QCR (QCRH) 25 Jan 232022 Q4 Earnings call transcript

Greetings, and welcome to the QCR Holdings, Inc. Earnings Conference Call for the Fourth Quarter of Full-Year 2022. Yesterday, after market close, the company disbursed its fourth quarter earnings press release. If there is anyone on the call who has not received a copy, you may access it on the company's website, www.qcrh.com. With us today from management are Larry Helling, CEO; and Todd Gipple, President, COO, and CFO. brief up the from the a then results, analysts. provide open we'll call will summary financial of and Management to questions

some Exchange guidelines of Before remind statements as be would I the forward-looking today of Securities by that and providing the we we’ll the under like falls defined information Commission. begin, everyone to

could of call differ and hopes, beliefs, company's As these any guidelines, the projected. statements, those part from forward-looking statements and materially concerning the predictions of actual are results made during this future expectations,

Additional SEC information on website. these the on factors is filings, the in included company's available which are company's

Additionally, contains management GAAP of refer non-GAAP financial measures. information quantitative the comparable available discussed measures. substitute not intended non-GAAP measures, which release may and supplement, as reconciliation other but to the directly be well to as the to the The website most today, to the for GAAP press are on

being February afternoon available this accessible be recorded on also conference will a be hour one the call. approximately XXXX, As X, of It after the will website. is reminder, this and completion through starting company's replay for this

At Mr. QCR I at Larry over Holdings. this call to Helling will now turn time, the

everyone additional to follow high-level will Welcome the will for the that you operator. our you, our model, quarter. XXXX of today. business Todd of the start fourth drive on success. with time and performance, factors thank Thank our financial taking join the for overview call and our a I us details with results a review

and loan interest driven XXXX income and growth increased excellent in quality. margin net credit record robust was Our net by

while the we strengthened acquisition Missouri vibrant this our successfully company's and closing Our largest where in integrating significantly to Southwest region. position date team our accomplished

differentiated five model in years growth has our commitment is This been the a and to result of banking. last exceptional. relationship business over Our earnings

relationships to banking which and at opportunities to the clients. the our current model serve with strengthen creates that our relationships agility multi-charter drive Our level, local provides growth. our establish bankers new We delivered

outperforming many the we In five peers. years, last our of doubled our size, have nearly

Our and share XX.X%. compounded annual period. rate growth results book compounded XX.X% same the core of and per earnings have XX.X% a at XX.X% support deposits annual compounded value total the share grown at growth diluted These and loans in our over rate annual per tangible our our the

Importantly, while many is critical of including our our we've our quartile economically dedicated our also grow profitability the pace, now a success. vibrant our is model. been we've contribute There group. ROAA able and to factors significantly employees, success, business peer our right consistent increased and in are our markets, the and retaining employees to that at top our Recruiting to differentiated

each We through have corporate local our strong extend of cultures charters. that

Our engaged our and clients with employees are communities. involved in our

and leads best higher enhanced profitability, attract culture and our important turnover, such as reduced market. to bankers and the shareholder This reputation Our outcomes in clients improved productivity, value.

engagement We which high company. receive our annually across measured continue to are employee scores,

growth. a do has charters in throughout consistent for have numerous and great being footprint sustained work place awards This local Our and business. our resulted to won

low in steady of with along the technology-focused some are educated of with relative They and vibrant regional which highly Midwest. the midsized part workforces, operate unemployment. and growth, activity mix We diverse most helps in industrial, commercial, income, a household high drive of economies markets economic

to great operate has for unique larger the banking national created which with that shareholders. to Our and needs, client experience local results This in enables our and to and client alternatives. employees, our our outcomes a our respond our speed model agility clients, outperforms regional better communities, management teams

owners, drives like value. which Our management teams think and act shareholder

provide growth high business lines built and additional profitability. performing that have opportunities we for addition, In

and loans, municipal drives strong fee income. Our growth lending, specialty tax well credit provides bonds Group which and in Specialty as Finance as

serves team related banking correspondent banks, our nearly side, income. deposits which fee core needs the and downstream deposit of generates banking the correspondent meaningful XXX On

helped assets performance $X.X years our a significantly the over lines management under diverse and environments. charters We economic outperform has benefits Lastly, of high business our us the our group a management billion. we've in variety creates teams our The operational wealth centralized which infrastructure, revenue with grown with traditional required stream, scale. of local of expertise, combination operations banking of and providing support

high best Relationships on local a place our matter in bankers on that be each in expertise us build service and is efficiency client level. this why and importance attract markets improves market and we to delivered as is leader our scale such aim to and markets clients. of touch enables our trust the We the that at

Now, for the XXXX Guaranty full-year year EPS million our associated respectively $X.XX adjusted one-time income adjusting results. XX.X% acquisition, diluted $XXX.X adjusted the our net up Bank income was for per comments diluted $XX.X our net our for results. on and XXXX X.X% the year delivered the and of million was share, costs over After a few per $X.XX with share. or We

Our our team this, successfully accomplished closing integrating acquisition mentioned date to and earlier. as while largest

for and in was traditional commercial lending, our when by acquired excluding was and leasing, driven XX.X% and the finance lease strength loan growth Organic specialty PPP full-year and businesses. loans

maintaining loan while growth current Given exceptional X% our with vigilant XX% continuing consistent between markets, goals, to for long-term relative on our quality. be credit are strength and our of of pipelines XXXX, we our and targeting

net our] value. the the deposit over long-term were time. loans are consistent continue for [indiscernible] grow focus, both will to in relatively which to acquisition, deposits bankers of and deposits deposits. number grow, Core Guaranty our static will when long-term to are excluding [Accordingly growth [ph] drive lead While new franchise acquired the accounts our year which deposits

net we primarily by the by in interest points, margin asset balance basis expanded environment. rate rising driven our sheet XX equivalent During year, tax yield our interest sensitive this

comfortable year and assets as of modest our of during X.XX% total at are basis ratio XX represent had asset the quality and end assets with non-performing remains points charge-offs which year. leases. the total reserves, Our to We the loans of net was the

concerns, remain the of markets. optimistic but resiliency cautiously our relative mindful about of recessionary are We economic

Additionally, quality and prepares asset us economic strong weather well credit uncertainty. our culture consistent to

their entire outstanding client the Holdings thank engagement for to team record to for like would delivering adjusted QCR year. dedication I conclusion, the service and and for earnings In

Our XXXX. that are have to key and immensely all in our accomplished success we of I'm the proud employees

that, results. With will call Todd, now turn value the strategy I over our our shareholder to financial drive to discuss strong to and

and a company and began developed our this by XXXX, This Thank X% includes year. lease limiting strategy minimum per and When a you, joining results least financial generating per year, Larry. shareholders. deposits, an early with long-term expense by our per enhance to I results organic loan grow for funded we at value. growing drive annual strategy, for to call X, and X, operating initiative in X% today. to income Good at year morning, shareholder attractive new and us everyone. core X% Thanks fee-based earnings We our growth the of roles Larry plan drive increases X

not are short-term quarterly benchmarks. These and long-term targets

value success this to our X long a our and run. company strategic the our our that across initiatives time long-term X, that and will of aligns believe consistently true the creates X, our language teams unites common shareholder the deliver in measure be Our strategy on for into ability will greater success. translate over actions We

our high of ROAA XXXX our and adjusted this of and we compounded quartile year, As And within our our rate successful growth have income XX.X% Guaranty of acquisition XX.X% on EPS net and top since X, performing combined a strategic proud group. NIM are a result grown have with to performance Bank initiatives, annual X, respectively. at peer X we achieved

and future of While on our to perform our has to the been over historical impressive, performance the at remain group the expect long-term. we continue peer focused top

our like would results, with income. I some fourth starting interest color net Now, to quarter provide regarding

loan of renewals, offset to higher the interest of restructurings, balance partially pay-offs our tax acquisition. increase equivalent asset And million from acquisition due quarter. was million impact impact sensitive million, XX.X primarily Our increase interest hikes from on due the income the sheet, a related net accretion net was The our by Guaranty basis X.X multiple costs. Bank X.X third of deposit on an increased to rate of and

interest With our assets in loan significantly quarter. and growth for strong grew income we yields, current earning improved the

expense in and the also the quarter of deposits, impact subordinated debt experienced as interest shift higher our our result full of However, mix costs, deposit recent of issuance. a a higher we

during Our partially and NIM basis fourth on quarter, yields a points by tax higher the accretion driven and the deposit XX higher loan equivalent yield improved basis net by acquisition-related offset higher costs. by

of periods mentioned nonlinear impacted during increases. NIM typically rapid patterns have we rate As before, is in

points betas half of XXXX, a lower and XX the the NIM, of increase deposit as during we first we slower that period. benefits of TEY In posted basis experienced

half second before as increases. progress year those However, rate the betas accelerated additional we deposit of Fed the through

year, on the X%. of our half the For deposits was first total beta

of And For deposits for CDs. moved our for on our accelerated it XX% from total beta a deposit and accounts deposits XX%. the quarter, mix to fourth the interest-bearing result demand shift an to was in noninterest-bearing quarter, third to as

XX%, the that current to on our in rising to is of For ended is period date, rate which last full deposits from our XXXX. height total comparable beta beta cycle the rates

interest at or growth, group. With robust also organic a experienced expansion and peer income NIM for and of year, has our near top the have NIM significant net loan we growth achieved our the

quarter NIM, in ahead, excluding net XXXX. of project accretion, acquisition-related remain static the fairly our Looking impact we first to the of

approximately of return per net accretion XXX,XXX acquisition-related expect normalized level quarter. more to we Additionally, to a

to million within noninterest quarter. our generated third was quarter was million million, from our for third XX we markets million capital XXX,XXX guidance of Turning of increase XX in range XX.X revenue income, million. XX.X the slightly quarter, our an which to and from the the up the Notably, XX.X

delays just to strong. clients for that in for million XX therefore, million Capital expect this remains the full-year our four to quarters, XX revenue and been be have a markets pipeline range source has million income the of XX fee last experiencing, of project the averaged Despite of we quarter our XXXX. over per some

X.X generated fourth million addition, up revenue quarter, quarter. management third the of from we In in slightly wealth the

new relationships significant continues million this past clients that in adding in This team to offset growth is helped new management XXXX. assets AUM meaningful and and in strong the in market occurred wealth XXX generate sharp new Our year. valuations management, under new stock adding client decline XXX clients

the for The to quarter our primarily expense totaled Noninterest fourth from million prior higher to third was to the due XX.X for quarter. increase million, the turning quarter compared expenses. Now, incentive-based fees to offset and the at conversion compensation the full-year to cost partially of merger other and savings. Bank performance, core by lower Guaranty completion data professional related our record due processing XX.X

is Looking the level rate in increase strategic X% that guidance consistent our the noninterest anticipate quarter first range be X range expense run our million. we X, XX our quarter and than XX million initiatives. fourth with of in expense a excluding of This ahead to acquisition-related of less XXXX, to will reflects items after noninterest X,

fourth quality, [X.XX%] at the to X.XX% to Turning to [ph] the end significantly of Nonperforming prior strong. which by assets be total X.X driven NPAs payoffs for quite the quarter-end, quarter in the was improved several of million quarter. the asset assets quarter to fourth during and compared XX% ratio continues by at of The quarter. NPAs to declined

In quarter total fourth the addition, static from leases loans loans the and of X.XX% and to classified at quarter. company's X.XX% loans prior to respectively, X.XX% at criticized were as and and compared fairly X.XX%, the the end

for in overall quarter. credit of recorded company losses fourth quality, no result in a the provision continued improvements the As credit

leases. at our capital Our strong improvement to and X remained allowance during loans an quarter, strengthened nonperforming X.XX% our XX.XX%. We total XXx represents total This risk-based the ratio for posting of leases. points of basis losses and allowance loans credit

end common September. We assets also our quarter-end, to of to up at X.XX% increased equity X.XX% tangible from the at ratio tangible

per an the increased in to in AOCI earnings Our securities both due result value by our certain changes value of This rates interest strong a and share during a million tangible quarter. as available-for-sale increase of fourth quarter. book our long-term portfolio $XX and was the the due X.X% to derivatives in increase during

the under announced stock purchased $XX.XX the common at as of average repurchase of executed during share, XXX,XXX and shares quarter, retired price our XXXX. During we of share we an quarter per the second plan purchases fourth

effective higher in quarter the third increased quarter. rate Finally, earnings to of in tax from our a for to taxable fourth XX.X% to quarter. The the tax-exempt rate and was ratio XX.X% due the revenue higher

rate was improvement the tax due full-year mostly primarily in was well XXXX. XX.X%, as revenue, from our tax credit loans, effective for from benefit XX.X% growth from strong This tax tax-exempt to floating Our exempt as an XXXX portfolio. rate in increased

We full-year be expect tax the of to in XX% range effective XX% rate the for XXXX. to the

your for quarter fourth financial context the questions. up our open With results, on that let's added call

Instructions] go Please Our Rulis with question [Operator first comes from D.A. Jeff Davidson. ahead.

Thanks. and Good Larry morning, Todd.

Good morning, Jeff.

morning. Good

of the that been any kind working payoffs we color? for nonperformers, those could kind some any, type credits sort on the time get of cleanup were color more for there, looking the those were of or what On on of you've just, loans

Yes. was over be figures, estate we several The and decided that between, the had one only contractor, to one, we And that quarters. just Jeff, between we loan fully it borrower a X real it off. thought that there's was reserved us, a would charge commercial not and just for best dispute

so, get And we to we decided some just hope best clean of XXXX, dispute, up. it but would to in recovery it’s the because

paid-off We It's and just one a figures got was you decided figures. that The long saw that paid in on other the couple couple that list so improvement to our had that nice NPAs. a quarter. time there our were X been off were NPA really X fourth of large clean credits, some we that we up, middle just in for

we've last few to NPAs down XX two-thirds years So, what ago over the to two our dropped by number quarters, points. possible was a didn't down think basis I a

a has job done So, there. great our team

were cleanup? that there of recoveries amount a meaningful And Okay. of some on associated any

substantial recoveries. No

cleanups expect Jeff. stuff, in here, [indiscernible] couple a substantial, XXXX just odds the small of We those of because nothing but

do that to the just [was] the December, you narrow on margin, what kind the in Todd, average Okay. [ph]? month in of have of

saw That's margin. Jeff, the static we were reasons Sure. month margin improvement a intra-quarter, each in guiding great one of question. actually we to

in the was [ph] It [X.XX] for full [ph] November [ph] [X.XX] Our quarter. was [ph] in October, [X.XX] in [X.XX] December. core and margin

towards in we got quarter. were fourth had was that run of loan we Part was So, new that to the we intra-quarter. nice some first in improvement yields more candidly end. It for expected seeing the there time, really – the really the start

basis loan points on October. XX than in fundings higher Our yields new December were

up So, part of the run the end of towards there the quarter.

kind read maybe but would deposits, as that around And of kind expectation you, earning of of gave further – little the would thereafter, Okay. us of kind a yield or any expectation? at, level near know I it's what on kind asset QX, be be into chew improvement that

Sure, Jeff.

in and us, fixed only to is about We traction continue on to very for deposits it's the the intra-quarter we significant, I or higher rate year. challenge loan pricing, further think the but and forecasted, quarter part fourth is, going the looking and of from QX we a be more we had feel static right into margin have little not word than saw a with CDs. noninterest-bearing into the shift whether beta low beta good improvement that really

market, a pretty that in a in about million already us confidence runoff XX million saw reversed here significant in noninterest-bearing, in correspondent in significant which talking January, We money but static balances, margin. XX gave has

quarter. start So, market in about million, deposits really to is correspondent come feel started million, and the we quickly good money have the up XX back up to January. Noninterest-bearing XXX

question, a long So, for the we really think word into kind little is not QX, XXXX. answer Jeff, look as but of to static just your I deeper short

And comment Okay. normal for I'll the talking about levels. core confirm, and return we're take more about your just to expectation into accretion to to account

good we'd Yes, outcomes. Jeff. in fourth Exactly. accelerate the that It of be by payoffs but level to Actually in [XXX,XXX] about pretty run restructurings to portfolio the We prescriptive more that rate. like big The be very accretion, that. wanted with quarter. and jump pleased given [ph] a did now the back

[ph] quarter, when in modeling thereafter. with So out [ph] [XXX,XXX] you're doing fourth [$X.X pull replace million] your yes, the it the

[discount individual means marks get – credit accelerate some the were appropriate. because paid of either comment. because on thought way that that that a of some higher put I'm we we perceive in Jeff, that what we to to restructured those rid off see I'd [ph] a thrilled of were we or accretion] credits, the was that add just they able

the our last numbers in tremendous of So NPA early that in up quarters. and speaks and we've made progress shows couple well the

Thank you. Okay.

with comes ahead. go question Please Damon next from DelMonte Our KBW.

today? guys, it Hey how is going

Damon. Good,

feel a like that? pretty provision So, through really front. we to there, room you need provision do down healthy there think that on little little [XXX can circle quarters. the bit? to of maintain at of are us on you going to idea the some coming Todd, a just just give little cadence you back XXXX? Reserve on was should how but the sounds wanted ], strong to, It guidance, things go trying credit Is the over let kind – And the get a about

We today let comfortable time coverage right here. like [first then lower. the lot I very XXx reserve it one we're but number gaps and [ph] the our is the a will with flow fill think also let take reserve NPAs, that in our Todd Todd] to when not seems our

through So, to a little reserve providing year, as going the the rest had. we of start the we've bit look for we're certainly that growth of need to

in there's We've not on show classified apparent the expect year, credit first NPA year, me, that year going the excuse but some coming start some you all of or nothing this quarter, the but normal, the down, for numbers – there's numbers in see to as the numbers what the numbers with up our yet. or of depending degradation to point coming things to possible at happens in to two that's to in more return seen next quarter no in that showing economy, it's certainly, later our we that certainly down happen that's in

we'll but next the levels have maintain a probably we expect quarters. bit during would we holding of to for going at have hope at the few reserving, little to we're a more to year loaded and the back-end be up, little do above it's if credits So, because reserve

it. Got

could helpful. to Todd, for guidance first year? as repeat then with and just progress of you And kind was expenses, look regards the Okay. into the as as the remainder you of what we your quarter That's

looking our Again, really X, a X, outcome our for we're staying range expense in on X. We're Sure. X% under rate that's XX run million million. of pleased with to XX the the

So that but XX about room expense. bit rate million costs we noninterest for on be would very million, feel a some our us gives run XX increased good there, guidance, to little

to staffing a the accomplished did really have saves and of We the bit cost little from heavier we acquisition were great clients and carry care We integration. control were the all a year-end. make sure doing Bank of things It's and a we perspective. sure a taking marathon, really making merger environment deal sprint. We great Guaranty wanted right from not over a

have So, well year-end. to we wanted things in sure hand we make over

some quarter [indiscernible] in expenses. fourth little the the of mentioned We a incentive-based in compensation of bit

We also staffed. got more fully

of but opening you the about things our talk noticed our might didn't we quarter. up have was One headcount in comments, [ph] that linked [XX] FTE really

lot a and doing better we're well things getting of a perspective. people from job So, staffed are fully going

Okay. one With Great. seeing weakness in then to office any how that much you portfolio, real And of exposure question. guys estate like do signs just the are And have? respect quick you commercial final segment?

Yes, I'll take that a swing Damon. one, at

Our we X% we $X big that of XX off the during good that are XX had deal size. struggling have is the have fourth leased, sponsors. over in quarter. got we one office paid deals as – others million And I the at really about exposure XXX% so our those don't only portfolio, there. and one look it, are – And we exposure we of have pretty

So is well. portfolio really that performing

multi-tenants. we've little markets office still think towers, where with what in got We would have about big very you

little have of We that. very

office firms, Our more those entities, kind likely government-related accounting things. tenants are medical of facilities,

holding really so are ours so, far. well And up

X% portfolio of no portfolio. so our million really So, total that in Again, about XXX it's far. or issues

that color. That’s I had. you. Appreciate Great. the Thank all

Damon. Thanks,

Tamayo ahead. from comes question Raymond next with James. go Our Please Daniel

Thanks for morning, everybody. Good the question.

Good morning.

for about know What you does hit Maybe you expect XXXX, we've to, be, It's stable to of saw prior I would outlook kind how this. run line we swap – just the is I on beyond I'm the run thinking guess, rate you that income. like that the for start item. increase And a it years. – rate gave to levels kind pretty lever that fee of in feel back

Yes.

construction last headwinds we've is certainly we quarters. have will of focus What in the talking longer-term about as produce for first Our results trying help been like the couple inflationary to had a that of couple consistent inflation, factor. we was of tremendous one and [getting which down of the the materials] because materials. now years when project [ph] cost slowed That the

the interest because cash long and The a out little other projects was bit. the flow topping with service rates, coming debt rates higher back had kind impact on on of higher is some

started has that to help. So

of factors so, a And be would it that would long-term and kind continued under increase control would in that so here over I rates, interest say that the the really reduction getting time projects to are normal easier to materials to certainty building certainly to of would getting got inflationary back capital the cost help. their together, put environment get because of inflation a and stacks they've on

swaps? makes fee That remainder quarter, the year And you have the the sense. for an of excluding in the Yes. income or outlook do first this

probably that Danny, the comments biggest And our – respect AUM. and management. open Yes. you with wealth to would bucket new clients new the be in of heard

grow to other X, we So, in income annual. keeping X, business in to expect see our X% parts of wealth at management would with fee X,

then just then past, asked bring How And funding I letting what's think the core deposit And strategy if the than lot the it you and in more talked we've are comfortable it ratio difficult deposit here are a comfortable margin about in that XXX% loan but or you go? now. lastly, loan growth how about around Terrific. ratio is to high loan of Okay. growth, you the growth? for expected funding

Sure.

of was banking. mentioned Yes, the of back with ratio. it's return now correspondent the XXs with funding I it at over into right So ask Daniel, down that I quarter-end, floated year-end, about someone hoping XXX was loan-to-deposit would some

likely we to guidance going the you. we of find at range. continue expect So, upper in XXs, to XXX, grow need our to prefer XX we gave bankers We rate the that loans all be to XXX that that we but will funding the to keep do run it's to it in under

rate to historically So, loan-to-deposits. of XXX color expect ended XX/XX/XX One at run at point we that higher. any was and on this don't float XXXX is, We we've XX%.

isn't always priority very funding loans. has sheet left growth We've new the company. engine The with we phenomenon reason pace and strong is been at side had us. always a margin a this for key But for it's level loan to a our with balance part of So a keeping with high our perform that of respect ROAA. that fairly to heavily

And It's so, pretty a in operating us. for we're comfortable historically range upper normal that XXs.

say our So talked Danny, this do a the now, is, would we a a portfolio second track securitization for other of to on thing the quarter. of we've I quarters about in are LIHTC and portion few

just a the is done second We're the pressure funding And $XXX we a first time, speak, in longer-term, get to on in to. the but will which do the likely the that's create details range. ones of Our if over tranche, that of be do we'll first some liquidity as the need million securitization, expect off quarter. lever working pull to additional to we we take able

helpful. Okay, guys. answering terrific. my All very questions for Thanks

Thanks Danny.

you. Thank

with Our Please question comes go Martin Janney Montgomery. from ahead. next Brian

guys. morning good Hey,

Brian. Good morning,

finance sounds just kind on or One of thinking a healthy Other Larry, – it the today but just where that are LIHTC you're pipelines was is maybe they're kind kind the about specifically of portfolio, just the pretty kind on just where on quality, or answered it maintaining with kind specialty traditional like give your of the credit the one, driving along at? it, little or today? and on, answered on mine are in or if just the pipelines Todd the the guidance of is are of commercial and just the, that the pipeline just of the color deposit. geographically, what's pipelines Is

of the Yes. quarters fill consistent I very are got Todd transactions that trends and kind of our they would as things. range of frothy and growth out if because in I that this again, couple he's on. over in really What's to coming changed, the for we're lines we and thoughts. of some really start, know, new credit new in say, Brian, and working you pipeline business Certainly, system year had the earlier I'll XX%, use of liquidity their let those looked XX% others clients morning, starting last at and other the

clients for credit close now. Our is line back of pre-pandemic to levels usage

push could So liquidity get on much little is, liquidity – we bit increases be, kind of out. and more it's but done, the loan to that big kind excess of a pushed there, pretty uses seems

both and look so the Specialty pipelines solid. the And core business Group Finance

get X%, XX% expect those consistent of we've back kind growth we'd is long of So, from over done both we've and which us what range more numbers that years. run, over in the what done is in X%,

period of but won't done over we've long And so, time. it work that's be to easy. We'll at levels, those a have hard to something achieve

you. Got

something kind just the think finance that's And today securitization? the Thanks portfolio portfolio there you off Larry. of are pipeline, if you when how helpful. specialty No, with securitization, big is about today LIHTC table that Okay. the taking the just think about

million, we highest which believe asset quality the mean, portfolio on $XXX sheet. around have I stabilized we to probably be our yes, LIHTC balance is So the lending

we we could all tool we've securitize market. first The have first the theoretically likely on going as to of tranche, got That's discussed that. the because growth securitization off like that books, but in $XXX available to we million not pull just because consistent in our we're it that

when extra a it's we in liquidity, the make growth there And we it lever the so, and to got off to want need the want top future. we've little sure so create we there take completely additional that that if figured out,

Got you.

Okay.

loans, Finance the piece the So, whole LIHTC is of Specialty portfolio that's the today? that piece, how big

in some There's municipal lending like done that between another that roughly construction. we've $XXX million and

quality a think that highest again, business. But big some of very So, have. piece it's of stuff our the we we

Yes. understood. No,

get want just So, how is. of a to it big frame I

I helpful. look that know okay, you the about does maybe Have out look to And So, trying – and the just capital just are but mean, that's just buyback? AOCI. build there's kind there on balance or thinking you the how just on on of rates I here understand front, with how the your it. uncertainty economically, still given guys

So, great question, Brian.

would First, really about our good are where feel levels we capital say, I today. at

Given the total going uncertainty, TCE AOCI and awareness forward capital. is in the growing risk-based and priority our economic the environment

you top performance quartile and is in to now, there. operating our expect we keep our As peer certainly know, group that

in longer because push ratios. capital of now be economic now peer to up we that shareholders, to our middle are to driving top storm [ph] shown the we [it We'd quartile quartile well those front group of hasn’t] kind If top we're and What is weather of the think get earnings capital think, but a to in tougher like will yet. we well-positioned right be ratios, our to capital, term the environment. possibly top we've got might we're the us, quartile in served

Got you.

fair? So, maybe the not in just given, commentary. quite near the buyback on kind as that term, of Is active your

fair. I think capital. priority Yes, our that's building is

Got Yes. you.

Okay. And then one maybe Todd. for just last

assumptions it kind just just it's normally, on to the in at, funding the where the Just those just it sounds but base, kind deposit. of look Todd, I on the your general, think as – of you'll in sounds the like the are margin, give maintained just margin RSAs, stability you like

funding You've just – kind down of or the and how deposit the of today stability, of and that? thinking and mix that borrowings talked is you're kind But are your outlook some level in assuming changes or borrowings about mix the consistent about that for whatnot.

good that that guidance being sitting has Yes, considering about static year feel We big a still lately really good Brian. started we've to assume the today, mix we're very conclusion. pretty slightly margin, asset-sensitive. January. the where feel in does our that how And about we yes, to here come we seen shift Sure,

other significantly back been pretty flowed borrowings to as pay We've able back down correspondent have in flown and deposits or in.

So, paying XXs better we've borrowings XXX. in loan about getting from benefit been some being that, overnight down instead margin over to of deposits the feeling

that those that's all – things are guidance. assuming what So, we're yes, in

you. Got

piece it? And then RSAs, the Okay. other the what was of

Sure.

are still there. lift to So, see billion nice continue RSAs still and some X.X

saw new we But earlier, very points rate and late been finally rate that probably see has jumped fixed basis in that starting the of yields, positive cycle, mentioned on I thing quarter, we're biggest October that fourth from really the on think as to throughout I that a December. traction the loan was deals, up XX to course. trend

able So being help margin. that us with us confidence about more some gives to

you. Got

Thanks questions. for the Perfect. Okay. taking

Yes, thanks Brian.

Thanks Brian.

ahead. question Next Nathan with from Please go Instructions] [Operator Piper Sandler. Race comes

Hi, guys good morning. Appreciate you taking the question.

Nate. morning, Good

Within Just higher rate on hikes Fed in zoom-out Do outlook. just believe a you that wanted of today maybe lower. just obviously, to some the half We have the that this index year. that loan the also you're you’ll will context, margin repricing of rate offset variable pricing the back loans seeing that some on can reprice deposits couple guys lower? contemplate new production of

curious how get thinking we kind later cuts protecting guys guess just are So, Fed you some do kind I this year? about, of I'm if margin of

margin. ability quickly. If if we'd that's in cut later many to Nate, bit does and know actually, Fed challenge struggle margin to terms very Sure. of as I give I a the the down us that, is terms of really well, side our were retail bring And holding cost you the sheet a our was rates in year. of commercial they deposits. our outlook right the good the more deposits on think in quite us think of been balance outperform of funding to ratio to That of for with a likely do

deposits. to of would that would We like our rate-sensitive liabilities able take that we performed They down pretty sharply. XXX bucket bucket be those call have beta

the been XX% cycle. it's far, So over

think it would on and rates perform relief funds down in of us quickly. we so, quite give cost And well some

one point earlier, describing just reserve then Okay. in on absolute a or an terms kind a of the And you Larry, were stable of of just as question dollar reserve. clarifying basis percentage Larry's stable on to Great. just loans? a

Yes, see certainly but economic see loans. we'd We're in headwinds, for clarification. thanks basis probably high there got possibly points year. that particularly we we're of later – powder it NPAs, for given if of but we've in range stable XXXs in like that hold as in a the low it some our – hold so we XX still a pretty if reserve now, build Yes, degradation percentage do that some that to

just how are the so days, value guys just forth, terms just still those seeing And flow M&A of of days. about given maybe kind and outlook, you. the lastly, opportunities kind macro in and in of of these environment are Got less you these you rate of interested marks interest fair develop then guys kind the thinking and opportunities

Nate, earlier Yes. call. in-line with stock good buyback kind in question again. the Certainly, goes it questions of

on, environment the on certainly likely. focus the right uncertainty less going And M&A given Our is is building all capital now.

on of [indiscernible] we'd long-term, anything will the that in open is things, economic be here to don't term, we the see uncertainty. sheet our test certainly, see focus build we and do on a if but stand balance near So, time certainly,

color. the appreciate Great. Okay. and guys I questions the taking all you

Thanks, Nate.

I would back for to This turn conference like closing concludes the session. any remarks. over Larry question-and-answer Helling to our

joining great like on healthy new thank Thank you, you for again look call everyone during day. today. forward Have I remains safe operator. I'd us you with the soon. hope to of speaking all a We and our to all year.

Thank now today's The for you conference concluded. attending has presentation.

now may You disconnect.