Good day, and welcome to the Hilltop Holdings Second Quarter 2021 Earnings Conference Call and Webcast. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Eric Yogi. Please go ahead.
Thank you,
Grant. Before we get started, please note that certain statements during today's presentation that are not statements of historical fact, including statements concerning such items as our outlook, business strategy, future plans, financial condition, allowance for credit losses, the impact and potential impact of COVID-nineteen, stock repurchases and dividends as well as other items referenced in the preface of our presentation are forward looking statements. These statements are based on management's current expectations concerning future events that by their nature are subject to risks and uncertainties. Our actual results, capital, liquidity and financial condition may differ materially from these statements due to a variety of factors, including the precautionary statements referenced in our presentation and those included in our most recent annual report and quarterly report filed with the SEC. Please note that the information presented is preliminary and based upon data available at this time.
Except to the extent required by law, we expressly disclaim any obligation to update earlier statements as a result of new information. Additionally, this presentation includes certain non GAAP measures, including tangible common equity and tangible book value per share. A reconciliation of these measures to the nearest GAAP measure may be found in the appendix of this presentation, which is posted on our website at ir.hilltop holdings.com. With that, I will now turn the presentation over to President and CEO, Jeremy
Ford. Thank you, Eric, and good morning. For the Q2, Hilltop reported net income of $99,000,000 or $1.21 per diluted share. Return on average assets for the period was 2.29% and return on average equity was 16.4%. Despite certain headwinds in each business, our collective business model was able to generate strong earnings and grow capital, while at the same time returning capital to shareholders through dividends and share repurchases.
PlainsCapital Bank generated pre tax income of $87,000,000 compared to a pre tax loss of $17,000,000 in Q2 2020. Improvements in the economic outlook and positive credit migration drove a $29,000,000 reversal of provision compared to a provision expense of $66,000,000 in Q2 2020. Outside of a few pockets of weakness, such as business focused hotels, our borrowers generally are seeing improved results with the economy reopening and robust activity. Strong deposit growth has continued with average interest bearing deposits, excluding broker deposits and Hilltop Securities suite deposits, increasing by 26% from Q2 2020. This growth was partially offset by the planned runoff of approximately $858,000,000 in broker deposits and the reduction in Hilltop Securities suite deposits of approximately $690,000,000 as we optimize our liquidity sources and defend our net interest margin.
We attribute this core deposit growth primarily to increased liquidity in the market from government stimulus and the work our bankers have done to increase deposits from existing and new clients. Total average bank loans declined modestly by 2% versus Q2 2020 PPP loans have run off and commercial loan growth remains pressured. Quality loan demand has been muted as our borrowers are flushed with liquidity, leading to pay downs and payoffs or the use of elevated liquidity to fund capital expenditures and other investments before seeking bank debt. However, the Texas markets we are in continue to experience significant activity from business and household migration, which should drive meaningful long term opportunities for the bank, specifically in higher growth markets such as Austin and Dallas with products like multifamily. Importantly, our business model has allowed us to selectively retain high quality mortgages from prime lending to support loan balances and provide improved yield opportunities for our elevated liquidity and capital.
PrimeLending had another solid quarter, generating $49,000,000 in pre tax income. While the mortgage market has begun to normalize compared with the frenzied activity in 2020, volumes and profitability still remain elevated relative to historical levels. PrimeLending originated $5,900,000,000 in volume with a gain on sale margin on loans sold to 3rd parties of 3.64 basis points. Although average mortgage interest rates declined year over year, refinance volumes decreased to 32% of total originations compared to 47% in Q2 2020. A decrease in mortgage interest rates typically leads to an increase in refinancing volume.
However, significant refinancing activity during 2020 has limited the population of loans eligible for refinance. Importantly, our focus on home purchase mortgage origination should allow us to outperform the broader market. As the 3rd party market for mortgage servicing has continued to improve, we have reduced our retained servicing to 25% of total mortgage loans sold during the quarter and executed an MSR sale of $32,000,000 reducing our MSR asset to $124,000,000 In addition to rates, inventory and affordability are the main things we are paying attention to in the mortgage industry. With low inventory continuing to drive home prices higher, the properties that are available are increasingly getting out of reach for buyers. This phenomenon affects both volume as well as gain on sale margins as certain products are more competitive in this environment.
Despite the ever shifting mortgage landscape, prime lending continues to execute well on its growth strategy, primarily centered on hiring purchase oriented loan $300,000,000 For Hilltop Securities, they generated 6,900,000 of pre tax income on net revenues of 94 $1,000,000 for a pre tax margin of 7.3%. This was a challenging quarter for the mortgage centric and fixed income businesses. Although these businesses have performed exceptionally over the past year, they are subject to volatility, which illustrates the importance of diversified revenue streams within Hilltop Securities. The structured finance business was adversely impacted by mortgage Q2 2020. On a positive note, lot volumes remain relatively strong compared to pre-twenty 20 historical levels as we continue to add and maintain strong relationships with existing clients.
Importantly, our public finance and wealth management businesses generated revenue and income growth and we are pleased with their positive momentum. Moving to page 4, Hilltop maintained strong capital with common equity Tier 1 capital ratio of 20% at quarterend. During the quarter, Hilltop returned $55,000,000 to shareholders through dividends and share repurchases. The $45,000,000 in shares repurchase are part of the $75,000,000 share authorization the Board granted in January. This week, the Hilltop Board authorized an increase to the stock purchase program to $150,000,000 an increase of $75,000,000 Factoring in shares repurchased made during the first half of twenty twenty one, Hilltop now has approximately $100,000,000 of available capacity through the expiration of the program in January 2022.
Even with sizable capital distributions to shareholders over the past 2 years, including the opportunistic tender offer executed in 2020, our tangible book value per share has grown at a compound annual rate of 21%, because of the profitability of our unique business model. We plan to continue to prudently distribute capital to our shareholders through dividends and share repurchase. In closing, Hilltop's performance in the quarter highlights the versatility of our franchise and the value of our diversified operating model. Although near term headwinds and volatility may occur, we believe each of our businesses are well positioned to take advantage of profitable growth opportunities and that we have the leadership capital and strategies in place to build on our franchise.
With that, I will now turn the presentation over to Will to discuss the financial results. Thank you, Jeremy. I'll start on Page 5. As Jeremy discussed, for the Q2 of 2021, Hilltop reported consolidated income attributable to common stockholders of $99,000,000 equated to $1.21 per diluted share. Included in the 2nd quarter results was a net reversal of provision for credit losses of $28,700,000 which included approximately $500,000 of net charge offs in the quarter.
On Page 6, we've detailed the significant drivers to the change in allowance for credit losses for the period. The most significant drivers in the quarter were the positive migration of certain credits in the portfolio and the further improvement in the expected macroeconomic outlook. 1st, related to the macroeconomic outlook, we leveraged the Moody's S-seven scenario for our 2nd quarter analysis. This scenario highlights improving real GDP and unemployment trends coupled with increasing risk of higher inflation in future periods versus the economic scenario selected for our Q1 assessment. The impact of the improving economic outlook resulted in the release of $11,000,000 of ACL during the Q2.
The second key driver was the ongoing improvement in credit quality across the portfolio. During the quarter, the restaurant portfolio experienced positive migration resulting from improving financial performance and more resilient outlook for future periods. Further, the business saw broader based improvement across a set of clients, whereby their full year 2020 results were not as severely impacted as was previously expected and their first half results were improving from prior risk rating assessment periods. Result of the improvement at the client level equated to a net release of ACL of $17,000,000 during the 2nd quarter. The combination of improved client performance and the improving macroeconomic and outlook, which were only modestly offset by net charge offs, resulted in allowance for credit losses for the period ending June 30 of $115,000,000 or 1.51 percent of total loans.
Further, the coverage ratio of ACL to total loans increases to 1.86% and loans that we believe have lower loss potential including PPP, broker dealer and mortgage warehouse loans are excluded. Turning to Page 7. Net interest income in the 2nd quarter equated to $108,000,000 including $12,400,000 of PPP related interest and fee income as well as purchase accounting accretion. Net interest margin declined versus the Q1 of 2021 driven by lower PPP recognition, higher average cash balances and continued pressure on loan held for investment yields. Somewhat offsetting these items were higher loan held for sale yield resulting from higher overall mortgage rates, coupled with lower interest bearing deposit costs which have continued to trend lower as expected finishing the quarter down 9 basis points at 32 basis points.
We continue to expect that interest bearing deposit costs will move modestly lower over the coming quarters as the consumer CD portfolio continues to mature and reset the lower yield. As it relates to asset yields, the current competitive environment for commercial loans is resulting in substantial pressure on new business loan yields as well as our ability to maintain current flooring. Further, with funded loan growth continue to be slower than we expected, we are increasing the level of 1 to 4 family loans we're retaining on the balance sheet to approximately $50,000,000 to $75,000,000 per month from the prior outlook of $30,000,000 to $50,000,000 per month. As we've noted in the past calls, we are using the 1 to 4 family home retention approach to offset the slower growth commercial lending environment. While this does provide a high quality source of assets and net interest income, these loans generally carry a yield below that of our traditional commercial loans.
And as a result, will put downward pressure on NIM. To that end, we expect that NIM will maintain will remain pressured into the second half of twenty twenty one, moving lower towards 240 basis points and 2 50 basis points by year end. Turning to Page 8, total non interest income for the Q2 of 2021 equated to $340,000,000 2nd quarter mortgage related income and fees decreased by $99,000,000 versus the Q2 of 2020, driven by lower origination volumes, declining gain on sale margins and lower lock volumes. As it relates to gain on sale margin, we noted in our key driver table at the lower right of the page, the gain on sale margin on loans fell 22 basis points versus the prior quarter. Further, we are providing the impact on gain on sale margin related to those loans that have been retained on the balance sheet.
For additional clarity, the reported gain on sale is the margin reported by our mortgage origination segment and reflects all loans distributed retained on the balance sheet. Gain on sale of loans sold to 3rd parties provides the margin on those loans that were distributed outside of Hilltop Holdings or purchase at market value. As a result of our 1 to 4 family loan retention approach and the increase in aggregate monthly loan retention levels, these gain on sale margins have begun to diverge more than they have in the past. And as a result, we have provided both statistics for reference in this presentation. These statistics have been provided in our Form 10 Q and earnings release materials historically.
During the Q2 of 2021, the environment in mortgage banking remained solid and as expected, continued to shift to a more purchase mortgage centric marketplace. During the Q2, purchase mortgage volumes increased by 1,100,000,000 or 38.5 percent, while refinance volumes declined 43% or $1,400,000,000 versus the 1st quarter origination level. We expect this trend to continue towards a more purchase mortgage centric market over the coming quarters, which could continue to pressure gain on sale margins into the future. We continue to expect the gain on sale margins for 3rd party sales will fall within a full year average range of 360 and 385 basis points. Other income declined by $37,000,000 driven primarily by declines in TBA lock volumes, volatility in market rates and volatile trading in fixed income capital markets.
As we've noted in the past, the structured demand in fixed income capital markets businesses can be volatile from period to period as they are impacted by interest rates, market volatility, origination volume trends and overall market liquidity. Moving to Page 9, non interest expenses decreased from the same period in the prior year by $27,000,000 to $343,000,000 The decline in expenses versus the prior year was driven by a decline in variable compensation of approximately $35,000,000 at Hilltop Securities and Prime Lending. This decline in variable compensation was linked to lower revenues in the quarter compared to the prior year period. Looking forward, we continue to expect that our revenues will decline from the record levels of 2020, which will put pressure on our efficiency ratio. That said, we remain focused on continuous improvement, leveraging the investments we've made over the last few years to aggressively manage fixed costs, while we continue to further streamline our businesses and accelerate our digital transformation.
Moving to Page 10, In the period HFI loan equated to $7,600,000,000 As we've noted on prior calls, we expected that loan growth would be challenging during the first half of 21 and the results bear that out. We've seen substantial increases in competition for funded loans across our Texas markets, which we expect will continue into 2022. Further, the ongoing growth in available liquidity both on bank balance sheets and customer balance sheets could further delay a return to more normal commercial loan growth rates for at least a few quarters. We continue to expect that full year average total loan growth excluding PPP loans will be within a range of 0% to 3%. As noted earlier, we are increasing the level of retention of 1 to 4 family loans originated prime lending to between $50,000,000 $75,000,000 per month.
During the Q2 of 2021, PrimeLending locked approximately $176,000,000 of loans to be retained by PlainsCapital over the coming months. These loans had an average yield of 3.11 percent and an average FICO and LTV of 7.80% 64% respectively. Turning to Page 11. 2nd quarter credit trends continue to reflect the slow with steady recovery in the Texas economy as the reopening of businesses continues to provide for improved customer cash flows and fewer borrowers on active deferral programs. As of June 30, we have approximately $76,000,000 of loans on active deferral programs, down from $130,000,000 at March 31.
Further, the allowance for credit losses to end of period loan ratio for the active deferral loans equates to 16.8% at June 30. As is shown in the graph at the bottom right of the page, the allowance for credit loss coverage ratio, including both mortgage warehouse lending as well as PPP loans at the bank, ended the 2nd quarter at 1.64%. We continue to believe that both mortgage warehouse lending as well as our PPP loans will maintain lower loss content over time. Excluding mortgage warehouse and PPP loans, the bank bank's ACL to end of period loan to HFI ratio equated to 1.86%. Turning to Page 12.
2nd quarter end of period total deposits were approximately $11,700,000,000 and remained stable with the Q1 2021 levels. While the overall balances were relatively unchanged, the mix of deposits continues to improve as broker deposits declined approximately $300,000,000 and non interest bearing deposits rose by approximately $200,000,000 versus the Q1 of 2021 levels. Given our strong liquidity position and balance sheet profile, we are expecting to allow broker deposits to mature and runoff. At six thirty, Hilltop maintained $268,000,000 of broker deposits that have a blended yield of 31 basis points. While deposit levels remains elevated, it should be noted that we remain focused on growing our client base and deepening wallet share through the sales of our commercial treasury products and focused client acquisition efforts.
Turning to Page 13. In 2021, we continue to remain nimble as the pandemic evolved to ensure the safety of our teammates and our clients. Further, our financial priorities for 2021 remain centered on delivering great customer service to our clients, attracting new customers to our franchise, supporting the communities where we serve, maintaining a moderate risk profile and delivering long term shareholder value. Given the current uncertainties in the marketplace, we are not providing specific financial but we are continuing to provide commentary as to our most current outlook for 2021 with the understanding that the business environment, including the impact of the pandemic, could remain volatile throughout the year. That said, we will continue to provide updates during our future quarterly call.
Operator, that concludes our prepared comments and we will turn the call back to you for the Q and A section of the call.
Thank you. We will now begin the question and answer session. Our first question will come from Brad Milsaps with Piper Sandler. Please go
ahead. Hey, good morning.
Good morning, Brad.
Jeremy, maybe I want to start with the broker dealer. Just wondering if you could maybe offer a little bit more color on your outlook there. I know it was a tougher quarter. I think you've made comments in the past that you thought performance in 2021 might look a little bit more like 2019. Just kind of curious if that still holds with kind of this quarter in the books now kind of based on what you're seeing maybe here to start the second half?
Sure. I mean, I think we saw a really volatile quarter as we discussed in Q2, particularly in the businesses that were really outperforming in fixed income and structured finance that are the higher margin businesses as well. And we see those being rectified and improving from where they are today, but clearly not at the levels they were in 2020 with the tailwinds that we had. So getting to your point, I mean, I think that as we look through the rest of the year, I think we're looking at net revenue of somewhere around 425,000,000 and pre tax margin in the low teens for the year.
Okay, great. That's helpful. And then just maybe moving to the balance sheet, obviously, cash continues to build. You'll continue to get more back with the PPP program. I know last quarter you commented you didn't really expect to build the bond portfolio in a big way and you really didn't.
Just curious if that kind of still holds or kind of what your plans are kind of with some of the excess liquidity?
Hey, Brett, it's Will. Couple of things to note, I do think the bond portfolio is higher to probably higher into the $2,400,000,000 to $2,400,000,000 $2,500,000,000 level into the period of 2,100,000,000 dollars As we continue to kind of work to address as you know there higher cash levels, higher liquidity levels.
We're also
increasing loan retention as we noted in our comments to $50,000,000 to $35,000,000 We view these mortgage retention strategy or approach both as a counterbalance to softer commercial loan demand, but also somewhat as an alternative to the investment securities portfolio. So that increase we'll continue to monitor on a quarterly basis. But as we sit here today, those are the 2 things we're proactively doing to address liquidity over time.
Great. And then just a final for me. I know you kind of addressed it there at the end, but I guess your provision guide would imply that you guys would be actually taking a provision in the back half of the year. Can you just kind of talk a little bit about that? You've got a pretty large reserve.
Obviously, you're not expecting a ton of commercial loan growth. So just kind of curious kind of what's kind of driving your assumption in the back half?
Yes, I think as we look at it and if you look in the appendix, you'll see the COVID modified loan portfolio. We still got about $76,000,000 of deferred loans. We're actively monitoring the portfolio. I think we've consistently said we expect charge offs to be a little higher in the second half of the year than they are in the first half. And that bears its way here into the outlook.
And I think the other portion is always out there is what's the economic outlook going to bear in subsequent quarters. So from our perspective, again, we've got a lot of monitoring going on across the portfolio. While there's been, as Jeremy mentioned, I tried to mention in my comments, I'd say, substantive improvement across a lot of industries and a lot of dimensions in the portfolio. We still we still got certain credits that we're monitoring very, very closely principally those business centric hotels in the short run. So that's what's leading to that outlook.
I know we've got a recapture so far of about $34,000,000 But again, I think it continues to be our perspective that we'll have our charge offs in the second half.
Great. Thank you, guys.
Thank you. Sure.
The next question will come from Michael Rose with Raymond James. Please go
ahead. Hey, good morning everyone. Just wanted to start off following up on Brad's question. So if I look at the ALLL ex PPP, it looks like you're at 112, if I'm doing my math right. So that would imply a little bit of build here.
Just given the outlook for credit, which is still pretty positive, I understand the comments around the COVID exposed industries and things like that. But are we kind of at a level for the ALLL that you would think would be relatively steady state from here?
Yes, I think we'll put the we got to put the traditional kind of caveat around that of the economic outlook can be volatile and that can move the number one way or the other materially in any given period. As it relates to kind of the other key drivers, whether it be credit migration, again, we continue to see positive credit migration across a large, large swap of the portfolio. We still got the watch portfolios, which I mentioned just a moment ago. And as you mentioned, we don't expect loan growth to be outsized in the second half. So those would historically be the key drivers, loan growth and migration, which we'll both continue to watch, but I think the guidance we put forward here tries to capture our best thinking around where that provision goes from here.
Okay, that's helpful, Will. And then maybe as a follow-up just on the mortgage business, I think we're all cognizant that you guys have had a great run here and things are normalizing, gain on sale spreads are normalizing, volumes are normalizing, although we did get another upward revision from the NBA the other day, which should help. What can you guys do, whether it's from hiring additional producers or targeting certain markets to, I guess, soften the blow and generate a kind of a softer landing as the market normalizes? Thanks.
Yes, that's a good point, Michael. And I think even though it is normalizing, it is still strong from historical pre-twenty 20 perspective. And to your point, what we're really the main focus we're doing is trying to recruit profitable LOs. And to date, we've LO account by 72 and in the quarter, as I mentioned in my comments, we increased it by a net 11, we think will add an incremental $300,000,000 of volume and that's net of the terminations that we've had.
Okay. So what's the base of that off of in terms of lenders? And obviously, it dovetails into the higher origination target that you've laid out for the year moving it from 'seventeen to 'twenty to 'twenty to 'twenty three, which is a nice move. But trying to get a sense for what the net add is and what it means for the
headcount? Sure.
Where our LO headcount is right now is about 1300.
Okay, helpful. And maybe just one final one for me. You guys doubled the share buyback authorization to 150,000,000 dollars I guess the assumption would be that you would probably use most, if not all of it. And then just given that capital levels are still elevated, is there the I guess the willingness and desire to continue to purchase shares just given you're trading about 1.2 times tangible? Thanks.
Yes. I mean, I think that clearly we've been trying to we bought $50,000,000 year to date and so we had $25,000,000 as the first authorization. And so we didn't we authorized another $75,000,000 because we didn't want to run into any pressure with that. So I think we'll take things one at a time and I think we'll be looking to be in the market, we'll obviously be prudent about price and where we're at now, I think is probably an area that we would be in the market and we'll just kind of play out the year and do it. We're only doing this in open market and we're only going to do it at a level that doesn't impact the stock price.
Understood. Thanks for taking my questions.
Sure. Thanks.
Our next question will come from Matt Olney with Stephens. Please go ahead.
Thanks. Good morning, guys. I want to go back to Michael's question around Prime and the new hires that were disclosed. Is this a newer initiative for Prime hiring new lenders or is this just the same hiring strategy, just finding more success recently? I'm trying to appreciate if we should assume additional hires in the future and we could see additional market share takeaway in the mortgage business?
Sure. I think it's part of the business period. However, with COVID and just overwhelming volume in 2020, there's just really not a lot of movement there. So you're always going to have churn, you're always going to have higher determinations. I would say that there's a renewed focus on hiring talented, purchase oriented loan officers this year, and particularly because we're seeing normalization in the market.
And the second part of that, Jeremy, given the new hires, should we anticipate some market share takeaways in the mortgage business?
Yes, I mean, as we said in our comments, I think given the models and the team that we have, I do think that as refinancing Wayne's, we will be market share takers and that's our goal.
Okay. And then sticking with prime on the expense side, you guys already disclosed some really good data around the variable comp for that business. But as industry volume slow down, are there any more fixed costs you consider pulling down if you think mortgage volumes could be slower for a while?
We're going to obviously really pay attention to that. But in this market where you've got like in some cases 10 buyers for a property, we're still having to do the work like we were originating like last year. So we still had to maintain staff. And we want to make sure that we were able to really deliver with exceptional service and being on time is a big part of that. So I don't see that waning, but we'll obviously be very focused on it.
Okay. And then lastly for me on the loan growth outlook, I definitely appreciate the commentary about the increased level of single family retention, but you also dropped the commentary around commercial loan growth rebounding in the back half the year that I think you previously mentioned back in April. Any more color you can add to that about why that was dropped?
Well, I think we're still at 0% to 3% kind of full year average, which has been our position on kind of full year average loan growth. So I don't know we've changed our loan outlook. I do think commercial loans, what we're seeing is for funded loans in particular is hyper competitive and both pricing, which we generally are comfortable competing on the pricing dimension, but also structure is starting to move. And again, we're going to be as we have been over time very prudent about structure and maintaining structure, maintaining kind of our underwriting principles. And so as we look forward and again, I think as we look out with both the liquidity that customers continue to maintain as deposits, customer deposits remain at very elevated levels along with the overall liquidity on bank balance sheets.
We think that could this kind of lower growth environment could persist as we noted into 2022, really driven by those items as well as again a slowdown in overall funded loan demand as customers put cash to work ahead of borrowing.
Okay. Thanks guys.
Thanks Matt.
Our next question will come from Michael Young with Chirif Securities. Please go ahead.
Hey, thanks for taking the question.
Hey, Michael. Good morning.
I wanted to see if I could just get sort of more of a real time update, maybe quarter to date. We've obviously seen a material drop in interest rates over the last couple of weeks compared to the prior 4 months and then also the removal of kind of the 50 basis point additional charge for refinance. So have you guys seen in the last couple of weeks a material increase in volume? And does that give you any additional confidence maybe above and beyond when you guys were originally setting guidance?
I don't think we've seen anything that would cause us to change our guidance. Took the origination volume up the range of basically $3,000,000,000 to reflect both first half performance, but what we're seeing on a real time basis. The fee reduction, I think in principle we're seeing been passed through to the clients at this juncture. So it's in there. We're seeing it.
But at the end of the day, most originators who will be passing that through, we certainly are. And so from our perspective, again, I think while the market continues to be choppy, we're still very constructive on the purchase origination market as Jeremy mentioned. There are some constraints there as it relates to overall availability and affordability. But that said, we still remain very constructive on the purchase side of the market. We think refinance is going to move around a little bit based on where rates are, but there was a lot of refinance activity over the last 18 months and as a result of that it's probably not as sensitive to short small basis point moves in the 10 year as it may have otherwise been historically.
So we think the guidance outlines our view and what we're seeing at most current levels.
Okay, thanks. And maybe in addition to LO hiring, could you talk about any other strategic initiatives that you guys might pursue? I know in the past you guys have gotten a little more involved in kind of the construction renovation market. Obviously, there might be a HELOC opportunity at the core bank as market values appreciate, but people want to hold on to their core loan. Any other things like that that we could look for joint ventures, etcetera, maybe kind of over the medium term?
I wouldn't look for any like product differentiation. We have our joint venture business that's in the homebuilding business is really strong. So we'll continue to try to grow that. However, our JV business at PrimeLending has just 3 affiliated partners and it represents about 8% to 10% of our overall volume. So I think that the big thing of prime lending that they continue to try to do is really enhance their technology and support for the loan officers and invest in that so that we're able continue to leverage that network and grow it more.
And that's what we'll continue to do. And then we have with the implementation of our new loan origination system Blue Sage and then we've got some other add on applications that should hopefully increase
Okay, great. And one last one if I could sneak it in just on sort of fair value marks or adjustments that may have flown through kind of the income statement this quarter that we shouldn't necessarily forecast going forward. I know that's
lot of fair value marks as it relates to pipeline marks as we've historically had in periods. I think we did note in our press release, we had about $6,500,000 of fair value marks related to certain hop investments where transactions were executed in the period that that was episodic, if you will, and not necessarily related to any pipeline activity in the core business.
Our next question will come from Woody Lee with KBW. Please go ahead.
Most of
my questions have been answered, but I had a couple of quick follow ups. So it's another nice quarter on the deposit cost front. It looks like you have around $300,000,000 of broker deposits remaining. I was just curious when these broker deposits are set to mature and what yield do they carry?
Well, the blended is right around 30 basis points and they're going to mature between now and over the next 12 to 18 months. So there's a long window in terms of the maturity. So they kind of move, I'd say, there'll be a block of CDs that continue to kind of roll off here over the next 90 days and then the more kind of money market funds have a longer maturity value on them.
Okay, got it. And then last for me, you noted that you executed another MSR sale of 32,000,000. Was there any material gain that came out of that sale?
We did execute the sale. We also executed a few LOIs, which will be noted as well. We did see kind of favorable pricing there relative to the mark to the tune of about $9,000,000
This will conclude our question and answer session. And now the conference has concluded. Thank you for attending today's presentation. You may now disconnect.