管理層發言
Good day, and thank you for standing by. Welcome to Q2 2026 Valley National Bancorp Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to turn the call over to Andrew Jianette. Please go ahead.
Good morning, and welcome to Valley's Second Quarter 2026 Earnings Conference Call. I am joined today by CEO Ira Robbins and CFO Travis Lan. Our quarterly earnings release and supporting documents are available at valley.com. Reconciliations of any non-GAAP measures mentioned on the call can be found in today's earnings release and presentation. Please also note Slide 2 of our earnings presentation and remember that comments made today may include forward-looking statements about Valley National Bancorp and the banking industry, and actual results may differ from those statements. For more information on these forward-looking statements and associated risk factors, please refer to our SEC filings, including Forms 8-K, 10-Q and 10-K. With that, I'll turn the call over to Ira Robbins.
Thank you, Andrew. Our second quarter results illustrate continued progress against our strategic growth priorities. We delivered strong customer deposit growth, including meaningful growth in noninterest-bearing balances. We generated diverse loan growth concentrated in C&I and owner-occupied commercial real estate. And we continue to expand fee income in both absolute dollars and as a percentage of revenue. We remain focused on strengthening our value proposition by scaling our relationship-oriented, commercially focused model across our markets and business lines. While the quarter's growth was encouraging, our focus remains on the quality, durability and strategic value of the relationships that we attract. We believe continued execution against these priorities will support stronger returns over time. This execution translated into strong financial performance for the quarter. Net income was approximately $171 million or $0.29 per diluted share.
Excluding certain noncore items, adjusted net income was approximately $173 million or $0.30 per diluted share. Adjusted pre-provision net revenue increased 6% from the prior quarter and at 1.64% of average assets reached its highest level since the fourth quarter of 2022. Deposit growth remains central to our strategy. We believe that our diversified commercial and consumer funding channels are increasingly critical as deposit competition intensifies across the industry. By expanding our commercial banking talent and driving greater adoption of our treasury platform, we expect to continue to win relationships based on service, capability and value, not simply based on rates. These efforts directly contributed to nearly $300 million of noninterest-bearing deposit growth during the quarter. On the asset side, our focus in C&I and owner-occupied commercial real estate continues to drive strong loan growth and greater portfolio diversification.
C&I growth was broad-based during the quarter with contributions from New York, Florida, Chicago and our specialty health care and fund finance verticals. These efforts also support our noninterest-bearing deposit growth as we continue to target disciplined, well-funded commercial relationships that can contribute to our sustained profitability improvement. Fee income was another area of strength. Sequential growth was driven by high-quality, sustainable businesses, including capital markets and tax credit advisory. Within capital markets, we continue to see a strong pipeline of Valley-led syndication opportunities, while swap activity has benefited from higher commercial real estate origination volumes. These fee-based capabilities are an important part of our commercial value proposition. And based on performance to date, we remain on track to achieve our 2026 growth objectives. As we discussed a bit last quarter, technology and artificial intelligence are becoming increasingly important to our ability to further scale our franchise.
From a macro perspective, we believe that banks that can effectively adopt AI have the potential to structurally shift their efficiency ratios lower by around 500 basis points. At Valley, we intend to be an industry leader, and we are excited about the progress that we have made to date. As shown on Slide 9 of the deck, we believe that Valley has several structural advantages that support our AI strategy, including Valley Ventures, our international and technology banking business and our relationship with Bank Leumi in Israel. Valley Ventures gives us direct exposure to the start-up ecosystem and access to emerging talent and technologies. Our international and technology banking team provides deep relationships with venture capital funds and early-stage technology companies, including businesses expanding from Israel into the United States. Additionally, our relationship with Bank Leumi gives us additional visibility into leading practices in cyber, fraud and risk management.
We have a robust team of AI practitioners focused on sourcing use cases and aligning solutions from these relationships that I just mentioned. Importantly, our AI strategy is embedded in our broader operating model and is intended to support productivity, risk management, client experience and scalable growth. As we look ahead, our priorities remain consistent and clear: continue to grow core deposits, deepen commercial relationships, generate more diversified loan and fee income growth and improve operating efficiency to translate our progress into stronger returns. We expect our continued commitment to these areas to drive further shareholder value over time. With that overview, I will now turn the call over to Travis to walk through the financial results and our outlook in more detail.
Thank you, Ira. Based on our first half results and the continued momentum that we are seeing, we are maintaining our strong outlook for 2026. We now expect gross loan growth at or somewhat above the high end of our range and believe that fee income will also migrate towards the high end of our expected range. Our outlook for deposit growth and net interest income is unchanged from the upwards revision announced on last quarter's call. We expect continued earnings growth and profitability improvement throughout the remainder of the year and into 2027. Turning to capital deployment. We continue to balance organic growth, capital returns and balance sheet flexibility during the quarter. We returned approximately $81 million to shareholders in the form of common dividends and the repurchase of 1.5 million shares. The quarter's reduced buyback activity was the product of our exceptional loan growth, and we will continue to toggle our buyback appetite in the context of near-term loan growth expectations.
We remain very comfortable with our regulatory capital ratios. Our ability to support substantial loan growth, repurchase shares and reduce our regulatory CRE as a percentage of risk-based capital by another 12 percentage points during the quarter demonstrates our flexibility and the value of our accelerating organic capital generation. Slide 14 illustrates the quarter's strong deposit growth. Direct customer deposits increased $1.1 billion during the quarter, including nearly $300 million of noninterest-bearing deposit growth, $200 million of interest-bearing nonmaturity deposits and $600 million of retail CDs. While core deposit growth remained extremely strong during the quarter, we did utilize $200 million of incremental brokered deposits to fund the temporary timing mismatch resulting from our high-quality loan growth. We also strategically rotated nearly $700 million of floating rate NOW balances to brokered CDs within our indirect deposit portfolio.
Total deposit costs were effectively unchanged from the first quarter and remained meaningfully lower than 2.67% a year ago. We remain focused on growing high-quality direct deposits and continuing to improve our funding profile over time. Slide 17 details the $1.6 billion increase in loans during the quarter, equating to around 13% on an annualized basis. Incremental growth continues to be focused in our C&I and owner-occupied CRE portfolios. And as Ira mentioned, we saw specific strength in the New York, Florida and Illinois markets and our health care vertical during the quarter. Regulatory CRE, which excludes owner-occupied loans, grew less than $100 million during the quarter. As a result of our strong organic capital accretion and our successful subordinated debt issuance in May 2026, our CRE concentration ratio declined to approximately 317% at June 30 from 329% at March 31. In general, our loan portfolio continues to evolve in line with our strategic priorities as we replace low-value transactional CRE with relationship-based C&I and owner-occupied CRE loans, which are contributing deposits to the bank.
Net interest income on a tax equivalent basis increased to $488 million, up approximately $16 million from the first quarter and $55 million from the year ago period. Net interest margin on a tax equivalent basis expanded 3 basis points linked quarter to 3.2% and was up 19 basis points from the second quarter of 2025. The linked quarter increase in net interest income reflected higher average loan balances and higher yields on new loan originations and investment securities. These benefits were mitigated somewhat by the cost of carrying excess subordinated debt between our issuance of $500 million in May and the redemption of our $300 million callable notes in June. We estimate that this dynamic weighed on net interest income by around $2 million during the quarter. Noninterest income increased $4.9 million to $73.7 million and contributed over 13% of our total revenue during the quarter.
The linked quarter increase was driven primarily by a $2.6 million increase in capital markets revenue and a $1.6 million increase in wealth management and trust fees. The fee growth reflected higher transaction volumes within loan participations and syndications and tax credit advisory services. We continue to view fee income as an important part of our business model evolution. Our enhanced treasury management platform, capital markets capabilities, tax credit advisory activity and broader commercial product set are giving us more ways to deepen relationships and generate additional high-quality and sustainable noninterest income. As mentioned earlier, we now expect 2026 fee income growth to be towards the higher end of our previously announced 6% to 9% range. Reported noninterest expense was $311 million, up approximately $1 million from the first quarter. Adjusted noninterest expense increased by $5 million as lower compensation costs were offset by higher FDIC expense, third-party spend associated with our operational transformation efforts and incremental costs related to the quarter's strong growth in fee income results.
Our efficiency ratio improved to 52.1% from 53.1% in the first quarter and 55.2% a year ago, and expenses as a percent of average assets remains well below peer levels. As Ira mentioned, we remain focused on driving positive operating leverage, including through the continued use of technology and AI tools to support productivity, improve process consistency and reallocate capacity towards higher-value activities. We expect our efficiency ratio will continue to improve as we drive additional revenue growth and control operating expenses in the remainder of 2026 and beyond. Despite a modest uptick in nonaccrual and past due loans during the quarter, we saw a significant reduction in criticized and classified assets on both a sequential quarter and year-over-year basis. As detailed on Slide 25, criticized and classified assets now stand at 7.3% of total loans versus 8.1% a quarter ago and 9% last year.
The continued improvement reflects improving underlying trends within our CRE portfolio, which has led to upgrades out of special mention and substandard classifications in addition to traditional payoff activity. Net charge-offs totaled $22 million or 17 basis points of average loans compared with $18 million or 14 basis points last quarter. The provision for credit losses for loans was $29 million compared to $21 million in the first quarter. The higher provision was due in part to the strong loan growth, particularly within the C&I category. Our allowance for credit losses for loans declined to 1.16% of total loans from 1.18% at March 31. This modest allowance coverage reduction is reflective of the criticized and classified asset reduction I just mentioned. For the remainder of 2026, we continue to expect charge-offs and provisions in line with our prior guidance. Tangible book value increased nearly 8% on an annualized basis.
Our CET1 ratio of 10.7% remains within our previously stated target range and our successful issuance of new subordinated notes net of redemptions bolstered total risk-based capital during the quarter. Our current capital levels provide appropriate flexibility to support our growth and capital return aspirations going forward. In summary, the second quarter demonstrated continued progress against the strategic priorities we have outlined: stronger core deposits, more diversified relationship-based loan growth, improving net interest income and margin, sustainable fee income growth, expense discipline and balanced capital deployment. We are pleased with the momentum in the business and remain focused on delivering continued profitability improvement through the remainder of the year. With that, I will turn the call back to the operator to begin Q&A. Thank you.
分析師問答
Just wanted to touch on fee income. It seems like a really strong quarter there, and the guide seems pretty positive. If we continue at this level, it looks like you probably exceed the guide. Is the expectation that some of the more volatile lines like capital markets likely step down from the high point in the second quarter?
Yes, Feddie, this is Travis. No, I think there's good consistency and continued growth opportunity. The one element that you referenced within capital markets is our interest rate swap income, which is heavily tied to commercial real estate originations. As you saw, the second quarter loan growth was extremely strong and included some pull forward from things that we may have expected to have closed in the third quarter. So I do think the swap income element was slightly elevated. Maybe that equates to $1 million or $2 million in aggregate. But other than that, I think you still see continued growth in deposit service charges, loan syndications were strong, tax credit advisory was strong as well and insurance picked up. So I think there are other elements, but I do think the interest rate swaps is the one that may have been slightly elevated during the quarter.
All right. Great. And if I could just switch gears to credit. Great to see the criticized and classified start to decline again. You mentioned some positive trends in CRE driving some of that. Can you provide any more detail on maybe what some of those trends are and really what you're seeing to drive some of these upgrades?
Absolutely, Feddie. So in general, the feel of our CRE clients is that the market continues to be robust in most asset classes, including office. We're starting to see positive progress in lease-up in office. Our portfolio upgrades and payoffs were primarily associated with some assets that were in transition and in lease-up and were downgraded. We had strong sponsor support. We had expected those properties to perform and lease up, and we are seeing that, and that's contributing to our payoffs and upgrades. And again, we feel that there's room in the portfolio to continue to see that positive trend in criticized assets.
Great. If I could squeeze in one more on credit. Can you just talk about the agentic AI for underwriting? Just curious if you have any example of how that works and what parts of the process you see the most opportunity to speed up underwriting without compromising on the quality of the underwriting?
Sure, absolutely. To be clear, for us, we're in the exploration and examination phase. We don't have agentic AI in our core analysis right now, but traditional proven financial statement spreading and rent roll population within our core systems are being employed now. We're highly invested in examination to continue to expand those capabilities, although not employed in core underwriting yet.
This is Travis. I would just add, like most AI use cases, the manual work can be automated, but it doesn't change the oversight, approval and governance that's around those AI efforts. So elements, to Mark's point, have already been embedded, but it's not like that's occurring in a vacuum with no human oversight. It's shifting roles and responsibilities somewhat.
Travis, the focus on a lot of the mid-caps this quarter in the regionals has been the accelerating loan growth, but a little bit of funding pressures. Interested in how you're thinking about that dynamic — growth versus margin as you go into the back half of next year? And then secondarily, do you have the spot price on the deposits?
Yes. The expectation for rates has changed somewhat since we came into the year. We've talked about being effectively neutral to the front end of the curve from a rate sensitivity perspective. I think we still see that playing out. We have some differentiated opportunities because we still have $5 billion of brokered deposits. Over the last 12 months, we've generated about $4.5 billion of new core deposits. That's $8 billion over the last 8 quarters. So we're seeing the core deposit growth trend be consistent and expanding. For the remainder of this year, we have $2 billion of brokered CDs coming off at a rate of 4.1% and $1.4 billion of fixed-rate loans at 4.7%. When you think about the repricing benefits of both of those items, it gives us good confidence in the margin outlook. I don't think there's any argument that deposit competition is heating up, but it's occurring more on the consumer side.
A lot of our focus has been on commercial deposit growth opportunities. This quarter, we originated, exclusive of CDs, $1.3 billion of new deposits at a blended rate of 1.66%. Last quarter, excluding CDs, that number would have been $800 million at 1.78% — so we had some CD promos out there that helped us generate volume. But exclusive of that, we're actually seeing our ability to generate new deposits at lower rates. All that's supportive of our margin guidance for the rest of the year. From a spot deposit perspective, the rate was 2.29% as we exited June. Part of that was elevated from March by 2 or 3 basis points because of the CD promos that we had in the market.
Okay. Great color. And Ira, I want to make sure I heard the AI discussion right. I think the comment was 500 basis points. That was either operating leverage or an efficiency comment. I guess I'm more interested in how the role of AI plus the role of smarter regulation is going to impact perhaps that mid-teens ROE that you've been talking about for some time.
Yes. I think there's tremendous opportunity on both sides of the balance sheet when we think about the AI implications. When we think about the composition of that 500 basis points, in my view it's more along efficiency ratio improvement, driven around maybe 65% coming from expense reductions and around 35% coming from revenue enhancements. As we think about resource deployment, whether capital or human, that's where those allocations come from. On the expense side, we think about gearing ratios and implications across frontline and support areas. We're already seeing the elimination of certain software across the organization, reduction in specific expenses and just an improvement in efficiency. On the revenue side, we believe we will be able to get a larger share of wallet based on enhancements in data and analytics and the ability to provide critical value-add information to our clients, which we expect to be differentiating and give us additional revenue opportunities. We're deploying capital associated with this. For the year-to-date, we've seen about $15 million in savings in the expense run rate.
Yes. All in, we have $15 million of savings in the expense run rate against about $3 million to $4 million of AI-associated expenses that are new, whether it's headcount or vendor spend.
Could you talk a little bit more about your loan and deposit pipelines and how you're thinking about the timing and drivers of growth over the rest of the year? The guidance implies deposits outgrowing loans by about $400 million for the full year, but through the first half, loans have been about $400 million ahead of deposits. Is there any seasonality or timing for either of those lines that we should be thinking about? And then secondly, as core deposits catch up to loans, should we expect meaningful improvement in deposit costs as you're running brokered down?
On loan growth, we're running 9% on an annualized basis this quarter. Over the last 12 months, it's been around 10% growth in C&I and mid-single-digit aggregate loan growth. I would expect the second half of the year to look more like what we've done over the last 12 months than this exceptional quarter. We've been hiring on the commercial side for the last 12 to 15 months, which resulted in a growing pipeline coming into the second quarter and very strong pull-through. The pipeline is down about $1 billion from March 31 to June 30, but remains a couple hundred million dollars ahead of where it was coming into the year. Seasonally, the third quarter is typically a bit slower with summer vacations, and you see acceleration in the fourth quarter and toward year-end. So when we revised loan growth guidance higher, we said at or somewhat above the high end of the 4% to 6% range, which I think remains accurate.
On the deposit side, we continue to see very consistent growth — about $1 billion a quarter in core deposits historically. There is a lag between putting on C&I loans and achieving the deposit expectations associated with those loans. For example, loans originated in January had generated about 10% of the deposits expected by March and were up to 80% by June, so there's a 3- to 6-month lag. That's why we highlighted a timing mismatch this quarter: loan growth was exceptional and deposit growth was also exceptional but with some timing differences. Over the next two quarters, I expect that gap will close and we'll continue to see brokered deposits come down. For the remainder of the year, about $2 billion of brokered CDs come off at a rate of 4.1%. On a blended basis, this quarter's new deposit originations were well below that rate, which supports our structural tailwind and differentiates us from peers.
On asset repricing, loan yields came in, I believe, 3 basis points higher quarter-over-quarter, and you called out new originations coming in at a higher rate. Can you provide any color about how much fixed-rate asset repricing we still have going into the second half of the year and maybe into 2027?
For the remainder of this year, we have $1.4 billion of fixed-rate loans maturing at a rate of 4.67%, which is about 150 basis points lower than where new originations are. For the first half of next year, there should be an additional roughly $1 billion at about 4.75% maturing. So that provides some of the tailwind we're talking about on the loan side.
Great. And just last one on capital. How are you prioritizing capital between loan growth, buybacks and potential further reduction in CRE concentration from here?
There's no change in our capital deployment framework. Our primary focus remains well-funded, high-quality loan growth and secondarily buybacks. This quarter we had significant loan growth and we toggled back on buybacks. If loan growth lightens next quarter, we would be more active on buybacks. CET1 is in the middle of our guidance range, and there's no change to that. On CRE concentration, you've seen it come down consistently. This quarter it came down 12 percentage points; nine percentage points of that was due to the subordinated debt issuance, and the remaining three percentage points was due to organic capital accretion. We still grew regulatory CRE by about $100 million this quarter and were able to drive the ratio lower by roughly 3% organically.
I'll start on credit quality. You saw some migration in and out of the 30- to 59-day bucket into nonaccruals. You attributed that to some CRE loans. Could you share more on that and your latest thoughts on credit quality overall into the second half of the year?
For the migration into nonaccrual, two of the three loans that moved into that category are appraised extremely strongly and are covered by value. One is a unique office portfolio where we could not come to terms on a continuation and are looking to exit; that loan matured and we're continuing to receive payments on it, and it's well collateralized. The other loan has been hovering between the 60-day bucket and beyond 90 days; it moved into nonaccrual, the borrower made a payment and it's running closer to 60 days now, and it's also very well collateralized. We're not concerned about the collateral values and continue to expect to receive payments. I'd point out that in our nonaccrual portfolio, approximately 50% of nonaccruals continue to pay interest. We look at overall trends, and the large reduction in criticized loans is a strong indication of where the portfolio is heading; we're seeing solid trends there.
And then on the ACL ratio, it fell a few basis points quarter-over-quarter, but you reiterated the provision expense outlook. Do you still think you could get back up to 120% by the end of this year?
I don't think we have a hard target of 120%. It's within a range we're comfortable with. Year-over-year, it's down a couple basis points despite a 15 percentage point reduction in criticized and classified assets. As criticized and classified continues to come down, it implies a lower ACL, which is offset by our C&I loan growth carrying a higher allowance. So everything is playing out as we expect. The allowance will move around a couple basis points each quarter due to economic assumptions and model dynamics, but generally it's been stable for a long period of time.
Travis, I want to go back to funding. Considering the competitive dynamics for deposits and against the maturing brokered, what are your expectations for deposit cost increases from here? And how much of the $5 billion in brokered do you think can or do you want to replace with core? I'm assuming there's some residual brokered that will remain on an ongoing basis. What might that residual be?
On deposit cost, the level of competition could raise core deposit costs, but we have an offset from brokered deposits. Our model currently has roughly 4 to 5 basis points of deposit cost expansion over the next two quarters, and we expect margin expansion of about 5 to 7 basis points in each of the next two quarters, so the earning asset side offsets that. I don't think brokered deposits will go to zero; they serve an important interest rate risk management purpose. Our goal is to get loans funded by nonbrokered deposits to 100%, and I think we can do that. There have been periods over the last eight to ten quarters where we've achieved sizable brokered reductions. Core deposit growth has been consistent and differentiating for us, and we'll continue to make progress. But some level of brokered is likely to remain to support IRR and liquidity.
Okay. And then you touched on it a little bit, but thinking about the NIM longer term, we're in a period where fixed asset repricing benefits exist. But if I look back to 2023 when loan yields spiked and assuming some of that rolls off in 2028, do you start to see NIM leveling off as we exit '27 and into 2028? I'm curious about your longer-term NIM thoughts.
I'll get you through the end of 2027: we expect continued expansion between now and the end of 2027, and I don't expect it to teeter out during the next year. There are continued tailwinds beyond 2027. Given our CRE concentration entering '23 and '24, we weren't originating many fixed-rate CRE loans when rates were highest, so we don't have the repricing headwind of higher-yield fixed-rate loans coming off. The fixed-rate loans we have coming off are relatively low yielding, which gives us an opportunity and reduces volatility from prepayments compared with peers who originated more fixed-rate CRE at higher yields.
Matt, we've made a lot of structural changes since then. Think about investments in the treasury solution product, the C&I teams we brought in, and deemphasis of some transactional commercial real estate assets, which have lower relationship and compensating balance characteristics. The structural funding advantages we have provide tailwinds as well. So our model and these structural changes support the outlook for 2028 compared with 2023.
Got it. Ira, maybe while I have you: we talked about that mid-teens ROTCE outlook. When do you think you can hit that based on what you know today?
We've given guidance toward the beginning of 2028 for the 15% ROTCE target. I still think that's the timeframe. We see tailwinds in margin and positive operating leverage as expenses come down across the organization. AI will contribute, but as Travis has noted, we are not relying solely on AI to get to 15% ROTCE. The guidance we gave hasn't changed.
On expenses, can we assume that professional and legal fees are trending down in the second half of 2026 and through 2027? I believe this line item has been elevated because of the transformation efforts over the past few years. Also, with AI benefits and the positive impact on efficiency ratio and positive operating leverage plus your expectations on NIM expansion through 2027, how should we think about the efficiency ratio target? You've talked about sub-50% by the end of 2026. How should we think about it beyond 2026?
I'll start with the efficiency ratio. There's no change to our expectation that the efficiency ratio should be 50% or lower as we exit 2026. Industry-wide AI could provide an additional opportunity to enhance efficiency ratios by around 500 basis points over the long term, and we believe Valley can benefit similarly. If you exit 2026 at or below 50%, there's additional opportunity to continue driving it lower as revenue tailwinds persist into 2027 and expense growth remains below revenue growth. Regarding professional fees, I agree — this is likely near the peak as we begin to offboard third parties that were supporting our transformation. You'll see professional services come down, and as we optimize onshore headcount, compensation costs should stabilize or come down while professional fees offset some of that during transition. Overall, that's a positive trade for expense control and the efficiency ratio. There are a lot of moving pieces each quarter, but we feel good about AI efficiencies and more to come.
Okay. Are the new deposits coming into the bank on the core side, including NIB, coming in around 2.5%, which I believe was quoted a quarter or two ago, or slightly higher? Could you give an updated number?
I'll give you the numbers. In the first quarter, in aggregate, we originated $1.4 billion of new core deposits at a rate of 2.55%. This quarter, we originated $2.5 billion in aggregate at a rate of 2.71%. However, this quarter's originations include about $600 million of retail CD promos at a rate of 4%. If you exclude CDs from both quarters, we originated in the first quarter $800 million at 1.78% and in the second quarter $1.3 billion at 1.66%. So exclusive of CDs, we originated $500 million more core deposits this quarter at a rate 12 basis points lower than the first quarter.
I just wanted to clarify: did you mention the Fed interest rate assumptions for the NII guide? Could you confirm those, please? Apologies if I missed it.
At this point, we have one hike assumed for 2026 and another half hike assumed for 2027. We've talked about being effectively neutral to the front end of the curve. That continues to be our balance sheet positioning. Effectively, our floating-rate loans, which are about 40% of our loan portfolio, balance the amount of deposits that would also float on the front end when adjusting for beta. So whether there are cuts or hikes, it doesn't materially change our NII outlook. We're more exposed to the belly of the curve, and we've seen good expansion there since the beginning of the year.
And remind us, is that on a constant-size balance sheet? Or does that include a presumed slowdown in balance sheet growth if rates are a little bit higher? I meant more along the lines that higher rates can weigh on loan growth, for example.
We made the statement with our balance sheet today in mind. As we do more C&I, the amount of loans that float on the front end of the curve would increase; at the same time, that's where our deposit growth is coming from as well. Given the talent we've added, market presence and specialty verticals, we don't expect a reasonable expansion in longer-term rates to materially change our loan growth outlook.
I just want to once again thank everyone for taking the time to join us this quarter. We're very excited about the results and the outlook for the rest of the year and look forward to talking to you again after Q3. Thank you.
This concludes today's program. We thank you for joining. You may now disconnect.