Q1 2023 The First Bancshares Inc Earnings Call
Good day, and thank you for standing by.
Welcome to the review of first quarter 2023 financial results Conference call.
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I would like now to hand, the conference over to your speaker today I'll be called CEO . Please go ahead.
Good morning, everyone and welcome Oh, I've got some of our team members with US. This morning, Debbie Lowery, our CFO , George <unk>, our Chief Credit Officer, and J J.
Fletcher, our chief lending officer.
I'll start by covering some highlights for the quarter and then turn it over to the rest of the things.
Oh gosh, we're so pleased with the outcome of the quarter. It was a great quarter and a strong start for the year.
As noted in the release, we closed our largest acquisition ever.
In South East Bank as of January one.
And we integrated our systems as of 331, so close and integrate it all in the same quarter.
Accumulate.
One 6 billion in assets 24, new locations in Atlanta, coastal Georgia and Jacksonville.
Over the last nine months, our team has done a phenomenal job closing two of the largest.
Actually our two largest acquisitions ever as you remember back in July we closed beach bike, which was a little over 600 million dollar acquisition.
July one we integrate their system December bird and then again without just well just learned about close to inherited south east Bye.
So all in all we.
We've grown $2 2 billion in assets over the last.
Wisconsin mentioned organic growth that that were experienced in the loan portfolio.
And opened up new markets in Tampa, Jacksonville, Atlanta, Savannah, and built significant density at a bar Panhandle. So we're absolutely just thrilled and I appreciate the phenomenal job that our team members have done to make all that come together.
It was a balance sheet management for the quarter I thought we did a really nice job of managing our deposit flows.
Staying disciplined around deposit pricing and maintaining our liquidity.
If you look for the core deposits were down three 2% overall, but.
But if you adjust for $77 million of broker deposits that we let go deposits were down only two 1%.
Our deposit mix studied pretty cost impact that improved just a bit.
Noninterest bearing deposits were 31% of total deposits ended the quarter as compared to about 30% at the end of the fourth quarter. So we're pleased with the ability to manage our deposit flows maintain our relationship managers have done a really good job.
And not only depend on what we have but when were doing matching a rabbit margin I can people were asking people to bring new monarch to us.
So like most people you know in the industry, we're feeling deposit pricing pressures as well.
However, we're again, we're probably just a really good job of remain disappointed at how long the costs of our pilots were only up 20 basis points to 72 basis points, but still well below 1%.
Loan growth was a bit muted for the quarter it was up 1% quarter over quarter, 4% annualized about 37 billion.
But that was not in consistent with our guidance from last quarter, where we had seen pipelines off about 20% gigantic now offer some additional color about where pipelines are now and what we expect.
For the second quarter in the back half of the year.
Net interest margin again, I thought we did another good job of managing our margin sorry.
Certainly the seasonal we got it to some margin improvement in the first quarter last quarter, we certainly experienced that.
Because of the seasonal deposit flows but also because of the addition of Eric is southeast and beach, both added asset sensitivity to our balance sheet. Our net interest margin was up 32 basis points to 363%.
So all of this combined for a great quarter in terms of improvement in our core earnings adding the scale by just the.
The effect of getting all the cost saves with majority of the cost saves from beach.
Plus our better than expected margins contributed to our core earnings growth of 9.9 billion quarter over quarter, 58%.
Earnings per share was up 27% quarter over quarter to 86 so.
Given where we sit today the cost structure of our balance sheet strong liquidity, well diversified low cost funding sources.
Our capital position earnings ramp, which is aimed at creating more capital.
Can reward our shareholders with an deployed but we feel like we're in a really good spot to compete powerful.
Even though we have significant economic headwinds, we feel like we're in a really good spot so with that I'll turn it over to Danny to give us some more detail around the financials.
Alright, thanks copy them.
As he mentioned obviously about the heritage clothing, I was going to start by saying we have noise again, this quarter and that seems to be our phase every quarter is the noise in trying to get to with our operating results.
Actually our minus that noise, but we did close heritage on one one and issued.
$6 9 million shares of our common stock.
For the quarter ended March we reported 16.3.
Million or 50 to 52 cents per diluted share.
But on an operating basis, which excludes the acquisition charges, which were net of tax of $2 8 million and then the day one initial provision for credit losses for.
For the heritage loan portfolio net of tax was $8 million. So what you see.
Take those into account when our actual operating earnings were $27 1 million or <unk> 86 cents.
Happy Atopic didn't mentioned that was an increase from previous quarter and up $9 9 million or 58%.
The drivers to this quarter, obviously included a full quarter of heritage Bank as well as cost savings from the Beach Bank. If you remember we closed six locations in relationship to the Beech acquisition and those were all done in the month of December following the systems.
The beach.
Our net interest margin as Hap mentioned did expand $3 63 to $3 63 that was an increase of 32 basis points 21 basis points of that was related to the purchase accounting.
Yes, Matt.
And if you recall from our call last quarter, we did expect a net interest margin expansion for the first quarter, mainly due to the closing of heritage Heritage had a higher net interest.
Margin.
As a company as a whole compared to ours and they also have.
<unk> had more floating rate loans as a percentage of their portfolio than we did so.
As well as the beach land portfolio that have been mentioned so our core knee.
<unk> increased 18 basis points to 347.
We are expecting some contraction in the margin going forward.
You had indicated that expect expansion in the first quarter, mainly due to the increase.
The addition of the heritage portfolio so.
We think we could have 10.
10 to 15 basis points of contraction throughout the year.
On the core margin to probably about a 330.
One point as well after bringing heritage on we we do remain asset sensitive about a percent and a half.
So we had mentioned that as well as before that they would increase our asset sensitivity.
On earning assets increased 49 basis points, while our cost increased 20 basis points during the quarter.
On the topic you did mentioned our deposits did decline three 2% a part of that was from the pay off of brokered Cds of 77 million and then the remaining part of that was kind of split 50 million in interest bearing 88 million between our savings in money market and $76 million.
Our noninterest bearing.
And then the heritage portfolio at the total was down 54 million and that was mainly in the interest bearing categories.
Non CD related so.
Really good about that topic mentioned, we kept our mix with 31% of noninterest bearing.
At the end of the quarter.
Our cumulative interest bearing deposit beta.
<unk> was 18% and that was from a period of.
Quarter in 'twenty, one to current so we feel really good about that 18%.
Beta we also have been.
I mentioned, our liquidity, we feel really good about our liquidity, we have a strong liquidity position our ratios are well above our limits our loan deposit ratio is below 75% our borrowing capacity.
<unk> is $1 8 billion and then we have about 41% of our securities portfolio is that the pledged so that's roughly about $850 million.
The next four quarters about 220 million as expected and cash flows out of our securities portfolio. So.
So we feel really good about our liquidity position.
At the end of the year. If you recall, we had 130 million in advances from the home loan bank.
It is work paid off in January as well as the 77 million in brokerage Cds throughout the quarter.
At the end of March we.
We still have 27 million in brokerage Cds that was all paid off at the beginning of April so.
Those are our are going off our balance sheet. We did participate in the bank term funding program with the Federal reserve.
At the end of March we felt like.
That was a good.
A good way to go ahead and kind of look at our liquidity look at where we were with some of the deposit run off and take advantage of that and.
And we did 250 million at a rate of 469. So we were able to use our Unpledged Securities book and our pleasure was that the fed. So we really kind of remained our think our liquidity position remained the same with being able to borrow 250.
Felt like that was a good decision as far as looking for them to work for our liquidity needs.
I just want to highlight a couple of our operating results our operating net income ratios or our ROA for the quarter was $1 36, a return on average tangible common equity was 20.
13, our efficiency our operating efficiency ratio was 53 per se. It is happy mentioned our capital ratios. Our capital is good our TCE was seven point too.
Common equity was 11 point to our leverage was 8.8 and our total risk base was $14 seven so all great capital ratios.
So I think that is all for me all my prepared remark choppy good to great.
Great report Thanks P J.
So again, we'd like to.
Digging into the loan portfolio.
Alright, Thank you Avi.
<unk> already reported the bank achieved modest growth of about 37 million for the quarter would note with HSBC close on one one a lot of time and effort was spent on both sides HSBC and.
First legacy trying to get those people up and trained and going into our system. So.
A lot of effort and we appreciate that on everybody's part bright spots within the company continued to be our private Bank Division and also the Tampa market.
Somewhat slow start to the quarter overall originations were about $245 million, including HSBC.
And positive momentum of about $90 million in originations just in March <unk>.
<unk> legacy portfolio.
He also mentioned in January we reported Python said compressed about 20% from the previous quarter. However, at the end of Q1 2023.
Numbers were back up to previous levels pretty much on line with the Q3 2022 numbers and heritage of course excluded there, but they had about $90 million in pipelines at the end of Q1 2030.
On pricing, we remain diligent in repricing opportunities and all renews renewals in modifying loans and continue to maximize spreads on new production that youll see in the release overall weighted average yield for the new loans in the first quarter was $7 36.
<unk> unfunded commitments and lines continue to augment production in the first quarter trailing 12 months of unfunded commitments were about $345 million and 118 months unfunded about $600 million. So summary from the loan side is cautiously optimistic as to production and funding going forward based on our current pipelines unfunded commitments.
We have several new lending teams being on boarded currently at this time in different markets and then look forward to the full integration of the <unk> team members into our system.
Alright. Thank you all thanks J J.
George.
Alright, thank you.
Generally through the first quarter, our credit performance metrics remain very stable.
Some categories, showing some moderate improvement benefiting from the acquisition of HSBC.
Adding their results so our numbers are.
Delinquencies for the quarter continues to remain very manageable, averaging about 39 basis points.
During the quarter.
Our criticized and classified loans.
Percentage of capital plus ICL.
<unk> showed improvement with the <unk>.
Klein of nine basis points in total so you can see an.
<unk>.
As a percentage of capital.
Ill improved slightly we saw a decline of just under two basis points. So generally all of these metrics.
From the credits.
If youre looking at today.
So comment if you will correct.
Pie charts, starting with page 15.
So you can see these comments there our loan portfolio composition contain it continues to remain.
Very balanced CRE overall represents 44% of the loan portfolio when Dubai.
Owner occupied added 24.
Owner occupied at 20.
The balance among the subcategories.
One to four family run at about 19%.
Steve.
And so the 14.
40% of our overall loan portfolio all of the other categories.
I don't really see 5%, Oklahoma, so good balance across the whole portfolio.
Drilling down to CRE.
You can see the predominant categories later post the acquisition are retail stand alone at 27%.
Hotel about 21% professional office space 20.
Retail center at 12 are the predominant robertson's majority.
And the C and D category residential one to four.
As the largest subcategory with subdivision lots at 16.
Commercial issues with.
Oil so again no other category.
5%.
Well oriented multifamily categories.
Moving on to page 16, just for reference with thumb.
What more heightened focus on office space, particularly non owner occupied office space on a lot of folks' mind.
So kind of where are we where we see it as far as non owner occupied office.
As a percentage of our total portfolio were about four 1% of total loans.
So about 204 million give or take.
In the non owner occupied office space.
Of that comprises about 43% of our total office launch some the large majority is on the owner occupied.
It's been a traditional.
Category for us.
Iraq.
And both studies.
As you might imagine with the recent acquisitions in both Florida and Georgia.
See that Florida holds about 49% of our non owner, Georgia was about 29 million.
Our average loan size.
It's probably too.
Our community Bank.
More so than a larger a larger national bike our average loan size on the non owner occupied office.
727.
We've got a lot of us.
Mountain overall portfolio.
Our maturities are total loans and non owner occupied maturing through the end of 'twenty.
Comprise just under 20%.
And Thats, a pretty even balance about 5% to 8% of the subcategories each year over the three year run.
So a pretty orderly maturity schedule coming up in non over owner occupied and 51% of the portfolio matures in 2020 and beyond.
So we feel like the takeaway the areas that gets was through what we hope will be kind of the downward trend in rates as those loans mature in 2020.
Forward.
Thus far our credit quality has remained stable over the last several years, our occupancies have continued to remain in our portfolio within acceptable ranges.
As with most of our newer loans in this space.
Newer credits we are those are typified.
More owner and Jackie injected equity and the credit.
Put them in our performance ratios, we once were.
Classified non owner occupied office is running just under one 6% so again <unk>.
Continue to see good good credit quality through the portfolio.
I'll just refer you to pages 17, and 18 and 19, if you have any questions on those we could certainly.
Certainly answer those to come but that generally is a pretty good overview credit.
Through the end of the first quarter. Thank you George I. Appreciate those comments that concludes our prepared remarks, and so now we open it up for questions.
Thank you.
We will conduct a question and answer session. As a reminder, <unk> asked a question you will need to press star one one on your telephone and wait for your name to be announced.
To withdraw your question. Please press star one one again.
So please standby as we compile our Q&A roster.
Okay.
Our first question will be with Catherine Mueller from <unk>. Your line is open.
Thanks, Good morning, Hey.
Hey, Kevin good morning.
What are you thinking in your in your NIM guidance, how are you thinking about deposit betas, even over the course of the rest of the year.
Well I think we have.
Yes, I think that we're going to go up a little bit because I feel like we've had we're going how we're continuing with the pressure.
With some of our competitors with some products.
And we just been matching the topic kind of mentioned in the same thing last quarter were just.
Fighting It every day in China, you know maintain what we have and so I just can say that continuing we tried to put a little slide in there that showed the cost and you can see the increase you know from February to March to kind of show a little bit of guidance going forward.
It's not like it's.
Daily every day, but I mean, we have some continuing kind of daily so.
They say that going up.
Tom.
Catherine.
A little more aggressive.
From here on out because as J J noted pipelines are building. So we've got the ability to be a little more aggressive with deposit side, but but put out and the loan book.
Youre welcome you have to be a little more aggressive.
But it's amazing if you look at your cumulative total beta so far is just still so low at only 12% so it.
Is it that you're well.
What do you think is drive is the driving factor so far.
To keep as low of a deposit beta as you have done so far and I understand it will it will increase from here for sure, but it's still I mean, I think will be.
Below industry averages.
We've got a well diversified relatively rural deposit base across the southeast and I think if you look at the slide in the deck that shows that like 80% of our accounts our consumer accounts. So we don't have a lot of.
Concentration in large commercial accounts, which tend to be a little more a little less sticky I guess.
So I think thats, a cataract surgery is highly granular average size accounts $23000. So it's a highly granular.
Older season retail deposit base across the southeast.
Okay great.
And then on.
Some remix too we're seeing across the industry update remix from noninterest bearing into interest bearing.
It's hard to kind of Steve just because you've got the merger kind of think of the numbers a little bit.
What are you seeing in that mix shift and what do you expect for the rest of the year.
For the last several quarters Catherine we then in that same like our noninterest bearing.
31% I think at the end of the year, we were higher over 30 35 somewhere in there and I think September we were 31 and a half so.
We've continued to kind of maintain that noninterest bearing percentage so.
Thank you.
We hope to be able to maintain a pretty costly.
Okay.
Great and then on the expense side.
Our outlook on just.
The expense run rate for the next couple of quarters and the pace at which we will see cost savings flow through.
Yes, Catherine I think.
We should see some more cost savings this next quarter I'm showing.
A little under a percent probably.
758%, 7% seven five to eight 1% and this <unk>.
Next quarter, and then I think I'm going down to the third quarter, probably had a one 5%. So and then kind of constant for the fourth quarter. So I think we'll have.
With the Bache acquisition.
A lot of those folks that were remaining that were.
Lastly at the end of January and then with the heritage that will be.
The end of May for some of those folks so.
I think we'll be able to see even more of that by the third quarter.
And the percentages, but just to be clear that youre, giving can you specify what exactly you mean.
So like on our actual expenses for the first quarter without acquisition charges is like $41 8 million, so im showing that down to about 41 and a half.
Got it.
<unk> 48.
The next quarter that makes sense, okay, great. Thank you.
Clarity alright, great great quarter. Thank you so much thanks Catherine.
Thank you very much.
Yeah.
Our next question.
From.
Oh excuse me from Matt Olney.
With Stephens your line is open.
Hey, Thanks, good morning.
Wanted to go back to the discussion around the core margin.
Indeed, Im curious what that assumes for liquidity deployment still have a very low loan to deposit ratio and you mentioned some of the security cash flow expectations. Just curious kind of what the plan is for deploying liquidity this year.
I think it's kind of like we have been saying.
Remix and as we talked about the securities portfolio coming in the 250.
We will be able to deploy that into the.
And to the loan book.
Considering what the deposit run off.
I'll take my continued to be obviously, we've talked about that and being aggressive in keeping those deposits, but 78% to 80% loan deposit ratio would be it would be really good for us and so that's kind of what we've been talking about for this year was a big remix opportunity.
Okay.
Helpful and then.
On the loan growth side, I think J J mentioned.
A few new lending teams that are hopefully being onboard a pretty quickly pipeline sound like they are better now than they were maybe a few months ago curious kind of what this means for loan growth expectations for the balance of the year.
Yes.
Well.
I think we're feeling like.
Mid single digit.
Single digits, given that we've got the new markets and Tampa, Jacksonville, and Atlanta, and the Panhandle, We're really building our pipelines pretty quickly so somewhere between five to seven 5% is kind of what we internally feel like our loan growth will come out for the year.
Okay.
That's helpful. And then just one last one on the.
On the going back to I guess to the margin the accretion level $3 $5 million. This quarter, what's the expectation is for the scheduled accretion from here.
Oh part of that and that is difficult to predict because the first quarter until heritage was on our books, we took a straight line approach to the accretion for heritage.
During this quarter those loans will be.
Added on are the accretion will be added on and it'll be creating off on a loan by loan basis based on the average life of each individual alone. So.
It can fluctuate so it's very hard to just kind of predict I would say.
I think we have.
On to about 8 million.
Top my head kind of internally budgeting for that for this year.
But it's really kind of loan by loan basis, obviously, if one pays off or pays down you get more of that quarter.
Okay.
And just to clarify.
For the remainder of the year or the full year of which we've already recognized two or three and a half.
Well part of that was not all of that with heritage. So I was really kind of talking about the additional accretion for this year over last.
It was about $8 million for the heritage.
I think there was a little over $10 million for heritage.
This quarter got it.
We still got some of those other acquisitions still generating some accretion in there.
Uh-huh.
Okay, guys. Thank you great quarter, Thanks, Matt for the furniture.
Thank you.
Okay.
Our next question will be from Christopher <unk> of Janney Montgomery Scott LLC. Your line is open.
Thanks, Good morning wanted to talk about credit and hobby. If we look out. The next may be 18 months I think now that the company has completed the acquisition and integration continues I was kind of a steady state should we expect to see some just modest normalization of kind of special mention and substandard loans and I'm, just curious kind of how those get resolved now.
Compared to the past do you think the credit resolution is the same as it would have been in past cycles or will this environment being any different.
That's.
So much about it would be any different I think that.
My initial thought Chris says first of all we're not same credit cracks were keep looking.
You got to believe with the blocks as interest rates go up it is going to be some cracks somewhere there in terms of resolution I don't see us taking our changing our approach to quick resolution to.
In my career, it's always been the identification and quick resolution of problem credit limits your loss through first losses, you're likely your smallest law. So I think we've been very conservative about grading credits I think our loan reviews and our exams have proved that out and then.
I can't remember last time, we had any material downgrades from an external.
Auditor and so on.
We're pretty diligent we got pretty prudent credit culture here. So I would think quick resolution.
<unk>.
Our our continued quick resolution.
PR strategy, Georgia thoughts forever.
Great.
We have beefed up our.
Regional senior credit officer.
<unk> in each of our regions, so and so.
On end market regional credit officer.
Also works with our regional special assets off so they are able to identify.
Problems early on and work together toward resolution I don't think our strategy will change.
But certainly the addition of <unk>.
Some additional resources.
From from folks working on that very thing.
We will benefit us.
Sorry, George you made a great point when you said that I thought about it Chris I think this goes along with your answer as we've grown we've never had a special assets division up until about eight months ago. We for base, we took a very seasoned credit officer in.
And she started our special assets Division. So now we have a more formal collection process, where the fire department that manages those problem credits in preparation for what would be the larger banking too.
The economic headwinds and the fact that.
It's just a lot larger.
Larger footprint demand so that's a good point George.
Alright, great. That's helpful and I guess, just more kind of stating the obvious with the modest growth that you have in the future. It still feels that the pre tax pre provision based on stable and growing that also feeds into.
Credit protection as well.
Yes.
Great. Thanks for taking my questions. Thanks, Chris.
Okay.
Thank you very much.
Our next question comes from Brett Robinson from the Humvee, it's great.
Hey, good morning, everyone.
Brett.
Wanted to.
Just talk about the rebuilding of the loan pipeline and I guess I'm curious just to hear your experience in this market if others pulling back is providing opportunities on credit Orchard, just still seeing existing customers, maybe looking to do things.
If there is pullback are you being able to.
Originate new stuff or put stuff in the pipeline that might be enhanced from AR.
From a credit perspective with equity et cetera.
So this is J J, so I think a couple of things.
The interest rate run up happen late last year I think we saw a pullback in contraction just from demands of our customers.
Not sure and so we knew that the end of the year that was going to be down and it was and so I think we just got a little more aggressive and rebuilding.
Those pipelines, but I think it's just a combination of our clients getting ready we are getting some some new look but George I'll tell you. We're seeing some things now that I think.
We werent looking at in the past that are coming to us that we're not excited about because it feels like everybody.
<unk> placed the deal so I do think there is.
Some limitations in the market, but I think our core business.
It remains the same and we're still looking for quality opportunities.
And our recent committee meetings, you can feel the pick up of credit and good credit from what we saw at the end of last year. So that's one of the thing.
<unk>.
We have required substantially more equity amongst all projects that we've done since the end of last year and a FERC should I look at that pipeline and look at the equity going in on a Friday and people are putting it in our core customers still have a lot of equity a lot of liquidity and we're just requiring more equity because the right spot rate environment and they are still doing it.
Yes.
Okay.
That's helpful.
I wanted to make sure.
Got you.
Youre, having to pay more in deposits everybody is in your betas have been really low.
Would you guys have just the spot deposit rate that maybe you paid for for Cds money market type accounts at the end of the quarter.
I believe we are one of our CD specials, you'll correct me, if I'm wrong, but I think we are.
We came out toward the end of the quarter at 4% for <unk>.
4% for nine months and $3 75 for 13 months that was kind of two of our specials at the end of the quarter. When we when we put that in place. We are seeing some 5% numbers from some of our competitors on money markets and some short term three six months Cds at.
5%.
We've been kind of just around that whether it was on a CD or money market.
Mostly.
In the 3% range on our money markets up until.
Probably.
February March really more in March we went into that 4% range on some of the request for money markets.
Okay. That's helpful.
And then you noted.
I kind of mentioned a while ago, but in the deck. We put out you can see that inquiries from February to March which was really where we obviously with the last rate hike, we had to increase our CD specials and then some of our money market. So our all in cost of deposits was 83 basis points as standard.
March March.
Okay.
And then just just lastly.
The tax rate from here.
Is 22% a good number or does that does that move any higher or lower.
It's generally it's I would say around that spot is kind of where we are.
We were right on top of our call for this quarter. So.
Thanks will be in that range.
Okay, Great appreciate all the color and congrats on the quarter.
Alright.
Yeah.
Thank you for your question.
Our next question.
Comes from Kevin Fitzsimmons from D. A Davidson your line is open.
Hey, good morning, everyone.
Just for me.
Okay.
Just wanted to given that the deal is now in the rearview in.
You guys have healthy capital levels, but granted.
A bit uncertain in the environment, how are you feeling about buybacks today.
I think its still part of our capital tool and reward for our shareholders.
These prices certainly attractive I think we will use it I think to your point, Kevin We've got plenty of capital and it's another tool we can use to reward our shareholders.
And what's the can you remind me what the current authorization and places.
So $50 million.
Got it okay.
And then happy now with you guys over deals are done you're over $8 billion in assets can you.
Remind us or maybe update us how youre thinking about this approach however, long it takes towards $10 billion in terms of weather.
Whether that with.
The amount left whether that changes your.
Our strategy our attitude on the M&A and weather.
Things that are generally expected or required of being $10 billion how much of that is.
As already in your expense base or is there more to go on that.
Hello, Tory checklist or being written because I think you've said in the past that.
They start well in advance of getting you ready.
I have and that continues.
Both our state examples that our federal the federal reserve.
Been very proactive.
For us to say, okay here, our expectations levels in terms of audit compliance management systems BSA.
Information systems, and we actually are having monthly calls with <unk>.
Federal Reserve just to make sure that we keep pace with our expectation levels and they are kind of be honestly, they've gone out of their way to do it.
I've done it.
They said Hey look we want you to be ready curve, if you're already working with us So I appreciate that.
What would be your attic.
In terms of M&A.
Right now for a bit we're going to digest. If we just can be completed two big acquisitions. So we.
We always remain nimble for opportunities, Kevin, but we are very much focused on integrating these acquisitions. We've added some markets, which we think gives us above average.
Organic growth opportunities. So we're very much focused on the organic growth piece of it.
But we will remain opportunistic we've started our <unk> Committee, we formed an internal management committee that meets quarterly.
We started our GAAP analysis, where we have a third party look at the gaps between $4 billion to $10 billion. What we have now in terms of our support systems versus what we need at $10 billion. So we've got a good start to go they're going to be some more expense as we get closer to that $10 billion.
We think we've got good platforms built in terms of software platforms process and procedure.
Across the company, but theres going to be more people required.
We approach that $10 billion.
Threshold, so I think the closer we get to that Youll see maybe some increased expenses associated with that.
And I assume thats really compliance folks for the most part.
Compliance BSA audit those are all areas that.
Really changed materially from being in the community Bank space to a regional bank organization.
Got it okay. Thank you very much thank you Kevin Kevin.
As a reminder, if you would like to ask a question you Press Star one one on your telephone.
Please standby, while we compile the Q&A roster.
At this time I would like to turn it back to <unk> for closing remarks.
Well, thanks, everyone for joining us today again, we're really thrilled with our quarterly results and we feel like we're in a really good position.
For from a competitive set that even given the economic headwinds.
I appreciate everybody attending.
Look forward to visiting with you next quarter.
Thank you for your participation in today's conference. This does conclude the program you may now disconnect and have a good day.
Okay.
[music].
Okay.
Okay.