Prepared remarks
Hello, and welcome to the Axos Financial, Inc. Fourth Quarter 2024 Earnings Call and Webcast. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Johnny Lai, Senior Vice President, Corporate Development and Investor Relations. Please go ahead, Johnny.
Thank you, Kevin. Good afternoon, everyone. Thanks for joining us today for Axos Financial, Inc.'s fourth quarter 2024 financial results conference call. On today's call are the company's President and Chief Executive Officer, Greg Garrabrants; and Executive Vice President and Chief Financial Officer, Derrick Walsh. Greg and Derrick will review and comment on the financial and operational results for the three and 12 months ended June 30, 2024, and we will be available to answer questions after the prepared remarks. Before I begin, I would like to remind listeners that prepared remarks made on this call may contain forward-looking statements that are subject to risks and uncertainties, and that management may make additional forward-looking statements in response to your questions. Please refer to the Safe Harbor statements found in today's earnings press release and in our investor presentation for additional details.
This call is being webcast and there will be an audio replay available in the Investor Relations section of the company's website located at axosfinancial.com for 30 days. Details for this call were provided on the conference call announcement and in today's earnings press release. Before handing over the call to Greg, I'd like to remind listeners that in addition to the earnings press release, we also issued an earnings supplement and 8-K with additional financial schedules for this call. All of these documents can be found on the Axos Financial website. With that, I'd like to turn the call over to Greg.
Thanks, Johnny. Good afternoon, everyone. And thank you for joining us. I'd like to welcome everyone to Axos Financial's conference call for the fourth quarter of fiscal 2024 ended June 30, 2024. I thank you for your interest in Axos Financial. We delivered outstanding results in our fiscal fourth quarter of 2024, generating double-digit year-over-year growth in earnings per share, book value per share, and ending loan balances for a ninth consecutive quarter. We outperformed the majority of our peers primarily due to successful execution of our strategic and operational initiatives. We grew deposits by approximately $256 million linked quarter with growth coming primarily from non-interest bearing deposits. Ending loan balances were up 2.7% linked quarter or 16.9% year-over-year to $19.2 billion. The diversity of our lending and deposit businesses allowed us to grow profitably in the three and 12 months ended June 30, 2024 as evidenced by our 18.8% and 21.6% return on average common shareholder equity respectively.
Our strong returns contributed to the 26% year-over-year growth in our tangible book value per share. Other highlights include the following. Net interest margin was 4.65% for the quarter ended June 30, 2024, up 46 basis points from 4.19% in the quarter ended June 30, 2023 and down from 4.87% in the quarter ended March 31, 2024. We carried higher excess liquidity with average interest bearing deposits of approximately $2.7 billion in the fourth quarter of 2024 compared to $2.2 billion in the third quarter of 2024. The excess liquidity had a nine basis points drag on our Q4 2024 net interest margin. Our credit quality remains strong with net annualized charge-offs to average loans of 5 basis points in the three and 12 months ended June 30, 2024. Total non-performing loans dropped by $9 million linked quarter and non-performing loans and leases to loans fell by 6 basis points to 0.57%. Net income was approximately $105 million in the quarter ended June 30, 2024, up 20% from the corresponding period a year ago.
Earnings per share for the three and 12 months ended June 30, 2024 were $1.80 and $7.66, representing year-over-year growth of 23% and 51% respectively. We repurchased $13.2 million of common stock in the fourth quarter ended June 30, 2024 at an average share price of $48. For fiscal year 2024, we repurchased approximately $97 million of common stock at an average share price of $38.18 per share. We still have approximately $106 million remaining in our authorized share repurchase program. Total loan originations for investment were $2.5 billion for the three months ended June 30, 2024, up approximately 11% from the same period a year ago. Strong originations were offset by higher repayments across the majority of real estate backed lending categories. Ending balances for our multifamily term loans and commercial real estate specialty loans declined by approximately $122 million and $31 million respectively in the fourth quarter.
We continue to reduce our auto, consumer, and select real estate backed loans to tactically manage our interest rate and credit risk. Average loan yields for the three months ended June 30, 2024 were 8.55%, down 10 basis points from 8.65% in the prior quarter and up 104 basis points from the corresponding period a year ago. The prepayment of an FDIC acquired loan increased the Q3 2024 average loan yield by 8 basis points. Excluding one-time items in the fiscal third quarter of 2024, organic non-purchased loan yields declined by 4 basis points, reflecting a focus on loan verticals that come with compensating non-interest bearing deposits. New loan interest rates were the following: single-family mortgages 8.1%, multifamily 8.5%, commercial and industrial 9%, and auto 10.4%. Our commercial real estate loans continue to perform well. As we've discussed previously, the structure, duration, and exit strategies for commercial specialty real estate loans are significantly different from traditional CRE term loans that most other banks originate and hold.
The low loan-to-value and senior structure we have in place for an overwhelming majority of our commercial specialty real estate loans provides significant downside protection in the event of a deterioration of the borrower's ability or willingness to repay, the valuation of underlying properties or construction project delays. Our commercial specialty real estate loans are floating rate with contractual maturities generally between two and three years compared to fixed-rate loans with contractual maturities of seven or longer for most commercial real estate loans. Of the $5.1 billion of commercial specialty real estate loans outstanding at June 30, 2024, multifamily was the largest segment representing 37% while hotel and retail represent 21%. On a consolidated basis, the weighted average loan to value of our commercial specialty real estate portfolio was 40%. Our retail and office segment of our commercial specialty loan book is well secured with weighted average loan to values of 46% and 35% respectively.
We have very little office exposure in our commercial real estate specialty loan portfolio with ending balances equal to $302 million or 6% of the total commercial specialty real estate loan portfolio. Non-performing loans in our commercial specialty real estate portfolio remain unchanged at approximately $26 million, representing 50 basis points of our total book outstanding. These are two loans, a condo building in New York for $15 million and a student housing building in Berkeley for $11 million, which make up the entire non-performing commercial real estate loan portfolio. We do not anticipate incurring a material loss on either of these loans. Non-performing loans in our multi-family mortgage portfolio were approximately $35 million at June 30, 2024, down $3.5 million linked quarter. Of the $35 million, there is one loan on an assisted living property of $25 million that has been reserved for more than a year.
The rest of the multifamily term loans are for properties located in California and across the U.S. with recourse and personal guarantees. The average loan to value of our non-performing multifamily mortgages is approximately 57%. We do not expect to incur material loss at any other multifamily loans currently categorized as non-performing. We closed two loan portfolios with a UPB of $1.25 billion from the FDIC in December 2023. Ending balances decreased by $12 million since March 31, 2024. We do not have any prepayments resulting in discount accretion this quarter in the loans we purchased from the FDIC. All loans purchased from the FDIC are current. Non-performing single-family mortgage loans decreased from $51 million at March 31, 2024 to $46 million at June 30, 2024. The weighted average loan-to-value of our non-performing single-family mortgage portfolio was 55% as of June 30, 2024.
Given that home values continue to increase in the majority of markets where properties are located, we do not foresee much loss content, if any, in our delinquent single-family mortgages. We increased deposits by $256 million in the fourth quarter and by $2.2 billion in fiscal 2024. Demand, money market, and savings accounts representing 95% of total deposits at June 30, 2024 grew at 16.5% annualized. We have a diverse mix of funding across a variety of business verticals with consumer and small business representing 62% of total deposits, commercial cash, treasury management, and institutional representing 18%, commercial specialty representing 10%, Axos Fiduciary Services representing 6%, and Axos Securities, which is our custody and clearing business, representing 4%. Total non-interest bearing deposits were approximately $3 billion, up $220 million quarter-over-quarter. Our balance sheet remains relatively neutral from an interest rate risk perspective given the shorter duration variable rate nature of our loans and the granularity and diversity of our consumer, commercial, and securities deposits.
As of June 30, 2024, approximately 69% of our loans were floating, 25% were hybrid arms, and 6% were fixed. Term deposits were only 4.8% of total deposits at quarter end, providing us flexibility to adjust interest costs if and when rates decline. For the quarter ended June 30, 2024, our consolidated net interest margin was 4.65% while our banking business net interest margin was 4.68%. Our consolidated banking business NIM remains above our guidance of 4.25% to 4.35% despite holding excess liquidity due to strong deposit growth and elevated levels of loan repayments. When we announced the FDIC loan purchase in December 2023, our expectation was that the transaction would boost our net interest margin by 35 to 45 basis points. One caveat was that any loan prepayments would accelerate the recognition of the purchase discount, boosting our net interest income and net interest margin in the period that the prepayments occurred and reducing both in future periods.
Given the prepayments in this portfolio, we now expect our net interest margin benefit to be 30 to 40 basis points for fiscal year 2025. We break out the average balances and loan yields for the purchased and non-purchased loans in our supplement schedules provided as an exhibit to the press release for readers to separate the impact of the loan purchase on net interest margin. Total ending deposit balances at AAS, including those on and off Axos' balance sheet, were relatively flat compared to the prior quarter. The rate of decline has troughed, and we believe that the pace of cash sorting at AAS has stabilized at or near the bottom, representing 3.3% of assets under custody at June 30, 2024 compared to the historical range of 6% to 7%. We are focused on adding net new assets from existing and new advisors to grow our assets under custody and cash balances. In addition to our Axos securities deposits on our balance sheet, we had approximately $550 million of deposits off balance sheet at partner banks.
Non-interest expense increased $7 million linked quarter, driven by increased salary and benefits, professional service expenses, advertising and promotional expenses, and higher FDIC fees. We continue to selectively add talented leaders and team members across various business and functional units to support our existing and future growth initiatives, particularly in treasury management, sales, products, and operations where we saw nice growth in non-interest bearing deposits. Some of the elevated professional service expenses pertaining to consulting and legal fees were for specific projects and are not expected to reoccur. We expect the growth in marketing and promotional expenses to moderate given our elevated level of excess liquidity. Our ongoing investments in front and backend systems, product reaches, service offerings, and other enterprise software and systems will further optimize our processes and capabilities.
We migrated all existing small business deposit customers to our Universal Digital Bank in June. This platform transition provides a better user interface and more self-service capabilities to small business deposit customers that were not available in the prior platform. We continue to add enhancements in UDB to leverage data we have on existing and prospective consumer clients in order to further drive cross-sell of banking, lending, and security services. Feedback on our white label RIA banking from introducing broker-dealers has been encouraging. We will refine the platform based on our feedback to ensure that we have the features and ease of use that will drive adoption and usage once we roll this out to all existing and new custody and clearing clients. Axos Clearing, which includes our correspondent clearing and RIA custody business, continues to make steady progress. Total deposits at Axos Clearing were $1.3 billion as of June 30, 2024, roughly flat from where they were at March 31, 2024.
Of the $1.3 billion of deposits from Axos Clearing, approximately $750 million were on our balance sheet and $550 million held at partner banks. Net new assets from the custody business increased by approximately $256 million in the fourth quarter. We had positive net new asset growth in our custody business in every month since March 2024. Total assets under custody were $35.7 billion at June 30, 2024, up slightly from $35 billion at the end of the March quarter. The sales team continues to make solid progress on-boarding assets from new advisory firms, offsetting the decline in some of Axos Advisory Services' historical turnkey asset management clients. The pipeline for new custody clients remains healthy and we expect continued asset under management growth in Axos Advisory Services. From an operational perspective, we have identified dozens of straight-through processing and system implementation improvements that we are starting to implement.
We believe that sustained new asset growth, a normalization in cash balances, and operational productivity initiatives will drive positive operating leverage in our clearing and custody business in the medium to long term. I'm pleased with how we performed in fiscal 2024 from a growth risk management and capital allocation perspective. We are well positioned to maintain net interest margins and returns above our long-term target in fiscal 2025. Our asset-based lending philosophy with conservative loan to values and prudent structures, coupled with our strong capital and liquidity, put us in a favorable position. As we continue to evaluate various organic and inorganic growth initiatives, we will remain opportunistic with respect to capital deployment. I firmly believe that our prudent investment in the businesses, systems, processes, and people that we've made will generate attractive future returns for our shareholders. Now I'll turn the call over to Derrick who'll provide additional details on our financial results.
Thanks, Greg. To begin, I'd like to highlight that in addition to our press release an 8-K with supplemental schedules was filed with the SEC today and are available online through EDGAR or through our website at axosfinancial.com. I will provide some brief comments on a few topics. Please refer to our press release and our SEC filings for additional details. Our loan growth outlook is consistent with what we have guided to in recent quarters. We believe that we will be able to grow loan balances organically by high single digits to low teens year-over-year for the next few quarters, excluding the impact of the loan portfolio purchased from the FDIC or any other potential loan or asset acquisitions. Our ending loan balances will continue to be impacted by the pace and timing of payoffs in any given quarter. Demand in our asset-based lending, lender finance, and capital call lines and select commercial and industrial lending categories remain solid where we continue to manage our credit and interest rate risk in jumbo single family mortgage, multifamily, commercial specialty real estate, auto, and personal unsecured lending businesses.
Our loan pipeline remains solid at $1.9 billion as of July 26, 2024, consisting of $270 million of single-family residential jumbo mortgage, $58 million of gain-on-sale mortgage, $26 million of multifamily and small balance commercial, $26 million of auto and consumer, and $1.5 billion across the broader commercial categories. Our provision for credit losses was $6 million in the three months ended June 30, 2024, matching our provision for credit losses in the corresponding period one year ago. Our allowance of credit losses to total loans held for investment was 1.34% compared to 1% at June 30, 2024. We remain well reserved relative to our low historical and current credit loss rates. Non-interest income was approximately $31 million for three months ended June 30, 2024, down marginally from the $32.7 million in the corresponding period a year ago. Higher mortgage banking and service rights income and higher advisory fees from our custody business were offset by lower broker dealer fee income and prepayment penalty fees.
Based on our loan growth and our return outlook, we expect to build additional excess capital. Our priority for excess capital remains organic loan growth and investments in new businesses and operational and technology initiatives. We will continue to evaluate opportunistic stock buybacks and accretive asset or business acquisitions.
Thanks, Derrick. We are ready to take questions.
Questions and answers
Our first question is coming from David Feaster from Raymond James.
I wanted to start on the deposit side and touch on some of the deposit initiatives and where you're seeing success. You talked about some new hires within treasury management. Curious how do you think about deposit growth and some of the other initiatives that you're working on, such as securities business and deposits from there and then business and entertainment management, just other things you guys are working on?
So we have been investing fairly significantly in treasury management teams. We're trying to do it in a way that allows us to integrate those teams, so not making hires that are 30 or 40 team hires a quarter like some of the banks that have done as they're repositioning and basically taking advantage of some of the opportunities for some of the movement that's happening in the banking business right now. But we've been adding three and four person teams that are deposit-focused, very operating deposit-focused. Also, as our loan portfolio continues to evolve into more C&I related loan categories, including fund finance, those loans are generating higher levels of operating deposits as well. So we've had to add teams that are focused on treasury management product and delivery and those sorts of folks. So that's what's going on there. I'll stop if there's anything you want to follow up on.
And you saw a lot of growth on the consumer direct side. I'm curious how pricing is trending? Just I guess, broadly on the funding side. Hearing some others talk about potential improvements or at least stabilization in funding costs, especially at the top end and maybe start to reprice some deposits lower? Just kind of wanted to get a sense of how funding costs are trending from your perspective.
We see that too. We definitely think they're trending down a bit. We've been able to cut our rates a little bit, and we're definitely not seeing as much pressure. There may be a variety of factors as to why, but I do agree with that general statement that you had.
And just kind of maybe a bit high level. You're very forward-looking and constantly leveraging technology in some pretty neat ways. I guess, first, what's the early feedback on the UDB rollout? And then AI is obviously kind of a buzzword these days and a huge focus. Curious, what are some opportunities that you guys may have with that to whether leverage across your existing footprint or maybe ways that you can deploy that into new verticals that maybe have been less attractive historically?
We have implemented two specific initiatives. The first involved transitioning our small business clients to UDB, which has been very successful. Clients appreciate the platform, and we've begun to cross-sell on the consumer side, resulting in good growth in accounts. This segment traditionally has a steady cost of funds, even though the accounts are relatively small and diverse. For our white-label initiative, we've partnered with a select group of RIA firms, and their feedback has been positive. We have introduced a one-touch SBLOC product along with varying complexities in how we access clients. In some scenarios, we have clients who are firms that manage other client firms, which then serve end clients. We're broadening our focus beyond just banking products to include cash management and enhancing transactional capabilities to simplify operations. The feedback we're receiving is encouraging, and while sign-ups are good, it's still early to determine if this will lead to a significant increase in deposits.
However, it should alleviate some operational challenges over time, particularly regarding document delivery and check deposits. Change management is crucial, but I remain optimistic about the outcomes. Regarding AI, it’s a complex topic since we’re exploring various aspects where AI is being utilized or considered. One impactful area has been our chatbots, which currently divert about 80% of calls from our call center, resolving them effectively through AI-enhanced vendor solutions. We rely on different vendors who incorporate AI into specific solutions for operational challenges. Additionally, we’re employing Microsoft's Copilot across our development work and exploring other AI tools to expedite development processes. We see significant potential in software use, along with opportunities in Generative AI for marketing. Our AI task force is actively identifying opportunities, developing a broader strategy, and ensuring successful use cases are shared across the organization.
Lastly, we're focused on enhancing our underlying data infrastructure to support more extensive AI applications. It’s crucial to have our data digitized, well-organized, and accessible over time, so we're prioritizing data interoperability and governance to develop robust data warehouses that future AI tools can utilize effectively as they emerge.
Next question is coming from Gary Tenner from D. A. Davidson.
I wanted to ask about kind of the broker dealer fee income line down a bit this quarter, down year-over-year. Is that sort of the bottoming out of the cash balances? I think you referenced to 3.3% relative to AUC in the quarter. Is that reference to that or are there any kind of rates paid or anything like that?
No, we think that's sort of at the relative low point; it certainly is from a historic perspective. It's obviously always possible that it goes down, but it is stabilized quarter-over-quarter. There were some one-time items that sort of hit those broker dealer fees this quarter. It's about…
Some other fees…
Yes, some other fees was about $1.5 million, something like that, or is it a little bit lower?
A little shy of $1 million…
There were some one-time items that affected the broker dealer side. As I mentioned before, when looking at the AAS side, they have brought in nearly $5 billion in new assets, but their growth hasn't kept pace because the business is transitioning from a TAMP-oriented model to a more direct approach with underlying RIAs. This isn't due to a lack of interest in those clients; some of them were just losing assets. We expect this to stabilize and continue to grow. We are achieving efficiencies in our operations but are also heavily investing in technology and product development. We see many opportunities ahead, but there's a significant amount of investment in technology and products on both the clearing and custody fronts. I don’t anticipate massive growth in fee income, but if we can stabilize the TAMP size, it would significantly enhance growth since we are bringing in a considerable amount of assets. The sales team is performing well; however, they are somewhat treading water, though we had some growth over the past two quarters, it hasn't reached our desired levels.
The follow-up on the broker dealer question regarding the cash sorting fees relates to recent comments from the industry, particularly from Wells, BAML, and Morgan Stanley, about their plans to increase sweeping interest rates. Could you discuss the competitive dynamics or any potential regulatory effects, and how they might influence Axos regarding fees and cash balances?
We are not observing much activity in that area at the moment. We have a fairly open platform, allowing people to transfer their funds freely. Consequently, trading cash is currently at a low level. We do not have any specific plans to make changes regarding this.
Our next question is coming from Andrew Liesch from Piper Sandler.
I have a question about the margin. First, regarding your plan to maintain that excess liquidity, if we see a reset of about 9 basis points higher, do you believe the margin will trend down from that point? It seems like yields are slightly decreasing.
Well, yes. I think that's true. But I also think that what we are seeing is that some of the rotation into fund finance, for example, as a product that's grown from a growth perspective does have lower yields than, let's say, commercial specialty real estate. Conversely, it generates nice offsetting non-interest-bearing deposit balances. And so that you saw that a little bit this quarter we had much better non-interest bearing growth, but there was a little compression on the loan yield side. So I do think that that's one dynamic you're seeing. But in general, I would say that spreads are tighter than they've been previously, just in general. Why that is? Maybe it's fewer deals, it's more competition but I do think spreads have declined a bit. So that is something we have to keep in mind as we're looking at what we're doing. Obviously, part of what we're trying to do is continue to expand our treasury management vertical so we get more non-interest bearing deposits. But I do think it's a little bit tougher to get yield than it has been, let's say, in the last calendar year.
And then on the consumer direct deposit side, it seems like there might be some complexity out of the FDIC about whether these consumer direct deposit channels can still count as core; maybe they might have to count as brokered. I mean, does that impact your strategy going forward?
No, not the way we do it. I mean those are direct consumer relationships with respect to for us, and they're not sourced in the manner that would implicate that from our perspective.
I have one more question. In the last quarter, there was a report concerning some of the commercial real estate you manage. Have you had any regulatory inquiries? And regardless of whether you have, would you be willing to cooperate with any investigation they might conduct regarding your stock compared to the general market?
I wouldn't want to comment on any assistance we provide regarding those matters. I'm aware of the Andrew Left situation that's making headlines. As we indicated in our response, there are many inaccuracies, and there was also significant trading activity on the same day before any response could be issued. Hopefully, those aspects will be examined, but I cannot comment on any communications concerning that.
Next question is coming from Kelly Motta from KBW.
I appreciate the revised color on the accretable contribution to margin. I believe in the past you said that the core margin excluding that would be in the 4.25% to 4.35% range. I'm wondering if you have any color kind of putting together some of the comments you had if there's any update on how you're thinking about the core margin range on a go forward basis, as well as how we should be thinking about the incremental impact of rate cuts here?
Yes, I believe that's still a reasonable guideline. It seems to be around 4.31% this quarter. We think that's a solid outlook moving ahead. We do have some advantages from certain hybrid loans that are repricing, but there are also some potential challenges, including yield compression and a shift in the balance sheet towards products that yield less but have higher deposit balances. All these factors will need to play out, but overall, I don’t see that as bad guidance.
And I know you have a fairly significant floating rate loan portfolio. Can you remind us any swaps you have against that, as well as when rates are cut, how we should be thinking about the repricing on the funding side of things?
So what we're contemplating is that we have commercial deposits that are tied to Fed funds, and then we also have the ability to cut rates on our consumer portfolio, which is, as we stated on the prepared remarks, not term oriented. So I think the question will be how those rate cuts are absorbed and whether we are faster or slower than loan repricing. And I think that's going to be the question. And I think we feel pretty good about our ability to do that; we positioned ourselves that way. But what we have not done in general is go out and do a lot of sort of floating to fixed swapping of our loan book. And part of the reason why is that we have pretty decent movement in our loan book. And so unless you're doing that on the borrower side and the borrower is interested, then you're sort of just taking some gambles on how good you are at estimating the forward curve. And so what we do is we have a good naturally matched-off book right now, and we think we will be able to go through that. I think one of the good things is that we do have our lower cost funds through all the different channels we discussed. We also have a higher cost consumer deposit base that we also expect will be able to be repriced in a lower short-term rate environment.
I appreciate the commentary around capital. Your ratios are strong; you do have a pretty strong loan growth outlook. Just given the run in the stock price here, can you remind us of any guideposts in terms of valuation or earn back that you guys look to when thinking about engaging in the buyback at the price?
We look at it as an NPV on earnings. And so we look at that, and we look at it as a relative value with respect to what's out there from an acquisition perspective and what's out there from a loan growth perspective and other operational investments and try to balance that out. So yes, obviously, the stock price is up, but earnings are up. It just really is a decision that we make, and we utilize. We take our earnings forecasts and we can apply NPVs to them and look at whether capital is best allocated to loan growth or other strategic investments or buybacks.
Next question is coming from Edward Hemmelgarn from Shaker Investments.
Just one or a couple of questions about loan growth. I believe you mentioned in the last quarter's call that you experienced a significant amount of loan repayments early in this quarter. I'm assuming that was one of the reasons for the excess liquidity. Is that correct?
We had some loan repayments that occurred earlier than expected, and we also experienced slightly better deposit growth than anticipated. As a result, these two factors contributed to excess liquidity compared to our expectations.
What's the loan climate like right now, I mean, in terms of…
I would say the performance is somewhat mediocre compared to last year. We have a diverse portfolio, which contributes to a decent pipeline, and we're still anticipating loan growth. However, our spreads have tightened, making loan growth slightly more challenging. There are fewer projects and investments taking place. Other banks seem to have resolved their past issues, but we do expect strong loan growth. Derrick mentioned our targets, and we hope to exceed them, but it is becoming more difficult. Our portfolio is experiencing repayments, which is positive, although in some cases, we're allowing those strategically. For instance, in the multi-family portfolio where most loans adjust, many are paying off while competitors are refinancing at lower rates, which isn't appealing to us. We want to see additional factors before committing to 6% and 6.5% five-year duration risks. Some of this is influenced by our risk management approach and what we currently want to pursue, considering both credit and rate factors. Nonetheless, I believe we will achieve solid growth and this quarter looks promising for loan growth; however, we need to monitor potential prepayments that could affect the numbers.
Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.
Thank you, everybody for your interest and we'll talk to you next time. Thank you.
Thank you. That does conclude today's teleconference webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.