Banc of California (BANC) 21 Jul 222022 Q2 Earnings call transcript

Hello! And welcome to Banc of California's Second Quarter Earnings Conference call. All participants will be in listen-only mode. [Operator Instructions]. Today's call is being recorded and a copy of the recording will be available later today on the company's Investor Relations website. Today's presentation will also include non-GAAP measures. and release, information the which Relations these the available company's for website. press earnings is reconciliation additional is required in Investor The available on website. on presentation company's also reference available The Investor is Relations the

President the Banc Before we begin, and Chief both Statement conference would and now like the in to of Earnings forward-looking included Jared Earnings would over company's like turn Please everyone statements to Officer. to on the go Safe-Harbor direct we California's to Wolff, Release Presentation. Mr. Executive I the ahead.

Banc And welcome California's morning! call. Good earnings to of second quarter

Joining is more Financial detail on Hopkins, in Officer, quarterly our our results. me Chief today's call about talk who will Lynn

annualized pre-provision adjusted in that asset point we loan quarter Our growth, disciplined the our built strong income past and over control, excluding good pre-provision a pre-tax, deposit the franchise was underwritten, a second well X% years. the conservatively of XX a have in portfolio. loans, solid with on commercial quarter and cost increase was by a banking The commercial basis average adjusted expense warehouse base, low representation loan assets. in performance highlighted and quality PPP funded return pre-tax, secured XX% increase three in

We excluding quarter. prior are in the growth impacted proud share, results of in the our earnings legal positively per continued sequential our settlement that

much inflation, negative rates, AOCI in represented due outstanding We demand labor during supply in inflationary markets repurchase interest our verticals, value book also stock operating approximately pressures impact and aren’t Nevertheless, for is despite the loan share which increase don't also as were headwinds and shortages. other the resilience. benefiting tangible There macro uncertainty in chain of per continues operate in $XX.X flat shares. X.X% Our which Southern of other chain to where as our dependent industries. California California to our from environment million higher on remained services economy show of and quarter, supply focus disruption where the common the we the of the an and

market We activity we the we opportunities. increase some While selective, to moderation do lending continue economic real buyers be from and the expect see in to continues the most quality impact. and in commercial adjust active as however rates sellers recent to remain estate

in productive teams the bank are banking With and new effectively strength have which economic clients add since $X.X billion to This highly highest we loan in existing the the expand of the fundings seen during our second capitalizing I resulted built, our we and XXXX. in loan fundings quarter, joined on markets demand relationships. level in was

targeted at we loans second increased quarter. loans, commercial continue to multi-family of the excluding portfolio, in annualized areas during and drive Importantly, loans real-estate commercial digit double warehouse, growth notably which of all rates most our the

we make more key of new addition, space touch payments and to earnings value as we we'll towards that the continue believe verticals prepared our will In franchise that on end enhance the such hires remarks. in

in has we release Sahota Jagdeep and us which as that pleased joined are EVP a Payments We announced Officer this month. Chief earlier press

helped offset second with our refinancings in line of the growth. relationships were client. impact through a us warehouse of for the warehouse utilization, the loans, mitigate demand our with drop loan SFR which to our the decline to quality During reduced on able quarter, we high balances partially warehouse overall in This purchases

to grow to our expected and we relatively previously earnings portion our As portfolios our and other warehouse of a smaller affecting we portfolio, while become indicated, not growth.

we our to declined. even benefit or second interest as prior were average yet on increases, to quarter the in The we seen that rates yields were our warehouse of full our higher balance our so that the of as the impact loan loan loans net reflected not the This portion earnings balances margin. have recent priced quarter rate expanded fundings

Our of the at the rates we quarter, pipeline average being consistent higher quarter. loan remains second first strong end production at we the and than the while level with had relatively the in saw

grew On have balances the of to the to depositors been operating liability which bearing rates, our relationships, over bearing utilization expectations. some rates, and increase line depositors has the receive side, while of account years of have deposits non-interest our since in accounts. in the the bounces, generally interest keep impact in a this developing for past non-interest average have usually the this we quarter. funds increase into their warehouse lower in deposit but with to asked contribution some built are of those in clients up our helped commercial some with balance who first behavior Institutional bearing continued Lower couple deposit our move shifted line new prior with consistent corresponding success of some offset

now consistent margin, loan increased quarter our overall most rates higher that the of deposit resulted asset reflecting second production balance with of in increase not even second with the net costs total our but the the interest our in Our Year-to-date an earnings sheet deliver sensitivity strong during risks economic execute we and sheet our expectations, returns, manage in quarter we of ability variety interest effectively increased rate seen demonstrate a continue to in and and cost and loan higher controls pipeline. and our are to environments. balance growth our while driving

over I'll on to then hand our for provide Lynn. performance remarks will up financial who it before more and Lynn lines some color closing opening the have I’ll Now, questions.

to some move quarter investor of on to Earnings be start I please indicated, comparisons mentioned, release quarter then reviewing otherwise provides to by stockholders first highlights diluted Thanks, income Relations review the for of our comments $X.XX our of second per limit per as was so website earnings legal quarter a diluted second can the of When my recovery areas $XX.X is $X.XX first statement, Net we'll discussion increased prior the performance. excluded, the or I’ll by Jared. stock and our sheet which quarter. additional some our are deck, Frist I’ll great Most share our on with quarter found common share. are Investor income preferred deal trends. available as balance million second to where our redemption of the and period warranted. information, the all in XXXX. charges refer

excluded. Our on second net adjusted partnerships diluted the totaled alternative costs legal energy earnings investments $X.XX for when and per share quarter, are losses indemnified and

points net basis of Our earning asset funds increased margin points total our as during X.XX% XX quarter, basis overall to X increased by the increased interest and cost basis XX points. by our yield

asset X.XX% due yields the during higher increased quarter. to to and loans on second both earning Our yield interest securities

Our increase XX the have this interest in rate month XX federal portfolios, higher due average yield occurred to yet higher X.XX%, loan the our due first the in with to and to and rates. so basis the that yield of basis during impacted June SFR quarter, March. point not CLO in The primarily rate increased interest market points to The yields of increases on XX that yield X.XX%, May impact the portfolio in CLO each portfolio. warehouse and resets resetting portfolio average and on mostly the X increased basis points securities average the occurred funds

for strong points quarter. cost points by of to increase of second points deposits X funds our our of interest points, in total Our average to well basis basis basis XX our increased average deposits in basis fund driven XX the due our by loan XX help CD's average cost as as to money increasing cost addition rate The and checking primarily to was some to mostly market accounts, increases bearing the production.

our are elected in As expected. of interest rate to of part term strategy, that management ahead interest we funding some rates in increases further lock longer

with our $X to similar the and was increased building. consistent by growth of branch our customer on partially prior the offset client attributable income second quarter no the sale approximately prior to including $XXX,XXX were million a non-interest base. $X.X mostly There quarter. the This income increase which of from quarter, the service was by fees in compared gain items an million equity a from first the in Our higher investments quarter, in

addition, $X for for Loans In assets. write included in other in second downs sale. the on totaled are value held included and XXX,XXX fair quarter million sale loans held

support tax new talent and XX%. prior being quarter banking XXXX our consistent cost as to payments technology tax to of we Our for adjusted our the approximately quarter, the contributor during prior largest at development a future effective effective our and with throughout Also from we the annual second fees, professional the at rate portion growth. the second increased help higher quarter estimate with the $XXX,XXX one for non-interest rate relatively business. was to The our XX.X%, quarter expense to investment continue brands look opportunities savings, to related consolidated the which of we continue organization offset

by quarter in equity in million our quarter. unrealized balance the The capital losses to the by and was partially billion, net total decrease Turning portfolio, earnings for sheet, in assets our offset investment decreased $XX.X mainly to and million. due second actions, equity higher total net $XX.X total decreased to the $X.X our by

repurchase stock Our value million At capital in June of the first book under dividend, common and the actions $XX XX announced per program of quarter common our in our quarter. stock our tangible The unrealized the included XXXX. resulting the the losses the AOCI $XX.XX, was portfolio, first reduced per with in higher by share tangible book common value $X.XX. share common investment consistent end of change from in we

quarter, essentially were the and of SFR C&I, the CRE, offset continued production. our warehouse, unchanged portfolios first increased loans the as relationships, to forgiveness inflows quarter, end the was Deposits and the loans. commercial from from million the by due multi-family loan in PPP support decline the in growth that Our of to added CDs strong were new to $XX during continued growth and primarily

were non-performing not the We loan provision quality the result half given the or second of net $XX.X in second XX, A downs credit to status, were accrual loans other loans million loans and quarter. charge-off. remains SBA quality. million and little quarter than in the payment but in through with recoveries flat more X(a) losses with XX% for the the improvement pay the attributable strong balances, decrease payoffs, of did Our guaranteed of second program. for non-performing the reasons general at loans either a classified was decreasing to status, A credit the quarter, of non-performing asset $XX.X to in the rest current record returning June end

end allowance ratio at Our our prior a allowance for bit than end of X.XX%, which credit totaled is higher $XX.X the million quarter coverage the the quarter. and to loans at total second losses of the stood

relative ratio stood coverage which ACL at methodology, Excluding and risk PPP XX. the levels in warehouse both at loans our of have loans, our X.XX% reserve lower June

presentation the turn ratio Our ACL loan XXX%. At remained this I'll over non-performing to at back Jared. to healthy time

I’ll Lynn. many growth are you, earnings few half targeting, with Thank a a and we we outlook. see we increases the about Through catalysts executed well our first and have the of in per share. comments profitable wrap up further drive year should that generated that

estate rates real loan demand, C&I and any Our start remains not loan strong, change. while we impact demand may have seen and pipeline meaningful to higher to-date loan

the and as Our we cost and deposit low innovative that our rate margin, managing generate growth, with also to payments products support in we to support new us us our pipeline banking leverage talent we expand and the while fund expansion notably quarter, strategically environment which grow most are growth interest of third terms to to sheet also toward continue higher enable which net will current continue to revenue. reinvesting expenses, development base operating to able should manage in both start We've strong, continued expect this balance our loan in production continue enable expense the of remains business. and effectively been deposits. our to services, and to new Starting add we to our further our reflect loan

foundation approach reflects We technology. building thinking have to pleased are of be that our we a we in offering very the what will made with progress forward differentiated the believe

bank, coming also further payment. the Sahota joined of We Banc as improving deposit solutions initiatives, experience California who forward [ph] lead to deep payments is on offer payment the expect new solidifying payments fee with value the our continuing provide commercial begin We Core as while well relationships. source clients to income will details more thrilled attract that on Figueroa focus meaningful relationship strategy our the of base. Jagdeep our brings solutions also cost for of low Keeley receipt ability look our in additional providing a to initiatives months. to we solutions added as a our on I'm to the the our to providing our grow to clients, and our

we over can well. in and uncertain, and and environment operating conditions oriented continue managing franchise residential and well that have our notably secured enabled in markets deteriorate, the relationship commercial than portfolio our to pandemic, solid we of deposit effectively of our more are industry loan demand growth, via risk. remains depths real-estate portfolios. through deliver of the XX% housing same economic then the loan to built the strongest loan growth conditions country. year effectively markets, characteristics banking then we also the that with the while we us in underwritten by most performing believe the economic to manage very of would a conservatively California the one If a positioned loans expect rest We continue participate to Although that strong credit remains If

through go franchise to position for our our we As franchise quarter, dedication, and built enable that all a let's and to continue we continue contributions generate believe for to forward. With thank the us Banc their now of questions. very we will which up for navigate to the and want at further us line environment, going to to of enhance that helped open strong shareholders. value results I the of our well deliver California the have colleagues us solid current operator, ahead

Please [Operator first Timur come from question go our Instructions]. And ahead. of Braziler Wells will Fargo.

morning! Good Hi!

morning! Good

morning! Good

is outlook, there? appetite this that just of purchasing loans your from the then incremental level good portfolio I warehouse for loan out Maybe just portfolio, within forward? continue foresee loan any a going starting guess you Do pressure on and your SFR partners to

our growth you were Well, on that across quarter growth of overall know balanced pleased. first growth diversified and so all across, saw warehouse, now. we all continuing very We very outside and Thanks we for lines loan of for Timur. our of see and portfolio do the

quarter-over-quarter pipelines not behavior we but be rates, robust. Our very are on will impact Unsure just strong a it rising yet. in was what the basis and changes of have seen

and forward for and bit of loans there drop mean a are little loans see was bit think reason, a ahead I going rising I a a multi-family of done, cliff we of up-tick to get that. think an feast people kind of to that don't off probably but saw for rates that in doesn't little that going we

what outlook able and balances, less past, very growing I relates to portfolio obviously mean of it’s moderate purchases will for been warehouse, are than has road and our as we be but grow now from It what an a down. the what but just probably now wouldn't it our would overall, to balance we a be contribution eventually originations I right We in the our seems SFR smaller from warehouse. are said don't balances it of know. I As that be growth. it hard the portion We lot portfolio working warehouse see through earnings fine. our relatively stable, warehouse that's said. perspective the sheet asset our expect the terms overall the would stability to We and well. will we would that of in the know disrupt for become keep loan would see down in teams and we

appreciate And Okay, that's then, helpful. the I commentary…

moved to – point yield our as got other loans continue XX of pretty that I on Timur on mean forgot rates well. that high. thing have I a and is new warehouse up just the I kind I mentioned expect and bump, One yield our product in before so that, basis loans was to we

has going So big are lower, the contribution so up, that of a help there's if averages even gone well. rate that's to as

origination dovetails question like the on, quarter what look That the at know next yields and into today? perfectly in the second as looking you my were what pipeline, you are the yields pipeline

have I our out me yields here, overall. help Lynn but production

making just early environment share? late that’s that of rates, up. for XX the new a kind because one do you of are happens this booked are basis quarter then right, loans be in a getting the quarter, environment. things and is have loans likely in series finishing you prior may reflect so so loans the tale and points there'll know tail a rate is third quarter, current be data those committed now done the probably of the of that to to rates rate The Lynn You the fourth will than next effect bit little to that right reflecting week environment from get raise whole we've stuff first know there feds higher other a and

No, get rising in don't production the the the upward. on and and rate the specifically, up in should agree, basis think you and higher there's continue was pricing with participating moved the we're second know rate I we, expectation actually quarter. the step I And the are production able benefit but through anticipated the to pipeline, rate would for I production environment, I Yes. the that on to up environment we respect to an second then third we in think as commenting quarter, move it the that know rate points quarter, XX the in for

don't the first we QX jump jump to to and quarter large level I Hard a didn’t and our continue up. to was expand expect I know You margin. say of would Timur, in what to know still we a that margin going a at in manage margin our back since and did to move see expect that big end from did we think first our we QX. We very at had some obviously the in I through quarter, notes margin the

expect earnings, do managing loan we continuing to the yield and to grow of up. are We but keep moving our profitability kind

the Okay, then if question base. and could just I more one ask funding on

this improved happy under You falling expectations. in your to belt, new know first base see funding was line couple of quarters Results with your are and that. broader

of you is growth, you're I mean funding larger think else funding be going of a component story something bearing Is we savings, or overall how types of under funding the to non-interest You going is driving thinking that that? loan kind know mechanisms? you future as on should about about think be either are other CDs. to indexed there core, that

flexibility a is have decided obviously comments I mention some to the you continue just which on us I forward and and I we Lynn, the put my bearing of expect preference you hard lock businesses would anything and be done CD's lock day probably know of rate but cost our lot balances to rising – term at some and on know know with would think over do CD of we We that earnings not, or that and in CD's you of like all. rates, have little funding I checking Well, single our to bit prefer ahead the at we've in need deposit a tempering that? accounts is and to to. in loan-to-deposit little did fixed to to funding see checking agree to. for bring lower. broker of side, – probably had and with some we we every funding prioritize disposal I We're would grow, checking now priority we do low that's we our money would operating just longer liquidity can plenty loans bit and wanted non-interest and our that see else markets, whether match time. we tools with selectively of that to we right I ratio we kind accounts hot our we funding at and their on. the work so a you don't if terms say lot in a or that have of and over of

Talk] Yeah… [Cross

comments, script don't so me, might these People Lynn with know but… disagree we

with No, I you well. agreed it prioritized how as – to

supported we funding a to focus we’re deposits, the that participate. do to of our bearing during and interest I do to think flexibility Our expect non-interest we have on I quarter, XX% have average side. lot the think continue and net margin able that success which on and

and there preference CD's in maybe out strong Our know ratio fairly and over some market but again you wholesale low fund market, lot funding need a some opportunities should place. growth, there. There's there's over loan liquidity money good then still is there's we opportunity the of to

the you Got color. it. Thank for

Thanks Timur.

next Raymond Feaster comes go of from ahead. The James. question David Please

everybody! Good Hey! morning,

Good morning!

David! Hey

growth Just follow-up on the of kind loan wanted side. to

pretty But taking if commentary looking a growth pay somewhat at and offsetting pull and of your of of it outlook, a offset one year the slides, Is should I in see to just into think CRE, know loan do your of half maybe about to know ’XX. mean see be slowdown the downs fair? in the a multi-family just like You in funding. you some together, acceleration forward feels continuing that still you kind core some and payoffs commercial your I we the that back even still – growth lot in seem was outlook know there is and of slowdown if solid we your –

Yes.

expectations invested lot you it? me, – like you and on drivers? I in some you C&I where the where – And excuse your niches. to new I you characterize drive opportunities, seeing know growth. some the what of have are you're if – some CRE to expecting where how is pipeline, at had most when you know see I look your do get and we guys mean would seeing guess the I are you segments a

occupied it diversified That's well. and estate, very, C&I owner warehouses real entertainment. going its is based business I was quarter. healthcare, it's mean as Well, core I'd excludes say which its our this pretty broad very

to much in – chains, markets they and being things affected that very lending doing were you be they that We we up rehabbed multi-family housing, buildings group and of there's saw uptick generally not seem lender, being affected by knew we’re and as it’s know are this fixed know very improved and we've business that our obviously Construction doing those. for know These that construction. are to we're not are You we very, on team and balances and very we’re that well. pressure in going is working broad lot for for little selective an have well business, and it's very, is know We're expanded in on supply infield deep well, well. real you by lending so so but as and tight construction. very very CRE been based. opportunity labor We're bridge only – a are drawing that's And our then a not markets is inflationary doing bit. on projects pocketed you know less estate office and developers you good pretty well, with an

the a high there might standards Got your there you you economic know know but thoughts. level at guys you – appetite outlook bit be it, that’s have being you just any of outlook’s environment. construction overall standards, just given more look great. You credit Is on that tightening And there? we be tight on? on economic perspective, know is overall you but selective I know and segments you a on the and always underwriting quality. there increasingly cautious I’d your segments of for here are just at your touched I from that curious as be any Obviously maybe just mean may credit asset level uncertain, the high

businesses and you you with that the interest be are like of where true be for of feel there labor chain are comment of we’re in seems So, businesses. concerned more right the always I supply higher last sorts would continuing underwriting. that our extent still businesses in now, strict, well they that know to be that have to course we're about then challenge controlled I'd I and space those this time challenges, made distribution a believe always and the rates it trifecta it's manufacturing know we problems

that know what's And down and of happened against ABL that and that we’re a I issues C&I inventory. in less businesses. quarter you in – representative think on like to you that's would Tesla so, like to kind it's you those the traditional make we in know that look receivables of lending what at sure against their on To drew terms that's our of just that that, manufacturing rely their think things – I know core extent you're and going good

we're being don't a of David have our change you know large I that's So anyway. been a cautious, because base but don't fundamentally behavior, We installed way manufacturing we've – of major base and that distribution the have see we we borrowing clients, a have a That's huge terms on. say not base of what don't them, in just we any, focus haven't seen lot demand of installed to we don't of and yes.

lot and over a world. you year, attracting know, just the talent the it of you year success so. magnet. I’ve or in you sense half a new And have talent called a the all makes then That know past

and late, of still new appetite and how whether you’re having is trended curious success has Obviously increasingly cost hiring expensive. new hires. for maybe of Just just much competitive your hires it’s as

know thoughts hiring curious, your side. on Just you the

the reason. think some bit is gone actually market easier little for I a

we we know haven't problem You a a haven't attracting problem had and talent had either. turnover

growing So areas. key we've been been growing and selectively we've in

they we other announced great many here, a that hasn't you lot to of two that You women are been California work people great of the around to an women talented event benefits to a issue. and place be, people want at culture, a bank, we this people I and just we and becoming have is people it things and in Banc so think an this leadership, and have the of on and senior great know afternoon talented know this quarter were focused that's want two going just brought that and we on

everybody! That’s great! Thanks

David. Thanks

comes question Matthew next go Please Sandler. ahead. Clark from of The Piper

Hey! Good morning!

Good morning, Matthew!

Any on what last – update expenses time? to for Lynn, maybe provided any rate you your guide run relative

don't Matt, really – I any if there's know updates. think I don't

is XX.X have talked we that of XX been about. think of to kind what about we've kind I think I chatting think I

in think did service quarter professional we some current our of up-tick some fees. in I have the

some little might I to as I of down come in bit. so investing think think we’re a even corporate expect initiatives, those our

at grow ourselves of but time. us more kind a earnings the of that's So higher investing reflection and able the being end to of I the at range, same in of still think

So still on track. think we're I

maybe of the line just you great. And opportunity a the size maybe Okay, sight maybe expense the and then Can revenue you payments on opportunity. that Jared, just to up speak needs. have related

we for see expense that the get a profitable. revenue how could Just year magnitude sense quickly perspective trying next from can become to a it and

I Hi and why give know We're numbers just asking. Matthew! prepared to yet. those you’re appreciate not you I asking

I more – announcement that announcement We of be hopefully Did clarity, opaque. Matthew? later make in for we we more context. so we – kind lose to think when around hear to give trying you people not a that have sorry kind detail and a a of us? different to you just with can Matthew, will want

thank Yeah, you.

two Q&A’s juggling Sorry now. between right

hear Oh! that. Sorry to

right look, know business it busy how us. is now, I be the to think yeah. to going is Well I know Okay, you important

have proud – be been when differentiator. the evident ball leverage mean is top the and been. to and a the stable out metrics, we're really eye We line and our that half been obviously been a talent This variety side had a here it to not real strong just row. be and year going just ball our in our what it'll we're are will it's in announce our continuing how payment think don't we in operating do building we've how but I for I'm going team, has a how and quarter, know the and grow not obviously which can core about and doing and core franchise differentiated different we're – which We I you fantastic just I strong take creating stable now. here, taking off that we to what it consistent quarter it's franchise exactly support it’s showed really of of eye our strong off is, we roll on and of mean space, read to know environments. a franchise, several people compete quarters I very the fundamentals of however that back, we’ve believe in

Okay, great. Thanks.

Thank you.

question from next ahead. KBW. go Please Motta The Kelly comes of

with to-date. saw were back question. quarter Thanks continue be the last really that I to Hi! active quarter active you the and buy for

Just wondering loan for about maybe your with appetite there, topline smaller may particularly part becoming warehouse now? as a be growth slowing

Yeah, you almost Lynn, announced how perspective. used we've buyback that I what playing of from do Yeah. think out? two-thirds we've see a up

thanks Yeah. the for Kelly. No, question

it. we've about You know of two-thirds I think taken down

stock our on opportunity our book viewed priced and relative to good we've been a think the it's tangible based as where I market value.

volatile done in I keep loss place capital and and think you able job being our we've flat offset the earnings. AOCI great it between to is think just pretty despite market modest know a by a relatively of I quarter actions

what’s So of the buy-back opportunity stock I the think we'll and for other it at look compare against opportunities. left

driven necessarily it's growth don't but take loan I will we that at it, know a kind off of of quarter. next look So

things there's think other we can I evaluate. that

other quarter and expect or similar rates, where higher they – some is Thank million run-off with you are? of you, the a this know of bearing. Lynn! amount how of turning you of have And that Do deposit $XXX base, to cost Thanks. had you deposit migration to about of you outflows much migrated a non-interest Awesome! expectations then do that sense categories

of banks well. held seeing meaningfully. have I now pretty acquired; NIB Kelly. should a we if of just I new going in brought I'm we to data, bearing think perspective discreet. of think non-interest been There to the were actually, pretty on grew give that I know of expect. and balances what the mean know couple I I then I've a think down I saw Thanks side read, actually have a and We out was relationships our deposit Right we number I lot we don't warehouse and last but balances. the just I of we’d were level got that One, you actually the some we things outflow the specific we're don't see that was the down, other accounts relationships associate up account mean with going data outflow. about from client pretty same had quarter bank. had we on. general pure from and a that inflow

just we pleased factors so and out. bit how our and expect know it. mentioned, while average much down, a on flat I down hopefully completely, we’ll think work are here that little it I we NIB balances in putting lot stayed to plus from continue but the a were quarter I at I'm control and where I that grow, they it was looked And like I believe grow a average can't

Last another very bank generally color. a me, the been deterioration some for credit on saw a their from from mortgage that know category. warehouse. safe question it’s Thanks I perspective there Awesome! was

see with relationship? you’ve if your wondering all at that Just

the take you and we We we the lines hedge exposure. So, our and and we moving have controlled be might know at for loans are design, that with directly borrowers the any originated look the we've mean, visibility they of moved. some loans, We seen vast lines. overall either you the we been rates. rates, how say lower off We that or to at the mortgage business work how have set change borrowers of we and majority have something quick are – loans our don't warehouse that managed exposure agings, think in we’re the believe well look at forward I how been know that thought could outs. we are Most I’d been a into disruption have I borrowers well up have think have way pretty any able struggle, through. absolutely with, through it's manage the with in ourselves but went don't ones their

them that of that the don't from and and so And market, volatility then protects ones carefully. insulates at the the in very very, some look we

us, out. we mean So some underlying of that even their exposure that business or don't the might but doesn't any move borrowers, see shrink for

Thanks! appreciate lot I it. for That's Thanks the step time. back. helpful. a I’ll

you, Kelly! course. Thank Of

from D.A. Gary of comes question Tenner next The Davidson. Please go ahead.

Thanks! Good morning!

Good morning, Gary!

my on of that at – just you're opportunity? as here as all, were you relates know is and I a it is there going the you to asked. fee exclusively announcements do business, question but know Hey! side, part a or into view detail So not play But payment is it and expenses it payments deposit as

the we're financial part view solutions services they this. better question. for opportunity a designing We and one payments Thank being the significant can you ecosystem. where that's as What that for of on we’re focused very deposit their have of clients, pursuing the reasons is

into payments. tied several they think to real bank processing bank this a businesses those think you financial provide real the have If we as provide visibility solutions see a today And to wait as you a that merchant hub their have clients As might attract have as to services might of way get to additional visibility. us a that that payments will payment things we able We And Fee be account, clients. be their you accept to in you and they to sudden don't want we’ve see and ecosystem be large. together income time, for it payment, benefit with a equally services a of deposits about time new said, but of to where know don't businesses when how is they most both we be the card, substantial there, this opportunity will clients. via help their have days. see marry as real a ability and payments benefit, credit can time all well clients, like that existing there's they are

So to we’re that's we opportunity deposit working attractive on, tidbit the there's of but things a make all those of on think side, obviously a things and for pretty come. more

was during a that laddered Lynn or just terms money of piece the than? of is that the And it then quarter, in appreciate month earlier color. I the XX that was added up brokered money

I bit than further think it’s The average that. maybe XX little around months. a

there's little and year bit two there. think short term [ph] some money I then a in

you. Thank

Gary. Thanks

has This disconnect. concludes presentation for and session. question-and-answer you The concluded. you now today's conference also Thank our may attending now