Veritex Holdings, Inc.

Q4 2022 Earnings Conference Call


spk_0: the day and welcome to the vertex holdings fourth quarter two thousand and twenty two earnings conference call and webcast all participants will be analysts and only mode please note this event will be recorded i will now there in the conference over to miss susan coddle investor relations officer and secretary to the board of vertex holdings
spk_1: thank you before we get started i would like to remind you that it's presentation may include forward looking statements and those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ the company undercut undertake no obligation to publicly revive any forward looking statements at this time if you are logged into our web cat please refer to our slide presentation including our safe harbor statement beginning on flight to for those of you joining up by phone please note that the safe harbor statement and presentation are available on our website varitek think that cop i'll comment made during today's call are subject to that say partner statement some of the financial metrics discussed will be on a non gaap it with our management believe better reflect the underlying core operating performance of the business please see the reconciliation of all disgust non gaap measures and are filed eight k earnings really joining me today are malcolm holland our chairman and ceo very early our chief financial officer and clay really our cheap credit officer i will now turn the call over to malcolm
spk_2: thank you susan the morning everyone and welcomed our fourth quarter earnings call for they want to focus our fourth quarter results as well as or twenty twenty two year and results the quarter reported operating earnings of seventy four cents per share or forty million in for the year two dollars and seventy four cents per share one hundred and forty seven point nine million pre tax free provision returns were two point one five percent for for two and one point nine seven percent for the year your rear metrics continue to perform at at levels with aro a at one point three five percent pvv increase over the year of six point six percent rotc of sixteen percent and efficiency ratio as forty eight percent the quarter did have a few items under which jury will give you additional detail on momentarily
spk_0: lone growth less mortgage whereas continues to temper trending down since to due to twenty five percent for the quarter in and thirty four percent for the year
spk_2: is clear that loan growth and twenty twenty three will be much lower than and twenty two a do with our current pipelines down over seventy six percent we continue to say twenty twenty three low growth will be in the low double digits primarily consisting of the to be funded construction book the market is certainly slowing down as the borrowers are uncertain of a looming recession and interstate for guess they've done a good job of self policing their credit requirements pay off for the quarter remain fairly consistent with previous quarters at four hundred million but we do feel his level of pay off will continue to decline in the coming quarters overall credit trends are moving negatively as we are seeing signs of a slower economy with the rising rapes trading some level of stress did record of five me and our see in a jar jar of an acquired credit that we've been monitoring for several months this loan is now fully extinguished our total provision of eleven point eight mean for the quarter accounts for the charge off growth and keeps or a seal at one point o one percent allows mph to assets did increase ten bits but still remain at an acceptable level of point three six percent
spk_0: deposit growth continues to be or greatest focus and with most bags our greatest challenge
spk_2: our deposits did grow during the fourth quarter seventeen percent annualized and shows are commitment and dedicated strategy to growing deposit that the same rate as or loans grow we're investing the process people and technology while making core deposit gathering our top strategic initiative on now turn the call over the cherry
spk_3: thank you malcolm starting on page five keys for was a challenging quarter courtrooms double pants and would have been a lot better without the loss and drive and the charges on the acquired credit that malcolm referenced earlier the financial metrics around or away a efficiency in rotc eat are still very acceptable table book vapor sharing to be europe eighteen point six four percent
spk_2: five point two percent for the quarter an eleven percent for the year after adding back the effect of are given it
spk_3: as you look at the financial results on the year over year basis remember to factor in the capital raising first quarter or we issued approximately four point three million common shares and raised the hundred fifty four million in common equity given the current economic outlook we're pleased with achieve such a favorable results for the bike the capital raise certainly wait on the year over year performance and bps in return on tangible common equity additional additionally twenty twenty one was available credit year as we didn't need to provide for growth given the reserves established during the pandemic finally and twenty twenty one we also had a were nine million dollars ppp fees that not did not me occur in twenty twenty two
spk_2: antoine nine one production decline thirty five percent from que three to queue for as interest rates continued to increase economic uncertainty rose and liquidity became more of a concern with a termination the interlinked be a leading few three i focus shifted the growing our deposit portfolio to greater emphasis on the gonna
spk_3: and a lower appetite for a d c and great unfounded eighty see construction continues to drop at the rate of three hundred to four hundred million dollars per quarter on slide can you see the evidence the greater emphasis on sienna during the fourth quarter and i accounted for forty one percent of our production up from thirty percent and que through right on the page eleven editor think i'm increased by five point one million or just over five percent to one hundred and six point one million a queue for the two biggest items in the increase or the fed raising short term interest rates which represents or point two million of the increase and road which also accounted for about seven hundred
spk_4: point seven million dollars the net interest margin increased in basis points from que three the three point eight seven percent margin for the mother december was three point nine three percent the queue for nam was negatively impacted by interest reversal them from credit and kids deposit rate competition in our primary markets the
spk_2: after you and houston the competition for deposit by and at a reasonable price reasonable price it's not just wanted to other financial institutions for the first time in my career banks are competing directly with us treasury at the was yesterday three month tb overpaying for point seven percent creating significant rate in volume pressure on the banking system
spk_3: all this to say the answer likely app or very near their peak as the deposit deposit betas are going to catch up making growth in that if we think i'm harder to achieve varitek that that since chevy is largely unchanged from que three we've been intentionally hedging floating rate ones to mitigate falling short rates outgrew twenty two my sex on slide twelve please note that during our young que four hour long you'll with up ninety seven basis points to five point nine eight percent while deposits increase seventy basis points key for loan origination to ninety three percent floating and these floating rate loans during an interest rate at quarter end of seventy point one nine percent so thankful to have a predominantly floating rate loan book to offset the deposit beta impact flight thirteen a productive quarter on the deposit fraught with growth the three hundred and seventy five million and a sixteen percent cage or since the beginning of twenty to twenty thousand or cycle to date totaled up posit beta is approximately thirty percent of total deposit rates have increased a hundred nineteen basis points and the average bedpans effective rate as moved three hundred and fifty three baths points we seem to deposit make start to change during keep a war with dd a declining six percent and time deposits growing twenty five percent on slide fourteen non interest income increased by one point two million to fourteen point three million great performance the us be a business was largely out have been increase lawsuit thrive and lower swap revenue will come back with additional comments on us s a and thrive and just a man non interest expanse including several severance costs increase six point one million to fifty six point seven million reflecting the investment in talent we have discussed for many quarters salaries rough one point seven million and variable comp without the same a meaningful part of the variable comp increase is due to the exceptional be the performance and north avenue capital during the fourth quarter the rest of the expense increases with what inflationary pressure and spread across the other categories even though operating expenses up efficiency ratio remain strong and the forty seven percent range looking forward the pace of hiring slowing the seems prudent as a blonde production and growth slow and twenty twenty three slower long road will translate into stronger capital ratios and less funding pressure turning to slide be a thing is i noted earlier keep or was a great for quarter from that with seventy five million and us the a ones closed and additionally for the go year and twenty two we call it a hundred and seventeen million we entered twenty twenty three with positive momentum premiums looking pretty well and are pipelines for or as be a business continues to strengthen his new leadership and recent our interaction with was on this forty million dollars in as be a volume twenty twenty two including sixteen beginning queue for the pipeline it up forty six percent since the end of the third quarter gang of fail premiums and yes the business are stronger than a quarter ago but much weaker than you
spk_2: as the a side moving to thrive
spk_3: varitek recorded inequity equity method loss of over five million dollars is funded by him decrease to almost bought him fifteen million the gail fail margins collapse to one point eight percent due to rising rates significant great volatility and the impact of long dated right locks given these results in cuba or they say
spk_2: stop issuing mortgage rate lot longer than ninety days and initiated an effort to write stars the expense structure of the company given forecasted twenty three twenty twenty three volume we expect both actions to meaningfully improve brad financial performance
spk_3: a sixteen hell capital group possibly forty one day and around the corner and two hundred ninety six million during twenty twenty two to any at one point four billion
spk_5: the eighty one ratios and expanded by fifty one basis point zero we're looking forward on capital we believe that moderate long growth and lower unfunny commitments problem with higher earnings from rising rates should allows to achieve our eighty one target ten percent by the and twenty twenty three with that unlike turn the polymer clay for some comments on credit
spk_2: carry a good morning everyone
spk_5: i live in the paid seven page can see a decrease in criticize that during a quarter that's driven bar quarterly review process for credit the largest change than a quarter was driven by moved a special mention of a customer and are no funny of business
spk_3: that is experience negative ironies but continues to maintain good liquidity and capitalization we downgraded three office properties during the quarter that have demonstrated underperformance surveillance is the word of the year for credit thing
spk_5: as malcolm mentioned we had an uptick in mph during the quarter that was driven by a downgrade and a pc the pool of lounge the not a cool status a single credit that made up ninety five percent of the outstanding balance of what about pc the pools was posted for closure
spk_3: because the pool as a unit of accounting for these acquired lousy almost be great at the site
spk_6: or a sale for the quarter group by six million mostly due to the change and that is projections for taxes unemployment and gdp which accounted for back what me may enter the increase growth in alone accounted for an additional six point three million as the bill
spk_3: i'll set by charges
spk_2: during the quarter we had a boat and past days and the thirty to sixty day range most of the increase was created primarily by administrative past caused by the end of beer season delays
spk_3: he pointed may add as the ball was cleared in early january turning to charge us during the quarter which spreads and unexpected unexpected deterioration in an acquired power point two million dollars marshall credit and the power generation states
spk_5: during the core of the bar will became unresponsive missed several established milestones that led us to question the bad bill at the at a bar
spk_3: given the fact that we acted quickly to remove the quick credit on the books
spk_2: and will treat any collection prostate as a recovery and picture quarters or that apparent lack of enough basically as we look into twenty twenty three a think we all at some level of economic uncertainty and our minds
spk_0: i'm sure you've heard to act as well position remains confident in a positive twenty twenty three performance that will be happy to answer any questions operator thank you as a reminder to ask a question please press star one one on your telephone and wait for your name to be announced to withdraw your question please press star one one again
spk_7: our first question comes from brady gailey with kbw he may proceed
spk_8: i thank you want to guys
spk_3: liberated library
spk_7: a want to start with your outlook for the net and first margin end of the bottom right corner of slide eleven where you talk about your interest rate sensitivity you have a base case interest rates scenario and that kind of point two or three sixty eight net interest
spk_3: sergeant and yeah you just said he did like of three ninety three in december so i'm trying to reconcile other two numbers budget just some color on the net net or gross margin how you think that trend than twenty twenty three
spk_9: well i think he knows i feel i think that interest margins at or near there are near their peak ah if they have a pig and as the at our personal a yard or or view is that you look we get one or six and that interesting common queue for and that milestones the base case on the stack balance sheet
spk_2: eat with that you know
spk_3: that at that the have four hundred and twenty so that tells you that even with growth with growing get interesting come is is really not very possible to get an enlarged view is not because of where rates are going from here it's deposit funding costs fresh so i said it's gonna be hard to grown an interesting up with the law debated and said that that sell you know that's how we get to a view that ah that me and we'll we'll it'll be difficult the grown an interesting come memes will be under pressure downward likely throughout the year
spk_2: as a as you're too nice girl was one could be flat
spk_3: but but out of a bigger you know my also be down it's really very it's so hard to predict the never seen deposit pricing competition like this and anyone who doesn't believe the us treasury is our primary competitor is kind of
spk_10: yet said yeah got your head hadn't thing
spk_3: it just makes you arrived in on here in your eyes it's hard to grow and i i dollars even including elo double digit logo or is that a excluding the longer for the year amir the a static balance sheet so he did it doesn't include what the if you just took this balance sheet and roll at forward with the right shot knowing what's gonna happen to deposit vegas on just that i'm not i'm not actually think we can grow know everything come next next year because of the lung growth we've been talking about low double digits if it's gonna but it's just gonna be harder you're not gonna get the same level of fame amount of leverage from lung growth and twenty three that you've been getting the can't of the pa the pricing pressures
spk_2: except by that's that toppled then next all expenses does it feels like you guys you guys are still i'm hiring and your expenses can a little higher than my efforts a any color on what you're investing and and how we should think about expenses and twenty twenty three
spk_11: yeah we've only just be addressed the hiring piece of it in a we still have some replacements that we're we're working through there a couple a key positions
spk_2: that we still are looking at whether to buy i would say most of them are gonna be focused on the deposit generation side of almost all of them would be actually are we do have an internal audit a program that we're going to put in place and twenty twenty three yeah that's a good of going over ten be in size deal but the hiring is not gonna be as it's been in the past two or three years but there are couple replacements areas that we have ah care was tell me yesterday think now our or total is down less than fifty sixty percent from where it was terms of the amount of people but i don't think that's gonna drive a huge increase or where we are from the expense base right now
spk_3: you are talk about expenses very well may i think that you know a thing the and the inflation is real surprise surprise ah that the i also a in addition to i don't see if the net ads like malcolm same net adds to appease and not going to be that gray go to twenty three we just we can't do that
spk_2: but we are one thing goes spend more money on marketing dollars on the deposits that
spk_3: it was it you know we're we're we're standing up that area and we're gonna put more way more dollars focus that way to to help build this deposit base in a more significant more granular way ah so i think ah expenses
spk_2: that you know we're probably if you if you added if you analyze keep a war and add a little you're probably about in the right place at you know but but you know so plenty i'll just say this to bring weather phenomenon swear that i look back on twenty twenty two
spk_12: you can you get argue they say we buy two billion dollar back and twenty twenty two may regret two billion dollars and part of that was i think our expenses on the cops side were a little on the savvy sadder a little low in third quarter to add some people moving out we had some new people coming in and late
spk_2: three que and for cute can all caught up to us and so we look hard at the efficiency ratio which is remain stable despite this the spike in increases are on the expense tie ins i think we're just settling into a new expense level with adding two billion dollars in assets over the last year it let let me add to that i mean year over year
spk_3: a total assets not average asset year over year group grew you know one point on the average one point six billion dollars and from queue for to keep for they grew over they could ride at today and out and yet for the year in a the average asset is only a bad bets one seventy eight to one eighty three ah yet you know for the year and so malcolm's right we grew a two billion dollar
spk_7: or bag and are and arcana you to average asset is twyla tharp it it's been one heck of an inflationary here
spk_3: i there and then finally for me know a lot of volatility with though the us the a fees have a great quarter but then thrive on not having a great korea anyway on the another it's harder you have look at those two on a on ongoing basis but
spk_2: at the any idea of about the forecasts but as too volatile line items at you know at at yeah tried to say it in my in my comments which is thrive is making pretty and know the not pretty very significant expense changes and bother again or fill margin for the fourth quarter was one eighty three a think it is i when eighty nine the year was three thirty five
spk_3: okay so it's a packages must stopping the long dated lock sledding the gang of fill margin revert to where they've historically been deal with their expense cuts you should see much better financial performance out at right nag we that you know i mean if you see their pipeline you see the quarter you can tell her that know if we close seventy five million in the fourth quarter and eight and only one seventeen for the year and then we've got some of that pent up demand after teacher when que three in the us the i really came through for us but words were pretty
spk_13: we feel good about twenty three a neck
spk_14: i craved like has has be placed him but that is good is that day
spk_0: the area thank you
spk_15: thank you a moment for questions
spk_16: i question comes from gary tenderly gave it in you may proceed thanks as morning
spk_3: i'm morning sir just as kind of start your recent comment on not expand find can analyze your fourth quarter and and adding a little bit as you said it's only twenty three you like a less korea talk about ana hi single digit growth and twenty twenty three you know that come he just made sounds like you're more an image hi teams longer expense growth is that is that what you can intended to suggest near gonna what if they did you know what i would say hi single digits over the for you hi single or double digits over four year twenty twenty one is is more what i'm thinking right now but certainly look at as deprived bucky for ah just that you know it did it was all across the in across the board or not i'm not trying to eat you know ah go go go size is is it may be it seems to let me a buckler that up more more high single low double from twenty twenty two levels
spk_16: thank you
spk_15: and then also on on thrive i mean based on your your comments you just made is there is or visibility to the brothers visibility mortgage all
spk_3: or visibility and twenty two based on born twenty three based on what you're talking about on expand side
spk_2: it to work at least thrive would be neil a break even scenario in twenty twenty three to where it's not a headwind for thirty pts absolutely that's you know his book we've we spent a lot of time over the last sixty days talk under the thumb of the best people in the industry and what the success but dr look like and twenty three that's exactly what you just said it's kind of where the industry is based on their we all the feedback we can get and and they have they have put together a
spk_16: clear road map to get there it's not an open a prayer yeah they're they're making appropriate expense reductions the candidly they have some really nice volume you know they did a small acquisition at the end of the year
spk_3: that was not very costly that helped on the volume side and so we feel pretty darn confident in in in own a break even year for thrive i've got a great and then lot less for me just on under the positive side and the growth there i think less korea talked about yeah probably utilizing somewhere in the way a brokered time deposits in the fourth quarter i didn't see it called out anywhere on earth he can talk about what your your activity was on that side of things and for corner ah like my own nothing many peers report it was it was that the brokered side was very meaningful in the fourth quarter ah you know we still grew absent brokered we still brew we still group of a very poor five percent i've done the math i'm doing my get i'm somewhere and on a lake quarter and ula that's a brokered but so that up that kind of tells you that that yes the right number forty five and if we get them thing that does you were the ref thought it was
spk_2: okay shutterstock of at all about how you can a ladder those answers and charities soviets are we we are from an interest rate risk out like keep him under twelve months from they are just they thinking about the overall balance sheet and how we balance out liquidity we're going out eighteen to twenty four was fafsa at a ski you to you twelve months and under but there is some that we're doing it's that little a little bit longer
spk_17: i don't want to go real long because the go in again customers or
spk_18: like more frequently asking for longer term see days and that's just not where were pricing aggressively or as aggressively ah woodward with to try to keep everything
spk_0: mean twelve fifteen eighteen months in an or guys like it
spk_19: thanks for your experience
spk_3: thank you humor moment for questions i ask i think on some bread ravaging with have the group you may proceed hey guys good morning martin brett a breath
spk_5: wanted to our circle back on credit arm and to few pieces it and just make sure i understood that the bomb and i'm guys make downright pretty clacking aggressive with that because they differ he office properties can you may be talk about god and and what you've done taking a look at your crush of of it
spk_3: portfolio and maybe what led it has right
spk_20: yeah philips a great question the bread side by side quests wait we did have been off as died during the quarter that we look at every loan over a million dollars in the book and ah yeah does that make sure that
spk_5: we now have probably had everything graded on were addressing anything that we saw the at any weakness and the deal so we looked at every credit over a million dollars and that portfolio and and that's just part of our surveillance brought process for the entire year
spk_21: though
spk_3: any color what specifically led to the downgraded or three credits
spk_22: loss of a of candidates ah and then one is just than a historical a problem that said became out pct ah
spk_3: acquisition of of green by that ah has been had some damage to that from hurricane harvey that has never really recovered from that so
spk_2: and cry
spk_23: ah some sounds like it's a it's
spk_24: and it's er et cetera and ltv it is basically out a casual perspective and there
spk_3: sound issues which pm
spk_2: you guys have any color on how much class be office space you might happen inside the loop
spk_6: it is got a lot which lou
spk_3: at the best use of specifically
spk_6: not that i'm aware of we have no cbd
spk_2: ah office exposure ah class be in general that makes a thirty three percent of our office but today and sixty two percent of our office the kids and class a which is encouraging the me for that that's where we'll ethical single least a match press epa and were in this thread farmers are many krugman the questions on as much or the three credits in the vulgar are all of the increasing criticize ff wrestling quarter no that's not all of them the the the the largest one that i discuss with and are nope been a it's a group of move to special mention of the one of those bar was that are actually the largest ah office was second and then
spk_3: yeah so doesn't than the the two largest aires downgrade in a quarter
spk_2: look out our by men and their back on deposit for a faggot
spk_21: did you know obviously you you funded the balance sheet in the fourth quarter with with cds and a and you know last year year there were some various efforts to
spk_2: i'm fine alternative sources to to grow funding that would you know maybe the market oriented but maybe not be few days given the environment you know it and very you guys sound a little shell shocked with just the competition and the treasury market you know it at as you have you changed your could get in a be tethered to a different strategy in terms of you're looking for alternative sources to grow the posits whether he you know cleantech or other sources that that that might ah i'm not entails cd funding yeah major arson as the answer your questions strategy hasn't changed it has ramped up you know as i think we said in the third quarter that this was that this is a multiyear strategy you know can we just hired one of our league guys they just started this week or we hired a consultant in the fourth quarter and nice now producing some really good work there is no magic pill or magic vertical that's gonna solve this funding problem it's about six seven maybe eight different things and were poland every single one of those levers and i think you're starting to see some movement you can see back you know we we did grow deposits are know the industry right but we did grow deposit albeit not what we wanted to but some of our efforts are however efforts are moving and a very positive direction it's just gonna take some time
spk_3: and so as when terry doctor that short term funding and the cds these are are hoping these are gap fillers
spk_22: as we continue to be successful at our strategy the be specifically i mean is when it when we talked about hires there's a couple ayers they were making in that area
spk_2: we have a specific group they have some opportunities as of this week that are going to be nice funding opportunities for us
spk_25: oh we continue on that strategy we haven't diverted off of it
spk_19: we think it's the right one it's it's gonna take little bit more time and brett those that there are meaningful opportunities there but they are going to be high beta but if you're thinking about rage down this not a bad thing so
spk_3: i'm kind of and and maybe as well i for one night he knows you think about base is you just mentioned ah yet he asked you like he could
spk_26: what what percentage of the planes you i think maybe to in the fourth quarter or she's worry my have to get to in terms of the relative treasury car
spk_3: but it felt lamotta he broke up a little bit oh sorry i'm so just fucking at at the slot on deposit growth in our and the jack and shine writers write an average headphones effective and yeah there's an obvious upward movement and three q and airport you hear your interest bearing rate and you're tall deposit rate accelerate a tricky to fork you and i don't know that has to go to be effective headphones rate but you feel like you've you've taken ill a meaningful portion of the head that you need to terms of deposit pricing pressure yeah at i think it's feel calm and just because i think and got he got term deposit she got money market customers that you're gonna you're gonna be going to buy his hand to hand combat to retain these these customers these relationships and these dollars and i think you know ah at the
spk_27: a the deposit data you know it is it pricing on the margin every day
spk_3: and or kids more aggressive is what i would you it as just let's just the way the environment is ah
spk_0: and so i don't i just don't expect this deposit made a thing that when we're nowhere near it's speak now that enough for have look out fans got that yeley the fed got another fifty or another seventy five ah
spk_22: yeah somewhere in there i would say that they're gonna hang out there is like for the for the balance of the year and that's why i think there's gonna be near pressure as as we get maybe and you one but certainly as we get later in the year
spk_3: okay by for a dollar
spk_2: thanks brett thank you make you a moment for questions rx machine guns from michael rosen raymond james you may proceed and morning as most my questions have been are kind of asked and answered by down the fan credit you know you guys are standing up a pretty cautious town i think that's you know your conservative nature but the other the low moss reserve was was only have a base is pointless by decreasing in you have criticized classified you know why not you know just just fell bad a little bit more now just given the cautious town yeah what you expected to see that ratio builders we're a you have to the or thanks i mean we'd expect to see it build a the in a we do have you know sequel is a pretty constraining
spk_3: measuring and there's a lot that goes into the as you well know and so it's not your we get tweak here and tweeted candidly we dug we done a fair amount in changing you know are waiting done some of the possibility that to happen know we haven't we haven't nasrallah key factors until we work pretty hard to keep it at those levels because the the model just spit out a much lower number sometimes until it's gonna be difficult but and you're certainly our desires to have a little bit more in there and going forward yeah we hoped we hope to accomplish it believe week or not certain it if me have had a just dad to that which is year over year our allowance allowance what to let london's with down from one fifteen to one of for but our general reserve excluding specifics went up from eighty to be up to ninety and i would expect that tree and to continue
spk_2: the makes sense michael yeah
spk_3: got it
spk_2: and then maybe just back the to thrive obviously the the outlook i'm stuck in the a be a forecasts are yeah down a significant amount in in twenty three yeah business a tough quarter understand them making
spk_3: yes and structure changes near kind of etc but yes expected either he earned money from the investment the sheer but now go back and the i think success to make it is it possible yes or a it it would would would and success would be a positive number i think target is the break even and it looked the only reason this option is available to them is is a small acquisition malcolm reference that brought on three billion dollar
spk_28: dollars and volume at good margin the margin with three thirty three for the year where they've had significant extent cuts i've been able to strip out
spk_3: close to sixty percent of the cost to the company would bring the volume on the their platform and so that's what without that and without fixing the long dated locked and right sizing the expense drugs structure of legacy thrive and do i think that was at do i think break even or betters achievable know but that's that's where we stay
spk_29: and heading into job twenty twenty three and december was a leg was a good month they close five hundred and sixty seven units in december which was above their average for last year
spk_2: and always memo six the us to sixty five seventy percent of their business is in texas the three key markets is the after get used in san antonio and and that's that's why it's encouraging and i'd i've already saying that that you not thing the result a know what the results worked with december obviously it's so that's what kills me that this idea about where we can get were thrive can go is is
spk_3: you can see it from here from the december results
spk_28: i'll fall and then just finally for me
spk_0: yeah such a by one point five times tangible yeah he noted earlier that you expect capital the to grow grows is kind of longer and you growth slows an ethos around a buyback at this point and yeah what the what you could do that place
spk_30: you know what it is that think that's something we with we think about in the back half of twenty twenty three when the recession outlook is clear
spk_31: our credit is it the situation is clear and capital has built close to this tempers it is it ten percent he one or better and ah credit is in a recession looks mild and and credit looks fine it's something we'll think about but at me not a we don't like devaluation i still think now
spk_3: the be right now especially in the first half of the year as just this is not the time to be looking at it i just wouldn't rule it out the back half right yeah we have no plans in the back out it's just something that we we could get to with everything goes as point i said presented a colleague i think like michael thank you among for questions
spk_16: our next question comes from that brad miller as with by britannic he may proceed
spk_3: come c'mon guys
spk_32: a bright red
spk_33: if address missouri they just a couple me the housekeeping questions
spk_30: i carried and after pauses on the good pit bull is the out with a spot rate for the loan portfolio i'm at the end of year
spk_3: because i didn't bring that number with me i'll him that know we can we can follow later at that a mate habit before the end of the call for the largest sale say it but and then okay
spk_34: and then just curious
spk_2: you mentioned the the increase it's inexpensive some feel somewhat tied to the to the big where you had it at in a see a good guy curious that you know
spk_3: kind of think about those numbers going forward as you know that kind of up the a forty or fifty percent pay out on that on that revenue that had a eat about it was i get some yeah just want to see how much of it was it actually tied to the yeah good us to a performance
spk_28: now it's not know it's not nearly that much it's you know when that
spk_2: wow double digits but but it's how can you meet you know it the in meaningfully moved the variable cop
spk_3: and that's just the compared you know given the getting wholesale premiums and dollars in that space right now that the it that is market if you want to attract the that really good producers and and we have some
spk_33: guy and in a brand
spk_3: the twelve thirty watch the end of your loan raiders six thirty six and that's a long held for investment yes
spk_35: okay and then would with this is you know maybe st years and those good security yield was up quite a bit as well i'm in any kind of one time or to narrow that just you know you give lower yelling stop rolling off and and interested in general improvement
spk_3: i'm i'm sorry i went what one more time read broke up at the summit yeah apologize the security poor fellow yield was also have quite a bit
spk_2: this guy curious if there's anything in there that got would be one time nature now that's just okay that that's that's it and also that raid i gave you does not include mortgage warehouse said okay for more great last race not that they're bound they're not materially different and that the be honest when the ah there that they have definitely in the thick as ah but but that rate is excluded them
spk_36: okay great
spk_3: and then final they pushed beer a pitcher question of you know you got your like instruction on the some of these projects are coming to an end can get can you talk about the environment for your other folks providing you know permanent financing are you guys doing and some cases i know you're pretty cat got on theory but
spk_8: just just curious you know kind of what the environment is out there for you know some of these construction projects you know finding a new home once they are completed
spk_2: the i mean they're still they're still commerce gone on a specially and are specific markets you know you read the paper everyday about a new industrial read one is more than a huge industrial deal which is so
spk_33: because nike became the can it there and so people are still selling industrial cap rate certainly have increased a bit but there is absolute commerce dawn on making a fourth quarter we saw are paid off about four hundred me and half of that was about was a c r e project just we do so
spk_5: see that slowing down but in terms of us doing more term we have it we haven't really seen the request come in a lot of this stuff is coming out of the wreaths and and the bigger fund that people that are buying this stuff desert quality assets mainly multi and industrial or
spk_0: we haven't seen it slow down but we are certainly anticipating it slow it down
spk_37: and the agency yeah is a much more viable our than it has been in get ten year fixed rate in the seventy five seventy five range to also me i agree that big payoff yesterday and greg davis is portfolio import work at about twenty five million a let me in gotta decide this morning on it as if but they're going to fall but that
spk_38: you know
spk_20: that there there
spk_24: there there's there's viable way than it and then there's a lot of commerce on yet
spk_3: okay great thank you guys
spk_6: extracts brent
spk_3: baby one home and for questions
spk_13: or as i can confirm that only with stevens you may proceed
spk_3: hey thanks for pointing as a man that
spk_6: why go back to the credit discussion and i think clay referenced a note financing as one of the primary sources of the downgrade in the fourth quarter to just remind exactly what it is your funny and seen any types of loans and and what was the size of a specific credit that was downgraded in the fourth quarter oh it's a nice matt
spk_38: you know it it's very very granular exposure pads financing this particular virus and same small objects and flip
spk_6: the single family residences so that no
spk_2: don't give you some color all national what we're talking about their the overall know finance portfolios made up of abroad categories you know catching various products types but this particular bars very granular exposure in a single family face and then the size of that was a total commitment thought billion dollar facility am i remember quickly this isn't and you guys have been doing for for several years yes yes with a be experience and brought experience in that flat place okay until i get some you think about that at the risk care of those type the wounded and work ethic is more residential single family in a in the metro tech markets
spk_38: ah yes i mean yeah the risk is that the out on yeah slow and in that space which you know and everyone's gotta do it you have hundreds of hundreds of borrowers very very granular
spk_2: and were financing a percentage of what they finance so it the you know it's it
spk_3: sixty five seventy percent advance on and already eighty seventy five eighty percent advance so collateral values are way down there
spk_2: the reason that when he had there was that bad and operating loss
spk_3: but remain heavy and cash a very strong like apple this is a very strong company
spk_38: but we think it's know worth were quick to put stuff on under special mention when they need to be and when they showed the last that's why they ended up there we don't have any
spk_3: we're not we're now that as as no not much anxiety on our side that would ever get to the plateau this is a very very strong company
spk_2: okay great appreciate cover their and then i guess if impact on deposit i think the average depart on how the average non interest bearing deposits were down quite a bit of fourth quarter and and were seen it across the industry ah with all your all your peers and i guess a message getting from others it is
spk_3: could be more had when they're in the first half a year from the in ibiza i'm i'm curious kind of we're expectations are of of the outflows there for the bag and when you think those kids could same life
spk_2: well i think i think the outlook you just described as accurate the think it's going to continue the trend now i mean customers are as aware as i've ever seen of breaks and they're so much incentive to aggressively man's with whether the so bad you know i don't i don't think that
spk_3: i don't think we have found a we we were at the end of of that that connection going on
spk_39: but but i think that's why the the whole importance of our seen our business and we've been investing in that heavily over the last year you see it in the production side and and it's our community and our i'm see an ad that are gonna help us stabilized and
spk_40: and and get the and get the deposit road going and at you know even a you know and in they they had good years they had good quarters but but it's just it and it's face the community in commercial it's just a harder time
spk_0: yeah look at me for that terry and then i'm thinking about finding a job security for folio any any mature cashflows come off that and twenty three they could help our can have been a longer here
spk_41: well mean i think if a here's what i would say if if you look at that the loan growth at minus it had the the lumber was for forty five or forty five million roughly deposit growth with three seventy five the difference between those two and we only board twenty five million from the fhlb so we bonded forty five million dollars of one guy from the security both in earnings expect you know that fifty million dollars a quarter tight should contain the is is that the help of a there there's gonna be it's gonna be you know hundred two hundred and but hundred one to one hundred twenty million ah for the year in terms of cash flow projected to come off on the base case rates and so on

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