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spk04: Good morning, everyone. I'm Paul Langdale, Executive Vice President of Corporate Development and Strategy for Independent Bank Group, and I would like to welcome you to the Independent Bank Group fourth quarter 2021 earnings call. We appreciate you joining us. The related earnings press release and a slide presentation can be accessed on our website at ibtx.com. I would like to remind you that remarks made today may include forward-looking statements. Those statements are subject to risks and uncertainties that could cause actual and expected results to differ. We intend such statements to be covered by safe harbor provisions for forward-looking statements. Please see page five of the text in the release or page two for the slide presentation for our safe harbor statement. All comments made during today's call are subject to that statement. Please note that if we give guidance about future results, that guidance is a statement of management's beliefs at the time the statement is made and we assume no obligation to publicly update guidance. In this call, we will discuss a number of financial measures considered to be non-GAAP under the SEC's rules. Reconciliations of these financial measures to the most directly comparable GAAP financial measures are included in our release. I'm joined this morning by David Brooks, our chairman and CEO, Dan Brooks, our vice chairman, and Michelle Hickox, executive vice president and CFO. At the end of their remarks, David will open the call to questions. With that, I will turn it over to David.
spk03: Thanks, Paul. Good morning, everyone, and thank you for joining us on today's call. We were very pleased to report solid results for the fourth quarter. with adjusted earnings of $1.28 per share, healthy return metrics, and a strong annualized organic loan growth of 11.2%. Notably, this organic growth is driven by broad-based lending to our customers across Texas and Colorado and is supported by the strong tailwinds that continue to benefit our four great markets. On the credit side, we were pleased to see and meaningful improvement in our non-performing assets, which declined from 44 basis points to 31 basis points during the quarter. Our company's strong performance in the fourth quarter resulted in tangible book value per share increasing by 46 cents to $35.25. In addition, we repurchased a total of 201,326 shares of our common stock and increased our dividend for the fourth quarter to 36 cents per share. These actions reiterate our steadfast commitment to deliver returns to our shareholders. With that overview, I'll now turn the call over to Michelle for more detail on the operating results for the quarter.
spk01: Thank you, David. Good morning, everyone. Note that slide 6 shows selected financial data for the quarter. Full year 2021 GAAP net income was $224.8 million, or $521 per diluted share, an increase of $23.5 million, or $0.54 per share over the prior year on a diluted basis. For the fourth quarter, adjusted net income totaled $55 million or $1.28 per share, an increase of $2.4 million or $0.06 per diluted share over the linked quarter. Net interest income trended upward to $132.7 million in the fourth quarter, which was an increase of $4 million over the linked quarter. This increase was driven by an increase of $1.7 million of acquired loan accretion income versus the linked quarter, as well as a strategic reduction in our deposit funding costs. During the quarter, we achieved our target of growing our securities book to $2 billion and booked loan growth at an 11.2% annualized rate. However, the impact of these increased earning asset balances were partially offset by lower incremental yields relative to older loans and securities maturing. PPP fees remain stable at $4 million in Q4, with $2.6 million remaining to be recognized. We anticipate this $2.6 million to be mostly recognized in the first half of 2022. The net interest margin excluding accretion was 2.87%, down four basis points from the linked quarter. The decrease is primarily due to increased average liquidity during the quarter, which had a negative impact of seven basis points, and was partially offset by the reduction in deposit costs. Total non-interest income was $15.1 million for the fourth quarter, a decrease of $1.8 million versus the linked quarter, which was primarily due to decreases in mortgage banking revenue due to seasonality impacts as well as the recent uptrend in mortgage rates more broadly impacting the mortgage business. Non-interest expense totaled $79.9 million for the fourth quarter, a flat reduction of $664,000 versus the linked quarter, and an increase of $4.7 million when compared to the fourth quarter of 2020. The increase over the prior year is primarily due to $5.2 million of increased salaries and benefits expense, mostly driven by additional headcount, including executive and senior leadership positions that were added during 2021. This increase was partially offset by a reduction in mortgage commissions and incentives, of $1.8 million due to lower volumes in the year-over-year period. Fourth quarter 2021 also includes $614,000 of non-interest expense related to COVID-19 vaccinations incentives and testing. Slide 19 shows our deposit mix and cost. Deposits total $15.6 billion at quarter end, with total non-interest-bearing deposits up by $153 million from linked quarter and $901.8 million from the fourth quarter of 2020. Interest-sparing deposit costs decreased eight basis points from 40 basis points in Q3 to 32 basis points in Q4. This was a result of our efforts to reduce rates on CDs and interest-sparing DDA accounts in anticipation of contemplated increases in the Fed funds rates during 2022. Capital ratios are presented on slide 21. In the fourth quarter, the company's consolidated capital ratios remain strong, with common equity Tier 1 capital of 11.12% and a total capital ratio of 13.67%. As David mentioned, we repurchased about 201,000 shares of our common stock during the quarter for an aggregate price of $14 million. That concludes my comments. I will turn it over to Dan to discuss the loan portfolio.
spk03: Thanks, Michelle. Overall loans held for investment, excluding mortgage warehouse purchase loans, were $11.7 billion at quarter end compared to $11.5 billion in the linked quarter. Excluding the impact of PPP loans, core loans held for investment increased by $318.2 million over the linked quarter, which represents an 11.2% annualized rate of loan growth. Loan growth continues to be driven by broad-based relationship lending to our customers across Texas and Colorado. There are $112.1 million of PPP loans on balance sheet at quarter end, down from $243.9 million in the linked quarter. Average mortgage warehouse purchase loans decreased slightly to $801.7 million for the quarter, which is reflective of lower industry volumes overall due to upward pressure on mortgage rates. Credit quality metrics strengthened during the quarter in line with our expectations. Total non-performing assets decreased to $57.5 million or 0.31% of total assets at quarter end, which was a reduction of $25.3 million during the quarter. Net charge-offs totaled $3.0 million or 10 basis points annualized during the quarter. and were related to a leasing portfolio acquired as part of a previous M&A transaction. These credits had been fully reserved through purchase accounting adjustments at the acquisition date and were subsequently transitioned to the allowance under CECL. At December 31, 2021, the allowance for credit losses on loans is $148.7 million, or 1.28% of loans held for investment, excluding mortgage warehouse loans. These are all the comments I have related to the loan portfolio this morning. So with that, I'll turn it back over to David. Thanks, Dan. Looking ahead, we remain confident in our ability to grow our core loan portfolio at the 7% to 8% level in 2022. We are also incrementally encouraged by our strategic position of the balance sheet ahead of any increases in overnight rates. To that end, we have made a concerted effort to optimize our funding cost and mix. while deliberately booking new business with a rate hike environment in mind. We are also continuing to make strategic investments in our platform in anticipation of future growth, and we remain focused on continuing to attract talented individuals to our company. While we are encouraged by strategic discussions with potential partner banks, we will remain patient, disciplined, and deliberate in our approach to M&A. Our priority remains to create long-term shareholder value by growing our high-quality franchise across our four strong markets and to deliver consistent high performance to our shareholders, customers, and communities. Texas and Colorado remain two of the most attractive economies in the country, and our bankers continue their disciplined pursuit of winning new business and expanding existing relationships each day. I'm grateful to our entire team for the strong finish to 2021 and look forward to the great things we can accomplish as we continue to leverage our strong culture and grow our platform in 2022. Thank you for taking the time to join us today. We will now open the line to questions. Operator.
spk00: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time, we ask that you each keep to one question and one follow-up. Thank you. Our first question comes from the line of Brady Gailey with KBW. Please proceed with your question.
spk02: Hey, thank you. Good morning, guys. Hey, good morning, Brady. I know last quarter, you know, Michelle gave us the expense guidance of, you know, expecting expenses up about 3% year over year in 2022. You know, so far throughout earnings season, we've heard a lot of banks talk about inflation and compensation going up because they need to retain people. How are y'all thinking about expenses now? Has there been any change to that 3% growth estimate, Michelle?
spk01: Yeah, that's a good question, Brady. I think similar to our peers, we have seen continue to have challenges on wages, just being able to identify and hire talent, especially talent with specific skill sets, has been more expensive. And so we are going to update our expense guidance. I think previously it was 3% over 21. I'm going to update that to 5% over a full year, 21 expenses. just due to the wage pressures as well as our board has wanted to continue to make investments in our infrastructure. So we've identified some new areas that we're going to make some investments there as well.
spk02: Okay. All right. That makes sense. And then as you guys had talked about, the bond book grew in the fourth quarter. How are you thinking about, you guys still have excess liquidity here. So how are you thinking about bond book growth into 2022?
spk01: I think we'll continue to invest in the bond portfolio as long as we continue to have that liquidity on our balance sheet. You know, our plan is called for us to put at least half a billion in this year. It could be more, you know, really depending on how the liquidity holds.
spk02: Okay. All right. And then just one final one for me, the buybacks, you know, you were You bought back about 0.5% of the company this quarter. You did the same last quarter. But the stock is now trading. I think the back half of the year, you bought it at a little under $70 a share. The stock's now higher than that. How are you all thinking about the buyback this year? Do you think you continue just to chip away at it every quarter? How are you thinking about the buyback?
spk03: I think, Brady, our view on that hasn't changed at all. We will be opportunistic with the volatility in the markets. We've had the opportunity the last two quarters to repurchase, you know, for us, material amounts of stock compared to what we purchased in the past. You know, but because our retained earnings and our capital continues to grow, our tangible value for shares growing. So as it grows, then obviously the price at which we would be willing to purchase our stock continues to go up. We'll see how that plays out over time. I still believe that strong organic growth and some future M&A opportunity possibly is the best use of our capital for our shareholders. But in the meantime, we will be active buying the stock back when the market allows that and then also continue to look to raise our dividends in the days ahead. Okay, got it. Thanks, David. Thanks, Brady.
spk00: Thank you. Our next question comes from the line of Michael Rose with Raymond James. Please proceed with your question.
spk05: Hey, good morning, everyone.
spk03: Hey, good morning, Michael. Good morning. Hey, just wanted to touch on the loan growth outlook. So it sounds like, you know, the expectation is kind of in line with last quarter, you know, really healthy growth for next year. It looks like you guys had really good energy growth for the second quarter. a quarter in a row. Can you just give us, you know, kind of what the puts and takes are of that outlook? And then maybe if you can just comment on the CNI team, you know, build out that you've talked about previously. Thanks. Yeah, thanks, Michael. We were pleased with, you know, where the loan growth was in the fourth quarter. We felt like, you know, that's what we had, what we'd expected it to be for the year. You know, a little over 6% was I think where we had budgeted in the range of what we had expected, but certainly felt like it would accelerate in the second half of the year. We feel like that our guidance to 7% to 8% for 2022 is still a good number. There could be upside to that depending on how the economy goes, how quickly the Fed raises rates, and a lot of things we don't control, but But we feel like under most scenarios, 78% is a good number for us. For 22, the C&I, middle market C&I build-out continues to go very well. We saw some good traction there. They had some nice relationships moved over and some good fundings in the fourth quarter. Continue to build out their team. We expect to continue to do that aggressively as we build out across Texas in 22. On the energy front, we have had a lot of success moving over and picking up some high-quality relationships. It's about, I think, current commitments around $500 million and current outstandings around $340, $350 billion. So it's still a relatively small piece of our overall loan portfolio, but very proud of the team we've got there. We did just hire another energy banker in Houston. And so we intend to continue to invest and look for opportunities in the energy space. But, you know, with current outstandings around two and a half to 3% of our total loan book, we think we have some room to grow. As long as we see the high-quality opportunities with the right structures and right pricing, I think we'll continue to do that. Dan, did you have any other thoughts on energy? No, I think you covered it well, David. We did see some really nice opportunities during 2021 in the energy book specifically and would expect if we see those opportunities in 2022, we'll continue to grow it there. But beyond that, I think you covered the nice opportunities we saw in middle market. Great. Thanks for the color. And maybe just as a follow-up, David or Michelle, if you guys can comment on the mortgage business. Obviously, we can all see the MBA's forecast and what that implies for next year. But if you could just comment on your portfolios, given the relative strength of your markets, and then maybe what you might expect for the warehouse as we move through the year.
spk01: Thanks. I think for our plan for our retail mortgages, we expect that they will be down just a bit in 22 relative to 21. Of course, it's hard to predict that business really depending on what rates do this year that could more heavily impact them, but they have done a good job of building out that team. You know, and we do have great markets where we have more, you know, buy versus refinance here in our Texas markets for sure. Warehouse, we expect, you know, again, they've done a really good job of building, upgrading their customer base. Those average balances should be down a bit. That's our expectation for 22 as well. But we still think probably 700 to 750 million is what our plan calls for right now.
spk05: Okay, thanks for taking my questions. Hey, thanks, Mike.
spk00: Thank you. Our next question comes from the line of Brad Millsaps with Piper Sandler. Please proceed with your question.
spk07: Hey, good morning. Hey, good morning, Brad. David Michaud, I know you guys have been really focused on lowering your funding costs. I'm just kind of curious how much more room you think there is to go there, and then I noticed, too, there was a pretty decent difference between kind of period-end deposits and the average. Is that more seasonal, you know, kind of public fund-related, or is there something specific there that you're running off the categories that might continue to help you out as well?
spk01: Yeah, as it relates to our funding costs, you know, we made some changes fairly early in the quarter to reduce costs on CDs and interest-bearing DDAs. really trying to align better with peers, and just given the liquidity we had, we felt like we had room to do that. There is still some opportunity, I think, in the first quarter as CDs reprice, and we have some contractual agreements that will reprice as well. So it should be a bit lower in the first quarter, but we probably won't see the full benefit of that until the end of Q1, Brad. We did have, there was just a lot of volatility the last week of the year with some of our specialty treasury deposits where we had a bunch of outflows And we actually sent some one-way deposits off. I think it was about $400 million right at the end of the year. So that's why you see the year-end balances be a bit lower than the average balances. Those have really sort of come back to where they were before that, I would say, fairly flat for the first quarter.
spk07: Okay, great. And then just kind of sticking with the margin discussion, Michelle, can you kind of discuss, I know there's a lot of moving parts, but in your mind, if we do start to see short-term rates lift, You know, what does that, you know, for each one, what does that mean for IBTX's margin? And, you know, do you want to do it in dollars or basis points? And then finally, can you remind us how much accretion you guys have left to recognize from some of your previous deals? Thanks.
spk01: Yeah, I think we have about $24 million left of accretion, which is primarily from the guarantee deal, Brad. Our current outlook and plan doesn't call for any rate increases. We did our budget assuming a flat rate environment, which I think we all probably expect that that is not what is going to happen. It will benefit us. We're more asset sensitive than we ever have been, but it's really hard to predict. It's hard to predict how long will deposits lag, hopefully longer than they have in the past just due to the amount of liquidity. You know, also, what will the impact be on our mortgage group as rates go up? Because I think you'll get some offsets there. I mean, I think it will be beneficial. I just hesitate to estimate what that would be at this point.
spk07: Okay, great. Thank you, guys. Thanks, Brett.
spk00: Thank you. Our next question comes from the line of Matt Olney with Steven Zink. Please proceed with your question.
spk06: Hey, thanks. Good morning, guys. Just wanted to follow up on a few of Brad's questions there. We're back. Good morning. Remaining discounts, $24 million. Michelle, any more color on what we should expect to see in a more normalized quarter or the next few quarters?
spk01: Yeah, we did have some accelerated accretion in Q4. As you noticed, it went up from Q3 to Q4. I think our expectation is that that run rate is going to be closer to $3.5 million a quarter for 2022 is a better way to look at it.
spk06: Okay, perfect. And then as far as the discussion around sensitivity to higher rates, I get there's lots of moving pieces here, but any commentary you can give us around the loans that are going to be repricing higher with the Fed, and how should we think about the loan floors and how much incremental repricing benefit you'll get with each incremental Fed increase? Thanks.
spk01: We have very few loans that are below floor. In our variable rate loans, we should get an immediate impact on most of those. But that's only about 15% of our loan portfolio reprices immediately, even though I think we're about half and half fixed and variable right now. But some of those reprice monthly, some quarterly. And so you'd have to consider that. Right now, I think it's going to depend on liquidity in the market. The long-term rates have really not changed. And so I think the question is still out on how that will impact our fixed rate loans. And so, you know, we don't really have that built into our plan that we're going to get a significant benefit from that at this point.
spk06: Okay. And just lastly for me, I guess for David around loan growth, any incremental thoughts on commercial real estate paydowns? I know it's been a pretty aggressive pace over the last year or so, but I guess some of your peer banks have expectations that paydowns are going to remain elevated the first part of the year, but hopefully... moderate the back half of the year into, into 23. I'm curious kind of what your thoughts are around the pace of the paydowns.
spk03: Yeah. We've been a little surprised, uh, Brad, by the volatility. It seems like in one quarter they're elevated the next quarter. They're not. Um, but from the highest level, I think our expectation is that we will continue to see you accelerated payoffs in the first half of the year. Uh, the reason, uh, As much as anything, one of our concerns, especially on the commercial real estate side, is that as the market gears up for this rate increase cycle that most everyone's expecting, the thought is that maybe the cap rates on some of these assets have been at historic lows for the last couple of years and have resulted in a lot of these asset sales and asset repositionings and things that we've seen our customers doing. that that might accelerate even if people think that, hey, this is my last chance to really sell this asset at a very low cap rate. So, you know, I think that's consistent with the way we're thinking about it, that the payoffs will continue to be a lot of headwind, at least for the first half of the year. Then I really would expect that to moderate once rates start going up because, again, I think cap rates will go up. People will be settled into whatever they're going to hold here for this next cycle. And so there will always be some, obviously, turnover and paydowns. But, yeah, our view is the same, similar, pretty accelerated first half of the year and slowing down late into the year and into 23. Thank you, guys.
spk00: Thanks, Matt.
spk03: Oh, thanks so much, Matt.
spk00: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star one on your telephone keypad. Our next question comes from the line of Brett Robinson with Hubby Group. Please proceed with your question.
spk05: Hey, good morning, David and Michelle. Hey, good morning, Brett. Hi, Brett. I wanted to ask, you know, your deposits through the pandemic are up about a third, like many, and your DDA is up almost a billion dollars in the past year. I'm curious, what's the thought on the stickiness of deposits as we go forward as rates increase, and how are you thinking about managing excess liquidity as it relates to maybe some concern that some deposits might draw down?
spk03: I'll start us out, Brad, and then Michelle can give some more details, Brett. Our view is that For starters, these are our customers' deposits, so it's not a lot of high-yield money that's come in during this time. It's really our customers, their deposits. There will certainly be some pressure to raise rates as rates go up over time, but I think early on our expectation is that given the amount of liquidity that we and other banks have, There will be an ability to keep the deposit prices down without losing a whole lot of deposits. Then as rates continue to go up, that gets a little more interesting, a little trickier. But our view is that a lot of that DEA growth has been our C&I customers and C&I deposits. And so we feel good about that. I feel good about, as you pointed out, the growth in DDA, the trend as a percentage. Our deposits are getting better quality. But, Michelle, you could comment on deposit runoff or how much we might expect those deposits to flow out.
spk01: Yeah, I think at this point, Brad, I don't really have an expectation for a big outflow of deposits, at least in I think this is going to be a longer term phenomena. Obviously, as David said, we're going to have to manage as rates go up and as our competitors change rates on deposit accounts, manage it that way. Right now, we don't really have a concern about liquidity. We have plenty to manage that out. We have made a lot of investment in our retail team and in our middle market treasury management team. you know, as David said, to improve our deposit base. So I think we're in a much better place than we were in the last upgrade cycle as far as building customers and retaining deposits.
spk05: Okay. That's great, Keller. And then the other question I wanted to ask was, you know, David, thinking about M&A, you know, last year we kind of started the year early and you were pretty optimistic on, you know, doing a deal or two. And then I think as the year progressed, you know, maybe, maybe price expectations may have, may have added your enthusiasm a little bit, you know, as we start 22, um, was curious just kind of what your optimism might be around MNA. And if you think that's, um, a potential likelihood for this year, or if you know, you think maybe MNA is, is, is tougher, what's your, what's your thoughts are on optimism around, around deals?
spk03: Well, Brett, as my brother says, I'm a glass half full rising guy. So, you know, I'm always encouraged, you know, about opportunity in the future. But that said, given my track record the last couple of years, prognosticating about M&A volumes, I'm going to give up that job and just stick to what we do really well, which is growing an organic bank in the best markets in the country, and that's what we control. I really don't have a good sense, Brad, at the highest level. I just continue to believe there will be consolidation in Texas and high quality markets with high quality banks. We continue to invest in those relationships with those banks, but what motivates a group to decide to seek a partner Those things vary, obviously, across the board and timing. I do think that our expectation going into this pandemic was that would cause a lot of disruption, maybe a credit cycle that would force but cause a lot of banks to think about where they were and what their future was going to be the next three to five years and that they might think it was a good time to find a partner. given the amount of assistance that came into the markets given the fact there was really no credit cycle in our view um the banks are doing extremely well all of our peers are doing well all the high quality downstream banks that we would have an interest in are doing extremely well and there's just nothing kind of pushing if you will uh motivating and a lot of people point to the bigger macro things, which I think, you know, are all relevant and pertinent around technology and, you know, regulatory investments and things like that. But, you know, that's a longer term focus thing. And that's not anything that I think presses, you know, banks that are in this two to 10 billion range that, you know, are banks the size that we would be looking at. So all that said, I just don't have a feel for it. I do know that, you know, what we're focused on is, as I mentioned, organic growth, hiring great teams of bankers, both customer-facing and also hiring, really looking across our company and the infrastructure of our company and seeing where we need talent and where we can add talent. That's a part of what Michelle talked about with the expense guidance going up a little bit. For 22, we really looked late in the fourth quarter at what was going on with with the talent war, if you will, in Texas and Colorado, and not only hiring new people, but paying and retaining the great talent that we've got. All that is very expensive. And then also looking to say, hey, where do we need to add more talent or where do we need to continue to invest? Michelle mentioned our board is very focused as well on making sure that we have an outstanding $20 billion platform from an infrastructure and technology standpoint so that we can, you know, in the future, grow the company, continue to grow the company organically and, you know, hopefully someday with some M&A. But I'm not, I just don't have a sense, Brad, at all, whether it's a late 22 or is it, you know, will, you know, something happened, will it be 23? You know, I continue to believe from a highest level that yes, there will be high quality M&A, but when and, you know, timing and structure and all that, I just don't know. I do know we will continue to be very disciplined around making sure we wait for the right deal at the right time with the right people and the right structure. And that takes 12 months or 18 months or 24 months. You know, it will be what it will be, uh, The other thing that ties back to what I was saying a moment ago is we have to keep running our company well. We have to keep growing. We have to keep growing our profitability. And by doing so, hopefully that allows us to continue to trade well in terms of our stock, which then, again, continues to give us the opportunity to be a good partner for someone in the future.
spk05: Okay, that's a great call. I appreciate it, David.
spk03: Thanks, Brett.
spk00: Thank you. Our next question is a follow-up from the line of Matt Olney with Steven Zink. Please proceed with your question.
spk06: Yeah, thanks for taking the follow-up. David, I just want to ask about loan pricing. I think on the October call, you mentioned that the pricing for new and renewed loans had deteriorated a little bit in the back half of the year versus the first half of the year of 2021. any, any update on what you're seeing in more recent weeks and months around, around loan pricing?
spk03: Uh, sure. Uh, Matt, we, we continue to see pricing being very competitive, uh, for the same reasons we talked about in the fourth quarter, which, um, which is that all the liquidity and, and, uh, institutions are just looking to book high quality assets. And so I'm seeing a lot of pressure on pricing, continuing, um, The structure, I think, generally remains strong, and I'll let Dan comment on that. But I think the pricing was continued, I would say, in the fourth quarter at similar kind of pricing what we saw in the third quarter. So it didn't get worse in the fourth quarter, but it certainly remains super competitive. And we expect that to hold. Michelle alluded to this earlier, Matt, what I think it's hard to know, you know, on the some of these three-year and five-year fixed rate deals um as interest rates go up later this year likely you know how quickly does that get get reflected or would it be reflected in the uh in the cre you know pricing market again just don't have a feel for that we certainly I've been booking a lot more floating rate as a percentage of our loans here, anticipating an uprate cycle, as I mentioned in my prepared remarks earlier. But that said, we've built in pretty conservative pricing into our models, and we still feel good about our spreads and our margins. I know Dan, in terms of structure, any concerns or anything you're seeing in the market? I think the only structural pressure that we're seeing, Matt, is coming from non-banks. It's always out there. The fact that the banks have the liquidity they have today, I think it's primarily a pricing issue, as David mentioned. It's just competitive, but it's been competitive. All of 21 was competitive, so we certainly expect that that would continue in 22, but I think overall, the banks that behave well as it relates to structures, and it's primarily the non-banks who are in that space.
spk06: Okay, that's helpful. And maybe just lastly, a big picture question. We haven't talked much about efficiency ratios for a little while, but if we go back a few years ago, the bank had efficiency ratio below that 50% level, and now we're a little bit above. So help us appreciate just what we need to see to get that core efficiency ratio back below 50% level? Is it a matter of just seeing higher rates, or do you often think it's going to have to be driven partially by M&A? Thanks.
spk01: Yeah, I think I don't expect that that efficiency ratio will go back below 50% in 22, Matt, just due to all the things that we've talked about this morning. I would expect by 23 it will trend back below 50%. It's primarily going to be driven by revenue growth, really. I don't expect at this point we're going to really reduce our costs going forward. Hopefully they don't continue to increase at the level they will in 22. But just as a growing company, I expect they'll continue to increase. But especially with rate increases, we should drive higher revenue in 23 that will help us push that efficiency ratio back down.
spk06: Okay. Thanks. It's all from me.
spk03: Hey, thanks, Matt.
spk01: Have a great day.
spk00: Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Brooks for any final comments.
spk03: Thank you. Appreciate everyone being on today. I did want to comment one more time. What an amazing job our team did in 2021 and really for the last two years. We had no no understanding really early in 2020 what was coming for the next two years. And our team has just done a fantastic job of leaning in and taking care of our customers and taking care of our communities. And I've been proudest of everything that we've accomplished the last two years, has been proud of our team and the work they've done. and our ability to continue to attract such talented people who, you know, resonate with what we're trying to do and the company we're trying to build and the impact we're trying to have in communities. And so we're committed to that and, and we continue to build our team in a way that, you know, points to a long, a long-term future and, and just appreciate each of them and appreciate each of you who listen and who invest in our company and, and, uh, We will continue to work hard on your behalf as well. Have a great day.
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