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Date
Friday, July 25, 2025 at 1:00 p.m. ET
Call participants
President and Chief Executive Officer — Jeremy B. Ford
Chief Financial Officer — William C. Furr
Moderator — Matt Dunn
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Risks
Mortgage origination results remain "negatively impacted by a highly competitive and challenging mortgage origination market," with margins pressured by elevated home prices, persistently high interest rates, and affordability challenges.
Management stated, "we expect stiff competition within our markets to have a dampening effect on near-term loan growth," signaling possible headwinds for loan expansion.
There is ongoing sensitivity to deposit cost pressures, as Will Furr said deposit betas are expected to decline "towards our historically modeled betas of 50 to 55%," with further probable rate reductions, which could constrain future net interest income.
Expenses outside variable compensation are guided to remain at current elevated levels, with non-variable costs impacted by ongoing inflation in personnel and computing-related expenses.
Takeaways
Net Income-- Reported net income was $36.1 million, or 57¢ per diluted share, for Q2 2025.
Return on Average Assets (ROAA)-- Return on average assets was 1% at the consolidated level for Q2 2025.
Return on Average Equity (ROAE)-- Return on average equity was 6.6% for Q2 2025.
Net Interest Income-- GAAP net interest income was $110.7 million for Q2 2025, up 7% year over year, driven by lower deposit and borrowing costs following debt redemption.
Net Interest Margin (NIM)-- Net interest margin increased by 17 basis points to 3.01% for Q2 2025, with improvement attributed to higher loan yields, lower interest-bearing deposit costs, and an additional day in the quarter.
Allowance for Credit Losses (ACL)-- The allowance for credit losses declined by $8.2 million to $98 million in Q2 2025, mainly due to improved asset quality and a switch to the Moody's baseline economic scenario.
Credit Losses-- A $7.3 million net reversal was recorded, with cumulative net charge-offs of approximately $900,000 for Q2 2025.
Deposits-- Average total deposits reached $10.6 billion in Q2 2025, increasing by $212 million year over year, though there was a sequential decline driven by seasonal and specific large-customer flows.
Core Deposits-- Core deposits ended Q2 2025 up approximately $275 million year over year.
Interest-Bearing Deposit Beta-- A 72% interest-bearing deposit beta was achieved through the first 100 basis points of the down rate cycle; management expects betas to revert to 50%-55% with additional rate cuts.
Loan Growth Outlook-- Average loan growth guidance adjusted to 0%-2% for the full year 2025.
Noninterest Income-- Total noninterest income was $193 million for Q2 2025; mortgage banking revenues declined by $12 million year over year due to lower pipeline valuation and originations.
PrimeLending Legal Settlement-- A nonrecurring $9.5 million legal recovery was booked in Q2 2025, materially benefiting reported results.
Noninterest Expenses-- Noninterest expenses rose $5 million, or 1.8%, to $261 million for Q2 2025, driven by higher variable compensation at Hilltop Securities.
Public Finance Revenue Growth-- Hilltop Securities' public finance services achieved a 36% increase in net revenues year over year for Q2 2025.
Wealth Management Revenue-- Wealth management revenue increased by $2.5 million to $47.3 million in Q2 2025, with growth tied to higher advisory fees and improved asset balances.
Fixed Income Revenue-- The fixed income segment posted a 43% sequential increase in net revenues for Q2 2025, attributed to demand for municipal bonds.
Shareholder Returns-- A total of $46 million was returned to shareholders via $12 million in dividends and $35 million in share repurchases for Q2 2025.
Common Equity Tier 1 Capital Ratio-- The Common Equity Tier 1 capital ratio was reported at 20.8% for Q2 2025.
Tangible Book Value Per Share-- Tangible book value per share increased by 54¢ from the previous quarter, reaching $30.56 for Q2 2025 (non-GAAP).
Summary
Management reiterated the adoption of the Moody’s baseline forecast scenario, replacing the slower growth trend alternative for Q2 2025, which directly contributed to the release of credit reserves and positive classification upgrades. Commercial real estate and mortgage warehouse lending both posted sequential portfolio growth in Q2 2025, while intentional reductions continued in specific C&I, especially auto note portfolios. The office property loan previously downgraded due to tenant loss was upgraded this period after the client secured new lease agreements. Share repurchase authorizations were increased to a total of $135 million for 2025, and leadership emphasized a preference for repurchases given the stock’s discount to tangible book value. Management indicated that net interest income (GAAP) will likely trend a few million dollars lower per quarter relative to Q2 2025, aligning with expectations for two rate cuts in the second half. A recurring theme of cautious expense management was highlighted, but ongoing inflation in personnel and technology continues to weigh on fixed costs.
Will Furr stated, Net interest income (GAAP) will likely stabilize at a few million dollars per quarter lower than recorded during Q2 2025, referencing expected impacts from projected rate changes.
Segment-level commentary clarified that public finance and wealth management are outperforming, even as material interest rate volatility pressured the overall blended pretax margin at Hilltop Securities for Q2 2025.
Outflows in deposits were attributed to seasonal tax, public fund distributions, and large C&I operational flows, with expectations for rebuild in the back half of the year.
Improvement in classified loan metrics was mainly driven by paydowns and refinancings during the period.
Current asset sensitivity models as of Q2 2025 assume further deposit beta reduction with successive rate cuts, and management acknowledged outperformance on this front to date.
Management acknowledged that M&A activity in the sector is increasing, and stated an openness to more cash type deals, but provided no firm guidance on timing or targets.
Industry glossary
Deposit Beta: The percentage of changes in prevailing interest rates that is passed through to a bank’s deposit rates, reflecting the responsiveness of deposit costs in changing rate environments.
Gain on Sale Margin: The profit, expressed as basis points, realized when a mortgage lender sells loans to third parties, excluding servicing rights.
Classified Loans: Loans designated as having a higher risk of default, typically based on regulatory definitions, and subject to enhanced monitoring and possible loss reserves.
Mortgage Warehouse Lending: Short-term lending facility provided to mortgage originators to fund loans until they are sold to investors or securitized.
Full Conference Call Transcript
Matt Dunn: Before we get started, please note that certain statements during today's presentation are not statements of historical fact including statements concerning such items as our outlook, business strategy, future plans, financial condition, credit risks and trends in credit, allowance for credit losses, liquidity and sources of funding, funding costs, dividends, stock repurchases, subsequent events, 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 expectations 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 the preference of 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. 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.com. Thank you. I'll now turn the presentation over to Jeremy Ford.
Jeremy Ford: Thank you, Matt, and good morning. For the second quarter, Hilltop reported net income approximately $36 million or 57¢ per diluted share. Return on average assets for the period was 1%. And return on average equity was 6.6%. During the quarter, PlainsCapital Bank realized a meaningful increase in net interest margin. And was able to further grow its loan pipeline as customer demand remains strong in Texas. The broker dealer continued to see a strong issuance market in its foundational public finance business, and was benefited from a healthy market for its wealth management. PrimeLending's results continue to be negatively impacted by a highly competitive and challenging mortgage origination market.
From a capital management perspective, Hilltop was able to return over $46 million to stockholders through dividends and share repurchases. In the second quarter, PlainsCapital Bank generated $55 million of pretax income on $12.7 billion of average assets. Which resulted in a return on average assets of 1.35%. Net interest margin at the bank increased by 19 basis points, as the blended cost of deposits declined during the quarter by nine basis points. Due to expected outflows primarily in our highest yielding products. Loan yields increased by five basis points due to repricing of the loan portfolio into a higher rate environment. Further, the bank's balance sheet realized a mix shift out of cash and into higher earning assets.
As seasonal mortgage-related loan balances increased throughout the quarter. The bank generated positive growth in its loan portfolio and pipeline. However, we expect stiff competition within our markets to have a dampening effect on near-term loan growth. Average total deposit balances at PlainsCapital declined during the quarter as certain large balance customers reallocated their surplus liquidity. We do expect to recapture a material portion of these deposits through the remainder of the year, as seasonal inflows occur during the second half of 2025. Core deposits within our markets did continue the trend of strong year-over-year growth by ending the period approximately $275 million higher. Results in the quarter included a $7.3 million reversal of credit losses.
This was primarily driven by an improvement in the underlying asset quality within the collective portfolio. And further impacted by a change in the economic scenario utilized in our CECL modeling assumptions. Will is going to provide further commentary on credit in his prepared remarks. Overall, the bank benefited from actively managing deposit costs and expanding lending activity. Which resulted from our talented bankers' efforts. Moving to PrimeLending. Where the company reported a pretax gain of $3 million during the quarter. Notably, PrimeLending's results include a nonrecurring legal settlement of $9.5 million that positively impacted results.
While the second quarter typically starts the seasonal uptrend in home buying volumes, which somewhat materialized with an increase in origination volume on a linked quarter and year-over-year basis. The industry-wide headwinds of elevated home prices, persistently high interest rates, and overall affordability challenges have not alleviated. Accordingly, competition within the mortgage origination market for muted look volumes continue to put pressure on overall margins. The market has experienced some relief for our homebuyers as existing home listings have increased across the country. However, this has not coincided with improvement in affordability. Regarding margins, PrimeLending's reported gain on sale of 228 basis points was up four basis points versus the prior quarter and flat on a year-over-year basis.
However, industry competition continues to put pressure on mortgage origination fees and other related income. Where the margin decreased by 11 basis points on a linked quarter basis. PrimeLending's management team continues to focus on reducing expenses in order to ensure efficient operations within the context of the overall mortgage market. For the second quarter, fixed expenses were reduced by 11% on a year-over-year basis. We will continue to look for ways to achieve while providing value-enhancing services to our customers. During the quarter, Hilltop Securities generated pre-income of $6 million on net revenues of $110 million. Or a pretax margin of 6%.
Speaking to the business lines at Hilltop Securities, public finance services produced a 36% year-over-year increase in net revenues as the business line realized strong increases in both advisory and underwriting fees. Structured finance net revenues declined by $1 million from 2024 primarily due to softer market demand for call-protected mortgage product. In wealth management, net revenues increased by $2.5 million to $47.3 million compared to the second quarter of 2024. This increase in performance is primarily due to an increase in advisory fees on improved asset balances and strong market conditions within the securities lending business.
Finally, fixed income showed a 43% increase in net revenues on a linked quarter basis, in part due to an increase in demand for municipal bond product. Overall, Hilltop Securities continues to see strong results for public finance and wealth management. However, material interest rate volatility negatively impacted other parts of the business, and weighed on the firm's blended pretax margin. Moving to page four. Hilltop maintains strong capital levels with a common equity Tier one capital ratio of 20.8%. Additionally, our tangible book value per share increased over the prior quarter's level by 54¢ to $30.56. During the period, we returned $12 million to stockholders through dividends, and repurchased $35 million in shares. Thank you.
I will now turn the presentation over to Will to discuss our financials in more detail.
Will Furr: Thank you, Jeremy. I'll start on page five. As Jeremy noted, for the second quarter of 2025, Hilltop reported consolidated income attributable to common stockholders of $36.1 million equating to 57¢ per diluted share. The quarter's results included a year-over-year increase in net interest income of 7%, stable noninterest revenues, which did include the benefit of the $9.5 million legal recovery noted during our first quarter call and a modest increase in noninterest expenses. Further, Hilltop reported a net reversal in the provision for credit losses of $7.3 million which I'll review in more detail as I move to page six. Hilltop's allowance for credit losses declined during the quarter by $8.2 million to $98 million.
As is noted in the graph, the top recorded net charge-offs were approximately $900,000 and increased specific reserves by $1.8 million. In addition, certain upgrades in the portfolio occurred during the quarter resulting in a lowering of the allowance on those credits to $4.9 million. Of note, the office property loan that was downgraded last quarter due to the nonrenewal of a lease by a large tenant was upgraded this quarter as our client was successful in getting new tenant lease agreements in place during the period.
Lastly, the economic factors leveraged for the second quarter analysis improved as we adopted the Moody's baseline forecast scenario, a change from the Moody's slower growth trend alternative forecast scenario used during the first quarter of 2025. Lastly, it remains of note that we continue to believe that the ACL can be volatile as it's impacted by changes in the mix, and makeup of the credit portfolio net loan growth, credit migration trends, and changes to the macroeconomic assumptions. And outlook over time. I'm turning to page seven. Net interest income in the second quarter equated to $110.7 million, including $600,000 of purchase accounting accretion which declined by $1.4 million versus the second quarter of 2024.
Versus the prior year's second quarter, net interest income increased by $7 million or 7% primarily driven by lower interest-bearing deposit cost coupled with lower borrowing costs, resulting from our redemption of $200 million of debt in 2025. During the second quarter, net interest margin increased versus the 2025 by 17 basis points to 301 basis points. The improvement in NIM was largely driven by higher loan yields, lower interest-bearing deposit cost, and one additional day in the quarter. Our current rate outlook includes two rate reductions, one in the third quarter and one during the fourth quarter.
Based on this rate scenario, we expect that NIM levels will moderate at current levels and that net interest income will likely stabilize at a few million dollars per quarter lower than we recorded during the second quarter. I'm turning to page eight. Second quarter average total deposits approximately $10.6 billion and reflect an increase of $212 million versus the second quarter of 2024. During the quarter, we did experience a decline in deposits on an in-balance basis. This decline was expected as it reflects normal seasonal flows related to tax payments, scheduled distributions from certain of our public fund depositors, and business flows and distributions from some large C and I clients.
We do expect that deposits will begin growing again during the second half of the year. As a result of our ongoing pricing efforts, interest-bearing deposit costs declined from the first quarter levels to 291 basis points during the second quarter. During the first 100 basis points of this down rate cycle, PlainsCapital Bank has been able to achieve a 72% interest-bearing deposit beta. As we've noted in the past, we expect that with additional rate reductions from the Federal Reserve, that we would see our beta levels decline towards our historically modeled betas of 50 to 55%. We will continue to balance, fostering our long-term customer relationships with prudently managing net interest income over time. Moving to page nine.
Total noninterest income for the 2025 equated to $193 million. Versus the same period in the prior year, mortgage revenues declined by $12 million driven primarily by lower valuation marks on the pipeline and lower loan origination fees paid by customers. Second quarter origination volumes increased by 2% versus the prior year period, while mortgage gain on sale margins loans sold to third parties were stable versus the prior year period at 223 basis points.
It remains important to note the ongoing challenges in mortgage banking continue as a combination of the current level of mortgage rates lower home affordability, and lower consumer confidence, combined to create an environment that remains restrictive and continues to push back a recovery in margins and production volumes across the industry. Growth in securities investment advisory fees and commissions were driven by strong public finance revenue growth, as the MA franchise continues to develop and our underwriting business gains further momentum. Other income declined versus the prior year driven by lower revenues in finance at Hilltop Securities.
Of note, the decline at Hilltop Securities was significantly offset by the inclusion of the recorded legal recovery in PrimeLending of $9.5 million. As we noted in the past, revenues from structured finance fixed income capital markets can be volatile from period to period, as they're impacted by market volatility, interest rates, market liquidity, and production volumes. Turning to page 10. Noninterest expenses increased from the same period in the prior year by $5 million to 1.8% to $261 million. The increase in expenses versus the prior year second quarter was driven by increases in variable compensation, largely Hilltop Securities and reflect the impact of higher revenue in public finance.
In addition, step up in expenses other than variable compensation from the first quarter of this year the second quarter reflects the previously noted legal recovery that was reported in the first quarter at the bank and equated to $6.5 million. Looking forward, we expect that expenses other than variable compensation will remain relatively stable at current levels as we remain diligently focused on prudent growth of revenue producers while continuing to gain efficiency across our middle and back office functions. I'm moving to page 11. Second quarter average HFI loans equated to $8.1 billion.
On a period ending basis, HFI loans grew versus the 2025 by $94 million driven by $74 million of growth in CRE lending, and $48 million of seasonal growth in our mortgage warehouse lending business. Growth in these portfolios was somewhat offset by declines in C and I lending, which continues to maintain loans in certain segments that are being managed to lower balance levels. Including the auto note portfolio that has been reviewed over time. Related to lending activity, we're pleased with both our commercial lending pipelines which have continued to expand throughout the year and our first half commitment bookings. We recognize this improved activity will take time to fund and be represented on the balance sheet.
And as a result, we are adjusting our expected full year average loan growth rate to 0% to 2%, for 2025. Turning to page 12. Starting in the upper right chart, NPA levels have declined consistently over the last twelve months as we continue to see steady improvement and solid workout in this portfolio. Additionally, in the chart in the upper left, class and criticized loans as a percentage of bank loans has improved versus the prior year levels to 301 basis points. Down 59 basis points. During the quarter, net charge-offs equated to $896,000 or five basis points of average loans.
As is shown on the graph, the bottom right of the page, the allowance for credit loss coverage at the bank ended the second quarter at 1.27%. Including mortgage warehouse lending. I'm moving to page 13. As we move into the third quarter of 2025, continues to be a lot of uncertainty in the market regarding interest rates, the impact of ongoing higher than Fed target inflation, as well as the resilience of the overall economy. In the face of these uncertainties, we're pleased with the work that our teams are doing each day to support our customers, and the communities we serve.
We believe that this work is helping us build momentum in the bank, and the broker dealer businesses and supporting our focus on returning our mortgage business to profitability. As is noted in the table, our current outlook for 2025 reflects our current assessment of the economy, and the markets where we participate. Further, the market changes and we adjust our business to respond, we will provide updates to our outlook on our future quarterly calls. Operator, that concludes our prepared comments. I will turn the call back to you for the Q and A section of the call.
Operator: Thank you, sir. Ladies and gentlemen, if you do have any questions at this time, please press star followed by one on your touch tone phone. You will then hear a prompt that your hand has been raised. And should you decide to withdraw from the polling process, please press star followed by two. And if you're using your speakerphone, we do ask that you please lift the handset first. Before pressing any keys. Please go ahead and press star 1 now if you do have a question. And your first question will be from Woody Lay at KBW. Please go ahead.
Woody Lay: Hey, good morning, guys. Morning. Morning. Wanted to start on the broker dealer business. It looks like the efficiency ratio of the segment's been running a little elevated relative to last year. Is that just a reflection of some mix shift in the revenues in the business? Or is there another dynamic impacting that?
Will Furr: Largely a reflection of the makeup of the revenue of the business as you see Public finance services is up, structured finance is kind of flat to down a little. Those are the principal drivers, but it's the profitability or pretax margin there will always move in concert with kind of the makeup of the revenues of that business. And we also had about a million and a half of additional severance costs that we had in the quarter. That benched the margin more.
Woody Lay: Got it. Alright. Alright. That's helpful. And then maybe on the fixed expense guide, it looks like the fixed expenses in the mortgage segment took a nice step down, but looking at the guidance, it looks like non-variable expense growth was guided up. Could you just sort of talk about what's driving that incremental pickup in the expense outlook?
Will Furr: Yeah. So we're you know, as we've said before, we're kinda continuing to see, inflation in personnel expenses, health care costs, related those kind of structural costs from a personnel perspective, but we're also seeing kinda ongoing inflation in software expense and kinda other computing related expenses really principally related to contract escalators and the like. So we have to we gotta reflect that in our guide, and that's kinda what's driving those are two pretty significant items, and that's what's driving, the guide a little higher.
Woody Lay: Alright. Got it. And then just last for me, the NIM took a nice step up in the quarter. And as you called out, I think it you've achieved the 72% beta through cycle, which has come in above expectations. I guess what is sort of looking back on it allowed you to this higher than expected beta?
Will Furr: I think a couple things. One, I think we've continued to improve our overall analytic capability. We've improved kind of our analysis of customer sensitivity and the like. We've also candidly seen, I think, a more rational marketplace versus when rates were going higher in the upgrade cycle. And so a virtue of those two things, it still remains really competitive out there. But, again, our team is focused on making sure we're positioning our overall deposit base and the rates we're paying customers in concert with kind of the competitive environment, and we feel like that's we feel like we've been able to do that to this point.
As I think other financial institutions are also trying to improve net interest margin and NII given some of the challenges we saw in the upgrade environment.
Woody Lay: Alright. Thanks for taking my questions. Thanks. Thank you.
Operator: Next question will be from Tim Mitchell at Raymond James. Please go ahead.
Tim Mitchell: Hey. Good morning, everyone. Thanks for taking my question. Just wanna start on the loan growth commentary and some of the puts and takes there. So it sounds like you know, pipelines are strong and growing, and it'll take some time to fund some of these commitments. But I think Jeremy made some comments about competition. Picking up in the markets and you know, that may be weighing on loan growth kinda curious if you could kinda walk through the puts and takes there and the way you're thinking about growing the balance sheet right now versus protecting the margin if, you know, competition starts to pick up on the loan side?
Will Furr: If you think about kinda where loan growth is and you just look at our kind of page 11, you can see loans have been pretty stable here over the last twelve months. And, you know, as I think about a few things, we look at mortgage warehouse lending. We'll just break it down in a piece part. So we look at mortgage warehouse lending. Seasonally elevated here in the second quarter, generally kind of carries into the third quarter. But obviously, starts to wind lower in the fourth quarter. From a one to four family retention perspective, as you can see there in the graph, we've maintained those balances.
So the retention levels have been consistent with kinda keeping balances reasonably stable. And, again, that's been our goal. We're not looking to meaningfully grow that one to four family position. So then that leaves largely our commercial real estate and then C and I portfolios again, in commercial real estate, we've seen growth as I noted in some of my commentary. But in our C and I portfolios, we've got a few portfolios, most notably the auto note portfolio, which has been in decline, and we've been intentionally kind of moving that lower. And so, you know, that's offsetting some of the overall growth. So that's really what's capturing kinda what's driving the average balance.
As Jeremy noted and as we've noted, we've seen material increases in our pipeline and strength across the businesses, our bankers continue to do good work with our clients in that regard. And we've also seen improvements in what we call credit approved, so those credits that we've already gone through the underwriting and are credit approved, we still gotta win that business but we've seen material increases in that as well. The booked fundings are up year on year substantially. But as I noted in my comments, it will take you know, somewhere between ninety and a hundred and eighty days generally for those to start to build on the balance sheet.
So all of those things are factored into the zero to 2% loan growth outlook for the balance of this year, and that's a full year average basis.
Jeremy Ford: I would just add on. You know, we are seeing a lot of activity. And you know, being able to be successful commercial particularly on the commercial real estate side. And we're also, the competitive side, losing deals, not so much due to rate, but due to, you know, structure and other terms.
Tim Mitchell: Okay. Very helpful. Just a follow-up on the margin. Just kinda with that two to 4% NII range and the two rate cuts in your outlook given your asset sensitivity. Is kind of the higher end of that range reflected in if we don't get that cut. So then kind of, you know, if we don't see those cuts, you just kinda walk us through the puts and takes around NII in the margin.
Will Furr: Yeah. So we as we noted, we had a $111 million quarter. As I noted in my comments, we expect that to kinda trend a few million dollars a quarter below that on a go forward basis. We've been at a $105 million for the last three quarters. We'll be certainly higher than that. We expect. And so, you know, the real kind of puts and takes there is and we had an improvement in our stock loan business as they were able to achieve kinda higher margins. In that business. And so that will we don't expect that necessarily to be recurring or certainly to occur each quarter. So that's the largest driver of the reduction there.
From a net interest income perspective, though, you know, obviously, the deposit beta assumption that we make going forward is the largest. So if we don't get rate cuts obviously, that helps us a little bit from an asset sensitivity perspective. But I would say relative to our model of asset sensitivity, obviously, net interest income's up, so we've been able to outperform kind of the model results. We feel like we'll be able to continue to do that. Through maybe the immediate next rate cut whenever that occurs. But we also do believe there's gonna be points from a deposit cost perspective where customers become more sensitive.
And that will cause us to necessarily move closer to 50 to 55% through the cycle beta we've historically modeled to. Secondly, as it relates to the net interest income, if we see those rate cuts come through, we will see some of our more sensitive assets reprice immediately, whether that be variable rate loans that are linked to prime. Or our cash balances as well. So those are the things that would drive down NII. The deposit beta and outperformance in that regard will help mitigate some of that. And so that's really the basis of the guide as we look forward.
Tim Mitchell: Okay. Thanks. Thanks for taking my question. Thank you. Thank you.
Operator: Next question will be from Jordan Ghent at Stephens. Please go ahead.
Jordan Ghent: Hey, good morning. I just had a question on the capital. So you guys bought back a decent amount of shares during the quarter. And just kind of if you could talk about what's your appetite going forward for that and maybe what's gonna drive that, and then also kinda maybe what you're hearing on M and A discussions?
Jeremy Ford: Sure. This is Jeremy. You know, we're really happy or pleased with the share repurchases that we've had year to date. We bought about $68 million of our stock at, you know, at about tangible book value. And so and I think you've probably noticed our board just authorized increasing our share repurchase by $35 million. So that'll be a $135 million of total authorization for year 2025. So you know, our anticipation is just to try to continue to work towards that. And then as far as, you know, M and A, it's been a very active quarter, and year. With the Huntington deal and the Prosperity deals kinda two different deals. So, and other things throughout the country.
So you know, I guess that there's you know, we expect to see a lot of activity in M and A. And, you know, we'll continue to evaluate things. I mean, I think, clearly, our stock trades at a discount on a tangible book value basis. So we'll be looking hopefully for more cash type deals.
Jordan Ghent: Got it. Thanks. And then maybe just one more question. Kind of going towards credit. Can you I think you talked about the office property that was upgraded, but can you kind of talk more about what drove the improvement within the classified loans?
Will Furr: Yeah. So, as we looked at classified, we had some pay downs and that was the largest driver of the overall decreases. And so, we continue to see the workout activities across both our nonperforming assets as well as our classified and criticized portfolios. Continue to be worked well across the credit team. And so, for the period pay downs and what we call refinances out, were the largest drivers of the reduction.
Jordan Ghent: Okay. And then maybe just one more question, kinda going to the deposit cost. In your opening comments, you talked about how there's a large outflow of more of your higher yielding deposit products. Kind of where do you still think you can see more of that in the coming quarters? Or is that kind of dried up?
Will Furr: Well, that in Jeremy's note, that is seasonal to some extent in nature. And so some of those deposit flows were related to public fund customers. Others were what I'd call normal seasonal operational flows from our C and I clients. So we expect those will we expect those to go out in the late first quarter, second quarter every year. We also then expect them to kind of begin to rebuild in the second half of the year. So wasn't an outflow or an exit of a client or clients. It was just their normal flows. We benefited from it in the second quarter. And we'll see.
We expect largely those deposits will come back in the third and fourth quarters.
Jordan Ghent: Okay. Thanks for taking my questions.
Will Furr: Thanks. Thank you.
Operator: Thank you. And at this time, we have no other questions registered, which will conclude our conference call for today. We would like to thank you for taking the time to attend. And ask that you please disconnect your lines. Have yourselves a good weekend.