Q4 2022 Simmons First National Corp Earnings Call
Good morning, and welcome to the Simmons first National Corporation fourth quarter 2022 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.
You ask a question you May press Star then one on your Touchtone phone to withdraw from the question queue. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Ed <unk> Director of Investor Relations. Please go ahead.
Good morning, and welcome to Simmons first National Corporation fourth quarter 2022 earnings call. Joining me today are several members of our executive management team, including our executive Chairman, George Makris, and our CEO Bob Fehlman.
Before we begin the Q&A I would like to remind you that our fourth quarter earnings materials, including the release and presentation deck are available on our website at Simmons Bank Dot com under the Investor Relations tab.
During today's call, we will make forward looking statements about our future plans goals expectations estimates projections and outlook, including among others, our outlook regarding future economic conditions interest rates lending and deposit activity credit quality and net interest margin.
These statements involve risks and uncertainties and you should therefore not place undue reliance on any forward looking statements as actual results might differ materially from those expressed in or implied by the forward looking statements due to a variety of factors additional information concerning some of these factors is contained in our earnings release and Investor presentation.
<unk> furnished with our form 8-K today, our most recent form 10, Qs and our Form 10-K for the year ended December 31st 2021.
Including the risk factors contained in that Form 10-K.
These forward looking statements speak only as of the date. They are made and Simmons 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, we believe provide useful information to investors additional disclosures regarding non-GAAP metrics, including the reconciliation of these non-GAAP metrics to GAAP are contained in our earnings release and Investor presentation, which are included as exhibits to the form 8-K, we file.
With the SEC and are also available on the Investor Relations page of our website Simmons Bank dotcom.
Operator, we are ready to begin the Q&A session.
We will now begin the question and answer session to ask a question you made quite Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the cade.
Job from the question queue. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Yeah.
The first question is from Brady Gailey of K B W. Please go ahead.
Hey, Thanks, good morning, guys.
Good morning.
I wanted to start with the tax rate the tax rate has been.
A little volatile this year and it was abnormally low in the fourth quarter, where should we expect kind of the forward tax rate.
To be in and any color on why it was lower than for Q.
Hey, Brady this is Jay let me jump in on that and give a couple of initial remarks for first of all you're exactly right.
The effective tax rate came in low in the fourth quarter I'll speak to that latter question first call a couple of drivers there, but really the biggest one we call. It out in our materials is the tax credit that we were able to sort of complete the project and recognize in the fourth quarter.
As a result, we're able to take a full year of that credit.
The way that works from an accounting perspective, as you get the tax benefit sort of grossed up down in the tax line item.
And then there's an amortization of that tax credit up and the noninterest expense area, we call both those out there.
For the full year of benefit recorded in the fourth quarter was the biggest driver to the tax rate.
Sort of being below expectation in the quarter I think going forward to your to your initial question.
I think I would think of 2023 tax rate sort of ranging in that 18% to 19% area.
Sure.
That's helpful. And then I noticed you guys were pretty active in the share buyback for the first.
Three quarters of the year, but no buybacks in the fourth quarter.
Any color there and how we should think about you guys potentially repurchasing stock in 2023.
Brady. This is Bob I'll go ahead and take that one you know youre right early in the year. We did a lot of stock buyback you know our focus really right now is growing tangible book value per share through EPS and organic growth.
Doesn't mean, we won't do stock buyback at the Timing's right, but right now we're really focused on building our capital position going into 'twenty three so.
So as you saw we really didn't we did very little to no purchases in Q3 and in Q4, we did none at all.
You know, we're gonna be very selective going forward and in this environment. We're in just uncertainty of just holding onto capital build in tangible book value per share.
Alright.
And then another good quarter of double digit loan growth.
Which you know I know you guys kind of messaged on the conference call last quarter, but I think I remember after that you guys expect loan growth to really slow down in 2023 is that still the right way to think about that and where where do you expect loan growth to be this year.
Right now I'll jump in here.
We had a nice fourth quarter, a good diversified loan growth without a footprint as you can see in the material on our pipeline.
Belgium, economic condition, where rates are and where the pipeline is slowing we still see.
Moderate loan growth.
All of that through our unfunded commitment still seeing demand, but kind of that mid single digits is where were seeing 2023.
Three so far but.
It is a kind of an economic environment.
You know also Brady just like the rest of the industry, we have slower paydowns in this environment with rates going up. So you know you have less cash flow is going out on pay downs and refinancing and so that helps all of us in the industry build there, but it really bodes well for for the unfunded commitment pipeline, we had earlier in the year or two.
That we're still funding those over a period of time.
Alright, and then finally for me you are the net interest margin.
With stable if not down a.
A few basis points linked quarter, how are you thinking about the trajectory of the net interest margin in the 2023.
So Brady Jay again here, let me jump in with some initial remarks, there as well I think you know the thing to point to here for Q4.
We had some deposit leakage I'll call. It late in the quarter, we've had what I felt like it was a good third quarter on the deposit fought and candidly early in the fourth quarter as well you may recall in Q3 and I'll be he's actually grew we gave some of that back in the fourth quarter kind of fell more in line.
With the industry in the fourth quarter.
Couple that with some strong loan growth continued in the fourth quarter and we increase the the you know the reliance on wholesale funding and I think that's sort of cash flow timing as much as anything I sort of think that the thesis for us from a margin perspective from an NOI perspective, you know remains remains fully intact.
Candidly I'm, so when I think about sort of go forward.
Patient for margin.
Some of that some of that wholesale funding or launch in fact came late in the fourth quarter.
That'll be a bit of a headwind early in 2023, whereas from a margin perspective, but.
As we continue to.
And our loan to deposit ratio, you know sort of reinvestment of our investment.
Investment and other cash flows back into loans, which we think we've got plenty of loan demand in the foreseeable future to do you know some of that moderation in loan growth that Matt spoke to that we expect that that'll that'll help Florida really reduce any reliance on wholesale funding going forward.
I think that all it's kind of sort of tailwind for us in 2023 from sort of a built in.
Margin perspective, as time moves on I will mention one other item we called this out in our slides.
One thing that is important as we move later into 2023 remind you all that we have a you know about $1 billion of our bond portfolio fixed rate debt is swapped and that was on a two year forward contract and that will come into play in September of this year sort of late September .
And so they'll.
Basically.
Goes from fixed to variable late in the year and current rates would certainly be a boost to margins at that point as well.
Okay, alright, great. Thanks for the color guys.
The next question is from David Feaster of Raymond James. Please go ahead.
Hey, good morning, everybody.
Morning, David.
I was hoping that maybe we could we could touch on the deposits that we were just talking about maybe talk about some of the competitive dynamics in some of the drivers of the core outflows I mean, how much do you think is surge deposits versus seasonal dynamics versus clients, just using excess cash to pay down higher cost debt and.
You know are you seeing any differences from a geographic or regional perspective, where where competition is more intense than you think most of the surge deposits. If you will or are out at this point.
So let me, let me again jump in and David on that and Bob and Matt May also where others may have some comments here, but I do think that there is likely some seasonal seasonal impact for us in Q4, I don't think there's any doubt about that and again, we saw some of the outflows pretty late in the quarter, which would which would kind of.
Sink up with that that outcome of that expectation.
You know when I think about and I've spoken about this in prior quarterly calls.
When I think about excess funds that surge deposits funds that were laying around whether they're consumer or commercial or otherwise I think most of that moved out of the bank.
Earlier in the year last year, what it feels to me like when I'm looking at our data sort of daily weekly monthly right now.
It it feels more like just the overall competitive dynamic.
That's why I use the word leakage earlier I don't see sort of wholesale shift out of deposits certainly don't see sort of a customer loss. It's really just more kind of that retail leakage out there across the footprint from.
From a competitive dynamic or alternative opportunity for fun. So those are those are some perspectives I have but.
Matt if you've got anything or Bob that you'd like to layer in you may have some additional comments there.
No Joe you hit that right on I think whereas the only anecdotal piece I'd add to that just on that retail linkages. What we're seeing also alternative opportunities money markets with.
Oh, Smith, Barney or somebody did that affect all swap, but what they.
Also we are seeing in the small community markets rural markets that is getting very.
Got it.
Seeing some really irrational pricing and that's where we're also seeing small retail customers leak out not customer loss as Jay said, but just real competitors all the time all the time.
Okay.
And I guess, if we how do we think about you know funding loan growth and if there are additional pressures I guess, how do you think about funding that I mean, it looks like this quarter was primarily C. DS, but how do you think about C DS versus borrowings and even potential securities sale.
Sales and and if you could just remind us of the cash flows off the securities book That'd be helpful as well.
Yeah. So on the cash flow piece, David We've I think we've got it to 160 to 180 million per quarter.
Principal roll off I'll tell you Q4 that statistic was 185.
Sort of towards the high end slightly above that guide so I think that God kind of rings true.
As we go forward in terms of quarterly cash flow not a lot of appetite to sort of do you know of.
Broader balance sheet restructure in my mind, right now with the securities portfolio or otherwise.
I think we've got adequate cash flow, particularly relative to what we expect is moderating again continued loan growth, but moderating loan growth throughout the year.
And so that's sort of the expectation from a funding perspective, you asked a bit about sort of alternative funding out there to US right now the most advantageous funding from a cost perspective to the extent, we're relying on wholesale has been in the brokered CD market or brokered brokered market.
More advantageous rates there than F H L d's or otherwise, we've got plenty of capacity there certainly not our first option. We can fund it off our own balance sheet, that's what we'll do but.
But those are sort of the you know the relative opportunities in costs that are out there right now.
Okay, and then maybe just circling back to kind of the the loan discussion just wanted to touch on the pipeline, it's still healthy down a bit kind of fits with the dynamics that you've talked about but just.
Maybe could you talk to us a bit about the pulse of your markets from a demand perspective, what what geographies and segments are you still seeing healthy demand and what's your appetite for credit here, just kind of given the economic backdrop and funding challenges in and where do you still see good risk adjusted returns at this point.
Hey, guys great. Great question I'll start there may have comments, but first kind of top of the house on a pipeline. It is stable and I think what we're what we're very focused on pricing discipline and these conditions and also credit conditions.
What our members are resulting pipeline due to those disciplines is well diversified across all of our segments is not concentrated in any specific product type you want to see good middle market C&I most of the public sector banking you want to see.
<unk> selected a long term CRE Clos.
Across the board is very diversified right now your comment I'll, just staying to our netting around credit fundamentals.
Your question is there demand in the marketplace.
Moderated for sure with these.
This inspection with this yield curve.
Can make it a challenge, but yet people.
People were doing business, but we're gonna be taken care of relationships everyday bringing in new deposits with those relationships I think thats, indicating what the pipeline looks like.
For us moving forward, but there is demand, but it is moderating.
Are there any segments or geographies that you're seeing you know more demand and Conversely that the ones that are maybe pull back the most.
Hello.
As always not always but our our usual suspects on where even in this climate.
The Texas, the Texas market overall.
You know we had a we got a lot of success with our integration of spirit of Texas, they've done over $1 billion $1 $3 billion in new originations in April so that Texas market community to Metro is continuing to see demand, but it's still moderated youre seeing demand in northwest, Arkansas, Youre seeing demand in Nash.
I feel but really honestly, David all of our metros are still seeing demand just moderated and there's no one market that I'm, saying, hey, it's they're completely pulled out of the game I would say the contraction that is we're experiencing due to interest rates and inflation is similar throughout all of our markets. Okay. Alright, that's helpful. Thanks.
Body.
Thanks, David.
The next question is from Stephen Scouten of Piper Sandler. Please go ahead.
Hey, good morning, everyone and thank you.
I guess, if we could talk a little bit further about some of the inner workings behind like the funding duration extension strategy you guys have referenced them in.
In your release and kind of what you're having to price.
C D that on a lot of that and he was nearly $1 billion in growth in the quarter and just kind of what sort of duration you're taken most importantly, thinking about could that really relieve pressure over the next couple of quarters. As a result of what you did this quarter.
Yeah. Thanks, Steven So a couple of remarks on that you know first thing I'd say is don't read it as sort of going out multiyear in strategy or anything in terms of extending duration I think you know.
We extended duration and kind of ladder it out.
And in the fourth quarter.
Over sort of a think of like 369, and 12 month type basis, and so so I think our I think we disclosed this the duration went from something like the end of the third quarter six eight months to eight four months.
So again still a ladder of cash flows on the wholesale side.
But a bit of an extended lateral relative to where we were late in the year. We have done the same thing earlier in the year last year, just a lot of that kind of.
Repriced in the fourth quarter again, particularly later in the fourth quarter and you're seeing you're seeing handles with four handles on that in a lot of instances in terms of your questions around around cost on the wholesale side right now.
And that's kind of all across that that ladder is where we're seeing costs.
Okay. That's helpful. Jay and is the are the costs on a wholesale.
Based on what you guys are thinking of their costs in a wholesale better than what you're seeing in your in your markets and your branches on the CD side or is it just that in terms of filling the gap in terms of the volume that you need that brokered Cds are better than the FH L. B.
Yeah. It's it's it's really certainly anything we're doing on the CD side, whether it's you know what I'll call core versus brokered.
More advantageous than anything we could do at the H L B or other watch right now and so are our first our first.
Preference and priorities always on the core side, and that's where we're focused again to Matt's earlier comments that you know.
The.
The competition across all of our geographies is pretty fierce there and so to the extent we need to fill the bucket further.
That's where we got a wholesale.
Yes.
And Matt's comment was really interesting and I think something we've been seeing a lot maybe to my surprise this quarter, especially as it is in the more rural markets, where are you seeing that is that like a lot of credit Union competition, that's popping up or what's driving maybe more competition in rural markets and I feel like we've seen in the past upgrade cycle.
David This is Jim.
What we're seeing in Alex I can't speak to what other other competitors seeing but.
Throughout our community market is not.
Hey.
What we're seeing is a result.
Well to me bank's balance sheet and Theres somewhat maybe potentially.
But from their bond investment portfolio in southern Nevada.
The fun in a new way that they're not used to.
Laser focused on funding right now and resulting in it.
What we're seeing on the.
Especially on the.
I'll decide really what we're seeing.
Most interesting.
Thanks Robert.
Yeah, and I'd say you know.
Something we've talked about too on that its been its certainly been other community banks, Stephen I think you called out one we're seeing I mean, we were looking at a flyer I think late late last week that we saw from credit Union and footprint in one of our footprints with really aggressive CD rate. So it's it's across the board from a competitive point of view in that area.
Yeah, that's interesting and.
And maybe brings up another point to there is stress on some smaller community banks I think in particular on their balance sheet on Tuesday, he on the funding side of thing.
When you guys had been a little less.
I dunno aggressive in terms of your commentary around potential M&A, but is that something you guys have a greater appetite for in 'twenty three if there are some.
I don't know weakness weakness in potential targets.
Yeah.
George you want to.
Sure.
Sure Bob I'll I'll take that.
Steven you know.
We would always consider a strategic opportunity with regard to M&A.
But we are not actively pursuing that at this point in time.
So you'll hear a lot more going forward about our better by initiative, but I think it might be an appropriate time just talk about.
Where we are in that regard and you know in the fourth quarter, where you lay out some management changes and that is very specific to.
Our next three to five year plan Bob Fehlman.
They are C O congratulations Bob and Jay as our President and CFO Congratulations to Jay we're in a period of time or what have you.
All of them together over the last 10 years 14 acquisitions and I would say those have been very very successful in our financial metrics sort of bear that out.
We're at point in time, now, where we need to step back further integrate processes systems and take a look at our people across our entire footprint to make sure that we position ourselves.
For success over the next three to five years of what we can control and that is organic growth.
That's our primary focus today.
You know as we go forward, you'll hear a lot more about.
Technology plans, our process plans and so forth.
But.
We would.
Never say that we would never consider another acquisition, we're just not aggressively pursuing that today when you try to look at our footprint.
Our potential for growth within that footprint from an organic perspective.
I think it has just been so we've spent the last 10 years positioning this company for today.
And I'm very confident that under Bob <unk> leadership.
Our expertise in the areas that they focus so we're gonna be very very successful.
And Stephen this is Bob just to kind of add onto that if you look at our slide deck on page three it really tells the story of what we've done over the last 10 years and you go back to 2012, when George came on as CEO . We were really focused on Arkansas was our footprint primarily in fact, we had 2.6.
$2 billion and 94% of our deposits were in Arkansas.
And we really had a focus on growing the bank. So we can make additional investments whether it's in the I T area, whether it's in people, whether it's in our market outside and branding and over that period of time as George said was at 14 Bank acquisition and today at the end of the year and 'twenty two.
We have $22 $2 billion and the geographic diversification over that period of time is significant and now in Arkansas, 35% of the deposits are here and 22% are in Missouri, Tennessee, and so forth. We have a really good diversification and some really good growth markets in Middle America.
So we're very pleased with where we're going in and and as George said, our you know, we again will not turn away from an acquisition. They did is the right one but our focus today as what we have called US a better bank initiative, and it's really focusing on people processes and systems and that is what we're focused on and our end result.
Is really focused on growing the earnings per share and tangible book value per share.
Yeah.
Great. That's a lot of helpful color and thanks for the call out on that Pie chart, that's a pretty aggressive transformation nice to see if there are virtually no. Thanks a lot.
The next question is from Gary Tenner of D. A Davidson. Please go ahead.
Thanks, Good morning.
Good morning, Gary.
I wanted to just ask one more question on the funding side. It looks like you know like that.
A good bit of the wholesale time deposits that came on were later in the quarter unless I missed it have you provided or can you provide.
The kind of 12 31 spot rate on deposits.
Yeah.
You know I don't have that number off the <unk>.
Right off the hip here for you, Gary but I you know I think you can suffice it to say I think that maybe get to the point of your question.
If you if you unpack the quarter.
Certainly as we layered in on the wholesale side and made a decision to extend maturities you know margin or cost of deposits cost deposits with higher margin with lower late in the quarter compared to early in the quarter I think that as I've tried to say earlier or as I did say earlier as you know.
A headwind early in the year and a tailwind as we continue to move through the year next year.
Yeah.
Okay, and then just and just to be clear again make sure I understand it the the decision to kind of layer on some of that as more of a.
Issue with timing of funding in that you didn't really have a lot of excess liquidity that was you know even though you have a low loan deposit ratio. You were you were pretty well invest in series portfolio. So there wasn't a cashless to fund the loan growth that stayed strong in the quarter or was that kind of the thought for the for the fourth quarter.
But I'd say, it's twofold, that's a part of it and the other part again, if we'd had the same sort of third.
So the fourth quarter as we had third quarter in terms of some on the core deposit trends Bod, we wouldn't have had near the relaunch I think I think that's part of it as well, but it is timing of cash flows. We knew we were going to have at least a decent loan growth fourth quarter.
It candidly came in better than expected.
Maybe some seasonality and other headwinds that the impact of this on the core deposit side, that's all moment and Pom and me.
Cash flow off the securities portfolio sort of is what it is day in and day out quarter in quarter out and so I think as time moves on.
Again, all things being equal with with the deposit portfolio.
On the core side, our reliance on wholesale funding should should diminish over time as well.
Alright, I appreciate that and then just to go on the on the credit side for a second it looks like your weightings in terms of the Moody's scenarios a U S. T was about 30% and I think even later in the year is to have it become.
It has not become kind of the Moody's baseline forecast could you give us a sense of the sensitivity of your ACL you know as that kind of maybe if that's too.
Waiting word of English.
Yeah.
You know I'll just say a couple of comments you know this is just our management's input keep in mind, we're doing we're putting the scenarios in for the markets. We serve this is not on a national basis. So we really look at the markets, we serve and in overtime Moody's changes there as the baseline changes at one point the baseline was more positive now.
Turned a little more negative. So you know I would say you know I feel very comfortable it wasn't a lot of change in what we did from Q3 to Q4.
We all feel really good about where we are today, but we all have a little bit of concern on the economy, just because the rates have continued to go up and we just don't know where it's going to go but you know asset quality continues to be at its best level historically.
It's just we just continue to look at the market the macro environment, we're in and our markets more specifically.
Yeah, and don't forget we also have a pretty large reserve in unfunded commitments that didn't change this quarter. Our unfunded commitment level was relatively close to Q3, so there's a pretty significant reserve in there that when those loans fund over Wilhelm will.
We will move over to the ACL.
Great. Thank you.
Okay.
Gary This is George one other thing in our.
Our presentation on slide 13, we specifically deal with our.
Our portfolios in.
Office retail and construction.
And I think when you take a look at that you'll find that our.
<unk> is well diversified.
Smaller loans more rural in nature, and those three categories seem to be the ones that are.
Top of mind with regard to.
Sure.
Credit risk.
Our portfolios are a little bit different and very reflective of the conservative underwriting.
And the community by nature of our bike.
If you wouldn't mind just take a look at slide 13 to understand a little better.
Three highest areas of credit risk with regard to investors' perception of cross country.
Okay Fair enough. Thank you for that and then just last last question on the expense side. The comp line is kind of bounce around a little bit the last couple of quarters dipped in the third quarter back up here again in the fourth quarter I think you've called out some incentive comp accruals that were recorded in the third quarter, but that comp line moved.
Higher this quarter, so have there been reversals in the third quarter that now kind of reset in the fourth quarter, just want to make sure I understand that clearly.
You got it that's exactly what it was Gary So you had reversals in Q3, we called that out in the third quarter and that sort of more normalizing back in the fourth quarter.
Yeah, and keep in mind, Gary one other point as you know we always like to remind people Q1 is going to be a little higher if we get all the FICA payroll taxes, and 401K's and all of that is the first quarter is always higher one other comment we should've said earlier on just on our logistics here, we apologize for that.
Banging noise, there's a lot of construction going on in downtown Little rock, which is good but they happen to start the banging just as our call started today, we apologize for that Additionally, not sure if you've noticed but we have two of our staff that is working remotely trying to isolate and keep everybody else safe, they're all doing good.
But we're having to logistically handle that today, so hopefully none of that interfered with the call today, but just wanted to call that out logistically.
Yeah.
Okay.
Okay.
The next question is from Matt Olney of Stephens. Please go ahead.
Hey, Thanks, good morning, everybody.
Good morning.
I wanted to drill down on the construction portfolio and the funded piece continues to increase and obviously he's moving from unfunded to funded.
It looks like the unfunded portion moved down slightly I'm curious if you think that unfunded piece has now peaked it will move lower and then.
So you expect the the funded portion are the peak here shortly as well thanks.
Really good question, Yeah, you're correct and I would say we have peaked on the construction.
<unk> unfunded commitment not our overall unfunded, but the construction unfunded commitments I would say we saw that this quarter now.
Question on the peak coming on the construction funding me or no it's not it's actually due.
Due to the equity guys.
Average, that's where we gain most of our CRE loans at around 40% if not more on occasion, so really that ramp up peaks much further out I would say that's something that we're very focused on analytically of where those peaks arrives and when we need to start originating more C. L. D always thoughtful on credit more.
You're right it did.
We believe it is.
Fourth quarter, but the outside where funds are at that peak as far into the future.
Okay I appreciate that Matt and then I guess, Matt sticking with kind of the loan growth theme I think you've talked about that mid single digit growth.
Any more thoughts about kind of how we could see that play out during the year, if that's more front half loaded.
Or back half loaded.
I would say, it's going to be even.
Best guess at this point, Matt Theres no.
I've said that.
Unfunded construction that is later.
Month over month, when we project those draws will come to fruition. But then also we're also doing new business every day I'd say, it's more evenly.
Even EBIT.
Even number then versus one run in her back.
Yeah, and I think the math, Hey, Matt Jay here, just one maybe one footnote there as well, but I think it's important ballroom at one probably stress test earlier in the call, but just to remind you you know.
<unk> on the asset side, our loan side or certainly extending here.
Payoffs are a lot slower in this environment and I think that's one thing to keep in mind as you think about sort of loan growth throughout the year. We're not in the environment, we were a year ago, where where it was just sort of pay down pay down pay down all the time, we sort of move beyond that or stickiness, it sort of builds and that that sort of loan growth.
We coupled out with sort of the timing of the projects that are underway on the C and D side and you know it wont be they're never going to be even throughout the year, but we don't really see it loaded or front or back we see it more kind of coming in and systematically throughout the year.
Okay I appreciate that Jay and then I guess kind of a similar discussion on just the loan repricing of the fixed rate loans that you'd call out in the slide deck I think you'd mentioned just over $1 billion.
Our weighted average rate of 4.86 any color on kind of those reprice had dynamics, where we stand today.
So in terms of Yeah go ahead, Matt.
Not just from the standpoint of kind of that billion dollars of what we see kind of mentally definitely.
Much better rate environment to reprice those loans are doing that and you know we're opening seven handle.
Our pipeline now and that does conclude their Wednesday.
So we were very moving very disciplined too.
Rates are overall, but I will also tell you, though this yield curve creates a challenging environment with where treasuries are so we've got to fight for every basis point.
It's all about bringing new deposits to the bank as we do new originations with core clients hopefully that makes sense to you Matt.
Thanks for that.
And I guess, just lastly on.
George you made the comment about the last few years as far as acquisitions and where the bank is today and it seems like you've successfully completed a number of expense initiatives over the last several years.
As you step back and I'm curious, where the bank is today on the expense side and are there more opportunities that we could hear about in during the year.
Jay you want to take that.
Yeah.
So yes, sorry, I was I was trying to come come off mute there Bob So yeah, I think absolutely matter one of them when when George spoke earlier and Bob about our focus going forward.
Never say never on acquisitions, but our focus is on this better bank initiative and it's very internally focused.
We think we've got a lot of opportunities, Matt I don't want to over promise and under deliver on sort of timing of when we might come out with what some of those initiatives mean, but I'd tell you we've got a.
Everybody rallied around sort of that those initiatives internally.
Everyone's excited about where our focus is.
The focus on organic growth, making sure we've got the scalability in our business to sort of capture that and that's absolutely going to lead to a number of efficiencies across the board for US. These are harder to get efficiencies than sort of that first phase.
Coming out of an acquisition, but theyre still very meaningful in my mind and I think we've got a lot of work to do and I think there'll be promising efforts ahead in that regard.
Okay. Thanks for that Jay and I guess, just following up on that on the better Bank initiative.
What are the primary metrics. The bank is focused on within the initiatives are that we should appreciate maybe from from Orlando.
Well my answer to that would be there's probably a lot of internal metrics. We're most focused on right now in that regard that'll lead to what you're focused on a map, but it's not going to be anything you hadn't seen before I mean to me at the end of the day as we you know as we optimize our balance sheet, which is sort of priority number one and my mom.
And as we just kind of continue to do that overtime remix the balance sheet to where we want it to be that's going to be obviously advantageous to revenue. We're doing a number of things that I think we're going to gain some additional.
Economies of scale as we execute on that and grow and so the number one metric I'd point you to if you think about both the revenue and expense sides gonna be the efficiency ratio and I think we've got a lot of opportunity.
To continue to drive that down into overtime to drive that down into the lower fifties I would love to see US. This is this is a more intermediate timeframe com, yet but optimistically.
Optimistically I'd like to see us put a four handle on our efficiency ratio and that's going to take us to execute on both sides of that equation.
Okay. Thanks for the commentary guys appreciate it.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to management for closing remarks.
Well, thanks again for joining us on our quarterly conference call.
Once again I'd like to congratulate Bob Jay and their teams for recognition that I.
Have a great.
And the future of Simmons by going forward.
We're in a great position today as we've talked about with a better bike initiative.
What are the things that I'd like to point out.
Is that as we as we go through this people process and systems evaluation.
Or stay out has been very busy over the last 10 years with.
With their day jobs and integration of 14 acquisitions, where you were currently evaluating what our capacity is without those acquisitions and I think what you're going to see it.
A very pleasing result, so.
More to come on that I think Joe you hit some high level metrics that we're taking a look at I can't remember if it was Barbara J that said, we're absolutely focused on increasing earnings per share tangible book value per share. We believe that's really what's going to drive shareholder value going forward.
And while we spent the last 10 years.
Helping the bike where you are today. So thank you very much.
For joining us today and I hope you have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.