Enterprise Financial Services Corp (EFSC) 2024 Q2 法說會逐字稿

Hello, and thank you for standing by. At this time, I would like to welcome you to the Enterprise Financial Services Corp second-quarter '24 earnings conference call. (Operator Instructions)

您好，感謝您的支持。現在，我歡迎您參加企業金融服務公司 24 日第二季財報電話會議。 （操作員說明）

I would now like to turn the conference over to Jim Lally, President and CEO. Please go ahead.

現在我想將會議交給總裁兼執行長吉姆·拉利 (Jim Lally)。請繼續。

Well, thank you, Jericho, and thank you all very much for joining us this morning. And welcome to our 2024 second quarter earnings call. Joining me this morning is Keene Turner, EFSC's, Chief Financial Officer and Chief Operating Officer; Scott Goodman, President of Enterprise Bank & Trust; and Doug Bauche, Chief Credit Officer of Enterprise Bank & Trust.

好的，謝謝傑里科，也非常感謝大家今天早上加入我們。歡迎參加我們的 2024 年第二季財報電話會議。今天早上加入我的是 EFSC 財務長兼營運長 Keene Turner； Scott Goodman，企業銀行與信託總裁； Doug Bauche，Enterprise Bank & Trust 首席信貸長。

Before we begin, I would like to remind everybody on the call that a copy of the release and accompanying presentation can be found on our website. The presentation and earnings release were furnished on SEC Form 8-K yesterday. Please refer to slide 2 of the presentation titled forward-Looking statements and our most recent 10-K and 10-Q for reasons why actual results may vary from any forward-looking statements that we make today.

在開始之前，我想提醒通話中的每個人，可以在我們的網站上找到新聞稿和隨附簡報的副本。昨天，該簡報和收益發布已在 SEC 8-K 表格中提供。請參閱標題為前瞻性陳述的簡報的幻燈片 2 以及我們最近的 10-K 和 10-Q，以了解實際結果可能與我們今天所做的任何前瞻性陳述不同的原因。

I'm very pleased with our second quarter results. Our business model, associate base and management team has been constructed to perform well in any economic environment. The results of the second quarter are a product of the great work has done for the last several years. In the quarter, we were able to expand margin, grow net interest income, experienced positive operating leverage, and continue to significantly compound tangible book value per share.

我對我們第二季的業績非常滿意。我們的商業模式、員工基礎和管理團隊的建構可以在任何經濟環境中表現良好。第二季度的結果是過去幾年所做的偉大工作的成果。在本季度，我們能夠擴大利潤率，增加淨利息收入，實現積極的營運槓桿，並繼續大幅提高每股有形帳面價值。

Like we've stated during previous earnings calls and investor meetings, over the last several years, we have worked diligently to diversify our business model such that we do not have to depend on any one business, market, or asset class to produce high-quality and predictable earnings. Our second quarter financial performance as a result of this strategy, and I'm confident that we can continue to perform this level or better for the remainder of 2024.

正如我們在先前的財報電話會議和投資者會議上所說的那樣，在過去的幾年裡，我們一直在努力實現業務模式多元化，這樣我們就不必依賴任何一種業務、市場或資產類別來產生高收益。我們第二季的財務表現得益於這項策略，我相信我們能夠在 2024 年剩餘時間內繼續保持這一水準或更好。

Financial scorecard begins on slide 3. For the quarter, we earned net income of $45.4 million from $1.19 per diluted share. And we produced an adjusted return on assets of 1.27% and a pre-provision return on assets of 1.74%. These results improved over a fundamentally sound first quarter.

財務記分卡從投影片 3 開始。我們的調整後資產報酬率為 1.27%，撥備前資產報酬率為 1.74%。這些結果比基本良好的第一季有所改善。

Our net interest income increased $2.8 million to $140.5 million. Looking back over the last six quarters, we've been able to hold this number at or around $140 million despite challenging, competitive, and interest rate conditions. This reflects the strengths of the franchise we've built, remain positioned to produce high-quality earnings that consistently improve shareholder value through deep-rooted client relationships.

我們的淨利息收入增加了 280 萬美元，達到 1.405 億美元。回顧過去六個季度，儘管面臨挑戰、競爭和利率環境，我們仍然能夠將這一數字保持在 1.4 億美元左右。這反映了我們所建立的特許經營權的優勢，我們仍然能夠產生高品質的收益，透過根深蒂固的客戶關係不斷提高股東價值。

Our stable net interest income was aided by the defense and growth of our net interest margin to 4.19%. This is a direct result of our property price, stable deposit base, and our ability to originate commensurate to the needs of our clients are priced well amid the current interest rate environment. Keene will provide much more detail on these results in his comments.

我們穩定的淨利息收入得益於淨利差的維持和成長至4.19%。這是我們的房地產價格、穩定的存款基礎以及我們根據客戶需求發起資金的能力在當前利率環境下定價良好的直接結果。基恩將在他的評論中提供有關這些結果的更多詳細資訊。

As we thought would happen, loan growth moderated in the quarter, largely due to lower line usage, higher paydowns and payoffs in the quarter, and the planned rundown of the agricultural portfolio. Our second quarter saw strong loan origination activity, as you will hear from Scott, and I'm confident that we will see our normal second half strength in loan originations.

正如我們所預期的那樣，本季貸款成長放緩，這主要是由於本季度貸款使用量減少、還款和還款增加以及農業投資組合的計劃縮減。正如您將從斯科特那裡聽到的那樣，我們第二季度的貸款發放活動強勁，我相信我們將看到下半年貸款發放的正常強勁勢頭。

Deposit growth continues to be a bright spot for our company. After experiencing our typical first quarter seasonal outflows, the second quarter saw us grow client deposits by an impressive $192 million. Our confidence in the continued growth in our national deposit verticals allows us to be disciplined with respect to deposit pricing in our geographic markets. This is evidenced by the fact that our overall cost of deposits increased only 3 basis points to 2.16% in the quarter. At quarter end, our loan and deposit ratio remained at 90%, while our DDA level improved to 32% of total deposits.

存款成長仍然是我們公司的亮點。在經歷了典型的第一季季節性資金外流之後，第二季我們的客戶存款增加了 1.92 億美元，令人印象深刻。我們對全國存款垂直行業持續增長的信心使我們能夠在地域市場的存款定價方面受到約束。本季我們的整體存款成本僅增加了 3 個基點至 2.16%，這一事實證明了這一點。截至季末，我們的貸存比率維持在 90%，而 DDA 水準則提高到總存款的 32%。

With the overall business generation strong, I remain optimistic that our high single digit balance sheet growth is achievable. We are starting to see backlogs grow in our life insurance premium finance business. Our geographic markets have seen recent discussions intensified for new C&I and CRE opportunities. But timing on actual funding's will likely be mid to late fourth quarter with some of the as we get into 2025.

由於整體業務強勁，我仍然樂觀地認為我們的資產負債表可以實現高單位數成長。我們開始看到人壽保險保費金融業務的積壓情況不斷增加。最近，我們的地理市場對新的 C&I 和 CRE 機會的討論更加激烈。但實際融資的時間可能會在第四季中下旬，其中一些是在進入 2025 年時進行的。

The bottom line is that we will have opportunities to deploy deposit growth in either loans or securities, both of which we view as favorable long term value and profit drivers. Scott will provide much more detail on our markets and businesses in his comments.

最重要的是，我們將有機會將存款成長部署到貸款或證券中，我們認為這兩者都是有利的長期價值和利潤驅動因素。斯科特將在評論中提供有關我們市場和業務的更多詳細資訊。

Our balance sheet remains well positioned and provides for great flexibility with respect to capital planning. Capital levels at quarter end remained stable and strong with our tangible common equity ratio at 9.18% and an adjusted return on average tangible common equity of 14.06%.

我們的資產負債表保持良好狀態，並在資本規劃方面提供了極大的靈活性。季度末的資本水準保持穩定且強勁，有形普通股比率為 9.18%，調整後平均有形普通股回報率為 14.06%。

Tangible book value per common share was $35.2, a 10% annualized increase for the quarter. Given the strength of our earnings and our confidence in our continued execution, we increased the dividend by $0.01 per share in the third quarter of 2024 to $0.27 per share, and we returned an additional $8.5 million to shareholders during the quarter through common stock repurchases.

每股普通股有形帳面價值為 35.2 美元，本季年化成長率為 10%。鑑於我們的獲利強勁以及對持續執行的信心，我們在2024 年第三季將股息增加了每股0.01 美元，達到每股0.27 美元，並在本季度透過普通股回購向股東額外返還了850 萬美元。

Before discussing our areas of focus for the remainder of the year, I would like to provide an update on credit. I am pleased with the progress that we continue to make. As expected asset quality continued to improve as classified assets decreased by 8% or $15 million.

在討論我們今年剩餘時間的重點領域之前，我想先介紹一下信用方面的最新情況。我對我們不斷取得的進展感到高興。正如預期的那樣，資產品質繼續改善，分類資產減少了 8%，即 1500 萬美元。

NPAs were well-managed, and net charge-offs were nominal at less than $1 million. We did receive results of the third party loan review of our agricultural portfolio. This report did not surface any abnormalities that we had not already identified by our internal review.

NPA 管理良好，淨沖銷名目金額不到 100 萬美元。我們確實收到了我們農業投資組合的第三方貸款審查結果。該報告沒有顯示我們內部審查尚未發現的任何異常情況。

That said, the overall sector is showing some signs of weakness and our efforts to reduce our exposure as well as our allowance build represents our posture towards the industry. We're making good progress in reducing our exposure as a portfolio reduced by just under $40 million during the quarter and stood at about $194 million at quarter end, with further reductions expected throughout the remainder of the year.

也就是說，整個行業正顯示出一些疲軟的跡象，我們為減少風險敞口以及補貼增加所做的努力代表了我們對該行業的態度。我們在減少風險敞口方面取得了良好進展，本季投資組合減少了近 4,000 萬美元，季末約為 1.94 億美元，預計今年剩餘時間將進一步減少。

Slide 5 shows where we're focused for the foreseeable future. Our focus remains on taking care of the great clients that we have accumulated over a 36 year history. While adding those family owned businesses and cherish high-touch consultant relationships. Doing this day in and day out will lead to several more quarters of really strong performance and continued building franchise value. We will not alter our credit discipline to chase growth, and we're cognizant of the current market pricing trends to make sure we continue to protect and grow our client base.

投影片 5 顯示了我們在可預見的未來的重點。我們的重點仍然是照顧我們 36 年歷史中累積的優質客戶。同時增加那些家族企業並珍惜高接觸的顧問關係。日復一日地這樣做將帶來更多幾季的真正強勁業績並持續建立特許經營價值。我們不會為了追求成長而改變信用紀律，我們了解當前的市場定價趨勢，以確保我們繼續保護和擴大我們的客戶群。

In addition to this, by our next earnings call, we will have converted to our new core system. To date we are on time and on plan with respect to this conversion and look forward to the benefits that this will bring the company for many years to come. The fruits of our recruiting efforts, especially in our higher growth markets and higher profit, specialized businesses are beginning to pay off. We've onboarded several new RMs in our western markets and will continue to capitalize on the disruption caused by M&A in these markets.

除此之外，到下一次財報電話會議時，我們將轉換為新的核心系統。到目前為止，我們正在按計劃按時完成此次轉換，並期待這將為公司帶來未來許多年的好處。我們的招募工作的成果，特別是在我們更高成長的市場和更高利潤的專業業務中，正在開始獲得回報。我們已經在西方市場聘請了幾位新客戶經理，並將繼續利用這些市場併購造成的混亂。

Similarly, we are very, we're being very strategic with our adds to our specialized lending teams and our national deposit verticals, focus on those areas that provide the greatest shareholder value combined with the businesses that have been most disrupted due to M&A. Our banks have decided to disinvest or disregard the business in total. We will aggressively pursue more of these opportunities, drop '24 and '25.

同樣，我們對專業貸款團隊和國家存款垂直領域的增加非常具有戰略意義，重點關注那些提供最大股東價值的領域以及因併購而受到最嚴重干擾的業務。我們的銀行已決定完全撤資或忽視該業務。我們將積極尋求更多此類機會，放棄「24」和「25」。

Before handling the call to Scott, I would like to provide a little perspective on how our clients are seeing the world. The challenges related to loan growth, our product and the sentiment of many of our clients and speaking to several of our C&I business owners, their posture on increasing leverage ahead of Fed cuts in the fall election was quite conservative.

在接聽斯科特的電話之前，我想提供一些關於我們的客戶如何看待世界的觀點。挑戰與貸款成長、我們的產品和許多客戶的情緒有關，在與我們的幾位商業和工業企業主交談時，他們在美聯儲秋季大選降息之前增加槓桿的態度相當保守。

Unless there's a specific need for capital in new equipment line for newly awarded business or close on a new acquisition, they're likely to stay on the sidelines and operate conservatively. On some a positive note, supply chain issues for the most part are behind them. And the wage pressure that plagued many of these businesses just a few years ago have largely dissipated. These same clients remain very well capitalized and are eager to grow their businesses. They have better visibility to the economic and political climate ahead.

除非新授予的業務對新設備生產線有特定的資本需求或完成新的收購，否則他們可能會保持觀望並保守運作。從正面的角度來看，供應鏈問題大部分已經過去。幾年前困擾許多此類企業的薪資壓力已基本消失。這些客戶仍然資本充足，並且渴望發展業務。他們對未來的經濟和政治氣候有更好的了解。

Last quarter I talked about the Fed easing of rates as a psychological impetus for CRE projects to go from the drawing board to reality. But the likelihood of this rather imminent, we have seen the number of meetings in our higher growth CRE markets increased significantly.

上個季度，我談到聯準會放鬆利率是商業房地產項目從繪圖板走向現實的心理動力。但這種情況的可能性相當迫在眉睫，我們已經看到在我們的高成長商業房地產市場中的會議數量顯著增加。

With that said, I'm confident we'll see these discussions during the closings late in 2024 and into 2025. We enjoy a great reputation and corresponding market share of middle market businesses in our mature geographies and specialized lending businesses. As such, I'm confident that we will continue to get much more --much fit more than our fair share of corresponding opportunities.

話雖如此，我相信我們將在 2024 年末和 2025 年的交易結束期間看到這些討論。因此，我相信我們將繼續獲得比我們應得的相應機會更多的、更適合的機會。

Our newer markets and higher growth areas will provide similar levels of opportunities while we continue to build our reputation in these markets. This blend is what gives me high confidence that we will continue to grow and earn at a predictable rate while continuing to compound tangible book value at a higher level than our peers over the foreseeable future.

我們的新市場和高成長領域將提供類似水準的機會，同時我們將繼續在這些市場上建立我們的聲譽。這種混合使我充滿信心，我們將繼續以可預測的速度增長和盈利，同時在可預見的未來繼續以高於同行的水平複合有形賬面價值。

With that, I would like to turn the call over to Scott Goodman. Scott?

說到這裡，我想把電話轉給史考特古德曼。史考特？

Thank you, Jim, and good morning, everyone. Turning to loans, which begins on slide 6. With a modest reduction of $28 million in the quarter, year-over-year loan growth is $487 million or roughly 5%. Jim outlined the primary factors leading to the softened net growth this quarter. But breaking this down a bit further, there were certainly numerous positive factors which position us well and provide optimism moving forward.

謝謝吉姆，大家早安。轉向貸款（從幻燈片 6 開始）。吉姆概述了導致本季淨成長放緩的主要因素。但進一步細分，肯定有許多積極因素使我們處於有利地位並為前進提供了樂觀。

Foremost, among these is that overall production is sound with originations of new credit commitments up roughly $100 million from the Q1 levels for loan details on slide number seven, provide a helpful picture of where we are seeing near term reductions versus growth for the quarter.

最重要的是，整體生產狀況良好，新信貸承諾的發放較第一季的水平增加了約1 億美元，第七張幻燈片上的貸款詳細信息為我們看到了本季度短期減少與增長的情況提供了有用的信息。

The largest reductions were in the C&I categories with roughly half of this change attributable to lower balances on revolving lines of credit. As the impact of higher short-term borrowing costs took hold, businesses tended to lean a bit more on cash to fund working capital and other short-term needs.

最大的減少發生在商業和工業類別，其中大約一半的變化歸因於循環信貸額度餘額的減少。隨著短期借貸成本上升的影響顯現，企業往往更依賴現金來滿足營運資金和其他短期需求。

Other reductions in the C&I category includes the planned runoff of several agricultural loan relationships associated with our planned exit from this business line as well as some expected payoffs and paydowns from commercial clients relating to the sale of assets and operating businesses.

C&I 類別的其他減少包括與我們計劃退出該業務線相關的若干農業貸款關係的計劃徑流，以及與資產出售和經營業務相關的商業客戶的一些預期回報和付款。

Commercial real estate posted net growth for the quarter, bolstered by some larger property acquisitions, refinancing, and facilities expansion in Dallas, Arizona, Orange County, and Las Vegas. Activity seems to be ramping back up in this category, particularly in higher growth markets as owners and developers are adjusting expectations and refinancing deal structures around the current rate environment.

受達拉斯、亞利桑那州、橘郡和拉斯維加斯一些較大規模的房地產收購、再融資和設施擴建的推動，商業房地產本季出現淨成長。這一類別的活動似乎正在回升，特別是在成長較高的市場，因為業主和開發商正在圍繞當前利率環境調整預期並為交易結構進行再融資。

Existing projects also continued to move forward, driving additional growth in construction and development loan balances, which were up $65 million in the quarter. We view our capacity for growth in these segments as a competitive advantage as our overall commercial real estate, construction and development levels remain well within regulatory limits and provide ample runway for additional opportunities.

現有項目也持續推進，推動建築和開發貸款餘額進一步成長，本季增加了 6,500 萬美元。我們認為我們在這些領域的成長能力是一種競爭優勢，因為我們的整體商業房地產、建設和開發水平仍然在監管限制之內，並為更多機會提供了充足的跑道。

Loans by region are broken out on slide 8, showing net growth in specialty lending, Southwest and Western markets with the quarterly decline attributable to our mid-western markets. Within the specialty lending business lines, Life Insurance Premium Finance posted a seasonally soft growth quarter with lower originations, offset by some paydowns being driven by policy restructuring around higher interest rates. We're also seeing some heightened rate competition from a few select national and regional players that tend to ebb and flow in this space based on overall loan demand.

按地區劃分的貸款在幻燈片 8 中進行了細分，顯示了專業貸款、西南和西部市場的淨增長，其中季度下降歸因於中西部市場。在專業貸款業務範圍內，人壽保險保費金融業務季度增長呈季節性疲軟，來源較低，但被圍繞利率上升的政策重組推動的部分支出所抵消。我們也看到一些選定的國家和地區參與者的利率競爭加劇，這些參與者往往根據整體貸款需求在這一領域起伏不定。

In general, though, our pipeline of new opportunities is solid, including deals referred from several newer adviser relationships and the growth outlook in this vertical is sound. SBA production remained steady in the quarter and generally in line with expectations. Growth in this business has been pressured for a while now by higher payoffs prompted by the higher rate environment. Although this trend -- this is trending down in 2024 versus the prior year. Application activity is increasing as borrowers become more comfortable with the current rate environment and ultimately a reduction in rates would have a positive impact on payoffs.

不過，總的來說，我們的新機會管道是穩固的，包括從幾個新的顧問關係中推薦的交易，並且該垂直領域的成長前景良好。本季 SBA 產量維持穩定，基本符合預期。由於高利率環境帶來的更高回報，該業務的成長已經受到一段時間的壓力。儘管這一趨勢在 2024 年與前一年相比呈下降趨勢。隨著借款人對當前利率環境越來越滿意，申請活動正在增加，最終利率的降低將對還款產生積極影響。

The tax credit portfolio continues to perform well and grew by $20 million in the quarter as existing affordable housing projects moved through the construction phase. The sponsor finance book was essentially level in the quarter with healthy origination activity offset by payoffs stemming from the sale of portfolio companies by our private equity clients. New deal activity in this business continues to steadily ramp up in what is typically a busier second half of the year.

隨著現有經濟適用房項目進入施工階段，稅收抵免組合繼續表現良好，本季增加了 2000 萬美元。本季贊助商財務帳面基本持平，健康的發起活動被我們的私募股權客戶出售投資組合公司所產生的收益所抵消。在通常較為繁忙的下半年，該業務的新交易活動持續穩定增加。

Within the geographic regions, St. Louis and Kansas City markets which contained our largest base of general C&I businesses were heavily impacted by the reduction in revolving line of credit balances. However, new origination activity was up in both markets over Q1 with significant fundings on acquisitions by existing clients, new relationships in the non-profit and medical services industries, and improved activity in commercial real estate lending.

在地理區域內，聖路易斯和堪薩斯城市場是我們最大的一般工商業業務基地，受到循環信貸餘額減少的嚴重影響。然而，第一季兩個市場的新發起活動均有所增加，其中大量資金來自現有客戶的收購、非營利和醫療服務業的新關係以及商業房地產貸款活動的改善。

The Southwest region posted 11% annualized growth in the quarter and loan balances were up $234 million or 16.5% year over year. This strong growth is representative of the higher levels of new development and generally more robust economic activity in these major metro markets, which include Dallas, Phoenix, and Las Vegas.

西南地區本季年化成長率為 11%，貸款餘額增加 2.34 億美元，年增 16.5%。這種強勁的成長代表了達拉斯、鳳凰城和拉斯維加斯等主要都會區市場更高水準的新開發和整體更強勁的經濟活動。

Key drivers this quarter included fundings on development loans and process as well as stronger new loan origination versus the prior quarter. Notable deals include new relationships in Las Vegas with an auto-dealership and a metal fabricator as well as owner-occupied commercial real estate expansion with an existing financial services client in Phoenix.

本季度的主要驅動因素包括開發貸款和流程的資金以及與上一季相比更強勁的新貸款發放。值得注意的交易包括在拉斯維加斯與一家汽車經銷商和一家金屬製造商建立的新關係，以及與鳳凰城現有金融服務客戶的業主自用商業房地產擴張。

In our West region of Southern California loan balances were up modestly for the quarter and 5.8% year over year. This region was also impacted somewhat by lower usage and lines of credit. However, this was more than offset by several larger new loans in commercial development and hospitality as well as continued onboarding of new C&I relationships. Talent that we've added in this market over the past 18 months or so, has continued to gain some traction with over 20 new commercial relationships added so far year to date.

在南加州西部地區，本季貸款餘額小幅成長，年增 5.8%。該地區也受到了使用率和信貸額度下降的一定影響。然而，這被商業開發和酒店業方面幾筆較大的新貸款以及持續建立的新工商業關係所抵消。我們在過去 18 個月左右的時間裡在這個市場上增加的人才繼續獲得一些吸引力，今年迄今已增加了 20 多個新的商業關係。

Moving to deposits on slide 9, we posted strong core growth with balances up $192 million in the quarter and $1.1 billion or 99.9% year over year. Balances were up in all of the key categories, but most prominently in non-interest bearing DDA relating to a strong quarter in the property management deposit vertical, as well as our focus on new C&I operating accounts. In addition to growth, these strategies are helping to maintain our overall current cost of deposits, which Keene will expand upon and positions as well moving forward

轉向幻燈片 9 上的存款，我們公佈了強勁的核心增長，本季餘額增加了 1.92 億美元，比去年同期增加了 11 億美元，即 99.9%。所有關鍵類別的餘額均有所增加，但最突出的是無息 DDA，這與物業管理存款垂直領域的強勁季度以及我們對新 C&I 營運帳戶的關注有關。除了成長之外，這些策略還有助於維持我們當前的整體存款成本，基恩將在此基礎上擴展並繼續前進

The breakout by region on slide 10 further illustrates this growth profile with the increase for the quarter attributable to the deposit verticals and the southwestern markets. The same behaviors by operating businesses, which prompted reductions in revolving lines also resulted in lower deposit balances in our Midwestern and Southern California portfolios. At present, these companies are opting to use excess cash for working capital and short-term needs rather than borrow. However, as cash builds heading into the second half of the year and as companies become more confident that rates will come down in the future, we do expect this behavior to normalize.

投影片 10 中按地區劃分的突破進一步說明了這種成長概況，本季的成長歸因於存款垂直市場和西南市場。經營企業的相同行為導致循環額度減少，也導致我們中西部和南加州投資組合的存款餘額下降。目前，這些公司選擇將多餘的現金用於營運資金和短期需求，而不是藉款。然而，隨著下半年現金的增加以及企業對未來利率下降的信心增強，我們預計這種行為將會正常化。

The deposit verticals are further broken out on slide 11, which shows the overall portfolio well balanced between the three major lines of business. Growth in Q2 was particularly strong in the Property Management segment as we continue to add new accounts to our existing management company relationships.

投影片 11 進一步細分了存款垂直領域，顯示三大業務線之間的整體投資組合保持良好平衡。隨著我們繼續為現有的管理公司關係添加新客戶，第二季度物業管理領域的成長尤其強勁。

We're also seeing traction related to the Florida branch, which was opened in 2023, allowing us to bring on new accounts located in that state. These are coming both from our existing relationships as well as new management companies, which are now able to access our products and our expertise.

我們還看到了與 2023 年開設的佛羅裡達分行相關的吸引力，這使我們能夠在該州開設新帳戶。這些資源既來自我們現有的關係，也來自新的管理公司，這些公司現在能夠使用我們的產品和專業知識。

Funding mix is profiled on slide 12, which highlights the strong DDA component of our major client channels. In addition to our growth for Q2 being weighted in low cost account types, we continue to see moderation in both pricing and remixing to the higher interest rate products. Furthermore, we are producing higher average balances in accounts opened versus those closed across all channels, and we are having success in protecting and expanding our best relationships.

投影片 12 介紹了資金組合，其中突出顯示了我們主要客戶管道中強大的 DDA 組成部分。除了我們在第二季的成長中重點關注低成本帳戶類型之外，我們還繼續看到定價和重新混合到較高利率產品方面的放緩。此外，我們在所有管道上開立的帳戶平均餘額高於關閉的帳戶，並且我們在保護和擴大我們的最佳關係方面取得了成功。

Now I'd like to turn the call over to Keene Turner for the financial highlights. Keene?

現在我想將電話轉給基恩·特納，了解財務要點。基恩？

Thanks, Scott. My comments begin on slide 13, where we reported earnings per share of $1.19 in the second quarter. Reported earnings included the impact of core conversion related expenses of $1.3 million. Excluding this item, adjusted EPS was $1.21 per share, a $0.14 increase over the first quarter.

謝謝，斯科特。我的評論從幻燈片 13 開始，我們報告第二季每股收益為 1.19 美元。報告收益包括 130 萬美元的核心轉換相關費用的影響。不計此項目，調整後每股收益為 1.21 美元，比第一季增加 0.14 美元。

Operating revenue expanded nicely in the second quarter with both net interest income and non-interest income showing improvement. And expanded earning asset base and a 6 basis points improvement in the net interest margin drove the net interest income increase while a rebound in tax credit income also benefited operating revenue.

第二季營業收入成長良好，淨利息收入和非利息收入均有所改善。獲利性資產基礎擴大及淨利差提升6個基點推動淨利息收入成長，稅收抵免收入回升也有利於營業收入。

The improvement in margin this quarter was driven by strong client deposit growth that allows us -- allowed us to decrease usage of brokered CDs. Also, the provision for credit losses decreased from the prior quarter as total loans declined and net charge-offs remained low. Non-interest expense was incrementally higher in the first quarter, but lower than we had originally expected, and the increase was mainly due to deposit costs.

本季利潤率的改善是由強勁的客戶存款成長推動的，這使我們能夠減少經紀 CD 的使用。此外，由於貸款總額下降且淨沖銷仍較低，信貸損失準備金較上季有所減少。一季非利息支出逐步增加，但低於我們原來的預期，增加的主要原因是存款成本。

Turning to slide 14. Net interest income was $140.5 million in the second quarter, an increase of $2.8 million compared to the linked quarter. Interest income increased $3.9 million in the quarter as a result of growth in average earning assets and improvement in yields.

轉向幻燈片 14。由於平均收益資產的成長和收益率的提高，本季利息收入增加了 390 萬美元。

Loan income grew $2.6 million from the linked period with higher balances and improved yields, adding $1.9 million and an additional $0.7 million coming from favorable movement in amortization of purchase accounting marks. The average loan origination rate in the second quarter was 8.07% and continues to add to the overall loan yield of 6.9% for the quarter.

貸款收入較同期增加 260 萬美元，餘額增加，收益率提高，增加 190 萬美元，另外 70 萬美元來自購買會計標記攤銷的有利變動。第二季的平均貸款發放率為 8.07%，該季度的整體貸款收益率為 6.9%，持續上升。

Earnings on securities grew $0.4 million on improved yields as the portfolio continues to benefit from higher rates on cash flow reinvestments and from a growing portfolio balance. The average tax equivalent yield on purchases in the quarter was 5.43%, an increase in average cash balances generating an additional $0.8 million in period.

由於投資組合繼續受益於更高的現金流再投資率和不斷增長的投資組合餘額，證券收益因收益率提高而增長了 40 萬美元。本季採購的平均稅等值報酬率為 5.43%，平均現金餘額增加，期內額外產生 80 萬美元。

More details follow on slide 15. Interest expense grew $1.1 million in the quarter and was well managed to lower wholesale borrowings and a $48 million increase in average non-interest bearing demand accounts. Deposit expense increased $1.9 million as a result of higher average balances and an increase in rate mainly in time deposits.

更多詳細資訊請參閱投影片 15。由於平均餘額增加以及主要定期存款利率上升，存款費用增加了 190 萬美元。

The overall cost of interest-bearing deposits rose 5 basis points from the linked period, while the total cost of deposits increased by 3 basis points. Interest on other borrowed funds decreased $1 million in the quarter as customer repo balances declined from seasonal highs in the first quarter and deposit growth reduced our reliance and other short term FHLB borrowings.

計息存款綜合成本較同期上升5個基點，存款總成本上升3個基點。本季其他借入資金的利息減少了 100 萬美元，因為客戶回購餘額從第一季的季節性高點下降，存款成長減少了我們對 FHLB 借款的依賴。

The resulting net interest margin for the first quarter was 4.19%, an increase of 6 basis points from the linked quarter. Earning asset yields rose by 8 basis points, aided by higher loan origination rates as well as the positive change in purchase accounting. Our cost of liabilities increased by 4 basis points compared to the linked period as funding shifted toward lower cost, core DDA, and interest-bearing deposits and away from higher-cost brokered and wholesale funds.

第一季淨利差為4.19%，較上季上升6個基點。受益於較高的貸款發放率以及購買會計的積極變化，收益資產收益率上升了 8 個基點。與關聯期間相比，我們的負債成本增加了 4 個基點，因為資金轉向成本較低的核心 DDA 和計息存款，而不是成本較高的經紀和批發基金。

Our expectation is that while interest rates remain at current levels, asset yields will continue to improve as a result of the additive loan origination and renewal rates, along with the opportunity to improve yields in the investment portfolio through cash flow reinvestment. On the funding side, we experienced an easing of rate pressure on deposits in the second quarter and expect interest-bearing deposit costs to continue to rise at a moderate pace.

我們的預期是，雖然利率維持在當前水平，但由於貸款發放和續約利率的增加，以及透過現金流量再投資提高投資組合收益率的機會，資產收益率將繼續提高。資金方面，第二季存款利率壓力緩解，預計計息存款成本將持續溫和上升。

Loan growth funded with core deposits should allow us to add to net interest income dollars. When rate cuts begin, we anticipate initially each quarter point reduction in Fed funds will generally result in 5 basis points to 10 basis points of margin loss or $2 million to $3 million of quarterly net interest income.

由核心存款提供資金的貸款成長應該能讓我們增加淨利息收入。當降息開始時，我們預計聯邦基金最初每減少四分之一個基點通常會導致保證金損失 5 個基點至 10 個基點，或季度淨利息收入減少 200 萬至 300 萬美元。

We expect deposit rates to be somewhat sticky at first, and we may need to ease into rate reductions for the initial one or two Fed moves. With additional Fed cuts, we will be more deliberate in moving deposit rates just as we were when rates were increasing, we expect this will result in less net interest margin compression than the initial one or two cuts. And while not a component of net interest income, reductions in interest rates would positively impact deposit related non-interest expense as more than half of the underlying balances there are indexed to the Fed funds rate.

我們預期存款利率一開始會有些黏性，我們可能需要在聯準會最初一兩次舉措時放鬆降息。隨著聯準會進一步降息，我們將更加謹慎地調整存款利率，就像利率上升時一樣，我們預計這將導致淨利差壓縮程度小於最初的一兩次降息。雖然不是淨利息收入的組成部分，但利率下降將對存款相關的非利息支出產生積極影響，因為超過一半的基礎餘額與聯邦基金利率掛鉤。

Each 25 basis points of Fed fund move equates to approximately $1 million of quarterly expense. The net, we expect pretax income to decline by $1 million to $2 million for every 25 basis points of Fed fund changes on a quarterly basis for the initial cuts with the impact moderating it further cuts following. At that level, we estimate that mid to high single digit growth will replace lost earnings from interest rate reductions.

聯準會基金每變動 25 個基點相當於約 100 萬美元的季度支出。總體而言，我們預計，首次削減的聯邦基金每季每變動 25 個基點，稅前收入將減少 100 萬至 200 萬美元，後續進一步削減的影響將減弱。在此水準上，我們估計中高個位數成長將取代降息帶來的收益損失。

Moving on to slide 16, we show our credit trends. Credit trends remain unchanged and are a reflection of strong performance on our loan portfolio. Net charge-offs were less than $1 million or 2 basis points of average loans for the quarter.

轉到幻燈片 16，我們展示了我們的信用趨勢。信貸趨勢保持不變，反映了我們貸款組合的強勁表現。淨沖銷額不到 100 萬美元，即該季度平均貸款的 2 個基點。

Nonperforming assets were 33 basis points of total assets compared to 30 basis points at the end of March. Asset-quality trends continued to be favorable with classified assets declining by more than 8% in the period, along with a reduction in past-due accounts. These trends, along with loan growth and qualitative adjustments resulted in a provision for credit losses of $4.8 million, a decline of $1 million from the first quarter.

不良資產佔總資產的比例為 33 個基點，而 3 月底為 30 個基點。資產品質趨勢持續向好，分類資產在此期間下降了 8% 以上，逾期帳款也有所減少。這些趨勢加上貸款成長和品質調整導致信貸損失準備金為 480 萬美元，比第一季減少 100 萬美元。

From slide 17, we demonstrate the allowance The allowance for credit losses represents 1.27% of total loans or 1.38% when adjusting for government guaranteed loans. The allowance totals $140 million, which is up $4 million from the first quarter.

從投影片 17 中，我們展示了準備金。補貼總額為1.4億美元，比第一季增加了400萬美元。

The allowance build reflects a more pessimistic view of the economic forecast in addition to specific reserves, offset by the decline in loan portfolio during the quarter. We continue to use a weighted economic forecast that leans more toward a downside scenario that we continue to believe is appropriate for the environment.

除特定準備金外，準備金的增加也反映了對經濟預測更悲觀的看法，但被本季貸款組合的下降所抵消。我們繼續使用加權經濟預測，該預測更傾向於我們仍然認為適合環境的下行情境。

Moving on to slide 18, second quarter fee income of $15 million was a $3 million increase from the first quarter and driven primarily in the tax credit line item, which was higher on increased activity during the quarter.

繼續看投影片 18，第二季的費用收入為 1500 萬美元，比第一季度增加了 300 萬美元，這主要是由稅收抵免計畫推動的，該計畫因本季活動的增加而增加。

Turning to slide 19, noninterest expense of $94 million was up from the first quarter, but expense levels reflected some improvement from what we planned essentially across the board. Additionally, included in the quarter was $1.3 million of core conversion related expenses compared to $400,000 in the first quarter.

轉向幻燈片 19，非利息支出比第一季增加了 9,400 萬美元，但支出水準反映出我們基本上全面計劃的一些改善。此外，本季還包括 130 萬美元的核心轉換相關費用，而第一季為 40 萬美元。

Deposit servicing expenses were higher compared to the linked quarter due to growth in average balances on certain specialized deposits as well as the impact of allowances that expired unused during the first quarter. With growth in property management deposits in the quarter, we were pleased with the sequential performance of this line [items]. The second quarter's core efficiency ratio was 58% compared to 60% for the first quarter with improvement primarily related to the increase in operating revenue and better than anticipated expense growth.

由於某些專門存款的平均餘額增長以及第一季到期未使用的配額的影響，存款服務費用高於上一季。隨著本季物業管理存款的成長，我們對該行[專案]的連續表現感到滿意。第二季的核心效率為 58%，而第一季為 60%，改善主要與營業收入的增加和好於預期的費用成長有關。

Moving onto our capital metrics on slide 20, the strength of our balance sheet and capital position, we repurchased 225,000 shares at an average price of $38.7 for approximately $9 million. Our strong earnings drove tangible common equity ratio to 9.18%, up 17 basis points from the first quarter.

轉到投影片 20 上的資本指標，即我們的資產負債表和資本狀況的實力，我們以約 900 萬美元的平均價格 38.7 美元回購了 225,000 股股票。我們強勁的獲利推動有形普通股比率達到 9.18%，比第一季上升 17 個基點。

On a per-share basis, tangible book value increased to $35.2, a 10% annualized increase from the first quarter. We announced another $0.01 increase to our quarterly dividend, which will now be $0.27 per share. We continue to have a manageable dividend payout ratio that's less than 23% for the first half of 2024. Regarding potential share repurchases, we have approximately 1.7 million shares remaining under our approved repurchase plan, and we expect to continue to manage our capital levels through share repurchases.

以每股計算，有形帳面價值增至 35.2 美元，較第一季年化成長 10%。我們宣布季度股息再次增加 0.01 美元，目前為每股 0.27 美元。 2024 年上半年，我們的股利支付率仍處於可控水平，低於23%。我們的資本水準：股票回購。

This second quarter was another fundamentally sound quarter. Client deposit generation was strong. Asset repricing continued to improve. Deposit pricing pressure has abated and expenses remain well-managed. Credit conditions have also stabilized, and we continue to make investments in the business through technology with our core conversion later this year and also through new hires in both loan and deposit generating associates in our high-growth markets and verticals.

第二季是另一個基本面穩健的季度。客戶存款產生強勁。資產重定價持續改善。存款定價壓力減輕，費用仍有良好管理。信貸狀況也趨於穩定，我們將繼續透過今年稍後核心轉換的技術對業務進行投資，並透過在高成長市場和垂直領域招募新的貸款和存款業務人員來投資業務。

Additionally, we continue to generate better than peer profitability results with an adjusted return on tangible common equity of over 14% and a 1.3% adjusted return on average assets. Our pre-provision earnings topped $63 million in the quarter or 1.7% of average assets. These results are indicative of what we expect our company to deliver on an ongoing basis due to the strength of the business platform that has been strategically built over the last several years.

此外，我們持續取得優於同業的獲利能力，調整後的有形普通股報酬率超過 14%，調整後的平均資產報酬率為 1.3%。本季我們的預撥備收益超過 6,300 萬美元，佔平均資產的 1.7%。這些結果表明，由於過去幾年策略性建立的業務平台的實力，我們期望公司能夠持續交付。

I appreciate your attention today, and we'll now open the line for analyst questions.

感謝您今天的關注，我們現在將開通分析師提問專線。

(Operator Instructions)

（操作員說明）

Jeff Rulis, D.A. Davidson.

傑夫·魯利斯，D.A.戴維森。

Thanks. Good morning. First question relates to the credit side. It sort of nonperformers kind of treading water a little bit here. I had thought over the course of the quarter, maybe there was a potential for some movement of some of your larger credits, particularly maybe the St. Louis office loan. Any update on some of the larger non-accruals that may be in the bucket and any progress on those?

謝謝。早安.第一個問題涉及信貸方面。這有點表現不佳，有點原地踏步。在這個季度中，我曾想過，也許你們的一些較大的信貸可能會發生一些變化，特別是聖路易斯的辦公室貸款。關於可能存在的一些較大的非應計項目的最新情況以及這些項目的進展嗎？

Sure, Jeff. Let me bring on Doug here and he can address that.

當然，傑夫。讓我請道格來，他可以解決這個問題。

Yeah. Good morning, Jeff. As previously noted the St. Louis office CRE building is under contract. It's passed all of the due diligence periods and we expect to close on the sale of that asset here in the third quarter.

是的。早安，傑夫。如前所述，聖路易斯辦公大樓 CRE 大樓已簽訂合約。它已經通過了所有盡職調查期，我們預計將在第三季完成該資產的出售。

I guess I would just also know, Jeff, a non-performers at the end of Q2 were two agricultural relationships. One relationship totaling $2.5 million, which has subsequently been paid off in full and another credit relationship of about $6 million that saw 20% principal curtailments. So I think proud of the credit result at the end of the second quarter, I think it's very stable and I think we're carrying some pretty good momentum into the back half of the year.

我想我也會知道，傑夫，第二季末的非績效者是兩個農業關係。其中一項關係總額為 250 萬美元，隨後已全額還清，而另一項信用關係總額約為 600 萬美元，本金被削減了 20%。因此，我對第二季末的信貸結果感到自豪，我認為它非常穩定，我認為我們在今年下半年帶來了一些相當好的勢頭。

And Doug, that on the ag, those two credits, one was the new one, the other one that came on in fourth quarter?

道格，在廣告上，那兩個片尾字幕，一個是新的，另一個是第四季出現的？

Yeah, one was a downgrade here in this second quarter, Jeff, of about $6 million relationship. That's the one that we just got a $1.2 million principal curtailment on in exchange for the execution of a forbearance agreement. And another one of $2.5 million, that was paid in full.

是的，傑夫，第二季的價值約 600 萬美元的關係被降級了。這就是我們剛剛削減 120 萬美元本金的金額，以換取執行暫緩協議的條件。另一筆 250 萬美元已全額支付。

Okay. Are they related? I mean, other than just the broader in the categories?

好的。他們有關係嗎？我的意思是，除了更廣泛的類別之外？

No. No relationships. Both of them just in the agricultural relations in the industry.

不，沒有關係。他們兩個只是從事農業關係行業。

Got it. Thank you. Keene on the margin, then. I think kind of coming into the second quarter, I think you framed it up as maybe some first half pressures. We're talking excluding kind of rate moves, if you will. But I think the idea was that some of the core pressures ease in the second half and I think we've just kind of framed up maybe margin drifting back towards 4%, I guess the rate cut sort of guidance or impact.

知道了。謝謝。那麼基恩就處於邊緣。我認為進入第二季度，我認為你將其描述為可能是上半場的一些壓力。如果你願意的話，我們正在討論排除某種利率變動。但我認為我們的想法是，下半年一些核心壓力會有所緩解，我認為我們只是製定了利潤率可能會回到 4% 的框架，我想降息是一種指導或影響。

Can you help us on the margin now that seems like a little bit higher base. Outside of that cut, it sounds like the core -- the rate cut impact sounds like the core has maybe some tailwinds. Is that fair to stay on margin?

您能幫我們解決現在看起來基數稍高一點的問題嗎？除了降息之外，它聽起來像是核心——降息的影響聽起來像是核心可能有一些順風車。保持保證金公平嗎？

Yeah, maybe Jeff, I would say not so much tailwinds, but the headwinds have subsided. I think we didn't necessarily plan for such strong DDA growth in the second quarter. And we therefore, the abatement of repricing pressure happened a quarter earlier.

是的，也許傑夫，我會說沒有那麼多順風，但逆風已經消退。我認為我們不一定計劃在第二季度實現如此強勁的 DDA 成長。因此，重新定價壓力的減輕發生在一個季度之前。

And so while we were expecting down, it improved. I don't -- I think the asset repricing, we certainly expect that to continue with rates where they are. I do think that as we look at deposit growth, we expect good core deposit growth in the second half.

因此，雖然我們預期會下降，但情況有所改善。我不認為——我認為資產重新定價，我們當然希望這種情況繼續保持在原來的水平。我確實認為，當我們審視存款成長時，我們預計下半年核心存款將出現良好成長。

I don't know that we are so confident or exuberant that we think it's going to be all DDA driven. So I do think that as we get some interest bearing growth as part of the overall deposit growth, that mix net interest margin may be a little bit slightly down from where we are. But certainly we think it's a reset of the base at [419] here, and it's hard for me to guide less than 5 basis points.

我不知道我們是否如此自信或熱情，以至於我們認為這將完全由 DDA 驅動。因此，我確實認為，隨著整體存款成長的一部分，我們獲得了一些帶息成長，這種混合淨利差可能會比我們現在的水平略有下降。但我們當然認為這是對[419]基點的重置，我很難引導低於 5 個基點。

But as I look at margin performance over the next four quarters with rates where they are I mean, I think you're less than 5 basis points of compression per quarter with what we're planning and expecting. So, I think that 4% at the end of the year, we're going to be, I think, pretty significantly better than that. Probably 10 or so more basis points as we see it.

但當我觀察未來四個季度的利潤率表現時，我的意思是，我認為按照我們的計劃和預期，每季的壓縮率不到 5 個基點。所以，我認為到今年年底，我們將比這個數字好得多。我們認為可能還有 10 個左右的基點。

Some of that is going to depend on the timing of if you get deposit growth in advance of asset growth or if you get any deposit pressure and have to rely on wholesale funding. But for right now, that doesn't seem to be the case. We seem to really have good deposit generation and momentum.

其中一些將取決於存款成長是否先於資產成長的時間，或者是否面臨任何存款壓力而必須依賴批發融資。但就目前而言，情況似乎並非如此。我們似乎確實擁有良好的存款產生和勢頭。

And I think that gives us comfort that margin is stable-ish, maybe drift a little bit. But overall, I think the sentiment has improved and largely because and the pricing has stabilized and deposit generation, I'd say feels normal again. And so I'll stop there for any follow-ups.

我認為這讓我們感到安慰，因為利潤率是穩定的，也許有點漂移。但總的來說，我認為市場情緒有所改善，很大程度是因為定價已經穩定，存款的產生，我想說感覺又恢復正常了。因此，我將在此停下來進行後續跟進。

Yeah, that was a really thorough. Thanks. Just hop on one last thing on the core conversion, the timeline of those costs that I think you had close to a couple of million this quarter. Can we think about -- so I guess it's [$1.3 million]. Should we assume a few more in the third quarter but then we're kind of done with that or any discussion, the conversion timing and costs?

是的，那確實很徹底。謝謝。只需關注核心轉換的最後一件事，我認為本季度您的成本接近幾百萬美元。我們可以考慮一下——所以我猜是[130 萬美元]。我們是否應該在第三季假設更多一些，但隨後我們就完成了這個或任何討論，轉換時間和成本？

Yeah, happy to say, Jeff, I think are our third quarter will include a similar level of $1.5 million of conversion related expenses. And then there's probably going to be a little bit again in the fourth quarter to get to the total $4 million to $5 million that we expect to see. So I think we had expected it to maybe happen a little bit later in the year in terms of when the expenses came through. But I think it just shows that we're ahead, we're well prepared, and the costs are getting incurred early. So I think that's a positive sign.

是的，很高興地說，傑夫，我認為我們的第三季將包括類似水平的 150 萬美元的轉換相關費用。然後第四季可能會再次達到我們預期的 400 萬至 500 萬美元總額。所以我認為我們預計這可能會在今年晚些時候發生，就費用的支付時間而言。但我認為這只是表明我們處於領先地位，我們已經做好了充分準備，成本正在提前產生。所以我認為這是一個積極的跡象。

Okay. Thank you.

好的。謝謝。

Thanks, Jeff.

謝謝，傑夫。

Andrew Liesch, Piper Sandler.

安德魯·利施，派珀·桑德勒。

Morning, guys. A question on the loan growth d or the paydowns this last quarter, I guess how much of the decline in the payoffs was expected? And do you think that's going to continue here in the third quarter? I'm trying to get a sense of where payoffs could trend here before there's a lot more demand with lower rates?

早安，夥計們。關於上個季度的貸款成長或還款的問題，我猜預計回報會下降多少？您認為這種情況會在第三季持續下去嗎？我試著了解在需求增加和利率降低之前，這裡的報酬趨勢如何？

Yeah, Andrew, this is Scott. I can handle that. I guess look at it at a high level, I've put payoffs into maybe three categories: self-managed, the ag book, there were some sale of assets related to some classified credits that we kind of pushed and took advantage of. Expected payoffs, life insurance premium issues that I talked about with kind of rebalancing some of the coverage levels to a higher rate environment, some of the larger competitors, which we kind of see ebb and flow. And then the Kansas City clients that kind of cycle out and then back in with their real estate projects. And then lastly, just normal course of business.

是的，安德魯，這是斯科特。我能處理好。我想從高層次來看，我可能把收益分為三類：自我管理、農業帳簿、與我們推動和利用的一些分類信用相關的一些資產出售。我談到的預期回報、人壽保險保費問題，以及將一些承保水準重新平衡到更高費率環境的問題，以及一些較大的競爭對手，我們看到了這些問題的潮起潮落。然後堪薩斯城的客戶就這樣循環出去，然後又帶著他們的房地產項目回來。最後，這只是正常的業務流程。

So the way I the way I would look at payoffs is it's not a long-term headwind. Many of them are happening for reasons that we fully expected, certainly the ag book was something that is self-managed. And feel really good about production and the ability for production to outpace those payoffs going forward.

因此，我看待回報的方式是，這不是長期的逆風。其中許多事情的發生都是出於我們完全預料到的原因，當然，農業書籍是自我管理的。對生產以及未來生產超過這些回報的能力感到非常滿意。

Got it. So it sounds like, given where the pipeline stands that's in the commentary on unprecedented, you'll get back to growth through this third quarter. But really it sounds like fourth quarter based on Jim's commentary earlier, that's really when you'll see the growth accelerate with good momentum into '25. Is that a good way to think about?

知道了。因此，聽起來，考慮到前所未有的評論中的管道狀況，您將在第三季度恢復成長。但實際上，根據吉姆早些時候的評論，這聽起來像是第四季度，那時你會看到成長加速，勢頭良好，進入 25 年。這是一個好的思考方式嗎？

Andrew, this is Jim. I think that's exactly how I look at it. Our origination and production is right. We wanted to be, I think too like I said that the -- customers are waiting for the all clear sign. And so that will come later here with some Fed cuts as well as I think the results of the election.

安德魯，這是吉姆。我想這正是我的看法。我們的起源和生產是正確的。我想，我們也想像我說的話——客戶正在等待一切清晰的訊號。因此，稍後會公佈聯準會的一些降息以及我認為的選舉結果。

And our focus really is bringing in great relationships, people who -- companies that have fit well in our culture, who we know the long haul will invest in their businesses and loan growth will emanate from that. So overall balance sheet growth, we're confident that's going to grow mid to high single digits. And then loan growth will come from that that if you're on the right clients.

我們的重點實際上是建立良好的關係，那些非常適合我們文化的公司，我們知道他們會長期投資於他們的業務，貸款成長將由此產生。因此，我們有信心整體資產負債表成長將實現中高個位數成長。如果你有合適的客戶，貸款成長就會隨之而來。

Great. You've covered all my other questions. I'll step back. Thanks.

偉大的。你已經回答了我所有其他問題。我會退後一步。謝謝。

Thanks, Andrew.

謝謝，安德魯。

Damon DelMonte, KBW.

達蒙·德爾蒙特，KBW。

Hey, good morning, everyone, and hope you're all doing well. And thanks for taking my questions here. Just wanted to follow up on the expenses and then kind of the outlook here in the back half of the year. Keene, was a pretty solid quarter, came in below guidance. Could you give a little bit more color and perspective for the back half of the year?

嘿，大家早安，希望你們一切都好。感謝您在這裡提出我的問題。只是想跟進支出狀況，然後了解下半年的前景。基恩的季度業績相當穩定，但低於預期。您能為今年下半年提供更多的色彩和前景嗎？

Yeah, absolutely. I think similar to net interest income and margin, I think we reset the second half year with a little bit more favorable run rate. So we're pleased with that. There's an additional working day in the third quarter, and we have made some additional investments in people, as you've heard from Jim and Scott's comments.

是的，絕對是。我認為與淨利息收入和利潤率類似，我認為我們以更有利的運行率重置了下半年。所以我們對此感到滿意。第三季增加了一個工作日，我們對人員進行了一些額外的投資，正如您從吉姆和斯科特的評論中聽到的那樣。

So that's going to drive a little bit higher on the comp and benefits line. We do expect the deposit verticals to continue to grow. That's going to drive a little bit there. So sequentially, we're thinking from 2Q to 3Q, we're up $2 million to $3 million between those line items. And then obviously you get improved day count on the NII side. So pretty comparable and I think generally paid for.

因此，這將推動薪資和福利線更高一些。我們確實預計存款垂直行業將繼續成長。那裡要開一點。因此，我們認為從第二季到第三季度，這些訂單項目之間的成本增加了 200 萬美元到 300 萬美元。顯然，NII 方面的天數會得到改善。非常具有可比性，我認為一般都是付費的。

Got it. Okay. That's helpful. Thank you. And then on the fee income side of things. As you guys noted the tax credit income swung to a positive this quarter. You still kind of have that roughly $10 million annual level based on what you're seeing with deals that are scheduled to close.

知道了。好的。這很有幫助。謝謝。然後是費用收入方面。正如你們所指出的，本季稅收抵免收入轉為正值。根據您所看到的計劃完成的交易，您仍然有大約 1000 萬美元的年收入水平。

We do and I think with the second quarter results here, it may even prove to be a little bit better. But we don't control the fair value and rate impact there, but we were able to overcome an adverse rate move with the activity in the quarter. So we feel pretty good about where we're set up there for both the third and the fourth quarter.

我們確實這麼做了，我認為從第二季的業績來看，它甚至可能會更好一些。但我們無法控制那裡的公允價值和利率影響，但我們能夠克服本季活動帶來的不利利率變動。因此，我們對第三季和第四季的設定感到非常滿意。

Got it. Okay. And then just lastly, just to clarify the margin commentary to Jeff's question. So I think you said that originally you're kind of looking at a 4% level by the end of the year, could be upwards of 10 basis points better than that. Was that commentary including a 25 basis point rate cut or was it commentary around rate cut, the additional impact should that occur?

知道了。好的。最後，澄清一下對傑夫問題的邊註評論。所以我想你說過，最初你預計到今年年底會達到 4% 的水平，但可能會比這個水平好 10 個基點以上。該評論是包括降息 25 個基點還是圍繞降息的評論，如果發生這種情況會產生額外影響嗎？

Yeah. That was not including a rate impact with the rate cut. Margin will decline a little bit, but you'll get that offset in noninterest expense. And then to the extent you get multiple rate cuts, I think the margin compression, it isn't as significant in call it the third and fourth cut into this in the first and second.

是的。這不包括降息對利率的影響。保證金會略有下降，但你會在非利息費用中得到抵銷。然後，就多次降息而言，我認為利潤壓縮並不像第一次和第二次中的第三次和第四次降息那麼重要。

Got it. Okay, that's helpful. Thank you very much.

知道了。好的，這很有幫助。非常感謝。

Thank you.

謝謝。

Brian Martin, Janney.

布萊恩馬丁、珍妮.

Hey, good morning, guys. What Jim or whomever may Scott, just on the loan side, that runoff on the ag portfolio, how are you thinking that progresses here? In the back half of the year or just into next year, kind of timing as far as when you fully exit that business?

嘿，早上好，夥計們。吉姆或斯科特，就貸款方面而言，農業投資組合的徑流，您認為這裡的進展如何？下半年或明年，您完全退出該業務的時機是怎樣的？

Yeah, I can take that one, Brian. It's -- we've had some good success early on and there's probably maybe $40 million to $50 million that could run off the next couple of quarters. There's going to be a portion of that portfolio, though that may take a little bit longer. I mean, we're not going to just kick performing companies to the curb. But in the same light, they're going to go find a new home with a company that's probably in that business over time. But that I would say that maybe has a little bit longer runway.

是的，我可以接受，布萊恩。我們在早期就取得了一些良好的成功，接下來的幾季可能會消耗 4,000 萬到 5,000 萬美元的資金。該投資組合中將會有一部分，儘管這可能需要更長的時間。我的意思是，我們不會只是將表演公司踢到路邊。但同樣地，隨著時間的推移，他們也會去尋找一家可能從事該行業的公司的新家。但我想說的是，也許跑道更長一點。

Got you. Okay, helpful. And then Keene, just on the fee income line, kind of those volatile lines, if you will kind of a CDE and the some other ones in there. This quarter seemed like it didn't really have a lot of noise in there in terms of unusual items. So it's -- other line item kind of per se this kind of a clean quarter and then there's just still going to be some bouncing around on those other more volatile line items, if you will.

明白你了。好的，有幫助。然後是基恩，就在費用收入線，有點不穩定的線，如果你願意的話，你可以考慮 CDE 和那裡的其他一些線。這個季度似乎在不尋常的項目方面並沒有太多噪音。所以，其他訂單項目本身就是一個乾淨的季度，然後如果你願意的話，其他更不穩定的訂單項目仍然會出現一些波動。

Yeah, I would say this is a pretty your clean quarter in terms of the baseline items were as expected and you had a modest contribution from the tax credit business and with good deposit generation and lower -- little bit lower loan growth. We elected to retain SBA loans, which obviously helped the origination rate and the margin expansion. So I think if you could draw it up this way for the non seasonal quarters, I think it's a pretty good quarter for the fee income space.

是的，我想說，就基準項目而言，這是一個相當乾淨的季度，正如預期的那樣，稅收抵免業務的貢獻不大，存款產生良好，貸款增長略低。我們選擇保留 SBA 貸款，這顯然有助於提高發起率和利潤率擴張。所以我認為，如果你能以這種方式為非季節性季度製定它，我認為對於費用收入空間來說，這是一個相當不錯的季度。

Got you. Okay. And then maybe just one on the credit side. Just as far as the overall health of the -- I had a couple questions that laid about the C&I portfolios that some of the banks and just how the performance has been there. Just are you seeing any stress within that portfolio, if you can just give any commentary on it. It seems like credit is very healthy from kind of the commentary here, but just anything you're seeing on the C&I side or any concerns out there within that portfolio?

明白你了。好的。然後也許只是信用方面的一個。就整體健康狀況而言，我有幾個問題，涉及一些銀行的 C&I 投資組合以及其表現如何。如果您能對此發表任何評論，您是否看到該投資組合中存在任何壓力？從這裡的評論來看，信貸似乎非常健康，但是您在 C&I 方面看到的任何內容或該投資組合中存在的任何擔憂嗎？

Yeah, Brian, it's Doug. I'll try to address that. We saw in the second quarter a migration of about 8 or 10 relationships from past rating into special mention. No real commonalities there though. We saw companies that range from commercial roofing contractors to health care service providers to importers of payroll, but no real common trends and no real concerns about really the overall health of the portfolio.

是的，布萊恩，是道格。我會盡力解決這個問題。我們在第二季度看到大約 8 或 10 個關係從過去的評級遷移到特別提及。但那裡沒有真正的共同點。我們看到的公司範圍從商業屋頂承包商到醫療保健服務提供者再到工資進口商，但沒有真正的共同趨勢，也沒有真正擔心投資組合的整體健康狀況。

So yes, these were migration in risk ratings due to the collection of the fiscal year end '23 numbers and first quarter of 2024 numbers, but there's just some impairment of cash flow temporarily or liquidity, but I think appropriate plans in place to see these improve in the quarters to come so.

所以，是的，由於收集了23 財年末的數據和2024 年第一季的數據，這些風險評級發生了遷移，但只是暫時或流動性受到了一些損害，但我認為已經制定了適當的計劃來看到這些在接下來的幾個季度中會有所改善。

Okay, that's helpful. And then just the last ones, Keene, maybe I missed what you said on the outlook for the expenses. Was it just a couple of $2 million to $3 million a quarter, is kind of what you're thinking the increase may look like with the deposit expense, I guess, in there or is that --?

好的，這很有幫助。然後是最後一個，基恩，也許我錯過了你所說的關於費用前景的內容。只是每季 200 萬至 300 萬美元，您認為存款費用的增加可能是這樣的，我猜，在那裡，還是——？

Yeah, that's correct, Brian. And then eventually, once we're post core conversion, you'll have that sort of $1.5 million coming kind of back in our favor.

是的，這是正確的，布萊恩。最終，一旦我們完成核心轉換，您將獲得 150 萬美元的回報，對我們有利。

Okay. And if I remember right, Keene, the impact of the rate cuts, did it broadened out a little bit? I mean the 5% to 10%, it seems a little bit bigger than maybe what you had talked about in the past, but maybe that's more earlier rate cuts versus later rate cut, but just a the size of that impact on kind of potential cut. This sounds like it could be at the lower end of that range or even lower on the out cuts, if you will.

好的。基恩，沒記錯的話，降息的影響是否擴大了一些？我的意思是 5% 到 10%，它似乎比你過去談論的要大一點，但也許這是更早的降息與後來的降息，但這只是對潛在影響的大小切。這聽起來好像它可能處於該範圍的下限，或者如果你願意的話，甚至可以低於outcut。

Yeah, I would say on the [outcuts], we've had the passage of time and we've added to the investment portfolio, which has helped us to stabilize and further improve the net interest income stream. I think with -- we've put some hedges caps collars in place. And, I think just some what's happening on the origination side, we're getting a little bit less variable, a little bit more fixed in this current environment.

是的，我想說的是，關於[預算]，我們已經經歷了時間的推移，我們已經增加了投資組合，這幫助我們穩定並進一步改善了淨利息收入流。我認為——我們已經安裝了一些樹籬帽項圈。而且，我認為只是起源方面發生的一些事情，我們在當前環境中得到了一點點的可變性，一點點的固定。

So all of those, I think, are contributing to better than we had initially thought out rate guidance. And I also don't think that we had really talked much about that previously. We had stayed back from that. But I think just because we were still seeing so much deposits of pricing trickle through and now that slowed and we're kind of back to what feels more like a normal deposit environment. I think that gives us comfort with the initial cuts still being very similar, but not as not as dramatic on third fourth, et cetera.

因此，我認為，所有這些都比我們最初設想的利率指導做出了更好的貢獻。而且我認為我們之前並沒有真正談論過這個問題。我們沒有這麼做。但我認為只是因為我們仍然看到如此多的定價存款流入，現在放緩了，我們又回到了感覺更像正常的存款環境。我認為這讓我們感到安慰，最初的剪輯仍然非常相似，但在第三個第四個等等方面沒有那麼戲劇化。

Yes. Okay. That's super helpful. And just the last one was on the reserve coverage. It kind of ticked up a bit here, but credit still sounds pretty healthy. I guess is the current level of the reserve or current reserve coverage feel like it's sustainable at this level and really no further rise from here? I guess how you feel about that?

是的。好的。這非常有幫助。最後一項是關於儲備金覆蓋範圍的。這裡的情況有點好轉，但信貸聽起來仍然相當健康。我想當前的儲備水平或當前的儲備覆蓋率感覺在這個水平上是可持續的，並且真的不會從這裡進一步上升嗎？我猜你對此有何感想？

Yeah. I mean, obviously, a big portion of that, Brian, is what happens with the underlying forecast. The forecast got better in the second quarter compared to the first but we qualitatively weighted more heavily to be pessimistic with. I think even with cuts looming, it's still feels like higher for longer. And I think we want to make sure that we're just well-covered, given the profitability, given the capital levels for any of those credits that randomly might experienced stress just because of higher rates for such extended period of time.

是的。我的意思是，顯然，布萊恩，其中很大一部分是基礎預測所發生的情況。與第一季相比，第二季的預測有所改善，但我們在定性上給予了悲觀的權重。我認為即使削減迫在眉睫，它仍然感覺更高更長時間。我認為，考慮到盈利能力，考慮到這些信貸的資本水平，這些信貸可能會因為這麼長時間的較高利率而隨機經歷壓力，我們希望確保我們得到了充分的保障。

So I think we're trying to be prudent. I think it's sustainable to the extent that we don't have material changes in any portion of the portfolio, and we'll continue to evaluate the weightings and whether we want to get more pessimistic than we are that.

所以我認為我們正在努力保持謹慎。我認為，只要我們的投資組合的任何部分都沒有重大變化，它就是可持續的，我們將繼續評估權重，以及我們是否希望變得更加悲觀。

Got you. Okay. Yeah, it seems like with rate cuts potentially coming, that's going to be a positive for the borrowers. But I guess so -- but for now, the level seems fine, so okay, I appreciate you guys taking the questions. Thank you.

明白你了。好的。是的，似乎隨著降息的到來，這對借款人來說是積極的。但我想是的——但就目前而言，水平似乎還不錯，所以好吧，我很感謝你們提出問題。謝謝。

Thanks, Brian.

謝謝，布萊恩。

It seems that there are no further questions. So I'll now turn the call back over to Jim Lally.

似乎沒有更多的問題了。現在我將把電話轉回吉姆·拉利。

Thank you, Jericho. Thank you all for joining us today and for your interest in our company. Have a great day and we'll talk to you later this year at the end of the third quarter. Take care now.

謝謝你，傑里科。感謝大家今天加入我們以及對我們公司的興趣。祝您有美好的一天，我們將在今年稍後第三季末與您交談。現在保重。

The meeting has now concluded. You may now disconnect.

會議現已結束。您現在可以斷開連線。