STEL - NASDAQ

At this time, I would like to remind everyone in order to ask a question.

The next question comes from Matt Olney from Stephens. Your line is open.

Yeah. And and for what it's worth, you've seen both. You've seen the increased dividends in the fourth quarter, and we've chosen to be selectively active on the share repurchase. So we we appreciate that flexibility, and we think we sit at the catbird seat relating to having a lot of plenty of options and ability to do a lot of things. But I'll end where Bob started. Our goal is to continue to be a core bank.

Okay. Appreciate the commentary there. And then, I guess, switching gears, the other positive theme in the quarter that I saw was just a nice improvement on your interest bearing deposit cost. We'd love to appreciate just how much more room you think you have to to bring that down, whether the Fed kinda stays put or continues to cut rates and then for margin, ticks a little bit higher, love to appreciate your view of kind of the the outlook there. Thanks.

Certainly. Well, the first quarter, we saw the what I'll call, full quarter impact of a lot of the rate activity you saw in the back half of the year. Including in the fourth quarter. And it's we work every day to try and optimize that mix, but we we kinda see that we've gotten most of what we could out of that. Note our cost of deposits did not skew as high as a lot of our peers. So know, we're we're gonna continue to to work on working that down. But, ultimately, it's it's gonna continue to be a slog. I don't think we're gonna have or you'll the world will see the same kind of improvement in from the in the second quarter from the first quarter. But day by day, you know, that's our job, continue to drive an optimal mix deposits and try to grow that base. So we'll be working just as hard, but the incremental return in terms of improvement is gonna be hard to compete with this prior quarter's improvement.

Okay. And and, Paul, I guess the last part of that question was just around the core margin, I think, the 3.97% ex the accretion. Would love to hear thoughts on kinda directionally where where that could go.

Well, we're pleased with showing incremental improvement, three basis points quarter over quarter. Our goal would be to get a four handle back on our core net interest margin, excluding purchase accounting adjustments. And, we think we're on that path. It's just given a lot of the uncertainty, we we'd rather underpromise and outperform on that front. Think every basis point from here is is gonna be a win, and, we're we're just keeping our nose down to drive a core balance sheet. And with that, we'll we believe, will come, incremental improvement. But we're already in rare air so, every basis point we get from here is is gonna be considered pretty good win, and we're gonna continue to work on it.

Okay. For taking my questions. I'll step back.

Again? If do have a question, kindly press star followed by the number one. The next question comes from Will Jones from KBW. Your line is open.

Yeah. Hey, guys. Good morning. Thanks for the questions. You're welcome. So I wanted to circle back to the growth conversation. Ray, maybe if you could just help us frame what you kind of see and know is upcoming on the paydown front. I know it's been obviously a headwind for you guys, but more so a headwind for the broader industry. So just just so we understand what what the what the bar to chin is on on the pay down front. And then just just to the the comments about growth being more back loaded, I I know that you guys are used to kinda growing in that five to 8% range. Would you expect we would kind of immediately get back to that that level, or or is it really more of a slow grind higher as we move into the latter half of 2025? Yeah. Will, I'm payoffs, I mean, I think what we what we feel the kind of the behavior of the portfolio is something like $275 to $300 million a quarter is kinda what we're what we're what we're experienced in absolute dollar terms. On the growth side, you know, I think we we talked about going into the years more like low to mid single digits and you know, obviously, we had the down in the first quarter. But, again, as I as I said earlier, it's gonna really come in in two areas. One is the just the what's funded of new production then also where we where we start to see advances exceed payments. So you know, I think as we as we see that pipeline build and those originations start to increase, that that should result in in getting us over the payoffs and turn into growth. But, again, as Bob mentioned in the beginning, we think that'll be in the last second half of the year.

Yeah. Great. Okay. That's helpful color right there. I wanted to also circle back just just on the margin. I I appreciate the new slides on the repricing slide. That that's really great. It really helps kinda frame and visualize what would the fixed, repricing opportunity is. And and it really seems like, you know, moving beyond 2025 that there's still a a pretty meaningful you know, repricing story out there. But just curious today on on new loans, where where you're seeing pricing come in and and what you're kinda seeing from a competitive standpoint on on loan pricing?

Yeah. Well, I mean, it is it is competitive for the good loan. So but first quarter, our loan originations came on at a weighted average rate of 7.29%. And our, renewed loans, came on at 7.48%.

Okay. And are are you still sticking kinda within the same, you know, fixed versus variable SKU in in in terms of the, broader it's really kind of more of a fifty fifty mix.

Correct. On the on on the new. Yeah. On on what's coming on new. Yeah.

Okay. Great. And then just just lastly for me. I mean, Paul Paul, the expense story this quarter was really, you know, quite positive. I know we kinda talked about being more in that $295 million range for this year. I know it's not as simple as just analyzing what what you guys did this quarter and like there may be a little bit of timing differences with with some costs that are coming through. But you just help us appreciate where you see expenses trending maybe into the next quarter and the balance of the year?

Certainly. We we work every day on expenses, and we would caution against, annualizing the first quarter. Although, we we have our notes to Crimestone as it relates to to managing expenses, but also we wanna be as thoughtful as possible about continuing to invest in the business and what's gonna drive growth in a go forward basis. So we we look at this quarter as something that we can hold our heads high with respect to and know, we like our chances of of beating that prior guidance. But we we will continue to see incremental investment while while always holding the line where we can. Some of I probably got 50% of the the relative beat there was on timing related things that are likely gonna come later in the month, particularly as it relates professional services fees. And and certain external audits and things along those lines. That that have to get done on a time in a timely manner. So not all of it will get pushed into the next year, but we are, as diligent as we've ever been and we're very pleased with our performance on expenses year to date.

Yeah. Okay. Great. Well, nice work there. For the questions, guys. Cool.