opportunity between scheduled maturities on loans, cash flows, as well as covenant violations and loan modifications.
Speaker #4: How about that?
Speaker #3: Sounds great. Appreciate the code.
Speaker #1: Thank you.
Speaker #2: Thank you. Our next question comes from the line of Steven Scoutin with Piper Sandler. Please proceed.
Speaker #6: If you look at our total yield in the loan portfolio, adjusted for the quarter, it's coming in at 618. Our going on rate is at 632.
Speaker #5: Yeah, good afternoon, everyone. Great quarter here. Obviously, the NIM expansion in particular was really impressive. I know you noted there was a bit of a recovery there—maybe contributed five bps to the loan yield.
Speaker #6: So we still have some room to grow that, to expand that, but that gap is starting to narrow. So when we still expect to see expansion in the margin, but as I said, I think it's just going to slow because that gap of going on versus total portfolio is starting to narrow.
Speaker #5: So just kind of want to level set a little bit. And when you talk about expecting the margin to continue to expand from here, would that be off of this 363 NIM, or would that should we use maybe the June NIM or the 359 more as a starting point for continued expansion from here?
Speaker #5: Yeah, that makes sense. Okay. Yeah, because I think previously, you'd kind of thought, hey, 7 to 9 basis points in NIM expansion, quarterly, but maybe that's 4 to 6 or something in this sort of as we move further down the path.
Speaker #6: Yeah, Steven, this is David. Yes, when I'm talking about it, I would refer to the adjusted number, which is the 358. To your point, 359 was our spot rate for the month of June.
Speaker #5: Is that a decent way of thinking about it?
Speaker #6: Yeah. We may get one more quarter of the 7 to 9 range, but I would start to think about the 5, 4 to 6 kind of range of expansion.
Speaker #6: And we still have over $2 billion of opportunity between scheduled maturities on loans, cash flows, as well as covenant violations and loan modifications. If you look at our total yield in the loan portfolio, adjusted for the quarter, it's coming in at 6.18%.
Speaker #6: As we get towards the end of the year.
Speaker #5: Yeah. Still something a lot of folks don't have directionally. So that's fantastic. In terms of kind of balance sheet, migrations and ability to fund loan growth, I mean, the loan deposit ratios, obviously, ticked up here on the really strong growth.
Speaker #5: Could we expect to see maybe securities balances decrease further, or how do you think about Tom, you said if a good customer wants to make a loan, we're going to make the loan.
Speaker #6: Our going-on rate is at 632. So we still have some room to grow that, to expand that, but that gap is starting to narrow.
Speaker #5: How do you make sure you have the funding to be able to do that? And does that potentially put pressure on deposit costs moving forward to make sure you can do that?
Speaker #6: So, we still expect to see expansion in the margin, but as I said, I think it's just going to slow because that gap of going-on versus total portfolio is starting to narrow.
Speaker #1: Well, we always want to be in a position where we need deposits. So that's the first thing is if we generate the loan demand, then we'll work hard to generate the deposits to fulfill the loan demand.
Speaker #5: Yeah, that makes sense. Okay. Yeah, because I think previously you kind of thought, hey, 7 to 9 basis points in NIM expansion quarterly, but maybe that's 4 to 6 or something as we move further down the path.
Speaker #1: So that's the preferred that's the preferred position for the bank is to need deposits and rather than trying to find loans to make. So that's the second part of the leg.
Speaker #5: Is that a decent way to think about it?
Speaker #6: Yeah, we may get one more quarter of the 7 to 9 range, but I would start to think about the 4 to 6, maybe 5, kind of range of expansion.
Speaker #1: And we feel confident we can do that. And the second half is typically we see typically see nice deposit growth in the second half of the year.
Speaker #6: As we get towards the end of the year.
Speaker #5: Yeah, that's still something a lot of folks don't have, directionally, so that's fantastic. In terms of balance sheet migrations and the ability to fund loan growth—the loan-to-deposit ratios obviously ticked up here on the really strong growth.
Speaker #1: I did see a lot we saw a large number of tax payments some major large tax payments by individuals well over several well over 100 million dollars each.
Speaker #5: Could we expect to see maybe securities balances decrease further, or how do you think about — Tom, you said if a good customer wants to make a loan, we're going to make the loan.
Speaker #1: In April 15th, filing cycle or at least paying estimates. So the second half of the year is when we always generate deposits. So we feel good about it.
Speaker #5: How do you make sure you have the funding to be able to do that? And does that potentially put pressure on deposit costs moving forward to make sure you can do that?
Speaker #1: Well, we always want to be in a position where we need deposits. So that's the first thing. If we generate the loan demand, then we'll work hard to generate the deposits to fulfill the loan demand.
Speaker #6: And Stephen, I'll go ahead. When Tom talks about the healthy pipeline, we're talking about loans and deposits at the same time, not just the loan side.
Speaker #6: I mean, we're seeing opportunities in deposits, especially out of Texas. We're having some opportunities in Texas.
Speaker #1: So that's the preferred that's the preferred position for the bank is to need deposits and rather than trying to find loans to make. So that's the second part of the leg.
Speaker #5: Got it. Got it. And just with that securities book, I think maybe you showed in the supplement, 260 million or so of unpledged securities remaining.
Speaker #5: Is that kind of the magnitude of what it could potentially run down if needed to kind of remix the balance sheet away from securities, maybe into loans, given the demand?
Speaker #1: And we feel confident we can do that. And in the second half, we typically see nice deposit growth in the second half of the year.
Speaker #6: Yeah, I don't think our first priority is going to be to run down the security book because we use that for collateralization because we do a fair amount of business for municipal deposits, right?
Speaker #1: I did see a lot — we saw a large number of tax payments, some major, large tax payments by individuals, well over several, well over $100 million each.
Speaker #6: And we have to collateralize those. I think we have some mortgage repose, which is a short-term investment we have, and we can unwind some of those if we need the liquidity.
Speaker #6: So I think that's what we would look to. But yeah, that's what we're going to do.
Speaker #5: Okay. Great. And then just last thing for me, maybe a very high class, I don't want to call it a problem, but high class issue to think through is just, I mean, you're growing capital even with this rapid loan growth, given the strength of the profitability.
Speaker #1: In the April 15th filing cycle, or at least paying estimates, the second half of the year is when we always generate deposits. So we feel good about it.
Speaker #6: And Steven, I will add, when Tom talks about the healthy pipeline, we're talking about loans and deposits at the same time, not just the loan side.
Speaker #5: So how do you think about what to do with this building excess capital and what the best uses are for it above and beyond organic growth?
Speaker #6: I mean, we're seeing opportunities in deposits, especially out of Texas. We're having some opportunities in Texas.
Speaker #5: And would a share repurchase at any point be on the table?
Speaker #1: Yeah, it is a champagne problem. I would agree. And the last time we had this issue was right before COVID hit, and then we had extremely rapid growth during the COVID period.
Speaker #5: Got it. Got it. And just with that securities book, I think maybe you showed in the supplement about $260 million or so of unpledged securities remaining.
Speaker #5: Is that kind of the magnitude of what it could potentially run down, if needed, to remix the balance sheet away from securities, maybe into loans, given the demand?
Speaker #1: And all of those questions went away because we grew into our capital pretty quickly there. For a period of time. So we don't take anything off the table, whether it be an acquisition or whether it would be stock repurchase.
Speaker #6: Yeah, I don't think our first priority is going to be to run down the securities book because we use that for collateralization, since we do a fair amount of business for municipal deposits, right?
Speaker #6: And we have to collateralize those. I think we have some mortgage repos, which are a short-term investment we have, and we can unwind some of those if we need the liquidity.
Speaker #1: We're not going we're going to do the best thing for our shareholders, whatever we think that is.
Speaker #6: So, I think that's what we would look to. But yeah, that's what we're going to do.
Speaker #5: Okay, great. And then just last thing for me—maybe a very high-class, I don't want to call it a problem, but a high-class issue to think through—is just, I mean, you're growing capital even with this rapid loan growth, given the strengths and the profitability.
Speaker #5: Got it. Okay. Makes sense, Tom. Appreciate you guy's time and all the color. Congrats again on a great quarter.
Speaker #1: Thank you.
Speaker #6: Hey, hey, Stephen, I will add also just a side note. When you're asking about the securities, the 260 million dollars in securities, on our supplemental data, we are applying a haircut to that.
Speaker #5: So, how do you think about what to do with this build-up of excess capital, and what the best uses are for it, above and beyond organic growth?
Speaker #6: We worked with the regulators in we are highlighting our available liquidity in that supplement. And so we agreed with the regulators that we would haircut our securities in the event of a liquidity crisis.
Speaker #5: And would a share repurchase at any point be on the table?
Speaker #1: Yeah, it is a champagne problem—I would agree. The last time we had this issue was right before COVID hit, and then we had extremely rapid growth during the COVID period.
Speaker #6: So that's why you've seen a decrease on that so much. In the second quarter versus the.
Speaker #5: Got it. Got it. Very helpful. Thanks, David.
Speaker #6: You're welcome.
Speaker #1: And all of those questions went away because we grew into our capital pretty quickly there, for a period of time. So, we don't take anything off the table, whether it's an acquisition or whether it would be a stock repurchase.
Speaker #2: Thank you. Our next question comes from the line of Steve Moss, with Raymond James. Please proceed.
Speaker #5: Good afternoon, guys.
Speaker #7: Hey, Jake.
Speaker #5: Hey, Tom. Maybe just circling back here to loan demand and the pipeline being at record highs. And given that paydowns are slow, do you think for the remainder of the year, are you thinking a mid-teens type growth rate is a fair assumption?
Speaker #1: We're not going—we're going to do the best thing for our shareholders, whatever we think that is.
Speaker #5: Got it, okay, makes sense. I appreciate your time and all the color. Congrats again on a great quarter.
Speaker #1: It's hard to say. I don't like to give a forecast because we really don't know. We had a pretty good size payoff this month that we knew was coming.
Speaker #1: Thank you.
Speaker #6: Hey, hey, Steven, I will add also just a side note. When you're asking about the securities, the $260 million in securities, on our supplemental data, we are applying a haircut to that.
Speaker #6: We worked with the regulators, and we are highlighting our available liquidity in that supplement. And so, we agreed with the regulators that we would haircut our securities in the event of a liquidity crisis.
Speaker #1: It was also a watch list loan. So that's not all bad. To get a watch list paydown, but if loan demand holds up, we think we can have a end up with a pretty decent year, Steve.
Speaker #6: So that's why you've seen a decrease on that so much in the second quarter versus the—.
Speaker #1: But it's kind of hard to say for right now, it looks pretty good, but you get rates going up, we get some kind of geopolitical event, it's funny how the when this little thing in Iran started, that kind of beat everything back for a few weeks.
Speaker #5: Got it. Got it. Very helpful. Thanks, Steve.
Speaker #6: You're welcome.
Speaker #2: Thank you. Our next question comes from the line of Steve Moss with Raymond James. Please proceed.
Speaker #5: Good afternoon, guys. Hey, Tom. Maybe just circling back here to—
Speaker #1: And things slowed down. And I mean, Jim Harper sitting here, he sits there at his desk and has the deal flow come in and it'll drop and then it'll come back.
Speaker #1: And it has not been consistent all year.
Speaker #7: I actually even thought early May was really slow and you look up at the end of June and this is what we've done, right?
Speaker #7: So it lasted a couple of weeks and rebounded really quickly.
Speaker #1: Yeah.
Speaker #7: Yeah.
Speaker #1: Yeah. So barring any geopolitical event, certainly and rate increases, we think we're positioned for rates to go up or down. We think we're going to be fine.
Speaker #1: We think it'll work out. But I guess I don't have a very good answer for your question, Steve.
Speaker #5: No worries. I figured I'd ask and see what you'd say, Tom. And then I guess the color was helpful. I will say that. The other thing here in terms of sticking with loans for a moment, with the large nearly 100 million dollar relationship that you guys have on non-accrual, just kind of wondering what's the update on that, the status of that relationship these days?
Speaker #1: Yeah, all those properties are being listed. For sale. And expect those to be disposed of. And all of our non-accrual loans are properly reserved.
Speaker #1: And we feel good about where we are on that relationship and that we have proper reserves in place. As needed.
Speaker #5: Okay. Great. And then last one for me here, just on the sub-30% efficiency ratio subject. Curious how you guys are thinking about expenses, for the upcoming quarter, obviously, you've had both fair amount of investment in Houston.
Position for rates to go up or down. We think we're going to be fine. We think it'll work out.
Um, but—but I, I guess I don't have a very good answer for your questions, Steve.
Speaker #5: But just kind of curious as to how you guys are thinking about total expenses here.
Speaker #6: Yeah. So Steve, this is David. I think our 50 million dollar run rate is a good run rate right now. I think we have fully baked in there the Houston team, right?
Speaker #6: Houston team is going to continue to expand, although not as quickly as it has the last couple of quarters, I don't think. And so what we're seeing right now is it's Houston is sort of a drag on the efficiency ratio, right?
No worries. I figured I'd ask and see what's what. You'd say Tom, and then I guess the color was helpful. I will say that, um, the other thing here in terms of, um, you know, sticking with loans for a moment, with the large, uh, nearly $100 million relationship that you guys have on non-approval, just kind of, you know, wondering what's the update on that, the status of that, uh, dealership these days?
Yeah, all those properties are being listed.
Speaker #6: And so because they're not their loans and their business or deposits are not ramping up as quickly as their expenses are. It's just a natural evolution of building out franchise, right?
for sale and expect those to be disposed of, and like all of our, uh,
Speaker #6: And so I think from here, Houston is only going to improve in regards to the efficiency ratio. They're going to grow their income, right?
All of our, uh, non-accrual loans are properly reserved, and we feel good about where we are with that relationship.
Speaker #6: Well, more loans are going to come on the book. So is the efficiency ratio going to stay below 30%? I mean, that's going to be a challenge.
Speaker #6: I mean, we are going to we're not adding a ton of headcount. You could see what we've put on in the quarter and Tom talked about it.
Speaker #6: We had nine bakers that were added in the quarter. Most of what we add from an FTE perspective are customer-facing. We're not adding back office costs.
Speaker #6: We don't have additional technology that we're spending money on. And so I think the non-interest expense run rate is pretty stable at the 50 million dollar rate right now.
Speaker #5: Okay. Great. I appreciate all that color there. Thanks very much, guys.
Speaker #1: Thank you.
Speaker #6: Thank you.
Speaker #2: Thank you. Our next question comes to the line of David Bishop, with Hove Dee Group. Please proceed.
Speaker #7: Yeah, just a quick follow-up maybe for David. Just David, just curious, it sounds like maybe the FedEx move is up. Maybe rather than down or stable as we thought maybe last quarter.
Speaker #7: Just curious if the interest rate risk profile how that shapes out for a more hawkish Fed rather than dovish here at this point.
Speaker #6: Yeah. I mean, Dave, I mean, if I could predict what the Fed was going to be doing, I would be in a different business, right?
Speaker #6: I'd probably be making more money betting on the market. We have asked our asset liability management consultant to run a couple of different scenarios for us.
Speaker #6: And so as we stand right now, I mean, we are pretty neutral in regards to interest rate sensitive. We still slightly liability sensitive, but just barely.
Speaker #6: And so we looked at two scenarios. We looked at increasing 25 basis points which if that happens, we lose about 240,000 dollars in the first year of net interest income.
Speaker #6: Not a big amount at all. It's a nominal impact. If rates decrease 25 basis points, we're looking at gaining 105,000 dollars in net interest income.
Speaker #6: So I point those out to show you that's the band. I mean, we have like a 300,000 dollar swing either way. And so to Tom's point, what's going on in Iran, there's just a lot of unknowns in the economy right now.
Speaker #6: And I think the Fed as much as they want to decrease interest rates, there's going to be pressure, continued pressure from an inflationary standpoint to increase rates.
Speaker #6: And so I think we're just going to get a stagnant environment, at least for the remainder of this year. I don't see any rate movement this year, barring any to Tom's point, any geopolitical event that's going to change that.
Speaker #6: But I think as we stand right now, we're going to be at a neutral rate environment.
Speaker #7: Okay. Great. I appreciate that. And then David, maybe a good effective tax rate to use. I know it's bounced around a little bit here, but just curious any color you can give there.
Speaker #6: Yeah. Dave, that's I talked about it. I mean, we're trying we have some carryback capacity on tax credits. And we continue to work on that front to maximize those.
Speaker #6: I expect to see some benefit from those in the future, in the second half of the year. My target is to stay below 20% on effective tax rate.
Speaker #6: And so we're doing things where we try to look at tax investments for the current year and then purchasing credits for carryback perspective. And so I guess for your benefit, I would try to target below 20% is what I would hope for.
Speaker #7: Okay. Got it. Got it. And then one final question. Tom, just curious, in terms of the Houston expansion, if you're at a point where you can maybe give outstanding balances, just curious if those offices started funding up from a loan or deposit basis.
Speaker #7: Thanks.
Speaker #1: Yeah. I mean, we funded they funded 50 million dollars or so in the quarter. In loans and maybe 25, 30 million dollars in deposits in the quarter.
Speaker #1: So but it's building. It is starting to ramp up, Dave, in terms of both loan and deposits.
Speaker #7: Got it. Thank you.
Speaker #1: Sure.
Speaker #2: Thank you. There are no further questions at this time. I'd like to pass it back over to Tom for any closing remarks.
Speaker #1: I have none. Thank you, everybody, for for joining us. Have a great evening.
Speaker #1: We funded—you know, they funded—you know, $50 million or so in the quarter in loans, and, you know, maybe $25 to $30 million in deposits in the quarter, so, you know, but it's building.
Speaker #1: It is starting to ramp up—they are seeing growth in both loans and deposits.
Speaker #2: Got it. Thank you.
Speaker #1: Sure.
Speaker #3: Thank you. There are no further questions at this time. I'd like to pass it back over to Tom for any closing remarks.
Speaker #1: I have none. Thank you, everybody, for joining us. Have a great evening.
