Good morning. Welcome to the Guaranty Bancshares first quarter 2021 earnings call. My name is Nona Branch, and I will be your operator today. This call is being recorded. After the prepared remarks, there will be a Q&A session. If you have a question, you can notify me by hitting the Raise Your Hand button at the bottom of your screen. At the appropriate time, I will announce your name, then enable your line so you can unmute and speak to the panel. Our host for today's call will be Ty Abston, Chairman and Chief Executive Officer of the board of the company, Cappy Payne, Senior Executive Vice President and Chief Financial Risk Officer, Shalene Jacobson, Executive Vice President and Chief Risk Officer. To begin our call, I will turn it over to our CEO, Ty Abston. Good morning, everyone. Again, welcome to our first quarter call. We're going to do a presentation for you, as Nona mentioned, and go through that, and then answer any questions you have. We have had a good quarter. We feel very good about how things are opening up in our economy through Texas, and pretty positive about not only the overall state of the economy in Texas, but the markets we're in and kind of how the bank's prospects look for the remainder of the year. We'll go through some of these numbers and the key points we want to present to you, and then we'll answer questions. Cappy? Thank you, Ty. Good morning, everyone. I'll quickly kind of go over a few highlights of both the balance sheet and the income statement. I think many of you have seen the earnings release that was obviously put out on the wire this morning. I'm not going to read anything to you, but our balance sheet trend really over the last five quarters has been continually moving a little higher. I think, again, most of you have seen this in the industry. Our total assets at quarter in were $2.89 billion. That's up $150 million linked quarter, and $500 million from a year ago. We know a lot's happened this year, no doubt, and most banks' balance sheet, as I said, probably have expanded due to the PPP and the multiple stimulus payments. That's probably a trend you're seeing a lot of. I thought my focus this morning, I'll address mainly the loans, deposits, and liquidity. You'll notice on the balance sheet, our temporary investments, mainly our Fed Funds, increased significantly linked quarter. We continue to have strong liquidity due to the increase in deposits. I'll get more into detail on that on the earnings mix, or earnings asset mix, I guess, here in just a minute, though. Loans obviously make up the biggest part of the asset section. Loans were up $45.5 million from prior quarter. As most banks have, Guaranty participated Round 2 of the PPP. We started that funding during the quarter. This quarter, Round 2, we funded $84 million, and was offset by a decrease Round 1 or pay downs or forgiveness, I guess, if you will, of approximately $66 million. The net increase in PPP loans for the quarter were about $18 million. The other $27.5 million in growth came in our loan book, mainly in our Central Texas, DFW, and Houston regions. Those markets were up nicely. If you ex out that PPP, that growth was annualized about a 6.4%. On the deposit side, also showed a nice increase. We were up $189 million or 8.3%, and ended the quarter at $2.48 billion in total deposits. I think worthy to note is that this is a $475 million increase from a year ago. As we've seen in the last 12 months, I know we've talked about it in the prior calls, I think just customer spending habits, PPP funding, the stimulus payments, just probably just an overall increase in savings patterns have contributed to this increase in deposits. We continue to have a high percentage of our deposits in non-interest bearing, which is now at 35% of total deposits. Stockholders' equity grew $7.5 million linked quarter, and $26.5 million from a year ago. We did not buy back any stock during the quarter. As you know, we were pretty active in the stock buyback program in 2020. We just don't see that as the best strategy for our capital at this point in time. We did not buy back any stock during the quarter. As indicated in the earnings release, we did pay another $0.20 quarterly cash dividend. We also issued a 10% stock dividend, which was a little bit unusual event. I guess just one note, we did not restate historic per share data related to this 10% dividend, which by the way added about 1.1 million additional shares outstanding. We did this really right in the middle of the quarter, mid-February. We're going to go back and address this restatement of prior historical data before we file our 10-Q for the quarter. Just FYI, I do think that stock dividend went very well with our shareholders. They liked it. Of course, everybody likes the cash dividend, and we got a long track record, I think about 30-year history of paying an increased dividend, cash dividend. We're proud of that and the return that that's providing on a cash basis for our shareholders. Looking over at the income statement, as Ty mentioned, we're very pleased with our net earnings performance for the quarter. We had a strong performance in 2020, and we followed that with the first quarter of 2021. Again, I think as Ty alluded to, we like where we're positioned. We think we have a strong balance sheet and a pretty diversified earnings stream, especially as the Texas economy looks to really open up here pretty soon. Our net earnings for the quarter were $11 million. That's a reported earnings per share of $0.95 a share. That's up from prior quarter of $9.9 million in earnings in fourth quarter of 2020. $11 million for the first quarter is an ROA of 1.6% and an ROE of 16%. Really good numbers that are tracking positively. We did provide in the earnings release a detailed table that highlights our core earnings, which is what we classify as our earnings before credit provision, before income tax, and before all PPP effects. Here we're just trying to take out some of the recurring and non-recurring noise in the numbers, mostly the PPP effects, since that's so extraordinary. That way we can point out our core earnings stream. In first quarter this year, you'll note our core earnings were $9.8 million, compared to the linked quarter or Q4 of last year of $9.6 million. Comparable, still positive trends. If you take that $9.8 million, that gets our core earnings per share at $0.85 a share for Q1. Let's talk a little bit about margin. I know a lot of you put a lot of focus on that. We do too. We're very focused on our margin. In looking at the PPP effects, we continue to have a strong reported net interest margin. For the quarter, it was 3.85%, fully tax equivalent. That compares really equal to that same amount of margin for Q4. It was also at 3.85%. Backing out the PPP effects, and again, we have a table in there that shows that for the Q1, the margin was 3.48% compared to 3.70% for linked quarter. I do want to emphasize some positive here. I know we need to also understand on what's driving it down some, in addition to that. You'll notice on that table, our loan yield ex PPP was 4.79% in Q1, and that compares to 4.83% in Q4 of last year. That's down four basis points, I think that's very positive in that we've been able to hold on with some headwinds, obviously, on our loan book. As stated in the press release, we've got about two-thirds of our loans that do have rate floors, and just over half of those are currently sitting on their floor. I think that's very positive news. I guess the second thing positive I'd like to point out is our cost of interest-bearing deposits. They decreased 9 basis points in Q1 to 0.42%. If you look back at our total cost of deposits, which includes that 35% of interest-bearing deposits, then our Q1 total cost of deposits were 0.27%, and that would be compared to 0.33% during Q4. We continue to have positive trends there to help out our margin. I guess the negative aspect of our margin is that strong liquidity position I was referring to earlier. I think a little surprisingly to us anyway, much more of our growth in deposits have stayed longer than we projected in our modeling. Now and in Q1, we have a much higher mix of our earning assets and temporary investments. Just to give you a little color on that, briefly in Q1, we averaged 13% of our earning assets in Fed Funds, compared to Q4, it was 6% of our earning assets. By our estimates, that excess liquidity has put a drain on our margin of about 25 basis points if we were to drop the liquidity to a more normal level. Again, really kind of modeling out where that continued deposit mix is going to stay in. It did have headwinds on our NIM, no doubt, of about 25 basis points because of the excess liquidity. Of course, there is a temporary drain on income as well as margin, but we just don't think it's prudent to really go big into the bond market at the current interest rate levels. We are buying slowly into some mortgage securities as the yield curve tries to steepen. We're not going to add any significant duration risk at these current interest rate levels. That's a decision we've made, and then thus we've had a little bit of drain on our margin because of it. We do model out, though, deploying more of our liquidity and loan growth during quarter Q2, Q3, and Q4, especially as the economy begins to open up even more. Looking at non-interest income, it continues to remain strong. We're at $6.1 million for the quarter. That is down slightly from linked quarter by about $307,000 or just under 5%. Of course, as most of you, I'm sure, have seen, the biggest variance is in a decline in our gain on sale of mortgage loans. It was down $500,000. Both our mortgage and warehouse lending group continued to do well and have a good volume in the pipeline. The mortgage volume obviously is seasonal. Q1 is historically a lower volume for a quarter than Q2 and Q3. It was a good quarter. We are modeling Q2 and Q3 to do better, especially due to the hot real estate market here in Texas. What could hold that down somewhat, I think for everyone, is the housing inventory across the state, in general, it's pretty low. As example, in DFW, there's a little over a one-month inventory supply of homes on inventory when the equilibrium is closer to six months. Challenges ahead, no doubt. Just we see the volume continuing to be strong, though, in those two departments. Operating expenses were actually down a little below our budget for Q1 numbers. Really the only extraordinary information we put out there in the expense column was due to PPP 2 origination costs deferred of $392,000. Real quick, the efficiency ratio was 56.6% stated, compared to 59.8% linked quarter. Again, if you back out the effects of PPP, the efficiency ratio for the quarter was 65.3 compared to linked quarter of 65.6. Continued to have good trends in that regard also. I'll turn it over to Shalene and her topics. Great. Thank you, Cappy. With respect to COVID, we are definitely seeing more activity on the roads, in stores, and in restaurants around Texas. As you all know, our governor, Governor Abbott removed all COVID-related restrictions a couple of months ago. There are still some local or business- specific restrictions, but we're definitely starting to see people get out a lot more. The local news reports also indicate that people are making progress with vaccinations. They definitely appear to be more readily available. We're optimistic that we can achieve that herd immunity goal sooner rather than later, and hopefully get back to normal. Speaking of normal, all of our lobbies are back open at normal banking hours now. We still have approximately 10%- 15% of employees working remotely, but we expect all of them to return to their office or in-bank work environments by May the 1st of this year. We are excited to say that we again participated in the PPP Round 2 program, which began in January and is expected to go through May 31st or until those funds are depleted. As of March 31st, we originated $84.5 million of PPP Round 2 loans to 932 borrowers. We recognized origination income from those loans of $1.8 million during the quarter, and we deferred $2.1 million, net of origination costs of $392,000, which Cappy just mentioned. With respect to the PPP Round 1 loans that originated back in 2020, there has been $135.9 million or 64.8% of those dollars forgiven by the SBA so far. Between both Rounds 1 and 2 of PPP, we have about $2.9 million of deferred income remaining as of quarter end. Although we do expect to record a bit more during Q2 as Round 2 wraps up. We're definitely encouraging everybody from PPP 1 to submit their forgiveness applications. We think borrowers are really going to be interested in that as they start having to make payments here pretty soon if their loans aren't forgiven. We anticipate quite a bit more of the Round 1 loans to be forgiven over the next quarter or two. We will start accepting Round 2 forgiveness applications when the program ends on May 31st or sooner if the funds are depleted. We haven't had anything forgiven there, but we also have lots of customers already, lots of borrowers in PPP 2 who are already wanting to submit that application for forgiveness. We anticipate that those funds will hopefully be forgiven pretty quickly through 2021 as well. As far as the COVID-related deferrals that we had under the CARES Act, as of March 31st, there are no principal and interest deferrals remaining. We do have 11 loans that remain on an interest-only deferral that have balances of $49.8 million. Those are primarily hotel and hospitality- related. Ty may want to comment on this, but I believe all of them have very positive trends in occupancy. We expect them to be back on contractual payments at the end of their interest-only deferral period, and we don't anticipate any further COVID-related deferrals across our portfolio. That's all I have to say. I will now turn it over to Ty to address our overall loan portfolio and non-performing assets. Thank you, Shalene. Like I said, we're seeing increased loan demand and loan opportunities in all of our markets across our footprint. Obviously, there's a lot going on in the DFW Market. The Houston Market is active. The Central Texas Market, particularly Austin MSA, is very active. We're opening two locations, additional locations in the Houston region, Lakeway and Georgetown, and have, we think, strong lending teams there that should help us continue growing that Austin presence. We're seeing, I think I mentioned this last quarter, surprisingly, through all of this, we're seeing a lot of strength and opportunity in our East Texas regions, in our footprint. Opportunities and really strength that I haven't seen in 30 years. We're seeing opportunities as far as loan opportunities in the East Texas region. We're seeing deposit relationship opportunities and just strength in real estate prices and activity. I think a lot of that has to do really with COVID, because a year ago, we didn't see that strength. We're seeing people move in from around the state and around the country and not move to Metro Markets. that's something new that we're seeing that is kind of surprising, but I guess it makes sense. We're seeing people that are working remote or have to work two or three days a week in a Metro Markets and are deciding to buy property and homes out in the rural markets. That's been surprising, and we think there's some opportunities there for us really across the board in our East Texas region that again, a year ago, I probably wouldn't have said we had in front of us. Related to deferrals, like Shalene said, we have a handful of hospitality loans that are on interest deferral. They will go back on contract by the end of Q2. Those were loans that had low loan-to-value and good equity positions, good guarantor strength. It was a situation where they didn't have to have a deferral, but we felt it helped them to retain their liquidity to give them interest only, so we did. We were pretty accommodative through this last year. Those are credits we're very comfortable with. They'll go back on contract, like I said, end of second quarter, and really we're seeing a real uptick in hospitality across the board. The good news, there haven't been new properties brought online, obviously, in the last year and probably won't be in the next year or two. It may be counterintuitive, but I'm actually kind of positive, feel pretty positive about that sector right now, going forward the next year or two. We're seeing on our non-performing assets, we saw a definite improvement in that ratio for the quarter. The total in non-performing assets were primarily three or four loans we acquired from Westbound two or three years ago, I guess it was. Those resolved during the quarter. The charge-off we recorded for the quarter were pretty much 90% charging off the balances, losses that we had in a couple of those Westbound loans that we had well reserved. In fact, I think we released $400,000 or $500,000 in excess reserve on those credits. Our problem assets are pretty low, but our asset quality continues to be very strong. We're built not only comfortable and confident in our asset quality, but feel like the reserves we took this time last year have proven to be very conservative with what we actually will ultimately see from this. That's kind of a quick recap of our loans and credit. I'll turn it over to Shalene, let her speak a little bit more about CECL, and then we can cover some more of the credit side of it in Q&A. Okay, great. Thanks, Ty. There was no ACL provision or reverse provision in Q1. Within our CECL model, we have nine standard qualitative factors that we developed as part of our methodology. When COVID began in early 2020, we chose to create a 10th, hopefully temporary, COVID-specific qualitative factor, which we've described in prior filings and earnings calls, that added about 55 basis points of reserves to our portfolio. The Texas economy is showing some positive trends from the baseline that we used to develop that back in March and April of 2020, when the economy here was really at its worst. Throughout the upcoming year, what we plan to do is cautiously unwind that COVID-specific qualitative factor that we put in place while transitioning some of that COVID residual risk or really any other risks that come about during the year back to our standard nine qualitative factors within the model. During Q1, we reduced the COVID-specific qualitative factor by about 14 basis points, but that was offset by some growth in our loan portfolio as well as some adjustments we made to the standard qualitative factors for items such as concentration changes in certain segments and possible impacts of tax rate increases on our borrowers over the next couple of years. As a result of those changes, our first quarter allowance for credit losses, excluding PPP loans, is now at about 1.87% of total loans. As we unwind that COVID-specific factor that I was telling you about, we don't anticipate that we're going to release all of the effects of that. We do think that there's going to be some residual COVID risks that we're going to account for in our standard qualitative factors. We're going to be cautious and conservative about releasing that. We do believe that, if our portfolio continues to grow and the asset quality trends stay as they are, that we probably will need to release some additional reserves throughout 2021. Ty and Cappy, unless you have anything else to add, that concludes our planned remarks, and we can turn it over to Nona for Q&A. Thank you, Shalene. It is now time for the Q&A session. If you have a question, please hit the Raise Your Hand button at the bottom of your screen. If you're participating from a telephone, star nine will raise your hand. Star six will unmute your line. Our first call today is from Matt Olney with Stephens. Matt, your line should be unmuted. Okay, great. Thanks. Good morning, guys. Can you hear me? Sure. Hi, Matt. Sure. Hi, Matt. I'll start, I guess, with Ty. You made some interesting comments about seeing some surprising strength in the East Texas markets. It's great to hear this. It sounds like the bank could benefit from this. For the last several years, I think you've worked hard to move into some other Metro Markets in order to get more growth. If you're starting to see a shift of more growth in East Texas, does it give you any pause of your growth strategy in other markets? I'm just trying to appreciate if the trend continues. Is there any strategic shift we could see? Thanks, Matt. There would not be a change in our overall philosophy in view of the fact that the majority of the growth in Texas the next 20 years are going to be in the DFW, Central Texas, Houston regions. What it has done is increased our focus and attention that we're paying to the East Texas markets as far as opportunities we see to grow within the East Texas footprint. It doesn't change the strategy, but it's definitely something that we're looking at as we're updating our strategic plans. We see opportunities in the East Texas region that we just haven't seen in a long time, we think that's a net positive. We're going to continue the strategy of growing throughout our footprint. Okay, got it. On the deposit side, another great quarter of deposit growth. Any more details you can provide about the pace of the growth in the quarter? Was it steady throughout the quarter, or did it accelerate towards the end? What have you seen in recent weeks? I'm just trying to appreciate if this growth can continue in the near term. Well, I'll answer that, Matt. It was a pretty steady growth during the quarter. I think, again, part of that's going to be some of the PPP money that's just kind of hanging on to be conservative on businesses' balance sheets. We've seen, I think each month was an increase in deposits. I will say this, about $30 million of that is Public Fund-r elated. I failed to mention that, and I should have. Traditionally in Q1, that's an increase in Public Fund money. Each first quarter, we get growth in Public Fund money, and then it starts going out in Q2 and Q3. It starts building back up in Q4. That's pretty traditional. Part of that was that, but no, we've seen a continual increase in deposits throughout the quarter. Cappy, it sounds like you're still not very excited about investing liquidity in the securities portfolio. Would love to hear how you guys are thinking about that potential and when you would consider that more throughout the year. Well, we did increase our security portfolio. You'll notice end of period in Q4 to end of period in Q1 of this year. As I said, we're going to gradually go into it some. We're not going to leave all that money parked on the sideline. A couple of thoughts, as I alluded to, that the rate environment isn't great, and it does potentially put in a lot of interest rate risk in an uprate environment, which at some point in time we're going to have. Two, we do plan on our loan growth to continue upward, and we think we can deploy more money in Q2 and Q3, specifically in the loan book. We are willing to take a little bit of a decrease in earnings and I guess some headwinds to the NIM by keeping that money parked on the sideline a little more conservatively. Let me add a little bit to that, Matt. Like Cappy said, I would look at what we're doing basically as dollar cost averaging in the bond portfolio. We do have concerns with rates being as low as they are, buying in the bond portfolio and adding to the bond portfolio. That being said, it's a bet on the other side to sit on all cash and not buy bonds. The intent is to buy bonds as we go along in each quarter. As Cappy said, though, we're also planning to continue to grow the loan book and deploy some of the liquidity in the loan portfolio. Our model continues to be to develop core deposits. One thing, I'm doing a video for our employees after this call, and we're talking about the next quarter and the fact that we're going to get out again and go on offense and be out in customers' businesses and doing calls and developing core deposit relationships and core loan opportunities for the company. We're going to continue to develop our deposit base. We're going to be thoughtful in how we deploy it, certainly in the longer bond side or bond market instruments. We are still also looking at deploying more of our liquidity into loans as we grow throughout the year. We're still guiding mid-single digit loan growth. That's probably going to end up being a little conservative. We're still being a little cautious with how we guide going forward, given there's still some unknowns out there. Again, overall, we're very confident and pleased with what we're seeing as far as the strength in the overall economy in Texas. Okay, great. Well, thanks for the commentary, and Nona, I'll hop back in the queue. Thanks, Matt. Okay, our next call is going to be from Brady Gailey with KBW. All right, thanks. Good morning, guys. Hi, Brady. Hey, Brady. I wanted to start with the PPP income. I know you highlighted it as about $3.5 Million this quarter, but how do you envision that income playing out for the next couple quarters going forward? This is Cappy. We have more loans that we are booking in Q2, we do take some of that when we book it. There'll be a little bit more increase because of that in Q2, it's going to really depend on the forgiveness piece going forward, especially in Round 2. I think they pretty well got it figured out. The SBA got the program figured out, we're seeing Round 1 being forgiven. We're down quite nicely in it, some of that will continue. That will continue to go down. We'll get some income in Q2, Q3, and Q4, I think, for Round 1 and for Round 2. It's hard to model out how much, how quick the SBA will get that money to us. We do see a pretty good amount to be recorded yet in 2021. Okay. All right. I heard your comments about not being as interested in the buyback. Obviously, the stock has done really well. It's almost 2x tangible book value now. Maybe on the flip side, since you have a currency that is more valuable now, what's your take on bank M&A? We saw a big deal last week in Texas. I know you guys have bought some nice franchises over time, how are you thinking about bank M&A with you guys as a buyer? Brady, this is Ty. Let me take that. We're definitely looking at opportunities throughout our footprint. We're seeing increased conversations. It does help that we have our stock prices stronger. I think you'll see some additional activity in M&A throughout our state, and we're definitely in those conversations. Certainly, banks below a billion, we're one of the calls that they make. We're going to continue to be disciplined with how we approach that. At the same token, we think it's a pretty good opportunity not only for where our stock is at, but just the opportunity with the economy and everything, to possibly do some acquisitions as we go forward. We're obviously more focused on that today than we were a year ago, and we think that'll continue at least for the foreseeable future. Lastly for me is just on loan growth. I know you guys just touched on it. You're sticking to your mid-single digit loan growth guidance. Man, the tone definitely feels a lot better. Would it be far off to think about you guys doing double-digit loan growth for the next couple of years? That wouldn't be out of the realm of possibilities, no. We'll try to give more detailed guidance on that as we get through mid-year. Yes, we're seeing a lot of opportunities, and mid-single digit may prove to be conservative without a doubt, and we'll try to update that as we get further into the year. Okay. All right, great. Thanks, guys. All right. Thanks, Brady. Our next question will be from Brad Milsaps of Piper Sandler. Brad, you should be ready. Hey, good morning. Am I coming through? Yeah, Brad. Hey, Brad. Hey, guys. You guys have addressed most everything. Wanted to follow up on the loan growth. I think last quarter that you mentioned you hired six new lenders in the fourth quarter, and those folks kind of averaged anywhere from $30 million-$75 million at their previous banks in terms of their loan portfolio. I don't think your loan growth guidance for mid-single digits included any production from those folks. Just curious, did they drive any of the growth in the first quarter? Have you hired anyone else new? Does production from them maybe kind of bridge to maybe some higher loan growth levels as you move through the year? Brad, this is Ty. Yes, that definitely gives us tailwinds on our loan growth with the lenders we've brought online. I don't think there's a lot of their production in Q1, maybe a little bit. We have brought on at least one other lender, I think, since our last call. Maybe two. Yes, and that's what I'm saying, that as we get to mid-year, we'll give some more detailed guidance on that, on loan growth. Without a doubt, we have tailwinds there with not only just what's going on with the overall economy, but with the lending teams we've brought on in our different regions. Great. Thanks. That's helpful. I hear you guys loud and clear on not wanting to maybe add to the bond portfolio, but I do think it's interesting the yield there stayed relatively flat for three consecutive quarters. Just kind of curious sort of how you've been able to do that even though you are reinvesting, kind of what you're buying and kind of where new bonds are coming on, kind of relative to the book yield? Well, one reason, this is Cappy, one reason for that, Brad, is for years now, we've been on the level yield accounting method, that takes a little bit of rodeo out of that and how we amortize the premium and accrete the discounts. We've been doing that for six, seven, eight years now, for quite a while. That makes the yield a little more level. That's the main reason why it has stayed consistent. Now, some of the bonds, obviously, that we're bringing in are going to be a little bit lower, and I think that's going to weight it down some, and has. The main reason is the accounting treatment is the level interest rate. Okay. Then finally, Cappy, 42 basis points on interest-bearing deposit costs. How much more room do you think you have to drive that lower? I think in Q2 that will go down. I think probably not the level of nine basis points that we did comparable to linked quarter, but there is room for it to go down more, I would say in the 5+ basis points. It's going to continue to improve in Q2. Okay, great. Thank you guys. Thanks, Brad. We have another question from Matt Olney. Thanks, Nona. Just to follow up with respect to credit and the $50 million of loans that are interest only, that are on that six-month window. I guess, when does that window start to expire for the majority of those borrowers? Remind me how those loans of the $50 million, how are those currently rated internally, and could we see additional downgrades over the next few quarters as that six-month term expires? Thanks. Thanks, Matt. This is Ty. They are all coming out of that program, I believe at the end of Q2, I think every one of them. They'll go back on contract end of Q2. We have them graded very conservatively in-house. We don't see exposure in those credits, and we haven't from day one. Like I said, we just wanted to give them some relief on the principal portion or payment. The loans have a group that I believe the majority of the dollars are actually with one group that had strong liquidity and strong guarantor support and actually have very low LTVs. We're very comfortable with the credits. We just gave them that program to kind of get them through this. We will actually be upgrading them, not downgrading them from where we have them. Okay. Ty, as far as the resolution of those lingering credits in the first quarter, I think those were mostly hotel loans in that Houston Market. I think from our side, we're trying to understand the market value of these hotels post-pandemic. Is there anything else you can share with us about how these hotels are being valued today versus pre-pandemic? It really depends. We see different valuations for different sectors in hospitality. Overall, I will say it's strengthened quite a bit. There's quite a bit of money out there looking to invest in hospitality. For instance, one of these that sold had two or three different people trying to buy it. I think that my best guess is valuations are actually getting back to within 80% of where they were pre-pandemic. Again, the challenge in hospitality is always the supply side of how many properties are brought online. That's pretty much been muted and will be muted going forward. They're going to start seeing some real opportunities in occupancy, and I think you'll see a real improvement in that area. The valuations have improved, without a doubt. They're not probably back where they were 100% pre-pandemic, but they're getting closer. Okay, thanks. On the loan balances, any color on the mortgage warehouse balance, the change from last quarter? No, nothing specific. We saw quite a bit of growth in the warehouse space as well as the mortgage division. That's starting to level out a little bit where we stand today. It was a strong quarter, and kind of followed up with a strong quarter in the fourth quarter. Both our mortgage and warehouse kind of run in tandem, and we're just seeing a lot of opportunities there as people are refinancing and purchases. I don't see that growing materially, but I think it's going to continue to run at a pretty good pace. Lastly from me on the fee side, we saw some really good strength on merchant and debit card fees. That's both sequential year-over-year. Is that growth we've seen recently, is that purely volume-based, or is there some other nuances that have also supported that growth over the last year or so? Go ahead, Cappy. That's volume-based. We've seen an uptick in that, and that's going to continue. I think Q2 will be stronger than Q1. I'm pretty sure it will. We have a strong volume there. We did renegotiate that contract a couple of years ago, and we're seeing the benefits of that also somewhat. Okay, sounds good. Thank you, guys. Thanks, Matt. Okay, there are no more calls in the queue. We'll give it a few more minutes, a few more seconds. Since there are no further questions, I want to remind everyone that the recording of the call will be available by 1:00 P.M. today and will be posted on our investor relations page at gnty.com. Thank you for attending our call today, and it is now concluded. Have a good day.