Prosperity Bancshares Inc (PB) Q2 2026 Earnings Call Transcript

Good day, and welcome to the Prosperity Bank Shares second quarter conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star and then two. Please note this event is being recorded. I would now like to turn the conference over to Charlotte Rasche. Please go ahead.

Thank you. Good morning, ladies and gentlemen, and welcome to Prosperity Bank Shares' second quarter 2026 earnings conference call. This call is being broadcast live on our website and will be available for replay for the next few weeks. I'm Charlotte Rasche, Executive Vice President and General Counsel of Prosperity Bank Shares, And here with me today is David Zolman, Senior Chairman and Chief Executive Officer, H.E. Tim Tamanish, Jr., Chairman, Ossobek Osmanov, Chief Financial Officer, Eddie Safady, Senior Vice Chairman, Kevin Hannigan, President and Chief Operating Officer, Robert Franklin, Vice Chairman and former CEO of Stellar Bancorp, Randy Hester, Chief Lending Officer, Mays Davenport, Director of Corporate Strategy, Bob Dowdell, Executive Vice President, and Ray Vituli, Houston Area Chairman and former President of Stellar Bancorp. David Zollman will lead off with a review of the highlights for the recent quarter. He will be followed by Oswek Osmanov, who will review some of our recent financial statistics, and Tim Tamanis, who will discuss our lending activities, including asset quality. Finally, we will open the call for questions. Before we begin, let me make the usual disclaimers. Certain of the matters discussed in this presentation may constitute forward-looking statements for the purposes of the federal securities laws, and as such may involve known and unknown risks, uncertainties, and other factors which may cause the actual results or performance of Prosperity Bank shares to be materially different from future results or performance expressed or implied by such forward-looking statements. Additional information concerning factors that could cause the actual results to be materially different than those in the forward-looking statements can be found in Prosperity Bank shares filings with the Securities and Exchange Commission, including forms 10Q and 10K and other reports and statements we have filed with the FCC. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. Now let me turn the call over to David Zollman.

Thank you, Charlotte. I would like to welcome and thank everyone listening to our second quarter 2026 conference call. I'm excited to announce that on July 1, 2026, Prosperity Bank Shares completed the merger of Stuller Bancorp and its wholly owned subsidiary, Stuller Bank, headquartered in Houston, Texas. Stuller Bank operated 52 banking offices, including its main office in Houston, and banking offices in the Houston, Beaumont, and East Texas areas. I'm also pleased to announce that Robert Franklin, former CEO of Stellar Bancorp, and Joe Swinback. With regard to earnings, this represents a toll which is related to assuming a 21% tax rate, Stellar's secondizing this amount. This does not reflect any cost savings after the operational enterprise calls. These are the results we would be positive for the near. With regard to loans, loans were $25 billion at June 30, 2026. This was primarily due to the American Bank's paydowns of $1 million plus. We also are focusing on the integration with our new partners. Our deposits were $32.6 billion at June 30, 2026, an increase of $5.1 billion or $18.7, $27.4 billion, primarily again due to the American Bank. interest-bearing deposits of $10.7 billion. The net interest margin on a tax-equivalent basis was $3.47 for the three months ending June 30, 2026. The net interest margin in the first quarter of 2026 was a loan interest income of $4 million. The net interest margin continues to be positively impacted by the repricing of assets as we predicted and also back will give you a lot more color though asset quality or non-performing assets total 130 million or 34 basis points of quarterly average interest earning assets at june 30 2026 compared with 122 million or 33 basis first 2026 the allowance for credit losses on loans and off balance sheet credit exposure was $420 million at June 30, 2026. The allowance for credit losses on loans was 2.9 times the amount of money. With regard to acquisitions, we are excited about the synergy we have with our new partners, Stellar Bank, Texas Partners Bank. Our top priority is the operational integration of all three banks and our combined teams are working very hard while we continue to have conversation with other bankers regarding potential acquisition opportunities. We remain focused on the integration of our three transactions. Texas has one of the strongest and most diverse state economies in the U.S., ranking as the second largest by GDP after California and approximately the eighth-largest economy in the world. Oklahoma has a smaller but stable economy, heavily influenced by oil and gas, with more modest growth. Texas continues to move to the state because of the business-friendly political structure and no state. It continues to focus on building core relationships, maintaining sound asset quality and operating the banking to grow the company both organically and through mergers and acquisitions. I want to thank everyone involved in our company for helping to make it the support of our company financial results.

Thank you, Mr. Zalman. Good morning, everyone. Net interest income before provision for credit losses for the three-month end of June 30, 2026 was $330.6 million, an increase of $6 million for the same period in 2025, an increase of $9.4 million compared to $321.2 million for the quarter ended March 31st. The net interest margin on a tax equivalent basis was 3.47% for the three months ended June 30th, 2026, an increase of 29 basis points compared to 3.18% for the same period in 2025, and a decrease of four basis points by 1% for quarter ended March 31st. The third quarter margin decrease was primarily due to the previously mentioned one-time loan interest income of $4 million recorded during the first quarter. One-time loan income net interest margin increased by one basis point. Scluding first accounting adjustments, the net interest margin for the three months ended June 30, 2026 was 3.41% compared to 3.14% for the same period in 2025 and 3.44% for the quarter ended March 31, 2026. The fair value loan income for the second quarter, 2026, was $4 million compared to $3.7 million for the loan income for 2026 is expected to be in the range of $6 to $8. Non-interest income was $60.7 million for the three months ended June 30, 2026, compared to $46.5 million for quarter ended March 31, 2026, and $43 million for the same period in 2025. The higher non-interest income during the second quarter of 2026 includes a net gain of $8.2 million, resulting from the conversion of Visa stock, partially offset by loss on the sale of investment securities. The non-interest expense was $176.2 million for the three-month ended June 30, 2026, compared to $217.3 million for the quarter ended March 31, 2026 and $138.6 million for the same period in 2025. The first quarter included merger-related expenses of $42.5 million. For the third quarter of 2026, we expect non-interest expense to be in the range of $244 to $250 million. This includes the additional stellar bank operations. However, this projection does not include any one-time merger-related expenses associated with a stellar merger. Efficiency ratio was 46% for the three-month-ended June 30, 2026, compared to 59.2% for quarter-ended March 31, 2026 and 44.8% for the same period in 2025. The bond portfolio metrics at 6.30 in 2026 have a modified duration of 3.7 and projected annual cash flows of approximately 2.2 billion. I will now provide a high-level overview of stellar financial performance for the second quarter of 2026. Stellar also delivered strong financial results during the quarter. Stellar's net interest income before provision for credit losses for the three months ended June 30, 2026 was $106.4 million, an increase compared to $105.9 million for the quarter ended March 31, 2026. The second quarter results included one-time merger-related expenses and losses related to the sale of certain investment securities. Excluding these one-time charges, Stellar's adjusted pre-tax, pre-provisioned net income was $42.1 million, an increase of $2.9 million compared to the first quarter of 2026. Now, let me turn over the presentation to Tim Timanis for some additional detail on loan and asset quality. Timanis?

Thank you, Osselbeck. Our non-performing assets at quarter end, June 30, 2026, totaled $130,576,000, or 52 basis points of loans and other real estate, compared to $122,107,000, or 48 basis points, at March 31, 2026. Since June 30, 2026, $5 million of non-performing assets have been removed or put under contract for sale. The June 30, 2026 non-performing asset total was comprised of $119,271,000 in loans, $9,000 in repossessed assets, and $11,296,000 in other real estate. Net charge-offs for the three months ended June 30, 2026 were $2,183,000, compared to net charge-offs of $41,309,000 for the quarter ended March 31, 2026. There was no provision to the allowance for credit losses during the quarter ended June 30, 2026. No dollars were taken into income from the allowance during the quarter ended June 30, 2026. Average monthly new loan production for the quarter ended June 30, 2026 was 454 million dollars compared to 312 million dollars for the quarter ended March 31, 2026. Loans outstanding at June 30, 2026 were approximately $25.028 billion compared to $25.288 billion at March 31, 2026. The June 30, 2026 loan total is made up of 34% fixed rate loans, 33% floating rate loans, and 33% variable rate loans. I will now turn it over to Charlotte Rasche.

Thank you, Tim. At this time, we are prepared to answer your questions. Our call operator, Dave, will assist us with questions.

We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Our first question comes from Janet Lee with TD Cowan. Please go ahead.

Good morning. Good morning. From the last call, you've talked about that interest margin reaching the 370 level as exit 26 and then getting in the 380 range in 2027, do you still have a good line of sight into reaching that level, or is there any changes to the outlook versus before?

Janet, no. Our models are still showing as hitting. I think, again, also, Beck may want to jump in on this, but we're still saying that we'll end up with 3.75 at the end of the year, but our models are still showing 370 to 370 Yeah.

So our exit, yes, it is. We provide a guidance of 370. I think we're going to increase to 370, 375 because, you know, with additions still very accretive to us. So the guidance stays the same. And for 2027, we said 380. I think it's still for a whole year, 380, 385.

That will be updated guidance. The only caution I would put is we start getting past the 3.7% in net interest margin. You know, we're still very competitive. We offer some of the competitive CD rates, but we've been a little bit lower. That may temper the...

Okay. Makes sense. But the 380-plus range still contemplates that you're raising rates on your deposits?

Some rates, yes. We have increased some of them, so yes.

Okay. Got it. I understand that the priorities is on the integration part, but on the Stellar side, perhaps, or even on the legacy prosperity side, what are you seeing in terms of loan growth and demand there? It looks like outside of the mortgage warehouse, it was fairly stable quarter over quarter. Just wanted to see what you're seeing on that front.

Yeah, this is Kevin. I'd say for the remainder of the year, company-wide, still relatively flat for the remainder of That does include Stellar has got a pretty robust pipeline, a billion to two-ish, right? And so they feel as though they'll grow their loans. They grow them about $200 million in the first half of the year. They'll probably grow them another $200 million in the back half of the year. But overall for the company, I would call it flattish for the remainder of the year. Maybe on the better news front, as Tim said, production has been picking up. And we have several hundred million, probably closer to 400 million of construction deals, which we've approved so far this year, that are booked. They're in our pipeline. they will not provide any fundings this year as all the equity has to go into those deals first but beginning in the first quarter and and more materially in the second quarter of next year the pull through of those deals is going to start generating some positive overall company growth and this is Tim everything that that Kevin said is accurate, in my opinion.

We do forecast stability going forward. We have a decent pipeline of loans. We see decent loan activity out there in the marketplace. Really, the only thing we see that's a hindrance is some of the very, very aggressive structure and pricing that the competition is putting forward. So we have to be cognizant of that and careful with it. But basically, everything looks decent right now.

Yeah, as Tim said, and it's no news to all you on the call, but credit spreads are at 25 or 30 year lows across the risk spectrum. I mean, some things out there are just getting to the point of being ridiculous. We have looked at two meaningfully large transactions in the last two weeks, SOFR 125. The math on that yields you an opening day coupon of like $483, which is ridiculously low. And it's not like either one of those things came with massive amounts of demand deposits in a relationship. Across the spectrum right now is, I think, slightly mispriced.

And I'll give you a little bit more color because I think that I think you need to take profitability into consideration and just to give you a little color last week. OK, do I want to make a loan at five?

Appreciate all the color. I'll step back.

And the next question comes from Brett Rabbitin with Stonex Group. Please go ahead.

Hey, good morning, everybody. Thanks for the questions. Wanted to start on the other income. I know there was some noise in 2Q with the gains and the securities. Was the increase in other, was that related to anything in particular, and does that continue from here?

Yeah, on the other one, we had just about $2.5 million, I would say, annual income that we get that, but it's not going to be expected maybe next quarter, but annual income would generate about $2.5 million. Other than that, everything is a core except, of course, gain on Visa stock. So if you're thinking going forward, I would say, you know, our range around $50 million prosperity before Stellar, and Stellar has $5 to $6 million.

So I would say between $54 to $56 million, that would be a good run rate on the non-interest income. okay that's great color appreciate that also back and then um david you were just talking about you know your your kind of thesis on loans versus securities and with with where the the bond market is moved i was just curious if there was any maybe increased appetite to actually grow the securities portfolio you know from here and just thoughts on how you view the securities portfolios size kind of post-dollar integration?

Well, again, our first focus will always be loans, but on the other hand, when the price is getting to where it is right now, you really can't, we're not going to put a bunch of stuff on the books in just a risk, so I would say I think you'll continue to see, you know, we'll focus on building loans first, but whatever we don't, we'll continue to put into the bond market and you know we still grow organically it's still hard for you guys to see but when we strip out when we strip out the uh the banks that have joined us i think colin you did a showing yesterday that our deposits actually have grown organically about

3.2 percent so once things will stack will stack two to four percent organic deposit okay uh and And then if I could just ask one quick last one, just around, you know, it sounds like you guys are still seeing some irrational stuff on the lending side, but the monthly loan production was obviously stronger, link quarter, you know, would you guys attribute that to just increased activity in the markets, you know, customer gains, anything in particular you would point to to just, you know, kind of describe the link quarter improvement in loan production?

Yes. Once again, we see things as being very stable and maybe growing a bit. Our people are constantly out there trying to bring customers in, and that obviously includes loan customers as well as deposit customers. The problem with the pricing and the structure that we're seeing in the market, those things historically come and go. and right now they're here we're having to deal with it but how long it lasts I guess is anybody's guess so I think there's reason to think that we can improve our loan growth and therefore improve our loans outstanding you have to understand that quite often the loans that we put on the books don't fund right away. There are construction loans. There are different types of loans where equity has to come in and get funded first. So it can be a few months before we start funding those loans. So that's a normal time delay. That's a good thing, not a bad thing. So I see a lot of positive things out there and not that many negative things other than the current structure that we're having to deal with on a competitive basis.

At the bottom line, Tim, at Brent, again, Texas is still growing. You're still seeing businesses move into Texas. You know, we saw a lot more of the steel.

That's absolutely correct, and Oklahoma is doing well also. From a geographical standpoint, everywhere we operate right now looks good.

Some of the other banks, because...

Okay, that's great. Appreciate all the color, guys.

And the next question comes from Manan Khasalia with Morgan Stanley. Please go ahead.

Hi, good morning. You spoke about credit spreads being at multi-decade lows in the 20 million credit line. I guess the question is, how widespread is that competition on structure and pricing? Is that happening for a specific loan segment like construction or a specific type of client where there might be a higher likelihood maybe of getting other business down the line, or is it widespread across construction, CRE, middle market, C&I?

Yeah, the SOFR 125s are outliers. That's two deals, both of them pretty recent, but I'd say that's two deals that I think we go back all the way back into December, January time frame it's two deals from then to now so that there's two recent deals very large prominent clientele also back can probably give you some a little bit of color on originations both at and pricing on originations at both that stellar and it prosperity for the last quarter that might might help you understand where what we are doing but I would also say though that the one that I described with the seven-year fixed rate with 25-year amortization at five and a half is not

unusual, and those are loans that everybody's bidding on. I mean, they're not bringing deposits to the bottom line. That's loans like on one to four family, not one to four family, multi-family units, retail centers, office buildings, and stuff like that, and it's just going to the lowest bidder for the most part.

And I'll go back, let me mention before you start that it is not across the board. It is primarily the larger loans and what we're seeing more often than not is the large banks or relatively large banks that have recently entered the Texas market or are trying to enter the Texas market. and they're focused on those larger loans. They make a bigger splash that way, and it's understandable.

I think that's a good point, Tim. I mean, not everybody's doing this.

It's not everybody.

If you ask me, I can put them on one hand, and I don't even need all five fingers. Yes, it's mostly the bigger loans. But it's a couple of the banks that are coming in, by the way. I'm not saying that they're wrong.

Yeah, I'm just going to give the facts. You know, the average loan production monthly for the Q2 that Tim mentioned, $454 million. The average rate on that blended was around, well, we looked at Stellar's number two. I think the new loans they're putting up also around 6.5%. So we're comparable to that point. So we know that our, you know, fixed loans and some loans are going to be repriced at the higher rate.

That's all very helpful, Kala. I really appreciate it. So, you know, I guess when we talk to some of the other banks that have been talking about looking at the all-in returns of their client relationships, not just the loans and deposits, but also, I guess, cash management, investment banking, et cetera. I guess the question for you is, as you do more acquisitions, as you grow the size of the balance sheet, is there anything that you need to invest in on the product side or on the fees side to capture more of the economics of the client?

Well, I think that's the good news, is that over the last three years, we...

Got it. Thank you.

And the next question comes from Peter Winter with DA Davidson.

Please go ahead. good afternoon i was wondering kevin can you give an update on the mortgage warehouse business and just also with this increase in mortgage rates does that kind of virtually shut down refi activity yeah refi activity is is not all the way shut down there's always always been some but it has been muted and it's I just look at the first 28 days of the quarter so through through last night I think we're averaging right at a billion two fifty in outstandings which is off from the billion three sixteen or whatever it was three sixteen I think in two two so that's a little unusual for the third quarter. Usually a third quarter is pretty good, particularly in July and August with September being a little off. So it wouldn't surprise me if we average a billion two, maybe as good as a billion two 25 in Q3, which is, you know, it's roughly, roughly a hundred million dollars off the average of Q2.

Thank you. And then David, just how are you thinking about deposit growth? in the second half of the year. And you mentioned you might get a little bit more competitive on money market rates, but just how are you thinking about deposit rates going forward, assuming the Fed is on hold?

I was wondering if you were going to ask me a question, Peter. Thank you.

You're welcome.

It's hard to tell you that you're going to see a lot of growth because when you do these deals, there are some relationships that come and go. The only thing I can tell you is in our numbers show this that on an organic basis on legacy deposits we always have continued to grow two to four percent and where we do lose is when new banks join us right then we've been willing to pay or there may have been some circumstances or the customer just doesn't like us to be part of that deal but I think over time if you ask me to to make it I guess I first First of all, you know, the Fed, a lot of people were talking about them raising rates because of inflation. I think the Trumpster put this new guy in. They will. If you look at, you know, if you look at the last, you followed us, Peter.

To see, when you see our balance sheet, our deposits have decreased, but if you kind of peel off, there's a public fund that has seasonality each time, so it goes down second and third quarter, but if you strip out the public fund, our core deposits have increased in the second Yeah, I mean, I was extremely excited this time because last year I was still.

That's great. Thanks, David. The next question comes from Michael Rose with Raymond James. Please go ahead.

Hey, good afternoon, everyone. Thanks for taking my questions. Just wanted to start on the stellar side. I think maybe Ray is there. Looks like the margin was up pretty meaningfully in the quarter, and it looks like maybe there might have been some restructuring, securities balances were down and just trying to better understand how much of that benefit is driving the NIM guide that Oslo Beck laid out. Thanks.

Yeah, Michael, this is Ray. So we picked up nine basis points on the NIM. There was about a $30 million pay down of sub-debt in there, but it's really driven by, as Oslo Beck said, we booked $525 million, plus we renewed another $600 or $700, so that's about $1.1, $1.2 in the quarter, and an average rate of $650 on the loan side. Deposit cost held in there, and that was really the driver, most of the driver of that NIM expansion.

And just to add on the sale of security, it happened at the end of the quarter, so there was no impact on the margin. So the margin that they have nine base point increase, that was a quarter increase on the margin.

Very, very helpful. And then maybe just one follow-up just as it relates to the integration efforts and cost savings realizations of the two other deals, not Stellar, but where do you stand with those? And I understand you gave the expense outlook just trying to better understand the puts and takes. Thanks.

Yeah, on American and Partners Bank, we realize some of them, but most of the cost savings are going to come in after the system conversion, which we scheduled for September or November. But assuming that all the integration is done, we still expect from American and Texas partner additional $20 million to $25 million cost savings coming in. So we should see the full impact of it in 2027. Before tax, right? Before tax, yeah, before tax, 2025, before tax. And on the Stellar, we're still in line with what we announced on the pre-merger, how much of our savings we're going to get. so we expect to get that savings. It might be a little bit pushed back on the timing of it because the system conversion doesn't happen until March of next year because of the timing of everything going on with three acquisitions. So the timing might, but the cost savings that we projected is still in line on Stellar as well.

Okay, that's very helpful. Thanks for taking my questions. I'll step back.

And the next question comes from David Chiaverini with Jeffries. Please go ahead.

Hi. Thanks for taking the questions. So you mentioned a couple of times about your focus on profitability. Can you remind us how you're thinking about ROTC targets once the conversions are done and the cost savings are fully baked in, looking out to 2027?

What kind of targets? I didn't catch that.

Your return on tangible common equity.

Well, I mean, right now we're running, even right now we're running about 15% return on tangible capital. I'm really hoping, again, you might have these numbers in your model, but I'm thinking if we hit the numbers we say we're going to hit, we should be hitting 17%, 18%.

Yeah, I think initially we're going to take a hit because of the conversion, but we build it up very quickly, so our project...

You're talking about tangible capital, not return on tangible. Are you talking about return on tangible capital, or where tangible capital is going to be? I think it will return on tangible capital. But return on tangible capital.

Yep, you answered it.

Yeah, basically, I mean, if we're hitting the numbers that we're saying, you can do the math just by the share, you're going to get.

Perfect. And a follow-up to that on capital with your buyback, you reduced it in the second quarter. How should we think about the buyback going forward?

Whenever people are naughty and we have an opportunity to buy, we're going to buy. I mean, again, you can see the amount of money that we're making or proposed to make. Again, there's no black swan, so we have a run rate of $780 million right now. We have a lot of cost savings that's going to add to the bottom line, so I think our projections are $850 million to $880 million we're paying. How much in dividends? $200 million. So the difference between that and what we're going to make is we have a lot of gunpowder to do something with, and we will. So, I mean, if opportunity and definitely be too largely for.

Got it. Very helpful. Thank you.

And the next question comes from Stephen Scalton with Piper Sandler. Please go ahead.

Yeah, good morning. Thanks. Going back to the stellar legacy results a little bit, it seems like with the $33 million in net income you mentioned, maybe that's a fair bit ahead of where consensus numbers had them at one point in time. I'm wondering if their results are kind of ahead of what you guys assumed when you first announced the deal, if it's going, you know, kind of tracking ahead of expectations, and just if there were any material changes to the marks kind of at closing versus what you were expecting.

Yeah, on that, definitely running ahead, what we projected. I think when we put together, expectation was about $126 million for 2027 on stellar net income. If you take the $33 million, we're talking about $130 million. So it is ahead of it. But on the marks side of it, I think it's maybe a little bit higher than what we projected, but we're still working on it right now, and we have not finalized the marks yet. But I think the preliminary number coming a little bit higher than what we projected on the marks, loan marks.

Okay, and you said $6 million to $8 million in expected accretion in the third quarter estimate?

Yes, that is, including all.

And then one question on – I'm sorry.

I just want to say it's always, you know, depends if there's some loan pays off with a discount or premium, it could impact. But if you look at the model, it's $6 million to $8 million.

Kind of scheduled versus accelerated. Yep, that makes sense. And then in terms of the pro forma loan loss reserve, do you know where that will go to pro forma with the close for Stellar? And then, you know, you guys have had a kind of a zero provision for several years now. Do you think we'll start to see provision be more in line with loan growth moving forward, or is there still some excess that can be worked out over time?

On the Stellar one, we're still working on it, so we don't have any numbers. But I know it's going to be an addition, too, and maybe a pretty good healthy addition to that.

But we're working with that.

There's 420 right now.

Including the Unfunded Prosperity Bank. Prosperity. And so, you know, your Stellar, going with Stellar could take us up to 600. Yeah, we're still working on it.

So we'll give it that more in the third quarter. But on the provision, it's kind of hard to say if we're going to provision or not. We just have to run the models, and whatever model tells us if we need to provision, we'll do provision. If it tells us we don't, we're not going to take provision.

Well, it's hard to provision when you get three times the amount, and if you're asking me personally, unless there's something that I don't know.

Very good. Very helpful. Thank you, guys, for the time.

And the next question comes from John Arfstrom with RBC Capital Markets. please go ahead.

Hey, thanks. Good morning, guys. Good morning, guys. Asselbeck, can you just walk through the expense cadence again in terms of what you're expecting in the timeline? I know it's way out in the future, but just trying to get an understanding of what you think the run rate looks like when everything is fully converted.

I'll give you the, you know, Ron Redd, I gave $244 to $250 million. That's including Stellar and have some savings that we pull forward from American Bank and Texas Partners Bank, but not all of it. So we expect, as I mentioned earlier, from Partners in America, an additional $20 to $25 million cost savings going to be coming in. And for the Stellar, I think we expect – that's all pre-tax numbers, so what I'm talking about. And for the Stellar, we expect additional – probably cost saving around $80 to $85 million. And that is cost saves that we announced plus additional of new CDI. So in combination, it's around $85 million additional cost saves on Stellar's side, which with all baked in and everything. Of course, the timing, as I mentioned – That's pre-tax. That's all pre-tax numbers, yeah. So you've got 85 and 25. Yeah, 20 to 25 years ago.

And you've got to add the tax rate on that.

Yeah, so between additional 100 to 110 million.

But again, we ought to be conservative on that. I mean, these are numbers, and we'd like to give you a little bit less in case we do screw up there.

And it's also, I mean, we're kind of looking long term, right? We don't know what the inflation is, so the additional cost there might be in, but this is what we have it right now, what we expect, and that's what we're projecting. And we feel very comfortable about this savings.

We've looked at this up and down.

You kind of alluded to this asset size, not that $50 billion is a big deal, but you're a much larger bank. Anything else you need to do at your asset size that maybe you weren't thinking about or doing a year ago? You kind of referenced some hiring in products, but anything else to do that could cause some expense pressures, or do you feel like you have what you need?

No, in fact, we needed to get to this size just to utilize the costs that we had, quite frankly. I mean, the way the regulators treated us, they were treating us like we were $50 billion and $100 billion. So we were geared up to be a bigger bank. And so this really just utilizes all the additional costs that we took on to do that, really.

All right. Thank you very much.

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

Thank you. Thank you, ladies and gentlemen, for taking the time to participate in our call today. We appreciate your support of our company, and we will continue to work on building shareholder value.

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