SB Financial Group Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 2, 2025

There are 6 speakers on the call.

Operator

Good morning, and welcome to the SB Financial First Quarter twenty twenty five Conference Call and Webcast. I would like to inform you that this conference call is being recorded. We will begin with remarks by the management and then open the conference up to the investment community for questions and answers. I will now turn the conference over to Carol Robbins with SP Financial. Please go ahead.

Speaker 1

Thank you. Good morning, everyone. I'd like to remind you that this conference call is being broadcast live over the Internet and will be archived and available on our website at ir. Yourstatebank dot com. Joining me today are Mark Klein, Chairman, President and CEO Tony Cosentino, Chief Financial Officer and Steve Wall, Chief Lending Officer.

Speaker 1

Today's presentation may contain forward looking information, Cautionary statements about this information as well as reconciliations of non GAAP financial measures are included in today's earnings release materials as well as our SEC filings. These materials are available on our website, and we encourage participants to refer to them for a complete discussion of risk factors and forward looking statements. These statements speak only as of the date made, and SB Financial undertakes no obligation to update them. I'll now turn the call over to Mr. Klein.

Speaker 2

Thank you, Carol, and good morning, everyone. Welcome to our first quarter twenty twenty five conference call and webcast. We started the year with a continued focus on growth amid an economic environment with a fair amount of uncertainty. Despite current conditions, we executed on the growth plan, closed on the Marblehead acquisition while delivering solid results, underscoring the strength of our diversified revenue business model and solid efforts by our team. I'd like to begin by giving a few highlights and key achievements for our company this first quarter.

Speaker 2

Net income was $2,700,000 with diluted earnings per share of $0.42 up $09 or approximately 27% compared to the prior year quarter. When considering the $726,000 in acquisition related costs for Marblehead and servicing rights recapture, EPS, was $0.33 on a GAAP basis. Tangible book value per share ended the quarter at $15.79 up from $14.93 last year or a 5.8% increase. Net interest income totaled $11,300,000 an increase of approximately 23% from $9,200,000 in the first quarter of twenty twenty four. From the linked quarter, margin revenue accelerated at a healthy 14% annualized pace.

Speaker 2

Loan growth for the quarter was right at $97,000,000 up 9.8% from the prior year, and this marks the fourth consecutive quarter of sequential loan growth. Deposits grew over 10%, including Marblehead deposits of 56,000,000 excluding Marblehead, five point four percent. This growth demonstrates the strategic benefits of the acquisition as well as our relationship driven approach to attract and retain clients in a fairly highly competitive rate environment. Mortgage originations for the quarter were $40,000,000 down from the prior year and the linked quarters. However, the pipeline is currently sitting at approximately $50,000,000 and we look for a more vigorous summer volume than in past years, particularly with our new expansion team of producers and new Cincinnati market.

Speaker 2

Operating expenses increased approximately 3.5% from the linked quarter. And finally, charge off levels returned to more historical levels in the quarter at approximately three basis points, and our remaining asset quality metrics were consistent with linked quarter. Our strategic path forward, as we've reported on in a number of quarters, remains our five key initiatives: growing and diversifying revenue, a broader footprint for more scale, more households and more services in those households for more scope, operational excellence and, of course, always asset quality. First, revenue diversity. Our mortgage group had a fairly slow start to the year, as I mentioned, closing this $40,000,000 of volume.

Speaker 2

We were encouraged that we did see a bit of refinance volume, and that current pipeline is now well in excess of that $40,000,000 first quarter number. We remain committed to the residential real estate business line as it continues to provide us with a stronger foothold in the esteemed Columbus metropolitan market. In fact, we now service nearly one half of our 9,000 total mortgage households out of market. Over the past several years, we've reduced operating costs in this residential arena to better match resources with revenue. Also, we continue to assess departmental efficiency, and we intend to delay adding more support staff until volume puts us closer to at least the 400,000,000 production mark or approximately 80% of our processing capacity today.

Speaker 2

Noninterest income was up 3.9% from the prior year quarter at $4,100,000 but down slightly from the linked quarter. The increase from the first quarter of twenty twenty four was driven by increased gains on sale of mortgage loans and significant commercial loan swap revenue. The title business had a very strong quarter, exceeding the prior year revenue by nearly 50%. We continue to expand Peak's title revenue business beyond traditional mortgage title policies. In fact, this quarter, we had several large commercial title policy referrals from the State Bank commercial team that helped drive their contribution percentage of Peak's total revenue this quarter to 31%.

Speaker 2

The goal here is not only expand State Bank's contribution level to Peak, but also expand their third party global revenue base. On scale, a key highlight for the first quarter was the completion of the acquisition of Marblehead Bancorp on January 17. As we've in our annual meeting, this all case acquisition benefits both entities as it expands our presence in Ottawa County, Ohio and strengthens our market position in a higher growth area, while Marblehead will benefit from a more diverse pile of tailored financial solutions, allowing them to deepen their long standing relationship with their current client base. As we discussed in our annual meeting, this acquisition brought in an additional $56,000,000 in low cost deposits as well as a $19,000,000 loan book. This expansion reflects our commitment to both serving and growing our client base and prospects to drive long term shareholder value.

Speaker 2

Again, as I noted earlier, deposits were up from the linked quarter and year over year. For the linked quarter, we saw balances rise by over $119,000,000 and for the prior year quarter, 159,000,000. Significant contributions were made and were accelerated by higher tax revenue from our public fund entities as well as more traditional seasonal growth. As I mentioned, we added $56,000,000 from Marblehead. And adjusting for the acquisition, deposit growth would have been $103,000,000 from the prior year and $63,000,000 to the linked quarter.

Speaker 2

The Marblehead staff and the current client base have been extremely loyal, and we are excited to bring a full slate of products to their clients and that community. When we break down our deposit base to get to the core state bank retail presence, it is clear that we've made some meaningful progress in growing our deposit relationships in the company thus far in 2025. Specifically, when we exclude public funds, those homebuyer plus funds and the Marblehead book, the core deposit base has grown just under 5% this year for an annualized growth rate of 15%. As I mentioned, overall loan growth for the quarter was strong with additional support from the Marblehead acquisition. Our loan portfolio grew $97,000,000 or 9.8% from the first quarter of twenty twenty four and $42,000,000 or 4% from the linked quarter.

Speaker 2

Adjusted for that Marblehead growth of $19,000,000 loan growth would have been $78,000,000 up 7.9% and up 23% or 2.2% from the linked quarter $23,000,000 or 2.2% from the linked quarter. The Columbus lending team continued to provide the bulk of our loan growth, and we fully expect a strong full year performance from our team of now four seasoned commercial lenders in that market. Closing from the second half of twenty twenty four have yet to be fully funded and once complete, will add nearly onethree of our overall budgeted growth for all of 2025. Although pricing has become certainly more competitive, we've seen neither a pullback in this growth market nor any of our other significant growth markets for our company. In terms of deepening existing relationships, more scope.

Speaker 2

As we have commented on in prior webcasts, we understand that despite our size, our digital presence must keep us relevant to the offerings of the larger regional banks in our markets. In that vein, we recently identified a new position in our technology sector by naming a digital banking officer to drive our digital innovation to identify new clients, expand cybersecurity practices and forge a more intentional path forward. Our overarching goal is to ensure we customize our client care initiatives while accelerating the growth of each of our unique client segments 20 fourseven. In addition, we have recently recommitted to our current core provider, Fiserv. As part of that contract negotiation, we will be heightening our data security measures, working to reduce client rub and delivering a more intentional palette of banking services to include a broader offering of credit cards while enhancing the client's online banking experience, to name a few.

Speaker 2

On operational excellence, commercial real estate loans grew $80,000,000 C and I balances, 7,000,000 and consumer balances, 7,000,000 offset softness within the mortgage market. Despite the lower mortgage originations, total loan production for all categories in our company in the quarter was $107,000,000 which was up nearly 40% from the prior year quarter. Finally, asset quality. Charge offs fell to just three basis points from a fairly level number in the fourth quarter. Nonperforming assets totaled $6,100,000 representing 41 basis points of total assets, an increase of $600,000 compared to $5,500,000 or 40 basis points of total assets reported in the linked quarter.

Speaker 2

We remain focused on maintaining strong asset quality as demonstrated by the continued improvement in our criticized and classified loans, which declined to $7,100,000 from $8,700,000 in the prior year, a reduction of $1,500,000 or 18%. Our allowance for credit losses remained robust at 1.41% of total loans, not providing 254% coverage of nonperforming loans. Also by restructuring our asset quality department in the first quarter, we are now even better positioned in this arena to remain a high performer among our peer group. Now I'd like to ask Tony Constantino, our CFO, to give us a few more details, Tony, on our quarterly performance.

Speaker 3

Thanks, Mark. Good morning, everyone. Let me just outline some additional highlights and details of our first quarter results. Starting with the income statement. On net interest income, that was $11,300,000 in the quarter, up 2100000.0% compared to the same quarter last year.

Speaker 3

This growth reflects higher loan balances and improved asset yields, while overall funding costs eased slightly as a result of the interest rate cuts that began in September of twenty twenty four. Moderation of funding costs combined with loan growth was

Speaker 2

the primary driver for our margin

Speaker 3

improvement. For the quarter, the cost of interest bearing liabilities was 2.32%, down 23 basis points from the prior year and from the linked quarter was down four basis points. Our deposit cost of funds has likewise improved to 1.74%, down 12 basis points from the prior year and down four basis points from the linked quarter. Regarding non interest income, although non interest income rose from the prior year in the linked quarters, the percentage of our non interest income to total revenue was below our historical average at 27% due to the expanded margin revenue. We did see the gain on sale of mortgage loans, OMSR, title insurance and other revenue contributing to the year over year improvement illustrating the value of our diversified revenue stream.

Speaker 3

Operating expenses increased compared to both the linked and prior year quarters totaling 12,400,000 in the quarter as Mark has indicated. This includes $726,000 in merger related expenses as well as approximately $300,000 in ongoing operating expenses for Marblehead. Adjusting for these expenses would reduce the operating expense growth to three point five percent and ten point seven percent from the linked and prior year quarter respectively. The efficiency ratio for the quarter would be 76% and down from the prior year when excluding those acquisition costs. Now let's do a balance sheet review starting with loans.

Speaker 3

Total loans ended the quarter at $1,090,000,000 including the $19,000,000 in loans from the Marblehead acquisition. Net interest margin improved in the first quarter to 3.4%, up five basis points from the linked quarter. For the remainder of 2025, we have approximately $90,000,000 of loans that are contractually scheduled to reprice. On average, this scheduled repricing will drive loan yields higher by 140 basis points from their current level. And when we review our current pipeline of commercial credits, we are encouraged as balances scheduled to close in the next thirty days are approximately $90,000,000 while the sixty day window reflects additions of approximately $18,000,000 and at ninety days twenty two million These additions will go a long way to expanding our NIM and net interest income while helping to deploy liquidity from Fed funds to higher yielding loans.

Speaker 3

We continue to believe that rates generally will be lower for the remainder of the year, which will further drive our funding costs lower. We also anticipate that these lower that the lower forward curve will not impair anticipated loan repricings. On deposits, deposits ended the quarter at $1,270,000,000 the highest level in our company's history. The Marblehead deposits are quite profitable coming over with an average cost of 1.53%. With the acquisition, we saw a slight decrease in our loan to deposit ratio to nearly 86% from 89% a year ago.

Speaker 3

Given that growth, our overall cost of deposits decreased modestly to 1.77% from 1.87% in the year ago quarter. With the added liquidity from the MarbleHat acquisition combined with the scheduled amortization of our bond portfolio, we are well positioned to fund the majority of our 2025 loan growth. And additionally, when we break down that deposit base, we continue to see lower cost transactional deposits accelerate. In fact, this quarter we saw demand deposits expand by 8,000,000 or 3% for an annualized number of 12%. And likewise, deposits in our regular savings and money market grew by $27,000,000 or 7% for the quarter and 28% annualized.

Speaker 3

We continue to witness growth in our deposit base in nearly every market. As to capital management, during the quarter we repurchased 26,500 shares at an average price of just under $21 roughly 130% of tangible book. In keeping with our internal capital models, we paused the buyback later in the quarter and intend to reinstate it when we see an opportunity to repurchase shares at a lower price to tangible book value. As Mark mentioned, our tangible book value per share was up 5.8% year over year, but from the linked quarter was down zero two one dollars as the merger impact offset our net income and the positive mark to our AOCI. Specifically, for the acquisition was $3,900,000 with a deposit intangible of 1,700,000.0 This $5,600,000 in dilution was right in line with our acquisition model and will be recaptured in line with our projections.

Speaker 3

When we combine the low cost funding from the acquisition with our strong loan demand at market rates, the recapture of that dilution will accelerate. Looking lastly at asset quality. Total delinquencies were lower from the linked quarter and now stand at just 54 basis points. Our total provision expense for the quarter of $387,000 was comprised of a number of factors including $13,000 for unfunded commitments, dollars 224,000 related to the day one and day two Marblehead transactions and $150,000 for growth related provision. Likewise, the allowance reconciliation from year end 2024 of $15,100,000 to the current level of $15,400,000 included the $150,000 of growth related provision above offset by $85,000 in net charge offs.

Speaker 3

And in addition, the merger related CECL impact was a net increase to the allowance of $224,000 I will now turn the call back over to Mark.

Speaker 2

Thank you, Tony. As we certainly look in the rearview mirror at the first quarter, we are encouraged by our prospects for strong performance over the next three quarters. From an expedited integration of Marblehead Bank to a very successful Annual Meeting, it certainly was a solid start to the year. Even with the merger that impacted tangible book value, year over year tangible book value per share was still up by 5.8%. Recently, we announced a dividend this past week of $0.15 per share, equating to approximately 3.16 yield and 45% of our earnings.

Speaker 2

However, we do expect this payout ratio to normalize this year to something near our long term average of approximately 30%. In closing, we remain quite pleased with the potential to grow in our new region in an untapped market resulting from the addition of Marblehead. We intend to leverage our higher performance business model into organic balance sheet growth while maintaining our focus on operating efficiency and cost containment. Now we'll open it up to questions from our audience. Carol?

Speaker 1

Dorwin, we're ready for questions, please.

Operator

Certainly. We will now begin the question and answer session. The first question comes from Brian Martin with Janney Montgomery. Please go ahead.

Speaker 4

Hey, good afternoon guys.

Speaker 3

Hey, Brian. Good

Speaker 2

morning, Brian.

Speaker 4

Hey. Maybe just Tony, maybe one for you just to start on loan growth in the quarter and just more forward looking on your pipelines. It sounds like the pipelines are still pretty healthy here, both with the ninety day and sixty day in terms of fundings. Do you have any concerns on that with regard to the tariffs? Are you hearing any pushback from your clients that maybe they're going to looking to take a pause here just until some of the dust settles on the on the tariffs?

Speaker 4

Or are you pretty comfortable that, you know, the the loan growth is gonna materialize is kind of what you're looking at the pipelines today?

Speaker 3

Yeah. So I'll I'll add a little bit of color then Mark can kind of comment on or Steve on the on the client side. So the 60,000,000 in the in the ninety day pipeline, which is kinda, you know, about 20,000,000 a month over the thirty, sixty, ninety, we feel very confident on. Most of those have already closed and and the clients are funding, you know, either their money has now been used in the project and now they're they're coming to us for funding. So I feel very confident out kinda ninety days on that.

Speaker 3

We we kinda meet on that pretty regularly, and that feels pretty good. And I don't really have any concerns later out the curve. I still think we have pretty strong calling efforts and pipeline going forward. Mark, can you kind of comment?

Speaker 2

Yes. Just real quickly, Brian. As we mentioned, Columbus continues to be the shining star in the operation. We try to keep a governor on that location because we can probably grow as fast as we want. But we're starting to see some additional growth in the Lima market that we've got some coming from Toledo.

Speaker 2

Steve can certainly speak to a little more of the details of that. But overall, generally, we've been encouraged with our level to compete and participate even at the 6.75% to 7% level, which probably is a pretty normal rate in our markets. Now we do like some SBA lending, which is marginally higher, and those have ramped up dramatically. Steve, any additional comments?

Speaker 5

No, certainly. I don't think Brian to this point we have seen a lot of concern on the tariff front. There's no doubt a lot of economic uncertainty from folks, but it hasn't driven any pullback yet. Certainly, that's a potential cloud for the second half of the year. But to this point, remain generally optimistic about the economy in their own situations.

Speaker 4

Got you. Just as far as your outlook for loan growth this year, kind of upper single digits is kind of a reasonable take today given what you know?

Speaker 3

Yeah. I would we budgeted kind of 8% to 10% you know, inclusive of the Marblehead, you know, their 20,000,000. I would say we're still on board with that number. And, you know, I don't think we've wavered off that as we sit here today. And, Brian, as

Speaker 2

you know, our our our long term average is about 75,000,000 to $100,000,000 and, of course, you know, COVID, it kind of backed off a little bit. But we like that $100,000,000 to, you know, 10% number.

Speaker 4

Gotcha. Okay. That makes sense. And maybe just on the mortgage side, you you mentioned maybe a little slower start, seasonally, but certainly, you know, in some of the actions you took on on the staffing just to get to your capacity. But, how are you thinking about you know, how does the pipeline look today?

Speaker 4

And just, you know, if you think about, you know, full year, you know, what's, how should we kind of be thinking about the mortgage, the the balance of the year?

Speaker 2

Well, as you mentioned, you know, we're at that in the low fifties current pipeline and got good good demand. And, you know, we have now three individuals in the Cincinnati market that now puts up to 28 producers. And so, we're still pulling pretty bullish on what we can do, not only from a sold Freddie Fannie perspective, but from a portfolio as well. Some marginally in that one one, three one, five one arena kind of thing. But we're still pretty pretty optimistic that the $3.80 plus or minus that we have budgeted for 2025 is going to be certainly an attainable number.

Speaker 2

And as I mentioned, getting up to that 400, we certainly have excess capacity. So we can take on much more volume without adding fixed costs.

Speaker 4

Got you. And the the gain on sale margins are holding up pretty well at this point? No no real change on how you're thinking about that?

Speaker 3

No. You know, I think I think that's been in that, you know, kind of 02/02/2020 to 02/25 range fairly consistently, and, that seems to be holding up. You know, just all I just to add a comment to Mark's comment on volume. You know, we did 33,000,000 here in the month of April. I think we got a real shot at a hundred million type quarter.

Speaker 3

You know, previously, I've been kind of maybe 75 ish kind of quarter. So I think if we get, you know, a hundred to a hundred and 10 here in these next two quarters, you know, and if you've kind of put the 40,000,000 in the first quarter in the rearview mirror, we could be above 300,000,000 to $350,000,000 type range by the time we finish, which I think would be a pretty spectacular year given we did the $260,000,000 type range in 2024.

Speaker 4

Okay. And that's helpful. And then, Tommy, just on the deposits were really strong this quarter. Just certainly, Marble had helped, but just organically, in all your comments about the trends you're seeing there, mean, do you expect some of the seasonality if there was some this quarter to kind of back off or just given the liquidity that you have in the loan pipeline? Just trying to think about how we think about deposits here the next couple of quarters given the liquidity and the loan pipelines you have.

Speaker 3

Yeah. It is it is a you know, it's of one of those, you know, perfect storms as it were. I mean, we do have a lot of liquidity, and we have had a lot of seasonality. We've been successful with the public entities that we've called on. Those are generally maybe a little bit higher on the curve in terms of where we're paying, but we're hopeful that that long term relationship is going to get us into their operating accounts.

Speaker 3

Some of those monies are going to kind of move out of here over the next sixty to ninety days. So I would anticipate that, call it, second quarter is probably going to be a negative deposit level number on that. I think our core deposit range is still going to be up 4% to 5% because I do think we still have some pretty good kind of business growth and retail growth. But we'll see. We haven't had to really compete very strongly to stay where we are.

Speaker 3

We've been able to move rates down and customers have stayed with us, so we'll see.

Speaker 4

Gotcha. So the the loan growth should be funded, you know, I just think about that really primarily being funded by the liquidity, you know, in the short term here and kind of the pickup you're you're getting on that, Tony. Can you just as it relates to kind of your outlook on the margin, just if you can tie some of that together, just, you know, what what is the, you know, what the new rates on loans and then, you know, is is it fair to think that it's going to come from the current liquidity that's where you're gonna fund it from at this point?

Speaker 3

Yeah. I, you know, I I I kinda look at it two ways. I mean, you know, call it, we've got eighty five to ninety million of liquidity at, you know, call it four and a half. I do think we're gonna fund, you know, let's say, 30,000,000 of that kind of goes away with natural movement out of those public deposits. So we're going to have 60,000,000 of funding that pipeline, call it adding 150 to 175 basis points on that 60,000,000.

Speaker 3

And then that's not gonna include the 40 basis points we're gonna reprice on the 90,000,000 between now and the end of the year, which I don't think has an alternative source of funding anywhere in the marketplace given where they're what they're going to reprice at. They're gonna reprice it, call it the high sixes, and I don't think they're gonna be able to getting so it's gonna be kind of two ways. You're gonna fund 60,000,000 and call it 200 basis points higher, and then we're going to reprice 90,000,000 at a 40 basis points higher. And I do think funding costs as a general rule are gonna continue to come down as those reprice.

Speaker 4

Okay. And directionally, the margin just up, you know, throughout the balance of the year, guess, you know, guess even and I'm I guess, I don't know what your what your your assumptions are in terms of rate cuts. But if we get a couple of cuts here in the back half of the year along with what you just outlined, the margin is just trending higher throughout the year is how we should think about it.

Speaker 3

Yeah. And, you know, I can let Mark kinda add some detail. But, you know, we had assumed two two cuts. That's current still our position as we sit here today. I know lots of indication are four, but I think two is probably the the appropriate assumption.

Speaker 3

You know, we didn't think we'd get to a three forty margin till probably fourth quarter this year. So I think the the acceleration and speed of the repricing and the funding come down, you know, was a very positive surprise for us. I do think it moves up four to five basis points a quarter, and we're probably at maybe a three fifty five to three sixty on the best case scenario in q four of this year. So we'll see.

Speaker 4

Gotcha. Okay. That's helpful. And maybe just the last one for me was on the, you know, just in terms of credit quality and reserves, things seem to be pretty healthy today. It doesn't sound like there's much concern at least right now until I guess maybe get more details on the tariffs.

Speaker 4

But in terms of the reserve level now with Marblehead, guess, is your expectation, all else equal, that you're going to kind of try and hold the reserve worth at? Could you see that drift a bit lower given the credit quality? Or just how are we thinking about reserve levels today?

Speaker 2

Well, as we've said before, Brian, Tony and I have pulled different directions. I think $20,000,000 is a good number. Tony says 15,000,000 is an adequate number, but more for me is always better. But we're pretty bullish on how we've done things, but it's all economic dependent, and, you know, tariff is gonna have some impact on it. And liquidity of our clients still remains fairly strong, and performance is good.

Speaker 2

And we're pretty bullish on where we currently are at, Unless Steve has some additional comments on.

Speaker 3

Yeah. But I'll just say, Brian, before before Steve has some comment on on some specifics. I you know, I would say, you know, one forty one reserve level, you know, we had kind of previously indicated that kind of one forty is where we're extremely comfortable. I think we could move down a couple of basis points from that and still feel very good, but I don't see us going to a 120 reserve, even with our level of loan growth. So I do think we are going to be provisioning every quarter to keep pace with our anticipated loan growth.

Speaker 2

Clearly, Tony, a bigger balance sheet and a little bit of liability sensitivity where deposits are gonna cost less and loans are rolling up. As you might expect, Ryan, we're really bullish on not only the size of the balance sheet, but also the margins that we're putting it on and how we're going to increase by just holding course.

Operator

Yes. Then to on some

Speaker 3

of the nonperforming that, you know, kind of spiked up there at the end of last year.

Speaker 5

Yeah. Brian, I would describe, our our our supply is stable to improving on that front as we've talked about in the past. We have a very robust loan review process, and and we'd like to think we we don't get too many surprises. And right now, we feel like we've got a good handle on on those that are outstanding. And and I would argue resolving in a relatively positive way to what I would have expected three months ago.

Speaker 5

Continue to feel pretty good.

Speaker 4

Got you. Thanks for that color. And then maybe just I'm sorry, one last one if I could. Just

Speaker 3

on the capital levels.

Speaker 4

Clearly, talked about the buyback, Tony, and obviously the deal this quarter. Just what are the capital priorities here as we kind of look into the next couple of quarters? Is this just kind of rebuilding at this point post deal and getting the deal integrated? Or are there more M and A? Is there a buyback?

Speaker 4

Just how how are you thinking about higher level, just kind of the capital levels here?

Speaker 3

Yeah. I mean, obviously, capital levels move, you know, move down slightly. You know, I think we still feel very good at that CD one level, you know, 12 plus. So, you know, I do think the the buyback is still viable. I don't anticipate us doing anything different to our dividend policy.

Speaker 3

As Mark indicated, we'll continue to move that higher as the years go on. But I do think generally earnings and I think the improvement in the AOCI generally in the forward curve is going to drive our capital levels stable to higher.

Speaker 4

Perfect. Okay. Well, thank you for the color. It seems like a good report and good outlook here. So best of luck the rest of the year, and we'll talk to you next quarter.

Speaker 2

Thanks, Brian.

Speaker 3

See you, Brian.

Operator

Thank you. We have no further questions at this time. I would like to turn the conference back over to Mark Klein for any closing remarks.

Speaker 2

Thank you, sir. Once again, thanks for joining us this morning. We look forward to speaking with you in July and reporting on our second quarter of twenty twenty five results. Thanks for joining. Goodbye.

Operator

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

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