Banc of California (BANC) 19 Jan 232022 Q4 Earnings call transcript

Hello, and welcome to Banc of California's Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] There will be a question-and-answer session following today's presentation. [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

the Before we begin, release in harbor would like and included the on statements the company's everyone forward-looking to statement both safe direct we to earnings earnings presentation.

ahead. Banc Executive now call over Jared go Wolff, conference Officer. to Chief to and the of turn like President I would California's Please Mr.

Good Banc earnings morning, to call. quarter and California's fourth welcome of

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

Banc our of and of entire XXXX team. in record California net income proud I am tremendously generated

high last to sheet management. over earnings out quality have on built results we years. achieve XXXX, several expense we which balance was generate base and strength Our reflect performance and and that the overall were do disciplined in set the our what deposit solid able We to strong to stable capitalizing franchise of by the

As the quarters, has over sheet deposits. balance balanced stable last to and continued we a loans our of migrated to portfolio several commercial high have quality demonstrate

call balances ago, earnings we many on said that last we several warehouse These forward. forecast we continue to As out proven would plan. that this but down, our migrate quarters would move quarters have

macroeconomic as strong even loan selective the in given remain was we quarter fourth Our uncertainty. new production our

a we in quarter, prior bit tangible while the significant slightly result, higher sheet fourth a generated share. value our and per our a As were the average increase we book quarter had earnings a smaller balance core in than

and reflects financial value to is book important management. highlight share performance as sheet our it Our balance growth in tangible steady prudent per

million significant contribute stock than For of portfolio the the book the repositioning higher repositioning $XX $XX will a on million our including of interest by Lynn tangible acquisition rates our portion our per our notwithstanding AOCI, in more bit value a DeepStack and will actions call. this and the the to full completion earnings. of capital repurchase we program, that securities of our impact future increased the quarter later X% of Technologies, this took, discuss share year,

fundings the to be and combination balances the given in uncertainty, resulting of prior than essentially borrowers well slightly were more were to cautious loan warehouse, Our selective more keep lower the environment. as quarter due we from loan to the a demand But rates decision are overall during adding interest as the our loan quarter able loan lower higher our being commercial and in our loans excluding balances we current increase flat. economic

enabled we see funding this We continue our remained base the to taken around that XX% combined realize and costs, with more When have portfolio, us expansion. higher manage total margin the yields in actions deposits. stable to year our to which deposit of non-issuing

and we Banc rails In this platform smaller processing the terms on as our integration Technology we have on launch Earlier the with of of begun completed projected select schedule. of remain for into our our DeepStack the payments business, California month, sponsor with our track bank clients. we of internal payments

pipeline. will around the targeted out of at be with infrastructure we after to the process quarter, scale necessary which broadly build second more to continue transactions completion the our We end developing

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

period comparisons of I'll statement otherwise to move of investor sheet can to to quarter prior refer our review of free balance on the with we'll XXXX. some start fourth and be our Unless income our Jared. I are found our Please the highlights trends. feel deck, website Relations on performance. our Investor Thanks, which as indicated, quarter third then all with

Our earnings fourth areas for is my some per diluted additional information, of share. comments release million $XX.X helpful. I'll discussion limit deal quarter and was $X.XX provide to stockholders great to where the common so or a Net presentation investor income available

repositioned Jared of portion securities securities As fourth loss of and the of million, during diluted quarter a sale a on earnings mentioned, on $X.XX a had $X.X per which we our recognized pretax portfolio share. impact

diluted net adjusted net share fourth the million per net when basis, partnerships common the adjusted prior the per doubled that or quarter. of than for energy also of an securities net costs On loss net $X.XX diluted in sale It alternative losses and are worth is prior or There the income basis, This on on were since $XX.X compared income securities, adjusted no of $X.XX more an to quarter quarter. XXXX. fourth common $XX.XX indemnified share the quarter income for legal on investments in million has sold totaled noting excluded.

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

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

basis and loan in basis mid-November. higher yield investment to portfolio portfolio of is the to due in to X.XX% yield to XX the increased we higher the due the X.XX%. production yield rate the resets The securities portfolio increased loan impact part on mostly Our points average points actions and securities CLO XX on average accomplished

we loss We a the with and basis $X.X net the a of a portfolio years compared sold in of net points proceeds period yield allocation XX tangible million and back XX recognized reinvested approximately cause $XXX securities the of XXX forward. million basis this going increase overall We average capital basis in points points yield higher to securities, of to will in securities sold. three investment about book has value earn estimate to

that as checking points XX cost as of well This the interest This our we added interest of was in was the the some of offset funds points, to XX% bearing points. the of in XXX of basis CDs lock in impact deposits prior by for bearing as our total and term fourth the Our rate XX% market quarter, XX was positive to cost up climb. primarily impact points average XX market to the compared up non-interest quarter partially quarter. deposits the cost basis average from average accounts, continued deposits increase in quarter basis rates money average was driven prior by increases fourth our funding deposits our of basis have longer to have increasing in and

the has of increased average increased to time cost As basis continued increased. liquidity rate market and market, deposit by while absorbed same deposits our also basis And federal funds points has yield be points quarter-over-quarter, period. rates XX the of have XXX the interest expectation increased over the

for the information. to points net our a points cost presentation XXX and basis of in last deposits widened interest fourth drivers result, difference investor quarter. As XXX average basis funds The quarter the margin deck average illustrates between federal this from the rate the page

decreased of with being the areas non-interest to higher loss due of income gains equity $X.X consistent investments of $XXX,XXX. investment quarter, most securities. quarter prior were the million prior relatively with significant Other income from the variance Our the non-interest from sale on

including, of which Our adjusted a areas the but quarter, limited prior of reflection non-interest a million internal DeepStack. expense increase not was focused variety an in $X.X projects, to, from increased on

non-interest quarter the value. of we our maintain were that investing other with while continue as we expense control of disciplined of areas relatively prior long in the All believe will franchise consistent areas create to business expense term

quarter prior from fourth rate The to prior was the for tax the net decreased approximately effective higher the The up the by quarter effective current $XXX,XXX quarter's quarter. for XX.X% income of XX.X%. tax rate compared rate

estimate XX%. tax effective annual to For XXXX, be we approximately an rate

sheet. Turning to our balance

$X.X slightly end from XX, quarter. prior down Our December total billion the of assets at the were

shift Our total $X.X in by and million actions, million equity stock. offset $X.X net the the dividends in capital of that’s by million million which during and AOCI included fourth stock were in earnings common $XX increased common quarter, repurchase $XX.X positive

this previous With X% outstanding announced $XX and we the during shares. repurchases, buyback XXXX million completed the program stock repurchased quarter our of fourth we earlier year

strong, deposits and for XX%. the at bearing the ended XX% non-interest Our averaging remained quarter quarter

We better advances these costs we manage This in continue sensitive deposits. million client sources wholesale when both liquidity fourth quarter. to are $XXX in rate believe strategically the term FHLB than funding to adding use sources options included and funding

Turning to credit quality.

Our single residential fourth excluding credit or loans decreased SFRs family quarter. slightly quarter strong Non-performing the quality remained in loans quarter. over

our While end. and loss secured NPLs value SFR well with SFR of not exposure NPLs portfolio. increase, NPLs see SFR are very did represented to they year in we at loan our low do ratios XX%

guarantee. government two-thirds was status loans the or to guaranteed other of SFRs, our current XX, December at increase either that driven reasons classify a addition, and by delinquencies In totaled delinquent the XX% but non-performing loans period loans of loans most NPLs, portion million payment $XX.X an which in non total have performing SBA end. for at were or of of Similar

happens, delinquencies frequently quarter a drop million of our January. by in saw As SFR end dropped after and the delinquency by we middle $XX.X

provision a loan impact which the for given in losses offset weaker credit record balances not quarter did economic lower of We fourth the the forecasts.

charge totaled quarter and million ratio losses credit allowance million primarily compared at quarter. was a the to the at fourth to The the at at a decrease coverage $XX.X stood to prior million PMB specific credit Our for end allowance total X.XX% $XX of million the off our of loan X.XX% acquisition. to from a losses end the $XX.X credit of deteriorated the prior for quarter compared reserve end the for of purchased the loans allowance $X.X due in

total evaluated X.XX% X.XX% Excluding for individually impairment, quarter-over-quarter. associated coverage loans from the the reserves ratio with increased to

our excluding ACL have stood December lower the at And ratio loans, XX. risk at X.XX% in which methodology, relative coverage warehouse reserve

healthy remained ACL to at loan non-performing Our XXX%. ratio

At Jared. will time, over back I this the to presentation turn

initiatives, franchise financial Lynn. and effort their build California to you, for for XXXX a want Banc I And performance. strong of Banc to was at colleagues of all continuing year of successful strategic value. of outstanding and long our term in delivering executing thank our California very Thank on terms performance

XXXX the out checked is those by our to goals boxes. each we deck shareholders It what in our we do. pages of lays how deliver One are we we going out for what important continue as of set for we say to and doing

financial franchise continue we the positions that have strong the performance. XXXX, and manage environment through current to delivering well we to built to believe Turning us

very level a have stable high past of and to value expertise a the of in several the over done result we as work we that commercial deposits bearing provide. quality service have relationships bring non-interest of the years We base that

we have underwritten a year well-diversified level capital We capital portfolio at with finishing loan ratio X.X% ratio and our high respectively. a total the have TCE and and conservatively of XX.X%

bankers productive attracting part that want successful to company year we to talent very we in many been this the and that California. continue of have highly be as Banc to We of see expect

low to improve that and also ability enhance technology in client a priority further invest deposits. will We experience, on our continue to being further attract to cost with efficiencies elevate investments placed the

Since committed and to my service specialized that believe remain which franchise CEO, is that goal to targeting first expertise the day been done. And for market that successfully deposit taking robust will as levels technology, ensuring we we build and commercial to verticals core firmly a the deposit continue we have deposit adding base. best-in-class more by relationships. enable rich have share gathering us deposit We engine, value driven has our

is opportunities dependent like, makes going and in lending with higher largely deposit gathering, the begun with opportunities generate to enough and money point, If inflows have we has we a to range XXXX invest outcomes. then profitably in around uncertainty, given attractive to most earnings. forecast level expect which the notably available. challenging yields But are consistent economic we now success we possible portfolio, at securities which to environment there's wide this of the the loan of put can don't that that see our to on be it growth, those economic work

steadfastly we Absent first slower XXXX's results. remain fourth to by quarter would base and up the We bringing grow year. the core earnings be to compared XXXX an quality tends quarter the economic expect deposit on continuing to the credit bank. that throughout quality commercial a in high build than to relationships focused to Recognizing earnings turnaround, expect new and be we to slightly

have net going Let a XX% slightly have asset to with bearing non-interest balance a $X touch company the we deposits, with over Today, on this minute in me billion we healthy vision sheet a sensitive assets for forward. take in heart growing at credit of the values XX% low capital, of plenty largest a portfolio residential real margin, world. located are secured which is approximately fifth earnings, very and we economy of the the estate by loan safe at to interest

and We core estate, entertainment, education clients real commercial in other in have banking solutions serving a healthcare, niches areas. exceptional business few with and

toward cashless with moves merchant without on allow ecosystem. payment eventually, behalf that transactions, checks helping the promise card activity we merchant on us transaction solutions and be card of processing the and from partners of a away sales this and the transactions building client. world directly in a As hub clients or of are Processing and core as the software very funds payments with of well, intermediate visibility issuance card faster greater And for complete receipt into way. our to

will we significant and number an that will target we number benefit clients are a not have even solutions that from know We these existing that of clients our today. are greater there

clear be payments be now. clear and abundantly track should banking very of also of our and synergy record should execution by The

it are stress is solutions for to general long term it While important building on right. timing, we doing the laid and we have that out focused

progress and are we building and will a time line take do be it these business it not we however remains our long takes. right on things to true track, While deterred

backdrop, year for sure Banc but initiatives will have talented returns and we with underway, team, XXXX I an out, have with even term be XXXX our California. an greater know loan based of mission value we and shareholders. I exactly just uncertain ahead, year driving given Even incredibly fundamentals to do an driven roadmap have laid growth long continues vision culture going track of and the amassed and the be can't and exceptional will shake out have I an the strategic record is we for exceptional we be values where the that economic a

questions. open With up and that, line operator, the let's for go now ahead

Thank you.

begin session. Piper question-and-answer [Operator at now Sandler. first will go We ahead. Please question Matthew Instructions] Today's Clark from the comes

and Lynn. morning, good Jared Hey,

Good morning.

trying from to mortgage here assets. or them know of sense with how nearing kind may maybe difficult for Maybe warehouse bottom. to loan pinpoint, just on the the starting I Is leverage be you're earning them the a incrementally plan maybe manage But overall not? assets? earning us some grow and growth is even give stabilize to

Good Sure. morning.

been keep there's little bit grow it level right then power relatively at pipelines it. probably least at leverage like be. we'd selective flat pressing, And a great, if target we're we not needs pretty very flat. to the deals see we’re we're we They're think I to grow are environment to grow to -- probably to also we like do. a bit, but a of little If more. slowest the opportunities that being little we'll do The them opportunities asset where and I've staying been can bit are uncertain they've where now. is the we'd them assets to earnings maybe and use company, not the But in since not they keep huge

the where that $XX.X Okay, go run rate, maybe this great. coming non-interest the thoughts this your million might Lynn, core And expense just year? then on for quarter,

Sure, sure.

of a $XX to we've end were lower $XX provided we at range. I million of previously million, the the range think

our think the expectation $XX.X million I lower is probably end.

appropriate range $XX is I Maybe think of us, to higher And to we expenses. the unfolds, million. initiatives. range. we've has higher think then like look the at at higher I I into of still think continued that the we'd first And put year be as I the seasonally quarter the invest closer the said, as will end in many think I end though

where you in mid-XXs bearing think XX% And settle to then And might last your deposit interest cycle? updated was I thoughts think this out date? in cycle any Okay. the it on just it beta cycle,

contracts, in -- -- on and kind we what our we're that's to focus how seeing And don't was, deposits proud people quarter really and liquidity, overall of that bringing it's to questions. very cost low the as know expect we've downward moving book what's to continue outflows is there we what the the up. our from change been there mean, were said, be deposits it and holding going economy said Is much XX% I real? bring mix and I'm we to in to and but hold prior I is We that's of non-interest quarter economy last XX% Yes. grew of expect up? our because

the our our going an to kind efforts it's and percentage all me, output track to of So Matthew, we're deposit outflow. very try an keep is bearing Excuse non-interest it's really much that this -- we did it's growing something job deposit was of honestly, what to which we of beta other not me we as prior market. much quarters, increasing a have. relative the of the Fed increases And costs lower our% Lynn that, not meant much pointed quarter was than to better out because

to interest So target don't for Fed we're room We're just to closer it point a expand. think be want about margin and I getting number. has based on neutrality going smart still slightly move the But say to we're increases -- for our optimize to protect long We asset likely of they're would probably some the We that a indicated to rate what have do. peak that at know given And term. shareholders. I earnings to we'll sensitive. we to bit there's little

have it's have you is direct So I we question, number. deposit know of it we to and see how growth internally. non-interest about the make bearing we there. grow we know to a don't to Lynn, we have investments. add specific know that answer -- I anything your keep if in end or talk that's make beta to trying We but It just a we'll fund that's kind not deposits going up enough don't that where the specific really sure to don't quarter.

it numbers you at deposits or thing to looking lower I our is, bearing funding that I of the only from fact prior add cycle our are the you think I a of base think result trend I that deposit think provided of base. us being is were and the a relative would higher% beta non-interest our the

be deposit when at would to a our or versus that then compared that non-interest our to we look beta a extent, now, expectation mix Jared's So point, And think to prior expect managing the period have deposits generally cycle focus is it on positive I forward. now interest move prior and we lower. that bearing and as core base, we impact funding to continue on to

color. for me. Thanks one the then And Great. for Okay, last

Just on capital.

You capital are repurchase your share XX.X% started point this to CETX accrete done. What on here program again, cycle? buybacks another at authorizing thoughts of

Well, we've at got in -- couple do looking a there's here. we Board have think meetings I made and I there. of that up February. early coming any going a announcement to things we we haven't be mean, could We're

Looking initiatives the what the planned investments for are capital year, have. at including use of going in forward buyback the we the company we and of things. the And those of terms all number of have what's best dividend,

to stock makes cases back look buying level, for our that in If trading all and many a at it So sense, is stuff. be very there at we're long. low obviously then it going won't hopefully

think [Multiple a you since could XXXX right recovery modestly a a base. expect actually just to Okay. last that make I on you In core point opening on in to comments, relative operating we're I Speakers] that's of the be sneak clarification. to pre-provision a sure just assume And had XXXX basis. I basis using up you earnings year if your want I then in, big mentioned one

that. comments. was those -- was and -- about Yes, time was, when thinking the I recovery made one about about Exactly. obviously, out That unusual. thing I that I thinking That was backing was thinking I

would higher of how through to out And so we we the looks. stuff, unusual bit built that's little it you expect back and now, be have year. Where sit when a the it kind

Great. Thank you.

our Fargo. question with today And next Wells Timur ahead. comes from go Braziler Please

morning. good Hi,

morning. Good

last Maybe on line comments. just of following up the

out that a the assuming year zero essentially change asset if kind there's no methodology? and for in So the provision play real growth projections is of that CECL there's current

provision year. zero think it's this to expect reasonable don't I

on landscape. I stress our it's have we're portfolio. ratio our quality. in about to really do, well going and out, in There's think the to seen certainly in And come pretty underwritten. relative loss SFRs, we our an every any really her similar expect We good peers we Lynn (ph) Overall, darn never we've to well. really, coverage out thought comments, And it solid. with portfolios high. [DQs] portfolio, we look was but our we really that how feel as now don't based that quarter like is uptick and laid It's at credit I some time

If it’s if I else like that appropriate now. we but haven’t going be provisioning growing deteriorates, to stays And the have things yet portfolio I'd have it year climate seen would look are appropriate. more, that we'll And be of sense. right growth economy bit to sees what would whether provisions some are the in so, think little they a this economic so for terms I loan just see would at flat and our dependent and makes everybody to and where portfolio.

the maybe it you makes that plays the picture the have does visibility keep liquidity comments kind unchanged, an Yes, and that sense. excellent there rate here? still numbers? of house DDA, shift lag that is in of done out. of is will I while at up kind that much already the the guys risk which And Is just effectively much job guess outflow keeping or in hike again on in how last much and mix circling all liquidity then appreciate

-- very if they're our tertiary primary, cause all would not immediate government liquidity healthy. I in. -- meaningful fully to of know I sources you I'm have for correctly, pricing. answering continuing of article We on pressure say liquidity, question about deposit understand very, could and happen but thoughts, see if me I interesting out obviously pressure defaults about your secondary we're yesterday very any that came -- Lynn, continuing that we're see Let don't the and on and I mean, if feel how baked to debt your an on if problems that was banks? good there could what and It's

XXX% to a It be. the say we at on I But concern holding to doesn't based earnings them and deposit things all that still to that exists extremely liquidity loan comfortably want the market. stress we've managing are ratio, in I us think and would ways we can We where the able do been to pivot. that

book it stable sell us it. things capital think tap to it in pointing think are we're thing I see done coming to especially that little lack keep our very true it's Lynn impairment and capital One managing I into We don't growth have our tangible real well, to very, our is important have back have exceptional we value having we differentiator that really we to to securities any on levels existing a marks chose going have drop and us. from relative for think these and of worth of of if others. and but top would team with We a and that. or big we to our keep managing big her an cause of portfolio really for job out, that's play. think ACI don't -- AOCI of us mean, it's liquidity that We that's I that high

thinking then that we magnitude guess the just needed should to encompassing from the range. DeepStack? expense investment at Great. And up be million how And about stand that base kind then million at me, I to timing? and of Is looking investment in both last $XX $XX

want you take do Lynn, to that?

on fourth Yes. $XX include for DeepStack. it forward, I the as look Sure. following sort up that. expect income. that. should move do higher from And fee million will quarter does additional I some that we think The expense we of Thanks back the with have added with

that So some to base leverage of the including initiatives DeepStack. able for to be we the we have expect expense

your question, yes, it it So includes I it think Timur. answer

for Great. Thank you color. the

Thanks, Timur.

And Please our next go ahead. Gary you. Tenner Davidson. with from comes question D.A. Thank today

deposits about the wanted broker I quarter. the Lynn, ask morning. added Good to in

and on could you the those of [Multiple an us idea and timing give of If is term Speakers] kind of kind deposits? what rate

of Speakers] [Multiple some detail. maybe pull go the

just a comment. general I think

our we've balance think observation, kept Our nimble. sheet fairly I

some we've of brought balances, let down warehouse So the off. associated also some migrate that of the as with funding we've

of certain then in the expensive they extent broker term terms nature move so out using compared about rest overnight to the a have a to actually less shorter that days. are And can be versus So They're advances, portion two overnight. deposits XX to to XX maybe years.

more information. So [indiscernible] pull specific

Okay. No, confidence going then expectations terms about thinking of of just about thoughtful I year helpful. the of the business KPIs in as that to you're or flows appreciate thinking in I or a thank you're That's to business building about in expectations for I'll Whether business? had or that terms of might maybe the providing more just ask, relates that And over to how how kind out. you're be initial way of course obviously kind this for deposit that you. DeepStack, be about and little year. thinking it's in your Jared, terms thought kind it you of -- of be of

Sure.

get want to stood we it I up. think completely

on a sure the making We're right, mentioned on we I rails. it regulatory started that we've very get side now slowly, our lot the handle. systems to compliance be client my it comments, we all we right volume in able so that working responsibility all of to the that and feeders to transaction oversight expect our exercising get of and get that our onboarding want and -- particularly make As of are we're of right. all sure the doing There's things well side we

how job a doing really And this our out. we're of roadmap good is a rolling I have it. we so, And team think with

look of okay, be, second We then, as we give to are be I pipeline of kind quarter saying, people I'll more scale. do we of expect. be slated comfortable closer mentioned, to what the the the how by indication And and end to by should

be For a will quarter, now, the rearview as as it's little looking. get sharing we'll mirror, going more bit And to be happens, forward we it. it it to be kind be of through in easier second the

you clients that existing And means platform, Okay. clients over you're opposed moving correct, say to clarify, onboarding bank rails, just to to onboarding? DeepStack your to when as

clients. soft or this clients two which it far it on new in new wanted I to the call No, what test so is do boarded We quarter, And one we environment. a great.

to You massive on don't put volume. want

breaks, put happens, that if the it without you to can it fix something on want can can and disrupting. it You monitor you volume -- you

the were to a compliance our to we've a sure yet thing fulfill team thought get that really excited speed. way in tested pressure this faster moving doing to open is We're moving job. not do make it's and So just we we We're until up as that share to can ready and it floodgates and obligations. our great at the

All you. helpful. right. Thank That's

was Thanks, piece everybody. pull to one Gary. that able benefit the of detail for of I

So rates X.XX%. about our our nine a have -- about CDs of months is tenure are weighted rate brokered and average

Lynn. Thank you,

Please Thank you. ahead. our next David go comes question today with And James. Feaster Raymond from

Hey, good morning.

morning. Good

with have back a and any any it, about So have these you investment that? guys there have? stuff, all pretty standpoint. and you're it's need just of and pretty from how to side following you you've have you payments active DeepStack Finexio other level, really do expanding now? execution that the you you've and been tech the just that pieces high do may additive that and kind been -- of DeepStack banking about the just looking that as and into, at been from in the interested think you I step that growth you guess you And are Or in in innovative now think on kind aspects now pieces up other be what businesses the forward

she's all pieces the been We a the and a in got and just us long lift in team. think payments that and people yesterday head going been to provide risk I she of at deep joined people. aren't also have added certainly who's of we a industry the and a in banks. lot that big [indiscernible] the payments There payments to new have background all Well, have

we say, have we her David, the ecosystem payments. here. add a really build from to mentioned people, talent. complete thrilled have but out being technology, high comments, have as standpoint, we a I so able in And the I to Continuing that my we're vision to see, really, quality would for

has side. pursuing paths think think Operating and can on both rolling them underneath do side DeepStack as pursuing so we're the Sotoodeh complete And that these as we -- issuing in we we in both and we're him have our on solution. of will so And John for provide clients of what out parallel parallel. pass he's we Officer, the Chief what solutions And there kind directly well

the issuer the very processor. what be loop as years a both So we well was if obviously of were you merchant Morgan that's created sides there. get and And closed to as also where the many attractive have transaction systems JP ago on can they the system

forward are looking. So we

I capture differently we're we're possible, about than think us it's as to much together potentially thinking it pieces others allow putting that as the and will early. but

execute excited and to before endgame. but vision, too I'm pieces I'm share obviously of the have excited we these just demonstrate each So about we get to -- the

in And kind of still thinking breakeven contribution kind year XXXX? of this more it about

be outperform would able we're look with to if And that But I think right great. it. that, that's a Yes. at

of especially just bit returns? sense. risk where standpoint, touched solid, you've light any hires times cautious demand just of you Okay. -- adjusted some your seeing on thoughts bring risk new across desk side remains where you just from which the that a it ton I'm attractive commentary loans or from is curious, your And more still slowing, where other a several in having demand about makes made? still on of come that outlook, a maybe And are of this

Sure. good That's a question.

but good down. content. we see to little is of as a really niche. slowed see in financing It's things still filled going that's been creation channels attractive, really think for where we out lot a that opportunities to other And streaming we bit, continue carved have opportunity there's These us. even stable content on. So get slow a good We've

a got coming lot now financing we've people us we've asking And it. programs. of and to our at good for excellent put is together really team Our

an as smart like and is healthcare there in physician area things financing say also continues to thrive our practice our that team groups to things would and specialty and hospitals there. I in are So that and do market opportunistic

with and lot the to that is of charter something continues in there revolving have from deposit a know how get a help And charter is schools lines the them we terms be credit schools Education that basically rich receivables niche, aren't where good bridge that financing they of state. do banks of to that.

that. we've with so been successful And

the things that just done need today getting bridge stuff. floating maturity. into or There very certainly are on note are reach get to things On the the they financing real because done a flipped very, the that people some basically it's slow, estate side, rate is side, permanent

that loan are So borrowers are trying situation to they longer a people our and are afford the most in ones to take stuff the where in can are opportunistic caught sophisticated be seeing -- are who no out. who

strong of the So did to them. they're guarantors when they who a a in we to loans, the loan personally they're want there and we have they and support record track cycle, execution. doing know values what guarantee last be this to have They

but lot activity So buyers. with then very worry is is businesses impacted was. that get being rates. said C&I their -- they we by that's than paid else slow. very, I That Everything as it is, caught still oversupply I slow. is get and own about a by slow pretty slower mean,

we're So that's cautious, some color. being just super but

concern? on things. types in within like be from are credit the maybe And and But the guys segments continue some might focused of pull segments that at standpoint, notably investors mean, of on? some catbird the standpoint from and staying portfolio. just what of is causing you perspective, I some Maybe market, risk you what from sitting I mean, loan on with I kind some that the CRE you you that if low your obviously topic, seeing -- really are are seat look know are But and in of office credit opinion? market your just what environment curious, and on your you just a those -- for the the are there cautious back more

is that something not so Well, in. we traffic hospitality

And away that. by staying I from start so would

lot is a have their I of isn't isn't a and Second don't that I have of thinking much -- away really there space. mean, would for there heard now it that business from aren't stay about we office. reducing We sure.

leases come perform. up, obviously to begs there so is got that's something you going Construction And be to that lot a how careful. questions. of When

Now out the best then good pretty as no the because can side you and the infill of you soon you're construction is opportunity. that housing, demand that, best to is building supplies are and downturn there's certainly available know And developers ground, the are sometimes of fill up more come available, there's quickly. build when time teams more it for

the actually building you're today? construction. But what's say construction, So have avoid the cases, I price extremely wouldn't would the some Some building they're careful the of say be that of down contributing. offset I land to cost What's can that the on but costs you rate that on would going all gone most that increases. of

chain. -- warehouse about going I rates, that And things could core and to go and like to C&I, And hard and just you back get with supply think hit interest be labor hit. triple that things that are distribution that things are shortages

that's you have but be sort team, right you're doing do safer because to there the one cautious. C&I of now, this a in to ABL have environment, of you If better even ways good super C&I

pull makes unique as asset. will. look but And if if to we originate, the safe SFR on remains to wouldn't see that opportunities I And on you it don't other would the know, SFR good sense the hesitate. attractive. get We channels -- stuff, say we have we see we and side, to continue very side trigger, we that

That's Okay. everybody. helpful. Thanks

go comes from And Terrell our with next ahead. Stephens. today Andrew Please question

Hey, good morning.

morning. Good

just type to the sheet when kind speaking might incremental or you balance opportunities could objectives. maybe some about longer for look earnings? take Lynn, enhancing just Hoping of Just term maybe what maybe there. Jared of you looking advantage at of strategic color XXXX expand on

Yes, bit to on It's touched I more question. buy and than it beginning. we -- mean, attractive are just there was might think on can touched loans. We be that good I a securities a little opportunities the

match come up. have your funding your could and to right securities to You it back you're probably down, when costs borrow able rates to benefit down buy going yields you're and really to as come securities if go going

opportunities good there. there's So

lending just We are they're not seeing robust. opportunities, so

And then Lynn, would augment how else that? you

with I comments. agree your

maintaining I started about extent that the opportunities think to loan in looking out not and we earning there's average them at talking assets portfolio.

securities in there's I costs. to that we manage as opportunities think we Especially funding portfolio. view continue

think the we to landscape recognize but operating So I I within, to accomplish ability we're think be those an there's have I are that that. economic going think to primarily and

Yes.

if bit maybe bearing throughout the And deposits. of could color the so hear trends down you end move you. quickly non-interest more really the know the kind any a Thank was helpful. far That's Okay. was I hoping in just I January? average period was than to maybe quarter. have to I of regarding

average be a reasonable, of the wide. I'd at and to XX.X%, the XX% X% about we of end that at close. the We The though the say running we're period same kind quarter the didn't as quarter. were pretty band was within so look expect or was we for it's place down end up

pricing were to on continues. I it's it think now mentioned say the right bump here pressure few probably wouldn't said at would we're -- just to And it going of the the as hill end has. quarter. continues. down I increasing, So the times running continues that, it's a I we way the more and to earlier, where roll I going say it rates that's

And so optimize to our we're trying just relationships.

way this to by just not rates. we're that The is, reprice our selective portfolio promoting at be looking deposit trying we're and entire

of not. service deposit when overall provide are base direct So so And CDs strategy we've more I everybody, or for higher asking so roll the the individually why it, It's then we just the reasons think it over aren't whole one our rates, and funding that we it of work our out market a and have having it's we're we protected but have providing we lot market brokered in grown buy of for conversations. -- people lot because reminding to the relationships where get the monitoring that's and relationships, pricing people that even ask to or deposits lot automatically. a still that to want and -- don't non-core a a believe them here groups bulk, to by reprice rate of when to

about selective pretty be strategic to trying and we're about it it. so And

last And then $XX non-accrual the were I quarter. so think -- up I Okay. just one ask wanted on this loans or the for me. to million about

BANC credit hoping was the Just that it or already to with the get that a drove little acquired uptick and color what of an bit PCD originated? on mark this one was maybe against

consider we I we -- PMB that took reserved that on against, and don't I -- we and was well the credit off -- Well, that think was think of proceeded kind planned as specifically a was that was were reserved a that it charge it.

the for don't the -- The down if see know responsible they other at point. properly loans lot had that I at but on reserves and specific just have reserved don't think a point ones, I don't we And of them, I And came we and from this own them. we credit that we we're remember loans or this noise PMB not the road.

I the we'll able manage certainly my It's So we've haven't not that any be view. to think just fine. we had from underwriting from point way trend these been far, really a here, of and history in my

Okay. Very thank good. you for questions. taking Well, the

Yes. Thank you very much.

go Please question KBW. ahead. at And our today Motta comes next from Kelly

Hey, good morning.

Good morning.

sort out wondering I deposit for either have that book. you of if amount to minimum mine expect us that terms answered the of of As been know that's the relationships predict, if of if deposits could in there's as come to difficult with Thanks Most activity that I swing [indiscernible]? but loans at? bottom you well to remind the already, but and asked question. any warehouse back

fantastic a managing job credits. a all, that and really warehouse of of of quality good does relationships we of managing kind really, of team First have kind

manage very so, they're to selective going And and to it. we're in going how to who lend we're

things industry smoothly gone the kind have us for been so And fortunate of that kind that of rundown and generally. despite we've

tackle me Let first. the deposit piece

on the good they're institutional deposits business. the -- deposits they necessarily are warehouse that of have who We been buy through not but sometimes that very loans they're already on side, buying stable, a Those depositors have origination funded. amount side, operate with they're

kind they're as cash in there loans that. sitting true helping to needed buying and So it's with that C&I. way, fund we're of And

business, been So a of there's percentage come stable as higher a warehouse self-funded. it flows have warehouse the down, and deposit as have is very -- balances

And stable. we very monitor so that but pretty it's closely,

In you, numbers. are where tell balances most go you of think flow kind don't we down terms may have know more. where don’t the I the And out. warehouse going of them was up out, of pull -- I'm whether fourth quarter end to of it ahead. recent the fall trying have Lynn, front to you I million, $XXX will going yes, know the like it's $XXX go At to million. I in

I to maybe think continue to back. maybe just warehouse pull we the mean, expect -- Yes, to I add, just

the observed the maybe we entire decline in across think market. line with was I mostly what

think that forward, moderate is as I I look we where decrease expected think gone. have rates given to

it be that And pan to maybe we that same. the I fourth not the comes in but the averages be the may levels out it I think quarter. about observed at down will think somewhat, So

the built up other book I obviously headwind as places. look it's we of So forward less think and we've in a

through the think to that. portfolio that continue add. done I of just can outside warehouse concentration Yes, feel job good that a and of if earnings certainly Kelly, to diversifying we've I our before point, We like grow we

way staying team of getting even And so a good done but as we has don't within band. back back rates down, job come our see a up warehouse

band. And $XXX million, said warehouse like the was or of so kind we've always up down

shrunk, that's between it guessing exactly. It's $XXX I hard now, we're but probably. a band to it be, But today, it’s say too pretty going million As $XXX know, million big and our don't to probably I'd that's close. peg maybe

change structural some down go be Just from there's very of quarter-over-quarter me, if I positive a you're where helpful charging all know That's that's driven, service been sides. on -- forward maybe the less past if appreciate color charges they've just question fees in I activity would basis. interested saw from there? that’s running I the any and anything activity or nitpicky, don't couple both that helpful. Wondering service color in on Last are customer customer but if quarters. way in the bit a

can Yes. probably I bit. add a little

So included is -- and deposit there service loan say in customer I both that included fees. would

the fees. of volume the of lower service some don't think with a see the then And impacted I so being much little for the loan that deposit number bit way production And I the quarter. in

fees. heavily are we have those service think still business. a competing I deposit similar I expect our -- customer customers that would for we while

mostly what with going we in don't down. I And I see seeing just So know the loan the that would fourth we're any to it do is side. further quarter think

Thank Got much. you it. helpful. That's so

Thanks, Kelly.

and session and concludes and ladies answer this question And -- conference today's gentlemen, today’s

did or drop? Excuse operator. there question me, Was more that question one

dropped. They queue. from removed themselves the They

Thank you. you. Got

Yes, sir.

So question-and-answer for today's session call. presentation. today's all conference our this We you attending and concludes thank

You may day. lines now disconnect your a and wonderful have