Q4 2019 Earnings Call
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You're welcome by sales 2018 annual report on Form 10-K also during the call a certain non-GAAP Financial measures may be discussed regarding the company's performance. If so, I can find the reconciliation of these measures in the company's fourth-quarter 2019 earnings release. Our speakers will be referring to prepared slides during the discussion. You can find us Lies by going to bancorpsouth.com and clicking on our investor relations page where you'll find them on the link to our webcast or you can view them as exhibit to the 8K that we file yesterday afternoon. And now I turned it down Rollins for his comments on our financial results. Thank you. Will good morning everyone. Thank you for joining us today to discuss BancorpSouth fourth-quarter and full-year 2019 financial performance. I'll begin by making a few brief comments regarding the same for both the year and the fourth quarter John will be happy to discuss our financial results. Chris will preside a little detail on our business development activities. And after we conclude our prepared comments, our executive management team will wage.
Going to answer questions.
Turn to the slide presentation where a slide to contains the standard legal reminders that will is already discussed with you slide three covers the highlights for the year first and foremost. We were excited to reach $30 billion Mark in total assets for the first time in our company history actually ending the year with just over $21 billion in total assets. This accomplishment really speaks volumes to the success of all current, former teammates and continuing to grow our company and in a judicious manner both organically and through mergers and Acquisitions. We reported record annual earnings for 2019 both on a daily basis and operating bases are reporting are reported. Net income for the year was 234.3 million or $2.30 per diluted share while our net operating income tax including Mortgage Service writer adjustment was 254 million to 255.4 million or $2.51 per diluted share.
This represents an increase of operating income of 12.6% on a per-share basis compared to 2018 while we've battled recent head rims resulting primarily from a shift in a mix on our net interest. Margin our net interest margin excluding a credible yield increased by 8 basis points year-over-year to 3.72% on a year-over-year perspective. We should be able to outpace deposit cost increases with upward repricing opportunities in the loan and securities portfolio given the current rate environment. This trend is obviously reversed course in the back half of 2096 and John will be providing a little more detail on this in just a few minutes.
I would like to.
Amend our relationship managers for the success we had in 2019 with respect to organic deposit growth. We had clipped 1 billion in organic deposit growth, which is just over 7% for the year took a tremendous accomplishment for our team as we continue to believe that our core deposit base is the greatest strength of our company our credit quality remains strong as evidenced by our provision for credit losses of 1.5 million net charge-offs totaled 2.5 million for full year 2019, which represents only two basis points of average loans these metrics continue to speak about the quality of our underwriting Ang Turing that our credit team provides. Chris will provide a little more information in just a few seconds.
We continue to improve our cost structure our operating efficiency ratio, excluding declined by approximately 170 basis points compared to 2018 the 64.9% off we continue to benefit from the edit efficiency achieved through our growth efforts while also challenging expenses across all facets of our business contract renewals vendor relationships facilities and supplies juice name a few I expect our team to follow the same path in twenty-twenty challenge each and every dollar we spend to ensure we are adding value to our customers and our shareholders as we continue to improve on our fishing moving on to Capital deployment and management during 2019. We completed the for Bank transactions listed on the slide these transactions added 1 billion in loans and 1.3 billion deposits to our balance sheet. All four of these transactions have been converted to our operating systems with the most recent to having been converted over in the middle of the fourth quarter as we move into twenty-twenty. We hope to God
Tell you to realize improved efficiency.
He's associated with these transactions. Finally. We were active in our share repurchase program. We purchasing approximately two and half million of the three million share authorization for 2019 at a weighted average price $28.20. As we enter the New Year our board authorized another eight million shares for 2020. The increase in the authorization is primarily the result of our fourth-quarter Capital raise wage all discussing just a second slide for provides a view of our summary Financial results over the past five years both on a gaap basis and operating basis. I certainly don't need to spend a lot of time on the box here. However, I do want to emphasize the continued positive Trends and successes detailed on this slide most importantly we have grown operating EPS excluding MSR at a compound rate of 15% over the past four years.
Moving on to slide five we will briefly review the fourth quarter highlights, which are very consistent with the annual highlights accordingly. I can again be very brief here. We reported gaap. Net income for the fourth quarter of 65.8 million or 63 cents per diluted share. We had a positive MSR valuation in the quarter of three point two million while merger-related expenses totaled 5.8 million for the court accordingly our net operating income excluding MSR was 67.8 million or $0.65 per diluted share on a per-share basis this represents an increase of over 14% compared to the fourth quarter of 2018.
Essentially flat in the quarter on an organic basis. We had another outstanding quarter with respect to organic deposit growth generating 385 million or 9.5% annualized growth during the quarter wage deposit growth combined with the additional liquidity associated with the capital raised is the results resulted in a shift in earning asset mix that put downward pressure on the net interest. Margin John will discuss the Dynamics of the margin in just a few minutes.
well loans
Credit quality continues to remain a strength for us. We had net recoveries of 2.2 million for the quarter which supported the lack of any reported provision during the quarter virtually. All of our credit quality metrics in club non-performing in classified asset balances were stable.
The last three bullets relate to Capital manage management of the 2019 Chevy purchased total that I mentioned earlier just under 300,000 shares were repurchased during the fourth quarter. We also offer to the market during the fourth quarter with the South simultaneous offering of three hundred million and subordinated debt and 172.5 million and Perpetual preferred stock. We viewed the historically low rates wage perspective to these Capital instruments as an opportunity to bolster and diversify our Capital mix as a reminder. Our bank has historically operated with one hundred percent common equity, and this will improve Capital stock.
We anticipated.
Additional Capital will be used to either support further growth efforts or support additional share repurchases or a little of both finally the last bullet point on the slide relate to the closing of our merger with Texas First State Bank, which closed effective January 1st of this year 2020. We're excited to formally welcomed Rodney Crowell and all of our new Texas first team mates this transaction ads approximately 396 in total assets to our company as we enter the Waco Texas market and further enhance our market share and other surrounding communities. I'm now going to turn the call over to John and let him to discuss a little more financial results in detail. Thanks Dan, if it will jump right into the numbers if you'll turn to slide 6, you'll see our summary income statement and reviewing that that statement the income was 65.8 million or 63 cents per diluted share for the fourth quarter as Dan mentioned earlier. We had to not non-operating items in our fourth-quarter results. We had a positive pre-tax MSR valuation adjustment of 3 bath.
2 million and merger-related
It's just under six million accordingly. We reported net operating income excluding MSR of 67.8 million for the quarter or $0.65 per diluted share compared to 69.7 million or 69 cents per diluted share for the third quarter of 2019 and 56.4 million or 57 cents per diluted share for the fourth quarter of 2018 our net interest income increased two and half percent compared to third quarter of 19 and 11.7% compared to the fourth quarter of 2018. The transaction closed in the merger closed in both the second and third quarters of 2019 did obviously impact those comparisons is Dan mentioned earlier. We've seen some recent pressure on our margin largely attributable to the shift and earning asset mix our reported net interest. Margin for the fourth quarter was 3.76% while our net interest margin excluding a credible year yield. Our core margin was 3.61 copper Pig.
metrics for the third quarter of nineteen, but
3.8% and 3.76% respectively. We reported a net interest margin of 3.8% for the fourth quarter of 2018 while our core margin was 3.61% as we look at the quarter-over-quarter change in our core margin the shift and earning asset mix is largely responsible for the margin decline as Dan mentioned earlier. We had a great quote from a deposit growth perspective. And we also completed a public offering of subordinated debt and preferred stock the deposit growth success and the capital raised collectively contributed approximately 850 million in additional liquidity during the quarter that had to be put to work in addition. We were active in December purchasing purchasing shares in advance of the Texas. I'm sorry, I purchasing Securities in advance of the boxes first merger closing this earning asset mix shift was responsible for approximately 8 basis points of the margin compression. We all have also had some pressure on earning asset yield dead.
and looking more specifically at
This components loan yields excluding accretion. We're down 7 basis points from 5.02 for the third quarter before .95% for the fourth quarter. This seven basis point decline was largely the result of the impact of the September and October rate cuts on a variable rate portfolio security shields were down normally as well. And finally we saw three basis point across and a total cost of deposits which did help to offset some of the pressure on asset yields before we move on 299 interest Revenue expense. I'd like to briefly mention credit quality the damn downloaded to we did have no recorded provision for the quarter compared to the provision of half a million for the third quarter and a provision of 1 million for the fourth quarter of 2018 the our credit quality metrics, including non-performing and classified assets did remain fairly stable during the quarter. We also reported net recoveries of 2.2 million for the quarter which certainly helped.
If you'll turn to slide 7, you'll see a detail of our non-interest revenue streams total non-interest revenues was 74.7 Million for the quarter compared to seventy five point four million for the third quarter of 2019 and $59 million for the fourth quarter of 2018. The MSR valuation adjustment as usual is obviously a primary contributor to the volatility these totals outside of the MSR adjustments considering the seasonal factors mortgage had a nice quarter reporting production and servicing revenue of 6.9 million Chris Rock Star Movies business more in a moment, but we continue to benefit from some refinancing activity associated with a low-rate environment. The quarter-over-quarter decline in the insurance commissions is driven typically off seasonal factors associated with the renewal cycle in our book of business all other items shown on the slide. We're we're within our range of expectations given the merger activity during the Florida and other seasonal wage.
factors
Slide 8 represents a detail of non-interest expense towed my interest expense for the fourth quarter was 162.4 Million compared with 159.6 million for the third quarter of 2018 and 152.3 million for the fourth quarter of 2018 total operating expense which excludes merger-related expense and all other one-time items was 156.6 Million for the quarter compared to 155.6 million for the third quarter of 2019 and 147.9 billion for the fourth quarter of 2018. The merger close that occurred on April one and September one certainly impact the comparability of of these figures and was as we look at the quarter-over-quarter trends that decline in salaries and employee benefits offered to the third quarter is resolved of a year and here in troops to several of our crews, including our medical approval and incentive programs. These items provided a benefit of approximately four million in New Jersey.
fourth-quarter as our courts
Space remains in a relatively tight range. We're pleased to see continued improvement in our annual operating efficiency ratio, excluding MSR which improved to less than 65% and 2019 versus 66.6% the 2018 that includes my review of the financial is Chris will now provide some color.
Thank you. John sliding nine Flex our funding mix as a December 31st compared to both the third quarter of 2019 and the fourth quarter of 2018 total deposits and wage is grew almost three hundred and seventy million for the quarter or 8.8% on annualized basis over the course of 2019 deposits and Repose increased to two point four billion 1.3 billion, which is associated with the Ford transactions closed during this time organic funding growth has totally 1.1 billion or 7.6% We're very pleased with our deposit growth efforts both for the quarter a month or the year as we look at pricing our total cost of deposits declined to 6.68% for the fourth quarter from 7 1% for the third quarter of 2019. As we mentioned in our third quarter call. We were nearing the inflection point on the repricing of time deposits, which allowed us to ultimately improve our total cost of deposits in the fourth quarter roughly half of the fourth quarter deposit growth came in the 9th.
demand products which contributed to improvements
And deposit mix as well as we look at geographical performance relating to deposits. We had several divisions across our footprint stand out this quarter Houston, Texas, Texas Hill Country Tennessee metro west Tennessee, Missouri and our Northeast Arkansas divisions all reported strong deposit growth for the quarter, but I think it's like 10, you'll see our loan portfolio has December 31st compared to the third quarter of 2019 and the fourth quarter of 2018 loans were essentially flat on organic basis driven primarily by some larger payouts in the quarter and to some extent competitive pricing and structuring head winds for the year. We added just under 1 billion and acquired loans to our balance sheet and our team-mates have done a good job of holding these loans balances during the turmoil of conversion. In fact, it makes of our loan portfolio is very consistent for each of the. Shown here while our pipeline of opportunities remained good. The recent redirection of Fed rate action has led to Thursday.
a competitive pricing and structuring in the
Has presented a headwind for organic loan growth while you try to protect. Margin. We were working hard to protect these loan balances as well as margin of all the rate environment stabilizes despite the overall or a clone growth pressures. We continue to have success as in our lending efforts from a geographical perspective that several divisions produce significant meaningful loan growth our Dallas, Texas, Missouri South Arkansas divisions all had great quarters from lung growth perspective slide, eleven contains some credit quality highlights, which continue to be a strength for our company as John mentioned earlier. We had no provision for the quarter compared to other provision of $500,000 for the third quarter of 2019 and a provision of 1 million for the quarter of 2018 for the fourth quarter of 2018. We had net recovery 2.2 million for the quarter. Now, I'm performing assets represented 84% of net loans and leases at December 31st compared to date to September 30th 2018 at 5 a.m.
late one at December Thirty $1.29
Other than the previously discussed and enter anticipated lumpiness associated with acquired loans with our merger activity. We've been fortunate to maintain good quad credit quality metrics off the sum up the year. We believe our due diligence processes and performed well through our m&a activity and combined with our Legacy efforts as generate a stable and acceptable credit quality metrics. We will continue to focus his attention on asset quality as we believe this is a core strength of the company living on the mortgage and insurance the tables and slide twelve provide a five quarter. Look at our results for each product offering
A Mortgage Banking operation produced origination volume for the quarter totaling $505 million home purchase money volume was 322 million or 64% of our total volume for the quarter. This is consistent with our third quarter mix which was 66% purchased money industry consensus projects downward pressure on total production driven by a decrease in refinanced production through the due to the current wage environment. We feel positive about our diverse geography and our participation and growth purchase money markets like Houston, Dallas and Nashville.
Reason the corridor 419 million compared to $374 million in the third quarter of 2019 and 251 million in the fourth quarter of 2018 production and servicing Revenue which excuse to the MSR adjustment total 6.9 million for the quarter compared to eleven point two million for the third quarter of 2019 and 4.8 million for the fourth quarter of 2018. Our margin was 5.03% for the quarter representing a decline from 2.38 for the third quarter of 2018. The margin decline is attributable to seasonal aspects and an eighty million increase in the mortgage pipeline quarter-over-quarter. This is, each year is the pipeline declines leading into the winter months which are slower from a home purchase standpoint as evidenced by the .88% Margin for the fourth quarter of 2018. The $290 million pipeline of December Thirty One was comprised of approximately fifty percent refined 50% purchased money. Finally as Dan mentioned earlier MSR valuation.
adjustment during the
Quarter was a positive 3.2 million pound Insurance. Total revenue for the quarter was 27.6 Million compared to Thirty one point five million for the third quarter of 2019 and twenty eight million for the fourth quarter of 2018. As we mentioned each quarter. We typically Benchmark to the same quarter in the prior year given the seasonality in the renewal Cycles life insurance commission revenue is relatively flat for the fourth quarter of 2018. This was a direct result of a year-end true up in contingent commission estimates relatively our core PNC commissions and life and health conditions increased by 3.3% collectively. This is in line with our growth rates and comments on pricing for the last several quarters.
Finally, I'd like to briefly mention wealth management. We reported wealth management revenue of 6.6 million for the quarter for the year wealth management Revenue total 24.8 million which represents an increase of 50% compared to 2018 during the fourth quarter. We completed the system conversion for the Summit Bank wealth management book of business, which was acquired effective September one with the summit merger closing. We were off to have this conversion behind us excited about the value these new teammates will add as we continue to build our wealth management teams now will turn it back over to Dan for his concluding remarks. Thank you Chris Thursday. We were very pleased with our financial results for 2019. We've continued to improve virtually all of our performance metrics quarter after quarter and year after year as I mentioned. We surpassed 21 busy and total assets during the latter part of 2019 and achieved record earnings for the year. We improve most of our profitability metrics compared to 2018 while maintaining strong credit quality as we lived.
according to twenty twenty consistent with
Industry expectations. We anticipate this year to be a challenging Year from an earnings growth standpoint particularly given recent Trends in loan demand and margin pressure our message to our team is to Simply control the things that we can control our front-line team-mates will continue to focus on protecting our customer base and winning new business on both sides of the balance sheet while not compromising on structure or credit quality our business development teams will continue our efforts to enhance the customer experience through technology improvements and improved product offerings. We will also keep challenging every dollar we spend in an effort to continue improving our operating agency. Finally. We must work to efficiently manage and deploy our capital in a manner that maximizes value for our shareholders. Here's to a successful and prosperous 2020.
With that operator, we'd be happy to answer any questions.
We will now begin the question-and-answer session to ask a question. You may press * then one on your telephone keypad. If you're using a speaker phone, please pick up the handset before pressing the keys to withdraw your question, please press * then two. Please limit yourself to one question and one follow-up. If you have any further questions, you may re-enter the question Queue at this time. We will pause momentarily to assemble our roster.
Our first question is from Kathryn Miller from KBW. Go ahead.
Thanks. Good morning. Good morning, Catherine. Just wanted to start with the balance sheet and margin Dynamics. Can you talk a little bit about how quickly you think you'll be able to deploy the excess liquidity that we saw built off this quarter and how we should think about how that will translate into loan growth this year. Thanks. Yeah, so John's ready to jump in here too. So a couple of things were happening in the fourth quarter, you know, we closed on the Texas first transaction on the first and we were looking to kind get ahead of the portfolio that they'll be bringing across. So some of that will will be used in sucking up the portfolio. That's not coming across on there's they're very liquid and so cash will come in to take some of that your specific question on loan growth and we continue to be focused on loan growth. I like the fact that we're showing good growth and Texas wage reports of our footprint our slower growth or no growth spots today. And so we saw some contractions in the outstandings in a couple of States, but we saw a really good growth across the state of, Texas.
Specifically, I think Chris mentioned the the the pay down structure. We got another pay down today on a non-recourse low-rate CRE credit and so you saw
Credits drop for us. I don't think we're willing to play in those low rate, you know non-recourse games. And so we're we're sitting some headwinds on those payoffs. However, the production side especially in Texas, has to do very well John you want to take some of that just just it on the Texas First and that wasn't a very big portfolio. We did pre-fund the the that that restructuring of portfolio. So we in January here will be selling those Securities and and paying paying down some borrowings.
Okay. And so I mean do you is we think about a growth range for next year? I mean is it is
did you feel like a net basis kind of low single-digit? Is it good place to start is we're thinking about next year. Just given these Dynamics. Yeah, I expect this to grow. So, you know how we get there. You know, we took we we grew the balance sheet this year on the deposit side, but with the loans weren't there. So again, I think I'm really proud of the team in the core low-cost deposits that we're attracting we want to continue to do that. We've got to deploy that in terms of learning assets and if we can continue to do that across the state of Texas and the higher-growth footprint, you know, I think we're we've been on the ground in in the Florida Panhandle for only a couple of months. Now that area has promised for us. We think with the team down there can help us can help us grow. So I think we've got that opportunity in front of us.
Okay.
It's been on the margins side outside of the impact from excess liquidity. How do you thinking about the outlook for the margin this year? Assuming? No further rate cuts?
Well, we we are obviously less less optimistic than we were in the second quarter of this year. No doubt. There's there's going to be continued pressure on the margin. We've had we've had ten a ten or eleven quarters straight quarters of an increasing earning asset yields, and we've had thirteen or fourteen consecutive quarters of higher interest-bearing liability rates, but we've also had a number of quarters of of improving that interest margins. We've reached that an inflection point on that in the fourth quarter. We're earning asset yields are have fought did fall and also deposit rates did fall now deposit rates. There's a big tail on deposits. That's a lagging with the lagging thing. So I guess the wild card would be can't we maintain higher than than expected loan repricing, you know, we we're repricing
Loans at 5 and 1/2 in the second quarter. We're going to
Those loans that a couple of billion in loans over the next twelve months and current re pricings are somewhere between 450 and 4 ninety. So that's going to put pressure on them. Maybe the wild card is what can we do relative to deposit repricing deposits. That is as I said somewhat lacking so the the prime rate cuts and and the third and fourth quarter that that cost us about 5 and 1/2 basis points in the margin for the fourth quarter. And then we already mentioned that the sorry for the Train the home office rather the accent mix would cost us eight basis points. So that's about $14 of the $15 decline.
So yeah, I guess I would want to jump in there just a second, you know margin is certainly important to us and we're working hard to manage deposit cost the best we can you know, the mix of the lungs that we're bringing on. You saw a credit to grow this quarter. You saw cre credits go down C&I credits. Come on as a skinnier rate so that there's a there's a mix here coming on too. I I would want to focus on in I I we continue to look for opportunities to grow our bottom-line income and and we think we have that capacity.
Great. Okay. That's all very helpful. Thank you.
Thanks Catherine. Our next question is from Jennifer from Santa. Go ahead. Hey, Jenny.
Good morning. Two questions first wondering what the Cecil Day One impact will be on the BancorpSouth in Los reserve and then my second question is then you've been around m&a block, you know, as many times. It's probably almost anybody in the industry and I'm just wondering what your opinion is off on these larger Mo he's and if they could ever make sense for BancorpSouth, thanks. All right. So on the Cecil side John may want to jump in here again, too. I know Cecil's walking around in our building. I haven't met but I'm pretty sure he's here on on day one impact. Our team is working hard on that. I don't think we have really anything to add more than what we had put out back in the in the in the queue last time which was kind of a range of what we expect the numbers to be 30 to 50 million on the numbers, right? And so, you know, I don't know whether we're in the middle of that or or or a little bit outside of that range one way or the other but the team is
Working hard I suspect we will have that all done here in the next week or so and you will see more about that in in the K when the K gets filed.
On the on the front there's a lot of activity and a lot of talk out there still going on from you know bigger to smaller several transactions within our footprint just in the last week, you know, there's still a lot to talk out there. Your specific question was on the larger transactions. I I think some of those can can do. Well, I think it's going to be purely driven off of execution. And so if you have a better of opportunity to execute you probably have a better opportunity to make something like that that work, you know, there's there's opportunity for all of them. But there's also increased risk on the same size. So we we continue to talk and look at lots of things that are out there. We're not afraid to talk to anybody. We think there's lots of opportunity within our footprint for us on the m&a front.
Thanks a lot dear. Thanks you.
Our next question is from Kevin Fitzsimmons d a Davidson. Go ahead.
Hey, good morning. Everyone. Kevin good to hear from you. Good to hear from you Dan just on the subject of what Jenny just brought up about some of these large mergers wage present Market disruption opportunity for you that you've seen yet in terms of going out and hiring and that of course, you know, if it's done to a large degree would would in a near-term expenses but then longer-term some production some revenues coming in. How how much do you think you're going to get the participate in that? Yeah, there's certainly certainly disruption. You know, the everybody wants to talk about Atlanta and we're not in Atlanta. So, you know, I can't I can't speak to the disruptions over there. But but there's been multiple transactions in other parts of our footprint off from Tennessee to Arkansas to Texas and and all of those areas will will lead to disruption. We we have seen some movement amongst producers or amongst relationship man.
managers we continue to add relationship managers across
Our footprint I think our net relationship manager gain for 2019 was 51 across our footprint with right at half of those in the Texas footprint. We believed that we will be able to take advantage of that even more as we look into 2020. So that's certainly part of our game plan.
Okay, great. And and just a quick follow-up on BuyBacks. Is that going to strictly be governed by where the stock price is or do you have a certain idea of what we want to get through this much within the the time? Yeah, I don't think we have a number that says we have to buy X years back. We do have a 10:00 b51 plan, you know that that is executing and his in his mouth off of off of price. That's what drove some of the movement in in for you and I suspect that that that will drive movement here as we get deeper into the year and we watch what's going on, you know, maybe we took our gears a little bit right now. I think we we like the plan that we've been operating under and I suspect we will be in the market buying shares back throughout the year would be my thinking right now.
Okay, great. Thank you.
Question is from John wallstrom from RBC Capital markets. Go ahead. Hey, good morning, guys. Hey good John . How are you? I'm good. I'm good. I'm not driving the Train by the way. Do you have a problem? Is that where he is? I've been looking you shows up every quarter. He's here month. Yeah a couple of follow-up questions Chris you talked about the billion and acquired loans and that you've held a lot of the balances you just trying to a gym instructor loan growth of it. Can you talk a little bit about what kind of runoff you saw from the billion and acquired loans?
Yeah, I wouldn't say we've had obviously every time we do due diligence and we identified some loans that we perhaps don't fit our our balance sheet. We work on those. But other than that, I think we've done a good job of holding those so you'd probably see those in our PCI credits. That's a direct place where you'd see those numbers just from runoff in general. We're just seeing you know, fed the direction, you know Prime drop three times. We're seeing some really aggressive aggressive. I'd call it maybe try to race to the bottom of the interest rate on loans. We're seeing some three handles or seen some live down or structuring that's put some downward pressure on both our pipeline. I I would our pipeline remains good but when we when we're comparing those opportunities and we're competing against a a low wage or non-recourse loan will let that one pass and that also impacts your pay Downs when you have some loans, you know that exists on the balance sheet that are seeking out those same kind of opportunities wage.
our next
so that's that's the portfolio primarily in the
Need to do is protect us at quality and protect margin in our balance sheet. But in all those things don't always think up with every transaction. So that's the downward pressure. You've seen on some of the cre pay Downs that helped. Yep, you know that dead helps and then just buzzing through a couple of felines wealth management looks like he had decent growth and it sounds like maybe you're still optimistic on that and you made some recent changes. Can you talk a little bit about expectations there, but I think it's you know, some of that's market-driven. So you've seen the market increases Drive some of that but overall, we've had a good good production good new business opportunities on the trust and wealth management side Summit Bank added some assets under management to that books. That's what you seen those comments. So that took a stares at it from relationship managers across multiple markets. I think he's up three or four people this year to think we've had a couple in Texas. So we're excited about getting into you know, again just like on the loan side higher growth markets from the wealth management side, so I would see some upward pressure on Thursday.
From the opportunity that you have to weigh that against what the market does too but we're actively recruiting relationship managers and revenue producers across all product lines and and and wealth management has been a track some too.
Yep, okay, and then on insurance?
Focused on the year-over-year. Can you talk a little bit about premium Trends versus you know, winning new business or adding new business just help us understand the to bring those who puts in taste. Yeah, a lot of it starts with with with maintaining your business. So we have a great renewal rate for our for our book of business. It's it's good. So we have a good stable, you know, Great Book of a business good producers good relationships with our customers. There's been some farming of the price, you know, our guys would tell us that you know across the month. So you've seen that a little bit in the upper pressure on the revenue, I think and from a new business, it's same story two engines and we've hired new producers in the insurance world too and all the, you know across the foot of so that'll help us hope we put upward pressure on the on the revenue side. It's a little longer lead-time for those folks because they join with in the industry. It's common to have a non-solicitation. So you're investing in producers wage.
A little more lead time in terms of their ability to start producing meaningful numbers. Okay? Okay, and then just one follow-up down for you.
You know you you talked about a challenging twenty-twenty loan demand and margins and we all get that but you know, you'd think that would lead to softening prices and Eminem Just curiously curious what you're seeing in terms of pricing. Thanks. I see pricing all over the board. That's really been been interesting. You know, you see some transactions with with you know, no or low premium and you've seen other transactions that way when I would consider to be very high premiums and you know, some of them we've Shake our head a little bit out, but I think we're all over the board. So I think it's back to expectations and and and what can the institution do for the buyer? So again, I think we're going to see opportunities in our footprint and I think that we will be able to be, you know, successful on many of those. Okay. I'm feel a little nervous about any spending. So we're waiting. Thanks a lot. Appreciate it. Appreciate it.
Our next question is from Matt from Stevens. Go ahead. Great. Thanks gud morning guys. How are you? Good to go back to the bank sheet remix. I think you guys mentioned that your your pre-funding the balance sheet in the fourth quarter and you'll be selling some Securities in the first quarter from the Texas versus deal. Can you quantify that long? Did you refund the entire amount or just a portion of it? Yeah. So we've done the same thing with multiple of Acquisitions over the last year. So as we're looking at their Investment Portfolio coming into ours, we we both are looking to see if there's assets that we want to retain and assets that we want to divest many times their assets. We want to defend best. They were a 390 million dollar bank with a hundred and fifty million dollars in and loans and my guess is is you know, we did not pre-fund all of the remaining part there. But but we were working on trying to make sure that the portfolio looks similar to ours.
Okay, got it. And on the expense side, it looks like your
Deposit Insurance would still lower in the fourth quarter. Is that the run-rate or did you still have some insurance credits that offset that just to get a better idea for the run-rate into into twenty? I don't have an answer for that. I think I think that we needed a a fairly fairly small true up in our crew. I think we had over crude a little bit not significant what it wasn't something that really caught off as being significant though Matt. Okay, that's fine. And then on the just more of a as a modeling question on the preferred dividend if I'm doing this right looks like the amount will be about two and half million dollars per quarter. But but the first quarter could have a higher cruel around 3 and 1/2 and I do my numbers right there as far as the mileage and expense in in 2020. I don't think so. I think that the dividend payment is is a is on a quarter from when it was issued. So I think it's the little less than 2 and 1/2 million per quarter throughout the year.
For the first payment dates February twenty which is you know, ninety ninety days coming out from when we went out.
Okay, I was in.
Finding that the first quarter have a would have a higher accrual since it was I thought it was close sometime in the fourth quarter, but I can go it it was but we're not paying on a quarterly basis. We're paying in mid-quarter.
Got it, and it is our accounting fraud declaration basis, right? That's right. So you don't occur them there. They're subject to board action. Yeah, and and yes in yesterday's press release that went out wage. I think the dividend is in there. So that dividend is a record date February five I think and and payment date February twenty. So it it's not a calendar quarter payment.
Okay. Got it. I'll I'll check that out. That's all for me. Thank you. Okay. Thanks.
Again, if you have a question, please press * then 1 our next question is from John from Janie. Go ahead.
Good morning, guys. Hey, how are you? John ? Good Dean. How you doing? Great. Just just back to the Securities portfolio real quick. So I understand the pre-birth and stuff. But you know, so it's for it was four point five billion at the end of the quarter. Would you expect it to grow much from here or is it sort of stable going forward? I don't need that it grows unless our deposit mix grow significantly.
I think what you see is, you know, we're we're we're bringing deposits in and we grew deposits pretty healthy way last last quarter and you saw that money flow into the bond portfolio. And at the same time you saw us put some borrow on to make sure that we were prepared for Texas first coming on board that those barring should pull back a little bit this quarter and then if we grow deposits which would expect that we will grow deposits in the wage historically have then that will impact the the level of security is also. Okay? Okay, that makes sense. All my other questions were asked and answered. So thank you. I appreciate it.
Okay.
This concludes our question-and-answer session. I would like to turn the conference back over to mister chairman and CEO . Go ahead.
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