Hilltop Holdings Inc (HTH) 2021 Q3 法說會逐字稿

Welcome to the Hilltop Holdings Third Quarter 2021 Earnings Conference Call and webcast. My name is Robin, and I'll be coordinating your call today. (Operator Instructions)

I will now hand you over to your host, Erik Yohe, Executive Vice President of Corporate Development. Erik, Please go ahead.

Thank you. Before we get started, please note that certain statements during today's presentation that are not statements of historical facts, including statements concerning such items as our outlook, business strategy, future plans, financial condition, allowance for credit losses, the impact or potential impact of COVID-19, stock repurchases and dividends, as well as such other items referenced in the preface of our presentation are forward-looking statements.

These statements are based on management's current expectations concerning future events that, by their nature, are subject to risk and uncertainties. Our actual results, capital, liquidity and financial condition may differ materially from these statements due to a variety of factors, including the precautionary statements referenced in our presentation and those included in our most recent annual report and quarterly report filed with the SEC.

Except to the extent required by law, we expressly disclaim any obligation to update earlier statements as a result of new information. Additionally, this presentation includes certain non-GAAP measures, including tangible common equity and tangible book value per share. A reconciliation of these measures to the nearest GAAP measure may be found in the appendix to this presentation, which is posted on our website at ir.hilltop-holdings.com.

With that, I will now turn the presentation over to Jeremy Ford, President and CEO.

Thank you, Erik, and good morning. For the third quarter, Hilltop reported net income of $93 million or $1.15 per diluted share. Return on average assets for the period was 2.1%, and return on average equity was 15%. These favorable operating results again demonstrate the strength of Hilltop's diversified model when our businesses and our people execute on their strategies and capabilities.

PlainsCapital Bank had another strong quarter with pretax income of $63 million and a return on average assets of 1.4%. Income during the period included $4.6 million of PPP loan-related origination fees, and a $5.8 million reversal of provision. We have seen continued improvement in our asset quality, which is a reflection of both the bank's sound lending practices and the healthier economic outlook.

Total average bank loans declined $252 million or 4% versus Q2 2021, as PPP balances ran off. Excluding PPP loans, average bank loans were stable in the quarter. Although the lending environment is extremely competitive, and many of our clients remain flushed with liquidity, we have seen growth in our loan pipeline, which is at its highest level since the pandemic.

The current pipeline is heavily commercial real estate, specifically in residential lot development, industrial and multifamily across the major Texas markets. Payoffs will remain a challenge, though, as our quality real estate clients continue to find attractive opportunities for their projects in the permanent financing markets.

Total average deposits remained stable linked quarter, with average deposits, excluding broker deposits, increasing by $200 million or 2% from Q2 2021 and $1.9 billion or 16% from prior year. We continue to see growth in both interest-bearing and noninterest bearing accounts. Since Q3 2020, we have run off almost $1 billion in broker deposits.

This was another strong quarter for PrimeLending, generating $62 million in pretax income. Although a decline from the astonishing levels in 2020, volumes and pricing held on longer than anticipated. And as a result, we were able to deliver favorable returns during the period. PrimeLending originated $5.6 billion in volume in the quarter from its continued strength in home purchase volume. Refinancing volume as a percent of total volume decreased to 29% from 35% during the same period in 2020. If current mortgage rates remain relatively unchanged through the end of the year, we believe this downward trend of refinancing volumes will continue.

Gain on sale margin of loans sold to third parties declined by 17 basis points linked quarter to 359 basis points. Margins remain pressured as we see competition reacting to the decline in refinancing volume and as our product mix has shifted where the relatively higher-margin government product is lagging. Our team in PrimeLending remains acutely focused on monitoring pricing and margins.

PrimeLending continues to recruit productive loan officers and has hired 127 year-to-date, bringing total loan officer head count to 1,314. This is a primary focus as we target purchase-oriented loan officers to help offset the lower margins we expect in the coming quarters. We believe our exceptional team, purchase orientation, technology investments and focus on customer experience will continue to drive attractive returns from the mortgage business.

During the quarter, HilltopSecurities generated $17.4 million of pretax income on net revenues of $127 million for a pretax margin of 13.8%. This was a good quarter for the Public Finance business in particular, with revenues up $12 million from prior year, predominantly from a few larger deals. We are encouraged by the potential for growth in the municipal finance market with a healthy current pipeline and the anticipation of increased future infrastructure spending.

Revenues within the structured finance business decreased by $26 million from last year as the overall mortgage market has declined from the astonishing levels in 2020. From a historical average perspective, volumes are still strong, and revenues rebounded by $24 million linked quarter. We continue to build on the Structured Finance business by solidifying existing relationships and adding new clients.

Within our fixed income business, customer demand weakened given expectations of higher interest rates on the horizon, a trend that has been seen across the industry. While all product areas were challenged in the quarter, HilltopSecurities has made several key additions in the business, including leadership for our middle market sales effort, which has been a strategic priority for several years. Therefore, we remain focused on growing our market share and profitability in fixed income. Overall, HilltopSecurities is well-positioned as we have added key infrastructure, producers and leadership to broaden our core capabilities, and customer penetration as a leading municipal investment bank.

Moving to Page 4. As a result of strong and diversified earnings, we continue to grow our tangible book value while returning capital to shareholders. Our capital levels remain very strong with a common equity Tier 1 capital ratio of 21.3% at quarter end. And we have grown our tangible book value per share by 18% over the last quarter to $27.77.

During the quarter, Hilltop returned $84 million to shareholders through dividends and share repurchases. The $74 million in shares repurchased are part of the $150 million share authorization the Board granted earlier in this year. This week, the Hilltop Board of Directors authorized an additional increase to the stock repurchase program of $50 million, bringing the total authorization to $200 million.

As a result of dividends and share repurchase efforts, Hilltop has returned $153 million in capital to shareholders year-to-date. Additionally, we paid down $67 million in trust preferred securities during the quarter, which will reduce our annual interest expense by over $2 million going forward.

In conclusion, we are very pleased with the results for the quarter. All businesses showed solid momentum going into the fourth quarter and are performing well against our strategic objectives. We feel well-positioned with the team and capital in place to continue growing long-term shareholder value.

With that, I will now turn the presentation over to Will to discuss the financials.

Thank you, Jeremy. I'll start on Page 5. As Jeremy discussed, for the third quarter of 2021, Hilltop reported consolidated income attributable to common stockholders of $93 million, equating to $1.15 per diluted share. Included in the third quarter results was a net reversal of provision for credit losses of $5.8 million. During the third quarter, Hilltop recorded a modest net recovery of charge-offs.

On Page 6, we have details of significant drivers to the change in allowance for credit losses for the period. The most significant drivers in the quarter were the positive migration of certain credits in the portfolio, and a further improvement in the expected macroeconomic outlook. These were somewhat offset by an increase in specific reserves taken against a small number of credits that experienced deterioration during the quarter.

First, related to the macroeconomic outlook. We leveraged the Moody's S7 scenario for our third quarter analysis, consistent with our second quarter outlook selection. This scenario considers lower overall GDP rates, higher inflation, higher ongoing unemployment than other market consensus outlooks. As said, the S7 scenario did improve from the prior period and the impact of the improvement resulted in the release of $6 million of credit reserves during the third quarter.

Second key driver was the ongoing improvement in credit quality across the portfolio. During the quarter, the portfolio experienced positive migration across a number of industries and geographies, resulting from improving financial performance and more resilient outlook for future periods. Further, the portfolio of loans that are currently under active deferral plan fell to $17 million from $76 million at the end of the second quarter of '21. The result of the improvements at the client level equated to a net release of credit reserves of $5 million during the third quarter.

The net impact in changes resulted in allowance for credit losses for the period ending September 30 of $109.5 million or 1.45% of total loans. Further, the coverage ratio of ACL to total loans increases to 1.74% in loans that we believe have lower loss potential, including PPP, broker-dealer and mortgage warehouse loans are excluded.

I'm moving to Page 7. Net interest income in the third quarter equated to $105 million, including $8.3 million of PPP related interest and fee income, as well as purchase accounting accretion. Net interest margin declined versus the second quarter of 2021, driven by lower PPP fee recognition, higher average cash balances and continued pressure on loan HFI yields.

Somewhat offsetting these items were higher loan held for sale yields, resulting from higher overall mortgage rates, coupled with lower interest-bearing deposit costs, which have continued to trend lower, finishing the quarter down 4 basis points versus the second quarter of '21 at 28 basis points. We continue to expect that interest-bearing deposit costs to move modestly lower over the coming quarters as this consumer CD portfolio continues to mature and reset the lower yields.

As it relates to asset yields, the current competitive environment for commercial loans is resulting in substantial pressure on loan yields for new originations, which were 3.8% during the third quarter and is also challenging our ability to maintain current loan floor rates. Given overall market and competitive conditions, we expect that NIM will remain pressured into the fourth quarter of '21, moving lower to between 240 basis points and 250 basis points by year-end.

Turning to Page 8. Total noninterest income for the third quarter of '21 equated to $368 million. Third quarter mortgage related income and fees decreased by $114 million versus the third quarter of 2020, driven by lower origination volumes, declining gain on sale margins and lower lock volumes. As it relates to gain on sale margins, we noted in our key driver table in the lower right of the page, the gain on sale margins on loans fell 18 basis points versus the prior quarter. Further, we are providing the impact of gain on sale margin related to those loans that have been retained on the balance sheet, which for the third quarter equated to 13 basis points.

During the third quarter of 2021, the environment in mortgage banking remained resilient and is expected to continue to shift to a more purchased mortgage centric marketplace, with approximately 71% of our origination volumes serving as purchase mortgages. During the third quarter, purchase mortgage volumes declined modestly to $3.95 billion, while refinance volumes declined 12% or $235 million versus the second quarter origination levels. We expect this trend to continue towards a more purchase centric mortgage market over the coming quarters, and we continue to expect gain on sale margins for third-party sales will fall within a full year average range of 360 basis points to 385 basis points.

In addition, other income declined by $36 million, driven primarily by declines in TBA lock volumes, coupled with lower volumes and market debt in the fixed income capital markets. As we've noted in the past, the structured finance and fixed income capital markets businesses can be volatile from period-to-period as they are impacted by interest rates, market volatility, origination volume trends and overall market liquidity.

Lastly, our Public Finance and retail brokerage businesses at the broker-dealer drove solid revenue growth as highlighted in the securities related fee growth of $15 million versus the prior year period. This growth highlights the impact of our ongoing investments in enhanced products and service capabilities across HilltopSecurities, which has provided our bankers with additional tools and capabilities to support their clients.

Turning to Page 9, noninterest expenses decreased from the same period in the prior year by $44 million to $355 million. The decline in expenses versus the prior year was driven by a decline in variable compensation of approximately $35 million at HilltopSecurities and PrimeLending. This decline in variable compensation was linked to lower revenues in the quarter compared to the prior year period.

The bank continues to deliver improved efficiency, as highlighted in the sub-50% efficiency ratio. This has been driven by lower overall headcount, as well as benefits from strong mortgage production and the acceleration of PPP fees into current period income. As we've noted in the past, we expect that over the longer term, the efficiency ratio at the bank will fall in a range of 50% to 55%.

Moving to Page 10, in the period HFI loans equated to $7.6 billion, relatively stable with the second quarter levels. As we've noted previously, we've seen substantial increases in competition for funded loans across the Texas markets, which we expect will continue into 2022.

Further, the ongoing growth and available liquidity, both on bank balance sheets and consumer balance sheets could further delay a return to more normal commercial loan growth rates for at least a few quarters. We continue to expect that full year of 2021 average total loan growth, excluding PPP loans, will be within a range of 0% to 3%.

During the third quarter of 2021, PrimeLending locked approximately $243 million of loans to be retained by PlainsCapital over the coming months. These loans had an average yield of 2.95%, and average FICO and LTV of 776% and 64%, respectively.

Moving to Page 11, third quarter credit trends continue to reflect a slow, but steady recovery in the Texas economy, which is supporting improved customer cash flows and fewer borrowers on active deferral programs. As of September 30, we have approximately $17 million of loans on active deferral programs, down from $76 million at June 30. Further, the allowance for credit losses, the period-end loan ratio for the active deferral loans equates to 22.8% at September 30.

As is shown on the graph at the bottom right of the page, the allowance for credit loss coverage, including both mortgage warehouse lending, as well as PPP loans at the bank ended the third quarter at 1.58%. We continue to believe that both mortgage warehouse lending, as well as our PPP loans will maintain lower loss content over time. Excluding mortgage warehouse and PPP loans, the bank’s ACL to end-of-period loans HFI ratio equated to 1.74%.

Turning to Page 12, third quarter end-of-period total deposits were approximately $12.1 billion, increasing by $398 million versus the second quarter of 2021. Given our strong liquidity position and balance sheet profile, we are expecting to continue to allow broker deposits to mature and run off. At 9/30, Hilltop maintained $243 million of broker deposits that have a blended yield of 33 basis points.

While deposit levels remain elevated, it should be noted that we remain focused on growing our client base and deepening wallet share through the sales of our commercial treasury products and services and focus on acquisition efforts.

Turning to Page 13, in 2021 we continue to remain nimble as the pandemic evolves to ensure the safety of our teammates and our clients. Further, our financial priorities for 2021 remains centered on delivering great customer service to our clients, attracting new customers to our franchise, supporting the communities where we serve, maintaining a moderate risk profile and delivering long-term shareholder value.

Given the current uncertainties in the marketplace, we're not providing specific financial guidance, but we are continuing to provide commentary as the most current outlook for the remainder of 2021 with the understanding that the business environment, including the impacts of the pandemic could remain volatile. That said, we will continue to provide updates during our future quarterly calls.

Operator, that concludes our prepared comments, and we'll turn the call back to you for the Q&A section of the call.

(Operator Instructions) So our first question is from Michael Young from Truist Securities.

Wanted to start off on the positive kind of municipal outlook for originations there. Could you maybe just talk about kind of the factors driving that? Have you had any increased hiring or teams? And then also, I know I believe Texas passed a new law, I guess, that might be beneficial for you also could you maybe just walk through whether or not that should positively impact you?

Sure. Well, I will first say for the quarter that we did have a really good quarter in municipal finance, and we have a good team and a great organization. In that, as we've referenced for the $12 million increase, a lot of that was due to some bigger deals that I wouldn't necessarily run rate. But so just to, kind of dampen the run rate from last quarter, although you look out towards the future, we are very constructive on the municipal finance issuance, to continue to be strong as it is this year and then also with the pending infrastructure bill, we think that could substantially increase municipal issuance. And there is a lot of different reports out there. But in some cases, it might be 150% or 200% of what the run rate national issuance has been. And in us as an organization, this is really what we do. We're very well prepared to be a part of that.

And just on the sort of recent passing of the bill that might drive more market share towards you all. Is that a fair assumption to make and maybe I don't know if you have any sort of sizing of how much origination takes place from those that would now be excluded?

Well, we think that net it is a positive to us. And clearly, what you're referencing is the bigger banks that are not going to be doing issuances in Texas because of firearms. So yes for us, we're in Texas. It's our #1 state, and we're #1 here. So it will be beneficial. I don't think it will be quite a huge windfall in that -- we're really an FA to say. And so a lot of this will be the underwriting players. So I don't think that it will be huge, but I do think it will be additive.

Okay, great. And maybe just shifting gears over to mortgage, I appreciate the color you did provide. But maybe for Will, just trying to understand on the expense side, the variable piece -- I know you may not want to provide an outlook in terms of some absolute dollar level, but should we be thinking about a certain percentage of volume as being kind of the variable expense load or any other color on how we should think about that kind of moving up and down as volumes maybe fall off a little bit?

Yes, I think that's -- I think that's a good question. I'd point you to Page 9. We've tried to provide here a variable comp to originated volume ratio on the page, which you can see here, fell in the current period, about 158 basis points. I think as volumes over time go down, you'll see that likely trend lower given where we are in terms of origination volume and where folks are on their compensation scorecards and the like.

Likely for this year, we'd expect that number to stay steady, if you will, maybe slightly lower in the fourth quarter. But going forward, we'd expect kind of that ratio to continue to trend down to a more normalized level over time. So that's how we think about the variable comp portion, I think, as we think about fixed cost, we are continuing to make substantial progress, I think on measuring productivity, evaluating our middle and back-office functions across the franchise, whether that'd be mortgage or HilltopSecurities or the bank ensuring that we are making substantial investments in digitizing our processes and capabilities, one to support improved customer response time and as well as improving the overall productivity of our associates across the franchise.

So a lot of work being done to continue to affect change -- positive change from expense perspective around operating expenses but from a variable perspective, that's how we would think about it in mortgage.

Our next question is from Brad Milsaps from Piper Sandler.

Jeremy, maybe I wanted to start with the bank. You sounded a little bit more bullish on, you know the prospects of maybe commercial growth picking up. I was curious, you know if you can maybe, you know, quantify that a little bit more. And you know, if you do see a pickup there, would you continue to also adding one to 4 family to the books as well or one kind of offset together. Just kind of want to get a sense of, you know kind of where you think loan growth can go from here?

I'll just kind of talk maybe high level and then Will can be more specific on the -- particularly on the mortgage front. But, I'd just say we're kind of becoming more optimistic about growth as we've seen the pipeline and read about this from a lot of our competitors start to build up, it's up -- so it's built up, particularly in the last quarter to, you know, levels we haven't seen since pre-pandemic.

And at the same time, we are fighting payoffs, and we had a large payoff quarter as you know a lot of our clients and -- are finding more permanent financing. So I do think -- and we'll check my math here, but I do think you know we're expecting to turn to grow the core portfolio. But we're also, you know going to be measured about it, and it's extremely competitive with a lot of underwriting standards that we try to maintain is going to be difficult.

So I guess my view is just that, you know, I think we are going to grow. It is positive. But I don't think that it's just going to be unbridled. And I do think we'll continue our strategy of purchasing mortgages from Prime. So Will, go ahead.

Yes, I think Brad, I think that's right. I'll echo a lot of that, which is pipelines are stronger. I think Texas is a growing market, and that's -- it's obviously been to our benefit. You know, from a commercial perspective, as Jeremy said, it's been a kind of a one step forward, you know half -- 1.5 steps backward as it relates to payoffs and new originations.

We -- as it relates to the mortgage retention, though, the $50 million to $75 million as we noted in the past, that's a little more of a liquidity kind of consumption strategy and approach than it is necessarily a loan growth. We did kind of start that and accelerate it to offset what would have otherwise been soft commercial loan growth. As Jeremy mentioned, we expect that loan growth in the commercial book to start to accelerate here early part of '22.

But that said, as long as we're sitting on kind of the cash levels we have, which you know we -- from an average perspective, we were over $2 billion in cash at the bank. Our expectation is we'll continue to retain those mortgages out looking to create an over concentration in mortgage exposure. But we're managing that portfolio in concert with our securities book to try to soak up as much liquidity as we can while doing it in small bites kind of each quarter and each month and not taking any substantial vintage risk or vintage exposure as it relates to lagging in overly heavy to either the mortgages or securities in any given period.

Okay, great. That was kind of my next question. Just curious your appetite for deploying some of that liquidity into the bond portfolio, it looks like you grew it a little bit in the third quarter. It actually looks like on a linked quarter basis, my numbers are right, your yields were up in both the taxable and non-taxable. Can you kind of speak to what you're buying and then, you know the change in yield and sort of appetite further increases in the bond book?

Yes, I think we had some yield improvement in the trading book. But in the -- in what I call the bank portfolio, which is specifically used here for liquidity purposes and not a credit risk book, you know we don't have CLOs and some of the other more, I'd say, exotic type of securities in the portfolio.

As I mentioned, we're not looking to take a lot of vintage risk and lagging. So we're lagging in kind of $50 million to $75 million there in terms of securities per month as well, and you'll see that likely continue through, certainly through the end of the year and into next year as well. We're buying the traditional mortgage, mortgage security. Our average duration is about 3.5 years. So we're trying to keep it, call it relatively short because, again we doesn't feel like this is the place to take a ton of duration exposure. And so we're doing things we think are prudent to harvest NII in a world where the interest rate environment hasn't been terribly conducive to get -- to take a big bet.

Okay, great. And then just final question from me. Just back to the Public Finance numbers, Jeremy, I was curious if you could maybe just offer a little more color on the big deals and the pieces that you might think aren't repeatable? I was just looking at the dollar amount of offerings you did was down about 2% year-over-year. Number of offerings is down 17%, but your revenue was up $10 million or $12 million. So just trying to kind of piece together sort of what you consider run ratable versus not?

Yes, I guess, I mean we have $12 million increase year-over-year. We did see improvement in our -- just kind of our traditional business outside of those deals. I don't have the exact number on what those deals of the $12 million increase was. Will, I don't know if there's anything you want to add?

No, I think the way to think about it is, we have added substantial resource, our financial Public Finance businesses, including a debt capital markets team. That debt capital markets team throughout the quarter has been on with us for a period of time now, and they're starting to deliver some transactions that are larger and generate kind of a larger fees in aggregate than our risk.

In terms of run rate ability, I would say $5 million to $7 million of the number without going deal-by-deal and being specific about it. So $5 million to $7 million of kind of this period was, what I'd call larger transactions that might not repeat themselves on a period-over-period basis.

Our next question comes from Matt Olney from Stephens.

Want to start on the mortgage side and specifically on the gain on sale, it looks like we dipped in the quarter. Any more commentary you can provide within this, the pressure you're seeing? Whether it's a steady trend throughout the quarter or any commentary on that margin in September or in recent weeks, it feels like we're heading towards the lower end of that full year range that you gave us. I just want to make sure I'm thinking about this right?

Yes, I think that's appropriate. I think what we've seen is, I'd say it's been more resilient than we expected. I would have thought it could be under more pressure. And again, as I make these comments, think about it in terms of the gain on sale loans sold to third-parties, the gray line on Page 16. As we see they're 3.59%, I would tell you, we expect that to continue to trend down as volumes decline.

And our view is the mortgage industry has built up a lot of machinery, if you will, to process mortgages through what has been kind of historic mortgage run. What historically occurs is prices the first gives back when volumes start to slow. And as we roll into the fourth quarter, which is a seasonally softer period, and we expect it will be. We expect to see volumes come in. We would also expect to see price under some pressure.

Again, I think gain on sale was more resilient during the third quarter than we thought it might be, but the 360 basis points to 385 basis points again, really a target against that third-party sales and we feel like we'll be trending a little lower in the fourth quarter.

Well, I do think it will be, to Will's point, a more gradual or modest decline.

Okay, that's helpful. And then switching over to structured finance, I think the commentary mentioned, there's some pressure there, lower low mark volume, tighter spreads. It sounds like the business continues to slow versus a year ago. Any more commentary we should be thinking about as far as -- from these levels?

Well, I think that -- I try to put it in context that last year was, as I said, an astonishing year to be in the mortgage business. So I mean, we had just exceptional levels. And this quarter, structured finance really bounced back to be -- have a strong quarter by historical means. So I think that's the case on that. And so we're constructive there and kind of having revenue to be at the level we had this quarter. And the risk we see to the future of that, just going to be the risk of higher interest rates and affordability for first-time homebuyers.

And our last question is from Woody Lay from KBW.

So I know in the past, you've highlighted your hotel portfolio, the one segment that was sort of lagging the rest of the group from a recovery perspective. Any update on how that portfolio performed in the third quarter?

Will. I think the portfolio performed certainly too, if not better than our expectations as we look in our deferred loan portfolio. We've got kind of one hotel, one hotel group that's still under an active deferral program. And so we continue to see progress there. I think there's been a couple of things, one, there's been liquidity in the market to help those operators find either new equity or other forms of debt that certainly helped the cause.

But we're also seeing improved utilization and usage trends. I think as we've said in the past the properties that are performing the best are a little more destination/consumer-centric or at least have a mix of that in their business. The pure business travel have been -- have been a little more pressured. But again on the whole, the portfolio has for the year outperformed our expectations and continues to heal itself slowly but surely, and we continue to be focused on supporting our clients through the last lag of the journey here.

Okay, that's helpful. And then on deposits, I mean, it was another strong quarter for deposit growth. Any reason to believe this growth wouldn't be sticky? Was there anything seasonal behind the growth?

Nothing I'd call out as seasonal. As it relates to the growth, I think the overall liquidity in the market remains at historic levels. We continue to see positive deposit trends from our existing customers, those that have operating businesses are generating solid cash flows. They're retaining those. As Jeremy mentioned, we're also seeing customers who are able to sell properties. There's liquidity in the market to -- as our real estate customers take properties to market, they are able to find either additional funding or a takeout there.

So we're seeing a lot of the offset of the paydowns as we're seeing a cash build here. And so we expect that likely will moderate, but we expect deposits to remain elevated well into '22, maybe in the early '23.

Got it. And then last from me, just more about housekeeping issue. But how many PPP fees do you have remaining to recognize? And do you expect most of these to come in the fourth quarter?

Well, again, we think they're going to drift out over the next -- over the next couple of quarters. We think it will slow down. We basically exhausted all of the first round. We're now just into the second round. It's a couple of million dollars. So it starts to get inconsequential here after the fourth quarter.

We currently have no further questions. So this concludes the call. Thank you for joining the Hilltop Holdings Third Quarter 2021 Earnings Conference Call and webcast. You may now disconnect your lines.