Prosperity Bancshares (PB) 24 Apr 242024 Q1 Earnings call transcript

Hello, and welcome to the Prosperity Bancshares, Inc.

First Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. I would now like to hand the call to Charlotte Rasche. ahead. go Please

will Rasche, off President Tim Chief be Vice Financial Bob morning, a Officer; Bancshares our for and and Chief by including Davenport, Good I'm Asylbek call gentlemen, welcome our Eddie recent and and and Kevin and of review being Safady, H. next Counsel Officer; the followed of for Thank E. Bancshares, few Hester, who Jr, Quarter Director ladies and review Chairman; XXXX Prosperity Dowdell, will website Timanus, Randy He our First Tim live This Executive Executive lending of discuss for Earnings Operating to and Chief quarter. recent replay Mays who Osmonov, some Chairman be with Charlotte broadcast will Lending Chief the lead weeks. highlights you. on will activities, financial of and Officer; Osmonov, available Asylbek Vice Strategy; Conference is with Zalman, President me Senior General President. Prosperity quality. Timanus, Chairman; the Corporate here today Hanigan, Executive asset Vice statistics; is will David Officer; David Call.

we call Finally, will for the open questions.

such, the the or such and statements. Bancshares actual be future to factors performance of known results purposes involve Before from unknown results matters or we laws, make the implied may may for may statements begin, forward-looking federal uncertainties risks, let of usual as the Certain materially and of and by Prosperity presentation other expressed disclaimers. forward-looking me discussed in constitute performance securities which the this different cause or

statements. All Prosperity filed those and be and actual including filings statements have concerning XX-Q that with Commission Forms we qualified SEC. Bancshares' be in in cautionary with statements XX-K by factors found different in are their than reports forward-looking and expressly Additional cause results Securities the Exchange the forward-looking entirety statements can and the information to these could materially other

call Now David turn to let the Zalman. me over

I'd you, listening like everyone thank our Charlotte. quarter and conference Thank first to call. XXXX welcome to

to late Lone Bancshares October your to excited headquartered full associates and customers Texas. is the we Bank, Lone locations. XXX customers of XXXX, welcome in Lone hard X, State and trust. to when The team Lone merger are scheduled XXXX announce on Star win Star and operational completed Star Lubbock, will access have We our will We that to Star full-service for April Prosperity integration the work

during long-term tangible XXXX common repurchased the for capital quality to asset to with relationships while stock sharing while maintained to and Prosperity customer of in and first shares In our XXXX, continues Prosperity a shareholders a earnings of quarter strong our the equity first and to XXX,XXX focus on dividends quarter of maintaining Prosperity asset ratio of million. repurchases tangible Prosperity's return success was quarterly to and total return share high earnings $XXX from shareholders. dividend. fair addition shareholders. the XX.XX% XXXX,

XX, share was March lower months X and for was or December diluted $XXX $XX higher per $X.XX FDIC net XXXX. compared ended XXXX, ended X For XX, share the common income due $X.XX assessments. the or months the The common diluted million change interest to income per with million primarily

X.XX% loans ] March increased XX, billion the increase the compared XX, $XX,XXX XXXX. at million ] XXXX. average XX at [ the XX% efficiency from or $XX X.X% on The ratio $XX.XXX annualized XXXX, For the and assets return tangible on and X were months annualized or ended $XX.XXX XX, was was loans December March billion The equity XXXX, basis [indiscernible] of with an a annualized billion the was XX.XX% the return XX%. average March points, XX, at [

The loans, First during first basis loans purchase or $XXX increased or program quarter XX the the X.X% of excluding points and acquired in Bancshares warehouse million annualized of merger loans, XXXX.

$XX,XXX Our decrease XX deposits compared deposits million ] billion quarter the the deposits $XXX March with of $XXX appear $XX.X the XX, million at March to [ purchased. modestly. million were have XX, [indiscernible] or $X.X no public Deposits Deposits a increased XX, million stabilized XXXX. and fund XXXX, have from XXXX. core broker during basis Deposits, excluding points first at at increased deposits December with increased

Based our tax we should ending bond XXXX. The more normalized XX, for equivalent net X.XX% loan net as ended improve portfolio X to the our level December continue X a portfolio XXXX months reprice. March basis was our with models, believe and for the interest margin months margin to on compared XX, on X.XX% interest a

Our our XXXX. of net interest XXXX interest compared to average for XXXX was margin the net X.XX% from X.XX% of margin first quarter with

compared totaled $XX with or assets quarterly points of points XX million March nonperforming assets December at $XX assets at quarterly average or Our million XX, XX average basis of earning XXXX, XXXX. basis XX, interest-earning

our Our nonperforming loans. than higher assets are levels, acquired to primarily due historical

assets to reduce level a within our nonperforming more a ratio normal We to expect year.

XXX,XXX headquartered is economy and is named should believe in than in the the currently Best XXXX, The economy business State others. in Texas the road. XXXX climate Oklahoma the larger and ] the Canada, Texas in Russia, job $X.X at outperform the eighth top trillion added most most XX, other of jobs Fortune for world, Texas state nonfarm largest the and states. Texas nation. companies the [ Italy Nation Year and was XXX now for economy We

on scheduled April late to have and We're Bancshares excited XXXX. the Prosperity As XXXX, team. integration October for previously associates the mentioned, on Lone Star the was Lone is State merger the operational X, of completed Star

active and hope acquisitions. other conversations to with regarding potential We mergers continue have grow and opportunities to continue acquisition through thoughtful bankers to

Overall, thank for we the I want associates had. our to create success have helping all

customers Thank again help our your succeed strong bench support increase value. company. to prosperity, We at our and a a associates work of our have and and to for continue you to we'll hard team deep and shareholder

turn results achieved. our to Chief the Asylbek me to over Let Osmonov, we of specific Officer, that some Financial discussion our discuss financial

Asylbek?

same income the Good March everyone. XXXX morning, $XXX ended period XX, and XXXX. quarter before for XXXX in Net the the for X.XX% XXXX, X interest December XXXX. losses for Zalman. Mr. months for million The net December the the credit X.XX% interest to a to margin XX, basis period on was XX, XX, equivalent compared you, X.XX% million for $XXX.X and Thank million in ended ended XXXX, the was for quarter same for ended $XXX.X X March tax months provision compared

for March the ended same compared XX, X.XX% adjustments, to XXXX, X.XX% XX, XXXX. Excluding the months for [indiscernible] for the interest X.XX% the was in ended margin December quarter X and period net XXXX,

primarily to the $XX.X margin interest was and same the for earning million Noninterest December first million XXXX, the $XX.X to for increase income X The expense $XXX.X $XXX.X compared same for $XXX the net ended March period due period XXXX. XX, assets. to XX, December was million $XX.X XX, Noninterest million XXXX. million XXXX, XXXX for million the to months March XXXX, quarter XX, ended higher-yielding for months in repricing quarter in X compared for ended was in and the ended quarter

$XXX expect State be the rate expense acquisition Prosperity based Beginning merit annual second noninterest million. of X, expected the Lone we XXXX, Star for April Bank in on increase range is XXXX, to the Bank's in XXXX. the The second of in million of run on quarter increase to and the $XXX quarter

FDIC and $X during additional to costs merger-related quarter special assessment to XXXX, million $X of we the $X million $X Additionally, second million expect of approximately onetime million.

compared approximately projected quality. period XX.X% accounting in duration presentation for flows ended bond purchase Lone provision asset ended for and me XX, the second XXXX, The with on $X.X December the Star quarter Mr. some ratio will of same Tim for was cash let the and expense XX, that, Further, XXXX, Timanus? X results X.X [indiscernible] turn months XX.X% related at billion. and The include details over portfolio And modified to Timanus for loans annual XX.X% XXXX. of efficiency acquisition. quarter to the the March to metrics

you, Thank Asylbek.

XX, XX end a points XX December XXXX, sale. XX, been assets points [indiscernible] is March XX, $XX,XXX,XXX, nonperforming for quarter increase. of This contract XX.XX% at represents which This totaled XXXX. assets nonperforming loans of XXXX, have basis real Our estate. Since under at compared or March [indiscernible] and other removed basis put is to or

XXXX, no XX, was No [indiscernible] XXXX, losses nonperforming ended a credit addition XXXX. loans, ended decrease in income a comprised Also, the quarter asset XXX the March total ended other in taken compared charge-offs of on quarter XX, dollars linked $XX,XXX, for $X,XXX,XXX there net of for during no XXXX. For quarter to and into and quarters during . Net for XXXX. December were to There quarter ended [indiscernible] XXXX, to the March [indiscernible] XX, basis. million months were is was allowance This the the XX, assets XX, March the December December was allowance in XX, March ended estate. repossessed the X during XXXX. allowance addition from charge-offs real the $XX,XXX XX,

new quarter Loans approximately quarter ended XX, production million loan XX, monthly compared ended March compared average The for December were for XXXX the $XX.XXX outstanding million variable-rate XX% XXXX, over March total December loans. XXXX. XX, and the at XX% $XXX to was $XXX at floating will to Charlotte Rasche. billion up $XX.XXX loan turn loans, made it XX, XXXX rate XXXX. loans is March The of to XX% now XX, I fixed rate billion

Thank your to are questions. you, time, answer At this Tim. prepared we

with operator questions. call will assist Our us

comes Instructions] Peter D.A. [Operator Davidson. from Today's first Winter with question

of closing congratulate given guys for it of I But still just experience, given wondering, the was in First, to on took kind just M&A level Star. can't want little bank pause I you are while? you or interested I close. to Lone just a how frustration that imagine on long

good question. a it's Well,

We ourselves time. that ask the have all to

you Lone closing very As it was Star know, difficult transaction. the

we now. approved thought by a the was it don't quite of it took of there. DOJ We had get But out we I it to it up -- lot money hard. FDIC it about then held getting time First, was a from And trying until a -- spent the a while. lot.

things have no to it. I changed done. Washington. hard about There's deals question It think get is in

about that really -- more. to into You have want we determine do. -- to the think really world, the is, it we'll the the yes, will we to still probably think answer we're thoughtful still more be before question probably I do to you transaction want But just It's will it do. deals and be that M&A the

all know people do just that transactions still is don't is for know right that answer yes. right climate don't even I to the that that now. they But used can the I the do.

M&A. in are We interested

second the separately, you nice interest just impact your I'm what second is Got sequentially. it's income quarter outlook Lone the kind interest and it. net Star can net increase to the to just in of wondering, of in about And in year? just then see the talk with the half income

we a interest accretive of and -- on the our from looked talk income. and bit models, the margin. net impact our When Peter, little Star at Lone I'll it's we book about run margin our to

be basis So margin. few to points I a think on it's going

So the -- term Star will in long theirs. repriced and the but assets positive considering be ours as Lone

credit It off $X in of the of the would Peter, past, shown bonds that on interest did on improvement. rolled a the improvement liquidity had have we probably our every front would more also we more to line their a borrowed And say, margin billion keep requiring that runoff most in net of quarter, but in books. our -- regulators year. always are what their banks because I show this the

We of gave deposits of growth billion. another us also X% just to $X X% organic almost

a So in leave not today's the borrow advance, of pushing would regulatory always more And lot on we sidelines. to on hand. money keep agencies the really world, liquidity are in

down we if paid and that that higher. margin have would wouldn't and have our up, building to our again, do loan borrowings we had down somewhat and build And up, been would that have our

Just follow if could I up.

I'm some is outlook in what what outlook the just going then the first the us given You've quarter. Just guidance -- is? wondering margin? the forward on

I said, we're on think right had we we're we're we think think I would we're do. what we that said still mean to on that there. do -- I that I course everything --

the we agree. with projection I think And addition Star, higher few increased points is a our NIM than the projects of we projected. I little Lone

[indiscernible]. been that's So

to get where to we like . just be glad more were I'd back

in we provided about think think [indiscernible] months, to can we guidance XXX maybe I the I the estimate So months. XX XXX XX

than the bit though, that better around we months Just -- looking short we're you guys in little a given the had goals year-end. term, think X% and that at in to being I X somewhere

seems said for announcement. guidance that previous we be think in the I gave So that to we everything going the earnings direction in

on change, think but again, something model, that we're always can course. I think I the So

with question from Michael comes Rose next The James. Raymond

on few Star, a Just for Asylbek. Lone maybe

day is guys that appreciate And I relates will about of want I was provision to had year if X looking you for going want just I the think addition around, see be $XX the of like but back holds. say, I a to addition. talked kind yield a know as then million. this just think Star, those? to again, accretable what changed. Lone things guidance, have I margin I it

be their million, we to to still I only million. to subject could change to I $X between the say related loan we're accounting we X working of million Michael, million. we $X portfolio. And be $XX would to $XX $XX Lone million guidance is know we're the I I between day think million Star, provided $XX getting between as but could preliminary, on valuation think but finalize

So it's on but working -- day we're X be the might decreasing, that towards provision.

That's it a we think yield, number, million per value on million -- but to $X million going accretable to fair was I quarter. that's loans estimated what $XX income initially, to also preliminary $X will $XX be million around $X.X On between million. to be it

helpful. very And a Okay. That's maybe follow-up. just

think in bit a better in Kevin was room, asked came the the warehouse I quarter. little this I question is

have kind supply? second seasonal the up lack that quarter of mortgage maybe entering more a Just of a to wanted there's but and for of kind understanding see that we're rates now pattern, the outlook gone

Michael. moving it's around, Yes, been

we For in it January. to we than probably pretty million in million when bad March and off and really rallied throughout pull $XX $XX that late nicely average talked started QX, up February or were back more thinking

in QX, I'd have I last safe on than think far Rates quarter. of for with higher number. somewhere number average so the [ for the ], gone XXX quarter. night, average I'd ticked we're a I for this tick-up, [indiscernible] say peg Through little around might a have probably the $XXX but a up. XXXs average million

One million to I million, for on million, annualized said, . correct. $XX $X the to $X.X that's the to the [indiscernible] want million would to just -- want I start $X be I yes, not of as loan million, $X just

I was . total about thinking

Lone be million Star $X annualized. to that million will $X

Got it.

Okay. Helpful. And for then finally maybe me. just

those stay fourth for guide think in the of earnest and of just of realized, that second the Is the is growth? with are expense savings cost I it plausible kind But past the the conversion, that kind puts appreciate expense balancing in on kind quarter. as more cost get you through noninterest operational expenses savings I end that the fair you said Asylbek, the normal once the think, [indiscernible] range year. would in of takes

Yes, I would agree.

be I I now, right $XXX sitting project year, think, the I unless now think throughout to [ cost, will ] that quarterly, in $XXX changes. good say, would something guidance

Rochester The comes Point. with Dave question Compass from next

close. deal the on again Congrats

to your back on to comments Just go wanted the margin.

XX-month parts just of on There and in, of think do baked coming color XQ lot deal at point? of a with for the a for to is the are lot moving the You this in. NIM a X- everything look. accretion good you And gave the good range what

For think the we quarters, past XQ, our margin I in accelerating. what few see

margin in the point So to sitting I X right we have information now in increase another say X quarter. second with basis probably would the

the that securities is fund liquidity book to side? And loan growth down or idea the on either Okay. to borrowing continue the use to reduction run and

longer that's down it's David up said proceeds. to bond cash little We're like growth. higher for a Yes. term, yes, onset loan of build. use building we But if Longer cash. closer a still purposes. debt at little by the the on have We regulatory the cash, that chewed getting paid term, are the not as They'd being

you do ultimately? Yes. And then you how cash need think much guys

a in It's work progress.

I makes But think gut regulators our somewhere ... the what is happy. around

working to $X range on we're right billion now. the $X.X I that's think billion,

capital to switching then And quick. Okay. real

you above that years X more I deal. for X another once ratio I can announced than only was and right, think quarter, been maybe that before a you've about ago, XX% of remember, TCE

here sounds given still build through you regular you from prospects year like you what was can more I a do the So a in What over buyback? do at are are maybe point? interested still -- Or where the And are rates conversation next it little today? curious, think do a capital your just whatnot, these and to think bit to returning ratios you're deals. this potential like need capital deal? here more just maintain and you start levels

all conversations. even first -- in have There with you are, want matter Lone say few start questions truth I'll to sometimes to We'll frustrated are we and keep doing pursuing than We to should Star. we'll continue. the -- you get it. try we one. to just going close more trying the the there. would we you that had There's quite hard you the had. still it But a work conversations I working, probably take yes, did of is,

our question we want what something. just we do to franchise. and It's be accretive that -- to bank, I the -- on we Star the shareholders, it together, it Lone deals it's the before thoughtful and think be some we have Lone and get the to harder of about we odds I still get that. to working get and then the we'll right been to even to something, of there's -- I think to just are now start that will talking again, we're -- operational any the Star we integration, really we does to it able working good, put trying wanted don't do, on. enter wanted But done, about think value into we with adds

considerations So at. those just that looking we're the are

what the terms you think about do buyback, of that? And in

The a Okay. do money now. lot we buyback, of have

I was I about deal think everybody Silicon everything. after the stabilized. public, have things worried the and going Everybody Valley -- think Signature

are you feel things saw think will more buyers how of I I our if becoming better. that -- stable our stock, down, think first many think I goes to if price quarter, becomes I bought starting stock continue too. People to think right And shares the and with are now. that, we in it be

to it's have I we with -- high-class use do do lot a real a think opportunity have capital, of think stock but it our problem we back. we'll a when we buy

next KBW. Catherine question from comes Mealor with The

you building excess -- bit and -- in you that cash little towards Or to more on this might you Do a X% bit Do the between lower, get follow-up hold that little little liquidity, believe a your is near dynamics back still see a a sheet a the Just bit bigger. end margin the margin just to margin still a but borrowings. of maybe outlook? still path with follow-up you having that even see do the year the range? maybe balance on

same, So balance it it's X? but -- ends between up the a those

and correct say to Asylbek want but yes, I'll . may start off

stays I guidance dynamics. because No, X pretty think the as of

to as repricing also X% helps we're working securities we're Star, getting excess First still addition all, cash cash I That's [indiscernible] still mentioned, of our that And Lone dynamic with us. of the the from on with having. we're the out.

think we so able to those manage think how a reasonable we So X manage should still be right? far, assuming, but deposits. a But things, deposits. deposit, wild I are card I So is with

still X think So year. the guidance by stick we of continues go, be the we should end as if it I

that dynamics. black I or something Yes. and change deposits that, think have to true. that always seem out the that's there was I do change stabilized happened other there like swan some again the can mean, or that I mean

just that in So mind. keep

So...

Yes.

the has aspect. of up consideration been the in I taken think cash build finalization margin into

there. So that's built in in that's there,

That's rate that? to X% way easier too that about is it see if great. get think also And Is there cuts. any to we rate without And cuts. that be might some a

Yes.

with on changes. rate static is -- no balance sheet So this is the model the

just I went it even X even I than basis don't only difference again, would be basis points it basis But still few modeling. XXX a shows it down we're if is, of couple even a think if model what our mean or be it basis points, it which points, changes X points. is would a

positioned because neutrally we That's are . correct very

by And if actually basis X up basis interest would points, rates points. points, -- it improve our went basis X XXX

correct. That's

before you back supposed then the the I you for about growth, X% has growth about to of rate slow are And quarter for thinking X% year? Great. on the growth I to was think know . a everybody. for this said been half year. be had [indiscernible] How

Kevin, want do to? you

X% said X%. We to Yes.

a bit of a quarter We squeaked has First been equally bit growth, out challenging. challenging. little was April

we growth rate. So haven't any seen spurt in

we're X% the know So David. the if probably year, I'd we for I the lower agree, end say on of to said don't X% X%. if to X% you

when mean -- what I unemployment waiting when squeeze you see are your see do. do. inflation, that to and to and is the good. talk down CNBC, back, your I really on to some pulling so see economy just so interest of you low you Yes, rates customers, going commercial it's you customers are But turn you

-- think in customers the supply trying to talk -- some are they are our the we see slowdowns see wholesale, chains get full. of to they I and can

sell And concerned. so not able they're so much to they're as

year who where the they're on laying talk on you And these they plants turnarounds talk you and a plants. not many our this into as still on [indiscernible] do of lot where like they're works off. customers doing can people the big And to crews sometimes even to and when them. Coast, Gulf They're

I the So economy. delay a think is there in

it either. it chance most is watching. think think business it's a of everybody I are as but good the economy, any recession, as I down and I we're will don't that people says think don't slow

helpful. Very

I'd to wind are portions billion. at of our in a is little at is loans maybe got $X.XXX we've construction range, billion commitments $X on running the of back potential billion things still the that somewhere $X.X unfunded think, unfunded just add, X our I

So a lot we of have fundings. still

before we start go require we all As you funding equity in the up. to know,

a some funding for relatively opportunity do finally unfunded there's commitments, number, been stable growth just I through up. but think that's So

The next Brandon question comes King with from Truist.

that outflows quarter. first So, saw had noninterest-bearing some in the we

And you saying your could when characterize DDA stabilize? within you those mix? do think just So deposit balances what will you're still

me But seem it. number. from on CDs. my with money table, be you much can give But up to can the to go deposits from more bank your it the accounts stabilizing. crystal to me what we there's unrealistic what is we lower the -- again, I just of get Let Brandon, does into moving exact ask it where dates ball tell, But tell we and it deposits stabilizing. noninterest down, and and come see it's would that in -- still -- All here are does it still seem I'll seeing how sometimes to be be to for will market you're bearing some -- interest-bearing your

you're So that seeing still transition.

that think continue. I will

the something to that, most bank road failure bank is no that for that But part, think the or do announced we're we stabilizing, like get it stabilization. we that think some there's on bearing

agree. I

As have. Mr. we deposits increased that programs specialty people core but QX, the to we dynamics like putting our we noninterest-bearing in mentioned earlier, in has some CD with public funds, Zalman their mentioned what taking see that excluding

losing customers just not we're So repricing.

at on overall, on seeing effect are we're still where deposits. we deposit -- we good that feel those So lag on currently. But

[indiscernible] on percentage But -- at we're bank, probably about XX% still of or a our XX%. XX% deposits

don't grow, to I continue will that probably know. So still

at a the CD it within look continued repriced reprice being if portfolio, our can to a XX% and you but mean, within it's -- we short in I grow, months XX% term, X year. Yes, get

those So it's short-term for CDs. very duration

new insurance. something out issue disturbed in There's they but insurance What potential does have back that my that is of months they with tomorrow has conversations waned going customers just the about the did mean, change competition, bit. don't the over extent to a if still in ask X, customers, news rate a and insurance but lot could to appear ago. down came X the that the come existing people, I FDIC concern

in some has resulted deposits. stabilization that So of

with what the Okay. from does standpoint? that And NIM deposit a assume outlook,

I look our period-end cost So if you deposits, March, our at [indiscernible]. on was deposit think

our million, put up loans think I -- around March, but cost blended the on [indiscernible] And in $XXX $XXX million on average. a in up we, bit, think little I loan ] around rate it ticks [ model, we of it's January, side, February, deposits.

account So in model. the taking that's what's

through at of rest the And of Is you're assuming? what kind year. the it Okay. that guess, I stays that level,

Yes. We do.

static It's a -- model.

Okay.

sorry the I deal? then this, the the helpful just NII NIM, the think lastly, And quarter, just if in but Okay. the but around share given could noise missed you in step-up just I you second referenced in step-up

but let's I don't think we we have specific -- numbers, ... see

to your got normal. You we do some Brandon of to the can back -- get own work,

The Stanley. next question comes from Manan Gosalia Morgan with

that deposits. Before ball a bit you balances existing your you're elsewhere, work more to especially on little side? away, surplus see of commercial put you any X the customers would revisit fact demand, the I with think in of put they that crystal cash money loan client and their can have if Do that the change on rate seeing and slowdown expectations more a on

put this you're -- is they take they're leave to but think customers is something not out not money down. rates customers know just do what down, and minute more I to my not feeling, find their money, understood if gut would trying somewhere it, they're asking accounts. exactly, usually, when it with pushing and come with their in every using the -- I commercial will our the think if rates it slowing -- things I question don't I my else

probably time interest down, I customers, would keeping an you'll come with rates easier think commercial as have their balances up.

trying X% on be easier right higher, and or come they it or think get X% again, can the now if somewhere, interest they're where as money. even they that But rates stay see that can probably think work I to rates I at short-term interest they're would that down, really us.

this Manan, Kevin. is Yes.

has pay of of most I were money down credit. to They already that excess using occurred. think lines

calling So had they balances we they and the saw of X And of a paid they unfunded time this were then commitments loans. took asking as period excess still to off extent for us rising through DDA of think from really way going I special over get some it's here something It's don't but -- yet, accelerate rate kind happening. bumps. unless to or money, the all going don't it's think to odd not rate I

I Most Kevin. starting that happened already, has of think it's that use good talked their about to We point, a they're money on where money. before.

yes, That's point maybe follow money is their the Got just thinking of lot pressure to Is lot I I it too in on Yes. put too? helpful. peers rate is more a or loan of And the the it is up of your was question, But the half do seeing view about people in get cuts the we growth many a the rate without it helpful. rates? for because from ask this major gave reason if fewer elsewhere. year it. color of even growth just a year, on inflection cuts. more back you're economy a looking the are And that loan function of you

So I you growth was on what some you're just on hoping side? color more seeing the loan to from get

and I things multifamily out pencil whatever to new a might these the construction it all what upon lower say, to seeing be retail. rates. back at -- particular, related that of back, else, and think it to that X% -- rates. tend half, could of X% us today. And to It's this but saying would is to side is or of -- back-half be lot I'm range more the based these it agree We we're it, But towards in -- I'd call hard a get range. related lot

to and much a strip a a of your muted are it return takes bit still XX% off. work. gets you're any doing people If not so make waiting. that and see got are XX%, mean or either and every kind the out charge they've getting premium, put to build we on pencil it, X%, you're X.X% great, pre-leased, it of holding hey, just people just our not but to we're underwriting center XX%, costs on as kind that equity XX% equity little so [indiscernible] then and are now as wants then, deal It's somebody or that we to were. I in to of going make And your return much XX%, them deal equity

be of banks much In ratio loan of a high have now. emphasis banks going lot from but growth on agencies, I they think the a how regulatory growth, all monitor And general, may right have clear taken to with having where consideration, too, say very -- liquidity are want the and to we that have they loan-to-deposit really in majority to I I'm most really to lot think are the the change banks determined want pretty don't of of liquidity. growth that. on the dynamics is and know a have to in those if and have start being the -- unless I But into do right deposits. going there, all loans to organic the have basically. turf

your move And on I was cash certain even maybe stress that a to size? I keep to have of and out focus other you do HQLA -- your level a you or eventually, can follow of So books? the can like Or That's [indiscernible]? treasuries sources it helpful. on Is of if liquidity on point. surprised by up liquidity just the bank for

pick lines think also basically, funds a they the at Federal I -- want can billion Bank Federal as like are because we in Home $XX bank crazy and at call phone have those in Reserve. available it's Loan up we the the and ours,

really more to that to borrowed want we've think -- you always on because that that always had we've money I are But keep so and hand. regulators position. cash insistent going they're they are overnight the And becoming really

it but So crazy, what it's is. it is

from comes Barclays. Shaw The question next Jared with

were a little of I on most lending. detail but energy hit, just more maybe think mine

that had a grow grow You maybe and well? concentration continue for growth to as What's appetite as the to there. good

see percentage a growing I ... it don't X to I on larger a our The was the in that keeps, particular growth than It was transaction book was customer much [indiscernible] is of $XXX it total large. quarter loan now. think, with million deposit to it

[indiscernible] deposits on .

pretty they than making us the money. on the all book, was and alright. were acquisition the and own energy to It's with accounted They of for growth It opportunity an large us gave borrow. much more a in deal deposits some

Yes.

trying that be we're it's particular. think but energy, say not of to I to safe afraid we're

right. -- remain Particular particularly, we

average into is do back DDAs good end And going resume? question to versus type it the Or we pace potentially we that? good in the at then Okay. feels of anything That's DDAs. look -- March. color. on if Was had unique going of growth you some there that period, about think like start that you seeing could

in pickup takes going through tax in DDA did sized good a overall day. but discussion, was see deposits to and then I Yes, year, day, change a pretty for March. We And tax odd. pretty every earlier in It it continued like my dip. a I that say [indiscernible] kept

we was to bank as then we because were feeling at tax excluded periods other lot were of flowing April what DDA still it time, this right other -- to we to morning. to COVID in at -- not It's period has up great we whole payments. the back abnormal been of looking money we out when looked, a make we So it And XXth and the then. woke everything up in the of wonky and

look over typical the or of We'll a of guess, into to that it April. towards I typical. see in to we whether typically excited, returns But uptick and and relieved March years bit or returned way see So it's has the a May not, we're is say of bunch the been not. pretty little April end back

happens in -- in year it last -- it. the [indiscernible] of quarter it most the again, the does but Usually, that of Yes. Historically, in recover. primarily we

really us the a for with growth quarter quarter third in usually have our a tough kind middle always [indiscernible] quarter basically overall than historically the of second of is when shown kind we quarter first is the good year. fourth and have deposits we We the quarter

So ...

me. Okay. And finally just then for

been we at great. we'll deposit Any your funding, it's out? where deposit [indiscernible] As cumulative look expectation for top peak

do little increase but a we lag, what is we see rate bit that in mean I the decelerating. see the Yes.

we which to deposit, deposits moving positive. interest-bearing customers mentioned, their noninterest-bearing very is cost. that see we some still this But So as is driving the up

will smaller lag I it's [indiscernible]. there think pace effect, still a a be but

of [indiscernible] So QX was to year a basis [indiscernible]. points XX cost deposits

So pace. but do a it's bit slower little expect a at increase, we

Arfstrom with Markets. Capital Jon from RBC comes question next The

fee touched We I haven't income, guess. on

pretty me, and you anything but fee income to So quarter a trends like it typical would here? note looks expectations on from

good trust that's I I But income I say, related wouldn't in is, be trust it is saw would income, uptick did. old a income. services on I we to say, nonrecurring a say, mean normal. expected, nothing We little fee overall, bit had of I would fees, We what normal. some would the we probably think X unusual. fees good

-- I cognizant mean CFPB saying. is to just and of always there be you they're have out what the what

change. that But that rule can of comes some So course. stuff there's all down, of

Yes, NPAs they you number, can quarter like you've for sure. down but looks talked how fees. and and balances you for chunk us moved bit gave that end, little Tim, you don't might bringing expect it and you That's a those what like since down talk about about bringing a be? a material

little collecting of of we essence, and the -- our get is. more. almost leveling up that's it our acquisition. see about assets. think a way, came to And above pretty think don't a these I of it Unless First job these are through well, a And going nonperforming In surprised more towards negative nonperforming may it's We XX% from doing in good where out. some Capital people significantly we growing assets -- headed it substantially working tick

here. if So it I would went surprised be dramatically very up from

during to deal. million as a leased. $XX loans, leasing and of time, real acute X investors period problem about get -- people have care are they those total the into mentioned did of the having centers, they were them, even which cash and them And And really that Randy XX% about me,

they and but it, get out it show can sum money I that they'll to into some out a it the get able So and while secondary their be where market, they'll can't think performance because they as takes the lease want matures, to.

of a have us couple get us larger some they're to out. deals time we bigger, get take So them that working

Okay.

CRE. just But that was performing your or Good. just the Okay. the performance? then item. On X It's I'm about smaller for of highlight it's out book than -- or how office only you? deck in CRE Slide your XX, on $XXX worse you That's any nonowner-occupied better curious million. other if in curiosity, helpful. And than deck

and long last very us it's pretty not other book time, a businesses, a other period performing the to in Over estate to generate real that's It's lot good all -- of for a those to [indiscernible] go the if because them. thing that's for lifeblood. the banks, and that's really been keep It's they've of in their going got trouble really business. the be generate revenue

and over been It's a business, -- good particularly of book XX, of list really it's a here. and well So good XX, been even XX talking and X I'm those about on it's watch to rare years, underwritten, loans. see it's

and it don't a They want CFO they own that their up. customers want the . are to Those all their building have building. to leverage pay own They saying

really book been a us. good for It's

question guess, Nonowner-occupied I for piece, the me? [indiscernible] is

a lot think I equity in has fortunate lot And so states pretty XXX in-migration been [ so in of position. stress increases. really until really things that for it's low really tested. being know, [ that from where in sorry. we stress very to XXX, those a much population these of some It's don't rate these help occupancy market a for withstand And test it's good, ], growth, of and But there's There's up but which pretty and driven puts up low rare. be XXX good it's rents the deals. been ]. Heard a been recently, book well. up in wrong. been as lenders, we other in I'm up loan-to-cost you We've -- It's performed all stressed days us to

repriced low. too going be I a deal back maybe we January, in. It was thought that think and in Jon, had was about I to was back it coming that talked I

X.XX% back package put cash would -- from for some cash think have at to the seen. thing. And back like [indiscernible] it had and close this X.XX%, a like as of That's and coverage I while the have to to move can stress loved I've right the we're then got were X.X, on on I the to only a as go to flows. [indiscernible] situation, something but we difficult going and the we we get it flows going would a realize that us to have

to I now Rasche over session. concludes back like remarks. Charlotte this would any the closing turn call question-and-answer our to for

the support Thank for and to of building ladies We to we your participate time taking our Thank work gentlemen, on will today. shareholder company, continue and in call value. appreciate you, you. our

you concluded. for Thank your now participation. conference The has

You may lines. your disconnect now