Cadence Bank - Q1 2023
April 25, 2023
Transcript
Operator (participant)
Good morning, welcome to the Cadence Bank Q1 2023 conference call. All participants will be in a listen-only mode for the duration of the call. Should you need any assistance during that time, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. If you would like to withdraw your question, please press star, then two. Please note that this event is being recorded today. I would now like to turn the conference over to Will Fisackerly, Director of Corporate Finance. Please go ahead, sir.
Will Fisackerly (Director of Corporate Finance)
Good morning, and thank you for joining the Cadence Bank Q1 2023 earnings conference call. We have our executive management team here with us this morning, Dan Rollins, Chris Bagley, Valerie Toalson, Hank Holmes. Our speakers will be referring to prepared slides during the discussion. You can find the slides by going to our investor relations page at ir.cadencebank.com, or you'll find them on the link to our webcast, or you can view them at the exhibit to the 8-K that we filed yesterday afternoon. These slides are also in the presentation section of our investor relations website. I would remind you that the presentation, along with our earnings release, contains our customary disclosures around forward-looking statements and any non-GAAP metrics that may be discussed. The disclosures regarding forward-looking statements contained in those documents apply to our presentation today.
Now I'll turn to Dan for his opening comments.
Dan Rollins (Chairman and CEO)
Good morning, everyone. Thank you for joining us today to discuss Cadence Bank's Q1 2023 financial results. I will start with a few general comments and highlights. Valerie will review financials in more detail. Following our prepared marks, our full executive management team is available for questions. While it was clearly a very unique quarter for the industry, I believe our customer base and our company's Q1 results generally reflect a business as usual operating environment. While we added some additional on-balance sheet liquidity, including borrowings and brokered deposits, simply out of an abundance of caution, customer behavior, including deposit flows, were actually pretty normal during the Q1. We reported total deposit growth of $450 million or 4.7% annualized for the quarter.
If you exclude the routine seasonal flows of public funds as well as the brokered funds, deposits declined approximately $400 million, which we view as reasonable given the industry pressure on deposits. We actually saw a modest increase in our deposits within our community bank, offset by some normal Q1 outflows from some of our corporate customers, which is not unusual given the annual bonus and tax payments during the quarter. The sticky, granular nature of our largely rural deposit base has been and will continue to be of tremendous value to our franchise. We have an average consumer account size of less than $20,000, while our average commercial account balance is approximately $135,000.
Additionally, as of the end of the Q1, approximately 98% of our total accounts had balances less than $250,000, and 70% of our deposit dollars are either fully FDIC-insured or collateralized. From a loan growth standpoint, we had another solid quarter, reporting net loan growth of $933 million or 12.5% annualized. While the largest portion of our growth this quarter came from our corporate banking team, it continues to be very diverse, both geographically and by category. A portion of this growth is funding on existing CRE credits originated in prior quarters. As we look forward, our pipelines have declined, but we are still seeing good activity. Having said that, the overall credit tightening is very apparent in the industry as almost all banks are requiring deposits.
I anticipate pipelines will continue to decline over the next quarter or two. We continue to have a large unfunded CRE book of existing lines that we'll fund throughout this year and will be somewhat of an annuity for us on loan growth in the coming quarters. Stepping back and looking at some of our other financial metrics, we reported net income available to common shareholders of $74.3 million or $0.40 per diluted common share, and adjusted net income available to common shareholders of $124.4 million or $0.68 per share on an adjusted basis. The primary difference between the two was a loss on sale of investment securities, which I will discuss further in just a moment. From a credit quality perspective, net charge-offs continued to remain very low, totaling just $1.9 million or two basis points annualized.
We recorded a provision for the quarter of $10 million, which accounted for our net loan growth, as well as some increases in non-performing and classified assets. We've said for quite some time that we expected to see our credit metrics return to a more normal level from the historically low levels we've reported now for many quarters. We, like the rest of our industry, expect to see negative impact of increasing rates on our clients' year-end financial reporting, which has driven some grade migration. This has been especially true in the C&I space for us. Before I turn it over to Valerie to review the financial statements, I would like to briefly discuss the ongoing efforts to improve profitability and operating efficiency.
During February, we sold $1.5 billion in available-for-sale securities that had a weighted average yield of 70 basis points, which resulted in an after-tax loss of approximately $39.5 million dollars. This trade is expected to have an earn back of around 7.5 months and be accretive to earnings in early Q4, ultimately improving net interest income by approximately $10.5 million this year. The strategy was strictly an effort to improve our financial performance and was unrelated to and well in advance of the industry liquidity concerns that occurred later in the quarter. In addition, branch optimization is one of the many efficiency initiatives we are focused on. We plan to close an additional 35 branch locations during the third quarter of this year as part of our ongoing effort to optimize our branch network structure and to improve our efficiency.
These closures are in addition to the 17 branches closed in the Q4 of last year. This branch optimization, in addition to our other efficiency initiatives underway, is expected to result in expense savings of approximately $15 million-$20 million annually. As we are now past our system conversions, we are continuing to actively identify and execute on additional efficiencies as we look forward through the coming quarters. I would be remiss if I didn't acknowledge Paul Murphy's transition this month from Executive Vice Chairman to a key consultant for both me and the management team. As you know, Paul was the force behind building legacy Cadence and coined the phrase, "For same-day service call by eight PM," which exemplified the company's service-oriented culture.
While he's no longer engaged in day-to-day management, his continued commitment to customer engagement and service insight will be invaluable to all of us as we continue to grow as the new Cadence Bank. Valerie, let me turn it to you for a few minutes on financials.
Valerie Toalson (CFO)
Thank you, Dan. I wanted to first point out, a bit of new information that we added this quarter to further illustrate some of the points Dan made on our deposit base and liquidity position, specifically included in our slide deck on pages four, five, and 6. Slides 4, 5 and 6. Dan mentioned 70% of our deposit base being either fully insured or collateralized. The top left graph on slide 4 shows the components of this calculation. One of the points of confusion that we saw in some of the early screens, that were published on this topic was the lack of adjustment for collateralized public funds, which in our case is a fairly meaningful number at approximately $6 billion as of the end of the Q1.
When you take this into account, we compare very favorably with peers, with over 70% of our deposits being either insured or collateralized. Our contingent funding availability, which is shown in the slides as well, is over 50% greater than our uninsured and collateralized deposit total. Slide five speaks to the diversity and granularity of our core deposit base. Over 75% of our deposit balances are within our community bank structure and over 85% of our deposit accounts are consumer accounts. The nature of our deposits are tenured, with over 70% having been with the bank over five years, including over 50% that have been with us for over 10 years. We're very proud of our granular deposit base and the long-standing relationships that exist between all of our customers and bankers.
Regarding our $10.9 billion securities portfolio, it continues to be, as it has been historically, fully categorized as available for sale, with any fair value adjustments transparently reflected on the balance sheet. We have always believed balance sheet flexibility is important, and that flexibility allowed us to execute on the accretive securities sale in the Q1 without any negative implications to the rest of the portfolio. Our securities book, representing just over 20% of our assets, is made up of highly liquid, largely government-backed securities with an effective duration of just over 4 years. Given the nature of the investments, it provides solid cash flows on an ongoing basis, and we anticipate approximately $1.5 billion in cash flows to come off the portfolio for the rest of 2023. This can be used to support higher yielding loan growth or other investments.
Moving on to the components of our net income for the quarter and looking at slides 12 and 13, we reported net interest income of $354 million for the Q1, a decline of $5 million compared to the Q4 of 2022. Q1 has 2 fewer days than the Q4, and each day is worth about $4 million in net interest income. Excluding the day count, we would have increased around $3 million linked quarter due to the strong loan growth and positive impact of higher rates on our earning assets. Our net interest margin was 3.29% for the Q1, down just 4 basis points from the linked quarter.
On a net basis, the decline in the margin was simply due to the excess liquidity that we added to the balance sheet in March, with the impact of what I would call routine higher funding costs offset by the improvement in earning asset yields. Our total cost of deposits increased to 1.28% from 76 basis points in the quarter. As expected, we continue to see migration from non-interest bearing products to interest bearing, which is reflected in a linked quarter decline in our percentage of non-interest bearing deposits from 32.7% at year-end to 29.2% at the end of the Q1. Although this quarter's ratio was somewhat impacted by the late quarter addition of $1.6 billion in brokered CDs.
Our total deposit beta was 59% for the Q1 and now stands at 25% cycle to date on a cumulative basis. This compares to the Q1's loan beta, excluding accretion of 53% and 41% cycle to date. Our yield on net loans, excluding accretion, was 5.87%, up 47 basis points from the prior quarter. That's a lot of information, but when you step back, we're very pleased with our ability to continue to grow net interest income on a per day basis by continuing to grow loans and improve our earning asset yields to offset funding pressure. Looking out over the rest of this year, we currently anticipate our margin to trend pretty stable to potentially upward if our deposit assumptions hold, including a cumulative deposit beta of 30%.
Non-interest revenue highlighted in slide 15 million, which includes the security loss that Dan mentioned earlier. Excluding this item, non-interest revenue was $125.3 million for the quarter, which is a $9.9 million increase comparable to the Q4. Insurance commission revenue is responsible for approximately $5 million of the increase as Q4 is the lowest quarter each year from a seasonality standpoint. Insurance continues to perform very well for us from both a retention and pricing perspective, which is reflected in the year-over-year quarter growth rate of 11%. Mortgage revenue was also up, $3 million. It increased due to increased origination revenue and a decrease in payoffs and pay downs.
Card and merchant fee revenue declined this quarter due both to the seasonality of transaction volumes as well as the impact of a Q4, additional $two and a half million dollar benefit related to vendor incentives. Excuse me. We had a $6.4 million linked quarter increase in other non-interest revenue. This increase was really driven by various items in the $1 million-$2 million range, including Federal Home Loan Bank dividend income, SBA volume, and credit related fees. Moving on to expenses which are highlighted on slides 16 and 17. Total adjusted non-interest expense increased from $279.3 million for the Q4 of 2022 to $305.2 million for the Q1 of 2023.
If you recall, our Q4 conference call, we indicated that the run rate was closer to $290 million when you factored out various year-end accrual adjustments, approximately $7.3 million of which was related to employee benefits. In addition to this variance, approximately $5 million of the change in salaries and benefits this quarter was related to seasonal increases in payroll taxes, primarily from the FICA resets, with the majority of the rest of the increase driven by increases in insurance commissions linked to strong revenue this quarter. The linked quarter increase of $2.4 million in FDIC insurance is of course, largely driven by the 2 basis point increase in the assessment rate effective in the Q1.
While there are several other puts and takes, the increase in other miscellaneous expense is a result of a number of items, including the impact of a Q4 benefit of $1.6 million related to franchise taxes. Regarding Q1 items, we had an increase in fraud losses of $2.4 million, which is in the process of collection over the coming quarters. In addition, the portion of pension expense that is recorded in other expense increased $1.7 million as a result of higher interest rates impacting the discount rate. SBA expense also increased about $1.6 million on increased volume, which also positively impacted the revenue, as I mentioned earlier. The remainder of the increases were driven by various smaller items, several of which we detail in the slide deck.
Going forward, we expect second quarter adjusted expenses to be below $300 million and closer to the $290 million base level we discussed last quarter. Trend downward from there the latter half of the year as the impact of the branch optimization and other efficiencies are realized, partially offset by the third quarter merit cycle. Our longer term efficiency ratio target remains below 54%. Regarding the non-routine adjusted items, merger and merger related costs were $14 million, which is a significant decline from the $53 million in the Q4 period that included our franchise rebranding and our core system conversion. The largest component of the Q1 total is related to one-time employee compensation agreements and certain trailing system decommissioning costs.
We expect these merger and merger related costs to decline by more than half in the second quarter and continue to dwindle and be complete later this year. Finally, some additional color on the credit picture, which is shown on slides 10 and 11. We are pleased to see net charge-offs continue to hold at low levels totaling just $1.9 million or 2 basis points annualized for the Q1. As Dan mentioned, we had a provision of $10 million for the quarter, which was necessary to support the loan growth we reported for the quarter, resulting in a stable ACL coverage of 1.45% of loans. NPAs as a percent of assets ticked up compared to the Q4, but is relatively flat with the Q1 of 2022, and continue to compare favorably to historical levels.
From a non-performing perspective, the increase was driven by 2 larger C&I credits, and additionally, approximately $12 million of the increase was the repurchase of government guaranteed loans, primarily SBA, that we previously sold in order to fulfill our collection obligations. It is important to note that $43 million of our total NPAs are government guaranteed SBA and FHA loans that we're required to repurchase while working through the collection process. These do have a longer resolution cycle, but a significant portion of these dollars, in excess of 75%, are guaranteed from a loss perspective. Given our active participation in these markets, that does elevate our non-performing numbers somewhat. From a criticized loan perspective, we are seeing some impact in grade migration as we collect year-end financial information and incorporate it into our credit models.
We have referenced in past calls that, you know, our expectation is that interest rates may have some credit, may have some impact on credit. While we are seeing it in some of the grade migration, we are also seeing stable past dues across all geographies and business lines. In short, we have not experienced any systemic trends or themes in types of loans, geographies, et cetera, and results to date align with expected grade migration for a credit cycle with increased rates. Looking back at what was an interesting quarter for the industry, our performance highlighted the broad strength of our balance sheet, our resilient net interest margin and fee revenue streams, and the clear differentiating value of our customer relationships, having both a rural and metro footprint and a community plus corporate business mix.
We also demonstrated our commitment to refining our branch footprint and driving ongoing operating efficiency, a theme that is a key focus for us, particularly through the rest of this year and into next. Operator, we would like to now open the call for questions.
Operator (participant)
We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. We ask that you please limit yourself to 1 question and 1 follow-up for today's call. You may rejoin the queue if you have additional questions. At this time, we will pause just momentarily to assemble our roster. Our first question here will come from Brad Milsaps from Piper Sandler. Please go ahead with your question.
Brad Milsaps (Managing Director)
Hey, good morning.
Dan Rollins (Chairman and CEO)
Hey, Brad.
Thanks for taking my questions. Valerie, thanks for all the color around the margin and other details. I was curious if you might be willing to provide sort of spot loan and deposit rates at the end of the quarter. Obviously a lot of moving parts like every bank, but just kind of wanted to get a sense of maybe where some of those deposit rates were at the end of your at the end of the quarter.
Valerie Toalson (CFO)
Absolutely, Brad. At the end of the quarter, you know, I'd say new loans, for the month of March were coming in around the 7% level, you know, and that varied a little bit depending on the type of loan, obviously. New CDs, if you back out what was brokered, were actually renewing at about a 1.5% rate. There have been a number of, you know, CDs that were, you know, part of the growth this quarter that were actually, you know, between 4%-5% as part of some promotional activity. Then Chris, I don't know if you wanna add a little color on some of the money markets and so forth.
Dan Rollins (Chairman and CEO)
I've got the loan numbers pulled up. Chris, you can jump back in here. The production in the Q4 came on at an average rate of 6.25%. Loan production in the Q1 came on at an average yield of 7.04%. Chris?
Chris Bagley (President)
Nothing to add. You guys covered it.
Brad Milsaps (Managing Director)
Okay. Valerie, then just to kind of delve into your guidance around the margin staying flat or moving up a few basis points, should we assume that you plan to take some of the cash that you had at the end of the quarter, which I think was above $4 billion, and pay down some of those advances that you brought in at the end of the quarter? Or how is that kind of the bit of mix change that we should see there to kinda keep the margin flat?
Valerie Toalson (CFO)
Yeah, exactly. I do think that we'll probably continue to have a little bit of excess liquidity, at least in the near term, and that could swing a little bit depending on volatility in the industry. Absent any of that, yes, we would use those dollars to pay down the borrowings.
Brad Milsaps (Managing Director)
Okay, great. Final question from me, just kind of bigger picture on credit. I know some of these numbers are moving from very small numbers, but just wanted to get a sense. Were the loans that you are seeing migrate, are these loans that would have been originated, you know, since the merger happened? Or would these be legacy BancorpSouth loans or more legacy Cadence credits or maybe a mix? Just trying to get a sense of kinda the key drivers there. Thanks.
Chris Bagley (President)
Yeah, I'll take that.
Dan Rollins (Chairman and CEO)
I think the easy answer is all of the above. Go ahead, Chris.
Chris Bagley (President)
The Vantage is not since the merger. They go back two and three years. One's a legacy BXS that we lead, one's a legacy CADE that we're a participant in. Color there is, you know, they're not related to each other in any way, different industries. No really tied to, you know, any kind of trend that we can think of from a credit perspective.
Brad Milsaps (Managing Director)
Great. Thanks, Chris. I appreciate it.
Dan Rollins (Chairman and CEO)
Thanks, Brad.
Operator (participant)
Our next question will come from Manan Gosalia with Morgan Stanley. Please go ahead with your question.
Manan Gosalia (Executive Director and Senior Equity Analyst)
Hi, good morning.
Dan Rollins (Chairman and CEO)
Hey, good morning.
Manan Gosalia (Executive Director and Senior Equity Analyst)
Good morning. Appreciate all the color on the expense side. I was wondering if you would help us with, you know, how we should think about expenses exiting the year. You know, given you mentioned that the run rate expenses should be about $290 million next quarter, heading lower from there, given the branch cuts and the other actions you are taking. You know, I think you also noted that you will identify and execute on additional efficiencies. I was wondering what the, you know, what the exit expenses would look like as we go into the Q4 of 2023.
As we think about 2024, does that mean that we should see expenses actually decline on a year-on-year basis, or are they, you know, upward pressures coming through from inflation as we think about 2024?
Dan Rollins (Chairman and CEO)
Yeah. Let me take a stab at that a little bit, Valerie, and you can jump back in on some of your comments that you made. I think it's a great question. We continue. You know, we're less than 6 months past the consolidation of our 2 banks through the merger and the consolidation of all of our systems. We continue to look for and find and harvest efficiency initiatives. I don't have a number of what some of that turns out to be as we work through the rest of the year. We certainly wanted to let you know what we were doing now, so you've seen those numbers. We continue to try and push down on expenses. Valerie, you need to go through the details behind what you were putting out there for what you think will look like in dollars going forward.
Valerie Toalson (CFO)
Then I would just circle back around to your question on some of the exit expenses regarding the branch closures. I don't have an estimate for you now. Those are generally not significant. We actually own about two-thirds of the locations and lease the others. So there won't be a huge amount of exit costs associated with that. However, we will be sure and isolate that as a separate line item in the earnings releases going forward, so that will be very clearly definable. Then, you know, like I said in the, in the release, you know, the Q1 always has a number of unique items, and the payroll taxes and all those kind of things, they dwindle throughout the year.
We are expecting closer to, you know, between the $300 million and $290 million level for the second quarter, and then layering in for the third and Q4, the savings from the efficiencies of the branch closures of $15 million-$20 million on an annualized basis. Obviously getting, you know, closer to half a year impact on that for 2023.
Manan Gosalia (Executive Director and Senior Equity Analyst)
Got it. Looks like you're absorbing some of the upward pressure from inflation there as well within that number.
Valerie Toalson (CFO)
Those numbers include inflation impact. That includes merit increases, and of course, the increases that we saw in the Q1 of FDIC assessments and pension costs and so forth.
Manan Gosalia (Executive Director and Senior Equity Analyst)
Got it. All right, perfect. You know, separately, you know, you made the comment earlier on the call that the credit tightening is very apparent in the industry. Can you talk about, you know, what you're doing on lending standards? Just generally, you know, how much you think loan growth is gonna be impacted from, you know, both tightening lending standards as well as weaker demand.
Dan Rollins (Chairman and CEO)
Yeah, that's a great question. We're certainly seeing the demand pull back. You heard the comments that our pipelines are declining a little bit. We do have some tailwinds. We continue to feel the tailwinds of construction and CRE loans that were booked in prior quarters that will fund up in 2023. We're definitely seeing a slowing pipeline and a slowing demand coming through. We, like I think most of our peers, Hank and Chris can jump in here, are certainly taking tighter looks at what we're seeing. I think we would expect to see the loan production, while we've got a good tailwind with the book loans that will fund up throughout the year, the current production continues to decline. Guys?
Chris Bagley (President)
Yeah. I think both the bank and our clients are taking a more conservative approach. Interest rates are impacting, you know, the uncertainty around economic forecasts, and just slowed down some of the pipelines that we're seeing. Dan covered the tailwinds we have from a color perspective. Hank, you have anything to add there?
Hank Holmes (Chief Banking Officer)
I'm in full agreement. I would say, you know, the RMs that are out there, from a deposit perspective, a lot of emphasis there in continuing to grow those. We are seeing an overall kind of wait and see attitude within the markets from a loan perspective.
Dan Rollins (Chairman and CEO)
His question was also what are we seeing in the way of credit tightening? Are we seeing any experience with other banks? What are we getting better terms? Are we getting better conditions?
Chris Bagley (President)
I think in general, there's more equity going into projects that are, you know, speculative in nature, if they're being done at all. Just maybe more loan agreement covenants tightening there and definitely a requirement for deposits to play.
Hank Holmes (Chief Banking Officer)
The ancillary is definitely in play at this point and very important to the relationship.
Dan Rollins (Chairman and CEO)
Help you out?
Manan Gosalia (Executive Director and Senior Equity Analyst)
Great. appreciate the full amounts. Thank you.
Dan Rollins (Chairman and CEO)
Appreciate it. Thank you.
Operator (participant)
Our next question will come from Kevin Fitzsimmons with D.A. Davidson. Please go ahead with your question.
Dan Rollins (Chairman and CEO)
Morning, Kevin.
Kevin Fitzsimmons (Managing Director, Senior Research Analyst)
Hey, good morning, Dan. Hope everyone's doing well. As I look out, when we think about the pace of loan growth and deposits going forward, is it, you know, reasonable to assume those are gonna be relatively aligned? If, you know, in terms of there's an ongoing mix shift within deposits, but to the extent that, you know, you're gonna go out and pay for higher cost CDs and money markets, you're gonna peg that off loan growth, which is slowing. I mean, that's all a long-winded way of asking, should the loan-to-deposit ratio stay relatively stable, or do you think that will creep higher? Thanks.
Dan Rollins (Chairman and CEO)
Yeah. We would certainly like to be able to grow deposits to hold with loan growth. We've certainly got capacity to not do that. When we came into the year, we were talking about the fact that we could grow loans this year and see the loan-to-deposit ratio climb higher. We certainly saw that in this quarter. I think we would like to see deposits grow. As you heard Chris say, you know, the what's changed has been, you know, today, to make a loan today, you need some deposits, and that wasn't always the case for all banks. Certainly, we've been leading with deposits for a long time, but many of our peers and others are now, you know, requiring that.
Some of our peers are completely loaned up, they've got a little bit different position than we're in today. We wanna make sure that we're making good, strong decisions, we're certainly asking our team, Hank mentioned it just a second ago, we're certainly asking our team to lead with deposits on a regular basis. Hank, you wanna add on to that?
Hank Holmes (Chief Banking Officer)
Absolutely. I would just say that from, you know, over the last 35 years, I think we've had two years where deposit wasn't a focus. The DNA is there, and the understanding of the liability side of the balance sheet from the RMs is a real focus. Obviously, our friends at Legacy BXS had a strong granular deposit base, and we're gonna continue to build on that as well.
Dan Rollins (Chairman and CEO)
Yeah. When you saw a loan, when you saw deposits in the quarter, I think you heard that in the comments. The community bank actually grew deposits in the quarter, and we would want to continue to be pushing that out there.
Valerie Toalson (CFO)
The other thing I would add is that securities portfolio has room to decline a little more. We're comfortable in the 15% to 20% of asset range. You know, just this year, there's anticipated billion and a half of cash flow off of that securities portfolio as well that can also fund loan growth.
Kevin Fitzsimmons (Managing Director, Senior Research Analyst)
Got it. Thank you. One kind of bigger picture question on just the deterioration or the linked movement we saw in nonperformers, and I know Brad mentioned before that, you know, it's coming off of loan numbers. We also saw a pickup in special mention. Is this just really the pace you all saw occur, or was there any kind of more, I don't know how to maybe call it a more proactive or aggressive scrub, given that we're looking ahead to a slowdown in the economy that might have accelerated some of that migration on credit?
Dan Rollins (Chairman and CEO)
I think we, I think we have a pretty aggressive process in place all the time. Chris, talk about where we are today.
Chris Bagley (President)
I'll take nonperforming first. You know, we mentioned the 2 C&I credits that drove that. In addition to that, you saw the $12 million that I would call government guaranteed type increase. I think it's important to know those things have a long collection cycle. When you look at that $43 million or so, it'll take us several months to move through those. We would expect to see more of that come through, I think, as we're just, you know, we're a big player in the mortgage and SBA loan origination. I think we'll see some of that. From a criticized perspective, I would call that a normal. You know, we look at those on pretty much a quarterly basis. As financial statements come in, we get updated, we get the models updated.
That's a normal ongoing process for us. I think you've heard us say in previous calls, we expected interest rates to have some impact, and I think we're seeing that. You take the inflation on wage inflation, you take the inflation on interest rates, and that it drives some of the EBITDA and debt service coverage. That's what's driving some of those model changes. You know, where we look forward going forward, we'll continue to pull those numbers in and adjust accordingly. We're not seeing any general trends. Most of it's in the C&I book that we're seeing in the migration. Some of the CRE book is holding up really well right now. There's been a lot of talk about office. We don't have a lot of that. It's very granular, very small average loan balance. It's very, performing very well in our books.
I'll turn it over to Hank. Anything you wanna add?
Hank Holmes (Chief Banking Officer)
Well said. Does that help you, Kevin?
Kevin Fitzsimmons (Managing Director, Senior Research Analyst)
Thank you, guys.
Operator (participant)
Our next question will come from Brett Rabatin with Hovde Group. Please go ahead with your question.
Brett Rabatin (Director of Research)
Hey, good morning, everyone.
Dan Rollins (Chairman and CEO)
Hey, good morning, Brett.
Brett Rabatin (Director of Research)
Wanted to start with just the retail deposits. I know 76% of the deposits are defined in the community bank. Just given the low deposit number in terms of average size for the, for the retail, do you have a number for how much would be retail versus commercial from a dollar basis?
Dan Rollins (Chairman and CEO)
Is that in our deck? There's a whole lot of new disclosure in the deck. I got to flip through there to find that for you. I don't know if you went through that too. It breaks out deposits. I got to get to the right page. Six is what Will's telling me.
Valerie Toalson (CFO)
Yes.
Dan Rollins (Chairman and CEO)
You may be able to get there quicker.
Brett Rabatin (Director of Research)
It's 76%.
Valerie Toalson (CFO)
Yeah.
Brett Rabatin (Director of Research)
76% is community bank segment, I don't know if that actually means that you would call those retail or if you would have some commercial in there as well.
Dan Rollins (Chairman and CEO)
Oh, no, there's absolutely commercial in there too. Yeah, that's talking about where the customer is talking to us. The community bank is the 350 plus branches that we've got out there and all of the customers that they talk to, from smaller businesses to some larger businesses. The corporate group and the corporate deposits are all in the corporate bank, which is our larger, you know, corporate relationships. You've got delivery channels is how we broke that down. 76% is in the community bank. That's again, mostly the rural South, but includes Houston, Dallas, Austin, Atlanta, Tampa, Nashville, et cetera. You're gonna have corporate deposits in those markets. You've got corporate deposits in smaller communities also. It's just, it's more heavily weighted towards the consumer and small business.
Brett Rabatin (Director of Research)
Okay.
Valerie Toalson (CFO)
Brett, if you look on slide 6, the mix of the total deposits is about 44% consumer accounts or consumer balances and about 36% commercial balances. If that helps.
Brett Rabatin (Director of Research)
Okay. Perfect. wanted to ask about the loan growth. You know, obviously a lot of the loan growth was Texas and other, which I assume means kind of lines of business, you know, healthcare and the other businesses. Can you talk maybe a bit just about, you know, that growth, those pipelines, and then if the lines of business From Cadence Classic, if those might be the drivers going forward, if there's opportunities more in those type silos?
Dan Rollins (Chairman and CEO)
I like that. Cadence Classic. I like that, Hank. What's going on with Cadence Classic?
Hank Holmes (Chief Banking Officer)
Cadence Classic. That's a good one. I like that. You know, as we've indicated that our pipelines have moderated to some degree. We're still seeing activity, just not as much as we've seen historically. The CRE book, as been previously mentioned, has kind of a built-in growth engine in there currently. Obviously, we feel like we've been very disciplined in underwriting there and like that portfolio. We'll continue to be active in all the specialty lending groups that we had at Cadence Classic. Sorry if I said that right. That's Legacy Cade, is going to be our focus going forward. Yeah.
Brett Rabatin (Director of Research)
Growth?
Chris Bagley (President)
Yeah, if you look at the growth from the quarter, I think it was about a third, a third, a third, generally from the real estate side, primarily driven by the larger corporate pieces that was multifamily and industrial. The biggest percentage of that, we also had nice increase in our mortgage book. So the ability to write to hold some portfolio mortgages is a win for us. The rest of it was maybe a general, kind of, I'd call it general C&I. The community bank has a tremendous amortizing loan portfolio, so we get a lot of cash flow from that. That's where we've seen the slowdown in the pipelines first. The community bank is, you know, just because of that headwinds on their amortization, it's tougher for them to grow in an environment like this.
We're seeing some nice opportunities in some of our business segments. Energy still has some nice opportunities, the renewable piece. That's looked pretty well for us in the recent months.
Dan Rollins (Chairman and CEO)
Billy Braddock's with us today, too. Billy's our Chief Credit Officer on the corporate side. Billy, I know you can cover some of that.
Billy Braddock (CCO)
Yeah, sure. You know, the guys covered it pretty well, the color I'll add is that a lot of our approvals that we've been doing have been at, you know, higher price points, more ancillary, that's been covered, the structural discipline has been there too. While we're getting lots of looks, we're also losing some deals because of those structural enhancements, we're winning more than our fair share, I'd say. Where we're winning, we're winning at tighter standards. You know, I don't want to say that credit's tightening, we're able to win good business at tighter standards, which is good for us going into this cycle. You know, that's really the point I wanted to make that I hadn't heard come up yet.
Dan Rollins (Chairman and CEO)
Thanks, Billy.
Brett Rabatin (Director of Research)
That's great. If I could sneak in one last one on fee income. Valerie, I didn't quite get to the linked quarter 1Q to 2Q 2023. You know, obviously, other was up, SBA and some other lines, but typically insurance is stronger in 2Q. Does it make sense that 2Q fee income is better than 1Q?
Dan Rollins (Chairman and CEO)
Insurance is typically the highest in one Q, Brett, and then will drop off a little bit in two Q and come back again in three Q. The best quarters for insurance for us historically have been one Q and three Q. Not that far of a drop off in two Q, but not as good as one Q. Valerie, I'm sorry I jumped in on you.
Valerie Toalson (CFO)
No, that's fine. You know, we would expect card fees to bump up perhaps a little bit in the second quarter. You know, they tend to be seasonally low in the Q1. That's an area that could continue. Obviously, our wealth and our brokerage, you know, those businesses continue to really build upon themselves. You know, modest growth throughout the year is what we're looking toward there. Then on the mortgage banking piece, you know, they had really nice originations last quarter and slower pay downs.
That combined led to some of the improvements in the Q1. You know, just kind of depending on what we see, it is coming up into the buying season. We could continue to see, you know, nice revenue continue to come off them as well. Obviously with the higher rate environment, wouldn't expect that to be a material change in the coming quarters.
Dan Rollins (Chairman and CEO)
Remember, the deposit fees, both card fees and deposit fees, day count is also a factor there too, certainly business days.
Valerie Toalson (CFO)
Yeah. Yeah.
Dan Rollins (Chairman and CEO)
The, the low day count in 1 Q is a negative impact on the deposit fees and the card fees a little bit.
Brett Rabatin (Director of Research)
Perfect. Thanks for all the color.
Dan Rollins (Chairman and CEO)
Thanks, Brett.
Operator (participant)
Our next question will come from Catherine Mealor with KBW. Please go ahead with your question.
Catherine Mealor (Managing Director, Equity Research)
Thanks. I just wanted to circle back to the margin. Valerie, you mentioned you added $1.6 billion in brokered CDs late in the quarter. Can you remind us what the average rate is on those CDs and the maturity?
Valerie Toalson (CFO)
Yeah, sure. The average maturity at the end of the year or at the end of the quarter rather, was about 5 months. You know, really pretty short. The average rate was just under 5%.
Catherine Mealor (Managing Director, Equity Research)
Okay, great. Part of your, I guess, outlook for the margin to improve, or maybe the bond restructuring to be accreted in the Q4 is part of that as we run off these brokered CDs and maybe we kind of redeploy some of the cash by lowering borrowings that way?
Valerie Toalson (CFO)
Yeah, obviously that's all factored into the margin projection. As far as the $10.5 million of incremental on the security sales, that's really completely different. That actually had to do more with the reinvestment of those dollars. Yeah, on the brokered CDs, as those run off, we anticipate that those will be used, you know, likely to either fund additional investments or fund loan growth, and that'll obviously be better yields.
Catherine Mealor (Managing Director, Equity Research)
Great. Okay, great. As we look at excess cash, I guess how are you kind of feeling the pace of deploying that excess cash look like over the course of the year?
Valerie Toalson (CFO)
Yeah, I think that, you know, I mean, in the near term, we may run, you know, with about $1 billion or so of excess cash. Again, that could vary fairly significantly depending on volatility in the industry. We wanna make sure that we have excess cash just to be prepared. That could vary. Otherwise, you know, expect that to come down fairly quickly and be managed at that level.
Dan Rollins (Chairman and CEO)
We wanted to make sure we had plenty of excess liquidity, obviously, through the month of March after things started blowing up, and we wanna make sure we've got plenty of liquidity going forward, too.
Catherine Mealor (Managing Director, Equity Research)
Yeah. As I think about, stable to up margin, and then you kind of get the bigger balance sheet with the cash, any kind of outlook or commentary you can give on just dollar NII growth for the rest of the year?
Valerie Toalson (CFO)
Yeah. You know, I think that just like we saw in the Q1, we saw the daily managed income growth compared to the Q4. With the expectations on loan growth, if we can get the stability in the deposits that we're anticipating throughout the year, we do believe that that'll be able to continue to grow from a dollar standpoint modestly throughout the year.
Catherine Mealor (Managing Director, Equity Research)
Okay, great. Maybe just going back over to credit. Valerie, you mentioned that you're seeing some negative migration within classifieds just at quarter end. How do you think that impacts your ACL over time? I mean, you've got such a high ACL, you know, given the merger, you know, but we already see some negative credit migration. I mean, do you think we have kind of a stable ACL from here, or is there what do you think would actually take that ACL to build from these higher levels?
Valerie Toalson (CFO)
Yeah. You know, I think that to build it meaningfully would require some meaningful charge-offs. There's a lot of, you know, variability obviously in all of those assumptions, one being significantly the environmental impact. You know, I think that there's potential for that environmental impact to have a longer term positive outlook. You know, I don't think that we'll be taking that view in the very near term, but, you know, I do think that that's something that can obviously be offsetting the potential downgrade that those were to occur in the upcoming quarters.
Catherine Mealor (Managing Director, Equity Research)
Great. Okay. All right. Thank you.
Operator (participant)
Our next question will come from Jon Arfstrom with RBC Capital Markets. Please go ahead.
Jon Arfstrom (Managing Director)
Hey, good morning.
Dan Rollins (Chairman and CEO)
Morning, Jon.
Jon Arfstrom (Managing Director)
Yeah, good morning. Just a few follow-ups here. community bank deposit increases, what do you think the driver of that was? Was it CD driven, rate driven, or was it something else?
Dan Rollins (Chairman and CEO)
Yeah, I think the CDs certainly play in there because just like everybody else, we've got rate specials. I think our team does a great job of playing hand-to-hand combat. We've got a lot of customers out there. I think the team is involved in what's going on in the market, and we've been pushing them hard to grow deposits. Chris, you wanna tag on to that?
Chris Bagley (President)
Yeah. We'd actually instituted and kicked off a deposit emphasis promotion well before the events in March and the quarter. Some of that was part of a plan and some marketing and some outreach we were already doing. Dan's right, it's granular, it's across the whole geography, and it's reaching out to existing relationships and new clients. I think there's been some banks probably trading deposits across the street given the recent events, you know, that's probably part of it too, and we've won our fair share of that.
Jon Arfstrom (Managing Director)
Okay. You've got some good new slides in your deck, on slide five, you have that 98% number and the 70% number. 98% of accounts are insured.
Dan Rollins (Chairman and CEO)
Yep.
Jon Arfstrom (Managing Director)
Then 70% of the dollar amount is insured. What did you hear from the 2% that was uninsured and maybe the 30% balances that were uninsured? What did you guys hear from them mid-March and after? Any outflows of magnitude?
Dan Rollins (Chairman and CEO)
Let me make sure we're saying that correctly. 98% have balances less than $250. That doesn't necessarily mean that all of that's insured because they could have multiple accounts in the same name. That's a 98% have less than $250,000 in the account. What we heard from customers, and we certainly ask our Relationship Managers and branch folks to be close to customers throughout that process, and they're still doing that today, you know, is that there was a little bit of concern. Certainly the nonprofits is where we saw some stress points. The large nonprofits were wanting to make sure that they were taken care of. Our customers, again, as I said at the very beginning, were mostly business as usual.
They were looking to see kind of what's going on. Certainly the fear factor played in, the news was talking every day, but we saw pretty normal behavior. We had some customers and some of the larger customers. Jon, when you walk back, one of the things we talked about during the quarter was that we were at 67% insured or collateralized at the end of the year. That number came down, which would indicate that some of those large deposits went out. Then some of the growth that we brought in, we saw loans, we saw deposits coming in at under $250. I think we had some growth in the smaller ticket sizes. We certainly saw some reciprocal deposits. Lots of customers are using the Insured Cash Sweep or the ICS product.
We saw some movement in that area. Again, we're mostly in the South. The economy appears to be humming along maybe a little better than other parts of the world, we feel like our customers are in pretty good shape.
Jon Arfstrom (Managing Director)
Okay. Good. That's helpful. Just one more follow-up on credit. How far along are you guys through the cycle of collecting year-end financial information from borrowers? Kinda what's left? I would assume it's smaller borrowers, but I thought I'd ask that.
Chris Bagley (President)
Yeah, the corporate clients, we're probably almost completely there with even with audits for the most part. Smaller clients, typically that's tax return driven, take a little bit longer cycle. Most of those are amortizing credits, so you get to monitor those on their payments and their past dues status. But we've that's a focus for us. We take a look at everything of size, and we're focused on getting that information in so we can properly grade those credits.
Jon Arfstrom (Managing Director)
It feels like you're through the bulk of it, though. Is that fair?
Chris Bagley (President)
That's fair. That is fair. Yep.
Jon Arfstrom (Managing Director)
Yeah. Okay. Thanks.
Dan Rollins (Chairman and CEO)
I think the, the 30 to 89 day past dues actually was, behaved very well in the quarter.
Chris Bagley (President)
Yeah, it did. We're actually in near term past dues, 30 to 90s, we're down $4 million. It's actually flat to down a little bit. That was a good sign.
Jon Arfstrom (Managing Director)
Yep. Okay. All right. Thank you. Appreciate it.
Dan Rollins (Chairman and CEO)
Thanks, Jon.
Operator (participant)
Our next question will come from Brandon King with Truist Securities. Please go ahead.
Dan Rollins (Chairman and CEO)
Morning, Brandon.
Brandon King (Managing Director and Senior Equity Research Analyst)
Yes. In regards to the 35 branches that you're closing, could you walk us through the decision-making process behind selecting which branches to close? Could we potentially see more branch closures, potentially, you know, beyond that, the 35?
Dan Rollins (Chairman and CEO)
Yeah, great question. I think we've identified the ones that we can close, so I don't anticipate that you'll see another run of that here anytime soon. You know, you go through an elaborate process. We look at each branch, what the size of the branch is from a deposit perspective, what the transaction volumes are, what types of transactions are there, what kind of new business is flowing into that branch, how close do we have other branches coming by, what type of adoption to other delivery channels or is that customer base using from the adoption to mobile or digital deposit processes. That's the process that you go through in identifying what's there. I think the team did a great job of identifying branches that we can, you know, move out or close in the system without putting a whole lot of deposits at risk.
Brandon King (Managing Director and Senior Equity Research Analyst)
Okay. Was it?
Chris Bagley (President)
Bruce?
Clearly interest rates are driving some of that. There's just a lot of energy out there about interest rates. We're trying to keep all that short. Keeping, you know, the competition is doing the same. Everybody's competing on short terms right now.
Brandon King (Managing Director and Senior Equity Research Analyst)
Okay. Appreciate the commentary. I guess switching over to insurance, I think, Dan, we've talked about the insurance segment at Cadence, and we've seen some interesting transactions in recent months, in the marketplace, that have been pretty well received. I'm curious about your updated thoughts on Cadence Insurance and the openness and willingness to perhaps monetize this in the future.
Dan Rollins (Chairman and CEO)
I appreciate that. You know, we like the insurance business. Let me clean up where I was a minute ago on revenue. My brain is not all the way on. The question earlier was on what does insurance look like in 2Q. Contingency revenue and cleanup of that get spread. We used to record all of that in the Q1, which drove the Q1 higher. Now it's a little more spread. When you look back, second quarter is actually higher than Q1, and I would assume that we would see the same thing. We saw good organic growth on the insurance team, a little over 10% in organic growth, new customers and new business last quarter, so we were pleased with that.
Your question is more on, you know, what are we looking at. You know, it's the same as the question on any other M&A activity. We're always open to looking at and reviewing opportunities. We like the business lines that we're in. We think that we work well together. We like the fee business that we generate. Just like anything else, whether it comes to selling the bank or buying a bank or buying insurance, we just bought a new insurance agency in the last quarter. We continue to look for opportunities that we think will benefit our company.
Brandon King (Managing Director and Senior Equity Research Analyst)
Okay. Thank you, guys.
Dan Rollins (Chairman and CEO)
Thanks, Brandon.
Operator (participant)
Our next question will come from Brody Preston with UBS. Please go ahead.
Brody Preston (Executive Director)
Hey, good morning, everyone. Thanks for taking my questions. I did want to follow up just on the margin question, Valerie. you know, I think in response to Matt, you gave some good color, but I guess I wanted to put a finer point on the betas. What are you assuming for an interest-bearing beta in, within that total deposit beta assumption? What is the non-interest bearing mix that you're assuming? lastly.
Valerie Toalson (CFO)
Yeah.
Brody Preston (Executive Director)
What is your expectation for purchase accounting accretion?
Valerie Toalson (CFO)
Okay, sure. First, I'll take the purchase accounting accretion. I'm expecting $24 million in scheduled accretion for the full year. That includes what we experienced, the $10 million in the Q1. It does slow down a decent amount as we get into the next few quarters and into 2024. On the deposit betas, you know, really what I think I'd focus on is the cumulative beta of the 30%. The reason we do that is because that incorporates the move from the non-interest bearing into the interest bearing and, you know, really kind of a gradual increase as we go through the year. Probably, you know, if we get the last rate increase in May as we're projecting, you know, then I would expect that to stabilize out in, you know, probably the latter half of the third quarter.
Brody Preston (Executive Director)
Okay. Understood. Then I wanted to follow up on the expense guidance. You threw out the possibility of maybe getting closer to the 290 level for the second quarter. You know, I think you called out $5 million of seasonal expenses, at least as it relates to salaries and benefits in the Q1. I guess if I think more about a non-seasonal number as 300, the step down to 290 is relatively large. That's about a 3.5% decrease. What are some of the items that'll, you know, move lower? Are there any specific actions that you're taking beyond the branch closures that you called out for the third quarter? Is there anything you've done in the second quarter, that should help us see that number come to fruition?
Valerie Toalson (CFO)
Yeah. There's, you know, the focus on efficiency has been something that has been, you know, key in our minds really since before the system conversion. As Dan mentioned, we had the system conversion in the Q4 of last year. Incrementally, we have been working on that. There are a number of continued system tweaks and refinements in our processes as we've merged together that we are rolling out. The timing of some of those things could be earlier, some could be later. That's why I gave a little bit of a broad range there on the second quarter expenses. You know, you mentioned the payroll taxes and that kind of thing. You know, those tend to dwindle down.
We'll still have some of that obviously in the, in the second quarter, but it'll be less impactful as it was in the Q1. The, you know, the fraud expense that we had this quarter was unusual and, you know, certainly we are hopeful that does not repeat itself into the next quarter. Then there's just, you know, a few other things that do tend to be heavier in the Q1. Some of the annual mailings, some of those type of things actually, you know, come down as we look out through the year. You know, we're continuing to work on the efficiencies to build into that. Some of the timing of that is a little unpredictable right now until we get to some of the branch closures and some of the other things that are in process.
Dan Rollins (Chairman and CEO)
Just as a reminder, the branch closure piece is scheduled for the middle of the 3rd quarter, so you won't see a full quarter benefit there. Just like Valerie said, I think we've always been focused on and will continue to be focused on more things that we can do. Again, we're less than 6 months past systems conversions. We've got work to do to continue to drive a more efficient operation.
Brody Preston (Executive Director)
Got it. Thank you for that. Then just on the, on the credit front, I did just want to follow up on the, on the C&I NPLs. I think the average size there is about $20 million. I guess I would ask, is that fairly reflective of some of the other size C&I credits you have in the book, or is it smaller than that?
Dan Rollins (Chairman and CEO)
Oh, yeah, we've got C&I credits that range from, you know, less than $1 million to more than $20 million. Certainly in our corporate group, $20 million is gonna be right smack in the middle of the sweet spot. Hank, jump in here.
Hank Holmes (Chief Banking Officer)
I think that's exactly right. You know, we've had a history of kind of playing in that range and it's the bite size that we take on an average basis.
Brody Preston (Executive Director)
Got it. I would ask just one last one, Dan. I know, you know, Matt just asked about it, and you've been asked about it in the past, so I'm beating a little bit of a dead horse on the insurance front. I do think that I think I remember the longer term efficiency ratio is a 54% number, and it sounds like there's other kind of things that you're reviewing to maybe help, you know, get there over time. When you look specifically at the insurance business and the attractive valuations that are out there for insurance businesses, you know, the insurance business is obviously one way to improve the efficiency ratio and potentially earnings per share if you know, depending on what you did with the excess capital in a sales scenario.
It would be ROA and ROE dilutive, you know, given the small asset base and the little equity consumption that it takes up. Strategically, how do you think about those moving parts when you're evaluating that business line and why is keeping that business more beneficial to Cadence right now than strategic alternatives?
Dan Rollins (Chairman and CEO)
Yeah, I don't know that there's a right or wrong answer in that. I think we wanna make sure that we look at all of the parts of the puzzle. That's what I was trying to say in the, in the earlier answer was, you know, we're not for or against. I think we wanna continue to look at opportunities. We wanna measure the entire picture, all of the measurements. Like you said, some things are gonna be better, some things are gonna be worse. You know, that's just part of what we do as a company when all of the acquisition targets that we look for. I would tell you that I don't know that we're locked into any answer, but we like the business that we run today. We're pleased with the process that we've got in place.
That doesn't mean that we can't change our mind, but we like what we're doing today.
Brody Preston (Executive Director)
Got it. That's all I have. Thank you very much for taking my questions, everyone. I appreciate it.
Chris Bagley (President)
I'd go back on Brody's question on the, on the NPAs. Yes, the increase were two larger credits, but when you look at our total NPAs, the average is $398,000. I couldn't do the math fast enough, so.
Dan Rollins (Chairman and CEO)
The average NPA is $398,000.
Chris Bagley (President)
For that C&I book. you know, I think it's part of the, as the two companies came together. If you were a Legacy BXS follower, we had a much smaller granular average loan balance. If you're legacy CADE, you'd see bigger numbers. I think that's, you know, the industrial logic of the company coming together. That's part of the, part of the good side of the story. yes, those two that we had this quarter were larger, but there's also a granular component to that C&I book.
Brody Preston (Executive Director)
Got it. Thank you for that.
Operator (participant)
Again, if you have a question, you may press star then one to join the queue. Our next question here will come from Michael Rose with Raymond James. Please go ahead.
Michael Rose (Managing Director)
Hey, good morning, everyone. Thanks for taking my questions. Most have been asked and answered, but I did notice that the AUM of the trust business was up 15% sequentially. Can you just give some color there? Obviously the fees were up as well. Just any sort of outlook there would be helpful. Thanks.
Dan Rollins (Chairman and CEO)
Yeah, good to hear from you this morning, Michael. Good to talk. I think most of that is market-driven. You know, you've seen the market bounce around. The team's done a good job of managing assets. Valerie, you wanna jump in on that? We're really proud of what our. Remember we've got our general trust team and then, part of the legacy Cadence was a registered investment advisor. Both sides of that business have done very well for us in the Q1. Valerie?
Valerie Toalson (CFO)
Yeah. No, I agree with what Dan said. The other thing I'd add is that there is a component of that that is a little bit cyclical in the custodial AUM piece that tends to be a little higher at the end of the Q1. Some of that is factored in, some of the market impact and then some net inflows from customers. Just like, you know, many customers saw or many banks saw some of the funds flow out of their deposits into some of their investment funds, we saw a little bit of that as well, and that helped buoy some of that.
Chris Bagley (President)
Yeah, that's a good point. Some of the, you know, some of our own deposits migrated there as we were bringing some other deposits in. We've had some nice wins, and it's nice to have that in our toolkit to be able to help our clients.
Valerie Toalson (CFO)
Exactly.
Michael Rose (Managing Director)
Understood. Appreciate the color. Maybe just, kind of one final one for me. I think we've gone over the deposit beta piece a fair amount here, but just on the loan beta side, obviously that's had a nice progression as well, and it does seem like, you know, given where your loan to deposit ratio is, you have a little bit more capacity than maybe some other banks out there. Any sort of venture as to what the cumulative loan beta expectation could be? Thanks.
Dan Rollins (Chairman and CEO)
Yeah, I won't speak to the beta. I'll let Valerie do that 'cause she's got the calculator in front of her. You know, one of the things we've talked about and hadn't come up yet this morning, we've talked about it now for multiple quarters going back, is higher for longer is a benefit for us, the way the balance sheet is set up. We continue to believe that that's the case for us. Valerie, you wanna talk specifically about the beta?
Valerie Toalson (CFO)
We, we've been fairly consistent in the past couple of quarters, as you've seen on the quarterly beta. A lot of that is driven by not only the new loan growth that we've had that's been nice in that quarter, but also a repricing. You know, it wouldn't. You know, we expect that it'll actually maintain some similarity there as long as there are rate increases. Even after there are rate increases, we expect that the loan repricing will come into play, and we've got a slide on that on slide 14 that shows the timing of some of that loan repricing. There's a good amount, 43%, that actually reprices in the next 13. Or I'm sorry, 3 months. $13 billion that reprices in the next 3 months.
That'll obviously help support that specifically over the near term.
Michael Rose (Managing Director)
Okay, that's helpful. That's it for me. Thanks.
Dan Rollins (Chairman and CEO)
Thank you, Michael.
Operator (participant)
That concludes our question and answer session. I'd like to turn the conference back over to Dan Rollins for any closing remarks.
Dan Rollins (Chairman and CEO)
All right. Thank you everyone again for your questions and participation today. In closing, I would just like to reiterate that despite the industry uncertainty regarding rates and the broader economic outlook, we remain very optimistic as we look to the remainder of 2023. We have a very granular, stable core deposit franchise, a diverse loan portfolio, strong allowance for credit loss coverage, and additional the diversity of the various fee businesses that further differentiate us from our peers. Thank you all again for your joining us today. We look forward to speaking with you all again very soon.
Operator (participant)
The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.