Good morning and welcome to the Veritex Holdings First Quarter 2025 Earnings Conference Call and webcast. All participants will be in a listen-only mode. Please note this event will be recorded. I will now turn the conference over to Will Holford with Veritex. Thank you. Before we get started, I'd like to remind you that this presentation may include forward-looking statements, and those statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no obligation to publicly revise any forward-looking statement. If you're logged into our webcast, please refer to our slide presentation, including our Safe Harbor statement beginning on slide two. For those on the phone, please note that the Safe Harbor statement and presentation are available on our website, veritexbank.com. All comments made today are subject to that Safe Harbor statement. Some financial metrics discussed will be on a non-GAAP basis, which management believes better reflects the underlying core operating performance of the business. Please see the reconciliation of all discussed non-GAAP measures in our filed 8-K earnings release. Joining me today are Malcolm Holland, our Chairman and CEO; Terry Earley, our Chief Financial Officer; and Curtis Anderson, our Chief Credit Officer. I'll now turn the call over to Malcolm. Thank you, Will. Good morning and welcome to our first quarter earnings call. For the quarter, we reported net operating profit of $29.54 per share. Pre-tax, pre-provision earnings were $43.4 million or 1.41%. Overall, Veritex had a very good quarter. Our balance sheet remains in a very strong position, with capital continuing to grow. Our continued pursuit to achieve an ROA exceeding 1% the back half of the year is very much in focus and realistic. Our challenge, much like the rest of the industry, remains disciplined loan growth. For the quarter, we saw a decrease in loans of $125 million, or 5% annualized, while our average balances were down $135 million over Q4. Payoffs over the last four quarters were $1.5 billion, while payoffs for the four quarters previous were $1.3 billion, a 17% increase year-over-year. Although these payoffs continue to put pressure on our loan totals, it validates the creditworthiness of our loan book. Despite loan totals lagging, we're very encouraged by our bank-wide loan production. For Q1, we had $750 million in gross production, although only 31%, or $237 million, of that production was funded. The last four quarters, our production exceeded $2.8 billion, while the four quarter previous production equaled $1.2 billion, a 130% increase year-over-year. That bodes well for our future loan growth over the next several years. From a deposit growth standpoint, we had another solid quarter, bringing in lower price relationship dollars and moving out higher price non-relationship dollars. For the quarter, we moved out over $440 million in wholesale funding. Continued great work by the team to move our deposit costs down. More from Terry and Will in a moment on that topic. Credit continues to remain stable, with positive trends in almost all categories, with lots of work being accomplished by the team below the surface. I'll now turn the call over to Curtis for his credit comment. Thank you, Malcolm. We continue to make progress in managing credit risk, as reflected in our first quarter results. Our relationship teams are focused on risk identification and managing cycle times to resolution. In the quarter, we realized a net decrease in past dues and criticized loans. Our charge-offs are below forecast, and NPAs reflect our focus on moving names to final resolution. Moving to page five, non-accruals increased $17 million from year-end as we took targeted action on select names to bring them to final resolution. Accordingly, non-performing assets increased from $79 million at year-end to $97 million at the end of the first quarter. The increase was primarily from two loans representing retail and office exposures. We expect resolution on a majority of our current non-accrual exposure by early third quarter. Property and sales agreements are in place with buyers on a number of these assets. Past due loans reflect strong oversight and management by the team and declined from $31 million at year-end to $11 million at the end of the first quarter. Net charge-offs totaled $4 million for the quarter, primarily reflecting lost exposure on commercial office and retail real estate loans with final resolution. Our 2025 full-year charge-off forecast of 20 basis points has not changed. Moving to page six, criticized assets were down 4.3%, or $18 million, from year-end and down 26%, or $135 million, from the first quarter in 2024. CRE criticized totals continue to show meaningful reduction. In summary, we're pleased with the risk management discipline of our relationship teams. As Malcolm noted, their focus and partnership with special assets delivers results that are not fully evident in the top-line numbers. These results include criticized payoffs and paydowns, restructurings resulting in positive grade changes, and early risk identification that ultimately mitigates further downgrade and loss. We are committed to this continued focus. I'll now turn the call over to Terry. Thank you, Curtis. Starting on page seven, when I look at the results since the end of 2022, I'm encouraged. The balance sheet is in a good place. Liquidity is strong. Reliance on wholesale funding is down under 14%. Capital and reserves are up, and CRE concentration levels are right where we want them, just below the regulatory guidelines. Moving to page eight, capital ratios held relatively steady quarter over quarter, except for the total capital ratio. The decline in total capital is a function of a $75 million tranche of sub-debt that was repaid in the middle of the quarter after the rate converted to SOFR plus 347 basis points. Over the last two years, a significant contributor to the expansion in the capital ratios has been a $700 million decline in risk-weighted assets. Tangible book value per share is $22.33, up from $21.61 at year-end and a 13.8% increase on a year-over-year basis, including the dividends we've paid. It's worth noting, since Veritex went public in 2014, it's compounded tangible book value per share at a rate of 11.5%, including the dividends that have been paid to shareholders. Considering our growth outlook, organic capital generation, and risk profile, the bank has increased its quarterly dividend by 10% to $0.22 per share per quarter. Finally, Veritex repurchased 377,000 shares during the quarter. The tangible book value dilution was minimal, and the earnback is just over two years. We have $37 million remaining on the authorization, which, at the current stock price, is sufficient to repurchase just over 3% of the company. We intend to be opportunistic in its use. Moving to page nine, the allowance now sits at 119 basis points, up significantly in the last eight quarters. Additionally, when you exclude the mortgage warehouse, the ACL coverage rises to 127 basis points. Our general reserves comprise 95% of the total allowance. We continue to use conservative economic assumptions in the CECL modeling, with 65% of the weighting on downside scenarios. In Q1, we shifted the weighting toward the most pessimistic scenario. Part of the weighting we shifted towards the most pessimistic scenario. This seems reasonable, considering all the economic uncertainty from tariffs, interest rates, reduction in government spending. I could go on and on. Bottom line, the combination of the key factors and the economic forecast weighting gives Veritex a very conservative allowance result. Moving to page ten, as Malcolm said, total loans declined 1.3% during Q1 and 3% on the year-over-year basis. We made significant progress in reducing our CRE and ADC concentrations and ended the quarter at $297 and $85, respectively. The significant decline during Q1 in CRE and ADC can be seen in the top right graph. As shown in the bottom right, loan production has increased by $1.6 billion from the four quarters ending Q1 2024 to the four quarters ending Q1 2025. A meaningful part of the increased production is in the ADC area. Funding on these two loans lags for several quarters as the borrower's equity goes into the projects first. Loan growth will remain muted in 2025 due to higher-than-normal payoffs, but this production over the last several quarters will translate into loan growth as we move into 2026 and beyond. On slide 11, it provides the details in the term CRE and ADC portfolios by asset class, including what is out of state. Also shown is the breakdown of our out-of-state loan portfolio, including the significant impact of our national businesses and mortgage. The true percentage of the out-of-state portfolio was only 10.7%, and this is predominantly where we have followed Texas real estate clients to other geographies. On page 12, our strong deposit growth and low loan growth has allowed Veritex to reduce its loan-to-deposit ratio from 104% to 89% over the last two-plus years. We intend to remain below 90% going forward. Please note the loan-to-deposit ratio would be 82.8% if you exclude mortgage warehouse. Deposit growth has also allowed us to reduce our wholesale funding reliance to 13.7%, and it was over 24% the same period of the last couple of years. As you can see from the bottom-left graph, we've kept the time deposit portfolio short and have $1.9 billion in CD maturities over the next two quarters with an average rate of 4.57%. A short maturity profile helps us to manage the interest rate risk, given the floating-rate nature of the loan portfolio. On the bottom right, we show the monthly cost of total deposits. Note the 63 basis point decline since the month of June 2024, including 24 basis points since year-end. If you look at interest-bearing deposits, they declined 37 basis points in Q4, and we follow that up with another 33 basis points of decline in Q1 2025. Veritex is very focused on reducing deposit pricing where possible on existing accounts. Q1 2025 was another successful quarter of deposit remixing. Growth from our core lines of business allowed us to reduce our reliance on unattractively priced deposits like brokered or public. These unattractive deposits carry a cost that is approximately 185 basis points above our core business deposits. I'll now turn it over to Will for commentary on net interest income, investments, and liquidity. Thanks, Terry. Slide 13 reflects a NIM increase of 11 basis points to 3/31 in Q1, which is slightly higher than the previously guided range of 325-330. The primary driver of the NIM increase is the result of continued repricing and remixing efforts within the deposit portfolio Terry mentioned on the previous slide. The cost of interest-paying liabilities declined 33 basis points in Q1, while the yield on earning assets only declined 12 basis points. On a dollar basis, net interest income was down $700,000 for the quarter, driven by two fewer days in the quarter, lower earning asset volume, and the full quarter impact of rate cuts late in 2024 on loan yields, which were mostly offset by interest-expense savings from deposit repricing efforts and lower interest-bearing average deposits. On a go-forward basis, we expect NIM to return to the 325-330 range for the remainder of the year, absent outsized or accelerated rate cuts. As we mentioned in previous quarters, a $250 million pay-fixed balance sheet swap matured in late Q1, which will be partially offset by the interest savings from paying back the $75 million tranche of sub-debt that Terry mentioned. We expect continued deposit remixing and repricing efforts against muted loan growth to result in a relatively stable NIM throughout 2025. Slide 14 shows certain key metrics of our investment portfolio. Key takeaways: it's only 11.6% of total assets. The effective duration is 3.6 years, and 88% of the portfolio is held in AFS. Total available liquidity sits at $7.2 billion as of 3/31. The decline in available liquidity since Q3 2024 is a result of the decision to tighten wholesale liquidity policy limits in the fourth quarter, reflecting a lower liquidity risk appetite. Finally, please note the economics of the BOLI exchange trade completed in the first quarter, in which we exchanged an $18.1 million portion of our existing BOLI policy at a 2.76% yield for a new investment yielding 4.73%. We took a $517,000 one-time loss on the transaction, which equates to an annual pickup of $356,000, equating to a 1.4-year earnback. I'll now turn the call back over to Terry. On slide 15, operating non-interest income increased 2.4% to $14.8 million on a linked quarter basis. Fee income, as a percentage of total revenue, has increased to 13.4% in Q1 2025 from 12.3% in Q1 2024. The goal is to drive fee income above 15% of total revenue. Operating non-interest expense declined $2.8 million for the quarter, with a good execution across all the categories. The operating efficiency ratio declined 2.5% to 60.4%. To wrap up my comments, I see a lot of positives. The balance sheet continues to strengthen with more available liquidity, lower CRE and ADC concentrations, less reliance on unattractively priced deposits, and higher capital levels. Q1 earnings were in line with internal expectations. The NIM expanded by 11 basis points to 3/31, driven by deposit cost. Fee income continues to build momentum across every category. Increased attention to expenses is showing encouraging results, and loan production has increased meaningfully. The negatives I see are the lack of loan growth, driven by elevated payoffs and elevated deposit cost from over-reliance on expensive funding sources in earlier, higher growth periods. We're working hard to address these negatives. With that, I'd like to turn the call back over to Malcolm. As you've heard, the Veritex team continues to manage our balance sheet, capital, deposit costs, and earnings to add additional value to our company. We obviously have no control over the national economy and the various decisions made in Washington. Uncertainty has once again entered the system, but we remain focused and committed to our shareholders, team members, and community to bring the best Veritex we can. Operator will be happy to answer a few questions. Thank you. To ask a question, you will need to press star one-one on your telephone and wait for a name to be announced. To withdraw your question, please press star one-one again. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question will come from Brett Rabatin from Hovde. You're now connected. You're now open. Hey, good morning, guys. Wanted to start with the—wanted to start with deposits and just obviously strong core deposit growth and just wanted to see if that DDA was sticky and just what the success of that was mostly related to. On the CDs that are repricing in the next two quarters, the $1.9 billion at $457, what level you think those might go to? I think, Brett, Terry, I think on the deposit side, some of this is seasonality, and some of it is new customer attrition on the DDA side. One of the things that's in DDA is our mortgage escrow, and Q4 is historically, especially with the T&I escrows, there's a lot of outflows during that period. That's a contributor, and then just some good work by the banking teams on bringing in and allowing us to remix. Regarding the question on deposits, $457 so far in the second quarter, we're originating in the $415-$425 range. There's definitely, as you think about the NIM, and we'll factor this into his comments, yeah, you've got the hedge rolling off, but we've still got opportunity to help compensate for that from the hedge rolling off is this repricing opportunity. Okay. That's helpful. Obviously strong performance on managing expenses. What do you guys think the expenses do from here, and are there any initiatives that would grow expenses relative to the first quarter? Yeah, Brett, I'll just say on the expense side, it's been a hot topic for the last couple of quarters, to say the least, amongst my team, and we talk about expenses often. One of the things I would mention is that we're still investing in people. We made some really key hires that all y'all know about in the third quarter last year, some leadership hires. Those hires are going to be filling their teams. There will be some investments that we make in people. In fact, we've had three pretty serious commercial bankers that are all starting within either started in the last 30 days or going to be starting in the next 30 days. We are working really hard on the expense side, knowing that we have some investments coming on the people side. We're doing a good job of trying to manage the poor performers, but also invest in the ones coming. I'll be a little evasive just to say that expenses are not going to go down from where they are, and we do have some folks coming on. Terry, you might want to. Yeah, I would add two things. One, I do not think the attention to expenses in the history of Veritex has ever been greater. Secondly, I am going to make three points. I think Dom has done a really good job of moving out unproductive or not as attractive result bankers and replacing them in a good way with people who I think are going to drive this business model where we want it to go. Third, you cannot—I would not annualize where we are in Q1 and say that is a good estimate for the quarter. It is going to go up a little, but I do not think you are going to see it get back to the levels you saw in Q4. Okay. That's hopefully that helps. Yeah, that's really helpful. If I could sneak in one last one, you mentioned commercial bankers and new hires. It sounds like, given the payoffs, that maybe you're backing off loan growth expectations for the year. Maybe, Malcolm, do you think loans are flat this year with the first half being down and then the second half you grow with all the commitments? What's your updated thoughts maybe on the loan pipeline relative to the loan growth? Yeah, you nailed it. I think we're looking for flat from year-over-year. Obviously, down the first quarter, second quarter, we're hoping it's going to be about flat, maybe a little down. The back half certainly—I mean, we could see it in our pipelines. I mean, you don't grow pipelines at 130% without getting some benefit of that down the road. I think you nailed it. Flat for the year, and 2026 looks pretty good. Yeah. Given the pipelines and given the production that's already on the books, the outlook for loan growth in 2026 is more in the mid to high single digits, something like that. Okay. Okay. That's great details, all guys. All that being said, it could change tomorrow if the wrong tweet gets posted on Truth Social. It's a volatile environment. Appreciate all the color, guys. Yeah. Thank you. Thank you. One moment for our next question. Our next question will come from Stephen Scouten from Piper Sandler. Your line is open. Hey, good morning, guys. Just maybe staying on that loan growth topic, is there kind of a high-level number that you guys think about in terms of the CRE headwind, in terms of what you think you might face in pay down throughout the rest of the year? Just kind of trying to frame that up versus the $2.8 billion in production you gave over the last four quarters. Just maybe if you have any numbers on where that unfunded book is today and kind of where that's been trending. I may not be able to give you exact numbers. I can give you some directionally accurate comments. We're going to manage, I think, as Terry says, we're going to manage that CRE number at the high 290s and the 90s on the ADC. The ADC stuff is paying off quickly. I think at the end of the quarter, we had 85. We're not going to exceed that the next quarter. We're going to see that number start to grow, hopefully in the back half. Now, we'll see it grow in the back half, but it probably isn't going to see any real growth until you hit 2026. It's just those things have a long funding time. Our real estate team is doing an incredible job. They've kept the pricing at a really nice pricing. They deal with the best clients in the state of Texas, and it just takes a while to fund that stuff. The payoffs, candidly, have been pretty—they've been pretty stable over the past couple of quarters. We expect that to continue through the next couple of quarters for sure. The back half could see a little bit of a raise, but not grossly over what we've already done. The goal is to keep this a steady business instead of the wide fluctuations up and down and try to manage it right under the 300 and the 100 buckets. We have a great core discipline in it. You can tell by our payoffs, but that's going to be a focus. Our teams are doing exactly what we want them to do on that side of it. The investments we're talking about making are all in the commercial and industrial space, so in the C&I space. That's the area we're really placing the emphasis and the investment dollars. Okay. Really helpful color there. Appreciate that. Obviously, you can see in the presentation where the asset sensitivity of the balance sheet has been reduced fairly significantly. Just kind of curious how you think that plays out in practice if we get—I do not know what the expectations are for today, two cuts, four cuts, who the heck knows—but kind of how you think the balance sheet will respond, especially as there continues to be room on the funding side to lower cost. Sure. No, great question. That has definitely been a big area of emphasis with us. If you look at where we stood a year ago, say the down 100 case, for example, it was over double what it stands right now. We really look at our profile as pretty rate neutral with a caveat that it takes us three to four months to catch up when we get a rate cut because of our loan book being so variable rate. 76% of our loans are floating. When we get a rate cut, loans immediately price down, and it takes us three to four months for the CD book to catch up, which is why you see the NIM expansion in Q1 because we have had three months of stable rates. If we get—if the dot plot's correct and we get two cuts, one per quarter in the back half of the year, I think the NIM remains in that range that we guided. If we get three or four and they start coming back to back, I think you'll see a little bit of NIM pressure in the short run, and then it should stabilize and return to that range. Really, that's where we see it unless we see something outside of expectation, which is entirely possible. Definitely. Anything is possible. No, that's helpful. Maybe just last thing for me on the share repurchase. I know you said, I think, opportunistic was the verbiage used there. Even with the snapback today, which we all hope holds for the group, it looks like the repurchase this quarter was done around $25.20, if my math is correct. Would it be fair to assume that at or below that kind of level from the first quarter, you guys would continue to be fairly aggressive around the repurchase? I would say that if it's below tangible book value, see where the limit of our activity is, and we're going to stay close. Aggressive's not strong enough, but we're. Because it's accretive immediately, no earned back, and etc., etc., etc. No, I mean, look, we know what we've got left. I wouldn't expect that the share buyback, 377,000 shares, I wouldn't expect that to go down. If it's trading anywhere, if it were to be below tangible book, I bet the over. Yep. That makes sense. I appreciate it, guys. Thanks for the time. All right. Thanks, Steven. Thank you. One moment for our next question. Our next question will come from the line of Michael Rose from Raymond James. Your line is open. Hey, good morning, guys. Thanks for taking my questions. Just wanted to get some color and visibility, just given some of the uncertainty in Washington just around the North Avenue Capital business, the government-guaranteed business. Any sort of outlook there that may be different from a couple of months ago, just from what you're seeing here? Thanks. No. In fact, we're probably as bullish on that business as any business that we have at the company. Government guaranteed. Yeah. Yeah. He said North Avenue. Oh, he said I'm talking about full government. I swear to man. Okay. Sorry. Yeah. I mean, again, we put them all in one basket. I know they're different, but our reliance is more on the SBA side than it is on the NAC side. Yeah, we branded it Veritex Government Lending, but I understand your question. We're still seeing some USDA opportunities, actually some really good ones. We had our first approval through the Veritex system, if you will, because now it's running through Veritex and not through NAC anymore. We're pretty encouraged. We're not going to have the volumes at one time that we had, but what's happened is those folks that were at North Avenue Capital are now into the SBA space, and they have a huge pipeline. You're dealing with the similar type folks out there, whether it's a broker community or what have you, that have been able to produce some nice volume. We've made some substantial investments in government guaranteed just as recently as this week. When I say substantial, I mean substantial people across the country. It is going to take them a little while to get ramped up, but I think you're going to see that business be an outperformer in the back half of this year and into 2026. The SBA business has had two incredibly strong quarters in a row, and all indications are that's not slowing down, even as these people come in and get on board. In an economy that arguably may be going down a little bit, this is a space that actually gets more active. Helpful. I know this is a difficult question to ask, but you guys did about $10.1 million in that line item last year. The year before was roughly double that. Any sort of outlook, just given what you laid out, just in terms of some of the momentum in this quarter's start of where that could end up for the year? Yeah. We're not to the point where we can get back to where we were two years ago, but we would also be very disappointed if we don't do materially better than last year. In between the two numbers is a good place to be. Exactly. Okay. Helpful. Yeah, just because it's pretty hard from the outside looking in to kind of forecast that. So appreciate it. It is. As we said, we're trying to flatten that out, Michael. We know it's discouraging for you guys, and it's discouraging for us to be able to forecast. We're working really hard to flatten that out. That's why SBA is such a greater emphasis. It's more granular. Our average loan size is $1,500,000. In the USDA space, the average loan size in 2023 was probably $18 million-$20 million or something like that. It's just way more granular. It's easier to forecast, and it's a more stable revenue stream that we can depend on. I totally get it. Terry, maybe just one on the warehouse outlook. Obviously, a step down this quarter, but still up material on an average basis year-over-year. Any sort of thoughts there? I know mortgage rates have remained particularly sticky. Any sort of RWA relief that you guys are expecting, just with some of the changes that are out there? Thanks. It's on our radar. That's something that over the balance of the year, etc., the RWA relief there and in NDFI are an important priority for us. Balances, Michael, it's so hard. I mean, last week, apps were down, what, 12%-13% week over week. I saw, and it's so tied to rates. Yet, a month ago, they were having unbelievable volume. We like the business. I'd like it even better with the RWA relief. The risk-adjusted returns are still really, really good. I would expect there's a lot of seasonality. Hopefully, with some clarity on the Washington economic front, if rates can come down, I like what they're doing today on the long end, hopefully volumes pick up and averages. I would love to see averages $100 million-$150 million higher than they are, but it's a function of rates. Did you just ask for clarity in Washington? Everyone's got a prayer every now and then. Open up there. That is all I had, guys. Thank you. Terry, I think this is your last earnings call, so I just want to say congrats on a great career. Thanks for all the help along the way. Thank you, Michael. Very kind. Thank you. One moment for our next question. Our next question will come from the line of Catherine Mealor from KBW. Your line is open. Thanks. Good morning. I just wanted to have a follow-up just on the growth outlook. I guess two questions. One is, I know a lot of the, I mean, the pipeline has built, which is so great to see. Maybe the question is, how much risk do you see in that pipeline, maybe not following through, just given kind of the volatility that we're seeing in the market, versus how much of that you feel like is money good and is loan commitments that will be following through for the next couple of quarters? Within that, my second question is just, you talked about how a lot of your investments are in the C&I space. I'm curious how much of that pipeline is in CRE versus C&I. Thanks. Yeah. Just talking about the risk in that pipeline, obviously, the answer for me is going to be, "Oh, it's great. We just approved it." I guess if you pull back the sheets a little bit, the underwriting on that business is actually better than it's ever been. You've got huge amounts of equity, whether it's 40-50% in a couple of cases. You've still got good rates. At the end of the day, it's who the sponsor is. Our team has done a great job at dealing with the cream of the crop. When folks were still out of the space and we got in maybe a quarter or two before the rest of them, you could dictate the terms. Now, the terms you could see, they're starting to break down a little bit. When I say break down, I'm not talking about materially. Instead of getting 45%, you may get 40%. We feel really, really strongly about the type of stuff we're putting on. We're not going to put stuff on that we think we're going to have to deal with later. In terms of the percentages of that pipeline, I don't know. I would say it's two-thirds C&I, a third CRE. I don't have it in front of me, but it's somewhere in close to that. You and I haven't talked about this, but my confidence is much greater in the CRE side because of all the in-migration and all the things that are going on. On the C&I side, I mean, we've seen it in revolver utilization. It's come down some. I think you would, I would say the risk of not getting the pull-through is higher C&I than it is CRE right now. I don't know if you agree with this. Yeah. That makes sense. Okay. Great. Helpful follow-up. Thank you. Thanks, Catherine. Thank you. One moment for our next question. Our next question will come from the line of Gary Tenner from D.A. Davidson. Your line is open. Hey, thanks. Good morning, guys. Good morning. I want to ask a couple of questions. First, in terms of the securities portfolio, I think you highlighted $175 million in cash flows expected the next 12 months. Are you currently reinvesting, or are you kind of using that as a source of cash to further reduce wholesale funding? We're targeted investments. I mean, we're picking up stuff if we see if there's market opportunity. No, since loans have been muted the last couple of quarters, we've been using funds to pay down wholesale as you saw. Once you see loan growth pick up, obviously, we have to fund the other side of that to stay at our LDR target. You'll see us be more active in the investment portfolio once earning asset growth picks up. Okay. Great. Just a quick follow-up on the fee side. I know you've kind of talked about wanting a 60 handle on fees for the full year. On an operating basis, you were basically right at that run rate or a hair below it. Anything, as you think about the pipeline and sounded very positive on government guarantee, anything that kind of increases that kind of baseline or too early to tell? I mean, I think the momentum I think is going to build. I feel like our customer swap income is a place that they're having a they had a good first quarter, and I'm encouraged by how the second quarter has started. There's some things we got going in the card and the sponsorship space. We did a treasury, we've got a lot going on in treasury. To me, it's really across the board, syndications. As we've gotten more active in CRE and where the size of the projects and the ability for Andrew and his team to sell down, it has been really strong too, and I'm expecting a strong year there. That's why I said to me, you don't see it all yet, but you can feel the momentum. We're not hanging on one area. Every single area is contributing. That's where we get some pretty high confidence that the 60 annual is a pretty decent number. Yep. Great. Thanks. Just lastly, you kind of noted the increased weighting to Moody's downside scenario. Can you just remind us where the weighting was last quarter? It was at 65%, but we shifted some weight towards scenario four, just out of an abundance of caution. The overall downside stayed the same, but some of it went from, say, scenario two to scenario four. Okay. Got it. Appreciate the color there. Terry, keep on praying. It seems to be working today. Good point. Thanks, Gary. Thank you. One moment for our next question. As a reminder, that's star one-one for questions. Our next question will come from the line of Matt Olney from Stephens. Your line is open. Hey, thanks. Good morning, guys. Just want to go back to the discussion around capital. You mentioned you increased the dividend, really active buyback in the first quarter, and it sounds like you want to remain active on that buyback. Curious about the, I think there's a sub-debt instrument that becomes callable later on this year. Just curious if that's on the radar, if there's any appetite to pay this down later on in the year. It's definitely on the radar. It's a $125 million tranche. It's mid-October. I don't think we're certainly watching it, watching the market where you can refinance the debt, etc. I think the outlook or the probability of paying it all off is low. I think the probability of paying some of it off, which we can do, is very high. Some of this is going to depend on what happens with our CRE payoffs. I'm sorry. I mean, it's there. We're watching it all the time, but we've decided we're not. It's not the time to make a definitive decision until we see more. We need to see things play out a little bit from an economic and rate perspective. The other thing, Matt, I mean, even is on the table is a complete refinance, depending on what happens in the rate markets. There might be a place where we want to go ahead and redo it and maybe even increase it because we could use some more of that. It is all dependent on three or four factors and rates being probably the greatest one, as well as our CRE forecast. Yep. Okay. Appreciate that. On the credit, overall trends look good in the quarter. Lower credit-sized loans. I think the only blemish that Curtis mentioned was some migration into the non-accrual loan bucket. I think office and retail property was mentioned. Any more color on those migrations? They were long-standing names that we've been working with. We're taking the action to move them through and then move forward. I would just say that there's strategies in place to have those moved off by the beginning of the third quarter, and we feel confident in our ability to do that. Perfect. Okay. Thank you, Curtis. Terry, congrats, and keep in touch. All right. Thank you, Matt. Appreciate you. Thank you. This concludes the question and answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.