FB Financial Corp Q2 FY2025 Earnings Call

Good morning, and welcome to FB Financial Corporation's Second Quarter 2025 Earnings Conference Call. Hosting the call today from FB Financial are Chris Holmes, President and Chief Executive Officer; and Michael Mettee, Chief Financial Officer. Also joining the call for the question-and-answer session is Travis Edmondson, Chief Banking Officer. Please note FB Financial's earnings release, supplemental financial information and this morning's presentation are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the Securities and Exchange Commission's website at www.sec.gov. Today's call is being recorded and will be available for replay on FB Financial's website approximately an hour after the conclusion of the call. During this presentation, FB Financial may make comments which constitute forward-looking statements under the federal securities law. Forward-looking statements are based on management's current expectations and assumptions and are subject to risks, uncertainties and other factors that may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements. Many such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned not to put undue reliance on such forward-looking statements. A more detailed description of these and other risks that may cause actual results to materially differ from expectations is contained in FB Financial's periodic and current reports filed with the SEC, including FB Financial's most recent Form 10-K. Except as required by law, FB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures to comparable GAAP measures is available in FB Financial's earnings release, supplemental financial information and this morning's presentation, which are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the SEC's website at www.sec.gov. I would now like to turn the presentation over to Mr. Chris Holmes, FB Financial's President and CEO.

All right. Good morning, Betsy, and thank you to everyone for joining us on the call this morning, and thank you for your interest in FB Financial. For the quarter, we reported EPS of $0.06 and adjusted EPS of $0.88. We've grown our tangible book value per share, excluding the impact of AOCI at a compound annual growth rate of 12.2% since our IPO. The second quarter turned out to be a very busy quarter at FirstBank and across the industry. At FirstBank, the quarter began on the heels of our merger announcement with Southern States on March 31. The very next day, our teams hit the ground running, and we quickly deployed our integration working group, began the regulatory application process and started mapping out systems, processes and people across the two organizations. I'm particularly proud of the teams from both companies and their responsiveness and ability to execute in such a short time frame. Within approximately 90 days, we announced the merger, applied for and received regulatory approval and legally closed the transaction. In addition to closing the transaction, we put ourselves on track to fully convert systems, rebrand locations and markets and integrate teams by the end of Q3. During this quarter's execution, we're also very diligent about continuing to update our acquisition playbook. So we're compounding knowledge from each transaction. We're set up very well to continue to pursue opportunities like the one with Southern States. Simultaneously to the efforts on the transaction, April 2 brought some major news from global economies and markets and our communities. Policy announcements out of Washington, the Liberation Day began impacting trade policy and financial markets with the announcement of reciprocal tariffs across a broad range of goods and impacting a host of nations that trade with the U.S. Financial markets saw increased volatility on the news, and we began reviewing and dissecting customer profiles to identify those that might be impacted by these policies. As the U.S. engaged in trade negotiations and made announcements of tariff delays and newly negotiated deals, we saw increased speculation in markets and volatility during the quarter. Today, it seems like the financial markets have digested this activity along with other geopolitical events and have become a bit more optimistic on the path forward. And our view matches that optimism. As I stated in the last quarter, whether we're faced with prosperity or uncertainty, we stick to our core beliefs and our mission remains to build a better future for our customers, associates, communities and shareholders. History shows that times of uncertainty or change bring the greatest opportunities, some of the greatest opportunities for success. For those that are disciplined and prepared, our teams are smart and capable. Our foundation is solid and our geography is favorable. It's because of these things that we have confidence regardless of the economic conditions or financial landscape. In the midst of a quarter filled with distractions and heavier workloads across our executive, administrative and operational teams, at the front line, we were still able to deliver a solid quarter of operating results. In addition to the activities I've acknowledged, we also executed a significant securities transaction in the quarter, selling approximately $266 million of our investment securities at a pretax loss of $60 million. The impact of this transaction is seen in our GAAP results for the quarter, where we reported pretax pre-provision net revenue of a negative $4.4 million and net income of $2.9 million. On an adjusted basis, which primarily emanates from onetime events like the securities trade, our pretax pre-provision net revenue was $58.6 million, which was a PPNR ROA of 1.81% and net income of $40.8 million. During the quarter, we grew both sides of the balance sheet on a period-ending basis. We grew loans at an annualized rate of 4.2% and deposits at an annualized rate of 7.2%. The growth numbers, while better than most, we consider to be pedestrian, but we continue to be optimistic about the second half of '25 and 2026 given the economic outlook, market strength and pipeline activity. Our annualized growth through the first 6 months of the year was 5.6% in loans held for investment and 3.4% in total deposits, and we remain on track for the mid- to high single-digit growth targets we have for ourselves. As I look forward to the second half of the year into 2026, I'm very bullish on three key areas for the company: our earnings profile, our growth prospects and our balance sheet strengths, all of which enable us to grow value for our shareholders. First, on our earnings profile, in the near term, the transaction with Southern States adds immediate scale and accretive earnings to the company. And with our speedy deal execution, we'll begin to see positive impacts from the deal in the third quarter. In the long term, this deal strengthens our franchise in key cities where we operate today, principally Birmingham and Huntsville, while also expanding our franchise contiguously into new markets in Georgia and Alabama, where these new markets actually include a number of communities with strong growth prospects benefiting from their adjacency to metro Atlanta. Additionally, this quarter's securities restructure transaction further adds to our earnings momentum for both the second half of 2025 and '26. Secondly, our growth prospects. Growth is one of the foundations of success in banking and it broadly comes in two forms, organic and inorganic, and we're bullish on both forms. Organically, our markets continue to present us with opportunities to hire talented professionals and grow our new relationships. We also see opportunities on the horizon to capitalize on market disruption coming from upstream M&A activity across the industry. These put us in an enviable position. Inorganically, we're in a favorable position to see additional opportunities similar to the deal we just closed in early July. And finally, we continue to be in a solid position on capital, liquidity and credit. As a result, we're able to be on our toes and play offense at a time when competitive market forces remain challenging to navigate for banks. The regulatory environment is reasonable and bank valuations could get closer to historical levels. We think these conditions present opportunities, and we're excited about those possibilities. With that, I'm now going to turn it over to Michael Mettee, our CFO, to provide a deeper look at our financial results for the quarter as well as commentary around our guidance going into the second half of the year. Michael?

Thank you, Chris, and good morning, everyone. As Chris mentioned, it's been a busy quarter at FirstBank. I'll take a few minutes to walk through this quarter's earnings, and then I'll provide some forward-looking commentary on the second half of the year. Net income on a reported basis for the quarter was $2.9 million or $40.8 million on an adjusted basis, the large disparity being the securities loss that Chris referenced earlier. On net interest income and margin, we reported net interest income of $111.4 million, which represents a 3.5% increase from the prior quarter and an 8.6% increase from the same quarter last year. On a tax-equivalent basis, we expanded our margin by 13 basis points in the quarter from 3.55% to 3.68%. We achieved this through a mix of loan growth and the cost of funds management, namely through managing down higher-cost non-relationship-based deposits. And on a dollar basis, we also benefited from an additional day in the quarter. In noninterest income, we reported a loss of $34.6 million, and that's a result of the $60 million securities trade. Absent the loss, our core noninterest income was $25.8 million, which represents a 9% increase over last quarter and an 8% increase over the same quarter last year. These gains were led by stronger swap fees, higher mortgage banking revenue and a number of other increases across our fee categories. On the security sale, we decided to sell a group of securities that were earning 1.6% in aggregate. And we'll do a couple of things with those proceeds. First, we'll look to redeem our subordinated debt and our trust preferreds in the third quarter. And second, we'll retain the remaining capital and cash as a way to front-run our loan growth needs going into the second half of 2025. Towards the end of June, new loan yields were coming in over 7%. So all in, we estimate this transaction and our planned deployment of funds will give us a yield pickup of approximately 6% with a payback period of less than 4 years. Looking at expenses, we reported total noninterest expense of $81.3 million or $78.5 million on an adjusted basis. Our reported number includes $2.7 million of merger and integration costs, and you can expect to see that line item peak in the third quarter as we've now closed the transaction and will soon convert and integrate Southern States and FirstBank systems onto unified platforms. On an adjusted basis, our core efficiency ratio improved to 56.9% from last quarter's 59.9% and the same quarter last year where we reported 58.3%. Last quarter, we had some seasonal HR-related expenses for stock compensation, and those did not repeat this quarter. This was partially offset by increased salary expense for the first full quarter of annual merit and increased headcount in production-based roles within the organization. Moving on to credit. I first want to highlight, and you'll see them mentioned in our deck that we migrated to a new allowance model during the quarter. Our new model is designed to increase the granularity of our inputs, improve the precision of our forecast and enhance our ability to review and challenge modeled results. We'll account for this change in estimate, and you can expect to see the disclosures effect in our 10-Q filing in August. While there were some movements between the underlying components, in the aggregate, the model change had a net impact on the company's reserves of approximately $395,000. Provision expense for the quarter was $5.3 million, which includes the $395,000 for the model change. The remaining amount was driven by loan growth in the quarter, along with updated forecast assumptions in the model. The ending balance of the allowance for loan losses was $149 million or 1.51% of our loans held for investment balance compared to $151 million or 1.54% last quarter. The ending balance in the reserve for unfunded commitments was $12.9 million, and the increase was largely driven by the model change. Charge-off levels were muted this quarter as we reported $481,000 in net charge-offs or an annualized net charge-off rate of about 2 basis points. Nonperforming loan balances did increase this quarter as we had three large credits migrate into that classification. We've been monitoring these credits for a few quarters now. Each is well secured, and we believe the loss content within each of those to be negligible. To close out my commentary on the income statement, I'll take a minute to touch on taxes for the quarter. This quarter, our total tax number was a benefit driven by a few key components. First, our reported pretax income figure for the quarter was negative as a result of the $60 million securities loss that I previously touched on, which created a tax benefit. Second, we had a one-time tax benefit of approximately $10.7 million in our tax line related to the statute of limitations expiring on an amended tax filing. The filing was handled properly and in a timely manner by the company, but ultimately was not accepted by the IRS, resulting in the return of funds to the company. In total, the return amount was $8.7 million. Additionally, we released $2 million in accrued interest on the previously owed amounts, which we released through tax expense upon the closure of the matter. Looking at the balance sheet, we did see both loan and deposit growth during the quarter on an ending balance basis, but we expected more. As Chris outlined, this quarter did bring unexpected macroeconomic headwinds. As a result, we did see a number of deals in our pipeline get pushed to the second half of 2025 as many customers took a temporary wait-and-see approach to the uncertain and volatile market conditions. Loan growth in the quarter was concentrated within residential mortgage buckets as 1 to 4 family and lines of credit increased $56 million in aggregate as well as commercial real estate non-owner-occupied balances, which increased $45 million. On deposits, we saw an uptick in both noninterest-bearing and money market accounts as our community and metro banking teams continue to focus on growing relationships across the footprint. Broker deposits were up in the quarter, which was largely a product of our liquidity management strategy. Interest-bearing checking was down as we deliberately managed down a pool of higher-cost non-relationship deposits. Looking at average balances in the quarter, we did see the balance sheet shrink as we saw a decline in both total assets and total liabilities, primarily due to the timing of balance movements within the quarter. Averages were impacted by the deliberate runoff of higher-cost deposits that I just mentioned, which also drove the average balance decline in cash. Conversely, ending balances were impacted in large part by a large short-term public funds deposit that we retained in cash due to its short-term nature. Also reflected in cash were the proceeds from the security sale, which we'll deploy in due time. Both of those transactions took place right near quarter end. All right. So I'll take a moment to provide some thoughts on full year '25. With the completion of the Southern States merger on July 1, our view going forward will be on a combined basis. Obviously, we'll be working through some combination in the most efficient, effective way possible. So the timing of the levers we're pulling may vary as we get into conversion. On net interest margin, we expect our net interest margin to be in the 3.70% to 3.80% range in the back half of the year. That includes the reinvestment of proceeds from the security sale this quarter and the incorporation of Southern States' balance sheet. The team at Southern States was also very busy in the quarter, and they restructured their investment portfolio using the funds to pay off wholesale and broker deposits while optimizing capital treatment associated with their investment portfolio. The remaining proceeds from the investment sales will be utilized in the combined company to reinvest into loan growth. In noninterest income, we expect to see modest growth across various lines as we remain focused on increasing total relationships. From a noninterest expense standpoint, we continue to have confidence in our modeled cost savings that equate to approximately 25% of Southern States' annual noninterest expense. As a result, our banking noninterest expense should land between $285 million to $295 million for the full year '25. On a combined FirstBank and Southern States basis, we anticipate our core banking efficiency ratio to be in the low 50s by the fourth quarter and achieve our targeted 50% efficiency ratio in 2026. Southern States' standalone efficiency ratio is historically lower than ours. In the near term, we'll also begin to see the benefits of deal synergies that we previously modeled. Simultaneously, in our legacy FirstBank franchise, we continue to drive our teams toward internal expense goals, which are more aggressive than some of the outside expectations. Acknowledging that we did have extra noise in our tax line item this quarter, I want to reiterate a forecasted effective tax rate in the 21% to 23% range for the remainder of the year. On the balance sheet, we'll continue with our strategy of working down noncore high-cost deposits, which will weigh on our average earning assets. By year-end, this will be offset by core loan and deposit growth. Finally, on capital and liquidity, we'll continue to deploy our excess capital in meaningful ways to drive shareholder value while maintaining a safe and sound position for our company. With that, I will pass the call back to Chris.

All right. Thanks for the call, Michael. As you just heard, we did have a lot of moving pieces in the quarter. Even with the added layers of various onetime items, our team was able to deliver strong core earnings, all while preparing for the closing of a large transaction. I'm proud of the way our team was able to walk and chew gum this quarter, and you'll continue to see that versatility from our team as we move forward. Thank you again for your interest in FB Financial. And operator, at this time, we open it for questions.

The first question today comes from Catherine Mealor with KBW.

My first question was just to circle back on your margin guidance of 3.70% to 3.80%. So just kind of thinking about how I model the balance sheet going into next quarter. It looks like you said from SSBK, you've restructured or sold most of that bond book. And then, of course, we'll have the reduction in securities from your own restructuring this quarter. So is it fair to say in terms of bonds, like we shouldn't bring over basically any securities from SSBK and then model kind of reduction from the bond sale and then all those proceeds are going to lower borrowings and then up until loan growth? Is that an appropriate way to think about that?

Yes, that's right, Catherine. And we're bringing over virtually nothing from the investment portfolio other than the small slug of held-to-maturity that we're moving to AFS. Keep in mind, their investment portfolio had a yield of around 4.40%, which is basically where it's sitting in cash. So it's much more about paying down brokered. The risk weighting on the investment portfolio was a little bit higher than we typically have at FBK. And so there was some capital optimization. And then over the back half of the year, pending the timing on loan growth is where we'll deploy the rest of those funds and ours.

Okay. That's great. Regarding loan growth, could you discuss the mid- to high single-digit growth you reiterated? Can you provide some insights into the pipeline? Chris, you mentioned several credits that you expected would close in the second quarter but were postponed to the latter half of the year. Do you still believe these credits will fund? Is it mainly a timing issue? I would appreciate your thoughts on what your clients are currently doing.

Yes, we haven't altered our outlook from previous discussions we've had during earlier calls or meetings with investors. We still anticipate growth in the mid- to high single digits. As you know, the timing of quarters can affect results; for example, if you analyze data five days earlier or later, the figures will vary when assessing period-end balances. We did experience a couple of significant payoffs this quarter that were expected, but the timing of such events can be uncertain. Additionally, we noticed some funding activity had been slightly delayed, as some clients are less eager to finalize deals compared to a year ago, though not drastically. In general, however, customer activity remains strong, and clients are generally optimistic about moving forward with their projects and business initiatives.

Yes. Catherine, this is Travis. I would agree with Chris. Our activities were very strong in the second quarter as far as new loan originations. What we didn't anticipate was some of these payoffs that Chris alluded to. We expected them eventually, but not in the second quarter. Our pipeline remains strong. What we can't forecast and what we're trying to just understand is if the payoffs are going to continue at a more rapid pace than they have historically.

Great. It was encouraging to hear you mention that you're still achieving new loan yields over 7%. Is that the correct figure you provided?

Yes, that's right. We've actually seen it tick up slightly higher in July. The yield curve is an interesting dynamic. It changes, as you know, every 30 seconds. It doesn't look like a whole lot of relief for longer-term rates. We'll see what happens on the short end, but the team is doing a good job. Of course, the Southern States team traditionally has had a higher-yielding portfolio as well. We're pretty optimistic.

I wanted to start on the mortgage banking numbers and the commentary or the higher provision this quarter and the comment in the slide deck about some higher LTVs making a provision for those. Can you elaborate a little bit further on the provision for mortgage in 2Q? I also wanted to hear if the change in the ACL, if that was driven by anything in particular?

Yes, Brett, you made a good point. The advantage of our new model is that it allows us to analyze our loan portfolio in more detail. The previous model relied on an economic forecast from Moody's, while our current model is based on discounted cash flow analysis. We have separated our higher loan-to-value residential mortgage portfolio from our traditional 1 to 4 family loans in this analysis. Regarding this quarter, we still incorporate the Moody's forecast along with Bloomberg and MBA data. We've observed that home price appreciation has stabilized, which is evident across the country. Additionally, the unemployment forecast has increased for the latter half of the year. These factors significantly impact the high LTV portfolio, leading to noticeable losses. This situation prompted us to increase reserves in mortgage banking. We want our mortgage team to concentrate on generating pre-provision net revenue and maintaining a profitable operation. Naturally, we aim to avoid accumulating loans that may incur losses, but the older 100% loans we originated over the past 3 to 4 years have been considered collectively. This explains the adjustments in our modeling. We did not introduce a significant number of 100% loans in the second quarter that would necessitate substantial reserves.

Okay. That's helpful. Chris, I'm sure you were expecting this question, but you seem quite positive about ongoing activity in the banking sector for mergers and acquisitions. Do you have any updated insights on how you envision the environment developing for your team? You'll be approaching $20 billion after SSBK, so I'm trying to understand the range of opportunities you might be considering from here.

Yes, I can share some insights on our outlook. A recent transaction was announced, and I expect to see considerable activity in the deal landscape. This transaction is significant for our sector, and I believe it’s beneficial for the industry and support for valuations. Regarding our position, you mentioned the $20 billion mark. The deal we completed with Southern States is crucial as it enhances our scale beyond $10 billion. We believe reaching $16 billion to $17 billion is essential for achieving satisfactory returns that align with our goals and satisfy our shareholders. If you analyze our projections, you'll notice our return on assets is expected to be around 1.4%, which is encouraging. We see considerable growth potential above $20 billion, allowing us to pursue transactions similar to the one we just executed. There are more prospects in the $3 billion range compared to the $6 billion or $7 billion range, which suggests increased activity will likely occur both for us and the industry. If larger opportunities arise, we will evaluate how to approach those strategically. We are particularly well-positioned in our market to capitalize on upstream activities as larger banks refine their strategies. Our plans will focus on being prepared for organic opportunities stemming from upstream disruptions while continuing to pursue actions similar to our recent deal downstream.

Okay. That's helpful. If I could sneak in one last one on a related topic. Any update on what you guys are doing organically from a hiring perspective? Just what quarterly trends might have been in terms of pickups of banking associates?

Yes. In terms of the actual changes in banking associates, I'll say this. I'm not sure. Travis, I'm going to let Travis and Michael comment on the numbers there. But we continue recruiting efforts, again, thinking about potential disruption coming down the line. We just continue to try to make sure that we are the right landing place. In a lot of our markets, we're large enough to have a big balance sheet to be able to accommodate really successful experienced bankers that have larger clients, but we're also nimble enough to take advantage of some of the smaller folks in our geography too.

Yes. And just from a pure number standpoint, Brett, we hired four new revenue producers in the second quarter.

Maybe just starting on the margin. It would be helpful to get a sense as to the puts and takes between the low and high end of that guidance. Helpful to get a sense of whether you guys are contemplating any rate cuts in there as well as the ability to continue to lower deposit costs from here should those rate cuts not materialize? Any thoughts on sort of where the securities yield may kick things off in 3Q given the actions taken both here and at SSBK?

Yes. Russell, we've been pretty steadfast in our rate forecast from a Fed funds perspective. We've had two in all year. They've been in September and December. We haven't changed that mainly because I'm not smart enough to know when they're actually going to come. We'll continue to ebb and flow as the winds blow externally. That being said, we do have index deposits to Fed funds. The day that they do get cut, we would see roughly 35% to 40% of our deposits reprice lower. That's consistent with where we've been in the past. We are seeing some higher-cost deposits still out there. We're still trying to grow. You can see some pressure on margin as our loan growth accelerates. Typically, when you're dealing with what we call take it business, you've got to go take it from somebody else. Part of it is that you pay up a little bit while you earn their operating accounts. So the team is doing that, and we're working hard at it. That's why there's probably a broad range in NIM guidance, plus the layer of both companies in the balance sheet and then we work through organizing that in the most efficient way possible. The guidance on the investment portfolio, we're still working through a good bit of that. The transaction happened really late in the quarter. So how we reinvest, what that looks like, we're going to go mostly into loans, but paying off subordinated debt and trust preferreds will be the focus in the short term. You're taking our side, $266 million at roughly 1.6% just straight out of the number of both the numerator and denominator, I guess, the denominator. So you'll see a subsequent yield increase incremental on that side.

Got it. Okay. Very helpful. You just mentioned kind of deposit cost competition as loan growth accelerates. You guys are talking about mid- to high single digits. I also think you characterized this quarter's results as pedestrian. How should we think about you guys bigger picture going forward? Is it mid- to high on this size of the balance sheet going forward? Can you sustainably be in the high single digits with some clarity on the macro front? Just trying to get a sense for a bigger picture of how you're thinking about the growth rate going forward?

Yes, mid- to high is how we continue to feel good about that going forward. Keep in mind, we got a lot of adjustments going on here with taking in Southern States. For instance, their second quarter loan growth rate was approximately 10% on an annualized basis. Their deposit growth rate ex brokered was just a little high, approximately 12%. Again, we're factoring that in. We're looking at our historical growth rate. We're trying to factor in on loans. Looking at our pipelines, we feel pretty good about that. As we go forward and think about markets and economies, we think that's pretty good even moving past the next couple of quarters regarding what we anticipate. That's the bar we've set for ourselves today and frankly, we're pretty optimistic about that. Confident about that, and there are times when we hope for it to be even higher. There are some times when things get really slower, it could be lower, but we think we can do that, Russell, longer term. Even with the larger balance sheet.

Okay. Yes. Understood. Just last one for me. Anything to read into kind of putting capital to work with the securities transaction and a bit of buyback this quarter in terms of when or where the pace of M&A discussion stands for you guys and when we might see another transaction?

No, I'd say not really. If you look at our capital ratios, they're still strong. Our CET1 is still going to be 12% plus. Our TCE TA is again going to be really strong. We feel really good about where we sit moving forward if opportunities pop up for us.

I guess I wanted to follow back around on this M&A and potential upstream M&A activity discussion. I'm just curious if you have a real preference to that end. You guys have managed expenses phenomenally well, but if it was team lift-outs and other things from upstream activity, obviously, there would be an expense build. Just wondering how you're thinking about the balance of that versus whole bank M&A and if you would have a preference and if there'd be any limitations on how much activity you would pursue if there was upstream M&A in your markets.

We don't have a specific preference when it comes to M&A activity, and we approach opportunities as they arise. We're excited because all significant banks are part of our markets, and we feel well-positioned regardless of whether the activity comes from the largest banks, our competitors, or regional partners. The potential could be substantial. When considering an M&A transaction, we plan to issue shares, and we believe we have sufficient capital to do so. Ideally, if there’s increased movement from such transactions, it could present us with challenges we would welcome in terms of capital allocation. Looking ahead over the next few years, we feel optimistic. Regarding the earlier question about managing a $20 million size, we believe we can sustain operations on our platform with $20 billion in assets for a long duration while continuing to grow, enhance our scale, and improve our return metrics. This is our perspective moving forward.

Chris and Michael, I wanted to ask about the growth in the unfunded commitments, particularly in C&I. Is that a good alternative angle to look at kind of new growth down the road and obviously, just the timing differences of what didn't hit the balance sheet this quarter?

Yes. If you look at where we are historically, we haven't picked up that much going all the way back to post-COVID in terms of seeing those really on a utilization statistic, they haven't picked up that much. But we think that could be — we're not heavily relying on it, but it could be one of the factors that helps drive us moving forward.

Interesting, we actually had more line decreases than increases during the quarter, not new origination decreases, but just people paying down. We're in the mid-30s on line utilization. Pre-COVID, we'd have been upper 40s. So, there's definitely opportunity there. We think about that when we consider our loan growth guides. There's certainly opportunity.

Yes. It's always a factor. It's not a factor, but it's a factor. We typically plan weekends out before we even have transactions sometimes because we want to be prepared for that. It is a critical component of the success of a transaction. Our teams are busy working towards that, particularly our operational teams, and administrative teams are really busy working towards that. It's not a limiting factor on us moving forward right now because we're able to get it done quickly.

This concludes our question-and-answer session. I would like to turn the conference back over for any closing remarks.

Thank you all very much. We really appreciate the questions. We appreciate you joining us and hope everybody has a great earnings season. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.