Q3 2020 Simmons First National Corp Earnings Call
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Ask the question during the session you'll need to press Star then one on your telephone. Please be advised that today's conference is being recorded if you acquire any further assistance. Please press Star then zero I would now like to hand, the conference over to your speaker today, Steve Mess and Alan. Please go ahead.
Good morning, and thank you for joining <unk> third quarter earnings call. My name is Steve nationally and I served as Chief administrative officer, and Investor Relations Officer of Simmons first National Corporation.
Joining me today are George Makris, Chairman and Chief Executive Officer.
Bob Fehlman, Chief Financial Officer, and Chief operating Officer, and David Garner Executive director of Finance, and accounting and Chief Accounting Officer.
The purpose of this call to discuss the information and data provided by the company in our quarterly earnings release issued this morning and to discuss the company's outlook for the future we will.
We will begin with prepared comments, followed by Q and a session.
We have invited institutional investors and analysts from the equity firms that provide research on our company to participate in the Q and a session all.
All other guest in this conference call are in listen only mode.
A recording of today's call, including our prepared remarks, and the Q and a session will be posted on our website Simmons bank Dot com under the Investor Relations page for at least 60 days.
During today's call, we will make forward looking statements about our future plans goals expectations estimates projections and outlook.
Ill remind you that actual results could differ materially from those projected in or implied by the forward looking factors statement.
Due to a variety of factors addition.
Additional information concerning some of these factors is contained in our SEC filings, including without limitation. The description of certain risk factors contained in our form 10-K for the year ended December 31, 2019, our form 10-Q for the quarter ended June Thirtyth 2020, and the forward looking information section of <unk>.
Our earnings release issued.
Issued this morning the company.
The company assumes no obligation to update or revise any forward looking statements or other information.
Lastly in this presentation, we will discuss certain non-GAAP financial metrics, we believe provide useful information to investors.
Please note that additional disclosures regarding non-GAAP metrics, including the reconciliations of these non-GAAP metrics to GAAP are contained in our earnings press release and third quarter Investor presentation, which are included as exhibits to our current report filed this morning with the SEC on form 8-K and.
Available on the Investor Relations page of our website at Simmons Bank Dot com.
I will now turn the call over to George Makris.
Thanks, Steve and welcome to our third quarter earnings Conference call.
We're very proud of our results for the third quarter, especially under these trading conditions I'd like to begin todays call by thanking the Simmons associates for their commitment dedication and continued demonstration of our community banking value.
In our press release, we reported net income of $65.9 million for the third quarter of 2020, an increase.
An increase of $7 million compared to the second quarter.
Diluted earnings per share were 60 cents.
Included in the third quarter earnings were two and a half million dollars in net after tax merger related early retirement program their branch right sizing costs, excluding the impact of these items. The company's core earnings were $68.3 million for the third quarter of 2020 and.
Core diluted earnings per share were 63 cents for the quarter.
Our return on average assets was 1.2%.
Return on average common equity was 8.9%.
Return on tangible common equity was 15.4% and our efficiency ratio was 54.1 per share for the third quarter.
As of September Thirtyth total assets were $21.4 billion, our loan balance was $14 billion and our deposit balance was $16.2 billion our.
Our loan pipeline of approved and ready to close loans was only $70 million at the end of the quarter signaling that loan demand remains very weak in almost every aspect of our commercial economy.
Our net interest margin for the quarter was 3.21% and our core net interest margin, which excludes accretion was 3.02%.
The lower yielding PPP loans in additional liquidity decreased the net interest margin by 30 basis points.
Our non interest income for the third quarter was $72 million a day.
Decrease of approximately $13 million compared to the same period last year the deal.
The decrease was primarily due to the large gain on the sale of visa class B common stock that was recognized in the third quarter of 2019.
This decrease was partially offset by $9.5 million increase in mortgage lending income and a $15 million increase in the gain on sale of securities.
Non interest expense for the third quarter was $119 million core non interest expense for the quarter was $115 million.
Our capital remains very strong quarter end, our total risk based capital ratio was 16% our common equity tier one ratio was 13%.
Our tier one leverage ratio was 9%.
Ratio of tangible common equity was 8.7% at September Thirtyth.
We have once again shared and extensive presentation on our website at Www Dot Simmons Bank Dot com, along with the press release and financial data, which gives much more detail regarding our quarterly results and other important information about our company.
I'd like to take a minute to discuss some asset quality information found in our presentation.
In our recap of loans, excluding PPP loans, we show our allowance for credit losses, or a seal for loan types in selected industry categories.
Notably our CFO for our energy portfolio is 19.5% for our hotel portfolio, 4.1% for our.
For our restaurant portfolio, 3.8% to four our retail portfolio, 3.6%.
On October 19 loan modification to update we show those commercial loan still little modification period.
We expect only 3.9% of our loans to be considered for loan modifications longer than six months.
Most of those we expect to return to regular payments with no credit downgrade or long term restructure.
Once again, our efforts were very proactive early in the pandemic.
As fed Vice Chairman calls mentioned recently March was a record month of increases in senile loans as companies drew I'll know lines of credit that was not the case at Simmons and it's reflected in the contrast between our loan growth during that time and other banks and in the ability of our customers.
Two returned regular payment status.
And of the 1800 90 for consumer loans that receive Forbearances only 167 are being considered for a second room.
Our energy portfolio declined by $42 million during the third quarter and we expect continued reductions in the fourth quarter and into 2021.
We expect to begin submitting information to the SBS day during the fourth quarter for forgiveness of our customers PPP loans.
63% of our PPP loans are below the 50000 dollar threshold.
We have the detail supporting our eye sale, which is 1.77% total loans as of September thirtyth, and 1.9% of loans, excluding PPP loans from the total with her.
We have highlighted management's qualitative adjustment on that slide.
And last but certainly importantly, we want to recap our asset quality performance in our acquired portfolios for bank acquisitions since 2013.
While some of our largest charge offs and the energy losses have been from acquired portfolios. The comparison of losses to acquired loans versus credit marks to acquired loans has been exceptional.
We believe our diligence identified appropriate risk in each of the acquired portfolios and in no case have our charge offs in any acquired portfolio exceeded our credit bar.
Once again, we're very pleased with our ability to identify portfolio risk and acquired banks and manage it within our established marks.
Management of credit risk has long been a fundamental strength Simmons there, we're very proud of our record, including the management of acquired portfolio credit risk.
We continue our investment in digital capability, our customers are adjusting your habits to the use of more self service channels and we expect that trend to continue we have.
We have planned several upgrades to our digital offerings from now through 2021.
While we still have much uncertainty in the marketplace today, we're encouraged to see our customers taking their time to understand future opportunities.
We will be well prepared to help our economy recover at the appropriate time.
I will now turn the line over to our operator and invite questions from analysts and institutional investors.
Thank you as a reminder to ask the question you will need to press Star then one on your telephone to reply. Your question. Please press the powerful again that is star then one if you would like to ask a question.
Our first question comes on the line of Brady Gailey with KBW.
Let's now open.
Hey, Thanks, good morning, guys ore grades weren't.
So I wanted to start with the margin and with spread income I think before you all have talked about a core margin.
It was flat to down slightly.
And it was down I think around 16 basis points linked quarter. They even if you I know you would PPP and with.
The excess liquidity the margin Ken.
Sometimes challenging to look at but even if you look at spread income dollars and they were down 6% linked quarter on an annualized.
So maybe just talk about what can be done on the spread side and how you're looking at the March.
The margin going forward.
Yeah, Hey, Brady this Bob I would start off with just talking a little bit about our guidance was we expected to be in that the 230 to 40 range on a normal I'm, sorry, 343, 30 to 340 on a normalized basis when you back out the liquidity in the DPP.
And again, if like you said if you put if you normalize it would be in the low to mid Thirtys Threeq earnings, which is lower than we had expected and most of that was driven from a decrease in the loan portfolio. Some of those loans that theres more that matured and paid off this quarter and obviously lower volume of just across the banking sector was.
The driver of that so our goal going forward is going to be one is reinvesting into the security portfolio number two is developing reasonable loan programs. During this type of environment. We're in we're not going out stretching it but looking for opportunities as we continue to move forward.
Okay. So Bob when you look at spread income dollars do you expect to continue.
Continue to see some shrinkage there on a quarterly basis going forward or do you think that.
This at this level it should be roughly flat looking at spread income dollars.
I would I would expect it to be relatively flat, but I'd say this environment. We're in every every day you kind of find a little different out there, but our expectation is we've hit the bottom of it and our as we reinvest going forward, we should be picking up.
But you know again this.
Again this environment changes every week it seems like but our expectation would be this would be on the bottom end of it.
Okay, and then you mentioned the loan Shrinkages as one of the Big drivers how do you think about loan balances go.
Going forward should we expect a little more shrinkage before bottoming out.
Hi, Brady this George.
We would probably expect a little more shrinkage not much but let me let me.
Let me give you a couple of statistics here to show what's happened.
Particularly in the third quarter so.
This year since January we've had $1.5 billion of early pay offs. So those that paid off before the loan matured.
$628 million of that happened in the third quarter.
So from a new production standpoint, we have booked $1.4 billion of new production since January 1st the only $850 million of that is funded at this point, but.
But after six months.
We had booked $1.2 billion of new production.
So what we're seeing in the market place is our customers are de leveraging.
They are paying off their debt and they're not taking on any new risk. So until we see more certainty in the economy that gives our customers.
More encouragement to invest.
We're at war victim of.
That uncertainty.
And who knows in a couple of weeks, we could have a major change in economic policy.
And I suspect most people are just sitting on the sideline to see what's getting ready to happen too.
Yeah that makes sense and then finally for me is just.
Given the spread income headwinds you guys have already been pretty good about realizing some efficiencies on your expense base effect.
As you put in the release you close another 23 branches just last week.
Is there more work to be done on the expense side or are there additional opportunities that you can pursue whether it's on the head count or branch side to bring the expense base down to help offset some of this spread income pressure.
Brady I think certainly there's additional opportunity for us to compress our noninterest expense both from a facility standpoint.
And I think ultimately from a headcount standpoint, if our customers continue to do their basic banking through digital channels.
Certainly a more efficient way for us to provide.
Those services to our customers EPS can really be driven by.
Consumer preference and not anything we're going to force here.
Here since I would say that yes, we have an ongoing effort from a branch rationalization perspective.
We've taken care of what we consider to be the obvious.
Range closures now we're looking at more consolidation within certain markets.
To provide more products and services in an integrated fashion so.
So that that process is underway and I would expect us to make great progress during 2021 on that yet.
Brady This Bob I would also agree with George we but a lot has been done this year I think it's important to know where we were in first quarter of this year after the landmark acquisition.
Our non core non interest expense was $127 million for that quarter that was before the cost saves related to that acquisition and other branch rightsizing and others to me.
To move down with just in Threeq in two quarters down to 115 as a normalized cost is a lot of realized cost saves in the short period of time and AG.
In aggregate George Weve got Theres always room, and we're going to it will be a lot harder work on the next stage, we've gotten the low hanging fruit.
But there's opportunities, but we have made a lot of progress this year.
Great. Thanks for the color guys.
Great.
Thank you. Our next question comes on the line of Stephen Scouten with Piper Jaffray. Your line. Your line is now open.
Hi, everyone. Good morning morning, David.
Maybe just first I wanted to follow up a little bit more on the core NIM trend.
To confirm it sounds like you feel like deposits or con at their low.
And I would assume when you reinvest in securities book fees reinvestment yields are going to be.
Below the average and wonder if you could give some color where the securities yields could be coming on that and then kind of how you think about the liquidity from here how much of that excess liquidity could be reinvested in the near term.
So I'll start in the first thing I would say is on the investment portfolio.
Our team has done a really good job the last quarter reinvesting on the other side, we get to the first to September and we've looked at our portfolio and there were some opportunities. We asked our team to go out and look at the next 12 to 18 months for calls and basically realize those gains today instead of them being called over the next 12 days.
The months with no gain in the process. We also look for some there there was some nice gains out there that we basically had a year and a half worth of game of interest income that we took at that time. So we really we will always look for opportunistic.
Opportunities on our security portfolio, how we're reinvesting today and our team is working on it every day, but were what I would call more of the barbell approach. We've got portion of our portfolio that were going longer term those are coming in at about 275 yield and then we're doing the shorter term in the three to five year range that are coming in at.
In the 150 range. So overall were probably in the two and a quarter out of reinvestment range. When you look forward.
And not increasing our duration very much more.
Moving to the deposits.
A lot of work was done in the first quarter, a little bit more in second quarter, we think theres, a little bit more room, not a lot I mean, you start getting into the low ends, but we continue to look at that and we believe in Q4, there will be a little bit of improvement in those rates going forward liquidity wise were number.
Number one I mean, there's there's two sides is where do we put money number one investment portfolio or two in the loan portfolio. George mentioned, we're looking at that but again, we're not going to stretch the loan portfolio in this environment. We're in on the investment we're going to be very measured in time.
When we go back in and you know our goal would be to reinvest up to about half a billion dollars by the ended the quarter.
And the other side of that liquidity, it's really we can't really control that in this environment. It's based on the deposits. So right now we've got a lot of deposits that are on the books that have come in when the cobot started and we'll see where that goes over time, if we maintain that but that does have a negative impact on the NIM.
Right now, but that's where we're looking right now.
Okay. That's really helpful color. Thanks, and then on the deferred loans I think.
I think you guys sit on the mid quarter call you thought maybe they come down that 10% to 15% mining in the quarter, but looks like we did a bit better than that I got to 8.2% ex the PBB My math right. There so what kind of outperformed expectations, maybe on the deferred the path.
The path of deferred loans.
And maybe if you could note any any color specifically on the hotel book if possible.
Okay. So.
We had probably more pay offs.
We expected in the third quarter.
But once again, our customers were not put in a position of borrowing more money before we gave them relief. So many of them were in a position to get back to regular payments early.
Earlier than anticipated in that.
That was their goal they didnt want to have to pay deferred interest over a period of time.
We're very comfortable with.
Our category four through seven.
Low and as you can see on one of the slides on.
Almost 60% of that total is hotels.
We've done a deep dive into our hotel book.
And quite honestly were still fairly comfortable with how that's going to come out. So we're seeing gradual increases in occupancy while we still have several hotels under.
Under construction.
We hope that they're able to open his plan to file our them, we've got really no problems there.
But we're being very cautious.
In our categorization of these deferred.
Loans, so our field guys have been very focused on helping our current customers come out of this code with pandemic in good shape and ready to continue to grow and I think very effort has been the primary reason, we're seeing a better performance than we thought.
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Okay, that's great that's great.
Maybe last thing for me just looking at non.
Non accrual loans and maybe classified loans up a little bit was there anything.
Meaningful to call out there to note in the increase in non accruals and how do you think about the pace to reach a net charge offs over the next two or three quarters that some of these deferred.
Deferrals, and maybe fiscal policy benefits run out.
Well I would say we had a couple of large loans were two non accrual one was a hotel alone it's still under construction, but it hit the original opening date or another is a student housing project in Texas that were trying to work through today. So.
So the bulk of the increase in our Nonperformings were for those two large loans, we don't anticipate any losses on either one of those.
At this point.
But.
They met our requirements for non accrual and Thats, where they ended up.
From a loss standpoint.
You know, we're trying to err on the side of caution and when.
And when you take a look at our Hcl calculations, we thought is very important to put it in our presentation.
Our calculated a seal is below 1%.
But our IC sales of 1.77 or 1.9, excluding PPP.
So our management adjustment factors, we believe we're very conservative and particularly in the areas, where we recognize some potential weakness and thats hotels retail.
And certainly our energy portfolio.
Got it very helpful. Thanks see times when it got you.
You bet. Thanks.
Thank you. Our next question comes from the line of Matt Olney with Stephens. Your line is now open. Thanks, Good morning, guys morning, Matt.
I want to stick with the credit discussion and George you just noted that the.
Increase of non accruals in multifamily and hotel.
The other loan category with an asking about was retail like we saw an uptick of classified loans in the retail category any more color you can provide on that.
By geography or anything thanks.
Matt, It's just a smattering across our entire footprint and.
As as you know we have also increased our IC all on our retail portfolio soon.
Some of that was a little late in coming and we expect that even more will be light income and the reason exists.
They are still cash flow from existing leases in those retail facilities what happens when those leases start renewing that's that's when we really.
We'll find out if there's any trouble.
In that portfolio. So we're trying to prepare for that and we've seen a little bit of it but there arent any big loans.
Our retail portfolio that went to non accrual, it's just a little bit here and a little bit there across our entire footprint in fact that whole portfolio is relatively smaller loans. There is no big box retail well try.
Got it Okay Thats helpful and then shifting over to the energy portfolio, It's just 2% of loans now.
Can you give us an update as far as the efforts to shrink. This book, even more I think we talked a few quarters about getting that in.
Energy portfolio down to about $100 million by the end of the year, but looks like we're not going to get there.
Any more color on on why that's been been slower than we originally expected a few months ago well, yes, we.
With.
Oil prices, where they are the real time for us to get out of most of the.
Loans, particularly those that are shared national credits is at a redetermination period that usually happens couple of times a year and what you would expect is that if oil prices were going up that the.
Available balance would go up in our portion would go up that is the time that we would signal we're out guys, we're not going to raise our.
Percentage well that just hasn't happened as these redeterminations have been done in the oil prices actually.
In lower than it was at the previous pre Redetermination date, and therefore, the lines of credit or shrink.
Which is okay, we still feel very.
Very comfortable that the loans were even with a couple of exceptions that we've mentioned before are still good loans were just not an energy lending bank.
And in the future our energy portfolio is going to be with borrowers that we have a deeper relationship with and probably energy is going to be only a portion.
Their borrowings with us so it's just taken us a little bit longer.
To get out of these loans than we expected, but I don't believe it has anything to do with credit deterioration, it's just a timing issue.
Okay. Thanks.
Makes sense and then I guess.
I guess going back to the discussion around.
Loan balances shrinking security balances increasing.
Should we think more about the mix of earning assets and if we go back five or six years ago. I think the securities book represented almost 25% of earning assets and today, we're at 4%.
Im curious, where you see that moving to over the next year or so.
Matt. This is Bob I would say normalized is is probably in the 15% to 18%. Our long term target is not to build a security book as our main main earning assets I would say, though in the interim period, while we're going through this based on the percentage may increase higher than that 18% closer to.
20, or so but I wouldn't look for us to go back long term back to a 25% in security portfolio and 60% loan to deposit ratio. That's we're in the middle of this pandemic and trying to figure out how to navigate through these waters right now and the safer investment right now is the security portfolio.
Okay understood. Thanks, guys appreciate your help.
Thank you.
Thank you.
Next question comes from the line of David Feaster with Raymond James Your line is now open.
Hi, good morning, everybody.
David.
I just kind of wanted to start back on the loan on the loan side I mean, obviously, we've talked about the loan market pretty challenging because you guys are clearly still open for business with 1.4 billion and organic generation, just curious where you're seeing demand both by market and what.
We are still kind of open for business and just whats the competitive landscape.
Like right now.
Well, Mike White, yes.
Yes, so I would tell you the one area that we are still.
Funding pretty.
Pretty aggressively I would say is single family construction.
We have some markets throughout our footprint, where developers are doing extremely well.
And I think you can see by.
Mortgage.
Results that.
That industry is still doing well at this point in time.
The markets that have really driven our year to date, new production, our Dallas Fort worth our northwest, Arkansas market has done extremely well middle Tennessee.
Kansas City has added over $100 million here in Central Arkansas, Weve added $150 million since the beginning of the year and then believe it or not.
The one.
Division that is leaving everyone else is our Arkansas community banks in while none of those banks individually.
Hits, our top 10 color.
Collectively they've added $325 million.
New loan production this year.
So it's spread out throughout our entire footprint.
Those markets you showed a leading the way.
Okay. That's helpful. And then just you know given the revenue headwinds that we have one of the.
Benefits of your.
The bank, which we believe is the breadth and the fee income contribution that you have just curious whether that can be an opportunity to fill demand or the gap on the eni side and just your thoughts on being able to cross sell.
Some of the acquired.
Didn't have as much fee income and maybe cross sell some of these fee income lines ended hours go.
Going forward.
Well you just hit on our 2021 priority.
You probably know that we've hired a new head of our wealth Division.
We have already given him the green light to build out our staff throughout.
Throughout our entire footprint, we will very concentrated pear in Arkansas on in southwest, Missouri had very little presence in some really good opportunity markets. We've also come out with.
Several new credit card products, particularly from a business perspective purchasing card, it's really doing well and.
We believe once we get that rolled out that will be a tremendous opportunity for us. We've just put in a new treasury management platform, it's being met with great success got lot of opportunity to build deeper relationships a lot of our lending customers in that perspective.
And then you have seen what's happened with our mortgage business and just recap that a little bit.
We hired a new head of our mortgage division about a year year and a half ago. He was given the green light to build out that staff across our entire footprint and I think the results speak for themselves. So we expect the same kind of performance from our wealth group as they build it.
And I think you're absolutely right one of our biggest revenue opportunities is in our area of non interest income.
Okay.
Helpful.
Just last one from me could you just talk about your expectations on the PPP forgiveness front and the timing of that I mean, obviously there has been a pursuit of this smaller loan forgiveness.
But how do you think about the timing of IRAD rehab.
For some folks that might some borrowings my preferred delayed forgiveness for tax reasons, but I just wanted to get your thoughts on the timing and the magnitude of forgiveness.
Well.
I would say most of the small loans, we're going to go ahead and get processed.
This quarter.
I don't think thats going to make much of a difference to most of those folks would have $50000.
Loans or below I think I'd like to go ahead and get that behind them is we would.
And then we have the two schools one is I don't want that loan OMA books at the end of the year. So I want you to go ahead and process.
Documentation for forgiveness, and then we have some who may believe this bad laying it there's going to be some tax benefit were still unclear about that.
We have change in administration I believe there's still going to be a higher tax rate, whether or not those loans are going to be included in taxable income or not is still uncertain at this point so.
No. That's just speculation they have certainly a longer period of time to submit for forgiveness and that's caused us to delay recognition of income that we thought we would have by now. So you know most of it we expect our most of the loans, we expect to get submitted during the fall.
Fourth quarter.
Potentially most of the income could be deferred into 2021.
Okay. That's helpful. Thanks, guys.
Thanks, Dave.
Thank you as a reminder to ask the question you will need to press Star then one on your telephone.
Our next question comes from the line of Gary Tenner with D.A. Davidson. Your line is now open.
Thanks, Good morning.
And your EPS had a couple of questions Marty.
On the March.
Margin side.
You gave some color on there just wondering about the funding cost side of things, obviously, you're a little bit Hampshire on what you can do on the loan side in terms of volumes given the current environment in terms of pricing of the deposit side came down a little bit on interest bearing side this quarter, but not very much.
Maybe just give us a sense of what your outlook is on pushing those costs down further.
Well I think in Q4.
We're looking at that and actively a ready made some changes that expect another 510 basis points made saying the five basis points in Q4 so.
So it's just harder it's a big pool to move.
But it's just we're getting towards the low end of the rates there we still have.
Obviously pick up the time deposits as those mature those obviously get repriced. So we'll continue to get a little bit of benefit each quarter as we move forward.
Other than that I would look much in the the borrowed funds side most of that has either been repriced at their variable and if they're not weve, we locked into those.
About a year and a half ago first when funding started to move up.
At more of a longer term three to five year period down was a great decision now obviously looking back we would have needed it.
Okay. Thank you and then on the expense side of things I Wonder if you could just kind of update where you think the kind of core expense.
Number looks kind of with all the dust settling on the branch rationalization so what.
So with that kind of clean number would look like for Fourq, you setting would come down a bit further I think well. We we gave guidance of 100 1500 19 per quarter, obviously, we hit it with our core expense for the quarter, we hit right at the low end of that.
We do have expense savings coming in but you know right now our guidance is still the 115 two to 119 level. We do believe but we're as George said earlier, we're going to continue to work on that I would point out in Q1 as you're going into your 21 model remember the expenses do go up in that first quarter from payroll taxes and other.
Beginning of the year expenses that do come in so there is some timing differences on all banks basically.
Right now I'd say.
I'm still in that 115 to 119, hopefully thats very conservative.
Okay. Thank you actually one last question if I could.
You gave the detail on the in the slide deck today on the kind of credit experience from your acquisitions.
Just wondering if you could just.
Eight on the two months you talked about the hotel.
And the student housing, which trends, which which acquisitions those came cana.
One one came from southwest Bank, one came from bank SNB.
Yes.
All right.
You bet.
Thank you.
Today's question and answer session.
With that I'd like to turn the call back to Mr., George Makris proposal remarks.
Well. Thank you very much to each of you for joining us today. Once again, we're very pleased with our financial performance for the quarter.
So much uncertainty in the marketplace today, we're trying to be as flexible as we can in our decision, making so that when there is some certainty that returns in our customers are ready to reinvest were prepared to help. So hope you have a great day and thanks again for joining us.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Okay.
Okay.
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Ladies and gentlemen, thank you for standing by and welcome. So, let's first National Corporation third quarter earnings call a webcast.
At this time, all participant lines on a listen only mode.
So to speak this presentation, there will be a question and answer session to ask a question during the session you'll need to press Star then one on your telephone. Please be advised that todays conference is being recorded if you acquire any further assistance. Please press Star then zero I would now like to hand, the call, which I would your speaker today, Steve My finale. Please go ahead.
Good morning, and thank you for joining <unk> third quarter earnings call. My name is Steve mass not only and I served as chief administrative officer, and Investor Relations Officer of Simmons first National Corporation.
Joining me today are George Makris, Chairman and Chief Executive Officer, Bob Fehlman, Chief Financial Officer, and Chief Operating Officer, and David Garner Executive director of Finance, and accounting and Chief Accounting Officer.
The purpose of this call you discussed the information and data provided by the company in our quarterly earnings release issued this morning, and you discussed the company's outlook for the future we will.
We will begin with prepared comments, followed by Q and a session.
We have invited institutional investors and analysts from the equity funds. It provide research on our company to participate in the Q and a session.
All other guests in this conference call on listen only mode.
A recording of today's call, including our prepared remarks, and the Q and a session will be posted on our website Simmons bank Dot com under the Investor Relations page for at least 60 days.
During today's call, we will make forward looking statements about our future plans goals expectations estimates projections and outlook.
I remind you that actual results could differ materially from those projected in or implied by the forward looking factor statement.
Due to a variety of factors a dish.
Additional information concerning some of these factors is contained in L.C.C. filings, including without limitation. The description of certain risk factors contained in our form 10-K for the year ended December 31st 2019, our form 10-Q for the quarter ended June Thirtyth 2020, and the forward looking information section.
Our earnings release issued this morning.
Issued this morning.
The company assumes no obligation to update or revise any forward looking statements or other information.
Lastly in this presentation, we will discuss certain non-GAAP financial metrics, we believe provide useful information to investors.
Please note that additional disclosures regarding non-GAAP metrics, including the reconciliations of these non-GAAP metrics to GAAP are contained in our earnings press release and third quarter Investor presentation, which are included as exhibits to our current report filed this morning with the FCC on form 8-K and available.
On the Investor Relations page of our website at Simmons Bank Dot com.
I'll now turn the call over to George Makris.
Thanks, Steve and welcome to <unk> third quarter earnings Conference call, we're very.
We're very proud of our results for the third quarter, especially under these tried conditions I'd like to begin todays call by thanking the Simmons associates for their commitment dedication and continued demonstration of our community banking value.
In our press release, we reported net income of $65.9 million for the third quarter of 2020.
An increase of $7 million compared to the second quarter.
Diluted earnings per share were 60 cents.
Included in the third quarter earnings were two and a half million dollarss in net after tax merger related early retirement program their branch right sizing costs, excluding the impact of these items. The company's core earnings were $68.3 million for the third quarter of 2028.
Total diluted earnings per share were.
63 cents for the quarter.
Our return on average assets was 1.2% our return on average common equity was 8.9% Oh.
Oh turtle tangible common equity was 15.4% and our efficiency ratio was 54.1 per share for the third quarter.
As of September Thirtyth total assets were $21.4 billion, our loan balance was $14 billion and our deposit balance was $16.2 billion.
Our loan pipeline of approved and ready to close loans was only $70 million at the end of the core signaling that loan demand remains very weak.
Most every aspect of our commercial economy.
Our net interest margin for the quarter was 3.21 per share.
Our core net interest margin, which excludes accretion was 3.02%.
The lower yielding PPP loans in additional liquidity decreased the net interest margin by 30 basis points.
Our non interest income for the third quarter was $72 million a decrease of approximately $13 million compared to the same period last year the day.
The decrease was primarily due to the large gain on the sale of visa class B common stock that was recognized in the third quarter of 2019.
This decrease was partially offset by $9.5 million increase in mortgage lending income had a 15 million dollar increase in the gain on sale of securities.
Non interest expense for the third quarter was $119 million.
Our non interest expense for the quarter was $115 million.
Our capital remains very strong quarter rent, our total risk based capital ratio was 16% our common equity tier one ratio was 13%.
Our tier one leverage ratio was 9%.
Ratio of tangible common equity was 8.7 per share at September Thirtyth.
Weve once again shared and extensive presentation on our website at Www Dot Simmons Bank Dot com, along with the press release and financial data, which gives much more detail regarding our quarterly results and other important information about our company.
I'd like to take a minute to discuss some asset quality information found in our presentation.
Ill recap of loans, excluding PPP loans, we show our allowance for credit losses, or Hcl for loan types and selected industry categories, notably our sale for our energy portfolio is 19.5%.
Our hotel portfolio, 4.1%.
Our restaurant portfolio, 3.8%, therefore, our retail portfolio 40.6%.
In our COVID-19 loan modification to update we show those commercial loan still little modification period, where.
We expect only 3.9% of our loans to be considered for loan modifications longer than six months.
Most of those we expect to return to regular payments with no credit downgrade or long term restructuring.
Once again, our efforts were very proactive early in the pandemic.
As fed Vice Chairman calls you mentioned recently March was a record month of increases in senile loans as companies drew on their lines of credit that was not the case at Simmons and it's reflected in the contrast between.
Loan growth during that time, and other bikes and in the ability of our customers to return regular payment status.
And of the 1800 90 for consumer loans will receive federal Berets is only 167 are being considered for a second right.
Our energy portfolio declined by $42 million during the third quarter and we expect continued reductions in the fourth quarter and into 2021.
We expect to begin submitting information to the SBS I do.
During the fourth quarter for forgiveness of our customers PPP launch.
63% of our PPP loans are below the 50000 dollar threshold.
We have the detail supporting our eye sale, which is 1.77%.
Total loans as of September Thirtyth, and 1.9% of loans, excluding PPP loans from the total.
Highlighted management's qualitative adjustment on that slide and.
And last but certainly importantly.
I will recap our asset quality performance in our acquired portfolios for bank acquisitions since 2013.
While some of our largest charge offs and the energy losses have been from acquired portfolios. The comparison of losses to acquired loans versus credit marks to acquired loans has been exceptional.
We believe our diligence identified appropriate risk in each of the acquired portfolios and in no case have our charge offs in any acquired portfolio exceeded our credit for.
Once again, we're very pleased with our ability to identify portfolio risk and acquired banks and managing within our establishments marks.
Management of credit risk has long been a fundamental strength Simmons there, we're very proud of our record, including the management of acquired portfolio credit risk.
We continue our investment in digital capability.
Our customers are adjusting their habits to the use of more self service channels and we expect that trend to continue we have.
We have planned several upgrades to our digital offerings from now through 2021.
While we still have much uncertainty in the marketplace today, we're encouraged to see our customers taking their time to understand future opportunities.
We will be well prepared to help our economy recover at the appropriate time.
I will now turn the line over to our operator and invite questions from analysts and institutional investors.
Thank you as a reminder to ask the question you will need to press Star then one on your telephone to withdraw your question. Please pass the powerful again. That's star then one if you would like to ask a question.
Our first question comes from the line of Brady Gailey with KBW.
Let's now open.
Hey, Thanks, Good morning, guys order bright.
So I wanted to start with the margin and were spread income I think before you all have talked about a core margin.
It was flat to down slightly.
And it was down I think around 16 basis points linked quarter that even if you I know you are with PBT in what.
The excess liquidity the margin.
Sometimes challenging to look at but even if you look at spread income dollars and they were down 6% linked quarter on annualized.
So maybe just talk about what can be done on the spread side and how you're looking at the March.
The margin going forward.
Yeah, Hey, Brady this Bob I would start off with just talking a little bit about our guidance was we expected to be in that the T. 30 to 40 range on a normal I'm, sorry, 343, 30 to 340 on a normalized basis when you back out the liquidity in the PPP.
And again, it's like you said if you if you normalize it would be in the low to $33, which is lower than we had expected and most of that was driven from a decrease in the loan portfolio. Some of those loans that there was more that matured and paid off this quarter and obviously lower volume of just across the banking sector was.
The driver that so our goal going forward is going to be one is reinvesting into the security portfolio number two is developing reasonable loan programs. During this type of environment. We're in we're not going out stretching it but looking for opportunities as we continue to move forward.
Okay. So Bob when you look at spread income dollars do you expect to continue.
Continue to see some shrinkage there on a quarterly basis going forward or do you think that this.
At this level it should be roughly flat looking at spread income dollars.
You know I would I would expect it to be relatively flat, but I'd say this environment wherein every everyday you kind of find a little different out there but.
Our expectation is we've hit the bottom of it.
In our as we reinvest going forward, we should be picking up.
But you know again this environment changes every week it seems like but our expectation would be this would be on the bottom end of it.
Okay, and then you mentioned the loan shrinkage as one of the Big drivers how do you think about loan balances.
Going forward should we expect a little more shrinkage before bottoming out.
Hi, This is George.
We would probably expect a little more shrinkage not much but let me know.
Give you a couple of statistics here to show what's happened.
Particularly in the third quarter so.
This year since January we've had $1.5 billion of early pay offs. So those that paid off before the loan mature.
$628 million of that happened in the third quarter.
So from a new production standpoint.
We have booked $1.4 billion.
New production since January 1st the only $850 million of that is funded at this point.
But after six months we.
We booked $1.2 billion of new production.
So what we're seeing in the market place is our customers are de leveraging.
You are paying off their debt and they are not taking on any new risk. So until we see more certainty in the economy that gives our customers.
More encouragement to invest.
We're at war victim of.
That uncertainty.
And who knows in a couple of weeks, we could have a major change in economic policy.
And I suspect most people are just sitting on the sideline to say, what's getting ready to happen too.
Yes that makes sense and then finally for me is just.
Given the spread income headwinds, yes, you guys have already been pretty good about realizing some efficiencies on your expense base effect.
As you put in the release you closed another 23 branches just last week.
Is there more work to be done on the expense side or are there additional opportunities that you can pursue whether it's on the head count or branch side to bring the expense base down to help offset some of this spread income pressure.
Brady I think certainly there's additional opportunity for us to compress our non interest expense both from a facility standpoint.
And I think ultimately from a headcount standpoint, if our customers continue to do their basic banking through digital channels.
Certainly a more efficient way for us to provide.
Those services to our customers, that's going really be driven by.
Consumer preference and not anything we're going to force here.
Here since I would say that yes.
We have an ongoing effort formal branch rationalization perspective.
We've taken care of what we consider to be the obvious.
Branch closures now we're looking at more consolidation within certain markets.
To provide more products and services in an integrated fashion so.
So that that process is underway and.
We'd expect to see my great progress during 2021.
Net.
Yes Brady this is Bob I would also agree with George we but a lot has been done this year I think it's important to know where we were in first quarter of this year after the landmark acquisition.
Our non core non interest expense was $127 million for that quarter that was before the cost saves related to that acquisition and other branch rightsizing and others to move.
To move down with just in Threeq in two quarters down to 115 as a normalized cost is a lot of realized cost saves in the short period of time and.
And I agree George Weve got Theres always room, and we're going to it will be a lot harder work on the next stage, we've gotten the low hanging fruit.
But there's opportunities, but we have made a lot of progress this year.
Great. Thanks for the color guys.
Right.
Thank you. Our next question comes from the line of Stephen Scouten with Piper Jaffray. Your line.
Line is now open.
Hi, everyone good morning, more and more David.
Maybe just first I wanted to follow up a little bit more on the core NIM trend.
To confirm it sounds like you feel like deposits are kind of at their low.
And I would assume when you reinvest in securities book, the beads reinvestment yields are going to be.
Below the average and wonder if you could give some color where the securities yields could be coming on that and then kind of how you think about the liquidity from here how much of that excess liquidity could be reinvested in the near term.
So I'll start in the first thing I would say is on the investment portfolio.
Our team has done a really good job the last quarter reinvesting on the other side, we get the first of September and we've looked at our portfolio and there were some opportunities. We asked our team to go out and look at the next 12 to 18 months for calls and basically realize those gains today instead of them being called over the next 12 days.
The most with.
No gain in the process. We also look for some there there was some nice gains out there that we basically had a year and a half worth of game of interest income that we took at that time. So we really we will always look for opportunistic.
Opportunities on our security portfolio, how we're reinvesting today and our team is working on it every day, but were what I would call more of the barbell approach. We've got portion of our portfolio that were gone longer term those are coming in at about 275 yield and then we're doing the shorter term in the three to five year range that are coming in at.
In the 150 range. So overall, we're probably in the two and a quarter out of reinvestment range. When you look forward.
And not increasing our duration very much.
Moving to the deposits.
Lot of work was done in the first quarter, a little bit more in second quarter, we think theres, a little bit more room, not a lot I mean, you start getting to the low ends, but we continue to look at that and we believe you know in Q4, there will be a little bit of improvement in those rates going forward liquidity wise were.
Number one I mean, there's there's two sides is where do we put money number one investment portfolio or two in the loan portfolio. George mentioned, we're looking at that but again, we're not going to stretch the loan portfolio in this environment. We're in the investment we're going to be very measured in time.
As when we go back in and you know our goal would be to reinvest up to about half a billion dollars by the ended the quarter.
And the other side of the liquidity, it's really we can't really control that in this environment. It's based on the deposits. So right now we've got a lot of deposits that are on the books that have come in when the cobot started.
We'll see where that goes over time, if we maintain that but that does have a negative impact on the NIM.
Right now, but that's where we're looking right now.
Okay. That's really helpful color, Thanks, and then on.
On the deferred loan.
I think you guys sit on the mid quarter call you thought maybe they come down to 10% to 15% by the end the quarter, but looks like we did a bit better than that I got to 8.2% ex the PBB My math right. There so what kind of outperformed expectations, maybe on the deferred the path.
The path of the deferred loans.
And maybe if you could note any any color specifically on the hotel book as possible.
Okay. So.
We had probably more pay offs.
We expected in the third quarter.
But once again, our customers will not put in a position of borrowing more money before we gave them relief. So many of them were in a position to get back to regular pay much earlier.
Earlier than anticipated in that.
That was their goal they didnt want to have to pay deferred interest over a period of time.
We're very comfortable with.
Our category four through seven.
Low and as you can see on one of the slides.
Almost 60% of that total is hotels we.
We've done a deep dive into our hotel book.
And quite honestly were still fairly comfortable with how that's going to come out. So we're seeing gradual increases in occupancy.
We still have several hotels under.
Under construction.
We hope that they're able to open his plan to file our them, we've got really no problems there.
But we're being very cautious.
In our categorization of these deferred.
Well.
So are you guys have been very focused on helping our current customers come out of this code with pandemic in good shape and in ready to continue to grow and I think their effort has been the primary reason, we're seeing a better performance than we thought we would.
Okay, that's great that's great.
Maybe last thing for me just looking at non.
Non accrual loans and maybe classified loans up a little bit was there anything.
Meaningful to call out there to note in the increase in non accruals and how do you think about the pace to reach a net charge off over the next two or three quarters that some of the.
Deferrals, and maybe fiscal policy benefits run out.
Well I would say we had a couple of large loans went to non accrual one was a hotel.
Alone, it's still under construction, but it hit the.
Original opening date on whether it was a student housing project in Texas that were trying to work 30 day. So the bulk of the increase in our nonperforming loans were for those two large low.
We don't anticipate any losses on either one of those.
At this point.
But.
They met our requirements for non accrual and Thats, where they ended up.
From a loss standpoint.
You know, we're trying to err on the side of caution.
And when you take a look at our Hcl calculations, we thought is very important to put it in our presentation.
Our calculated hcl is below 1%.
But our IC sales at 1.77 or 1.9, excluding PPP.
So our management adjustment factors, we believe we're very conservative.
And particularly in the areas, where we recognize some potential weakness and thats hotels retail.
And certainly our energy portfolio.
Got it very helpful. Thanks, Nick when it got you bet.
You bet. Thanks.
Thank you. Our next question comes from the line of Matt Olney with Stephens. Your line is now open. Thanks.
Thanks, Good morning, guys want to Matt.
I want to stick with the.
Credit discussion and George you just noted that the increase of non accruals in multifamily and hotel.
The other loan category with an asking about was retail like we saw an uptick of.
Classified loans in the retail category any more color you can provide on that.
By geography or anything thanks.
Matt, It's just a smattering across our entire footprint and.
As as you know we have also increased our high scale on our retail portfolio some of the.
Some of that was a little light in coming and we expect that even more will be light income and the reason is this.
They are still cash flow from existing leases.
And those retail so what happens.
What happens when those leases start renewing that's that's when we really will.
We will find out if there's any trouble.
In that portfolio. So we're trying to prepare for that and we've seen a little bit of it but there arent any big loans.
Our retail portfolio that went to non accrual, it's just a little bit here and a little bit there across our entire footprint in fact.
In fact that whole portfolio is relatively smaller wells there is no big box retail well for us.
Got it Okay Thats helpful and then shifting over to the energy portfolio. It's just 2% of loans now can you give us an update as far as the efforts to shrink. This book, even more I think we talked a few quarters about getting that energy.
Energy portfolio down to about $100 million by the end of the year. It looks like we're not going to get there.
Any more color on on why that's been been slower than we originally expected a few months ago well, yes, we.
With.
Oil prices, where they are the real time for us to get out of most of the.
Loans, particularly those that are shared national credits is that a redetermination period that usually happens couple of times a year and what you would expect is that if oil prices were going up that the.
Available balance would go up in our portion would go up that is the time that we would signal we're out guys, we're not going to raise our.
Percentage well that just hasn't happened as these redeterminations have been done in the oil price is actually.
Lower than it was at the previous spring Redetermination.
And therefore, the lines of credit or shrink.
Which is okay, we still feel very.
Very comfortable that the loans were done with a couple of exceptions. We've mentioned before are still good loans were just not an energy lending bank.
And in the future our energy portfolio is going to be with borrowers that we have a deeper relationship with and probably energy is going to be only a portion.
Their borrowings with us so it's just taken us a little bit longer.
To get out of these loans than we expected, but I don't believe it has anything to do with credit deterioration, it's just a timing issue.
Okay makes sense.
Makes sense and then I guess.
I guess going back to the discussion around.
Loan balances shrinking securities balances increasing.
I think more about the the mix of earning assets and if we go back five or six years ago. I think the securities book represented almost 25% of earning assets and today were at 14%.
Im curious, where you see that moving to over the next year or so.
Matt. This is Bob I would say normalized is is probably in the 15% to 18%. Our long term target is not to build a security book is our main main earning assets I would say, though in the interim period, while we're going through this period and that percentage may increase higher than that 18% closer to.
20, or so but I wouldn't look for us to go back long term back to a 25% in security portfolio and 60% loan to deposit ratio. That's we're in the middle of this pandemic in trying to figure out how to navigate through these waters right now and safer investment right now is the security portfolio.
Okay understood. Thanks, guys I appreciate your help.
Thank you.
Thank you.
Next question comes from the line of David Feaster with Raymond James Your line is now open.
Hi, good morning, everybody.
Hi, David.
I just kind of wanted to start back on the loan on the loan side I mean, obviously, we've talked about the loan markets pretty challenging but you guys are clearly still open for business with 1.4 billion and organic generation just curious where you are seeing demand both by market then what.
Are still kind of open for business and just whats the competitive landscape.
Like right now.
Well Mike.
Yes, so I would tell you the one area that we are still.
Funding.
Aggressively I would say is single family construction.
We have some markets.
Throughout our footprint, where developers are doing extremely well.
And I think you can see by.
Mortgage results that.
That industry is still doing well at this point in time.
The markets that have really driven our year to date, new production, our Dallas Fort worth.
Our northwest, Arkansas market has done extremely well middle Tennessee.
Kansas City has added over $100 million here in Central Arkansas, Weve added $150 million since the beginning of the year and then believe it or not.
The one.
Division that is leaving everyone else is Arkansas community banks in while none of those bikes individually.
Hits, our top 10 color.
Collectively they've added $325 million.
New loan production this year.
So it's spread out throughout our entire footprint.
Those markets you showed a leading the way.
Okay. That's helpful. And then just you know given the revenue headwinds that we have now one of the.
Benefits of your.
The bandwidth.
Just the breadth and the fee income contribution that you have.
I'm, just curious whether that can be an opportunity to fill the gap.
The gap on the Eni.
Got it and just your thoughts on being able to cross sell some of.
Some of the acquired the didn't have as much the income and maybe cross sell some of these fee income lines under those.
Going forward.
Well you just hit on our 2021 priority.
You probably know that we've hired a new head of our wealth Division.
We have already given him the green light to build out our staff.
Throughout our entire footprint, we will very concentrated pear in Arkansas and in southwest, Missouri had very little presence in some really good opportunity markets. We've also come out with.
Several new credit card products, particularly from a business perspective.
Purchasing card, it's really doing well and we believe once we get that rolled out that will be a tremendous opportunity for us. We've just putting on a new treasury management platform, it's being met with great success got lot of opportunity to build deeper relationships a lot of our.
Lending customers in that perspective.
And then you have seen what's happened with our mortgage business and just recap to add a little bit.
We hired a new head of our mortgage division about a year year and a half ago. He.
It was given the green light to build out that staff across our entire footprint and I think the results speak for themselves. So we expect the same kind of performance from our wealth group as they build it out and I think you're absolutely right. One of our biggest revenue opportunities is in our area of non interest income.
Okay.
That's helpful.
And then just last one from me could you just talk about your expectations on the PPP forgiveness front and the timing of that I mean, obviously your key beneficiary of this smaller loan forgiveness.
Well, how do you think about the timing of Erad.
For some folks that might some borrowers Mike referred to delayed forgiveness for tax reasons, but just wanted to get your thoughts on the timing and the magnitude of forgiveness.
Well.
I would say most of the small loans, we're going to go ahead and get processed this quarter.
I don't think thats going to make much difference to most of those folks would have $50000.
Loans or below I think I'd like to go ahead and get that behind them is we would.
And then we have the two schools one is I don't want that loan on the books at the end of the year. So I want you to go ahead and process.
Documentation for forgiveness, and then we have some who may believe there's bad laying it there's going to be some tax benefit were still unclear about that.
[music].
We have change in administration I believe there's still going to be.
Higher tax rate, whether or not those loans are going to be included in taxable income or not is still uncertain. At this point. So you know that.
No. That's just speculation they have certainly a longer period of time to submit for forgiveness and that's caused us to delay recognition of income that we thought we would have by now.
So you know most of it we expect our most of the loans, we expect to get submitted during the fourth quarter.
Potentially most of the income could be deferred into 2020.
Okay. That's helpful. Thanks, guys.
Thanks, Dave.
Thank you as a reminder to ask the question you will need to press Star then one on gets Hal.
Our next question comes from the line of Gary Tenner with D.A. Davidson. Your line is now open.
Thanks, Good morning.
One of your EPS had a couple of questions Marty.
On the more.
Margin side.
You gave some color on there just wondering about the funding cost side of things, obviously, you're a little bit Hampshire on what you can do on the loan side in terms of volumes given the current environment, but in terms of pricing of the deposit side came down a little bit on interest bearing side this quarter, but not very much.
Maybe just give us a sense of what your outlook is on pushing those costs down further.
Well I think in Q4.
We're looking at that and actively a ready made some changes that expect another 510 basis points, maybe saying the five basis points in Q4 so.
So it's just harder it's a big pool to move.
But it's just we're getting towards the low end of the rates there we still have.
Obviously pick up the time deposits as those mature those obviously get repriced. So we'll continue to get a little bit of benefit each quarter as we move forward.
Other than that I would look much in the the borrowed funds side most of that has either been repriced at their variable and if they're not weve, we locked into those.
About a year and a half ago first when funding started to move up.
At more of a longer term of three to five year period that Don was a great decision now obviously looking back we would have needed it.
Okay. Thank you and then on the expense side of things I Wonder if you could just kind of update where are you seeing the kind of core expense none.
The number looks kind of with all the dust settling on the branch rationalization. So.
So what that kind of clean number would look like for Fourq you. So I think it would come down a bit further.
Well, we we gave guidance of 115 119 per quarter, obviously, we hit it with our core expense for the quarter, we hit right at the low end of that.
We do have expense savings coming in but you know right now our guidance is still the 115 two to 119 level. We do believe but we're as George said earlier, we're going to continue to work on that I would point out in Q1 as you're going into your 21 model remember the expenses do go up in that first quarter from payroll taxes and other.
Beginning of the year expenses that do come in so there is some timing differences on all banks basically.
But right now I'd say.
I'm still in that 115 to 119, hopefully thats very conservative.
All right. Thank you actually one last question if I could.
You gave the detail on the in the slide deck today on the kind of credit experience from your acquisitions.
I just wonder if you could just.
Based on the two loans you talked about the hotel.
And the student housing, which trends, which which acquisitions those cam Cana.
One one came from southwest Bank, one came from bank Ashland.
Yes.
All right all right. Thank you very much you bet.
You bet.
Thank you this concludes.
Today's question and answer session I would now like to turn the call back to Mr., George Makris proposal remarks.
Thank you very much to each of you for joining us today. Once again, we're very pleased with our financial performance for the quarter. So.
So much uncertainty in the marketplace today, we're trying to be as flexible as we can in our decision making sure that when there is some certainty that returns in our customers already to reinvest were prepared to help. So hope you have a great day and thanks again for joining us.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.