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spk04: Good day and thank you for standing by. Welcome to First Quarter 2022 Equity Bank Shares Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during a session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would like to hand the conference over to your speaker today, Chris Navratil.
spk00: Please go ahead.
spk01: Good morning, and thank you for joining Equity Bank Shares conference call, which will include a discussion and presentation of our first quarter 2022 results. Presentation slides to accompany our call are available via PDF for download at investor.equitybank.com by clicking the presentation tab. You may also click the event icon for today's call posted at investor.equitybank.com to view the webcast player. If you are viewing this call on our webcast player, please note that slides will not automatically advance. Please reference slide one, including important information regarding forward-looking statements. From time to time, we may make forward-looking statements within today's call, and actual results may vary. Following the presentation, we will allow time for questions and further discussion. Thank you all for joining us. With that, I'd like to turn it over to our Chairman and CEO, Brad Elliott.
spk11: Thank you, Chris, and good morning. Thank you for joining our call and your interest in equity bank shares. Joining me is Eric Newell, our CFO. Greg Kossover, our Chief Operating Officer, and our President, Craig Anderson. I'm pleased with the operating trends we showed in the quarter. Our earnings were both very strong and surpassed expectations. We had excellent loan growth and reported strong net interest income. Our EPS was 93 cents per share versus consensus of 63 cents, as Eric will discuss in a few minutes. Our hard work has yielded significant credit quality improvement with a decrease in our classified and non-performing assets. Our credits purchased in both the Almena and American State Bank mergers and our previously disclosed aerospace-related credit all saw improvement and, in some cases, elimination through payoff or disposition of assets. This resulted in a meaningful reduction of our criticized asset ratio. The continued execution by our special assets and credit teams is a reflection of the addition a year ago of Council Edna Czar and June Presnell's expanded role in this area. This team has transformed our process management of this area. our fee-based businesses continue to add to our income stream. After several years of focus on improving and introducing new products and services, we continue to see improved trends. We are just in the beginning phase of many of these businesses, so it is very encouraging to watch these teams of Kristen Humphreys, Andrew Musgraves, Ben Morris, and all our commercial and retail staff increasing sales. We'll continue to keep an eye on our expenses and find ways to uncover positive operating leverage. We start implementation of our ITM network over the next several quarters, and our operations teams are always looking at ways to automate processes. We stayed committed to our capital management measures in the first quarter. We were well positioned to take advantage of downward pressure on financial stocks with our stock repurchase program and declared a common stock dividend in the quarter also. We have many other positive items to note, but I will leave some of those for Craig, Eric, and Greg to talk about. I will let Eric take you through the numbers, and then we'll walk you through some of the other areas of focus for 2022.
spk05: Thank you, Brad, and good morning. Last night we reported net income of $15.7 million, or $0.93 per diluted share. Non-interest income decreased slightly, length quarter, to $9 million, and non-interest expenses, less merger costs, decreased $4.1 million, length quarter, to $29.1 million. we calculate core EPS to be $0.94 for diluted share. To reconcile gap earnings to core earnings this quarter, remove merger expenses of $323,000 and a BOLI death benefit of $134,000. I'd note that in the first quarter we recognized $827,000 of PPP fee and interest income compared to a peak of $8.2 million recognized in the third quarter of last year. We haven't been excluding PPP from our core numbers, given its contribution to our financial results for the last eight quarters. But its contribution is now de minimis, and we are pleased about the improved quality of our first quarter earnings. Our GAAP net income includes a net release of ACL due to provision to the allowance for credit losses totaling $412,000. The uncertainty of the economic environment and continued impact on the economy of previous stimulus measures are reflected in our qualitative and economic components of the calculation. The March 31 coverage of ACL to non-PPP loans is 1.48%, down from 1.55% the previous quarter. The decline of the coverage is entirely driven by ACL that was being held against specifically analyzed loans. If we normalize one times benefiting NIM, normalize the provision expense to approximately 10 basis points on average loans on an annual basis, and zero out the release of reserves for unfunded loans, we get an EPS of 70 cents per share, which beats the consensus of 63 cents. The beat is primarily in the expense line, with consensus at 31.6 million and our normalized level at 30.1 million. I'll stop here for a moment and let Greg talk through our asset quality for the quarter.
spk03: Greg? Thanks, Eric. As we anticipated during the fourth quarter 2021 earnings call, other repossessed assets declined $20 million in the first quarter of 22 based on the resolution of the largest of our aviation assets, which was sold at an attractive price and above where it was marked. There remains one smaller asset tied to this relationship. Equity Bank's portion of that participated total is approximately $1.1 million. Overall, non-accrual loans declined $8.6 million quarter over quarter and now stand at just 64 basis points to total loans, the lowest level since we went public. As a reminder, our non-accruals are driven mostly by acquired assets, and the teams are constantly evaluating these for upgraded status as credits improve. The ACL is 1.48% of non-PPP loans, as Eric has discussed, and net charge-offs are muted at just five basis points annualized. I am proud to report that through the hard work of our special assets and credit teams, we now have a classified asset ratio of approximately 17%. Without the required gross up for GAAP of the remaining participated repossessed aviation credit, that ratio would be lower by 160 basis points. We expect this ratio to continue to decline as we see improvement in classified assets acquired in mergers. And we have done this in the face of great uncertainty driven by the pandemic. Eric?
spk05: Thanks, Greg. I do think it's worth commenting about our general reserve. While we had significant improvement in our asset quality during the quarter, resulting in a large release of specific reserves, we did build ACL through general reserves. During the quarter, we saw significant growth in our loan portfolio, an important model input that drives general reserving. In assessing the economic landscape, we first acknowledge that our customers experienced a great benefit over the last quarter, with some of the headwinds as public safety measures in place during the pandemic have largely or entirely been lifted. The COVID concern has been replaced by the uncertainty of inflation, supply chain disruption, and input cost escalation that our customers are starting to experience, in part due to the stimulus pumped into our economy since the start of 2020, as well as the geopolitical situation. To be clear, we've yet to see our customers experience any specific difficulties from these concerns, but in assessing the landscape, we believe the risk of an economic slowdown coupled with inflationary pressures presents uncertainty that supports our general reserve build during the quarter. Craig, why don't you take everyone through your thoughts on the quarter?
spk02: Thanks, Eric. Organic-originated loans totaled $304 million in the first quarter. Of the total originations, 92% were in commercial, CRE, and agricultural loans. These originations resulted in length quarter loan growth of 87 million. When excluding the change in our PPP loan balances, loan growth in the quarter was 111 million, or 14.3% annualized. I am proud of the work that the sales teams have put in over the second half of last year that helped us notch a very successful first quarter. We have renewed our focus on speed to market. Over the last couple years, our attention was rightly focused on helping our customers get access to PPP and Main Street lending programs to assist with pandemic-related challenges and uncertainties. Thankfully, we have turned a corner. We are working with the shared service and credit administration teams to further streamline our underwriting process. By finding ways to better automate and enhance our loan processes, we provide a service to our customers and prospects that our competition cannot match. And better yet, it allows our sales teams to focus on being trusted advisors to our customers, helping them find solutions and products to make their businesses more successful. Our fee income did show a modest decline from the fourth quarter. But this is clouding some very positive news. First, we have seasonality in our crop insurance sales that peaks in the fourth quarter and is not repeatable in the first quarter. Second, the contribution of mortgage banking revenue declined this quarter due to rising mortgage rates and a slower selling season in the winter. Commercial credit card and debit card interchange was similar to modestly growing link quarter despite some of the typical seasonality generally experienced with spending. We continue to emphasize putting commercial cards in the hands of our clients, driving debit card utilization through marketing campaigns. The build out of our HSA platform is nearly complete. We have growing pipelines that our healthcare services team has developed that will allow us to service their employees' HSAs and other tax-advantaged flexible spending account needs. In time, this will contribute fee income through interchange and accounts that use a brokerage option. We have recently had two changes in regional leadership that I am very excited about. We recruited a new leader for our Tulsa region that has spent much of his career in the region working for a top national bank. We are excited about his leadership and potential to continue to develop our Tulsa footprint and enhance its contribution to our results. We've also promoted an internal candidate to lead our Southwest Kansas region. His prior experience was successfully supporting sales efforts in our retail network in western Missouri, southeast Kansas, and northern Oklahoma. Eric?
spk05: Thanks, Craig. Net interest income totaled $39.3 million in the first quarter, increasing from $37.2 million in the linked quarter, representing a $2.1 million increase. During the first quarter, the yield in the loan portfolio, excluding PPP, increased approximately 32 basis points. We had a 1.5 million benefit to interest income in the quarter from loans previously not accrual being moved to accrual. When excluding a one-time benefit and PPP impacts in both comparable periods, NIM in the first quarter increased 19 basis points to 3.2%. Slowed premium amortization in our investment portfolio contributed approximately seven basis points of improved yield in a quarter from the linked period. Our interest-bearing liabilities also experienced continued improvement, declining two basis points from the fourth quarter. Origination fees recognized from forgiven PPP loans continue to decrease. MIM was benefited by PPP loan fees in the first quarter by five basis points as compared to 12 basis points in the fourth quarter. We recognize $755,000 of fee income and $71,000 of interest income related to PPP loans in the first quarter, down $1.9 million from the fourth quarter. At quarter end, we had $500,000 of net unrecognized fee income associated with PPP loans, which totaled $20.3 million. The team has been focused on ensuring we proactively position the balance sheet for a rising rate environment. Over the last 18 months, we've been quite conservative about originating loans that were priced out further than three to five years on the curve. We've recently seen some customers opt to accept a variable rate because of the steepness in the front end of the curve that is causing fixed rates to be significantly higher. We recently took advantage of the record increase in two-year yields and swapped a part of our portfolio from variable to fixed for two years. While that may seem counterintuitive, our modeling and analysis showed that there was a great deal of value to capture that will benefit our NIMH. In the event interest rates don't rise as the market currently expects, we do even better. Our outlook slide does show moderate decline in NIM in the second quarter. There is some conservatism in that number due to some uncertainty with the cost of funds. Currently, our competitive landscape in our community markets remains very rational, which should allow us to lag any rate increases. However, if the FOMC follows through with a 50 basis point increase in May and even June, as some market observers think may happen, it could alter the competitive landscape on rates. On the asset side, we're seeing improvement in origination and renewal yields. CNI origination yields increased 14 basis points in the first quarter, which is about 40% of the quarter's origination volume. We expect premium amortization in the investment portfolio to remain slower, which should assist in yields from that portfolio. And as I have said in prior calls, we're working to move earning assets away from the investment portfolio to the loan portfolio, which will assist in higher asset yields. Brad?
spk11: I'd like to point out our progress on our strategic goals for 2022. We're focused on the continued improvement of operating performance. We saw progress in the first quarter on our goal to achieve a return on tangible equity in the mid-teens. We continue to look for opportunities to reduce excess liquidity on our balance sheet and increase fee income in our revenue mix. We saw our loan to deposit ratio increase. As I mentioned before, tailwinds from our credit and loan growth will help drive us towards greater operational efficiency. We are excited about the build-out of our HSA business, which provides cross-selling opportunities to our commercial and municipality clients as well as a state-of-the-art platform to our existing HSA client base. Our commercial credit card product continues its positive momentum in contributing to fee income. We are looking at several other opportunities to add to our suite of services and products for our customers that will support our goal of increasing fee income as a part of our revenue mix. Eric?
spk05: I wanted to turn your attention to the forecast slide on the earnings deck, which will put some specifics on our expectations for the remainder of 2022. As Brad mentioned, our long-term goals remain unchanged, improving our revenue mix, increasing fee contribution to that mix, driving positive operational leverage off of our expense base, and driving our loan-to-deposit ratio to levels we saw pre-COVID. This last goal is dependent, in part, on economic factors in the markets we serve. Successfully shifting excess liquidity to the loan portfolio from cash and investments is critical to improving our pre-tax, pre-provision, return on assets. Brad?
spk11: We're in active conversations with several different companies about partnering. Equity continues to be ready and willing to act as a partner to banks that fit and complement our organization, provided they assist equity in making progress to our stated financial profitability goals. As I regularly emphasize, we will stay true to our requirements on earn back, cultural fit, and geographic strategic fit. We will maintain our focus on organic growth efforts. And as always, we'll look for opportunities to rationalize our branch footprint while improving the digital experience for our customers. And with that, we're happy to take your questions.
spk04: As a reminder, to ask a question, you will need to press star 1 on your telephone. And to withdraw your question, just press the pound key. Please send by. We compile the Q&A roster. Our first question will come from the line of Terry McEvoy from Stevens. You may begin. Hey, guys. Good morning.
spk06: Morning, Terry. Morning. Maybe, Eric, just to start with a question, If the Fed raises rates 50 basis points in May, can you just kind of walk us through kind of both sides of the balance sheet and what you think that would mean to the net interest margin? And I know you ran through your outlook slide and touched on a couple things, but just want to be maybe specific to this quarter and an event we'll likely see.
spk05: Yeah, I mean, on the funding side, yeah. We don't have a lot of dependence right now on wholesale funding, so the impact there would be fairly minimal. And given our liquidity, our loan to deposit ratio, we have been looking at letting some customers that might be rate sensitive and they're only here for one product that we don't have a relationship with them, we might let that leave the bank but we would be competitive with customers that do have a relationship with us, particularly if they are providing or using a service that has fee income or contributes fee income. But again, I think we haven't really seen a lot of irrational pricing in our markets yet, and I'm hoping that even with a 50 basis point increase, we'll continue to see that not change. On the asset side, I think, you know, based on our, we use a loan pricing model. Everything goes through that model. And we've obviously seen market rates already pop up on the expectation of increases. And so we've been seeing that already in what we've been originating. And one of the examples there in my prepared commentary was CNI being about 14 basis points higher in the first quarter versus the fourth quarter in terms of originations. So putting that all together, I think that will be a fairly balanced NIM. I just don't know if we'll have a lot of movement from where we're at right now.
spk06: Thank you. And, Brad, maybe as a follow-up, you talked about just conversations with potential M&A partners, how pricing expectations may be changed as rates have gone up, but then you also have to balance some economic uncertainty and inflation, and I guess maybe if you could maybe talk to the size of the potential partners that you're having conversations with as well. Thank you.
spk11: Yeah, we've got three or four active conversations that we have going on, and some are in modeling stages, and What I would tell you is everybody understands how they have to fit in a box and how they have to work on an earn-back. They're sophisticated organizations with good bankers on the other side. So I think expectations are in line with where things need to be to get deals done. The question is which ones are the best strategic fit, which one brings the right opportunities to us, You know, we passed on a deal that was fairly sizable for us, and we just said, you know, it had a lot of cleanup work in the portfolio still, and so we just thought in this time of the cycle, it wasn't the right time to take into that opportunity, and so, you know, we passed on that. So we're looking at, you know, strategic fit still. It has to fit economically, and then, you know, do we think it will move the needle for us and our shareholders?
spk04: Appreciate that. Thank you both. Our next question will come from the line of Jeff Rulis from DA Davidson. Your line is open.
spk07: Thanks. Good morning. Good morning, Jeff. Just a couple follow-ups on kind of the outlook slide as well. So the loan growth guide and kind of the average balance is, if you could kind of frame up the low and high end of the 3.2 to 3.4 billion in average loans. Could we assume the low side is sort of economic uncertainty that sort of plays out? Or are there some other competition or price sensitivity on the low end? And maybe just, you know, is 3.4 at the high end? absence of those pressures. Thanks.
spk05: Yeah, just kind of a nuance with that's a full year average balance. So that 3-2 is taking into account the actual average for the first quarter. So I would say that, you know, that's a little bit of a nuance there. I wouldn't expect, we don't have an expectation that our loans are going to shrink from where we're at right now. So I would probably look more towards the midpoint there for average for the year, which I think if using that midpoint, I think it gets to about another 8% annualized growth from where we're at at 331 to the end of the year, which I think is a little bit stronger than where we started our expectations coming into 2022, where I think we were looking more at 4% growth.
spk07: Got it. So, okay, so the – right, if you're kind of 3-2 on average, you know, exiting first quarter, again, if you kind of flatline, that's just the reason for providing that conservative low end is – is it true that just the economic uncertainty is what would kind of push that down?
spk05: Yeah, that's a fair statement, Jeff. You know, given – We feel good about the remainder of the year based on what we know now and what we see our pipelines. However, you know, again, if the Fed moves 100, 150 basis points here in the next couple quarters, that could alter the dynamics of the market and uptake of our customers. But we're not seeing that at the moment. Sure.
spk07: And to that end, Eric, the 3 to 3.10 market, margin guide, both for Q2 and the full year. Can you clarify, that assumes no further rate hikes, or it assumes sort of an average of expectations out there?
spk05: Yeah, we're not really – we don't build in rate hikes, future rate hikes, into our modeling, so it's not like we're – It's not like we put our however many rate hikes the Fed is expected or what the market's expecting on there. For the second core outlook, though, I mean, you know, it seems like the market has coalesced around the fact that the Fed is going to move in May. So, you know, we have looked at some modeling with – and I talked to Terry about that on his questions. So, you know, I think that there's probably a little bit of an expectation of rate hike in Q2, but not so much beyond that in our outlook. Got it.
spk07: Okay. And maybe last one. Brad, just wanted to firm up the buyback appetite again. You know, you're sort of – if you apply first quarter activity – to what you've got remaining authorized, you get sort of to the end of that. I just wanted to, for the balance of the year, and I know that valuations change and the environment could change, but your view of further appetite and maybe the board's view of maybe increasing that or extending the authorization. Thanks.
spk11: Yeah, I think our board understands, you know, the capital markets and the use of capital markets tools. And so, I can't ever see when our board wouldn't have an available appetite to be in a stock buyback as long as it's prudent. But we will always have an authorization available unless we were not allowed to do that for some regulatory purpose. But I can't see any time in the foreseeable future where we wouldn't have a standing open buyback available in and using that to help increase earnings per share and doing the right thing for all shareholders.
spk04: Okay. Thank you. Our next question will come from Robaton from Hove Group. Your line is open.
spk10: Hey, guys. Good morning.
spk04: Good morning. Good morning.
spk10: Wanted to, I guess, first talk about the loan utilization in ag. And, you know, I know it's been in the 20s and it's usually in the 50s. Any update on ag and other farmers? We've talked about other making money in over FIS, what the demand might be in the ag markets. And then just generally as you're looking at the loan pipeline, you know, what pieces of the business look like they're poised for more growth?
spk11: I'll take part of this question and turn the rest of it over to Craig. The ag utilization still remains down, which is a positive from the standpoint of our customers are sitting on lots of cash, and our ag customers are sitting on lots of cash, and so they're not utilizing the lines of credit. We think that's positive from the standpoint of it puts them in a very healthy position and gives them lots of flexibility if there is a change in the commodity prices. Right now, the input prices are going up, but the grain sales prices are also going up faster. At this point, they're on pace to make a lot of money again this year, and they're all starting to forward sell some of that crop. We have very stable crops in our area because we are in a place where it uses irrigation, so we're not dependent on Mother Nature as much. as other places, and so I think that also bodes well for us. And, you know, so our ag guys are in good shape. I'll let Craig take the second part of that question.
spk02: Yes. You know, the results of our first quarter loan growth were primarily driven by significant activity in both Wichita and Kansas City. We were able to win a couple of very significant C&I opportunities, and then we had a very large CRE transaction in Q1. Our pipelines right now are very, very strong. They're very consistent with where we've been over the last probably four quarters. You know, very excited about the opportunities to continue to increase our loan portfolio. And there's a significant focus in our community markets on kind of the smaller middle market credits. And so, starting to see some nice lift in that particular area, primarily from our kind of our western Missouri northern Oklahoma and southeast Kansas territories.
spk10: Okay. That's helpful. And then I wanted to get back to the conservatism around the margin on the funding side and maybe get an update on, you know, I think some of that might be based on anticipating a higher beta on MMDA. You know, is 75% beta still what you guys are thinking on MMDA? money market or has that changed and maybe any thoughts on those more rate sensitive pieces of the funding mix?
spk05: Yeah, I agree with your statement or kind of question on what could be driving that conservatism. So again, you know, we've been seeing a lot of rational pricing within our community markets in terms of competition on the deposit side. And I think there's just a lot of liquidity out there. And so I think some of our competitors are probably looking at it the same way we are. If you have a customer that doesn't really have a deep or any relationship with us other than just that one product, we're willing to let that go across the street. And so we might have been experiencing a little of that here in the first quarter. But I do think that if the Fed moves once or twice I'm not so concerned about the ones, but some market observers are thinking that there could be another follow-up 50 basis points in June, so you have 100 basis points in a very short period of time. I do think that that could alter some of the dynamics there and cause some of the betas to rise from where we're seeing it right now. And I would think that that pretty much sums up the reason for the conservatism on the NIM.
spk10: Okay. And then just lastly for me, I just wanted to talk about credit leverage from here. It was nice to see the decline in classified assets and you guys addressing the aerospace credit. It seemed like you could have some credit leverage from here, like maybe the provisioning would still have a potential to be pretty light. Can you give us any color on specifically the reserves around the commercial real estate book and the CNI portfolio from here and, you know, the dynamics around the possibility of having a low provision continuing going forward?
spk05: Yeah. You know, we kind of budget kind of my what I would say is we're budgeting for growth. So you're right in that we might We might have some credit leverage, as how you explained it, in terms of the asset quality improving. And knock on wood, no further losses, which would drive provisioning from a historical loss perspective. But we continue to expect loan growth. And so that's one of the reasons why we budget for about 10 basis points on an annualized basis on average loans. through the year. So yeah, we did have that release here in the first quarter, which I walked through on my prepared comments and I won't repeat myself. So we did have that, but that was really driven a lot by what happened with what Greg talked about. So I would really actually probably say that I would put 10 basis points of provision going forward. Again, on an annualized basis. Okay.
spk10: Okay. Great. Appreciate all the time.
spk04: Thanks. And once again, that's star one for questions. Star one for questions. Our next question will come from Andrew Leash from Piper Chandler. You may begin.
spk09: Hi, guys. Good morning. Just kind of following up on this last question here. So on the The reserve bill from the economic and qualifying factors here in the first quarter, that's just more of what you're seeing currently and more of a one-off event. So the 10 basis points is still what we should be using going forward, just assuming that or with the caveat that maybe there's another one of these provisions down the line.
spk05: Yeah, I mean, I kind of look at it from a coverage perspective. So if you look at ACO to non-PPP loans, we're hovering around 150 basis points based on how we're seeing the uncertainty in the economy based on what I talked about in my prepared commentary. I would expect that that coverage would stay pretty close to that 150 basis points. It's not necessarily an anchor in our modeling. It just happens to be where we're landing. So that 10 basis points is just expecting further growth to maintain that around the 150 basis points.
spk09: Okay, that's helpful. And then just on the expense guide on the outlook slide there, it looks a little conservative on the high end, but I guess what would happen for expenses to get to $128 million this year?
spk05: Well, the biggest contributor to expenses is our people. I think we've done a really good job in limiting our some of the, you know, there's been a lot of attention on wage growth, and I think that we've done a pretty good job in limiting that here. I think, you know, from a budgetary perspective, We had between 3% and 4% growth, and that's currently in our numbers. But if we need to respond to something that we're not expecting to, that could be one source of an increase. But at this point, we're feeling comfortable that we won't get up to that 128%.
spk09: Got it. Okay. That's helpful. All my other questions have been asked and answered. Thanks so much.
spk05: Thanks, Ian.
spk04: And our next question comes from Damon Del Monte from KBW. Your line is open.
spk08: Hey, good morning, guys. Hope everybody's doing well today. Thanks for taking my question. So just want to kind of a little bit bigger of a broader picture on the loan growth outlook. Can you just kind of talk about maybe some of the dynamics you're seeing in the market with supply chain issues and just, you know, broader geopolitical risks that could be impacting your local economies? Are you seeing any slowdowns anywhere? Is there any, you know, major areas of concern on your end?
spk11: Yeah, we don't, at this point, we don't see a lot of slowdown in our marketplace. So our region has some oil and gas dependency. And so with oil and gas being at $100, you know, the Oklahoma, Kansas, Missouri markets are doing incredibly well. Arkansas is doing incredibly well, driven by retail. You know, the J.B. Hunt's trucking industry technology and Walmart effect down there. And so everything in our marketplace is doing well. We have some uplift from the aerospace industry. There's huge backlogs right now in that industry. So there's good demand on that side. There are some supply chain issues, but the supply chain issues are just holding back the ability to produce more jets at this point. So we don't really have any indicators right now that, you know, there is any problems or, you know, any slowing of the economy in our place, do you think?
spk03: Yeah, and Damon, I would also say, as you listen to Brad's commentary, what's embedded in that is even in our four-state geography, there is a pretty sizable amount of diversity. So western Kansas is is really very propped up by a healthy ag economy. Kansas City's economy is healthy, and it's a little different than Wichita's. It's a little different than Tulsa's. So we're blessed with having some diversity in our economic basis and our footprint.
spk08: Got it. Okay. That's helpful. I appreciate that. And then I guess just in most of my other questions I've been asked and answered, but I guess with regards to the fee income, You know, Eric, the last couple quarters, the other non-interest income line has been higher than it was earlier in previous quarters, I should say. Is there anything in there that you don't have a lot of confidence in being repeatable, or do you think that, you know, something in the low $2 million quarterly range is appropriate?
spk05: Yeah. I think the high $1 million, low $2 million is appropriate going forward. One of the things that is in there is the mark-to-market for derivatives, and with higher rates, that's a positive benefit to us.
spk08: Got it. Okay. That's helpful. All right. That's all that I had. Thanks a lot, guys. Appreciate it. Thank you.
spk04: Thank you. And ladies and gentlemen, I'm sure you know for the questions at this time. This will conclude our first quarter equity bank shares presentation. Have a great day.
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