Veritex Holdings, Inc.

Q1 2021 Earnings Conference Call


spk_0: good play and welcome to their effect holdings of first quarter twenty twenty one earnings conference call and webcast opec with offense will be in the listen only mode we've built this event is being recorded i will now a conference overcome this isn't caudal investor relations officer and secretary to the board of very that holding
spk_1: thank you before what your story of i would like to remind you that the presentation may include forward looking statements and those statements are subject to risks and uncertainties that could cause actual unanticipated results to differ the company undertake no obligation to publicly we buy any forward looking statements a bit time of your log into my web cam please refer to work like presentation including our sleepover statement beginning on flight to for those of you joining up by phone please note the debate club or statement and presentation are available on our website varitek bank dot com all comments made during day call are subject to that bay harbor statement some of the financial network discussed will be on a non gaap bases with our management believe better reflect the underlying or operating performance advertisement clean through the reconciliation of all this does not gap measure and are filed a k earnings really joining me today or malcolm holland our chairman of the iau carry early or chief financial officer and played rugby are cheap credit after i will now on the call over to malcolm
spk_2: good morning everyone we can do need a manager company and shepherd our clients through what we hope in the back lot of this pandemic our state is a hundred percent open businesses are back operating and many are been vaccinated and it feels normal again the bank is brilliant woman and we are currently operating and ninety two percent of our team back working in the office my game and are excited to bring our first quarter earnings after several challenging quartered nine twenty twenty the birth order performance was investigate on many fronts or net and income for the cool order was thirty one point eight million or sixty four cents a share eighteen cents better than the previous period a pretax greek revision earn operating earnings all to perform well exuding forty million dollars or one point eight to return on average assets while rotc he continued to trend up and in the quarter and seventeen point four percent as our economy continues to recover or growth continues at expected loveless for the quarter we have any live long growth of eight percent less ppp and mortgage warehouse both of which achieve small growth games on their own we did have several they are scheduled for to one that push indeed the second quarter but we still like a mid single digit longer number of the the year grove was equally divided between all loan categories we told you bought a new builder group which started january first there have an incredible success building their portfolio it appears our timing is very good are lending james the focus and intentional during the pandemic and some of the fruits of their labors pay and off or pipelines remain strong and building where same competition heat up especially related to pricing the bothered continue to go to very large way despite a discipline efforts to reduce the bothered last two point three one basis points from point three eight last quarter or deposit themes continue find ways to reduce our costs and still think we have some room to lower going forward credit continued the movement a positive direction in so many ways for the second quarter in a row we did not provided no loss buddhism total georgia for the quarter when not materialise hundred fifty thousand and r n p a total i said to do some point nine nine two point nine to afford look at our credit pitch your continues to be improving and encouraging on out not there and the call of is very good guesser financial hi malcolm on page five you'll see multiple graphs i want to focus on a couple of these first tangible good value for sheer increase to sixty dollars and thirty four cents in the first quarter reflecting strong tangible capital generation of thirty two point nine million dollars sixteen point three percent increase on a link order angela bases in translates to an eighteen point three percent year over year increase after adding back the impact of her quarterly evidence growing tangible book value per share remains important priority for a management thing that they're operating return on average tangible common equity remain very strong in the first word seventy point four percent and it averaged fifty point for over the last four quarters as we weathered the pandemic with level remains well above are caught capital family the operating efficiency ratios showed that we've been under fifty percent over the last five quarters the slow decency ratio achieved you are brands like this model is the key to maintaining our strong pretax republican times and strong capital generation on flood six men interesting come decreased one point two million from que forty one and sixty six million dollars the most significant drivers and the decrease was daycare which lower an interesting combat one point five me
spk_3: even said nobody five thousand lower purchased accounting accretion and five hundred ten thousand from lower lung rights this would significantly off that not disciplined upon the pricing which improve net interest income by one point one maiden and growth in our one portfolio are put in lung by i'm also contributes of our twenty one thousand
spk_2: that the net interest margin de pont than basis points from keep four to three point two percent working for your for factors which should provide support than the i'm first there are nine hundred and twenty three million in cd maturity remaining and twenty twenty one he's matured a rate of about eighty one basis points and should be dude around twenty five basis points second the premiums the ppp ones and redeployment of that one percent one the higher yielding asset classes for team one the ppp portfolio represents a ten based point dragoman them third average liquidity was approximately eighty percent higher than our normal parking lot will the had the impact and depressing than them but six days point the file backers balance sheet hedging and with that was transition slides them that you feel that flawed varitek started he one highly after than it especially to the shooting to the curb with sixty nine percent of our lungs were cleared thought the lab or plan we are exposed of rates falling or staying lower for longer the mitigate that risk we terminated of five hundred million tenure fix face swap it again and forty three made this game will start your creative and an interesting come starting in march twenty two additionally we put on three hundred seventy five million a fixed receive swaps with an average life with eight years on the edges we receive one hundred thirty one basis points and pay one what lab work based on the cob one month lab or rate the should add six basis to the him and he to twenty twenty one on the slide eight another strong on interest income quarter with forty point two million in revenue love to eat and mortgage make you can come up with the most significant increase was in government guaranteed learning come during the quarter as we originated the ppp lines vertex continued to elect the fair value option at the gap accounting treatment as a result in using the burgers burgers want to die you these loans were able to recognize six point three million ppp for use this amount includes feet from round to originate in and revenue that was deferred in round one but is now recognized the lines are forgiven operating expenses increasing few one me two million but fifty percent of the increase is due to lower lung referred one rich nation costs increase salaries were two hundred thousand for the corner and very much in line with management expectations given the investments is alan it we have highlighted in prior orders the remaining increases were employee benefits including start by scott and very much in line with management said our outlook
spk_3: are trailing for quarter operating fishy see ratio was forty eight point two percent
spk_2: to help maintain a strong efficiency ratio the bank clothing for branches and twenty twenty one and removing branch service from to others is the main pull reduction in are already brands like this is model for him slide non and deposits we have them strong courtroom deposit on as transactional deposits group three hundred and seven million robert twenty four percent annualized over the last year transactional deposits up one point three billion dollars or thirty one percent the graph on the bottom left to tranny quarterly party cough and against malcolm malcolm into decline a sudden deaths from keyboard you one we now said thirty one basis points and are far cry from discipline certainly helping the sport portland the energy margin ah wouldn't pass the first quarter you see the i pad cause repricing opportunity for the remainder twenty twenty one and beyond but non blood can and are loan portfolio mark i'm sorry talk about the growth for the quarter we saw growth and of documents set multifamily mortgage average more mortgage warehouse bounces group fourteen and a half percent in the first quarter when you would normally expect seasonal contraction his portfolio sits at eight percent of average total lungs exclude
spk_3: he ppp growth in this portfolios been a wonderful way to absorb the excess liquidity can ready by the deposit grow up discussed earlier it remainder and can't keep the average movies warehouse portfolio at ten percent or less of average loans
spk_2: that recorders bear attacks has grown total ones left ppp an annualized rate of eight point three percent it's execution coupled with our talent investments leads us to believe that we can achieve of appear longer especially when you factor in strike the pipelines see an ally and utilization and are unfounded eighty see construction commitments if you can see on the page scene i utilization is down twelve percent from your go levels for every three percent increase in line utilization it translates into one percent growth in total lungs additionally or on funny construction commitments and increased by approximately eight hundred million in the last four quarters slot eleven give you an overview of the ppp portfolio including round one round these statistics round three was about thirty six percent around one loan forgiveness is making good progress and we still have three point one million in the park revenue to realize as tpp forgiveness a curse on slide twelve the cafe racers at home counting the bank started the year from a strong position and remain robust as ratios are relatively flat the deposit driven balance sheet growth absolute capital levels are high by that point six million dollars we declare a regular quarterly dividend of seventeen cents per share about twenty seven percent payout ratio alpha your the quarter we report repurchased hundred and forty eight thousand shares and an average price of twenty seven dollars and thirty one sense we have a point nine million dollars left on our authorization an attempt to remain opportunistic our capital the point guard is given the current valuation of or stock are organic growth lebanon's strategic ground and lastly share repurchases with that like term color decline for the discussion on credit anti terror in the morning everyone overall were saying our credit metric stabilize and begin the show improvement
spk_1: as you can look it pays thirteen or the deck i believe it's important and know that in the chart on the top right you see our loans on not a cool are trending down from their peak in the third quarter of twenty twenty
spk_2: the banks as a trans reflected in the chart and the top left corner of the paid reflect the thousand and nine a day plus as day this both made up a lot of a at seven point one million dollar as be a bible for lung that cheered on them if they have this month without that has a loan our past the levels would be down in the fourth quarter a c l a total loans remains relatively flat for the order at one point seven six percent as reflected in the chart on the bottom right of the page and benefit of improve texas gdp in unemployment forecast by movies during the quarter or offset that by additional specific reserves identified as necessary during the quarter that charge after the quarter were just shy one hundred fifty thousand and while we expect charges will resume and future quarters we do not expect them to be anywhere near the levels of que or twenty twenty it's important to note that the vertex originated portfolio posted a network coverage of seventy eight thousand dollars over the past five quarters credits that that of the clan bap bap percent from the how watermark in the third quarter twenty twenty additionally we've experienced a twenty four percent decline and pc wells over the same period overall i'm encouraged bar ransom asset quality live to pay fourteen this like we have some detail on what we're saying in our hospitality an office portfolios or hospitality book continues to produce encouraging results revenue trends continue to improve as the lot of and featuring guns were tracking and logging data on seventy five percent of the hospitality book relative to occupancy revenue and wrath par for the month of march read par for the book with seventeen seventeen percent higher than the previous high watermark said in october of last year
spk_4: occupancy
spk_2: was sixty five percent for marched up from the average of forty nine percent from the pool or core of twenty twenty we expect continued improvement in the hospitality space as the state of texas continues to open a travel madras continue to improve were looking that right loans and this portfolio that are demonstrating can set the cash flow performance coming out of the pandemic the banks korea as portfolio makes up and and point eight percent of the book a weighted average ltd for the portfolios fifty nine percent out with portfolio is based in suburban locations which we still lack of better position for success coming out on and pandemic are typically the structure calls for significant cash it equity at thirty five percent or more which provides us with significant downside protection fifty one percent of the office portfolio is located in dallas suburb and locations our top ten exposures in the office in office make up thirty two percent of total portfolio and are performing well with only one credit in the top ten with a restraining of pass watch twenty six percent of the office book received a final during the pandemic with only one point four percent on the book receiving a second the fall there's only one classified as that in his portfolio that comprises one point six percent on the office portfolio overall performance of the out as both has been very encouraging given the head once experience in this sector with that out and tobacco the mountain i guy as you have heard were excited about a quarter but probably more excited about the banks future part this new jersey continued work on one of our core competencies am a day weekends and he'd have discussions with many different opportunities both private and public bags as well as non interest income companies but we will remain discipline in our principles underwriting and continued focused as get out and dps girl but right now like to talk about the pressure is release reissued concerning our investment to by forty nine percent interest in rod mortgage live as twenty five year old mortgage company or georgetown taxes just north of often owned and operated by the jones family last year came decided that we needed to make a concerted effort to increase or non interest in gun weird look at numerous businesses and identified drive as a potential partner that i'm inclined to the bank and well known to many of our bank officers the partnership with drive is very compelling from a strategic standpoint it provides a scale in the volume and attempted mortgage market it provides an additional driver are non injured income carry category which we have always liked up peer group additionally it provides a natural had to an ever changing interest rate environment and it also allows us to partner with a company focused on its employees clients and technology to make the mortgage process as streamlined and efficient as possible we could not be more excited to partner with drive and the jones family the deck including some historical results for the company that should provide some indication of in return we expect going for but the company result was quarter reagan feel strongly about giving back to our community very difficult days and we have done so in many communities and our markets additionally the ice storm or we got snowmageddon was quite costly your manager bar employees to give you a little glimpse into are very kept family courts sir the their fellow employees donated almost fifty thousand dollars out of their own pockets with the back to the bank beside the match to assist in repairing damaged homes and apartments these things continue to validate the culture of family and community that we're trying to live that every day and now like elton the line brain question
spk_0: thank you thank ladies and gentlemen as you had a question at that time at fastest time within the number one i touchdown terrifying i guess this tired than the number one touchdown calif out of your consent of the accent or your western of yourself from the t v fast
spk_5: and cool
spk_0: your first class our come on the line as michael those from raymond can see a lot of our like go ahead
spk_6: hey good morning as how are you
spk_7: good a mile
spk_3: a on maybe we'll just start with the out with that thrive acquisitions to just give it some color on yeah how it
spk_6: how came to be on your car from other with yeah by buying at something that yeah the mortgage related eventually the the top and of you know that that the cycle and then how should we think about canada the revenue contribution is into for assume it's gonna come through up the income at appreciate the first quarter numbers you have any expectations for i'm you know what their pretax income contribution might be ah this year and then there are any expenses related to it thanks
spk_2: yeah good good idea that came together like terry address them of financial considerations uses gas we did my my team that around and then after did planning session last year and any where where do we make you get data and no nicest income always has been something that been a little difficult for us been a major metropolitan area not having a wealth business or an insurance business or battle between them so we started looking around and you know we really were we had a small mortgage company and had a pretty decent at the a business and so is there i let's go somewhere will will we have some competency and and you know we had hired a gal the rent or mortgage warehouses very well known in the business and a we thought you know that let's figure out somebody that we know characters a big big deal for arson and so we started looking and and this one got a pop out and so we actually went to them and damp that ain't what he does beg and after that started to track down to where we are today they are a very high quality family a very high quality business i would tell you know technology is ah them
spk_8: very very good
spk_2: there's a husband wife team and then at a nurse son that run the business they're very in june to it and it just it became to be kind of a perfect match himself and when we never had any issues during the whole negotiating time and it's advocates come together really nice so so we just felt like was an area that would be helpful to our business going forward for the strategic reasons that i mentioned so we're really really excited jerry can address some of the financial stuff and yeah michael on that you know first die young the accounting obviously the neck witty method in bath but so we do not have to consolidate it will not generate any good wilmer intangibles ah any way we will pick up pro rata share of their pre tax earnings no comfort of the line you now and that's my mortgage banking come now know exactly what will call it would you be on the of and will certainly have enhanced disclosures i will certainly have a little bit and transaction costs mainly for financial advice from legal other than that it's not and that's not gonna be a big number at you know relatively speaking the what what we're you're taking here today ah from a financial standpoint the enough i think i think i've done a really really good job and a growing a business i think it's important to note how much of their business is coming purchase vs revive and how much better they're doing on the purchase side and the in a typical in be a statistics and in it and as you think about it got enough they did you see from the volume numbers one slot eighteen and be you know they did a couple of billion dollars last year there certainly are under their urine the luckily it is eleven third and so you see in your q one from december three february i mean a small town in in the mortgage banking space of year and you're off to a great start so while the mortgage banking association forecasts for twenty twenty one is down about fifteen percent that's not at all lot were expecting from fly in and and our our work with them and therefore in our expectations were not expecting a decline in volume by any stretch of the imagination ah and and certainly through for march it wouldn't it wouldn't indicate the did that in an hour you have since from what able to look like there's no sense of that's gonna be that that be the case certainly there is we going to twenty two the the forecast for the in be from the be a down about thirty percent
spk_1: you know and so are you know death and i think there's going to be able to the pressure on again or sell margins is volume draws up so that the way i would think about the arms contribution it it's you know obviously there's not anything to really integrate here said there's no cost of good there's really no distraction no cost to cannot put this not and the our systems
spk_2: so we leave a lot of strategic bandwidth if you will to do other things ah i'm and so what do you like that that's why did i think the big thing if it was shooting to get disclosed by you dirty honestly there's a there's a lot to do come on that pot ah but i think it exactly when we get closed it's going to be the biggest robert of of twenty one because i think they're off to great start and then you know twenty three we just want to continue to to work with them and grow with them and they have a great business that we're excited to be part of
spk_9: i appreciate all that all the color maybe just as my follow up you know another quarter of longer affects ppp were and ex warehouses of high single digits you not the get you said at the outset that you'd still expect a single digit the sheer but i think everything i heard you air commentary was was pretty positive in regards to the pipeline a home builder of finance group you know lender hires yeah it's that or a is there we defend the are ya lo year or
spk_6: is there some paid out the expect any color there would be helpful thanks
spk_2: i mean okay down has certainly captain that will challenge with as is everybody in that industry and those are a little bit harder to predict your question that we set the bar lol i think we're being reasonable but to your boy we have a lot of things work in an address in whether to the and funding these are the sea and i utilization or the billiard room or the new hires we about a lot of great momentum and and i may are during the pandemic as both came into office they would call on on people we work through the pandemic so yeah i think those are those are very attainable numbers without throughout
spk_9: okay thanks for take my question
spk_10: and by
spk_0: like to thank you
spk_9: can confirm the line of brady a theory on tv double w e line is a life for helpful
spk_11: hey thank you come on guys
spk_9: they brave
spk_2: some albion you just mentioned that yeah the hiring the your santa you guys talked a lot about you're hiring a lot of talent last year and twenty twenty that has that continued of this year and twenty twenty one so far
spk_1: ah good has not quite to that level
spk_8: but i can tell you that there had been a couple of he hires especially in the airport work
spk_2: area and i am there are some that were working on currently in houston and a couple and our so the answer is yes
spk_12: and everybody playing and that arena we're not we're not really hard with feel really good about a commercial real estate games in both dallas fort worth and is been so they're the really really non commercial real estate tax both but ah yes that that iran continues and it off it will always been
spk_2: can you you know if not do any other deals or doesn't do anything and i'll be organic growth be is always the beat if they are the most and it's the most value to our shareholders and in a we did they grab a really good situation with all these the mergers and twisted
spk_9: it's just that very disjointed in terms of banking palette and we have gathered with the had some their call it us and them so we're going to take advantage of just
spk_2: yup that and then period of want to talk about your the outlook for spreading common margin the i heard your comments and i have some cd maturities are coming off and hopefully excess liquidity will go down on your ppp will be less of a drag out how do you think about dollars would lead your blade up it's a good perks bread and in march and but you think are still some downward pressure the spread of market here why things are going to be i think lung pricing there's certainly downward pressure coming from that and i don't think it's going to get easier or better as the year goes along now i'm i'm tickled to death when you look at the flag on on that interesting car and we were able to off that the downward pressure from lung right with with more none of that it with the property rights i they get like six and he now so yeah hundred it it if you don't have what the government's going to be on the stimulus but but if there's more liquidity pumped into the market which there's likely to be and and deposit close continue as robot is we've seen over the last year i painted the be the neon pressure from from excess liquidity probably going to get worse i think the pod the pricing is if we still have a mean below how can be more thrilled about the job or teams have down and deposit crisis a mean you know thirty one basis points and headed lower of and say that with confidence because march with a meeting with or than the quarter total so that when company to put that down and if we can just upset what's going on on the ones that look out returned growing had interest income the me i'm a bit out of our control and what's going on on the funding side and and day we just don't wanna go to get too crazy and at you know about and and put that in a fixed income working in or investment portfolio too much of that show on yeah the and and also what those the you know the fixed income or the fixed receipt pages are gonna react that six basis points knicks fan
spk_13: from that alone because if it worked with seventy percent of your portfolio tagalog or and prime if rates go up we went big you see that in the interest rate risk measures what what what we're trying to do with off that the interest rate risk lot of of right staying down lower prolonged on know that's not the convey
spk_2: national wisdom the we win if rates go the other way in spite of edges in a big wedding still see it in the table without this is the way it would write staying down the puck six basis points the number one point two million dollars a quarter
spk_9: so
spk_2: are you not week we we that's gonna help too
spk_9: right that's that's good collagen finally for me your it's great to see the thrive mortgage the author guy
spk_2: understand that it's pretty pretty simple transacting does that that her having that deal pending into that in have set you back a couple quarters as far as you getting back out there and try to pursue
spk_1: you know a traditional bag them and a target and your as you are you know focus on bank him a day or just give us a little color on on what you're looking for are you looking for a smaller kind of downstream
spk_2: forget are you looking for something more your transformation all that see the larger slash in i'll lead as give us a player as far as what you really like when it comes to back them and act yes it dancing at first blush and brady does he does it take his out the clergy the answer is unequivocally no it it it just doesn't mean the this is an investment there's no immigration risk i'm terry gonna happen ten or more mean once a month no no systems real know that bird know their personnel transferred our system they're operating their company just like they were yesterday at both so
spk_1: no it does it does not in terms of what we're doing on the i'm and a side
spk_2: after me worried we taught the banks between just shy twenty billion all the way down to seven hundred million as and i did sound a little tried they need to know it's it's a little bit of a shotgun approach ah but i will tell you that just as and think gets important have conversations
spk_1: the the great news about their attacks it is that we have optionality and we've traded optionality for a reason and so that optionality could be to your point a couple of small downstream private banks it could be a smaller public banker could be an ama you were one of the he buys the done
spk_2: to emelina last thirty six months and we've got said that boy and so we have that going for it does that mean we do another one at a i don't know and there's nothing in i'm the him the animated and be intimate that we're done on that's the wrong word that you know and eminem imminent that's the word i'm angela sorry
spk_14: ah but we had a lot going on and i will continue to have those conversations and there's other non interest income opportunities that can help our company as well and though
spk_15: but we don't have to do anything we have a really nice organic growth story and now so we're a really good place and we're not gonna do anything it doesn't make sense
spk_0: yeah
spk_6: they were good color that yet
spk_16: tax burden
spk_17: thank you thank you next person will come from the line of gary can earth and the other line of how i feel has thanks guys morning
spk_9: one more
spk_17: go back to thrive hurt for second
spk_2: senate their they've been a customer at the memorial as customer of or tax or op react out at as market learned were out and some operated businesses operate account as well as primarily market where else so in the deck where you talk about deploying excess liquidity and capital is that just be the cash purchase or will there be some additional partnership in terms of more warehouse utilization that the name lines or you that were and other banks or any other anything else beyond the pure feet flow from there wager yeah yeah the good question gary i mean i didn't hear primarily were just talking about that that that the cash investment and obviously it's gonna be pretty minor impact on our national levels yeah certainly we're going to look to do more dozens with them ah woot woot woot been of we're not really looking yeah we think it's important for them and i think they would agree is that that that they keep their their current with the of mortgage warehouse ah providers do we want to be a bigger piece of that sure we do but they they had growth aspirations are you know they just did a team worked out and ca colorado in the last thirty days that meaningful to their like ah and so so that you know yeah we will increase the size of their lending commitment to them but we want them to maintain the other relationships they have also brought we get the chance to to bob but you know portfolio more
spk_9: once to we've been originating a lot in our portfolio pod and sixty percent of our in health mortgage volumes been going through app polio and we still think tank growing so yeah we're partnering with the i'm on the boat five one seven one jumbo arms things like that we love the product and with to third
spk_17: the their business and me and sixty five percent their business in taxes we love that and are are are are certainly happy to to deploy connect us with would it be that way you know so
spk_2: and that in and we'll see where the put the partnership like this from there but we think there's a lot of synergies in this from ah you know that can that a creek is benefit of the company enter their company and it wouldn't look for more more ways to work together the trade actually doesn't mean the next question terms of are you know jesus as a channel that kind of refocusing a family bucket which again to seven percent i think was over nine percent a year or so ago his era level you'd like to and i had a single family portfolio maintain order and yes i mean that that's definitely an area where we want to grow along work well obviously it's a great risk lady that that we that really no issues and no single family jumbo lucky we want to go and get is gonna get a good believe the really add to that would love he get to leave
spk_17: gilded get a tan and maybe even higher yeah as a percentage of the portfolio absolutely what we want to be mindful of where we are in the right cycle and you'll see our appetite for the product increase and as rates go up you know over the last five quarters we put almost two hundred million dollars and i'm in our portfolio mortgage product
spk_18: and it's trump and percent
spk_9: so and abby not and i think republicans slow the were certainly looking to be a pretty active at the bar with them on on the portfolio prop
spk_19: okay and and lot less pressure from if i can i give us and portfolio i mean it's it's cracked up a little bit that given kind of the deposited a shit asia's for longer it
spk_2: yeah the belgian to and answers your family bucket as well over time do you expect more upward creep in the portfolio where do you think that could get the point of ah yeah set up for the hundred million dollar question given that much that i'm in that lady without water may million an excerpt the quality that and he know i'm trying to resist the urge to the building the portfolio ah believe in the the people we hire and ended levers that malcolm referenced that you know in terms of talent lies
spk_20: business opportunities in a we got my mortgage warehouse gotten the builder our community group is doing real well and gotten what i'm a good show at thought and don't look for the for it will be opportunistic in there will certainly reinvest cashflows it will grow slightly but but don't don't look for the port for
spk_2: leo the ballooned up on i'm really thankful for the team and how they manage their portfolio and and the stable yielded given us over the last five quarters the cash will come on them and are hot it's not accepted and our premium risk and reinvestment risk is lower than most of our peers subtle ah we
spk_0: feel good about where it is let it grow a little the not too too much
spk_21: thanks for take my question they got here thanks
spk_2: thank you for your next doesn't come from the line of math all me some stay there until i live the life cycle happening great thanks to morning guy that most my questions have been addressed but a one asked about credit so open play on the spot and curry klay what you're up and thoughts are around the hospitality portfolio seems like that was an area we thought there could be some some higher laugh content a few quarters ago but i'm curious what your it appeared author around love content and in hospitality
spk_22: yeah gary advice for cause i'm sorry matt and question and
spk_2: yeah we we continue to be a letter and letter about the hospitality portfolio i mean and just anecdotal we we we upgraded a thirty two million dollar credit since the end of the first quarter because his and are born with a guy one point board that service coverage right
spk_21: yeah through the pandemic so yeah that that's one of anecdotal piece of evidence that the all of the numbers of were tracking and that portfolio or continued improving and you know we just we just don't see a lot of loss in that portfolio right now that we would
spk_2: say ah yes we have on we had no specific reserves that i can recall on a hospitality alone do that some
spk_21: okay that's that's helpful hi thanks for them and and just phone app care you mentioned and you're prepared comments
spk_23: the pain a few branches good just for can repeat what you said on that and and or the thoughts on the cost savings had asthma be reinvested in producers or technology just is kind of brawley with your daughter this
spk_10: are you not that we were closing for office and and reducing service and two others ah you know that that certainly you know look good that the impact of that is that on an annual basis authentic owner expense run rate not all that mid life it's significance
spk_0: you know look at war weary and i'm certainly we're going to have to continue the in death and technology which the hundred that long from dr they're doing some amazing with there's a and and it you know the we were we're continuing to do that and would you know there's one thing i've learned from malcolm is you are always recruiting
spk_24: and added matter really what the budget if if if the right opportunity on the personal power that present itself would not take advantage south i'm a i'm i'm not looking i'm looking for need not looking for expensive the actually come down from where we weren't you one but the biggest driver of that is is just be more different cost from originate
spk_25: guns which the that snowmageddon definitely slightly slope that down while that this quarter but been are unfounded mother's conflict and help so in out that the would wouldn't we're glad to have because they'd you're not you're not you're more specifically to do anything and i still like the rock after going to turn down from where they the particular
spk_9: okay perfect bank at
spk_2: thanks matt now thank you said and for your loss customer you have mr graham that son the pepper tablet thin a line and his allies settle a a guy's more in one mile just because kind of wondering what your also advocate might be to sell more as be a lot going for just prisoners is interested to hear me on this seems like premiums have been pre out the recently and as be a good as it has been up and i take it for the last year and with reality t in there for everybody you know that would focus and then really on the ppp that ah but we're still very very committed to it are very when we when we have an f b a long sale derrida that analyses on every single wow on whether make sense of not into the market gives his ability as well we'll sell if the market does it we will lead us and so sometimes makes said done on holding but
spk_3: that is an area where we're focused on our we made a few moves
spk_9: that with they enhanced that area with the actually part of even lenders in that area
spk_2: so we are were very committed to it and once we get through it and really the ppp thing i think the jobs to they would get one or two a day now and so it coming to a close
spk_9: and dr i do see that area rapid up just a bit yeah it it it's hard for them hundred try to deal with all the tpp stop me i think the the minimum the business
spk_2: is is picking up what jail cell premiums are as good as ever everything in my career it and so we've been at which certainly been in the market and will continue to be an end it we do discounted cash flow of of over overseas sell and a bit strong enough given these premiums will get what will sell palm and you know and now i agree with irving mountains said i'm i'm looking for good things come and comes the as we get to the rest of the year i great and then out the thanks again to disclosure on thrive last night and you get to talking about their technological capabilities and it's me that suggests they might be able to scale up or scaled down more efficiently than traditional merger evaders so i'm just kind of wondering what kind of efficiency ratio you
spk_24: you'd expect an hour and a more normal environment vs ah i'm like what we'd be seeing today or of the last twelve months
spk_26: for burden for the bank would thrive or for thrived and the lung
spk_0: just drive stand alone
spk_27: why map and you make that the like point that that that technology is certainly going to have to tip to play a key role in that ah you know there there there
spk_2: a pretty temperate efficient yeah ah a it and terms of of of how they you their that the that they're probably running in the from mortgage company in the mid sixties that you know maybe seventy percent efficiency proof so fortunately for us because it's inequity method investment we
spk_0: did pick it up on a pre tax bases it's gonna be very a creative and helpful to our efficiency ratio is gonna push it put it down meaningfully because we're picking it up on that basis but overall i agree with you i think it you know that the dirty city ratio on the standalone basis because of their technology and the business model it's from a whole lot better than most in the industry

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.