Hilltop Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
April 21, 2023

Key Takeaways

  • First Quarter Results: Hilltop reported net income of $26 million (EPS $0.40), with a CET1 ratio of 18% and over $7 billion in available liquidity.
  • PlainsCapital Bank Performance: Generated $58 million pretax income (1.4% ROAA), saw 8% annualized loan growth, stable core deposits, and a 10% decline in nonperforming loans.
  • PrimeLending Challenges: Mortgage originations fell 54% year-over-year with gain-on-sale margins at 193 bps, leading to headcount reductions, branch consolidations, and expense cuts.
  • Hilltop Securities Growth: Delivered $13 million pretax income on $105 million of revenue, up 45% year-over-year, driven by $26 million in trading profits and $13 million in wealth management sweep revenues.
  • Funding Cost Pressure Ahead: Management expects deposit betas to exceed 60%, causing higher deposit rates and anticipated declines in net interest income and margins in Q2.
AI Generated. May Contain Errors.
Earnings Conference Call
Hilltop Q1 2023
00:00 / 00:00

There are 7 speakers on the call.

Operator

Ladies and gentlemen, welcome to the Hilltop Holdings First Quarter 2023 Earnings Conference Call and Webcast. My name is Glenn, and I will be the moderator for today's call. I will now hand you over to your host, Eric Yohei, Executive Vice President of Hilltop Holdings. Eric, please go ahead.

Speaker 1

Thank you, operator. Before we get started, please note that certain statements during today's presentation that are not statements of historical fact, including statements concerning such items as our outlook, business strategy, future plans, financial condition, allowance for credit losses, Liquidity and sources of funding, the impact and potential impacts of inflation, stock repurchases and dividends and impacts of interest rate changes, 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 expectation concerning future events that by their nature are subject to risks 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 and quarterly reports filed with the SEC. Please note that the information presented is preliminary and based upon data available at this time.

Speaker 1

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

Speaker 2

Thank you, Eric, and good morning. For the Q1, Hilltop reported net income of $26,000,000 or $0.40 per diluted share. Return on average assets for the period was 0.7% and return on average equity was 5.1%. Although there was a considerable amount of volatility in the banking industry this past quarter, we entered the year with a strong balance sheet and feel very good about the position we are in. We have always managed our capital funding and liquidity for the long term and through various potential rate environments, so we can continue to support our customers during times like this.

Speaker 2

Specifically, we have over $7,000,000,000 in available liquidity, a common equity Tier 1 risk based capital ratio of 18% and a diversified and granular deposit base. We will continue to prioritize the health and soundness of our balance sheet and believe this will create opportunities for us over time. PlainsCapital Bank generated $58,000,000 of pre tax income on $13,700,000,000 of assets, generating a return on average assets of 1.4%. Average loans at PlainsCapital Bank increased $133,000,000 in the quarter or 8% annualized as both core bank commercial loans and retained mortgage balances increased. While the growth was strong, We are starting to see a slowdown in our pipeline as clients react to higher interest rates.

Speaker 2

Average bank deposits remained relatively stable despite the turmoil in the banking industry. Our total deposits declined 3% for the quarter, but importantly, Our core bank customer deposits only declined by approximately 1% from levels immediately prior to the bank failures until the week after. Though deposit declines has occurred as customers deploy their cash into projects or seek higher yielding often government alternatives, we have not seen any notable customer attrition directly related to the after effects of the recent bank failures. Out of an abundance of caution though, we drew down FHLP advances, which our bank previously had not utilized at all in March. And we moved an additional $300,000,000 from Hilltop Securities' sweep deposit program into the bank.

Speaker 2

These moves were purely offensive as we did not need the liquidity from an operational standpoint. We have not utilized the new of FedBanc Term Funding Program and we do not foresee a need in the immediate future. As a result of our actions and the strong liquidity position our bank entered the year with, we ended the quarter with over $1,700,000,000 in cash at the Fed. Credit quality remained strong during the quarter with non performing loans declining by $3,000,000 or 10% from the 4th quarter and a net charge off ratio to average bank loans of 2 basis points. Overall, our bank produced strong results from net interest margin expansion, minimal credit costs and a meaningful expense discipline.

Speaker 2

Moving to prime lending. Loan volume and profitability remain under pressure because of the impact to consumers from persistent low housing inventory, of high mortgage rates and high home prices. As well, continued excess industry capacity is driving a hyper competitive pricing environment as too many lenders contend for too few origination opportunities. Until relief of some or across all of these factors occurs, meaningful expansion of production volume, gain on sale margins and overall profitability will remain challenged. In response to these circumstances and the approximate 60% reduction in industry volumes since pandemic induced record highs, PrimeLending has taken substantial measures to resize the business and correspondingly reduce its expense base.

Speaker 2

Headcount reductions, consolidation of unprofitable branches and targeted fixed cost adjustments were executed during the quarter. Prime Lending originated $1,700,000,000 in volume with a gain on sale margin of loans sold to third parties of 193 basis points. Origination volume declined by 54% from the prior year, roughly in line with overall industry volume projections of 52%. We expect pressure on the mortgage business to continue as interest rates remain elevated and low inventories persist. Our team at Prime Lending has done an excellent job of reducing fixed costs by taking difficult necessary actions to resize the business for what we believe will be a smaller mortgage market for the foreseeable future.

Speaker 2

Hilltop Securities realized pretax income of $13,000,000 on net revenues of $105,000,000 during the quarter. Pre tax profit improved compared to last year's Q1 due to a 45% increase in net revenues. The revenue improvement was primarily driven by a $26,000,000 increase in trading profits from both structured financed and fixed income services and a $13,000,000 increase in suite deposit revenues from our wealth management business. The growth in revenue in these areas helped offset a slower quarter for municipal issuance as volumes were down across the industry. Moving to Page 4.

Speaker 2

As I stated earlier, Hilltop maintains strong capital levels with a common equity Tier 1 capital ratio of 18% at quarter end and our tangible book value per share increased from Q4 2022 of $0.18 to $27.36 The improvement in tangible book value per share was driven by both net income and a decline of $8,000,000 in our accumulated other comprehensive loss during the quarter. Though tangible book value per share declined year over year, It is important to note that was substantially driven by unrealized declines in our AOCI as well as We believe the size and pricing of that capital deployment drove significant value for our shareholders. Additionally, we repurchased $4,500,000 of shares and declared our dividend of $0.16 during the quarter, which is an increase from the same period in the prior year. Overall, the start to the year at the bank and Hilltop We did see deposit declines, which was expected, but anticipate the actions we have taken will slow the pace of declines and enable us to build them back once rates stabilize. Our balance sheet is in a strong position with robust capital and liquidity levels.

Speaker 2

The health and soundness of our balance sheet are paramount to the organization at this time, and I am grateful for the collective efforts our team has put into fortifying it. Moving forward, we remain confident in the value of our diversified business model, the strength of our employee base and our ability to adapt and succeed in an ever changing environment. With that, I will now turn the presentation over to Will to walk through the financials.

Speaker 3

Thank you, Jeremy. I'll start on Page 5. As Jeremy discussed, for the Q1 of 2023, Hilltop reported consolidated income attributable to common stockholders of $25,800,000 equating to $0.40 per diluted share. During the quarter, solid year over year net interest income growth was offset by ongoing headwinds in the mortgage business as volumes and margins remain challenged. Further, the Q1's results do reflect certain discrete tax items that reduced the overall tax expense in the period.

Speaker 3

The estimated EPS impact of these items is $0.04 per share and we do not view these items as recurring. Further, we expect that the full year GAAP tax rate will remain within the range of prior guidance at 22% to 24%. Turning to Page 6. Hilltop's allowance for credit losses increased by $2,000,000 to $97,400,000 as improvement in the macroeconomic outlook was offset by the impact of collective portfolio changes. The portfolio changes were driven by net Loan growth in the portfolio, which accounts for approximately $4,000,000 of the change and the ongoing updating of risk grades as year end financials were captured, which accounted for approximately $3,400,000 of the change.

Speaker 3

Allowance for credit losses of $97,400,000 yielded an ACL to total loans HFI ratio of 1.19% as of March 31, 2023. Of note, we continue to believe that the allowance for credit losses could be volatile and the future changes in the allowance will be driven by net loan growth in the portfolio, credit migration trends and changes to the macroeconomic outlook over time. Given the current uncertainties regarding inflation, Interest rates, the future outlook for GDP growth and unemployment volatility, we could expect heightened volatility over the coming quarters. Moving to Page 7. Net interest income in the Q1 equated to $122,000,000 including $1,900,000 of purchase accounting accretion.

Speaker 3

Versus the prior year Q1, Net interest income increased by $22,000,000 or 22%, driven primarily by higher yields on loans, securities and cash balances, which were somewhat offset by higher rates on deposits and variable rate borrowings. Net interest margin continued to improve versus the Q4 of 2022, increasing by 5 basis points to 328 basis points. Our current outlook reflects a scenario whereby Fed funds moves to between 5.50 basis points during the first half of twenty twenty three and remain stable for the balance of the year. Further, we expect that deposit competition for both balances and rates will remain very intense for the remainder of the year, causing NII and NIM to begin declining during the Q2. As we noted in our prior quarterly update, we do expect the deposit betas, which we have historically modeled at 50% Of the cycle increases from the Federal Reserve will exceed 60% during this cycle given the current competitive environment.

Speaker 3

Turning to Page 8. In the chart, we highlight the approximately $7,000,000,000 of available liquidity sources that Hilltop maintained as of March 31. While we consider the Federal Reserve's discount window to be a source of liquidity, we do not Further, the comparable liquidity sources as of December 31 equated to just over $7,000,000,000 and remained relatively stable throughout the Q1. As shown in the chart, at March 31, Hilltop maintained $1,600,000,000 of excess cash through deposits at the Federal Reserve. Included in the excess deposits of the Federal Reserve, during the Q1, we swept approximately $650,000,000 of additional deposits from our eligible Hilltop Securities FDIC insured balances in the PlainsCapital, and those balances are reflected in the deposit balances in the chart on the right side of the page and on subsequent pages.

Speaker 3

Further, we borrowed $450,000,000 from the Federal Home Loan Bank with terms of a few weeks. The next 2 to 3 quarters, we expect to maintain excess deposits of between $1,500,000,000 $2,000,000,000 at the Federal Reserve. Additionally, in the bottom left chart, we provide some detail on the pace of the deposit beta changes to date and note our expectations for future changes in interest bearing deposit rates under the view that the Federal Reserve continues to move short term rates higher. I'm moving to Page 9. 1st quarter average total deposits are approximately $11,000,000,000 and have declined by approximately $350,000,000 or 3% versus the Q4 of 2022.

Speaker 3

On an ending balance basis, deposits declined by $219,000,000 to $11,100,000,000 from the prior quarter ending balance level. Of note, approximately $360,000,000 of customer deposits moved from an on balance sheet deposit account into money market mutual funds or treasury investments within the PlainsCapital Private Bank. We view this as a favorable outcome as we've retained the balances at our company, while aiding the customer in achieving higher yields. We would expect that these balances could shift back into the bank deposits over time as market rates adjust through the next leg of the rate cycle. While we expected deposits to decline during the Q1, given the level and speed of market interest rate adjustments coupled With our decision to manage interest bearing deposit costs with a significant lag, we have seen that customer activity has significantly shifted as customers are seeking higher interest rates and their focus has resulted in higher price elasticity at each tier and product level.

Speaker 3

During the quarter, we adjusted our deposit pricing approach to become more competitive across our most liquid products. As a result, interest bearing deposit costs rose to 201 basis points, an increase of 44 basis points from the prior quarter. It is our expectation that interest bearing deposit costs will move higher during the second and third quarters given our stated views on the path to potential rate increases from the Federal Reserve and the updates we've made to our pricing approach. As it relates to deposit balances and costs, we remain focused on balancing our competitive position with our long term customer relationships, while continuing to focus on prudent management of net interest income over time. However, The current environment remains challenging and as noted earlier, we expect that the intensity of competition for deposits will continue to pressure rates higher in the short and medium terms.

Speaker 3

I'm moving to Page 10. Total non interest income for the Q1 of 2023 equated to $162,500,000 1st quarter mortgage related income and fees decreased by $74,000,000 versus the Q1 of 2022 driven by the ongoing challenges in mortgage banking or by the combination of higher interest rates, Home price inflation, limited housing supply and the ongoing overcapacity in terms of mortgage originators across the U. S. Has driven volumes materially lower and moved margins to levels we've not seen in recent history. Further, versus the prior year Q1, Purchase mortgage volumes decreased by $1,100,000,000 or 42 percent and refinance volumes decreased by $900,000,000 or 88%.

Speaker 3

During the Q1 of 2023, gain on sale margins continued what has been a multi quarter decline. While gain on sale margins have been pressured, we are continuing to see that customers are paying to buy down their interest rate and as such Mortgage origination fees have declined less sharply versus the prior year period. We expect the gain on sale margins will continue to be pressured And while they have begun to stabilize at these lower levels, it is not clear when and by how much the market will rebound during 2023 given the current constraints in the marketplace that I noted earlier. Other income increased by $29,000,000 driven primarily by improved lock and trading lock volume and trading activity in our structured finance business at Hilltop Securities. It is important to recognize that both the Fixed Income Services and Structured Finance businesses at Hilltop Securities can be volatile from period to period, They're impacted by interest rates, overall market liquidity, volatility and production trends.

Speaker 3

Turning to Page 11. Non interest expenses decreased from the same period in the prior year by $36,000,000 to $250,000,000 The decline in expenses versus the prior year Q1 was driven by decreases in variable compensation of approximately $31,000,000 at PrimeLending, which was linked to lower fee revenue generation in the quarter compared to the same period prior year. Additionally, non compensation variable expenses, particularly mortgage production related expenses, which are captured in other expenses in the table in the upper right of the slide, declined as production volumes declined versus the Q1 prior year. Looking forward, we expect expenses other than variable compensation will remain relatively stable As the ongoing focused efforts related to streamlining our operations and improving productivity continue to support lower headcount and improved throughput across our franchise, helping to offset the ongoing inflationary pressures that persist in the market. Turning to Page 12.

Speaker 3

1st quarter average HFI loans equated to $7,900,000,000 in 2023, relatively stable with the prior year Q1 levels. On a period ending basis, HFI loans grew versus the Q4 of 2022 by $100,000,000 driven by improving commercial loan growth, particularly in commercial real estate and the retention of 1 to 4 family mortgages originated by Prime Lending. Given the current market conditions, including the inverted yield curve, which has substantially impacted the economic value of holding mortgage loans on the balance sheet, We expect to substantially reduce our 1 to 4 family mortgage retention levels from $75,000,000 to $150,000,000 per quarter to between $20,000,000 per quarter for the remainder of 2023. In addition, we do expect Commercial loan production to begin to slow in the Q2 and throughout the balance of 2023. Currently, we are expecting full year average loan growth of 0% to 2% for the full year 2023.

Speaker 3

Turning to Page 13. In the graph in the upper right of the page, we show the progress made in reducing NPAs throughout 2022, which has continued into this year. Credit quality has remained solid through the Q1. And while we do not see any prevailing trends that cause us outsized concern in our portfolio, We are watching the portfolio closely with higher interest rates, potentially lower utilization rates in certain segments of commercial real estate and an expected slowdown in economic activity could have a negative impact on our clients and our loan portfolio. As is shown on the graph at the bottom right of the page, the allowance for credit loss coverage at the bank ended the Q1 at 1.23%, including mortgage warehouse lending.

Speaker 3

Turning to Page 14. As we move into the Q2 of 2023, there continues to be a lot of uncertainty in the market regarding interest rates, inflation and the overall health of the economy. We're pleased with the work that our team has delivered to position our company for times like these and our teammates across our franchise remain focused 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. As is noted in the table, our current outlook for 2023 reflects our current assessment of the economy and the markets where we participate. Further, as the market changes and we adjust our business to respond, we will provide updates to our outlook on future quarterly calls.

Speaker 3

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

Operator

We have our first question comes from Bradley Gailey from KBW. Bradley, your line is now open.

Speaker 4

I wanted to start just with mortgage. I know the headwinds that exist there. If you look at the last three quarters, it's been at a pretty notable loss position for the bank. Is there an opportunity to further reduce non variable Expenses at mortgage to get that business to at least a point of breakeven or what are your thoughts on Continued mortgage expense rightsizing and when we should expect to see that unit get out of the red back into the black.

Speaker 3

Hey, Brady, it's Will. You highlight the issue. It's been a challenging few quarters and really last year for the mortgage business. As we are evaluating that franchise first, it's worth noting It's a significant portion. It has been a significant portion of our business over the years and will continue to be.

Speaker 3

And as we evaluate it, we are solely focused on long term and making sure that we maintain a robust franchise to take advantage of that market when it does rebound. I think to your to acutely to your point around profitability, profitability for the full year is going to be challenging certainly given where The Q1 came in. We did take, I'd say, substantial actions in March early April to continue to reduce fixed costs. Objectively, we expect the loss level to continue to decline for the balance of the year and move us to a position where for 2024, we would expect to be at a run rate level of breakeven or better just given where the market dynamics I think as we sit here, we've got to we are being careful and prudent given the gain on sale margins at 193 basis points to 3rd parties, as well as the overall volume in the marketplace, we think that gain on sale level is unsustainable and will recover At some point, I think the challenge is kind of when and by how much and I tried to cover that in my comments. But again, from a cost perspective, we continue to make steps every month and every quarter with the leadership team at Prime and again, with a focus on improving or reducing the overall loss each quarter.

Speaker 3

But again, The market dynamics in a one handle in front of the gain on sale makes profitability a real challenge.

Speaker 2

And I'm hopeful that this is the bottom on margins and that the overcapacity is really being Hold out of the business. You are seeing some M and A and some other activity with like Wells Fargo and everything in the last quarter that What lead us to believe that we are the cycle is turning, but it's still not profitable.

Speaker 4

Okay. And in the Q1, was there any meaningful adjustment to the MSR valuation?

Speaker 3

Yes. We had about a $5,700,000 negative adjustment to the value of the MSR, Really reflecting, I think the market's view that and an evaluation view that the current loans going on the books are going into the MSR with a 6%, 6.5% rate are going to have a higher propensity to refi if you believe the Fed is going to move rates lower in the short term. So We did make that valuation adjustment. That's a pretax.

Speaker 4

Pre tax number, okay. And the $5,700,000 is that net of hedges? Did you guys hear me?

Speaker 3

Yes. Yes, it was net of hedges. That's correct.

Speaker 4

Okay. Yes. No, that is all right. And then my final question is just on the tax rate. I know it was You're abnormally low in the Q1.

Speaker 4

You're still sticking to the 22% to 24% guidance. So That would kind of suggest that the effective tax rate ticks up to like, I don't know, 26% to 27% For the rest of the year, is that am I thinking about that right?

Speaker 3

I think, yes, I mean historically the Q1 well, so the discrete items Did bring the effective tax rate down to 11.4%. I think what we're expecting is, As you saw second half of last year, 25% to 26% is probably the normal run rate. 1st quarter is always historically low from an I think a tax rate perspective due to some of the stock compensation related items that normally go through. So it's historically a below trend ETR. That said, we would expect 24% to 26% for the recurring for the remaining 3 quarters, but that will bring us in And likely will bring us in forward to lower end of that range for the full year.

Speaker 4

Okay. And one more, just I mean you guys still have excess capital. I know that M and A is tough right now given the backdrop, but I also know that Hilltop tends to You know, buy stuff that's out of favor in tough times. So maybe just an update on how you're thinking about M and A and is that a possibility

Speaker 5

today? Sure.

Speaker 2

Well, I mean, I clearly think that last quarter was A sea change and we're still interested in doing M and A. We're still interested in doing Deals that are strategic fits for our business and on balance just with the change And market prices, it better positions us in our currency.

Speaker 4

All right, great. Thanks guys.

Speaker 3

Thanks.

Operator

Thank you and my apologies, Brady. We have our next question comes from Brad Milford from Piper Sandler. Brad, your line is now open.

Speaker 5

Hey, good morning, guys.

Speaker 2

Good morning.

Speaker 5

Am I coming through? Okay. Thanks for taking my question.

Speaker 2

I was just curious if

Speaker 5

you could talk a little bit about the change in guidance on The broker dealer segment, just kind of curious is the area you're seeing more strength or is it really a function of revenues Feeling better about revenues sort of hanging in this range. I guess you had that really low Q1 last year, so it kind of Throws the year over year growth off a little bit, but just kind of curious what you're seeing and kind of how to think about the change in the broker dealer guidance?

Speaker 2

Let me speak and then we'll talk specifically to the guidance. I think first of all, The Q1 of last year, we had it was a really challenging quarter and we had some really muted structured finance Q1. This has been the opposite this quarter and we've had some really strong trading gains in the quarter, which I don't necessarily know if we're going to rely on those to persist throughout the year. But what is persistent is our sweep revenue, just given the rate environment and that was up to $15,000,000 for the quarter. So we do feel good about the momentum and the revenue and Several other businesses performing well at Hilltop Securities really throughout the next rest of the year.

Speaker 3

And Brett, I think That covers it. So you'll see the sweep revenue show up in retail and clearing services in the revenue items at the broker dealer. But that's really the primary contributor to the increase in the overall outlook coupled with, as Jeremy mentioned, a stronger Q1 than we might have otherwise expected.

Speaker 5

And Will, just back to the expense conversation. What are really mostly expense saves coming at Prime? Or I did notice too that the expenses, at least on a linked quarter basis, I know that's Maybe not the best comparison we're down to at the bank, but just kind of curious if you could maybe delve into the kind of sources of or the primary sources of the expense? Or is it really kind of across the franchise.

Speaker 3

I think the preponderance of the expense saves have occurred Brian, with that said, we are with the work we're doing there to right size the business to meet the market from a profitability perspective. But Across as we have and as we've continued, we are looking for productivity improvements and enhancements across the bank As we reevaluate a series of core processes there, that team is doing a very nice job kind of managing expenses Over time in what's otherwise been a pretty inflationary environment, I would say exactly the same for Hilltop Securities. Again, continue to evaluate Large processes where we can improve productivity and throughput and we're doing that across. So It's been across the franchise where we've seen kind of headcount declines and overall productivity improvement, but the preponderance of the cost saves have come from prime lending.

Speaker 5

Got it. And then just final one for me to follow-up on Brady's question on M and A. I mean, you guys historically have been proactive when things look toughest for the sector. Can you just talk about sort of How you think about maybe buying a bank that might have really low TCE because of marks, marks that you potentially have Jake, on a bond portfolio, you guys are typically a cash buyer or can put a lot of cash in a deal to make it work. Just kind of curious how your approach might be different or not in this environment kind of given everything that's gone on and opportunities you may or may not see?

Speaker 2

Sure. Well, from a balance sheet perspective, we feel like we We have a very strong balance sheet that can be can solve for issues of a potential target Certainly, and the combined entity couldn't get past a lot of this overhang that's out there. And just by nature of where Stocks have drifted and where we've kind of always been around tangible book value, our ability to transact is better whether it's cash or our stock.

Speaker 5

And Jeremy, what would an ideal candidate look like? I mean, smaller banks tend to have a lot more CRE. Obviously, that is not in vogue right now, but just kind of curious, if you were drawing it up, what would it look like? Would it be Necessarily certainly in Texas or you might look elsewhere, just kind of curious kind of what your criteria might be?

Speaker 2

I think it would make a better strategic fit to be in Texas and to be similar business. And look, I mean, I think we're working hard to stay on top of what's going on in the market. And we also are going to be Patient and careful in this environment, not just from a balance sheet liquidity standpoint, but also from of potential credit standpoint.

Speaker 5

Okay, great. Thank you, guys. Thank you. Thank you.

Operator

Our next question comes from Thomas from Stephens Inc. Thomas, your line is now open.

Speaker 6

Hey, good morning, everyone.

Speaker 2

Good morning.

Speaker 6

Lots of moving pieces this quarter in excess liquidity, bringing on the sweep deposits and some borrowings from the FHLB. Can you give us an idea of what kind of levels of excess liquidity you're looking to hold on the balance sheet moving forward?

Speaker 3

Yes. This is Will. As I noted in my comments, objectively, we are looking to hold between $1,500,000,000 $2,000,000,000 of deposits at the bid. And so We'll manage the levels to do that, the levers we have to do that. Really, out of an abundance of caution, that's That's not an operating level that we necessarily need.

Speaker 3

But as we sit here today with the uncertainty around the economy, potentially Uncertainty around the banking segment, we want to make sure we're nimble and agile in the event Something else were to occur.

Speaker 6

Thank you. And then one final one for me. I think you're a little less active in the buyback We were expecting, can you just give me an idea of your appetite from here in your buyback program?

Speaker 2

Sure. So for the Q1, I mean, if you recall, we filed our 10 ks, it was filed kind of late in the quarter. So our window was pretty narrow. And then we were just trying to do a little bit of activity while we had an open window. Since then, our share repurchase authorization, we still got about $70,000,000 left, but I think we're going to proceed cautiously there clearly given the state of Balance sheets and liquidity and

Speaker 6

All right. Thank you for answering my question.

Speaker 2

Thank you.

Operator

Thank you. We have no further questions on the line. Ladies and gentlemen, This concludes today's call. Thank you for joining. You may now disconnect your lines.

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