Q3 2021 Simmons First National Corp Earnings Call
Good day and thank you for standing by welcome to the Simmons First National Corporation third quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode.
After the Speakers' presentation, there will be a question answer session to ask a question. During the session you will need to press star one on your telephone.
If you require any further assistance please press star zero.
I would now like to hand, the conference over to your speaker today, and Bilek director of Investor Relations. Please go ahead.
Good morning, and thank you for joining our third quarter earnings call. My name is Ed <unk> director of Investor Relations at Simmons First National Corporation. Joining me today are George Makris, Chairman and Chief Executive Officer, Bob Fehlman, President and Chief Operating Officer, Jay Brogdon, Chief Financial Officer, and Treasurer, Steve Matt and early <unk>.
<unk> administrative officer, Matt Reddin, Chief Banking Officer, and David Garner Chief Accounting Officer.
The purpose of our call is to discuss the information and data provided by the company in its quarterly earnings release issued this morning and to discuss the company's outlook for the remainder of 2021, we will begin with prepared comments followed by Q&A session. We have invited institutional investors and analysts from the equity firms that provide research on the company to participate in.
The Q&A session. All other guests on this conference call are in listen only mode.
Recording of todays call, including our prepared remarks, and the Q&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'd remind you that you should not place undue reliance on any forward looking statements as actual results could materially differ from those projected or implied by the forward looking statements due to a variety of factors.
Additional information concerning some of these factors is contained in the company's SEC filings, including without limitation. The description of certain risk factors contained in the company's Form 10-K for the year ended December 31, 2020, and the forward looking information section of the company's earnings release issued this morning.
The company assumes no obligation to update or revise any forward looking statements or other information.
Finally in this presentation, we will discuss certain non-GAAP financial metrics, which we believe provide useful information to investors additional disclosures regarding non-GAAP metrics, including the reconciliations of these non-GAAP metrics to GAAP are contained in the company's earnings press release, and third quarter Investor presentation, which are <unk>.
<unk> as exhibits to the company's current report filed this morning with the SEC on form 8-K and available on the Investor Relations page of the company's website Simmons Bank Dot com.
I will now turn the call over to George Makris.
Thanks, Ed and welcome once again to our third quarter 2021 earnings call.
Simmons first National Corporation, once again delivered solid results during the quarter, reflecting our ability to execute basic blocking and tackling fundamentals equally importantly demonstrate our continued focus on strategically navigating the current economic environment without losing focus on our goal of creating.
Long term value for our shareholders. It goes without saying there are times like now when it's best just take what the defense gives you rather than taking undue risks and stretching for short term growth that ultimately creates future headwinds.
Before I get to the numbers in the quarter I'd like to spend a minute on our acquisitions of landmark community buying can triumph buying.
Shortly after the end of the quarter, we announced the closing and conversion of believes bikes, which means in approximately four months since the day, we announced the signing of the definitive agreements, we were able to obtain all necessary regulatory approvals shareholder approvals close the transactions.
And simultaneously complete systems conversion for both banks over Columbus day weekend.
So we know you opened for business on October 12, it was as Simmons Bank.
Closing and converting a single bank is no small task let alone two banks at the same time.
To effectively complete this task took a herculean effort and is truly a remarkable accomplishment by the Simmons associates, who work to make this happen further proof of the outstanding team we've assembled here at Simmons.
I'd also like to take this opportunity to walk more new customers associates and shareholders to the Simmons family, we're very glad to have used part of our group.
Now onto the numbers for the quarter.
Net income for the quarter was $86 million up $14.7 million or 22% compared to the third quarter a year ago.
Diluted earnings per share was <unk> 74 cents up 23% from the year ago quarter.
Core earnings for the quarter, which excludes certain non core items were $79.4 million or 73 cents on a diluted per share basis.
On a year to date basis net income for the first nine months of 2021 was $223 million up 10% from the same period, a year ago and on a diluted per share basis totaled $2.05, representing a 12% increase compared to the same period a year ago.
In terms of key performance metrics during the quarter return on average assets was 1.37%.
Return on average common equity was 10.42% and return on average tangible common equity was 17.43%.
Net interest income for the quarter on a fully taxable equivalent basis totaled $152 million compared to $151 $1 million for the second quarter of 2021.
Net interest margin in the quarter was 2.85% down four basis points on a linked quarter basis.
A positive note the yield on loans rose three basis points on a linked quarter basis, and we continue to have success in managing down our deposit costs with total cost of deposits dropping four basis points during the quarter to 20 basis points.
On a core basis, which excludes accretion.
Net interest income on a fully taxable equivalent basis totaled a $146 $1 million for the quarter up from the $145.5 million reported in the second quarter of 2021.
Noninterest income totaled $48.6 million for the third quarter of 2021 up 3% linked quarter.
Core noninterest income was $48.8 million.
5% a linked quarter basis.
Noninterest expense totaled $114.3 million for the quarter flat on a linked quarter basis, and down 2% compared to a year ago.
As previously announced during the quarter, we closed 13 branches across the franchise as part of our ongoing branch rationalization initiative.
The closing of landmark in Triumph Bank acquisitions, there will be additional opportunities to right size, our branch structure in the Memphis, and Nashville markets, which includes in certain cases. The addition of new branches to better position us geographically, while expanding our reach and allowing us to better serve our.
<unk> in terms of convenience.
We continue to be steadfast in maintaining a strong credit culture, a cornerstone of our bike nonperforming loans totaled $59 $4 million down $21.5 million on a linked quarter basis.
This was the fourth consecutive quarter of marked improvement with nonperforming loans now at the lowest level since December of 2018.
Net charge offs as a percentage of average total loans were 17 basis points in the quarter heavily influenced by a partial charge off of a single commercial credit.
These positive trends combined with improved economic modeling scenarios, resulting in a recapture of provision expense in the quarter totaling $19 $9 million at.
At the same time all of our coverage ratios remain strong with our allowance to loan ratio of 1.87% and our nonperforming loan coverage ratio at 341%.
With respect to the balance sheet total assets ended the quarter at $23.2 billion total loans were $10.8 billion and total deposits were $18 $1 billion loan.
Loan production during the quarter was $1 $5 billion, but was offset entirely by pay downs on a positive note our commercial loan pipeline Roes for the fourth consecutive quarter to $1.5 billion up 15% on a linked quarter basis. We're encouraged by this trend and other anecdote.
Evidence in the market that will translate into an increase in total loans for this reason amongst others were continuing to actively recruit loan producers across all business units throughout our franchise.
Capital levels remained very strong and significantly above regulatory well capitalized guidelines total risk base capital was 17.4% C. T. One was 14, 3% and the leverage ratio was nine 1%.
Importantly, these ratios also reflect increased activity under our share repurchase program authorized by our board of directors during the quarter, we repurchased 1.8 million shares with the remaining capacity under the program totaling approximately $98 $5 million is all.
Always continuing to return excess capital to our shareholders in the form of share repurchases will be dependent upon market conditions and as part of our overall disciplined capital management process.
Website at Simmons Bank Dot Com, we've shared an extensive presentation.
Along with the press release and financial data, which gives much more detail regarding our quarterly results and other important information about our company.
In closing we continue to be encouraged by our performance in 2021, while adapting to an ever changing landscape and challenging economic environment.
Closing and conversions of landmark in Triumph Bank.
Behind Us we are working to ensure our new associates have the tools and resources in place to meet our customer needs and provide exceptional service and capitalize on the growth opportunities afforded to us in these markets as we enter the final quarter of 2021, our focus remains on building on the past.
With momentum and finishing the year strong as we enter 2022.
This concludes our prepared comments I will now turn the line over to our operator and invite questions from our analysts and institutional investors.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question plastic pound key and we do ask that you ask one question one follow up and you can chew backup for question if you'd like.
And our first question comes from Stephen Scouten from Piper Sandler Your line is now open.
Hey, good morning, everyone.
I guess maybe.
If we can look a little bit on the on the loan growth front I know in the comments in the release.
It sounded like you feel a little bit more optimistic about.
Returning to growth in 'twenty two.
The approved and ready to close pipeline is up.
Maybe $26 million quarter over quarter. So could you give us some color just what you're seeing in your markets with your with your customers and kind of how you're thinking about loan demand from here.
These statements, Matt Yeah, glad to answer that and I'll give you a little color.
We are very helpful.
While net positive loan growth it could happen as soon as you remember the fourth quarter. We can't we have a really good shot in October being.
Net positive right.
All based on that pipeline growing and then our production growing.
Third quarter.
One five.
Julian that we show and.
Production compared to the first half of the year at $1 8 billion so really.
Showing we're getting real close to that inflection point in that positive.
And.
I'll tell you definitely saw in the third quarter that was really really good whereas a lot of repeat borrowers are getting more and more active across a lot of category CRE.
Industrial multifamily mini store to door finance credit tenant even some select office are really good diversified CRE opportunities.
Again, what I consider the potatoes.
Auto dealerships medical facilities specialty hospitals.
We have not seen that hydrogen ours.
<unk>.
Pre pandemic.
Back doing business again, and we're seeing new customer acquisition through new talent acquisition, New bankers, we're seeing.
Moving business over good core C&I business, we're seeing businesses being partners, we're getting there.
Some of that so.
The third quarter ratios are good.
Mig that we're bringing encouraging capital as we look forward to the fourth quarter into 2022.
Got it that's very helpful. Matt. Thank you.
And then maybe just my follow up would be around.
New loan yields I think maybe in previous quarters, you've given the yield on that.
Approved and ready to close the pipeline I'm not sure if I missed it this quarter around but.
Any data there are new loan yields because it looked like if I exclude PPP if I'm getting this right. The core loan yields were probably down seven or eight basis points quarter over quarter. So just wanted to get some color there that that drought in the money there and if you look at our on slide 13 of our commercial and that's just the commercial loan pipeline, but.
It is a low rate environment very competitive environment, and you know with our asset quality parameters that we have.
I've always say do you want to see that drift downward in this environment.
That new production coming on.
Okay. So that like I think last quarter or was it maybe like 370 range is that kind of they're trending or.
On the <unk>.
377 last quarter and $3 47. This quarter again that is as Matt said, that's without the consumer said, that's just commercial and it also does not have the loan fees that you'd see that hit the ledger correct. Sure have you go back to slide a few slides you can see on slide seven the actual yield and both the.
GAAP and the core yield was slightly up for the quarter.
Some of that obviously is b b b.
Right, Okay, yes, core just excluding accretion, but including the BBB that's right correct got it okay perfect well, thanks, guys and congrats on getting those deals closed and converted that is a very impressive timeline.
Good to see it.
Thanks, Steve.
And thank you and our next question comes from David Feaster from Raymond James.
Your line is now open.
Hey, good morning, everybody.
Good morning.
I just wanted to start on the commercial finance team and just get an update with those guys Thats, a pretty exciting group to bring over in.
Just whether they had begun contributing in the quarter and just what expectations you might have for that team.
Hey, David Matt. Thanks for the question Yeah, we're excited as well if you remember we talked about the commercial financings that group came from multiple institution. They all have some northwest is that we're absolutely observe and do it right, but really that.
<unk> core this what we just went through was process policy procedure platform and getting them on board and ready to go but we will see some production from them closing in the fourth quarter. So that's encouraging but it has to be a slow build with those non solicit, but the team is doing well and in really getting engaged and we're starting to see some some pipeline.
Coming to long familiar with them right now.
Okay.
Dwell for production going forward Thats great.
And then just even outside that team. It seems like you guys have been pretty aggressive recruiting just just curious how hiring pipelines are looking.
Or are you seeing opportunities and maybe whether there's any new verticals like like that team you picked off that youre looking to expand into.
I really appreciate that question as well you know that's something that's really important to remember about us right now.
We talked about EBIT coming into the painful pre pandemic, we were an adjustment period and now the $25 billion Bank, we're really focused on building out a metro market bank in our community market back and within those Metro markets. Yes, I think we will continue to segment, we'll see those opportunities opportunities to do that we're bringing.
We're upgrading our talent, we're bringing on true commercial bankers in our Metro markets go.
Go along with that what we already have and we're seeing the fruits of that recruitment we're seeing some pipeline come on but also when we talk about investing in talent.
It's important to remember we brought on a new head of consumer and business, Joe D&A by Antonio He was over business banking at regions Bank.
Years ago, and now he's building out infrastructure.
Acknowledged the platform. Most importantly build Mt. Bankers also we've hired a new head of consumer lending consumer credit card, where we can get much more proactive in the consumer lending space.
Also we're focused on where we candidate portfolio mortgages Thats, a nice complement with landmark and triumph, they were big and the medical and professional space Sports Entertainment and Jumbo really from a mortgage perspective, we're going to invest in that more bankers more talent there to take advantage of the needs that they have.
So hopefully that gives you a feel for where we're taking simmons' overall from our producers, but we are seeing pipeline ahead from our current bankers that we've added recently, but more to come as what I would tell you.
That's great.
And then just last one just it's great to see the strength in some of the fee income lines I know improving cross selling across the bank into the fee income business has been a major priority for you George but just curious whether you guys could walk through some of the puts and takes with the euro.
Your top the business lines, and where and what Youre seeing on some of those businesses.
Well I'll start and Matt joined Bob sharply.
Alright.
To start with our wealth management group recalls.
As you know about 18 months ago, maybe two years ago, we hired a new head of our wealth group Jimmy Crocker Jimmy came on in.
Jason Waters ahead of our investment strategy came on at the same time those guys have done a great job, but as I've mentioned before.
We have $6 billion of assets under management, but they are very concentrated in central Arkansas Southern Missouri.
And we need that service across our entire footprint and Jimmy adjacent had been very diligent in going out and building teams in those markets now that is one where the revenue comes absolutely. After you get the talent in place. So we're going to expect that that revenue will continue to grow our <unk>.
Now is that that group has already exceeded their budget for the year.
So I'll call them are sandbagging group.
They are definitely going to have a little higher expectation next year, but.
They've done a fantastic job and I think that's the one area where we have.
Stage all opportunity to improve I had also mentioned that credit card is an opportunity for us.
Building out a portfolio of products, we've been very limited in that in the past.
We will have a new.
Delivery channel through our digital offering.
Sometime in 2022 so.
We believe that credit card fee income is also going to be a really good opportunity for us going forward.
Matt will talk about mortgage a little bit.
Hard to predict because volatility based on rates, but.
<unk>, great job Bill next team out too and even though.
Mortgage revenue is down compared to last year.
It is certainly up compared to our history.
This is a little bit.
George Thank you David I appreciate those comments on wealth you, what we are seeing good quarter over quarter.
Revenue pipeline growth on the wealth side and you can see there were any other the wealth advisors, we brought on but just as important with added on the mortgage side. If you look at <unk>.
Some of our investor deck and look at that.
Slide 14, it really paint a picture of.
Of what 2020 was from a refinance housing boom on the mortgage market, but now kind of stabilizing at this high inventory still our production exceeding our 19 levels mainland were recruiting new ml Lowe's, we're having success, both with purchase and refi now.
And we're excited we'll bring on new Msos everyday and we think we have a platform that attracts.
Really good producers that can come alongside a bank and offer a complete.
Financial services to their customer base. So I think youll see continued build out of mortgage and also treasury management.
We've continued to hire into that space, we brought on new Treasury management Associates, and we think we had a nice little uptick there in service charge income from Treasury management. This quarter, So I think youll see.
Going forward there.
David I'll mention one other thing too with regard to deposit fee income.
As we acquired banks, we're very sensitive to the shock that we give to the customers that we acquire both from a product standpoint, right standpoint, <unk> standpoint, so we're a little slow to bring that new group into the fold. If you will so last year, we went through a pretty <unk>.
<unk> consolidation.
Deposit products deposit pricing deposit service charges. So now that group is all singing from the same hymnal if you will.
With our new acquisitions and Memphis were true.
Reform will slow in bringing that customer base home, we want them to get comfortable with Simmons bank there'll be some give and take there'll be some fees with lower some that will rise, but we will be consistent in the marketplace sooner rather than later and acquisitions going forward. So that's another.
The opportunity.
For us to standardize our product offering our pricing across our footprint.
And we think that ultimately that will pay dividends with regard to fee income.
That's great color thanks, everybody.
Thanks, David.
Okay. Thank you.
Our next question comes from Gary Tenner from D. A Davidson your line is now open.
Thanks, Good morning.
A question about just kind of balance sheet management, obviously, the last couple of quarters, you've put a lot of excess funds to work in the investment portfolio up over $8 billion now so almost $2 billion of cash and I think you'd get some more excess liquidity from the two deals that closed on October.
So just kind of curious how you're thinking about.
The liquidity deployment, if youre thinking about additional.
Leaning into some higher interest rates in the bond portfolio.
And balancing that against maybe a pending inflection point on the loan side.
Yes, Gary This is Jay I think everything you said is kind of true to form with how we're looking at it I'd say first and foremost we look at the balance sheet. Overall, so we're looking at everything from the liquidity position, which for US we think of as we sort of break apart the securities portfolio. There we've got about one point Bob.
And floaters and and so we think we think of those variable rate securities more like short term liquidity just like we have in the cash and cash equivalents bucket. So we show that number at $3 3 billion at 930.
And then we've got a very ladder approach in the call. It the fixed income securities portfolio. So.
A lot of cash flow coming off from that portfolio over the next several quarters, but ladder.
Into some longer term maturities as well and again all of that overlaid against where we're at in the loan book the percentage of that portfolio Thats floating.
Maturities in that portfolio. So we pay a lot of attention to where we're at from an overall balance sheet liquidity and interest rate risk point of view.
Okay, and then a follow up to that I, just wonder if you could provide a kind of update on the rate sensitivity within the loan portfolio. I know you do provide some detail in terms of overall rates have sensitivity.
But just maybe talk about the size of the portfolio is variable rate and then update us on.
Floors.
Thank you.
Gary I'll start I'll start on that question are mixed fixed and variable.
<unk> has historically been around 50, 50 variable and fixed but we've seen that go up slightly in the mid fifties now, but really that's as a result of some construction men.
Our CRA coming off our books.
Showing a little more fixed but still like that equal weighting there today.
And in terms of floors I don't know if he.
Could update any information in terms of the variable rate portfolio in Florida.
I would say a good portion I'll have that number right in front of me today that of what are our variable rate portfolio is the majority of them do have floors.
Thank you.
And thank you.
And then our next question comes from Matt <unk>.
<unk> from Stephens, Inc.
Your line is now open yes. Thanks, guys. Good morning, I was going to circle back on loan growth and definitely appreciate the <unk>.
Improving commercial loan pipeline on slide 13, and you also mentioned some of your newer verticals are gaining some traction and hopefully we'll be seeing some normalizing loan demand but.
But on the other side is the runoff in some of the Paydowns.
To be pretty pretty aggressive still even more so than some of your peers.
Any color on how closely we are to seen an inflection.
Core loan balances.
Hi, Matt Yeah, Great question, and when I look at that every day and what we see as our runoff is net and that gives me concern that business is being taken from us but it really is the continued right sizing from a heavy CRE book the Big Charterers continue to come off that need to come off that we're planning to come off not so much even now.
Planned run off but even profitable projects. There at completion that are moving to the secondary market or being sold outright, but as an inflection point.
Very hopeful that that could happen even in as soon as the fourth quarter. When we had a really good chance in the third quarter, our first month of net positive growth.
With that strong pipeline build and I think we have a nice fourth quarter production coming I think we're getting really really close match to that inflection point and the deposit loan growth moving forward.
Thanks for that and that in.
And that tells you when did you say the first positive month of net growth was did you did you see the third quarter I missed it or do you expect that in the fourth quarter.
We're very hopeful in October we had that much but as any quarter in a lot of things move around and main borrowers do pay off things.
That happened right at the very end, but we look at that on a daily basis and it was very encouraging the third.
In October and September that month, but again, it's getting really really close where you see that net positive on a monthly basis.
Got it okay. Thanks for clarifying and then I also wanted to ask about operating expenses.
Noise in the third quarter.
Or would you point us to for a good starting point for the fourth quarter for the legacy.
Sam at the Bank and then of course layering on the two acquisitions.
Yes, Matt This is Jay so couple of comments on that.
Fair to point out we had some some noncore noise in the quarter.
First of all I would just reiterate kind of the guide we've had historically for what I'll call Simmons legacy for this purpose again, we've closed early in the fourth quarter on landmark and try on so we'll talk about that separately in a moment, but when you think about the $1 12 to $1 15 range, we've been pretty consistent in that range. This year.
We had a couple of one timers in the <unk>.
In the third quarter that impact those numbers.
Balance of some true ups on accruals in the third quarter, we had a non core item related to branch right sizing. So if you go back in time to the prior quarter's noncore M&A expense on the mark to market.
Some of those branches when we bring them in as held for sale as we've worked through those branches, we've been able to reverse out some of that mark to market in the third quarter. So that actually shows up as kind of a noncore positives. If you will in the expenses in the quarter.
But when you when you clear out all that noise, we still feel really good and in our guidance range in that 112 to $1 15 range for what I'll call Simmons legacy and then I would fully kind of reiterate the guide that we had an announcement on landmark and try on but we had blended cost save expectations of 40.
Percent on those transactions.
We might not fully hit 40% in the fourth quarter, we're going to get the integration piece right.
Which will carry some of that expense burden here on the balance of October.
A portion of November, but I think by December and certainly all of next year.
We will meet if not exceed that guide with expectation to summer math earlier comments, Matt read in his earlier comments that we will invest some of that back into production talent and we're already having success there.
Okay. That's all from me thanks, guys.
Thanks, Matt.
Thank you.
And again, if you have a question star one again, if you'd like to ask a question that is star one and our next question comes from Brady Gailey from <unk>. Your line is now open.
Hey, Thanks, Good morning, guys good.
Good morning.
So I wanted to start with the buyback it was great to see you all.
Reengage in size, they're repurchasing almost 2% of the company.
<unk> is a little higher today than it was when you were doing these buybacks in the third quarter, how should we think about.
The buyback from here I know you have about $100 million left would it be safe to assume that you could do another $50 million in the next couple of quarters.
Yes, Brady I think you hit it it's all about management of our capital position and its the dividend payout as the stock buyback all of that as a whole and acquisitions when we do acquisitions, putting cash in the deal. If you look at the share buyback, we did have a pretty active quarter and we bought it back at about $28 50, as the price goes down.
We would probably slowed down a little bit as the price goes up I mean.
So I don't know if we have a timeline when we hit that $50 million to $98 million, but we will still be active our plan would be to be active in the buyback in the foreseeable future.
Alright.
And then congrats on closing the two pending deals in such a tight turnaround.
I know you guys always kind of remain active in M&A looking at downstream targets.
With these two now close maybe just an update on <unk>.
How things are progressing on the M&A front for Simmons.
Well Brian.
We have a lot of good friends, we've built relationships with over the years.
Across our footprint and we continue to have some very productive conversations at least in our opinion they are productive.
It's still very important part of our strategy.
To continue to build out our scale in the markets, we serve and maybe even some ancillary markets that we would pick up through acquisitions. So we're still very active still having very productive discussions.
Nothing.
Come to the point of announcement, yet, but we're very hopeful that.
One or more of these conversations.
In the near term anyway. So.
We're we're very.
But interested in continuing our M&A strategy.
Alright, great. Thanks, guys.
Alrighty.
And thank you.
And we have a follow up question from Matt Olney from Stephens, Inc. Your.
Your line is now open.
Yes, just following up on the last question around M&A, George how would you characterize the M&A chatter currently.
And in the market and then secondly, as far as preference I think the last two deals landmark in triumph or.
Two smaller banks that were.
The current footprint added density.
How should we be thinking about the M&A strategy from here should.
Should we anticipate.
Deals that would increase density or market expansion just any color.
Our first priority is to increase our density in the markets we serve so.
To the extent that we're successful there that would be our priority now.
We've been very fortunate.
With two needles in Memphis, all of that was in markets, where we currently work prior to that landmark.
Mike out of Columbia within our footprint, but in no markets that we currently serve so we would consider that to be in footprint as well.
So we're focused on the states, where we're doing business today.
And primarily on markets that were currently.
But if we happen to find a really good partner.
Had some presence in the market we were in but had some new markets as well, we would see that as a very positive outcome.
In Georgia to General comment you can make on just the overall.
Level and activity of the M&A chatter in your market.
Well.
It's probably picking up a little bit.
Yes.
But it's.
To me, it's sort of normal.
We've been pretty active for the last several years, so I would say that our activity.
Has not increased or decreased we sort to have.
Matt as we've talked about before about how many transactions we can manage at one time or within a certain period of time and I think we've been very disciplined in that process and we will continue to be disciplined so.
I wish I could tell you we controlled the timeline on acquisitions, but I will tell you that's just not the case.
We have a potential merger partner and their timeline is next six months, then its going to be up to us to try to meet that.
Expectation, so they sort of get slotted if you will.
And timelines that we feel like we can manage successfully knock.
Knock on wood, so far so good.
Okay, Great makes sense and just a few housekeeping items here at the end.
PPP I think.
You said $8 $5 million of remaining.
B that you expect how much of those would you anticipate realizing in the fourth quarter versus into 2022.
Matt we're working that every day and we've got a group out there it's gone down pretty quick the last quarter.
Or into PPP two now so it's a little different there's not much of a PPP one left.
It's going to be down by year end, but we will still have some going into the first quarter.
Okay. Thanks, Bob and then Tim.
A question on the discount accretion.
You can debate de minimus amount at this point.
But what should our expectations be next few quarters on that.
Yes, yes, I mean, I think youre right its kind of trailing off but of course youre going to have a pickup in that here in.
In the fourth quarter with the closing of landmark and try on early in the quarter. So I would expect the trail off on again I'll use that term legacy to sort of continue but to maybe be picked up a bit from the new acquisitions over the coming quarters.
And do keep in mind on the new accounting rules and Cecil is we will have the.
Day, one or the first day of day, two seasonal adjustment that will hit in addition to the loan discounts. So we'll have a double count so effectively all of the accretion will be interest income going forward versus being related to the credit Mark.
Yes, okay.
Thanks, guys.
Thank you Matt.
And thank you and I am showing no further questions I would now like to turn the call back to George Makris for closing remarks.
Thank you very much for joining us today, just in summary, I want to thank the folks that you've heard on this call. David calls I think it illustrates our ability to manage in different kinds of economic scenarios.
While our loan book is down.
Been able to manage fairly successfully our investment portfolio, we did make $80 million this quarter, which we're pretty proud of.
I think also the.
Marked improvement in our asset quality illustrates two points first of all.
Our conservative nature on the way that we.
Recognize risk in our portfolio. So when the pandemic started we were one of the first banks market.
Yes.
Recognizing additional risk based on uncertainty in the marketplace and our provision and our allowance reflected that at that point in time.
I think you can see that we are now starting to work with our customers and understand that they are past the point of that particular risk.
In our portfolios improving we're able to recapture some of that earlier provision, which I think is a very positive reflection of our customer base and I'll leave you with this thought because might have mentioned it.
While we're really proud of our loan pipeline build the end of the third quarter up 15% from the previous quarter.
Friday that loan pipeline was $1 8 billion.
With approved ready to close $530 million.
So just in this short three weeks since the end of the quarter, we've seen that pipeline continue to build and that's without.
The pipeline from landmark and.
Trough, because I just quite honestly haven't had time to get their pipeline.
Loan production system. So we're very optimistic about our ability to meet the market's needs.
If we had been in this position 18 months ago with alone positive ratio of 98% and CRE concentration of 340% we would not be in the position. We are today, so I'm really proud of what.
These folks have done the navigation that they've done during a very uncertain period.
<unk>.
Our economy.
So I hope Youll take that as a positive note. Thanks again for joining us today.
Have a great fourth quarter and happy holidays.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Okay.
Yes.
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