7/21/2022

speaker
Conference Operator
Operator

Good day and welcome to the PAC West Bank Corp Second Quarter Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Bill Black. Please go ahead, sir.

speaker
Bill Black

Thank you.

speaker
Bill Black
Director of Investor Relations

Good morning and welcome to PAC West Second Quarter 2022 Earnings Conference Call. Investors have been eager for us to do a call for some time, and we're excited to add this to our ongoing investor relations activities. With me in speaking today will be CEO Matt Wagner, CFO Bart Olson, COO and leader of our venture banking business, Mark Young, and our newly appointed president, Paul Taylor. Before I hand the call over to Matt, please note that we may make forward-looking statements during today's call that are subject to risks, uncertainties, and assumptions. For a more complete discussion of the risks and uncertainties that could cause actual results, to differ materially for any forward-looking statements, see our company's SEC filings, including the 8 file yesterday afternoon, which is available on the company's website. I'd now like to turn the call over to Matt.

speaker
Matt Wagner
Chief Executive Officer

Okay. Thank you, Bill, and good morning, everybody. I just wanted to make one comment before we get into the results for the second quarter. I'd like to welcome Paul Taylor to the PACWES team. Of course, Paul has been on the board since May of 2021. so he's not new to the PacWest story. As announced on June 13th, Paul joined PacWest as president and will succeed me as CEO upon my previously announced planned retirement at the end of 2023. Paul and I have known each other for many years, and many of you probably know Paul from his days as CEO of Guaranty Bancorp here in Denver from 2011 to 2014. and then Opus Bank from 2019 to 2020. We're very excited to have completed the search for my successor earlier than planned, and I look forward to working closely with Paul during the transition over the next 18 months. Paul, would you like to say a few words?

speaker
Paul Taylor
President

Thanks, Matt, and good morning, everyone. Like Matt, I'm very excited about the new opportunity. My time on the board has provided me with the opportunity to get to know both the board and the management team, which has allowed me to hit the ground running. I'm looking forward to building on the success of the company and leading it into the future.

speaker
Matt Wagner
Chief Executive Officer

Thanks, Paul. With that, let me turn it back over to Bill for a summary of the key highlights for the second quarter. Thanks.

speaker
Bill Black
Director of Investor Relations

Thanks, Matt. We continue to focus on two strategic priorities, optimizing the balance sheet through remixing earning assets and rebuilding our capital ratios. The second quarter was marked by exceptional loan growth, which has been the culmination of our colleagues' hard work over the last 12 to 18 months. That growth has had four material impacts on our second quarter. First and foremost, the loan growth helped drive the $15 million of net interest income growth quarter to quarter. Second, The $2 billion increase in unfunded commitments led to a loan loss provision for the first time since the fourth quarter of 2020. Third, expenses were elevated due to higher bonus accruals and commissions, as well as higher loan-related expenses. These items accounted for about $7 million of the Q2Q increase. Finally, the strong loan growth was a factor in upsizing our preferred capital rates. The second quarter saw an incredibly volatile rate environment and significantly more economic uncertainty which has caused us to tap the brakes with the expectation of slower loan growth in the second half of the year. We expect the higher interest rates to benefit our earnings over time and will start to show up in the second half of 2022. We saw continued deposit headwinds in our venture business with deposit outflows of $1.9 billion in the quarter, which was offset by increases in wholesale deposits. Our credit quality metrics remain near historic lows with net recoveries in the second quarter. We added to the ACL to be prepared for whatever the economic environment and greater uncertainty deliver. We strengthened our capital position with the $513 million preferred equity raise advancing our capital plan. We will continue to grow our capital ratios from here with increasing profitability and slower balance sheet growth. And with that, I'd like to hand it over to Bart for some specific commentary on the financial results before we go into Q&A.

speaker
Bart Olson
Chief Financial Officer

Thanks, Bill, and good morning, everyone. Hopefully, you've all had a chance to review the press release and the earnings release deck. So I thought I'd just touch on a couple items before I go into the Q&A portion of the call. As Bill mentioned, we booked a provision for credit losses of $11.5 million in the second quarter, $10 million related to loans, and $1.5 million related to our health and maturity investment portfolio, which I'll talk about in a few minutes. The loan loss provision was due primarily to the significant increase in unfunded commitments of $2 billion. The ACL remains a robust 1.07%, down slightly from the 1.12% at the end of the first quarter, and above our CECL adoption date ACL of 97 basis points. Looking at non-interest income, there was really nothing unusual here in the second quarter. Warren income was $1.6 million, in line with the historical quarterly averages when excluding the significant record gains from the fourth quarter of 2020 to the fourth quarter of 2021. Non-interest expenses were higher than the prior quarter, but keep in mind that the first quarter included $3.4 million in OREO gain and a lower commission expense of $2.4 million related to the significant valuation write-downs of equity investments during Q1. So adjusting for these items, the first quarter non-interest expenses would have been about $173 million compared to the $183 million in the second quarter or an increase of $10 million. This increase was primarily driven by an increase in compensation expense, including commissions by about $2.5 million, bonus accruals by about $2.5 million, both due to the strong loan growth. The remainder was largely due to a full quarter of annual merit increases, along with an increase in FTEs of 95. The FTE increase was primarily related to CIVIC, the community bank, and our digital and innovation strategy. I now want to turn to the balance sheet for a couple of comments and actions taken during the quarter. On June 1st, we moved $2.3 billion of available for sale securities to held immaturity to mitigate the impact on accumulated other comprehensive income for future increases in interest rates. As previously mentioned, at quarter end, we booked $1.5 million provision for credit losses on this HTM portfolio. The OCI related to this portfolio at the time of transfer was about $217 million. During the quarter, we also sold approximately $393 million of investments out of our bond portfolio at a loss of $1.2 million. We used those proceeds and the normal cash from the portfolio to fund loan growth while not making any significant new bond purchases. As mentioned, venture banking deposits declined $1.9 billion during the quarter for many of the same reasons as they declined in the first quarter. As a reminder, most of our venture banking deposits are related to late-stage companies, which are highly impacted by the capital markets, which again saw virtually no IPO activity during the quarter and the lowest level of venture investments in three years. This lack of capital market activity is a key driver in the decline in deposit balance. Other contributors to the decline included normal cash burn of the underlying clients, cash used for acquisitions and cash management activities, which could be a transfer to a money center bank or a transfer to our off-balance sheet entity, Pacific Western Asset Management, or PWAM. In the second quarter, transfers to PWAM were about $500 million. From a capital perspective, the preferred stock offering drove an increase in capital despite the strong growth in both loans and unfunded commitments, which increased risk-weighted assets by $2.7 billion. At quarter end, this put our Tier 1 capital at $10.15 up from $9.07 and put our total risk-based capital at $13.12 up from $12.27. This increase in capital aligns with our strategy to increase capital and operate at levels more similar to those in the first half of 2021. This concludes our prepared remarks. Operator, could you please open the line for questions?

speaker
Conference Operator
Operator

Yes, sir. Thank you. And if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that is Star 1 if you would like to ask a question. And we'll take our first question from Jared Shaw with Wells Fargo Securities.

speaker
Jared Shaw
Analyst, Wells Fargo Securities

Hey, guys. Good morning. Hey, Jared. Hey, could you just spend a little time on the outlook for funding growth and deposits? You know, I hear the headwinds on the venture side, and it seems like that's likely to be there for a little while. What other...

speaker
Bart Olson
Chief Financial Officer

sources could you could you tap to start to see growth there and would you look to growing you know continue to grow brokered to fund loans here yeah Jared this is Bart yeah if you saw during the quarter we did use some wholesale deposits to fund some of the loan growth I was all deposits for about 2.9 billion As we look into the second half of the year, we talked about the slower loan growth that we anticipate, but with the deposit outlook, I expect we'll have some further increases in wholesale deposits during the quarter looking ahead.

speaker
Jared Shaw
Analyst, Wells Fargo Securities

Okay. And then when we look at the deposit base, what's the expectation for beta if we assume sort of a 350 Fed Funds? and some of these changes, should we expect to see an accelerating beta as we go into the end of the year here?

speaker
Bart Olson
Chief Financial Officer

Yeah, our second quarter beta on total deposits was 15%, and I think looking forward, we'd expect that to increase to roughly, you know, within the first year, probably north of 22%, then probably move towards, you know, 30% if you look out over a two-year horizon.

speaker
Bill Black
Director of Investor Relations

Yeah, Jared, just keep in mind the absolute level of interest costs that are there. So, you know, a beta of X on a very low cost of deposits is not as impactful as just the overall thing. As we're looking at it, you know, we're looking to grow net interest income. And if the beta is X, but your overall cost of deposits is still low, that's really the foundation of the business, right?

speaker
Bill Black

Yep, yep, great.

speaker
Jared Shaw
Analyst, Wells Fargo Securities

Okay, thank you. I'll step back. And actually, what's the rate that you're paying right now on brokered and new CDs?

speaker
Bart Olson
Chief Financial Officer

Yeah, the brokered, it ranges, you know, from during the quarter, it ranges anything from 50 basis points to about 185. And it's up slightly, obviously, more recently.

speaker
Bill Black

Okay, thanks. And we'll now take our next question from Andrew Terrell with Stevens. Hey, good morning.

speaker
Andrew Terrell
Analyst, Stephens Inc.

Maybe just sticking on the kind of core deposit growth outlook, I'm curious, if we don't see any kind of improvement in capital markets and kind of private fundraising heading into third quarter versus the second quarter, Do you think we could see a similar level of core deposit declines as what you saw in 2Q? Or should it moderate from here?

speaker
Bill Black

You want to take it up? No, go ahead.

speaker
Matt Wagner
Chief Executive Officer

Yeah, no, I think we're starting to see it moderating already, but it's pretty hard to predict, Andrew.

speaker
Bill Black

Yeah, Mark, I don't know if you want to add to that.

speaker
Mark Young
Chief Operating Officer & Head of Venture Banking

Yeah, I mean, again, what we've seen here in Q2 even versus Q1 is the continued reduction in fundraising activity. I mean, I think we've all seen the data at this point coming out of the venture capital community. We are in the low of the summer months as well that we get part of it here through Q3, so that probably should continue in terms of transaction levels. But we are seeing, you know, some deal activity in our portfolio that is encouraging. some larger round sizes for companies that still had plenty of cash on hand. So I think that's an encouraging sign. But to Matt's point, I mean, I do think, as opposed to Q1, that there's a little bit more sensitivity, obviously, around yields. We saw a larger movement towards P1. An example, Bart spelled it out, 500 million bucks in a quarter. Obviously, that's something that we're working very closely with our portfolio companies to make sure that they see all of our liquidity products opportunities to obviously keep those monies on balance sheet.

speaker
Andrew Terrell
Analyst, Stephens Inc.

Okay. Thank you. And then if I can move over, I know when you, when you first closed the civic deal, we talked about how you were comfortable with the credit quality there. I guess just given what we've seen kind of in the real estate market, has the comfort level changed at all? And what gives you kind of confidence in the underwriting the business?

speaker
Bill Black
Director of Investor Relations

Well, we've got a track record of performance that we've been buying the loans since 2017. And I mean, since inception, we've originated a significant amount of assets and had de minimis levels of any real issues. We feel good in the underwriting. And we've been able to prove that out, Andrew, just from the ins and outs of loans that we've had.

speaker
Matt Wagner
Chief Executive Officer

So we feel really good about that. Yeah. Andrew, we've always been aggressive at downgrading loans. where there might be an issue here or there, but it doesn't mean that there's necessarily charge-off implications to that. And I think, you know, if you look at the track record over the past two and a half years, you'll see that. And I don't see that changing. The underwriting is very strong. Even our venture business, which, as you know, you know, lots of those portfolio company loans could be sort of air balls. We've had, you know, zero charge-offs literally for the last two and a half years.

speaker
Bill Black

That's our job, I should say. Okay, great. Thanks for taking the questions. I'll step back. Sure.

speaker
Conference Operator
Operator

We'll now take our next question from Brandon King with Truist Securities.

speaker
Bill Black

Hi, Brandon. Hey, good morning.

speaker
Brandon King
Analyst, Truist Securities

Hey, just wanted to touch on the loan growth guidance, anticipating slower loan growth back after the year. I know CIVIC is Kind of a surprising expectation as far as your production levels. I just want to know what the present dates are for loan growth in the back half of the year, what categories you see slowing more than others, and kind of where you see figures running back in the back half of the year.

speaker
Bill Black
Director of Investor Relations

Yeah, Brandon, I think you're going to see slowing overall. higher rates, more economic uncertainty. I think you're going to see a natural slowdown at a real high level, but obviously we will continue to monitor and really try to optimize the balance sheet. So I think you're going to see slowdowns in general, and I think from here we will be clearly more selective in And I think when you look at putting that together, you'll see that slowdown from the pace we saw in the second quarter. Now, what does that mean business by business? I mean, there's not a prescribed limit, but I think you would imagine that if you're looking to optimize the balance sheet, you could probably figure out where that is.

speaker
Matt Wagner
Chief Executive Officer

I mean, we're hearing that from our customers too, Brandon. You know, projects that may be penciled out at 4.5% interest rates, don't really pencil out a date or whatever you might be anticipating rates going to. That, you know, in terms of how it relates to construction projects, and then also your supply chain issues and just cost of materials. Rarely have we seen a project that's been completed in the last 12 months that didn't have some cost overruns in one line item or another.

speaker
Bill Black

Okay. Got it. And then,

speaker
Brandon King
Analyst, Truist Securities

I wanted to touch on uptick in classified loan. I was wondering if you could talk about there, what the source of that was, and if there's any data notes.

speaker
Bill Black
Director of Investor Relations

Yeah. Yeah, no problem. So yeah, you did see a tick up in some of the credit metrics. It was a few credits where we had some administrative type issues. I think these are things where we feel really good about them. We're very well secured, and we expect those credits to be either remediated or resolved in the coming months or months. I would tell you that the risk rating downgrades here, I think, are more of an indication of our conservative credit culture more than anything else. As you saw in 2020, we certainly were aggressive in downgrading things, but that didn't lead to losses. It's certainly not a sign of any form of credit deterioration. We feel really good about where credit is right now.

speaker
Brandon King
Analyst, Truist Securities

Okay. So it's fair to say those are kind of just more one-off issues and not sort of a result of the deteriorating macro.

speaker
Matt Wagner
Chief Executive Officer

Yeah. Yeah. And, you know, you're going to get a little extra activity from Civic, as you can imagine, as those loans become near completion or whatever. one of the customers could opt not to make payments, make his last couple of payments because the property is under contract or whatever, we're going to put that loan on special mention for sure. And, you know, you can get a handful of those. Again, they're granular. They do get resolved. We haven't had a charge-off yet, I don't think, have we, Bill? No.

speaker
Bill Black

Thanks for answering my question. Sure.

speaker
Conference Operator
Operator

We'll now take our next question from Matthew Clark with Piper Sandler.

speaker
Matthew Clark
Analyst, Piper Sandler

First one for me, just on the expense outlook, understand what contributed to the increase in comp this quarter, but can you give us a better sense of where you think the run rate will be in the second half?

speaker
Bart Olson
Chief Financial Officer

Yeah, sure, Matthew. This is Bart. I think it's going to be, you know, in that upper 170s, low 180s. I think if you, you know, kind of normalize, like I mentioned in my opening comments, you know, Q1 and Q2, you know, it's been what we talk about during the year thus far, which is starting in the low 170s and working its way up to about 180. And lung growth and the pace of that will affect that. But again, with the lung growth expected to down, and so I'd say something around the 180-ish area.

speaker
Matthew Clark
Analyst, Piper Sandler

Okay. Okay, and then just on the credit risk transfer, any update there in terms of potential timing and just overall plans there?

speaker
Bart Olson
Chief Financial Officer

Yeah, we're still working through that. Plans are at least something in the third quarter, and so that's what I would anticipate at this point.

speaker
Matthew Clark
Analyst, Piper Sandler

Okay, and then last one for me, just maybe for Paul. You've been on the board for some time now. I know it's still a little early, but it would be great to get your kind of initial thoughts on how you think the, you know, what might change when you formally take over in terms of the way that the bank's managed. Thanks.

speaker
Paul Taylor
President

Yeah, good morning. You know, I've known Matt for almost 20 years, and I've known John for the same period of time. And, you know, this is a great bank. I mean, this, in many respects, is an easy job to take over because the bank is very well run. I think that it's just it's more of the same and improving, you know, various products and pieces.

speaker
Bill Black

Technology.

speaker
Paul Taylor
President

Yeah, you know, technology is one of the big pushes today. It's a pretty huge project. PacWest has been through a number of acquisitions, and, you know, in doing that, there's some holes in the technology, and we're working hard to get a much better technology platform for the company.

speaker
Bill Black

Great. Thanks again.

speaker
Conference Operator
Operator

And once again, that is star one. If you would like to ask a question, we'll now take a question from Gary Penner with DA Davidson.

speaker
Gary Penner
Analyst, D.A. Davidson

Thanks, guys. Good morning. Just thinking about, hey, just thinking about the commentary on optimizing the balance sheet and, you know, outlook for some lighter loan growth in the back half of the year. You know, to what degree do you think you would continue to run down the securities portfolio or cash balances to kind of offset maybe some of the, you know, possible deposit headwinds that may still gather during the back half of the year. Do you have optimal levels that you'd like to have the mix look like, I guess, is the question.

speaker
Bart Olson
Chief Financial Officer

Yeah, Gary. I think we ended the quarter with cash around 6% of earning assets, investments around 24% of earning assets. I can see the investment portfolio running down a little bit further, but I would see cash staying around that 5%, 6%. And so a little bit on the investment portfolio you can see.

speaker
Gary Penner
Analyst, D.A. Davidson

Okay. So as we think about the back half of the year, potentially overall balance sheet growth is something lower than the amount of net loan growth you put on the balance sheet. Is that fair?

speaker
Bill Black

Yeah, I think that's fair. Okay. Thank you. Any other questions we're asked?

speaker
Conference Operator
Operator

We'll now move to our next caller, who is Christopher Marinak with Danny Montgomery Scott.

speaker
Christopher Marinak
Analyst, Montgomery Scott

Hey, thanks. Good morning. Thanks for hosting the call, everyone. I wanted to dig into the pace of loan growth on some of the other lines, such as lender finance and equity fund loans and et cetera. Is the pace of there kind of indicative of the macro environment, and do you think that may be different in the next couple quarters?

speaker
Matt Wagner
Chief Executive Officer

Mark, you want to take that?

speaker
Mark Young
Chief Operating Officer & Head of Venture Banking

Yeah, I can speak to that. I mean, the pace of lender finance and equity, so let's start with fund finance, right? I mean, there was limited growth in a quarter, but that really honestly is more indicative of just one-off funding that could happen on individual transactions given our portfolio construction. As you see, fundraising activity has been very robust, about $120 billion raised in the venture market alone in the first half of the year. And so fund formation continues to be at a relatively healthy clip. Obviously, we're watching very closely. Fundraising is starting to become a little harder, especially for emerging managers. So that's something we're watching carefully. But given that dry powder, I would expect transaction levels to pick up here in the second half of the year and fund finance should benefit from that. And I would say lender finance is kind of cut from the same cloth in the sense that there's still a tremendous amount of dry powder out there, $780 billion in the private equity landscape in the U.S. alone. And they're all looking to deploy that capital. And obviously, we provide in lending opportunities that enhance these private credit fund returns. number one. And number two, you know, we do provide a lot of warehousing facilities that are subject to the securitization market that has been a little kind of, I would say, intermittent in its activities. And so, obviously, we're watching that very closely for the remainder of the year. There's some securitizations that could happen that could quickly impact lender finance growth as well.

speaker
Christopher Marinak
Analyst, Montgomery Scott

So with higher interest rates, do these become better spread businesses for you just as we're in this part of the cycle?

speaker
Mark Young
Chief Operating Officer & Head of Venture Banking

Yeah, absolutely. I mean, we're seeing opportunities here to enhance our spreads, especially in the lender finance side. I'd say fund finance, that business is relatively commoditized. We play within a certain niche, more VC focused there so we can capture a better yield vis-a-vis our competitors. But in lender finance, yes, we're seeing opportunities here to enhance our spreads and make some better yields in our new originations.

speaker
Christopher Marinak
Analyst, Montgomery Scott

Great. And then I guess one other question for you, Mark, just on the technology build. How much extra expense is out there for the expense run rate, or is most of that technology build already in today's numbers?

speaker
Mark Young
Chief Operating Officer & Head of Venture Banking

No, there's obviously some more expenses, as we indicated, Chris, early days, right? And Matt said the best. I mean, for as much as I'd love to spend more on technology today, you can't spend it overnight. So we're getting some good traction here in headcount growth and in terms of some of our milestones around technology. But there's still, obviously, additional investments to be made. I don't know, Bart, what we're indicating to the market here in terms of incremental investments. vis-a-vis run rate.

speaker
Bart Olson
Chief Financial Officer

Well, I mean, yeah, I mean, I think, you know, it's in the numbers I talked about earlier, and again, the real change is just the pace of that. We obviously highlighted that we hired, had a growth of FTEs of 95 during the quarter. Obviously, some of that is related to the digital technology strategy, and I think about 15, if I remember. Yeah, yeah, around 15. And they're not cheap, necessarily, either. Correct. But that's, you know, certainly the plan has more than 15 built into the plan. But it is not easy to hire those people. Obviously, everybody knows the kind of market conditions right now. It's challenging for certain skill sets. And so we'll continue to work on that initiative.

speaker
Mark Young
Chief Operating Officer & Head of Venture Banking

And Chris, some of those expenses are going to be subject to capitalization as well, right? Because we're building software with a longer shelf life here. So there's that dynamic as well.

speaker
Christopher Marinak
Analyst, Montgomery Scott

Sure. Does it all make sense? And, Bart, the additional hires beyond the 15 in tech, are those mainly in production roles?

speaker
Bart Olson
Chief Financial Officer

Yes. Yeah. Yeah, within Civic and the community bank.

speaker
Christopher Marinak
Analyst, Montgomery Scott

Great.

speaker
Bill Black

Thanks for all the information this morning. Thanks, Chris.

speaker
Conference Operator
Operator

And, once again, that is Star 1. If you would like to ask a question, our next question will come from Chris McGrady with KBW.

speaker
Chris McGrady
Analyst, KBW

Hey, good morning. Hey, Chris. Hey. Maybe, Bart, a question for you. I know you guys don't like to talk about margin, given the optics of just balance sheet size, but you mentioned in your prepared remarks NII was up $15 million this quarter. Just given what you're doing with the balance sheet and also what the Fed's doing, should we think about that quarter-on-quarter growth accelerating from the second quarter levels in the back half of the year?

speaker
Bart Olson
Chief Financial Officer

Yes, I think so. And if you think about, you know, the timing of the different rate hikes, I mean, the last big hike was in mid-June. So what we've said all along is you're really going to see more of the real benefits from the hikes and the growth in net interest income in the second half of the year and into 2023. And in the NIM as well. You know, the floors, we had about 6 billion of loans on their floor at the end of the first quarter. That dropped to 1.9 billion with the rate moves during the quarter. And certainly the next move or two will take the majority of the remaining loans off their floors. So I would expect that by the end of the third quarter, the amount of loans on their floors is very, very small. So I would expect that to continue to grow. Like it has. That interest income is growing nicely over the last several quarters.

speaker
Chris McGrady
Analyst, KBW

that to accelerate. Great. On the comment about slowing growth, you guys have made a huge effort to rebuild the growth profile in the last couple of years. Do you worry about the messaging and talent loss given how competitive it is right now?

speaker
Matt Wagner
Chief Executive Officer

No, I don't think so. I mean, did you say talent loss? Yeah. No, I don't think that... I'm concerned about that really, Chris. People seem pretty happy. I mean, people have, you know, they've done such a great job in the first half of the year. They've pretty much made their bonuses, which is good. And they got to stick around to get them. I think, you know, we'll be back. I think you're going to see a, you know, you're going to see a change. You know, we had this extraordinary deposit growth in 2020 and 2021, really driven by the venture business, but also the community bank had, good, solid, high single-digit growth. And I think you're going to see, you know, you're going to see in the venture world that changing again. These companies have to raise money. It's going to come into the bank. It won't be at the level that we saw in 2020 or 21, but you're going to see that come back in, and we'll be able to, you know, get certain businesses' growth in. I think you're going to see a pullback definitely in construction lending. It's just These projects become less feasible. There's still a great need, as you know, most of our construction lending is multifamily. There's still a great need for the housing out there. I think it's tougher to finance the projects. The numbers don't work as well. So talking to some of our biggest clients, and Paul and I are going to be meeting with some next week, they're predicting volumes of 50% of what they did in 2021. and maybe down even as much as another half in 2023. So, you know, that's part of it. And that's a big sector of what we do, but I think lender finance continues to grow and other businesses continue to grow. And of course we've had this great luck with our guys at civic.

speaker
Chris McGrady
Analyst, KBW

Okay. Just the last, thanks for that color, Matt. Just the last one on the tax rate is 25% of our rate.

speaker
Bart Olson
Chief Financial Officer

Yeah, I mean, I think, you know, we've talked about a range of 25% to 27%, and so I would still say in that range. Okay.

speaker
Bill Black

Thank you.

speaker
Conference Operator
Operator

And as a final reminder, that is Star 1. If you would like to ask a question, we'll now take a question from Matthew Clark with Piper Sandler.

speaker
Matthew Clark
Analyst, Piper Sandler

Hey, just wanted to ask if you had the – spot rate on interest-bearing deposits at the end of June?

speaker
Bill Black
Director of Investor Relations

Spot rate on interest-bearing deposits at the end of June?

speaker
Bill Black

Yeah, spot rate on deposits at the end of June was 38 points. Okay. Thank you.

speaker
Conference Operator
Operator

And it appears there are no further telephone questions. I'd like to turn the conference back over to our presenters for any additional or closing remarks.

speaker
Bill Black
Director of Investor Relations

Thanks, everybody. We appreciate your time and effort, and we will talk to you soon. Thank you. Call us if you need us.

speaker
Conference Operator
Operator

And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

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