Renasant Corporation

Q4 2021 Earnings Conference Call


spk_0: good day and welcome to the run as aunt corporation twenty twenty one year and and fourth quarter earnings conference call and webcast all participants will be in a listen only mode should you need assistance please signal a conference specialist that pressing star than zero after today's presentation there will be an opportunity to ask questions to ask a question you may press star than one on a touchstone phone to withdraw your question please press star than to please note this event is being recorded i would now like turn the conference over to kelly hutchison with as on corporation please go ahead
spk_1: the morning and thank you for joining us for venice that corporations twenty twenty one fourth quarter webcast and conference call participating in his call today are members of renaissance executive management team before we began please note that many of our comments during this call will be forward looking statements which involve risk and uncertainty there are many factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward looking statements all their business activity in the markets in which we operate increase significantly relative to twenty twenty the spread of multiple variants during twenty twenty one including the most recent emma cranberry it reminds us that the impact is a pandemic and the federal state and local measures taken to arrest the virus may remain significant factors impacting our financial condition and operating results for the foreseeable future other factors include but are not limited to interest rate fluctuations regulatory changes portfolio prefer from it's and other factors discussed in our recent filings with the securities and exchange commission including or recently filed earnings release which is then posted to our corporate site www dot renaissance dot com at the press releases lanes under the news and market data tab we undertake no obligation and we specifically disclose same any obligations to update or revise forward looking statements to reflect changed assumptions the occurrence of unanticipated events or changes to feature operating results over time in addition some of the financial measures that we may discuss this morning or non gap financial measures a reconciliation of the non gaap measures to the most comparable got measures can be found in our earnings release and now i will turn the poll over to our president and chief executive officer mitch way cancer thank you clearly good more
spk_2: thing we appreciate you joining the call today before cabin in gym discuss results for the fourth quarter and i were near term outlook or want to reflect on twenty twenty one and the opportunities ahead first i am so very proud of our team is they persevered through the challenges of the health crisis i want to thank our team for their extraordinary efforts pudding each other and customers first around the year financially we produce solid earnings strengthen capsule levels and ended the year with considerable balance sheet liquidity additionally we published in the esteem
spk_0: reporting twenty twenty one which documents our efforts in a number of important areas including diversity and inclusion we expect is your new year's to report in twenty twenty two as we look to the new year the economic strength of our markets is evident and the outlook for growth is
spk_2: good industries they remain hard here makeover in early twenty twenty one have largely rebounded and are better positioned business activity across the footprint is vibrant and causes us to be hopeful on improving long growth i am optimistic about the coming year and sharing with you the results are will now turn the call over to cabin thirty minutes or fourth quarter earnings were thirty seven million dollars or sixty six cents per diluted share compared to forty million dollars for seventy one cents per diluted share in the third quarter for the year reported three dollars and tosses per diluted share compared to a dollar forty again in twenty twenty forgiveness of or triple pay loan portfolio continue to slow this quarter and was largest factor contributing to the decline in that is sustained computer of a quarter we utilize some of our on bouncy liquidity to grow security for folio and additional income generated helped to also the impact interesting come from trophy or users wealth management large businesses few seasonal slowdowns in the fourth quarter but put forth strong results for the for years twenty twenty one similarly a seasonal decline and mortgage volumes coupled with further compression again also margins resulted in a lower contribution from a mortars divisions for the fourth quarter we continue to make noticeable progress on our expense and efficiency nurses and are pleased with our recent results while the fourth quarter benefited from some one time items the trajectory of expenses year over year or quarter over quarter or declining as expected hand we spoke the impact of ongoing a new initiatives to reduce managers excuse for the year twenty twenty two compared to twenty twenty one our team is adaptive and innovative which have been key to driving our success customer behavior and preferences have evolved quickly over the past two years in our goal of understanding a medium medium our customers were the face to face or through mobile and digital applications remains unchanged technology and innovation have always been a high powered it's and will continue to receive a great deal focus for marty allan meltzer and the call over the doom thank you kevin every walk through the corners results our reference slides from the earnings deck starting with the balance sheet assets grew just over six hundred and fifty million dollars in the quarter was deposits growing by similar amount
spk_3: on the liability sad non interest bearing deposits now represent thirty four percent of total deposits is kevin mention we invested some of the excess recorded the in our security portfolio as kevin mention we invested some of the excess liquidity and are securities portfolio increase in the balance just over two hundred and fifty million dollars in the previous porter we also like to declassify approximately fifteen percent of our portfolio is held the maturity and as a result of this classification we record a corner last reserve a thirty two thousand dollars at the end of the quarter we are approximately one point nine billion dollars in cash we anticipate the combination of additional growth and the securities portfolio and loans to reduce his cash position and the coming quarters loans x triple p increase thirty
spk_0: a million dollars from que three and one hundred and fifty million dollars year over year which represents over one point five percent longer for the year two for was another strong quarter and terms of production with a hundred and twenty million dollars and new loan production and five hundred ninety million dollars of advances but the challenges around
spk_2: i'm pay offs that had been present during much of the pandemic did not subside and queue for activity our remaining triple p portfolio was nominal with balances declining nine million dollars for the quarter we had fifty eight million dollars and triple p loans outstanding that corner and all of a regulatory capital ratios are in excess of required morons too big
spk_3: and said well capitalized and reflect the strength to recap opposition during the quarter the company should to two hundred million dollars of tenure subordinated notes and a fixed rate of three percent for the first five years the proceeds of this offering replenish capital that we used to redeem forty five million dollars and tolerable subordinate notes related to this we have
spk_2: call for redemption another thirty million dollars of our subordinated notes which will occur on march first we also we paid a hundred and fifty million dollars and long term fhlb advancers and incurred of prepayment penalty charge of six point one million dollars we had a credit provision release of five hundred thousand dollars and that charges of five points
spk_3: four million dollars the a c l as a percentage of loans extra triple p decrease from one point seven one percent to one point six five percent we also had a release from a reserve for unfounded commitments of three hundred thousand dollars which is reflected in other non interest expense credit quality metrics or shown on pages for fourteen to sixteen past is classified and nonperforming asset measures all remain relatively steady the uptick in that charges is largely comprised of a single credit that was fully reserved at the time of charge of net interesting come decline one point eight million dollars quarter over quarter kevin mention that our trip
spk_0: a p forgiveness slowed this quarter like triple p interest and fees declining three million dollars from que three interest income from our additional security purchases help offset the clan and triple p revenue or for margin which excludes purchase accounting accretion and interest recoveries was down eleven bases boy
spk_4: points from two three
spk_3: after also excluding the impact from triple p or core margin was down only for basis points to decline and margin is the result of loan pricing pressures and the considerable on balance sheet liquidity our mortgage wealth management and insurance lines of business all experts seasonal slowdowns and queue for but produce
spk_2: strong results for the year
spk_3: our treasury solutions and capital markets teams as well as or as be a team all outperform this quarter and help offset the the from mortgage is also worth noting that we terminated for cash flow catches link to feature fhlb borrowings there are no longer expected to occur these swap terminations resulted in a game of four point seven million dollars which is recorded and non interest income non interest expenses with explosions were down approximately eight point six million dollars for the quarter a portion of that decline is attributable to the decline and expenses in our mortgage division as well as some other one time we could pay to see the benefits of expense initiatives announced in like twenty twenty and expect continued realization from other initiatives and twenty twenty two hour now turn the call back over to match thank you jam remaining committed to the fundamentals of sound banking with a focus on coal deposits asset
spk_2: quality capital strength and improving profitability or the keys to building shareholder value i will now turn the call over to the operator for q and i
spk_0: thank you we will now begin to question and answer session to ask questions press stars than one on your telephone keypad if you're using a speakerphone please pick up your handset before pressing the keys if you are in the question q and would like to withdraw yourself please press star than to at this time we will pause momentarily to assemble the roster in the first question comes from thomas swindler with stevens please go ahead
spk_5: good morning everyone
spk_6: though on on a other earnings release it says you gets have no current intense repurchased stock is is driven by the company's current valuation a link to give us an idea for their pathways the company is fighting more attractive for capital deployments
spk_3: this is jim so as a couple of thoughts on capital management
spk_2: of course it's something that we spend a lot something about and really what we're doing and in that deliberations thinking about the relative uses or those the different uses of capital which ones produce the best sort of returns on that capital and stock price is a factor in that are also another factor be the the consideration of sort of balance sheet growth while we might have an and and lastly i would say no acquisition opportunity so it's a it's a car is sort of way of the pros and cons and merits of each and right now we just see the best use tor capital being in those other alternatives away from share repurchases not something we'd rule out
spk_6: as we get this is the course of the bird this point it's not something we envision the near term
spk_2: that's great thank you and enough to keep it was that conversation in everyday can you give me any sort of color me as that size geography or it would be a bakery not bakery you guys might be focused their
spk_0: a thomas good morning damn this is mitch and as we continued to evaluate those opportunities certainly we would be looking at buying say nonbanks relative to sars for us it would most likely be on that one to five billion range not to say they we wouldn't go below that
spk_2: that one day and it's if we were building out and existing market but certainly in the you major nonbanks i would say in that space particularly for those opportunities that would compliment business land that were already have in place today and were enjoying success they are as or talk about production here in a moment but also i would say new business ones that would alarm
spk_6: with job our business model and risk appetite and opportunities that we see today across our footprint
spk_7: or it's it's great alla fall back on cue thank you
spk_0: thank you
spk_8: the next question comes from joe yen's tunis with raymond james please go ahead
spk_2: i guess any more than just good morning
spk_9: i believe you're prepared remarks in assess down your potential increasing security portfolio into would it kill and at easily for one person i've ever done before i was wondering if there's a kind of the cat that you had in your mind on will accept
spk_2: license i would say there's no absolute cats that we have mine and and and start with the fact that we view that for boli is really source of liquidity and certainly liquidity is now that is not a concern but we realize that things can change and in the deeper
spk_10: cause a behavior can change so that the whales a we envision at least the next quarter to is that we will contain a slightly build
spk_2: that secures portfolio you know along the lines of what we'd done in some prior corners and and we'll reevaluate as we get further new year we'll see what we've got the way of lung growth and also to the extent that has been any change in and deposit behavior so it's it's sort of them play as as a as it comes but near term i do expect to see some growth and that secure his portfolio so that's great appreciated and then i was also hoping to get your thoughts on you know where you think the general trend from from here and you when you expect for it to get the bottom out
spk_11: some of this the end of at the in the third quarter call we we do see signs of
spk_2: the nem stabilizing and and those those trends in science has continued so our our hope is an expectation is that as we get to the end of the second quarter
spk_3: the we got a stabilization in the margin
spk_2: and then i guess the other thing i comment on it in that regard as in terms of a net interesting come out we do see that's something that we've obviously
spk_0: in a focus on a lot we do see
spk_2: had the chance for that to grow in the coming quarters and that's largely a function of bouncy growth and the expectations and marginal start to stabilize but i would say
spk_11: from buffalo is of that equation is the expectation that we do have improved loan growth as we go through the year the other thing i'd say is both of these comments at the i just made about nam and the interesting come
spk_2: ignore the benefit of any rate increases
spk_12: got elected of on that you know the interest rate sensitivity you guys have ah an update for where things are trending in for q whereas at twelve thirty one
spk_2: the impact your and i from rising rates i believe bomb you guys ran about a half percent in three you i would say this is a we'd obviously whoa we're updating their data annoyed put out the the key will will publish it but i would expect
spk_3: even with no adjustment her deposit better it that eight and a half percent would probably go up a touch
spk_13: and then the other thing is it's obviously hard to compare but i out also think it's it's likely that our deposit baiters of probably higher than in some of our peers
spk_2: so
spk_11: in our our sensitivities probably a little understand it would be my guess as as you look at
spk_2: our interest rates sensitivity position
spk_14: well parked i really appreciate it they predict because she's
spk_0: thank you joe
spk_15: the next question comes from jennifer dumbass with true securities please go ahead
spk_16: thanks good morning
spk_15: the morning jennifer you mentioned that expenses are likely to be down into twenty to just wondered if you give us a
spk_2: tropical rain to their and what kind of hiring an investment environment that contemplates a cab fare as we look at our expenses and are making guidance about them being lower looking at a couple of days if you just look at the and the annual run rate of return since twenty the each of the corners last year expenses been down we we know there's headwinds when it comes to hiring or even some wage inflation or we still think that given where our bases are and see the we've got room to improve that that's why we we we were comfortable in now in in projecting the back gardens be lower it's gonna come from a variety of areas are that are the largest percentage of our expenses confused be fowler's employee benefits will be we will hire when the right opportunity the hires they are so was i will not to go we're not gonna not make a good higher for fear that it might all the blame for an uptick in expensive will continue to be opportunistic in the hiring what would also say that when it comes to others and firearms whether it's occupancy and equipment or data processing we expect those to continue to trim down as well but whether it is gonna come from our ongoing you missed of was praised closures contract really go jason our don't continue to be very disciplined ah or around around all of our line items for as we look out as far as guidance he savages i would say that are trend line of what we are what you see what a year by year quarter of a quarter gonna continue to continue to be there for two thousand a year to year basis as we look at you want are we will have a a small appeared in salaries and boy benefits just do the
spk_17: your routine mayor it increases ah we we mentioned in the called a queue for was help a lot of there was some adjustments out you just like a salaried employee benefits i think is down cause to seven million those adjustments comprised about three million said there was still appreciable decrease in our in our salaried employee benefits line item
spk_2: it's as we as we look out with we think that if you take the year
spk_18: the year to date expenses as your baseline and assume a decrease adams's that think that's going to be in line with where we end up for twenty two
spk_14: thanks can
spk_0: thank you jennifer
spk_2: the next question comes from brad millsap with piper sandler please go ahead
spk_19: a good morning
spk_20: the morning bread
spk_2: our biggest deal well i talked a little late but that just wanted to follow up on you know the expense question and just got curious you know maybe in terms of total had tell you know kind of where you are you know from court a quarter just wanted to get a sense of and you know kind of how much of it was been a purely it a mortgage and maybe other efforts that dad i get you guys are taking you know in other way to reduce have to reduce costs
spk_17: arizona in the morning breath
spk_2: days on on expenses and headcount
spk_17: let let me first by saying with with with what we're dealing with on the pandemic
spk_2: the headcount wow just i we need every able bodied that we can have right now for a certain areas weather's branches are wires are call center there are some critical functions that just due to protocols we just want to be absolutely certain we don't put too much strain on our employees and still be on for our customer service but if you look at our headcount our head count down on year over year probably ah no prob probably about a hundred one hundred employees but would also add that the there's certain areas that we continue to ah
spk_17: on i am what was again would also add that there's a lot of fatigue and system in which we want to make sure that we don't compound that for tea in our employees are in our customers on maybe because what we're having to having to address when it comes to staffing just doing the pandemic are as we look at where they stay
spk_2: aids is that the what it reduction will town everything is on the table whether it's sounds and long term benefits the into for we saw a nice reduction in our health and life insurance and i know that's a little bit counterintuitive consider some of the healthcare increases that we see ah but we've taken steps to to change contractual obligations are just reevaluate our on a benefit package
spk_12: to ensure that we're providing the maximum amount of benefit or employees and not only minimizing the company's cause the minimizing costume for you this is not an effort to shift call from the from the employer to the employee but actually maximize benefit and reducing fully costs as well but of the same time or for reduced employer
spk_17: half an hour i would say that's in healthcare that's another benefits as well
spk_2: and so as as we look at salaried employee benefits maybe some headcounts but it's also gonna be reevaluated all components of the yum our of atlanta item which which would include some of the benefits on mortgage mortgage did have a decrease in expenses at that their salaries employee benefits for down were down about million and a half to two million largely coming from the commission line item which is gonna be reflective as as mortgage kind of returns to normal rg restarted a serious at the end of two two two three and now you for remortgages is have a good for version back to a normal operating environment it's has some the cyclicality is now back in the morgue is that we didn't see for the past two years because the low rates okay great that you kevin and then you know just distributed followed up for gym and apologize it under states but dad dc like your sort of legacy low yields have had more or less kind of stabilize year around here three eighty five or so he had that secondly just gonna curious and apologized to be madness the where where are you putting on new bonds and as he by and just you get into your tax me it was down around once when he nods and it years what kind of improvement you think you could see their saga morning bad so you're you're correct me core loan yields and mean they were down touch key full of a two three but not much at all which gives us which is probably reason recently got the conference in terms of directly with a margin goes and then in terms of security for fine terms and were able to put that might work at him as were roughly fifty or sixty basis points higher than we were in cues range of the level of the fab
spk_20: in a put to work at a net not and we're not extending duration with that man yeah generally running three and a half to four years in terms of the securities it was funny on the books out as a nice up check their from key three
spk_21: great take gets
spk_0: thank you brian
spk_12: the next question comes from kevin fitzsimmons with the a davidson please go ahead
spk_22: take good morning everyone
spk_12: the morning kevin it seems like pay offs pay downs have been going up real headwind for quite awhile and it's it's it seems like it's going a little more for you all and i know that's a tough thing to projects but when you think about what's causing that the happen and maybe
spk_23: you know doubt the anticipation of rates going off work potential tax changes
spk_9: do you
spk_12: do you ah yes sir the hope that we may have had high point on
spk_0: got head when and then maybe some of this strong long production will will start translating into more substantial i'm growth i'm just curious how you feel about that
spk_2: ellen that this is in i thank you make a key point in your question i'm me let me start with your last comment in and reflecting on that and i'll start with production but i'm gonna end with relative to pay all something we saw in the fourth quarter as as we ended the year so just beginning with production we had record production this corner we actually produced eight hundred and twenty million in production that's up seventeen percent from seven hundred million in three q and actually for each quarter in twenty one we saw increases in production so a strong as i mentioned in his opening comments we we've seen really strong production and an echo continues to grow which is a reflection of our talent in some of the investments that cabin was referring to earlier ah but one thing we saw with that strong production in for que we did say continued the elevated pay offs but there was one segment of those pay offs that we saw increase quite a bit in the corridor
spk_0: sale of asset a prior quarter of hebron about forty six percent of those by else we saw that accelerate to about sixty percent in the fourth quarter and we saw a lot of those come toward the end of year as people mistook opportunity
spk_2: to sailed underlying asset which i thanks in large part to your point is driven by cap rates in other things that were saying in the market right now dribbling just given where where we are with rates but if you and if you simply adjusted for that change ends that sale of asset our net growth this quarter with been more and range of say seven percent given given the production so ah yes i would like to think that we're hopefully seeing some of that began to change or we will see that change going forward but what i'm really op op domestic about is our ability to produce and also the granularity i either geographically that we see in our pipeline going forward which is evident by the production were saying but also the granularity of types of loans that were producing whether that the and the the consumer wonderful family which was about twenty four percent or in our small business commercial which was about fifteen for sat and another twenty five percent in commercial credits greater than two point five million and then on top of that our corporate banking for a far larger see an hour credits and some of our specialty lands for about thirty six percent so why do you look at it geographically all about tight
spk_12: when we're seeing really good results from production and and maybe some outliers back to your point in the in pay off this driven by just sale of asset which we are hopeful we see that changes we going to twenty two
spk_2: okay thanks thanks match was that was really helpful just just want one fall on there's been a few questions on the margin but just trying to think about all the different moving parts year so is the way to think about it that even you see it stabilizing but is probably further headwind the calm at least in the first quarter from tpp
spk_12: come with the remaining ppt going off and and the income effectively going away maybe partly offset by this makeshift right putting cast work for and and then as it stabilizes getting toward mid year that makes shift i would think would continue and then you have to do was tell tailwind of rising rates and and so i think the margin benefit the he does it is the optimal optimal scenario that that plays out flaws the party gross moderates but not to the degree of actually
spk_2: declining so you would have you know you're you're building
spk_24: are stabilizing your average earning assets but take but now in i need you to be being driven more by the percentage nin than it has been in the past few years i'm just trying to trying to put all that together curious how you think about it
spk_2: thank you to forget you have cabinet putting it together no all those things a main a think underlying it on me what if if we look at new and renewed love raid serve as korea long years or all that sort of behaving in trending in the right direction i would say the the biggest key for us on margin is is the outlook for loan growth mean that that's probably the biggest variable again i'm i'm ignoring sort of the potential rate increases or that we may get i think that's because we still have some we mixing that will contain a day would take some of that access to quality put the securities and and that will help protect ladies at these higher
spk_11: right rebel and to invest that money but as as we want our miles of look at it long gross
spk_2: is is outside of
spk_12: the biggest sort of a variable and and and the optimism we gotta run improving that net longworth of be will be key to the to the margin
spk_25: great thanks to him
spk_0: nike kevin
spk_15: the next question comes from catherine miller with katie w please go ahead taking more than a follow up question on the march and just thinking about nine yards in in one repricing what do you mind if left percentage of your loan portfolio it's variable rate
spk_11: i the as a for than just how quickly you see that benefit went to the rights activists
spk_2: the morning cabinets gem
spk_3: if someone is a roughly six for the morning so roughly fifty percent of our portfolios fixed yesterday i think just a hair under that forty percent as is variable and and about eleven percent is adjustable and around seventy five percent of those variable rate loans have no floors or above the floor
spk_2: and of course as we get moves and rights that that seventy five percentage number starts to go up and i'd say that you know with a fifty basis point move your your up above eighty percent terms of those variable rates liberate loans are being above the floor and the other thing i'd say other thing it doesn't we've seen in our next you look at our one production of the last couple of courses and this gets this ties back and is a these questions about margin and or sensitivity we have seen the percent of variable rate loans
spk_15: as ups and a production increase it's not dramatic but we've seen that increase over last quarter or two and that certainly helped and then what they ask for an extent says on either way i think that so much as the extent space came from mortgages quarter or the reduction team from mortgages and it is is there as we look forward to mortgage gains a lower part of revenue next year
spk_2: if he had a week i think about course as it the ratio versus the market efficiency ratios as as we had together a model there are so how that cavern the moon is kevin the when we look at when we look at mortgage it's reverting back to the mortgage to cyclicality of and so
spk_17: over the course of a year will we still expect more his to help of our mortgage complete outperform the industry and as everybody knows the industry's under hadrian's
spk_12: particular kind of coming out of bounds
spk_2: compared to the last two years but if we can look back to nineteen or eighteen what what's what's happened over the last couple of years is their mortgage has become more efficient was that the margins although they may be down a to for compared to two three they're still higher than what they weren't you for nineteen or two for of eighteen so there's some underlying trans that a positive around mortgage that say mortgages reverting back to the cyclicality and so there's that there are several times over the last two years were mortgage benefited efficiency ratio as opposed to the head wounds a and right now we're starting to see a movie is now become a headwind again so if this is the ratio and mortgage for to for hours about seventy five percent ah typically rhymes in that's a front for the year you'll will typically run and that has sixty low seventies of the mother but above that
spk_12: but we we expect cyclicality in that to force public on be a little bit elevated on efficiency ratio and then it you to and que three have made sure that would improve on and and not be as much of a drag but overall our corporate goal is to drive the company's efficiency racial back down below sixty in the short run
spk_2: one and then continue to improve it but mortgage mortgages probably still don't be heavily on running went when running over the course of a year well run by the way it's still gonna be in the house sixty low seventies and gonna be a head wound just some of the some of in this is that going on there is not only the variable comp
spk_17: but mortgages taken steps to become continue to become more efficient there's been some headcount reductions as production has
spk_2: has has has ebbed and flowed and and are not other investment that will make him a little bit about a quiet time just improve how how mortgage will operate but the day we still expect more his to outperform elites what the industry's do and and be a benefit to the company but it will it is reverting back to it's normal state and will continue to be a headwind on efficiency doesn't mean it's a bad business line it just leads to less efficient business lines are and just for the benefit i would fall we're talking about efficiency the company the ratio there is about three to five percentage points as of the officials as i said that is attributable to some some non bank business plans insurance mortgage wealth management again good business plans they're just less efficient than they will weigh on the smaller compared and there will weigh on the corporate are consolidated efficiency ratio
spk_15: what about by the bank is operating at a little bit more efficient efficient run right and it kinda fifty percent corporate it's as if the ratio that you're targeting defeat that
spk_17: achieve of all in an in it's tennis a higher margin with better rates is the hit the is part of the to the fair and what sure in first one great show that is that something that you see achievable in in a year and junior or how long it takes you to get there
spk_2: yeah so is so you have you have have
spk_12: the if i can choose the environment will be there in a week or two but i don't know if it chooses the
spk_26: but but i think if we don't have a rebel don't have a we don't have rates yes i think it's a next year ban if we don't have rate increases or if we have rate increases the timing of how many ah
spk_2: what we we but we we could be we could be scary sixty percent as we as we enter next year again that's that's assuming rates rights move and i move could do that then move earlier on the year that sad our focus is still gonna have to be on the efficiency the operating despair is of the company regardless of what happened in the macro environment and so our focus whether we have rate increases fifty percent is only short term goal are longer term goal is to drive it to the mid fifties in the for in the mid fifties i mean that the that means the bank a community bank model is operating in the low fifties and we think that's about as as as efficient as a community bank model can operate so that that are longer term goals but yeah so if we have if we have rate increases the about that as sensitivity that the gym mention ah our core funding but what we are talking about is what we've learned that that that the deposit growth of we've had and now our knowledge or spare dd a as a pursues total deposits are city a thirty five percent plus on so we we continue to focus on some of the fundamentals
spk_17: and in as rates as right environment maybe normalizes whatever normally as we do expect the value those deposits that race sensitivity to help drive of maybe a little bit more out why did improvement in income
spk_15: in a if they ever be rough
spk_27: on the declared the wrong if you're talking around to different the ratio of sixty relative to two days adjusted sixty four so that's on apples apples
spk_28: that's correct
spk_29: a great idea for help or current thank you
spk_0: thank you captain again if you would like to ask a question please press star than one to join the queue
spk_6: the next question is a father left from thomas when they're from stevens please go ahead
spk_12: hey guys just one final question for me whispering starting to see a lot of big change their policies around and as a fees is that believe and looking at yeah
spk_2: thomas is kevin pounds so yeah we have a here and not not to get historical only but may take you back to a man the because we we saw at least the know nine the the we're into the commentary around in these are service charges around consumer deposits started to change in at time we the a large portion of our knowledge or stayed home was being driven by those exact line items and so at that time we we have added long term initiative to reduce our reliance on moon or to to lessen the contribution of those to non interesting times are we invested in insurance wealth management
spk_12: mortgage
spk_2: all of those that are just talk about how inefficient they were but but they're also very good been found to be and in our bare very effective use of capital it and so what we've seen over the last call it ten to twelve years is that our consumer service charges and an intercept these although the balance sheet has increased threefold those line items are flat the bail and their contribution to the total computer down so yes this is something we've been looking at and talking about
spk_11: not not only over the last couple of months as we see some peers come out with with commentary or changes to their model
spk_2: but we've we just seen as as as subtle as building and a headwind has been growing would also add that he even his stats that we've taken sooner than than ten to twelve years ago to to help our customers more effectively manage their accounts we've taken significant steps along the way to ted to help provide more education or more benefit to the customers that i can effectively manage other service charges would also say we've completely restructured our consumer deposit accounts and simplified the offerings that we have ah with less than they would we we have many less deposit options and there's also a variety of options in those them that the phone with the customer can choose that help felt taylor to their needs so just say yes is top of mind within a season overcharged or innocent season service charges were evaluating right now how that looks and in in the future we don't have any definitive answer yes but what would also add that over the last couple of years
spk_30: our customers have acknowledged that that they like how we interact with the we have been named the best bag and several other markets and several of the stage that we operate in ah and dad is result really what draws our decisions is our customer feedback and their satisfaction so that's gonna be our god
spk_29: oh my would also say his top of mind and it's something that we've been working on on that not normally the last couple of months but the last couple of years and almost a decade now a around specifically in assessing service charges
spk_0: okay thank you
spk_2: thank you thomas
spk_0: we have no further questions said this concludes our question and answer session on that to the carpets lack of the much weight as to for any closing remarks

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