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spk08: Good day and thank you for standing by. Welcome to the Glacier Bancorp second quarter earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Randy Chester, President and CEO of Glacier Bancorp. Please go ahead.
spk05: All right, thank you, Kevin, and good morning, and thank you for joining us today. With me here in Kalispell this morning is Ron Cofer, our Chief Financial Officer, Don Cherry, our Chief Administrative Officer, Angela Dosey, our Chief Accounting Officer, Byron Pollin, our Treasurer, and Tom Dolan, our Chief Credit Administrator. I'd like to point out that the discussion today is subject to the same forward-looking considerations found on page 12 of our press release, and we encourage you to review this section. We remain very optimistic about the long-term position of the company, despite the lingering headwinds impacting the banking industry today. The eight Western states in which we have a presence are among the strongest economies in the U.S. We have ample liquidity, a high-quality loan portfolio, a proven banking model, and M&A expertise that is well-positioned to take advantage of the market when conditions are right. Four of our eight Western states, Idaho, Montana, Arizona, and Utah, were in the top 10 states for the highest net in migration, according to Street.com's analysis of Census Bureau data. All of our eight Western states were in the top half of the country for highest net in migration. And we are once again recognized by Forbes as one of the best banks in the U.S. Some business highlights for the quarter include Total deposits and retail purchase agreements of 21.3 billion at the quarter end increased 25.5 million or 12 basis points during the current quarter. This momentum continues into the third quarter with deposits continuing to grow. Interest income of 247 million in the current quarter increased 15.5 million or 7% over the prior quarter interest income of 232 million. Interest income in the current quarter increased $47.7 million or 24% over the prior year second quarter. Net income was $55 million for the current quarter. I'm sorry. Net income was $55 million for the current quarter, a decrease of $6.2 million or 10% from the prior quarter net income of $61.2 million. Total non-interest expense of $131 million for the current quarter decreased 4.4 million or 3% over the prior quarter and increased 1.1 million or 1% over the prior year second quarter. Non-interest income for the current quarter totaled $29.1 million, which was an increase of 1.2 million or 4% over the prior quarter, which was primarily driven by an increase in service charges and the gain on sale of residential loans. The loan portfolio of $15.9 billion increased $436 million or 11% annualized during the current quarter. The loan yield for the current quarter was 5.12%. That increased 10 basis points compared to the prior quarter, increased 60 basis points from the prior year second quarter. New loan production yields for the quarter were 7.37%, up 41 basis points from the last quarter. and credit quality continued to perform at near record levels. Non-performing assets as a percentage of subsidiary assets was 12 basis points in the current and prior quarter compared to 16 basis points in the prior year of second quarter. Net charge-offs as a percentage of total loans were three basis points. We completely paid off $335 million of higher-cost borrowings at the Federal Home Loan Bank, Stockholder equity of $2.927 billion increased 83.2 million or 3% during the first six months of the current year. Tangible book value per common share of 17.16 at the current quarter end increased two basis points from the prior quarter. The company's liquidity position remains strong with solid core deposit customer relationships, excess cash, debt securities, and access to diversified borrowing sources. The company has available liquidity of over $15 billion, including cash, borrowing capacity from the Federal Home Loan Bank and Federal Reserve facilities, unflinched securities, broker deposits, and other sources. The company declared a $0.33 per share dividend in the quarter. The company has declared 153 consecutive quarterly dividends and has increased the dividend 49 times. So we're very pleased to see the growth in deposits and repurchase agreements this quarter. Our 17 bank divisions clearly demonstrated the effectiveness of our unique business model by leveraging their local customer relationships to grow deposits. Our focus has been primarily to maintain and grow deposits with existing business and retail customers by offering attractive rate options. Most of this outreach was done strategically by leveraging the technology of our marketing platform. We also kept our focus on opening new core relationship accounts, totaling a net add for the quarter of over 4,000 net new retail and business accounts with over $260 million in new deposits. And we have continued to reinforce the importance of asking for a strong deposit relationship with all commercial and residential loans. More than 80% of the loan customers in the quarter maintain deposits with us. The Federal Reserve's historic rate increases have changed the deposit mindset for many customers. Through the cycle, beta at the end of the quarter for core deposits was 10%. And while the beta will continue to increase until the Fed stops raising rates, we still expect to significantly outperform the industry beta. Our NIN continued to show signs of pressure from the increasing cost of deposits and funding. And we expect the rate of decline in the net interest margin to moderate going forward, given the forecast for interest rates and the resulting impact on deposits. In addition, our higher loan yields on new production and renewing loans will continue to generate interest income growth. Once again, loan growth was strong across all of our divisions. Most of the commercial loan growth in the quarter was due to construction draws on previously approved loans. A majority of the construction projects are residential housing related, either multifamily or new residential. And we are very confident in the ongoing viability of the underlying projects, the borrower's ability to meet the loan requirements, and the vibrant markets in which they are located. Our capital levels are strong and growing with an estimated CET1 increasing 13 basis points from the prior quarter to 12.47%. We believe this level of capital is more than 100 basis points greater than the average of the 21 pure banks listed in our proxy. We remain confident in the dynamic western markets we serve and our unique business model to continue to deliver strong results thank you to the glacier team for delivering another strong performance this quarter so kevin that ends my formal remarks and i would now like you to open the line for any questions that our analysts may have ladies and gentlemen if you have a question or comment at this time please press star 11 on your telephone
spk08: If your question has been answered, you wish to move yourself from the queue, please press star 11 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Jeff Rulis with DA Davidson. Your line is open.
spk04: Thanks. Good morning. Morning, Jeff. Just a question. I guess first I wanted to ask about the the timing of when the FHOB advances were paid off throughout the quarter. It looks like the average rate at 533, you've got about a, you're trading nearly 100 basis points cheaper on the ETFP, but trying to get a sense for when that was pushed off the balance sheet.
spk05: Sure. Well, we were happy to pay that down. And Byron, watch that carefully. Byron, do you want to? provide the timing for that pay down?
spk02: Yeah, I want to say, Jeff, that was in June. So that was the timing of the FHLD pay down.
spk04: Got it. Okay. So presumably you haven't seen a full quarter of that trade, and I guess that would be baked into, Randy, your commentary about margin continuing to be pressured but at a declining rate. Is that fair? Yeah, that's fair. That's correct. Okay. What was the spot rate interest-bearing deposit cost at quarter end, and how did that compare to the end of March?
spk02: Yeah, Jeff, this is Byron. The spot rate at the end of June for interest-bearing deposits was 1.27%. Looking back at March, March 31, spot rate for interest-bearing deposits was 70 basis points, so 57 basis points increased March 31 to June 30.
spk04: Got it. Okay. Maybe if I could hop to the expense line. Clearly, you know, pulling a lever there to offset some of the top line pressure. Wanted to see if there's anything kind of one time in that 130 and change level and maybe just expectations for the back half of Do we grow off that base or any commentary on costs?
spk05: Yeah, hi, Jeff. This is Ron. I appreciate the question. Nothing really one time in that $130.6 million. And I just want to shout out to the division, the corporate department, doing a great job, you know, very mindful of hiring. And we had a reduction in our FTE costs. between Q1 and Q2 of 20, but more importantly, over the year, we've had a reduction of 70 year-over-year in the FTE, so appreciate their focus on that. The guide is, I'm going to take it from 132 to $134 million for Q3. Simple reason, there is persistent inflationary cost pressures Even though I think we do a very good job managing the vendors, we're still seeing pressure that I think will show up certainly in the third quarter and probably continuing into the fourth.
spk04: So pretty confident in that. Ron, just to clarify, that was 132 to 134 range for Q3? Correct. Okay. And presumably within that ballpark in Q4?
spk05: Yes, right now.
spk04: Okay. Okay. Fair enough. And maybe just a last one for me on the beta. Randy, you mentioned that. I guess any update to both the kind of terminal beta expectation on total beta or interest-bearing beta or both?
spk05: Yeah, I think we've spent a lot of time looking at that because of some of the changes in the Fed, and there's been a lot of, activity there. So Byron, maybe you can walk Jeff through the current thinking on that.
spk02: Sure. Yeah, Jeff, last quarter when we reiterated the 15% through the cycle beta on total deposits, we noted at the time it was a good estimate, but really dependent on what the Fed does. If you go back to where we were in April, The market was looking for Fed cuts in the back half of the year. Now we're looking for one, maybe two more hikes in the back half of 2023. So if you look at market expectations for year-end Fed funds, it's now 100 basis points higher today than it was in April. So clearly that has had an impact on our deposit pricing outlook. So given the rate environment, we do need to adjust our deposit beta assumption. We're now using 25% as our through the cycle beta for total deposit costs.
spk04: Okay. Got it. Thank you. I'll step back.
spk07: One moment for our next question. Our next question comes from Matthew Clark with Piper Sandler. Your line is open.
spk03: Hey, good morning, and thanks for the questions. Maybe just a little more on the NIM. Do you happen to have the average NIM in the month of June?
spk05: Let me take a look. So for June, we can give you that, Matthew.
spk02: Month of June, the NIM was 267. Okay, thank you.
spk03: And then just on expenses, I think in prior quarters you talked about, you know, doing a lot more with less and the need for, you know, having a lot of open vacancies on, you know, in terms of your workforce. I guess, has something changed? I know the environment's obviously changed a little bit. But can you just maybe update us on your thoughts on kind of the resources you have internally and whether or not that's still the case, whether or not you need more?
spk05: Yeah, and Ron might have a little extra color. So yeah, we're still seeing some of that dynamic play out. So in the first quarter, certainly, we had less hiring than expected. And every quarter, now we do a bit of a bottoms up approach, where we go back out and see if the open positions are needed. So some of what's going on is some of the new technology that we've talked about, so a new commercial loan origination processing system, a new account opening platform, new construction management platform. People are getting used to that and I think as they begin to see some of the efficiencies, you know, we're starting to see that. So we saw a pretty good-sized adjustment in the first quarter. Ron, you want to comment on what we're seeing now? Yeah, it just continues the – just expand a little bit further on what Randy was saying. So the pilot division had great success. That's the beauty of our model. We don't have to force it down, you know, all 17 divisions. And so it's really accelerated as people are seeing the benefits, and they're not staffing to the old model. their staffing to the technology improvement.
spk03: Okay, great. And then last one for me, kind of a two-part question. Can you give us a sense for criticized classified trends in 2Q versus 1Q? I didn't see anything in the release. And then any update on office theory? I think it's about 10% of your book. whether or not you guys have done a deep dive and kind of what you're seeing there as well.
spk05: Yeah. Criticized class. Why we've never really, um, talk, disclose that just because there's a lot of subjectivity. Tom can give you a little color though. I think it's, um, very positive and, um, certainly commercial real estate office. We can give you a, um, maybe step back and give you the, uh, context that we look at when we think about that. And, um, where we feel that's going. And obviously, we feel good about it given, you know, kind of our markets and how we're positioned. But, Tom, you want to comment on that? Sure. Yeah, Matthew, on the cruise life class, what I'll say is it's continuing to trend in a positive direction. So we continue to see, you know, migration towards the less risk side of the loan portfolio. which, you know, we're certainly happy to see that. We're currently near record lows, just like we see on the NPA side. And then on the office, you know, obviously our portfolio in the office book really matches the footprint. The office is located in a lot of foods and jeans communities, just like where our divisions are located. So, you know, compared to some other portfolios and certainly a lot of the press around the office of real estate, that doesn't really match our portfolio. The average loan size is $680,000. It's split about 50-50, owner, non-owner. And in terms of performance, especially on the adverse, non-performing side, it's outperforming the rest of the portfolio. So it's really a different office segment to what we're seeing pressure in in the markets. very limited exposure to metropolitan areas and almost zero exposure to central business districts, no high rises. There's not a single office loan in the portfolio above $20 million. So it's really a collection of small single story kind of split between owner and non-owner office.
spk07: Okay, thanks again. One moment for our next question. Our next question comes from David Feaster with Raymond James.
spk08: Your line is open.
spk10: Hey, good morning, everybody.
spk08: Morning, David.
spk10: Maybe just going back to the funding side, I'd be curious if you could elaborate maybe on some of the trends that you saw throughout the quarter. You know, just kind of looking at the numbers, it looks like The majority of the NIB outflows happened maybe a bit earlier in the quarter. Just curious how flows were on NIB balances throughout the quarter, whether they stabilized, you know, some of the key drivers of that. Was it taxes? Was it, you know, more outflows from, you know, the failures? And whether you've seen kind of NIB balances stabilize early into the 3Q and, you know, late in the quarter into the early 3Q? and just ultimately whether that plays into the stabilization and deposit costs as well.
spk05: Yeah. So let me take a shot at some of that, and then Byron will probably have some more comments. We did see the outflow decelerate throughout the quarter. And so a lot of things happening here with tax payments and some other things going on. You know, over 60% of those balances stay with us. So even though they leave one category, they move to another. So we're retaining those within the company. But there is, given the, you know, what's going on with the Federal Reserve and now the consciousness around rates, that's obviously changed a fair amount of that dynamic. Around 80% of those are tied to operating accounts. And so... there we're actually starting to see, you know, as the tourist season kicks in, some of those accounts then, you know, start to replenish. So kind of feel like the biggest move there has occurred and, you know, we'll probably still see some continued outflow, but just not at the same rate that we did in the, you know, in this quarter. Byron, did you want to? cover anything there or add anything?
spk02: Yeah, David, you're exactly right. Noninterest-bearing outflow has happened early in the quarter. And by the time we got to June, we did see some outflow, but very, very modest. I'm looking at the noninterest-bearing outflow in June was only $31 million. And that has carried forward into July, still seeing just a tiny bit of outflow, but very, very modest. So did see some strong trends throughout the quarter in terms of stabilizing deposit balances and really encouraging signs that are strong seasonal summertime dynamics are gaining traction here as well. So I think that's having a big impact on our outlook for third quarter deposits.
spk10: And did deposit costs kind of have a similar trajectory, again, mostly front-end weighted and kind of a stabilization in May to June? Is that a fair characterization?
spk02: I do think deposit costs, probably the increase in deposit costs was closer to the back half of the quarter than the front half of the quarter, related to some special pricing that we had and other initiatives in place.
spk10: Okay. And then maybe just touching on the deposit growth side, I mean, it's great to hear you talk about 4,000 new accounts growing. I'm just curious where you're seeing success attracting clients. Obviously, you talked about some of the seasonality, but just curious maybe some of the deposit growth initiatives that you have in place to drive core deposits and ultimately kind of how that plays into – the deposit growth going forward and when we can start paying down, you know, some of the borrowings and those higher cost wholesale deposits, you know, when do you think you can start doing that? Because that ultimately plays it kind of to the NIN trajectory going forward.
spk05: Yeah. Let me take the first part of that and then Byron, if you want to take the thoughts around the pay down. A couple of things, David, number one, we're very happy that the bulk of this is, Bulk of the growth is existing customers, and so we've always had very good relationships. We had a decade of being very passive about reaching for deposits. That's all changed, and so the team has really done an excellent job leveraging what we already have, which is the relationship with the customer to pull that in. We include repos as part of when we include deposits. We just view that very much as a secured deposit. And so when you look at total deposits from our perspective, deposits and repurchase agreements, we were up. And we did use a fair amount of technology with our marketing platform that really allows us to target within the portfolio, the customers that we think are, you know, good candidates to make an offer to in terms of an increased rate and being careful not to cannibalize a very, very solid foundation of stable, sticky deposits. The new accounts, I mean, that's something we've done for decades. It's our continual focus. on bringing new accounts into the bank with a very attractive low barrier product for both business and retail free. It works very well. And with the in-migration numbers that I kind of touched on at the beginning, we're still now at a lesser rate, but we're still opening a lot of new accounts from people from California, Texas, and other markets. That's part of that 4,000 new net new accounts we opened. And we are, you know, have an increased emphasis now on bringing deposits with those new accounts. That's the $260 million in new deposits. The last thing I'll say, I'll hand it over to Byron to kind of touch on the thoughts around the paying down the debt, is that the lending team has done an excellent job with all the – asking for the deposit relationship along with that. So when we took a look this quarter, more than 80% of the loans made, you know, we had a deposit relationship with the customer. So that's really the kind of three-pronged strategy that we'll continue to pursue. That's worked very well for us and, you know, feel like that strategy will continue to be very, very effective. Byron, you want to touch on the pay down thoughts?
spk02: Sure. Yeah, David, I do think that we're going to have an opportunity this quarter to chip away at our wholesale brokered deposit balance. We've, of course, already paid off our FHLB borrowing, so made as much progress there as we can. But to the extent that we're able to see some of these early signs in July, the seasonal trends and the and the good flows that we've seen so far, months to date in July, if those are able to stick and continue through the rest of the summer, as we expect they will, that will give us some flexibility to pay down some of our broker TV balances. Okay.
spk10: That's helpful. And maybe last one from me, just touching on the growth side, it sounds like the majority of the CRE growth was construction, and you guys had kind of alluded to that before. I'm just curious, maybe the pulse of your clients at this point, how's demand exclusive of those construction fundings and the pipeline and where are new loan yields and just what's your thoughts on growth going forward and your appetite for credit?
spk05: Yeah, this is Tom. I can touch on that. So overall demand, you know, certainly we're not seeing the same level of top line volume given the higher rates and, you know, the fact that we're more selective in our credit appetite. I mean, we've always been selective for decades and very conservative, probably more so even now. So as Randy mentioned, a lot of the growth in the first quarter and the second quarter was due to draws on existing construction loans. I would expect it to decelerate in the next couple of quarters. We'll probably see a little bit of slowing in Q3, Further slowing in Q4 as tailwinds from those construction draws start to abate and those projects are finished, they're rolled into perm. And then, of course, as I mentioned with the lower top end volume, we'll probably see overall net loan growth start to slow in the late half of this year and certainly in the 24th.
spk07: That's helpful. Thank you. One moment for our next question. Our next question comes from Andrew Terrell with Stevens. Your line is open.
spk01: Hey, good morning.
spk08: Good morning, Andrew.
spk01: Maybe just for Byron really quick, do you have the spot costs on the customer repurchase agreements at the end of June for this quarter?
spk02: Yeah, spot costs for repo accounts June 30 was $299. Okay.
spk01: And then just trying to wade through the last of the margin here. I hear the level of compression, at least sequentially, should slow from here. I guess, would you still anticipate margin compression in the third quarter versus the June margin of 267?
spk02: From what we're looking at, it's going to be pretty close. I think it's going to be pretty close to 267. You know, that June number should, you know, from what we're looking at on our full quarter expectation for the third quarter, it should be pretty close to that same level.
spk01: Okay. Got it. And then just the – I think you guys mentioned $230 million of new client deposit growth earlier in the call. Can you just talk about what the incremental funding or deposit cost is related to that $230 million, or just more broadly how the incremental deposit cost compares to new loan production yields that I think are in the low sevens?
spk02: A lot of the, you know, a portion of the growth, as you can tell from our balance sheet, is coming from our CD portfolio. And I want to say the average rate of our, you know, new issue CDs in the second quarter was between, well, something close to like 470, 475 is what I want to say the new rate was. Okay. The other thing I'd say is,
spk05: A good portion of those balances are just in the transaction account. So now savings and the spot rates on those are under 50 basis points.
spk01: Got it. Understood. And maybe for Ron, on the operating expense line this quarter, specifically the comp and employee benefits, was there any material change in the a deferred origination cost this quarter that might have helped bring that expense or the comp line down? No. If so, can you quantify?
spk05: Very, very little impact from that because we grew loans in the first quarter and the second. There wasn't any appreciable difference in that growth rate that would have an impact to any degree on the deferred compensation side of it.
spk01: Understood. And then maybe one last one for me, if I could sneak it in. It looks like the dividend payout ratio was kind of approaching 70% this quarter, and it sounds like there will be a little more margin compression. I just maybe wanted to get a sense for the comfortability with the dividend. Where is that today?
spk05: Yeah, I think we're very comfortable with it. You know, we've got very strong capital. It's an important part of the strategy. We think the margin compression over the longer term is a shorter-term problem that will right itself in 24. So we're very comfortable at those levels.
spk01: Okay. Thanks for taking the questions.
spk07: One moment for our next question. Our next question comes from Brandon King with Truist.
spk08: Your line is open.
spk07: Hey, good morning. Morning, Brandon.
spk09: So all the NIM commentary is helpful, but from an NII perspective and with the assumptions of maybe one to two more Fed rate hikes back after this year, what do you think NII could stabilize going forward? And also maybe assuming next year Fed funds are stable.
spk02: Yeah, one of the things that I would point you to is, you know, is the Fed. I think once it becomes clear that the Fed is done, that's when you'll see our margin and NAI stabilize. So I think it's really dependent on, you know, how far they go. Is it one more hike? Is it two? You know, how long do they, you know, is it an extended pause, you know, higher for longer? These are all considerations that are going to you know, have an impact on our margin in the AI.
spk09: And do you think there's a quarter to lag after a pause to reach stabilization, or do you think it'll be pretty immediate?
spk02: We could see a little lag. There could be a quarter's worth of lag in that before we start to see, you know, stabilization. So I think that's a fair way to think about it.
spk09: Okay. And then with loan repricing, average loan yields were up 10 basis points sequentially. And I know you have a lot of fixed rate and adjustable rate repricing coming online, but is that a good kind of 10 basis points a quarter? Do you think is that a good trajectory as far as what you could see from a benefit from loan yield repricing?
spk05: Yeah, Brandon, it's Ron. I think we'll do better than the 10 basis points. Wade on that this quarter was the construction draws. Yeah, we're getting higher rates, but, you know, some of those loans were made first, second quarter last year, and so they're still advancing. But, yeah, I expect better than 10 basis points.
spk09: Okay. And then just lastly, there was a decent uptick in service charges. I wonder if there's anything one time in nature driving that and just more context around it.
spk05: No, that's a function of usage and seasonality. So, no, that's typically what we see in this starting in the second quarter, a little bit of a pickup.
spk09: Okay. And that's a good base to go off going forward, correct? I think so, yep. Okay, that's all. Thanks for taking my questions.
spk07: You bet. One moment for our next question. Our next question comes from Kelly Motta with the KBW. Your line is open.
spk00: Hi. Good morning. Thanks so much for the questions. I apologize about beating a dead horse about deposits and margin, but if I could, I'm going to do it. When it comes, I appreciate all the call, Ron, and Byron, about the deposit data, but When it comes to your commentary about deposit data, I'm just wondering what that assumes as far as DDAs as a percentage of total deposits. Obviously, there's been a lot of focus on that lately with runoff across the industry.
spk02: Yeah, I think we will continue to see a little bit of runoff in the non-interest bearing. That pace is going to, we think, materially slow, but I think we'll maintain at concentration greater than 30% of non-interest-bearing total deposits.
spk00: Got it. Thanks for that. And then, again, I really appreciate the June margin at about 267 and the commentary around kind of the outlook there. Just trying to get a sense Is that kind of assuming we get one or two more rate hikes, is that a good estimate of where margin troughs based on kind of just putting together everything? Or is there still more pressure off of that 267 to go? I know there's a lot of moving parts of the FHLB pay down that happened during the month, which I'm not sure is fully reflected in that 267.
spk02: Yeah, in terms of our, you know, the rate outlook that we're using to model and make some estimates of a forward-looking margin, we do have two more hikes in there. And so, you know, I think the third quarter will be influenced by one more hike. The fourth quarter would be influenced by, you know, potentially a second hike. And that's just an estimate that we're using in our own model.
spk00: Okay, so under that, would you anticipate additional pressure and kind of where we're assuming that that's a trajectory that rates follow? Do you have an idea of that level and the timing of when margin would trough?
spk02: That does put additional pressure on our fourth quarter margin relative to the third quarter. Where it troughs would probably be first or second quarter of next year, assuming that, you know, two hikes and they're done.
spk00: Got it. And then, so that seems to imply that there could be some relief thereafter, you know, should the Fed be done. Kind of rounding out the margin question for me there, do you have a sense of where margin could exit 2024 then under that scenario? sort of set of assumptions, given what you're seeing on the funding side, as well as the repricing of your loans higher.
spk02: Yeah, Kelly, sorry, we haven't looked that far out, but we'll have to dig into that and get back to you on that expectation.
spk00: Got it, got it. And I guess finally, last one for me, I know you mentioned the brokerage funding that you put on during the quarter and mentioned that there might be some opportunity to pace some of that down this upcoming quarter, depending on if you get the seasonal inflows. Can you just kind of remind us the cadence of when that brokered funding matures and how we should expect either the, I guess, the roll off of that as we get through the next year or two?
spk02: Yeah, most of that will mature within the quarter. Most of the issuance was one, two, three months when it was done. We did dabble a little bit of six-month maturity, but I would say the lion's share of the $475 million will mature within the third quarter and give us an opportunity to evaluate, do we roll it or do we allow some runoff to happen based on where we are at that point in the quarter with core deposit flows. I think the core deposit flows will determine how much we let runoff.
spk00: All right, thank you so much for the questions. I'll step back.
spk07: You're welcome. One moment for our next question. Our next question comes from Tim Coffey with Janie Montgomery.
spk08: Scott, your line is open.
spk06: Thank you. Morning, everybody. Morning. Randy, I had a question about kind of asset levels. By the end of this year, if we look back at total assets on a year-over-year basis, Is it more likely to be flat to slightly up or flat to slightly down? Total assets? Yeah, just the size of the balance sheet.
spk05: Yeah, it should be slightly up given our loan growth and expectations on deposits.
spk06: Okay. And then can you remind me again what the cash flow is coming off the securities portfolio?
spk05: Yeah, interest in principle right now is about $300 million a quarter.
spk06: Okay, so no big change from the previous quarter. No. And then on the construction loans that you're doing, a lot of housing stuff in there, is there any read-through to your mortgage origination and sale business line?
spk05: Is there any – what was the question, Tim? Is there any read-through? to the mortgage business? Do you mean a connection between the construction loan and an ultimate residential mortgage?
spk06: Yeah, if there's more supply on market, are you seeing more volume in the mortgage business?
spk05: So, yeah, we were up this quarter, so you saw the gain on mortgages increase. So, you know, we had more locks this quarter than the prior quarter. We're happy to see that. You know, that... is leveling off and it's really supply driven. There's just not enough housing. The new construction is a big part of what we see people moving into now. There's just not a lot of resale of existing homes because the people are hanging on to their low fixed rate that they have. That's what we see happening now. So, you know, our expectation on that gain is probably to stay right at that range, maybe be a little softness to it depending on the supply.
spk06: Okay. Great. Those are my questions. Thank you very much for your time.
spk08: Sure. And I'm not showing any further questions at this time. I'm going to turn the call back over to Randy for any closing remarks.
spk05: All right. Thank you, Kevin. and just want to thank everybody for dialing in today. A lot going on in the industry, so appreciate you taking the time. Have a great Friday and a great weekend. Thank you.
spk08: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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