Q3 2023 Home Bancshares Inc (Conway AR) Earnings Call

October 19, 2023

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Greetings, ladies and gentlemen, welcome to the home Bancshares incorporated third quarter 2023 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning.

Speaker 1: Greetings, ladies and gentlemen, welcome to the HomeBank shares incorporated third quarter 2023 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning.

Speaker 1: The company presenters will begin with prepared remarks, then entertain questions.

The company presenters will begin with prepared remarks, then entertain questions. Please.

Speaker 1: Please note that if you would like to ask a question during the question and answer session, please press star then one on a touch tone phone. If you decide you want to withdraw your question, please press star then two to remove yourself from the list. The company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You will find this note on page 3 of their Form 10-K filed with the SEC in February 2023.

Please note that if you would like to ask a question during the question and answer session. Please press Star then one on a touchtone phone.

If you decide you want to withdraw your question. Please press Star then two to remove yourself from the list. The company has asked me to remind everyone to refer to their cautionary note regarding forward looking statements you will find this note on page three of their Form 10-K filed with the SEC in February 2023.

At this time all participants are in a listen only mode and this conference is being recorded.

Speaker 1: At this time, all participants are in a listen-only mode, and this conference is being recorded. If you need operator assistance during the conference, please press star then zero.

Operator assistance during the conference. Please press Star then zero.

Speaker 2: It is now my pleasure to turn the call over to Donna Townsend, Director of Investor Relations. Thank you. Good afternoon and welcome to our third quarter conference call. With me for today's discussion is our Chairman, John Allison, Tracy French, President and CEO of Centennial Bank, Steven Tipton, Chief Operating Officer, and the Director ofodest British Loanership superstition office. Our volunteer,they are all fans of Centennial Bank. They areDOWN on organise. They want to support, their canty Food and these are those over county judges elections. fried

It is now my pleasure to turn the call over to Donna Townsell director of Investor Relations.

Unknown Executive: Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated 3rd quarter, 2023 Earnings Call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning.

Thank you good afternoon, and welcome to our third quarter Conference call with me for today's discussion is our chairman John Allison.

Unknown Executive: The company presenters will begin with prepared remarks then entertain questions. Please note that if you would like to ask a question during the question and answer session, please press star them one on a touch tone. If you decide you want to withdraw your question, please press star them to to remove yourself from the list.

I see France, President and CEO of Centennial Bank, Stephen Tipton, Chief Operating Officer, Kevin Hester, Chief Lending Officer, Brian Davis, Our Chief Financial Officer, Chris Poulton President of C. C F G.

And John Marshall President of Shore Premier Finance.

Speaker 2: 2023 continues to be tough for the banking sector. With bank failures, interest rate and funding pressure, and now potential credit concerns, this business is not for the faint of heart. Here at home, we hold ourselves to a high standard and to provide some details on our third quarter performance is our chairman, John .

2023 continues to be tough for the banking sector with bank failures interest rate and funding pressure and now potential credit concerns. This business is not for the sake of heart.

Unknown Executive: The company has asked me to remind everyone to refer to their cautionary note regarding forward looking statements. You will find this note on page three of their form 10k filed with the SEC in February 2023.

But here at home, we hold ourselves to a high standard and to provide some details on our third quarter performance as our chairman John Allison.

Unknown Executive: At this time, all participants are in a listen only mode and this conference is being recorded. If you need operator assistance during the conference, please press star then zero.

Speaker 3: Thank you. Welcome to the third quarter of 23 earnings release and conference call. We'll discuss the results in a quarter, we'll talk about the year and what's going on in the bank space, and then we'll open it up for Q&A. First, I'd like to pay respect to a mentor, a trusted professional investor, a respected friend, and trusted ally, a person we all look to for guidance and advice.

Thank you welcome to the third quarter.

This release and conference call, we will discuss the results of the quarter, we will talk about the year and what's going on in the bank space and then we'll open it up for Q&A.

Donna Townsell: It is now my pleasure to turn the call over to Donna Townsell, director of investor relations. Thank you. Good afternoon and welcome to our 3rd quarter conference call. With me for today's discussion is our chairman, John Allison, Tracy French, president and CEO of Centennial Bank, Steven Tipton, chief operating officer, Kevin Hester, chief landing officer, Brian Davis, our chief financial officer, Chris Poulton, president of CCFG, and John Marshall, president of short premier finance. 2023 continues to be tough for the banking sector with bank failures, interest rate and funding pressure and now potential credit concerns. This business is not for the faint of heart.

First I allowed to buy respect Joe Mcdonnell our trusted professional investor breakfast brim and trusted.

And we all look to for Dan Shannon.

Speaker 3: and we have total respect for her and she was above reproach. That is Sally Pope Davis, whose hand has guided Goldman Sachs Bank Stock Investing for many, many years. I said this at the Stevens Conference several weeks ago.

And we have total respect for her and she was above approach that is solid both Davis.

Whose hands as Jonathan Goldman Sachs Bank stock investors for many many years.

Stephens conference several weeks ago.

That having Sally and your stock is a long term investor with lack having the good housekeeping seal of approval when you start.

Speaker 3: that having Sally in your stock as a long-term investor was like having the good housekeeping sale of approval on your stock.

Speaker 3: All of us at home will miss our leadership, her guidance, her professionalism, and her straight top.

All of US at home will Miss her leadership for guidance or professionalism and a strike.

Speaker 3: because you always knew where Sally stood because she had a way of letting you know. Not only us, but the entire industry will miss her too. We wish her happiness in her retirement years and sincerely hope that life brings her many years of fulfillment. I have one other comment that will not be the same without you, Sally.

Because you always knew where salaries because she had a way to let you know not only us but the entire industry will miss her too we wish her happiness in retirement years and sincerely hope that last Brian for many years fulfillment I had one other call made will not lead to signed with <unk> Sadly.

John Allison: To hear it home, we hold ourselves to a high standard and to provide some details on our 3rd quarter performance is our chairman, John Allison. Thank you.

John Allison: Welcome to the 3rd quarter of 23 earnings release and conference call. We'll discuss results in the quarter. We'll talk about the year and what's going on in the bank space and then we'll open it up for Q&A.

Speaker 3: It will bring an emptiness that cannot be filled by anyone anymore. Let's go to the world and talk about banking. I asked last quarter what possibly can go wrong.

Bringing the emptiness cannot be failed anyone anymore, let's go in the world, Let's talk about Viking I asked last quarter, possibly can go wrong.

John Allison: First, I'd like to pay respect to a mentor, trusted professional investor, respected friend, entrusted our person we all look to for guidance and advice. And we have total respect for her and she was above reproach that is Sally both Davis, whose hand has gathered golden sex, bank stock investing for many, many years. I said this at the Stevens conference several weeks ago that having Sally in your stock as a long term investor was like having the good housekeeping seal of approval on your stock.

Speaker 3: I agree with Jamie Dimon, I read his information he put out and that in addition to being in a tough economic time, we're facing very perilous war with Ukraine war and now the war with Israel. And that one has the potential maybe of getting out of control, hopefully not.

Jamie Diamond ratio stemmed from I assume he put out.

In addition to ban in a tough economic times, we're facing very perilous wall with with you, Brian Moore and now the war with Israel and.

That one has the potential maybe of getting out of control hopefully not.

Speaker 3: The quarter was a little disappointed by home bike shares high standards because we always expect to be the best in the night.

The quarter was a little disappointed by home Bancshares have standards, because we always expect to be the best in the nation, but will continue to be an industry leader as we compare to other financial institutions.

Speaker 3: but we continue to be an industry leader as we compare to other financial institutions.

John Allison: All of us at home will miss our leadership for guidance for professionalism and a straight talk because you always knew where Sally stood because she had a way of letting you know not only us but the entire industry will miss her too. We wish her happiness in her retirement years and sincerely hope that life brings her many years of fulfillment. I have one other comment will not be the same without you, Sally. It will bring an emptiness that cannot be filled by anyone anymore.

Speaker 3: two main culprits were operating expenses and interest expenses that caused a slight decrease in net income.

Two main culprits were operating expenses and interest expenses that caused a slight decrease in net income operating expenses are creeping up as evidenced with almost 46% efficiency ratio and interest expense is creeping up blackwash as evidenced by the cost of interest bearing deposits.

Speaker 3: Operating expenses are creeping up as evidenced with almost 46% efficiency ratio, and interest expense is creeping up likewise as evidenced by the cost of interest bearing deposits.

Speaker 3: from 227 in June to 255 at the end of the quarter. The good news is, enters margin actually improved in the month of September , as we've been working diligently to stop the bleeding, and we're just starting to address the expense-fight issue.

From 227 in June to $2 50 at the end of the quarter.

John Allison: Let's go to the world and talk about banking. I asked last quarter what cost we can go wrong. I agree with Jamie Damm, I read his information he put out and that in addition to being in a tough economic time, we're facing very perilous war with Ukraine war and now the war with Israel. And that one has potential, maybe getting out of control, hopefully not.

The good news is interest margin actually improved in the month of September as we've been working diligently to stop the bleeding and we're just starting to address the expense issues. The.

Speaker 3: The lenders are done in the park by increasing revenue through reprising and higher rich nation rates of new loans. Of optimistic, they will overcome the increase in interest in spam for in the fourth quarter.

The lenders are doing their part by increasing revenues through repricing and higher origination rates of new loans are optimistic they will overcome the increase in interest expense in the fourth quarter.

Speaker 3: The expense of non-income producing the area of the bank will have to be addressed in these departments. It's really pretty simple. The profits are going down either in British revenue or reduced expenses. There is no other way to increase profitability or it will less you just more maintain the status.

John Allison: The quarter was a little disappointing by Home BancShares high standards because we always expect to be the best in the nation, but we continue to be an industry leader as we compared to other financial institutions. The two main culprits were operating expenses and interest expenses that call to slight decrease in that income. Operating expenses are creeping up as evidence with almost 46% efficiency ratio and interest expense is creeping up likewise as evidenced by the cost of interest brand deposits from 227 in June to 255 at the end of the quarter.

<unk> of non income producing area of the mine.

Have to be addressed in each department scrutinize, it's really pretty simple its profits are going down user installation revenue reduce expense. There is no otherwise the increased profitability or at least you're just more maintaining the status quo. Someone said originally hoped if I'm Lucky this will work out well hope's not a strategy.

Speaker 3: Someone said, Rick, I hope that I'm lucky this will work out. Well, hope's not a strategy and looks not a plan. We must plan for what we want to do to improve. The quantity remains strong and we've successfully reduced the size of our asset by letting the high price money go to those willing to pay almost anything for.

<unk> and less amount of plan, we must plan for what we wanted to improve.

Quality remains strong and we have successfully reduced the size of our asset base by letting the high price money go to those willing to pay almost anything forward.

John Allison: The good news is that interest margin actually improved in the month of September as we've been working diligently to stop the bleeding and we're just starting to address the expense that issues. The lenders are doing their part by increasing revenue through reprising and higher rich nation rates of new loans. Of optimistic, they will overcome the interest and interest expense in the fourth quarter. The expense of non-income producing area of the bank will have to be addressed in these departments.

Speaker 3: However, on the expit side, we still have the same number of people as we did when we had much larger efforts.

On the expense side, we still have the same number of people as we did when we had much larger asset base watching newspaper ads. It appears others may not be as good of liquidity liquidity position as home.

Speaker 3: Watching the news paper as an appearance, others may not be as good and liquidic, liquidic deposition as home, because they'll pay him almost any right just to get the money. Maybe profitability is not important to them. The margin fell nine basis for it during the quarter, 419, at September 30. However, the good news is, we've grew more as an in September and Steven will talk more about that in his remarks.

Charles.

Almost any right just to get the money maybe the profitability is not important to them the margin fell nine basis points during the quarter to 490 <unk>.

Timber 30, however, the good news is we grew margin in September .

John Allison: It's really pretty simple. Its profits are going down either in pretty short revenue or reduce expenses. There is no other way to increase profitability or unless you just will maintain the status quo. Someone said, Ruthfully, I hope that I'm lucky this will work out. Well, hope is not a strategy and looks not a plan.

Stephen will talk more about that in his remarks.

Speaker 3: Certainly appears that maybe the end courses have slowed down.

Peers, maybe then for issuance has slowed down.

Speaker 3: I could be ahead by state tune. Our TV and newspaper ads continue to promote the strength of home bike shares, which relates directly to seeking families from our customer deposits. Many customers are initially chasing rights on the positive without any consideration as to what happens if the big bad wolf shows up at the door. Many bikes would be closed before the sun sets to die.

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I would stay tuned our television newspaper ads continue to promote the strength of home bancshares, which relates directly to psych and soundness of our customer deposits. Many customers are initially chasing rates on deposits without any consideration as to what happens if the big bad will shows up.

John Allison: We must plan for what we want to do to improve. The quantity remains strong and we've successfully reduced the size of our asset base by letting the high-price money go to those willing to pay almost anything for it. However, on the expense side, we still have the same number of people as we did when we had much larger asset base. Watching the news paper as it appears, others may not be as good a liquidic liquidity position at home because they'll pay almost any right just to get the money. Maybe profitability is not important to them. The margin fell nine basis for it during the quarter to 4.19 at September 30th.

No.

The banks will be closed before the sunset It does yes.

Speaker 3: If their bank is 100% loaned and pocket less than 9% capital, it could happen to die tomorrow or anything.

If there are bank is 100% loan to deposit in less than 9% capital. It could happen today tomorrow or at anytime home has an 86% loan to deposit and has supported a powerful CET, 114% that puts us in the top tier.

Speaker 3: Home has an 86% or older deposit and is sporting a powerful CET-1, a 4, 10%. That puts us in the top tier for people don't want CET-1 is.

People don't want CET, one is that's capital puts us in the top tier of all banks in the U S. Regardless of size are powerful capital remember as demonstrated by the number one bank in America JP Morgan Chase as a CET one capital ratio of 14, 3% just slightly above hurdle.

Speaker 3: That puts us in the top tier of all bikes in the US, regardless of size. Our powerful capital number is demonstrated by the number one bike in America. JPMorgan Chase has a CET-1 cap to ratio of 14.3% just slightly above home. We're very proud of our forecast balance. We will continue to build on our strengths.

John Allison: However, the good news is we've grew more than in September and Steven will talk more about that in his remarks. It certainly appears that maybe the increases have slowed down. However, it could be a head-byte state term.

We're very proud of our fortress balance sheet, we will continue to build on our strength Jamie.

John Allison: Our TV and newspaper ads continue to promote the strength of home buying shares, which relates directly to sinking families from our customer deposits. Many customers are initially chasing rights on deposit without any consideration as to what happens if the big valuable shows up at the door. Many banks would be closed before the sun set to die. If their bank is 100% loaned in the deposit and less than 9% capital, it could happen to die tomorrow or at any time.

Speaker 3: If Jimmy Diamond said he is scaring his company to be ready for whatever comes his way, then your company home is doing exactly the same thing. I quote Mr. Diamond, this may be the most dangerous time the world has seen in decades. We are in total agreement and are continuing to take the safe path and protect our imposters, hard earned money, our shareholders' investment in home, and to ensure our employees have continued236.

<unk> said he has given his company to be ready for whatever comes is Y and Youre currently home is doing exactly defined by.

Mr. Diamond this might be the most dangerous time the world has seen in decades. We are in total agreement and are continuing to tighten the site task and protect our path to his hard earned money, our shareholders and investment in <unk> and to ensure our employees have continued important.

John Allison: Home has an 86% loaned deposit and is sporting a powerful CET-1, a 14%. That puts us in the top tier for people who don't want CET-1 is, that's capital. That puts us in the top tier of all banks in the U.S, regardless of size.

Speaker 3: Your bike will not be one of the SDB signatures or publics that did not have the ability to pay out uninsured depositors. Home can pay out all insured depositors and still have money left. I don't have any bike can save us today, but I'm damn sure proud of our ability to do that. And personally commit that we will remain in that strong position on a go-forward bike.

<unk> will not be one of the STB signatures or publish that did not have the ability to pay out of uninsured. The positives homes can pay out all insurance policies and still have money left I don't know how many buyers can save us to that new Hampshire proud of our ability to do that and personally commit that we were mining that strong position.

John Allison: Our powerful capital number is demonstrated by the number one bank in America. J.P. Morgan Chase has a CET-1 capital ratio of 14.3% just slightly above home.

On a go forward basis.

Speaker 3: In addition to that, home would run a 1.2-o return-on assets after borrowing all the money that we needed to pay off the other insured deposits. I think that's pretty good. Some bikes would love that. That is not an acceptable number at home by a year. Adding to the financial strength of home is paralading amounts of reserves for bad loans.

In addition to that home would run a one point to our return on assets. After barring all money that we needed to pay off the uninsured deposits of I guess pretty good some bikes, we love that that is not an acceptable number at home bancshares.

John Allison: We're very proud of our focus balance sheet, and we will continue to build on our strength. Jamie Donne said he is staring his company to be ready for whatever comes his way, and your company home is doing exactly the same thing. I quote Mr. Diamond, this may be the most dangerous time the world has seen in decades. We are in total agreement and are continuing to type the safe path and protect our depositors harder than money, our shareholders investment and home, and to ensure our employees have continued employment.

The nature of the financial strength of home is pure leading amounts of reserves for bad loans.

Speaker 3: Almost $300 million a 2% outstanding loan to RANCEF is one of the best in the country. A 2% reserve level has provided security for our company, even during the great financial crisis of 2005 to 2012.

Almost $300 million or 2% of outstanding loans ranks us as one of the best in the country, a 2% reserve level has provided security for our company even during the great financial crisis of 2005 through 2012.

Speaker 3: We had sufficient capital and reserves, and we came through that with hardly a bomb. We're all expecting additional impact to the economy as the Fed continues to hold rights higher for longer while attempting the difficult process of making a safe land.

We have sufficient capital and reserves and we came through that was hardly above we're all expecting additional impact to the economy as the fed continues to hold rates higher for longer while attempting the desktop process of making our site landing.

John Allison: Your bank will not be one of the SBV signatures or public that did not have the ability to pay out uninsured depositors. Home can pay out all insured depositors and still have money left. I don't know how many banks can save us today, but I'm damn sure proud of our ability to do that and personally commit that we will remain in that strong position on a go-forward bank. In addition to that, home would run a 1.20 return on assets after buying all the money that we needed to pay off the uninsured deposits. I think that's pretty good. Some bikes would love that. That is not an acceptable number at home bikes here.

Speaker 3: Maintaining strong reserves is another spoken of will to ensure home will be a survivor that the next crisis has we have been through all the others. Not only a survivor, but to come out the other side, stronger than what we were in.

Maintaining strong reserves is another spoke in Ohio to ensure home will be a survivor. So the next crisis as we have been through.

Not only a survivor, but to come out the other side stronger than what we were.

We're constantly watching for opportunities you're right on it than we were one of the biggest buyers of bell biased in the country and we're looking for opportunities and we're seeing strong another spoken of where the strength is protecting the growing tangible common equity better now as TCE, while many institutions that have not protected their TCE allow.

Speaker 3: We're constantly watching for opportunities. You remember right now in 10, when we were one of the biggest buyers of bad vibes in the country, and we're looking for opportunities, and we're seeing from them. Another spoke of the oil strength is protecting the growing tangible common equity better known as TCE. While many institutions have not protected the TCE, allowing several to even go negative. Home by chairs is proud of continuing not only to hold on.

John Allison: Adding to the financial strength of home is pure leading amounts of reserves for bad loans. Almost $300 million, a 2% outstanding loan is ranked as one of the best in the country. A 2% reserve level has provided security for our company, even during the great financial crisis of 2005 through 2012. We had sufficient capital and reserves and we came through that with hardly a bomb.

I have several to even go negative on that shares as proud of continuing not only the whole loan.

But the rollout during the fastest escalation of interest rates societies.

Speaker 3: But to grow ours during the fastest escalation of interest rates since the 80s.

Speaker 3: Over the past 12 months, we have paid out 143.3 million dividends. We've repurchased 2 million, 250,900 shares of stock for $51 million. And it's taken an additional mark to available for sale or referred to as AFS of $43 million. We've been 18 now.

Over the past 12 months, we have paid out $143 3 million of dividends, we repurchased $2 million 250000 now.

John Allison: We're all expecting additional impact to the economy as the Fed continues to hold rights higher for longer while attempting the difficult process of making a fake landing. Maintaining strong reserves is another spoke of the will to ensure home will be a survivor through the next crisis as we have been through all the others. Not only a survivor, but to come out the other side, stronger than what we were in.

900 shares of stock for $51 million and have tightened that additional more to available for sale are referred to as <unk>.

A $43 million, while still growing tangible common equity by 11%.

Speaker 3: We grew it from $9.82 a year, $10.90. So that's a shout out to all of our people for an outstanding job in managing this company through them, and it's pretty dangerous to come.

Through it from $9.92 a share to $10.90. So thats a shout out to all of our people for an outstanding job in managing this company through an extremely dangerous economy.

John Allison: We're constantly watching for opportunities. You remember right now in 10 we were one of the biggest buyers of bad bikes in the country and we're looking for opportunities and we're seeing for them.

Speaker 3: If you want to throw in the kitchen sink theory and take all the additional losses of happy bank bond book transactions that we hold as held maturity, the market would be approximately another $31 million. But still equates, if we take that, it still equates to tangible common equity growth of 10.4% over the last 12 months.

If you want to throw in the kitchen sink theory and types of additional losses of happy Bank Bond book transaction debt, how as held to maturity the mark to market would be approximately another $31 million, but still acquired if we take that it still requires some tangible common equity growth of 10, 4% over the last two.

John Allison: Another spoken of will of strength is protecting the growing tangible common equity, better known as TCE. While many institutions have not protected the TCE, allowing several to even go negative, home bike shares is proud of continuing not only to hold on, but to grow ours during the fastest escalation of interest rates since the 80s. Over the past 12 months, we have paid out $143.3 million dividends. We've repurchased $2,250,900 shares of stock for $51 million and have taken an additional mark to available for sale or referred to as AFS of $43 million while still growing tangible common equity by 11%.

Months.

If it's turned that bank stocks traded on a multiple of tangible book, one would expect home stock to be up about 10% with our TCE is up.

Speaker 3: If it's true that by stops trade on multiple tens of book, one would expect home stock to be up about 10% with those TCEs. We're actually trading down about that.

We're actually trading down about that same percentage.

Speaker 3: I think it's indicative of the fear that they exist in this aspect.

It gets an executive of the fear that exists in this asset.

Earnings ability is certainly another spoke in the wheel and we're continuing our March towards our stated goal at the first year of $400 million for the year as my football coach decides the highs and the follow on where most of the houses that are for the big three quarters, we've earned $306 $8 million through the first three quarters.

Speaker 3: Ernest Ability is certainly another spoke in the wheel to work continuing our march towards a steady gal at the birth year of $400 million through the year. It's my football coach, you should say.

John Allison: We grew it from $9.82 a share of $10.90 so I have to shout out to all of our people for an outstanding job in managing this company through an extremely dangerous economy. If you want to throw in the kitchen sanctuary and take all the additional losses of happy bank bond book transactions that we hold as held maturity, the market would be approximately another $31 million, but still equates. If we take that, it still equates the tangible common equity growth of 10.4% over the last 12 months.

Speaker 3: The haze in the barn. Well, most of the haze in the barn, for the big three quarters, we were in $316.8 million through the first three quarters. We had our 98.5 million for the third quarter of the year, 49 cents a share. But if you add the last four quarters together, homeless produced a record earnings of $415 million or $2.5 cents a share while fighting all of the strikes.

The $8 5 million for the third quarter of the year of $49 a share.

If you add the last four quarters together homeless produced a record earnings of $415 million or $2.05 a share while finding all of the distractions, we have encountered both an economic and manmade disruptions from some disgruntled former employees.

Speaker 3: We have encountered both on the economic and man-made disruptions from some disgruntled former

John Allison: If it's true that by-stocks trade on multiple of times will look, one would expect home stock to be up about 10% with those TCEs. We're actually trading down about that same percentage. I think it's indicative of the fear that it exists in this aspect.

Speaker 3: Going a few key numbers, revenue was 245.4 down his detect. RLA 178, we like a 180 or better. Nam was 4.19 and return on time for commonly active with 17.62%. Asset quality is still remaining strong with non-performing assets at 4.42. Last time we talked, we had an office bill, we just heard about an office billing that possibly was going to be...

A few key numbers revenue was $245 four down just a tick.

Roy 171.

One idea better NIM was four 1% a return on tangible common equity of 17 six 2%.

Quality is still remaining strong with nonperforming assets at full forward too.

John Allison: Ernie's ability is certainly another spoke in the wheel. We're working continuing our March towards a steady goal at the first year of $400 million through the year. It's my football coach, you should say, the haze in the farm. Well, most of the haze in the farm, for the big three quarters, we were in $306.8 million through the first three quarters. We are 98.5 million for the third quarter of the year, 49 cents a share. But if you add the last four quarters together, home is produced a record earnings of $415 million or $2.5 cents a share.

Last time, we talked we had an office building, we just heard about an office building that possibly whats going to.

Speaker 3: We're going to get back. It looks like it's going to be a fourth quarter item and we're going to get it back in order over the fourth quarter. I traveled to see the asset and walked off this building and I left quite happy with the location and condition of the property. Prime location, great parking garage, elevators, well kept. I don't expect much loss. Is any, I may go to the end of it.

We're going to get back it looks like it's going to be a fourth quarter item and we're going to get it back in the fourth quarter at travel to see the asset and wealth. The office building and I left quite happy with the location and condition of the property Prime location right parking garage elevators, Wellcare I don't expect much loss.

Any avnet, we are going to be in it.

Speaker 3: below 23, the 22 and 23 May. So time will tell what it's worth, but I'm not expecting much loss. We had a new one that popped up, the Marina and Dallas. This is new, probably too early to tell. I don't expect a loss here. We underwrote a problem, which I'm sure we probably did. If hot is Marina, and the Marine business has been, I can't imagine a loss there. There's one other one we've been carrying on the boats for some time.

Below 23 between 'twenty, two and 'twenty three so time will tell whether it's worth it but I'm not expecting much alone without a new and it popped up a marina in Dallas. This is move probably too early to tell I don't expect a loss here, if we underwrote a property, which I'm sure we probably did as hot as marinas in the marine business has been.

John Allison: While fighting all of the strikes, we have encountered both on the economic and man-made disruptions from some disgruntled farm employees. He's got a few key numbers, revenue was 245.4 down, just a tick, R.O.A. 178, we'd like a 180 or better, NEM was 4.19, and return on time for a common act, it was 17.62%. Asset quality is still remaining strong with number 4 and assets at 4.42.

I can't imagine a loss there is one other one we'd been carried on the books for some time.

Speaker 3: and I Kevin's gonna talk about it, look like he's gonna play me have a solution to that.

And Kevin is going to talk about it looks like he has got it when you have a solution to that one.

Speaker 3: Long the minute's been about half of what it has been. We may be in the beginnings of a long recession. Yellowstone loans were up to 6.98 from 6.48, up 14 basis points to last quarter.

Loan demand, it's been about half of what it has been that we might be in the beginnings of a alone recession.

John Allison: Last time we talked, we had an office building, we just heard about an office building that possibly was going, we were going to get back. It looks like it's going to be a fourth quarter item, and we're going to get it back and over and over the fourth quarter. I traveled to see the Asset and walked the office building, and I left quite happy with the location, the condition of the property.

Loans were up to 6.98 from $6 four eight up 14 basis points last quarter.

Speaker 3: Loans were up slightly for the quarter, primarily CCFG. They pressed his crew time on. I was expecting a loan growth in the fourth quarter. So far, I don't normally predict that because I usually might do the same, but I will predict in some loan growth in the fourth quarter. And we're now riding our loans in the high mines in the lower 10.

Loans were up slightly for the quarter, primarily CCF G <unk>.

Chris and his crew came one we're expecting loan growth in the fourth quarter. So far I don't normally predict that because I, usually mitral side, but we're predicting some loan growth in the fourth quarter and we're now riding our loans and the hormones in the lower teens.

John Allison: Prime location, great parking garage, elevators, well kept, I don't expect much loss, is any, I may go to be in it at below 23 to 22 and 23. Time will tell what it's worth, but I'm not expecting much loss.

M&A activity, we've been involved in several deals with most of them just don't work at this time last quarter. There was some press about some comments that I made some fresh came out I don't know where it came from.

Speaker 3: And when I get active here, we've been involved in several deals with most of you just don't work at this.

John Allison: When I knew it had popped up, a Marina in Dallas, this is new, probably too early to tell. I don't expect a loss here, if we underwrote it probably, which I'm sure we probably did. It's hot, there's Marina, and the Marine business has been, I can't imagine a loss here.

Speaker 3: Last quarter there was some press about some comments that I made. Some press came out, I don't know who pressed James wrong.

Speaker 3: about some comments I made during 2018 about not seeing a problem. I did say, I didn't see a problem with CRE back then, not sure what the purpose of taking an old quote and putting it four or five years later, but it looked and smelled and acted like maybe a hit piece. We're 100% correct because there was not a problem with our CRE portfolio, but maybe somebody's trying to make some money on the shores. We'll keep you informed about, give it to you.

About some comments I made during 2018 about not seeing a problem.

<unk> I don't see a problem with CRA back then not sure what the purpose of Titan in our quote and pruning at four or five years later, but it look and smell and that is why it might be a hit base, where we're 100% correct coast. There was not a problem with our CRE portfolio, but maybe somebody is trying to make some money on the shores, we will keep you informed.

John Allison: There's one other one we've been carrying on the boats for some time, and I Kevin's going to talk about it. Looks like he's got to play me have a solution to that one.

John Allison: Long to mind, it's been about half of what it has been, we may be in the beginning of a long recession. Yellowstone loans were up to 6.98 from 6.48, up 14 basis points last quarter. Loans were up slightly for the quarter, primarily CCFG, the press of his crew came home.

In the future.

Speaker 3: We always ask about what's going on in the regulation side. And the examiner's all thanked the wall as cured by capital. And I guess if the CEDK one was 100%, they would be correct.

We always ask about what's going on on the regulation side and examine resolved tomorrow is cured by capital and I guess, if the CET one was 100% that would be correct.

John Allison: We're expecting long growth in the fourth quarter, so far I don't normally predict that because I usually make mistakes. But I will predict some long growth in the fourth quarter, and we're now riding our loans in the high mines and the lower teens.

Speaker 3: You probably not going to expect this coming from me, but I'm inclined to be favorable to raising capital requirements. It appears to me that most bank failures are resolved of bad loans. So if there was some limit on loan to the positive ratios or loan to capital, they would not be able to stretch themselves into these kind of problems.

You're probably not going to expect is coming from me, but I'm inclined to be favorable to raising capital requirements. It appears to me that most bank failures.

All of that loan. So if there was some limit our loan to deposit ratios are loan capital they will not be able to stretch themselves and do these kind of problems.

John Allison: In an activity we've been involved in several deals with most of them just don't work at this time.

John Allison: Last quarter there was some press about some comments that I made. Some press came out, I don't know if we were to change around, about some comments I made during 2018 about not seeing a problem. I didn't see a problem with CRE back then. Not sure what the purpose of taking an old quote and praying in four or five years later, but it looked and smelled and acted like maybe a hit piece.

Speaker 3: would not be opposed to some kind of restraint because the world is full of 108% longer than the positive bias left in 9% capital. If I can't control themselves, somebody needs control.

Not be opposed to some kind of restrained because the world is full of 190% loan to deposit bikes were less than 9% capital if they can't control themselves somebody Leach control I also think that should be forced to hit a certain level of profitability for they can expand their franchise.

Speaker 3: I also find that she'd be forced to hear a certain plan to prop the bill report they can expand their franchise.

Speaker 3: I think those ideals had possibilities of helping and would be meaningful rather than some of the mass we do from time to time that really done many.

Those deals have possibilities of helping it would be meaningful rather than some of the mass window from time to time that really doesn't mean anything.

John Allison: We're 100% correct because there was not a problem with our CRE portfolio, but maybe somebody's trying to make some money over the shores. We'll keep you informed of that in the future.

Speaker 2: It appears to usually show up late in the dollar show. It's the old story. Some people might think that, and some people watch things happen, and other people say, what happened? And I thought to say, back to you, daughter, back to you, Matt. Thank you for those comments, Johnny. Steven Titts and we'll speak next with some details on our operation.

First I usually show up late in the dollars shore Zale stores. Some people might think happen. Some people will watch things happen and other people say what happened.

John Allison: We always ask about what's going on in the regulation side, and the examiners all think the wall is cured by capital. And I guess if the CT1 was 100%, that would be correct. You probably not expect this coming from me, but I'm inclined to be favorable to raising capital requirements. It appears to me the most bank failures are resolved with bad loans. So if there was some limit on loaned deposit ratios or loaned capital, they would not be able to restrict themselves into these kinds of problems.

Back to you dialed back to you Mike.

Thank you for those comments John .

Stephen Tipton State Nic and details on our operations. Thanks.

Speaker 4: Thanks Donna. I'll start with the net interest margin as you referenced in Johnny's comments. Reported them was down nine basis points to 419 and Q3.

Thanks Donna.

Start with the net interest margin as you referenced Johns comments reported NIM was down nine basis points to 419 and Q3, but.

John Allison: I would not be opposed to some kind of restraint because the world is full of 108% loaned deposit by less than 9% capital. If they can't control themselves, somebody needs control. I also think that she'd be forced to hit a certain level of profitability for they can expand their franchise.

Speaker 4: but included about half of the million dollars of net advanced expense this quarter due to a couple of non-accruals that Kevin will mention in his remarks.

That included about half a million dollars of net event expense this quarter due to a couple of non accruals that Kevin mentioned in his remarks.

Speaker 4: Normalizing for those event items, the net interest margin would have declined six basis points on a link quarterback.

Normalizing for those items. The net interest margin would have declined six basis points on a linked quarter basis.

Speaker 4: We continue to closely monitor asset repricing against the increase in cost on the funding set.

We continue to closely monitor asset repricing against the increase in cost on the funding side.

Speaker 4: On a month-to-month basis, we saw a little more pressure in August on the NAM. It actually had slight improvement in September with the Coronet Interest Margin at 419.

On a month to month basis, we saw a little more pressure in August on the NIM and I actually had a slight improvement in September with the core net interest margin at 419.

John Allison: And I think those ideals have possibilities of helping that would be meaningful rather than some of the maps we do from time to time that really doesn't mean anything. It appears to usually show up late in the dollar short. It's the old story. Some people might think something, some people watch things happen, and other people say what happened.

During the quarter total deposit costs increased 23 basis points to 187%, while the yield on loans. Excluding event income increased 18 basis points to six 9% on a monthly basis totaled.

Speaker 4: During the quarter, total deposit costs increase 23 basis points to 1.87% while the yield on loans, excluding event income, increased 18 basis points to 6.99%.

John Allison: I'm going to start to say back to you, Donald, back to your mind.

Donna Townsell: Thank you for those comments, Johnny.

Stephen Tipton: Stephen Titts and we'll speak next with some details on our operations. Thanks, Donna. I'll start with the net interest margin as you referenced in Johnny's comments. Reported them was down nine basis points to 4.19 and Q3, but included about half of a million dollars of net event expense this quarter due to a couple of non-accruals that Kevin will mention in his remarks. Marks.

Speaker 4: Total deposit costs increase seven basis points in September to 196.

Total deposit costs increased seven basis points in September to 196, while the yield on loans, excluding the income increased 11 basis points to seven 8%.

Speaker 4: While the yield on loans, excluding event income, increased 11 basis points to 7.08.

We're pleased to see the results in the loan yield is efforts from repricing maturities and discipline on new production begins to show in our results.

Speaker 4: We're pleased to see the results in the loan yield as efforts from repricing materiities and discipline on new production begins to show in our results.

Stephen Tipton: Normalizing for those event items, the net interest margin would have declined six basis points on a link quarter basis. We continue to closely monitor asset repricing against the increase in cost on the funding side. On a month, the month basis, we saw a little more pressure in August on the name and actually had slight improvement in September with the core net interest margin at 419. During the quarter, total deposit costs increase 23 basis points to 1.87% while the yield on loans, excluding event income, increased 18 basis points to 6.99%.

Additional loan repricing opportunities continue this quarter.

Speaker 4: Additional loan repricing opportunities continue this quarter.

Speaker 4: with over $200 million maturing at 5% or below. And we've got a little over $800 million between now and the end of next year at 5% or below. So there's definitely opportunity.

With over $200 million maturing at 5% or below and we've got a little over $800 million between now and the end of next year at 5% or below so there's definitely opportunity there.

Speaker 4: Switching to liquidity and funding, we continue to manage the interest rate environment we're in today, trying to strike a balance between the rate competition is offering and fostering our own relationship.

Switching to liquidity and funding we continue to manage the interest rate environment. We're in today trying to strike a balance between the rate competition is offering and fostering our own relationships and many of the markets. We are in 6% deposit rates are beginning to be the new normal.

Speaker 4: In many of the markets we are in, 6% deposit rights are beginning to be the new.

Speaker 4: Total deposits declined 478 million in the quarter, with the decline occurring in July and August . The Texas and Florida regions.

Total deposits declined $478 million in the quarter with the decline occurring in July and August .

Stephen Tipton: On a monthly basis, total deposit costs increase 7 basis points in September to 196, while the yield on loans, excluding event income, increased 11 basis points to 7.08%. We're pleased to see the results in the loan yield as efforts from repricing materities and discipline on new production begins to show in our results. Additional loan repricing opportunities continue this quarter with over $200 million maturing at 5% or below, and we've got a little over $800 million between now and the end of next year at 5% or below.

The Texas and Florida regions saw the majority of the decline.

Speaker 4: While the Arkansas regions continue to be a little more stable like we saw in prior.

While the Arkansas regions continued to be a little more stable like we saw in prior quarter.

Speaker 4: Non-intersparing balances accounted for about two-thirds of the decline in deposits in the quarter, and stand at 26% of total deposit balances. This is possible.

Noninterest bearing balances accounted for about two thirds of the decline in deposits in the quarter and stand at 26% of total deposit balances down from 27% in Q2.

Alternative funding sources remain extremely strong.

Speaker 4: Alternative funding sources remain extremely strong with broker deposits only comprising 2.4% of total I bill.

With broker deposits only comprising two 4% of total liabilities.

Speaker 4: We allowed 65 million in broker balances to roll out in July .

We allowed $65 million and brokered balances to rollout in July .

Stephen Tipton: So there's definitely opportunity there. Switching to liquidity and funding, we continue to manage the interest rate environment we're in today, trying to strike a balance between the rate competition is offering and fostering our own relationships. In many of the markets we are in, 6% deposit rates are beginning to be the new normal. Total deposits decline 478 million in the quarter with the decline occurring in July and August. The Texas and Florida regions saw the majority of the decline, while the Arkansas regions continue to be a little more stable like we saw in prior quarter.

And continue to work on customer relationships that provide long term value.

Speaker 4: and continue to work on customer relationships that provide long-term value.

Speaker 4: The focus in loan committees and discussions amongst all of our regional presidents continues to be on deposit gathering, core customer growth and retention.

The focus in loan committees and discussions amongst all of our regional presidents continues to be on deposit gathering core customer growth and retention.

Speaker 4: On the asset side, as Johnny mentioned, loan origination volumes load in Q3 with approximately 660 million in commitments compared to 1.3 through a day and last.

On the asset side as Johnny mentioned loan origination volume slowed in Q3 with approximately $660 million in commitments compared to $1 3 billion last quarter.

Speaker 4: yields on originations continue to improve with an average coupon of 8.98% in Q.

Yields on originations continued to improve with an average coupon of 898% in Q3.

Stephen Tipton: Non-intersparing balances accounted for about two thirds of the decline in deposits in the quarter and stand at 26% of total deposit balances down from 27% in Q2. Alternative funding sources remain extremely strong with broker deposits only comprising 2.4% of total liabilities. We allowed 65 million in broker balances to roll out in July and continue to work on customer relationships that provide long-term value.

Speaker 4: correspondingly pay off volume decline in Q3 to a total of 578 million pay off.

Correspondingly payoff volume decline in Q3 to a total of $578 million in pay offs.

And the yield on new loans was in excess of 150 basis points higher than the outgoing rate on those payoffs.

Speaker 4: and yield on new loans with an excess of 150 basis points higher than outgoing rate on those payoffs.

Closing with previously mentioned strength of a company <unk>.

Speaker 4: All capital ratios improved in the quarter, notably with the TCE ratio of 10.76% and a total risk-based capital ratio of 17.6%. With that...

All capital ratios improved in the quarter, notably with the TCE ratio of 10, 7%, 6% and a total risk based capital ratio of 17, 6%.

And with that Don I'll turn it back over to you.

Stephen Tipton: The focus in loan committees and discussions amongst all of our regional presidents continues to be on deposit gathering, core customer growth and retention. On the asset side, as Johnny mentioned, loan origination volume slowed in Q3 with approximately 660 million in commitments compared to 1.3 through a billion last quarter. Yields on originations continued to improve with an average coupon of 8.98% in Q3. Correspondingly, payoff volume declined in Q3 to a total of 578 million in payoffs, and the yield on new loans was an excess of 150 basis points higher than outgoing rate on those payoffs.

Speaker 2: Thank you, Steven. And now Kevin has journaled share information from the lending staff.

Thank you Steven and now Kevin Hester, who will share information from the lending.

Thanks, Donna and good afternoon, everyone.

Speaker 5: Many times through the years, I've characterized our approach to lending as conservative. We always preach to our lenders that we want asset quality, profitability, and growth in that order. In 2017, when most banks were loosening credit standards, we were tight.

Many times through the years I've characterized our approach to lending is conservative we always preach to our lenders that we won't asset quality profitability and growth in that order.

In 2017, when most banks were loosening credit standards, we were tightening.

Speaker 5: I believe that all of this was to put us in a position for a time like today. We knew that the free money days would come to an end and that interest rates would increase. However, there was no way to anticipate the giveaway money days of COVID that would create massive inflation.

I believe that all of this was to put us in a position for a time like today.

We knew that the free money days would come to an end and that interest rates would increase however, there was no way to anticipate the giving away money days of Covid that would create massive inflation.

Speaker 5: No one anticipated the level of interest rate increases that would be required to reverse the inflation caused by these poor fiscal and social governmental decisions.

No one anticipated the level of interest rate increases that would be required to reverse the inflation caused by these poor physical and social and governmental decisions.

Stephen Tipton: Closing with previously mentioned strength of a company, all capital ratios improved in the quarter, notably with the TCE ratio of 10.76% and a total risk-based capital ratio of 17.6%, with that, Donna. I'll turn it back over to you.

It is unreasonable to expect that service increases of over 100% wouldn't pass to even the most conservative of underwriting processes. We will see that this is the case, especially at the interest rate scenario is truly higher for longer.

Speaker 5: It is unreasonable to expect that service increases of over 100% wouldn't test even the most conservative of underwriting process.

Speaker 5: We will see that this is the case, especially at the interest rate scenario is truly higher for longer. During the last couple of months, we've been a-

Donna Townsell: Thank you, Stephen.

Kevin Hester: And now Kevin Hester will share information from the lending side. Thanks, Donna, and good afternoon, everyone. Many times through the years, I've characterized our approach to lending as conservative. We always preach to our lenders that we want asset quality, profitability, and growth in that order. In 2017, when most banks were loosening credit standards, we were tightening. I believe that all this was to put us in a position for a time like today.

During the last couple of months, we've been evaluating three credits. The first is the office building in California that John has talked about it's a class a property in a desirable location we.

Speaker 5: The first is the office building in California that Johnny has talked about. It's class A property in a desirable location.

Speaker 5: We will move this property into Oreo during the fourth quarter, had a balance of just below 23 million, which is about 70% of the new appraised value. Cash flow is not breakeven as present, but we're optimistic that there's a path to disposition at little or no loss.

We will move this property into Oreo during the fourth quarter had a balance of just below $23 million, which is about 70% of the new appraised value cap.

Cash flow is not breakeven at present, but we're optimistic that there is a path to disposition at little or no loss.

Kevin Hester: We knew that the free money days would come to an end, and that interest rates would increase. However, there was no way to anticipate the giveaway money days of COVID that would create massive inflation. No one anticipated the level of interest rate increases that would be required to reverse the inflation caused by these poor fiscal and social governmental decisions. It is unreasonable to expect that service increases of over 100% wouldn't test even the most conservative of underwriting processes.

Speaker 5: The second is a Miami property of about $7 million that is primed for redeveloped.

The second is the Miami property of about $7 million that is prime for redevelopment.

Speaker 5: The appraisal indicates that the land value exceeds our loan balance and it is also in a desirable area.

The appraisal indicates that the land value exceeds our loan balance and it is also in a desirable area.

Well, we will move this into Oreo in the fourth quarter as well. We are currently evaluating an offer that is above our carrying balance. So we don't expect any meaningful loss from here.

Speaker 5: While we will move this into Oreo in the fourth quarter as well, we are currently evaluating an offer that is above our carrying balance. So we don't expect any meaningful loss from here.

The last one is a marina that Jonny mentioned on a lake near the Texas, Oklahoma border that is in the $9 million range.

Speaker 5: The last one is a marina that Johnny mentioned on a lake near the Texas Oklahoma border that is in the $9 million dollar rate.

Kevin Hester: We will see that this is the case, especially at the interest rate scenario is truly higher for longer. During the last couple of months, we've been evaluating three credits. The first is the office building in California that Johnny has talked about. It's class A property in a desirable location. We will move this property into Oreo during the fourth quarter at a balance of just below 23 me, and which is about 70% of the new appraised value.

Speaker 5: Recent financial information indicates that the project is viable and it appears that our issue could be coming from something outside our relationship. We are continuing to evaluate the situation and we'll adjust our approach as we gain more information.

<unk> financial information indicates that the project is viable and it appears that our issue could be coming from something outside of our relationship.

We are continuing to evaluate the situation and will adjust our approach as we gain more information.

With these three loans on non accrual NPA as did increased 14 basis points to four 2%. This quarter. However, past dues only increased three basis points on a linked quarter basis, indicating a reduction in activity outside of these three loans.

Speaker 5: With these three loans on non-accrual, NPAs did increase 14 basis points to 0.42% this quarter. However, past dues only increase three basis points on a link quarter basis, indicating a reduction in activity outside these three loans.

Kevin Hester: Cash flow is not breakeven as present, but we're optimistic that there is a path to disposition at little or no loss. The second is a Miami property of about $7 million that is primed for redevelopment. The appraised will indicate that the land value exceeds our loan balance, and it is also in a desirable area. While we will move this into Oreo in the fourth quarter as well, we are currently evaluating an offer that is above our carrying balance, so we don't expect any meaningful loss from here.

Speaker 5: Even with this MTA increase, the allowance for credit losses still provides a stellar 314% coverage of non-performing loss.

Even with this NPA increase the allowance for credit losses still provides a stellar 314% coverage of nonperforming loans.

Speaker 5: I do believe that our preparation and discipline will pay off in the long run and will result in fewer asset quality issues with less severity than would otherwise be the case.

I do believe that our preparation and discipline will pay off in the long run and will result in fewer asset quality issues with less severity than would otherwise be the case.

Combine this with our best in class loan loss reserve and very high capital ratios and I believe that we're in a great position as the remainder of this interest rate cycle plays out.

Speaker 5: Combine this with the best in class loan loss reserve and very high capital ratios, and I believe that we're in a great position as the remainder of this interest rate cycle plays out. Donna, that's all I-

Kevin Hester: The last one is a arena that Johnny mentioned on a lake near the Texas Oklahoma border that is in the $9 million range. Recent financial information indicates that the project is viable, and it appears that our issue could be coming from something outside our relationship. We are continuing to evaluate this situation and will adjust our approach as we gain more information. With these three loans on non accrual, NPAs did increase 14 basis points to 0.42% this quarter.

Got it that's all I have and I'll turn it back to you.

Speaker 2: Thank you, Kevin. Down you before we go to Q&A, do you have any additional comments?

Thank you Kevin Johnny before we go to Q&A.

Okay.

Speaker 3: First you got to think Johnny, I don't think there's anything that you didn't cover Steven Kevin's cover for the backs but all I know is our group outside and the markers are stay focused.

Firstly can I think.

Jonathan I don't think Theres anything that you didn't cover Steven Kevin covered for the banks, but I don't know.

No.

Our group of outstanding bankers and stay focused.

We will do what's the best thing for the shareholder.

Speaker 6: do what's the best thing for the show? Brian , any comments? No, I'm good. Thank you for that all.

Kevin Hester: However, past dues only increase three basis points on a link quarter basis, indicating a reduction in activity outside these three loans. Even with this NPA increase, the allowance for credit losses still provides a stellar 314% coverage of non-performing loans. I do believe that our preparation and discipline will pay off in the longer run, and will result in fewer asset quality issues with less severity than would otherwise be the case. Combine this with the best in class loan loss reserve and very high capital ratios, and I believe that we are in a great position as the remainder of this interest rate cycle plays out. Donna, that is all I have, and I will turn it back to you. Thank you, Kevin.

Brian in your comments thank.

Thank you said it all.

Speaker 3: Thank you Donna. I think we're ready for Q&A.

Thank you Donna I think we're ready for Q&A.

Speaker 1: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If your question has been answered, or you wish to remove yourself from the queue, please press star followed by two. As a reminder, if you are using the speaker phone, please remember to pick up your handset before asking the question.

Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue. Please press star followed by two as a reminder, if you are using a speaker phone. Please remember to pick up your handset before asking a question.

Tim.

Speaker 1: Our first question comes from the line of Steven Scalton with Piper Sandler. Your line is now open.loudly open.

Our first question comes from the line of Stephen Scouten with Piper Sandler.

Your line is now open.

Hey, good afternoon, everyone I appreciate the time.

Donna Townsell: Donny, before we go to Q&A, do you have any additional comments? First, you got anything? Johnny, I don't think there's anything that you didn't cover. Steven, Kevin, covered for the banks, but all I know is our group of outstanding bankers will stay focused, and we'll do the best thing for the show. Brian, you got it? No, I'm good. Thank you for it all. Thank you, Donna.

That's true.

I guess.

Speaker 7: You guys already have one of the better efficiency ratios in the industry, but it sounds like maybe there could be...

You guys already have.

One of the better efficiency ratios in the industry, but it sounds like maybe there could be.

A closer look at.

Speaker 7: closer look at it's really every aspect of the business. Would you expect any sort of larger scale efficiency plan? Are we gonna, is Donna gonna get named the efficiency ratio as R once again? What are we looking at there on the expense?

Really every aspect of the business would you expect any sort of larger scale efficiency plan are we going to dawn again again named the efficiency ratios are once again, what are we looking at there on the expense front.

Unknown Executive: I think we're ready for Q&A. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If your question has been answered, or you wish to remove yourself from the queue, please press star followed by two. As a reminder, if you are using the speakerphone, please remember to pick up your handset before asking a question.

Steve This is Tracy I mean, I think for the past several years, we've had some growth.

Speaker 6: Steve, this Tracy, I mean, I think, you know, for the past several years, we've had some growth, you know, that's gone on. As Johnny mentioned, we even had...

As Johnny mentioned, we even had.

Recent activity that might have.

Speaker 6: Later company grows a little bit more that opportunities would come across.

I have to go out a little bit more of that opportunities come across.

Speaker 6: economic times today, you know, it's certainly past times to reevaluate a lot of areas of the bank that we're going to want to...

The economic times today.

Stephen Scouten: Our first question comes from the line of Stephen Scouten with Piper Sandler. Your line is now open. Hey, good afternoon, everyone. Appreciate time. I guess you guys already have a, you know, one of the better efficiency ratios in the industry, but it sounds like maybe there could be. The closer look, it's really every aspect of the business. Would you expect any sort of larger scale efficiency plan? Are we going to, is Donna going to get names the efficiency ratios are once again?

Certainly past time to reevaluate a lot of.

Areas of the bank.

<unk> started that and we will address that as soon as we possibly can so always room for improvement.

Okay.

Speaker 6: I didn't get, you know, you know, you're just straight. And I didn't get, you thought I got in the fatal position at the end of last quarter and curled up. I didn't do that. I want you to know that. You know, I can tell them all that you did that.

And I didn't get.

Okay Steve.

I thought I got in a favorable position at the end of last quarter and curled up I didn't do that I want you know that.

No I would tell them all of them.

Yes.

[laughter].

Speaker 7: And that what you thought stayed on. I just, I just, I just, I just worried you, you thought Bankin wasn't any fun anymore, you know? It's worried you, you're just, I don't know.

And then what your thoughts there.

Stephen Scouten: What are we looking at there on the expense, friends? Steve, this Tracy, I mean, I think, you know, for the past several years, we've had some growth, you know, that's gone on. The Johnny mentioned, we even had some recent activity that could have made our company grow a little bit more. So, I think it's worth that opportunities would come across with the economic times today, you know, it's certainly a past time to reevaluate a lot of areas of the bank that we're going to, we have started that and we will address that as soon as we've tossed the can.

Yes.

I was just worried you thought banking wasn't any filing any more worried.

This past Saturday.

No no.

Speaker 8: I don't know if I've ever had as much fun.

As much fun.

Yes.

Uh huh.

Speaker 7: I'll leave that one there. How about Lone Grose? I know you said it felt like maybe there wasn't a lot of demand out there, but in the same vein, it feels like a lot of your competitors are pulling back a good bit on the growth front. Do you feel like there might be opportunities out there for you guys to be more aggressive and sponsor to kind of pick your battles if you will, some areas where you could add Lone Grose, BCFG.

I'll leave that one there.

How about.

How about loan growth I know you said it felt like maybe there wasn't a lot of demand out there, but in the same vein. It feels like a lot of your competitors are pulling back a good bit on the growth front.

Do you feel like there might be opportunities out there for you guys can be more aggressive in spots to kind of pick.

Stephen Scouten: So, always run, run, run. And I didn't get, you know, Steven, I think that you thought I got in the fatal position at the end of last quarter and curled up. I didn't do that. I want you to know that. You know, I can tell them all what you did here. Isn't that what you thought, Steven? I just, I just, I just worried you thought Banking wasn't any fun anymore, you know, it's worried you.

Pick your battles if you will in some areas, where you could get as loan growth.

<unk> or otherwise.

Speaker 5: Hey, Steve at this cabin, the fourth quarter looks pretty decent from that perspective. You know, we see our pop line.

Hey, Steven this is Kevin.

The fourth quarter looks pretty decent from that perspective.

We see our pipeline.

Speaker 5: you know, out that far and know what we got closing. So fourth quarter is gonna be pretty good past that, I mean it.

Out that far and know what we got close and so fourth quarter is going to be pretty good past that I mean, it's.

It's all about opportunities and where the where the market goes and we'll take we'll take what we can get we're not projecting big loan growth.

Speaker 5: It's all about opportunities and where the market goes. We'll take what we can get. We're not projecting big, long growth. That's not the time of the market we're in.

Stephen Scouten: Here's my sourdough. [inaudible] and not the time of the market we're in, but this quarter does look pretty good. You're getting some high rates now on these loans, and particularly on some of the projects people are looking at, we're getting some high rates, and that's meaningful. You know, we've watched the last three quarters, not keep up with interest expense, and we're, as I said, we fight in that battle to stop the bleeding, and we may be getting close to doing that.

That's not the.

So not the top of the market we're in but.

This quarter does look pretty good.

Yes, you get some higher rates now own these loans.

Speaker 3: You get some high rates now on these loans and particularly on some of the projects people are looking at.

Particularly on some of these projects people are looking at we're getting some.

Speaker 3: power rights and that's meaningful. You know, it we watched the last three quarters.

Higher rates that's meaningful.

What's the last three quarters.

Speaker 3: not keep up with interest, expand, and where we...

Not keep up with interest expense and where we are.

Speaker 3: We fought in that battle to stop the bleeding and we may be getting close to doing that I watched the seven our liners have done really a good job on the seven hundred and fifty million it We from June to December getting pricing on that

I said, we bought in that battle to stop the bleeding and we may be getting close to doing that I've watched the seven our lenders have done really a good job on the $750 million from June to December getting pricing on that.

Speaker 3: 3, 4 to 500 basis points on those so that you know it I Really don't think we're going to kind of be flat here for a while if the Fed probably a good thought kind of be flat We're reprived some people with a 4.5 going to 9.5 That's a shock that that hadn't hit the market yet that has not yet

Three of four to 500 basis points on that also.

I really think we're going to kind of be flat here for a while if the fed probably a good time to be flat with where we perhaps some people at four and a half to one to nine and a half.

Well, that's a shock that hadn't hit the market yet that has not yet.

Speaker 4: And we got I don't know what's reprising next year's about a billion Even you have below below five. We've got 2,800 and a billion that's come to do this fix trade You

And we got I don't know what's repricing next year is about a billion Stephen.

Hello below five we've got between $801 billion, that's coming due that is fixed rate.

That will have an opportunity to improve.

Improved significantly island has really done a really pretty good job I have to date not pretty good they've really done a good job of getting that they understand what it takes and they're getting it done. So we're catching up we're just catching up with.

Speaker 3: I learned there's a really done a really pretty good job. I have to, they've not pretty good. They've really done a good job again.

Speaker 3: They understand what it takes and they're getting it done. So we're catching up, you know, we're just catching up with, I almost said that I thought we-

I almost said that I thought we'd troughs.

Stephen Scouten: I watched the seven, our lenders have done a really good job on the 750 million, from June to December, getting pricing on that, three or four to 500 basis points on those. I really think we're going to kind of be flat here for a while, if the Fed probably a good, kind of be flat. We've got, you know, we're reprising people with four and a half going to nine and a half.

Speaker 3: cost of interest expense, but that may not be right. We're damn sure getting close.

Cost of interest expense, but that might not be right. We're damn sure getting closer to it so.

Speaker 3: We're trying, we look at that before every day, we're trying to get...

Try and we look at Evercore everyday were trying to get there.

Alright.

Got it.

Speaker 7: Got it. And with those reprisings that 800 million to a billion, I mean, are there many concessions that you feel like you'll have to give as those loans reprice? I mean.

Would those repricing that $800 million to $1 billion.

Are there many concessions that you feel like Youll have to give us those loans reprice.

Speaker 7: It just feels like it'd be tough for that many loans, you know, to go from, say, under 5% to 9% or what, have you, do you think there's a portion of that that you'll have to do it, call it 7% or somewhere in the middle to keep them working, right?

It just feels like it would be tough for that many loans.

Stephen Scouten: You know, that's a shock. That's that hadn't hit the market yet. That is not yet. And we got, I don't know, what's reprising next year is about a billion, Stephen? Yeah, below below five, we've got between 800 and a billion that's come and do this fixed rate, that will have an opportunity to improve significantly. I learned there's a really done a really pretty good job. I have to, they're not pretty good.

To go from a stay under 5% to 9% or what have you do you think there is.

A portion of that that Youll have to do it call it 7% or somewhere in the middle to keep them working right.

I mean, there could be a few Steven we haven't seen yet.

Speaker 5: We've reprised quite a bit of stuff, you know, this last two quarters.

Yeah, we've repriced quite a bit of stuff.

Last two quarters and.

Speaker 5: We really haven't seen very much of that. So I don't anticipate a lot of it. There could be one ever now in them that...

We really haven't seen very much of that so I don't anticipate a lot of it there could be.

Stephen Scouten: They've really done a good job of getting the, they understand what it takes, and they're getting it done. So we're catching up, you know, we're just catching up with, I almost said that I thought we had trust on the cost of interest expense, but that may not be right. We're damn sure getting closer to it. So we're trying, we look at that before every day. We're trying to get there. Got it with those, with those reprisings that 800 million to a billion.

One every now and then that doesn't look that way but.

Speaker 5: I don't expect it to be widespread. If you remember, we're pretty low leverage.

I don't expect it to be widespread if you remember were pretty low leveraged.

Even back in that timeframe. So it will test our underwriting, but I don't think it'll break it very often.

Speaker 5: back in that time frame. So it'll test our underwriting, but I don't think it'll break it very often.

I think Kevin hit it on the head there.

We didn't create the interest rate increases.

Brian .

This way a lot, but most of the customers that we talk to.

Stephen Scouten: I mean, are there many concessions that you feel like you'll have to give as those loans reprice? I mean, it just feels like it'd be tough for that many loans to go from, let's say, under five percent to nine percent or what have you? Do you think there's a portion of that that you'll have to do it? Call it seven percent or somewhere in the middle to keep them working right? I mean, there could be a few, Steven, we haven't seen, you know, we've reprised quite a bit of stuff, you know, this last two quarters, and we haven't really haven't seen very much of that.

Speaker 6: a lot of the customers that we talked to, you know, they're good business people, so they understand what's going to happen or what's happened. So, our Kevin and the teams got...

There are good business people so they understand.

What's going to happen or what's happened.

So.

Kevin and the teams got their lenders.

Work on those a little bit ahead of game than normal.

Make sure we're in the right spot.

Fairly good about it.

I think I haven't really seen one wanted to ask I don't think I've only seen one I asked it might have been another has put out.

Speaker 3: I think I've only seen one ask. I think I've only seen one ask. Maybe I've never had one ask, but I've only seen one. You know, we...

I've only seen one.

Stephen Scouten: So I don't anticipate a lot of it. There could be one ever now and then that just looked that way, but I don't expect it to be widespread. If you remember, we're pretty low leveraged, even, you know, back in that time frame. So it'll test our underwriting, but I don't think it'll break it very often. Are they Kevin? Hit it on the head there. Hey, we didn't create the interface. Right? That's the way a lot.

We.

Which I think is outstanding.

Kevin that's a good point with low leverage.

Speaker 3: They might let some stuff go, but they're probably not gonna let that low-ever stuff go. They're probably gonna keep it. They're probably gonna keep it.

They might let some stuff go with their front I'll, let that low leverage stuff that they're probably going to keep it keep it.

I mean, if you got high leverage on stat.

They're probably going to go away.

Okay could come back.

Speaker 8: You think about the Alpha-Circle in the back. Yeah, that's definitely a testament to the underwriting.

When you think about the answer is yes.

A testament to the underwriting that yeah.

Speaker 3: Yeah, you touched that, that is a test, but that was originally a $50 million prize, or it's now a $34 or $35 million prize. So we're in it 70, and we've been in there 80 on the front end, we're being at 110 or 120 now. So we're in, we're in, we're very pleased with what, what's gone in that space. Presby, she won't talk about that a little bit on that one office building. I don't think you got any other office building.

Yes.

Stephen Scouten: Most of the customers that we talked to, you know, they're good business people. So they understand what's going to happen or what's happened. So our Kevin and the teams got their lenders working those little bit ahead of game that normal just to make sure we're in the right spot. So it actually feels fairly good about it. I think I've only seen one ask. It might have been another ask, but I've only seen one.

That is a test that was originally a $50 million appraisal is now 34 or $35 million appraisal. So we're in it Saturday and we've been in there ADM to front end, we'd be in that 110 120 now so we're in.

We're very pleased with.

What's going on in that space I appreciate and want to talk about that a little bit on that one office building.

Got any other office buildings.

No not really.

Speaker 9: And not really. This is our one. We had cash flow and we went on it. That serves me right. We don't usually like cash flow. But yeah, I'm happy to talk about the asset. We got involved in that asset in 2016 when we from ANC and P.L. purchase.

Now this is our one we had we had cash flow and we lent on it.

Stephen Scouten: One, which I think is outstanding. Kevin made a good point. We're low leverage. They might let some stuff go, but they're probably not going to let that low leverage stuff go. They're probably going to keep it. I mean, if you get high leverage on the stuff, they're probably going to go alike, or could come back. You think about the opposite. Yeah, that's definitely a testament to the underwriting that. Yeah. Yeah, that's that that is a test, but that was originally a $50 million prize.

That certainly right, we don't usually like cash flow, but.

Yes, no happy to talk about the how to talk about the asset.

We got involved in that asset in 2016, when we finance the NPL purchase.

Speaker 9: And our borrower converted the NPL to an REO. It was 50% lease then. They took it to 100% lease and had about a $70 million dollar value against that. And it's all in ground lease. The ground lease was resetting in 2020. We gave them some time to get through the...

And our borrower converted the NPL to an Oreo. It was 50% leased then they took it to a 100% leased.

And about $77 million value against that.

It's on a ground lease the ground lease with resetting in 2020, we gave them some time to get through the.

Stephen Scouten: Oh, it's now 34 or $35 million prize. So we're in its 70 and we've been in their 80 on the front end. We're being 110 or 120 now. So we're in, we're in, we're very pleased with, with what, what's gone in that spice pressure. We want to talk about that a little bit on that one office building. I don't think you've got to hear the office buildings. Do you? Man, not really.

Speaker 9: The ground lease reset and we got through that.

The ground lease resets and we got through that.

Speaker 9: There was a paydown obligation associated with that, which they met. And then, you know, we kind of got into the pandemic and one of the tenants in 2022 left, which put us back to 50% occupied.

There was a pay down obligation.

Associated with average thing that and then.

We kind of got into the pandemic and one of the.

One of the tenants in 2022 left which put us back to 50% occupied.

Speaker 9: And kind of after that our borrowers lost a little interest in the property and really kind of started to focus on trying to fill it up with what we would consider be slightly above market rents. And so we kind of got to the point over the last maybe six months or a year with that borrower that they needed to show some better effort on improving the value of the property. We had an opportunity to probably sort of modify and extend, et cetera. But we really got to the point we felt like the property value was either deteriorating or not improving. And we didn't think that our current borrowers was going to be the right party to.

And kind of after that hour.

Our borrower lots of little interest in the property and and and.

And really kind of started to focus on trying to fill it up with what we would consider to be slightly above market rents and so.

Stephen Scouten: This is our one. We had, you know, we had cash flow and we went on it. That serves, that serves me right. We don't usually like cash flow, but. Yeah, no, I have to talk about the, I have to talk about the asset. You know, we got involved in that asset in 2016 when we've named the MPL purchase. And our borrower converted the NPL to an RIO, it was 50% lease then they took it to 100% lease and had about a 77 million dollar value against that.

We kind of got to the point over the last maybe six months or a year with that borrower.

They needed to show some some better effort on improving the value of the property and we had an opportunity to probably sort of modify and extend et cetera, but we really got to the point, we felt like the property value was either deteriorating or not improving and we didn't start.

Stephen Scouten: And it has, it's all in ground lease. The ground lease was resetting in 2020. We gave them some time to get through the ground lease reset. And we got through that. There was a pay down obligation associated with that which they met. And then, you know, we kind of got into the pandemic and one of the one of the tenants in 2022 left, which put us back to 50% occupied. And kind of after that our borrower lost a little interest in the property and really kind of started to focus on trying to fill it up with what we would consider to be slightly above market rent.

Our current borrower it was going to be the right party to.

Speaker 9: to do that. We don't take it lightly when we take things back, but at the same time, you can't be afraid to do so, especially at our leverage. So, you know, the loan was, I think, at about $27 million or so. So we negotiated a return of the property that came with some obligations from our borrower. We brought it down under $23 million now. So, between $22, $23 million.

Do that we don't take it lightly when we take things back but at the same time, you can't be afraid to do so, especially at our leverage so.

The loan was I think at about $27 million.

So.

So we negotiated a.

Our return on the property that came with some obligations from our borrower we brought it down under $23 million now so between $20 million to $23 million.

Speaker 9: And, you know, we'll kind of work, we'll work it there from there. As is values, you know, we just got an appraise with 32 million, which is, you know, down 55% from its peak, but it's down 55%, we're still at 70%. We feel like there's some opportunity there. We were fortunate also that our existing office basement LA.

And what kind of work will work at their from their asset values.

Got an appraisal was $32 million, which is.

55% from from its peak, but it's down 55%, we're still at 70% we feel like there is some opportunity. There. We were fortunate also that our existing office space in la.

Stephen Scouten: And so we kind of got to the point over the last maybe six months or a year with that borrower that. They needed to show some better effort on improving the value of the property. And we had an opportunity to probably sort of, you know, modify and extend et cetera. But we really got to the point we felt like the property value was either deteriorating or not improving and we didn't think that our current borrower was going to be the right party to do that.

Speaker 9: the lease was maturing at the end of this year. So we're moving out of our property. We're moving into this property. We'll be there on site and start to work towards stabilizing this property. We have a good relationship with the owner.

The lease was maturing at the end of this year. So we're moving out of our property. We're moving into this property will be there on site.

And start to work towards stabilizing this property, we have a good relationship with.

The owner.

Speaker 9: That was not the case. Our borrower did not have a good relationship with them. And so I think everybody's working towards now the same goal, which is let's improve the value of the property. And we'll use it until we lease the rest of it up. But we like the location. We think it's a good property. And I think you can't be afraid to step in and do these things every once in a while.

That was not the case, our borrower did not have a good relationship with them and so I think everybody is working towards now the same goal, which is improve the value of the property.

Stephen Scouten: We don't take it lightly when we take things back, but at the same time, you can't be afraid to do so, especially at our leverage. So, you know, the loan was, I think, at about $27 million or so. So we negotiated a return of the property that came with some obligations from our borrower, we brought it down under $23 million now. So 22, $23 million. And, you know, we'll kind of work, we'll work it there from there, as is I just, you know, we just got an appraisal of 32 million, which is, you know, down 55% from from its peak, but it's down 55% we're still at 70% we feel like there's some opportunity there.

We will use it until.

Until we lease the rest of it up but.

We like the location, we think it's we think it's a good property.

I think he can't be afraid to step in and do these things every once in a while.

Yes, Okay. That's great color. Thanks, so much I appreciate the.

Speaker 7: Yeah, okay, that's great color. Thanks so much. Appreciate the color guys and glad to see you're still out there fighting Johnny. Keep it up.

The color guys and glad to see yourself, John can keep it up.

Thank you.

Speaker 1: Thank you. Our next question comes from the line of Matt Olnay with Stevens. Your line is now open. Hey, thanks a guy.

Thank you. Our next question comes from the line of Matt Olney with Stephens. Your line is now open.

Stephen Scouten: We were fortunate also that our existing office basement LA, the lease was maturing at the end of this year. So we're moving out of our property, we're moving into this property will be there on site and and and and start to work towards stabilizing this property. We have a good relationship with the owner. That was not the case our borrower did not have a good relationship with them. And so I think everybody's working towards now the same goal, which is what's that's improved the value of property and we'll use it until and until we lease the rest of it up, but, you know, we like the location, we think it's a good property and, you know, I think you can't be afraid to step in and do these things every once in a while. Yeah, okay, that's great color. Thanks so much. Appreciate the color guys and glad to see you're still out there fighting, Jon. Keep it up. Thank you.

Hey, Thanks, guys good afternoon.

Okay.

Yeah.

Speaker 10: I wanna ask about the event income that was highlighted. I think you mentioned it was negative and the third quarter had been positive for a while. Just any color on kind of the drivers, I think you mentioned the nonocural reversal. Just also remind me in a normal quarter when that is positive. Just remind me with that represents and what can I add, look, we should expect here. Thanks.

I wanted to ask about the event income that was highlighted I think you mentioned it was negative in the third quarter had been positive for a while just any color on kind of the drivers I think you mentioned that non accrual reversal.

Also remind me in a normal quarter when that is positive just remind me what that what that represents and what kind of outlook. We should expect here. Thanks.

Speaker 4: Hey Matt, this is Stephen Tiffin. It was about a million in non-accrual interests from the two credits that Kevin talked about during the quarter. So.

Hey, Matt This is Stephen Tipton, it was about $1 million.

In non accrual interest from from the two credits that Kevin talked about.

During the quarter.

So I think it was half a million or so net negative. So it would have been made and have it bounces.

Speaker 4: I think it was half a million or so net negative. So it would have been a half it bounces, you know, between half a million and several million a quarter, just depending on the pace at which loans pay off. And we may accelerate origination fee income. So a little hard to target going forward, but I don't recall it being a negative number any time in our history here. So.

<unk> <unk> and several million dollars a quarter, just depending on the pace at which.

Loans pay off and we may accelerate origination fee income so.

Matt Olney: Our next question comes from the line of Matt Olney with Stephen. Your line is now open. Hey, thanks guys. Good afternoon. I want to ask about the event. The event income that was highlighted, I think you mentioned it was negative and the third quarter had been positive for a while. Just any color on kind of the drivers. I think you mentioned the non accrual reversal. Just also remind me in a normal quarter when that is positive.

A little hard to target going forward, but I don't recall it being a negative number anytime in our history years. So.

I would not expect that going forward.

That was the it was just from those two.

Credits.

Speaker 10: So it sounds like even that can be a result of and a normal quarter, it can be a result of our origination or a paydown, not either one. I'm sorry, not one or the other, but both. Is that right? Yeah, that's fair.

So it sounds like Stephen that can be a result of an abnormal quarter. It can be a result of our origination or a paydown not either one I am sorry, not one or the other but.

Matt Olney: Just remind me with that with that represents and what can I look we should expect here. Thanks. Hey, Matt, this Stephen Tipton. It was about a million in non accrual interest from the two credits. It's that Kevin talked about during the quarter. So I think it was half a million or so net negative. So it would have been a half it bounces, you know, between half a million and several million a quarter, just dependent on the pace at which loans pay off.

Does that is that right.

Yes, that's fair.

Okay.

Speaker 11: And then I guess Stephen's taking with you on the non-interest bearing deposit still to mouth low in the third quarter. It looks like the end of period balance is still a little below the average balance in the third quarter. Just any color on what you're seeing there throughout the quarter and any thoughts on what we go from here.

And then I guess, Stephen sticking with you on the non interest bearing deposits still some outflow in the third quarter. It looks like the end of period balances still well below the average balance in the third quarter, just any color on what youre seeing there throughout the quarter and any thoughts on kind of where we go from here.

Matt Olney: And we may accelerate origination fee income. So a little hard to target going forward, but I don't recall it being a negative number anytime in our history here. So would not expect that going forward and that was the it was just from those two credits. So it sounds like Stephen, that can be a result of in a normal quarter, it can be a result of our origination or a paydown, not either one.

Speaker 4: Yeah, I mean, I think it's just a general combination of...

Yes, I mean.

I think it's just a general combination of Av.

Customers seeking higher yields and we've seen some here lately that our competition is offering.

Speaker 4: customers seeking higher yields and we've seen some here lately that you know our competitions offering you know a rate of interest on on demand deposits which has not historically been a thing or hasn't a long time and so you're having to to combat some of that but it's tracing our work every day.

Our rate of interest on on demand deposits, which has not historically been a thing or it hasnt been a long time, and so you're having to combat some of that but yes, Tracy an outlook every day.

Speaker 4: Every mod, I think a lot of it is just general customer spend too. When we look at current balance versus average balance.

Every month I mean, I think a lot of it is just general customer spend too.

We look at it.

Current balance versus average balance.

Matt Olney: I'm sorry, not one or the other, but, but both. Is that is that right? Yeah, that's fair. Okay. And then I guess Stephen, taking with you on the non interest bearing deposits still some outflow in the third quarter, it looks like the end of period balance is still a little below the average balance in third quarter. Just any color on what you're seeing there throughout the quarter any thoughts on where we go from here.

Over.

Speaker 4: over the last 12 months or so and broadly you're seeing.

The last 12 months or so I mean broadly you're seeing you're seeing a lot of those balances are off 2025% and I think a lot of that is just it's just a general.

Speaker 4: seeing a lot of those balances are off 20-25% and I think a lot of that is just

Speaker 4: business customer spend there so You know it may have a little

Business customer spend there so.

Yes, it may have a little bit.

Speaker 4: you know, trend downward from here, but we're managing the interest rate aspect of it. Best weekend, every day. Thanks.

Trend downward from here.

But we're more managing the interest rate aspect of it.

Matt Olney: Yeah, I mean, you know, I think it's just a general combination of of customers seeking higher yields, and we've seen some here lately that, you know, our competitions offering, you know, a rate of interest on demand deposits, which is not historically been a thing or hasn't a long time. And so you're having to to combat some of that, but it's tracing. I look every day, every month. I think a lot of it is just general customer spend to when we look at that, you know, current balance versus average balance.

Best we can every day.

Okay great.

Appreciate it.

Yeah.

Go ahead Doug.

Speaker 4: So go ahead. I was gonna say Johnny hit on the asset side of things. I mean, I think that's, we've said for a long time, you know, in this cycle that we're in, you know, interest rates.

Go ahead.

Say jonny hit on the on.

On the asset side of things I mean, I think that we've said for a long time.

In this cycle that we're in interest rates.

They've gone up.

Speaker 4: negotiate with customers one off we're gonna have to change the pay that I think the main

We negotiate with customers one off we're going to have to continue to pay down I think the main thing is just to try to offset that on on new originations, which we are and what we're able to pull through on all renewals.

Speaker 4: try to offset that on new originations with VR and what we're able to do.

Matt Olney: You know, over over the last 12 months or so, I mean, broadly, you're seeing, you're seeing a lot of those balances are off 20, 25%. And I think a lot of that is just, it's just general business customer spend there. So, you know, it may have a little trend downward from here, but we're managing the interest rate aspect of it. That's what can every day. Okay. Appreciate it.

Speaker 10: And it sounds like you found some maybe some maybe come charge go ahead.

And it sounds like you found some may some may be.

Sorry go ahead.

Go ahead, Matt.

Speaker 11: Well, I was gonna ask about just margin stability overall. I think you mentioned September , you found some margin stability. Curious kind of what kind of confidence you have that we'll see some more stability in the fourth quarter. Or could that be more like early next year? Yeah.

Well I was going to ask about just margin stability. Overall I think you mentioned September you found some margin stability curious kind of what kind of confidence you have that we'll see some more stability in the fourth quarter or could that be more like early next year.

Speaker 4: Tracy's laughing at the end of the table. Um, you know, some optimism I think just from September being up a couple of ticks from August and kind of being in line with where it was for the...

Tracey's last at the end of the table.

Yes.

Some optimism I think just from from September .

Being up a couple of ticks from August and kind of being in line with where it was for the quarter.

Brady Gailey: I was going to say Johnny hit on the asset side of things. I mean, I think that's we've said for a long time, you know, in this cycle that we're in, you know, interest rates. I've gone up, we've negotiated with customers one off. We're going to have to continue to pay that. I think the main thing is just to try to offset that on new originations with VR and we're able to pull through on renewals.

Speaker 8: But, you know, I think we'll take that on a weekly monthly basis as we work through the deposit side. We have a couple.

But.

I think we'll take that on them on a weekly monthly basis.

As we worked through the <unk>.

The deposit side.

We had a customer.

<unk> walked in and one of our mines.

Customer that I don't get along with and he didn't get along with me.

We don't like each other but we walk in and put $2 million in our bank and he said I don't know what site.

Speaker 3: We don't lock each other, but he walked in and put $2 million in our mic and he said, I know it's safe.

Brady Gailey: And it sounds like you found some maybe some maybe I'm sorry, go ahead. Go ahead man. What I was going to ask about just margin stability overall. I think you mentioned September, you found some margin stability, curious kind of what kind of confidence you have that we'll see some more stability in the fourth quarter or could that be more like early next year. Tracy's laughing at the end of the table. You know, some optimism I think just from September, being up a couple of ticks from August and kind of being in line with where it was for the quarter.

Okay.

Right right. So I don't know if I had to work it or not but were plan, that's working that side of it pretty hard.

Speaker 3: So I don't know if I had to work it or not, but we're playing that, we're working that side of it pretty hard. We have, you know,

We have you don't see any I mean high adds around strength as well.

Speaker 3: We're going to be here if the big bad wolf shows up home will be open in the morning.

We're gonna be here, if the big Bad Wolf shelves at home will be open in the morning.

Yeah.

Okay guys. Thanks for your help.

Batman.

Thank you.

Speaker 1: Our next question comes from the line of Brady Galey with KBW. Your line is now open.

Our next question comes from the line of Brady Gailey with <unk>. Your line is now open.

Brady Gailey: But, you know, I think we'll take that on a weekly monthly basis as we as we work through the deposit side. We had a customer, had a customer walked in and one of our minds and put a customer that I don't get along with and he didn't get along with me. And we don't block each other, but he walked in and put $2 million in our mic. And he said, I know it's site.

Speaker 9: Hey, thank you. Good afternoon, guys. I wanted to start on M&A. On our journey, you mentioned you have a couple recent conversations that you also mentioned to some banks out there with negative tangible common equity. Are those fields even possible to do without government assistance? Does the math even line up for that to make sense for a strong buyer like home?

Hey, Thank you good afternoon guys.

To start on M&A I know Johnny you mentioned.

Had a couple of recent conversations but you also mentioned there are some banks out there with negative tangible common equity.

Those deals even possible to do without government assistance that does the math even.

Lineup for that to make sense for a strong buyer like home.

Brady Gailey: So, I don't know if I had to work it or not, but we're playing that we're working that side of it pretty hard. We have, you know, I mean, high ads are all strength ads. We're going to be here if the big bad wolf shows up home will be open in the morning. Yeah. Okay, guys, thanks for your help. Batman. Thank you.

No.

I mean, I get to a point they get to point, where that you can't do.

Speaker 3: I mean, they get to a point, they get to a point where that you can't do it. I mean, we're on the tr...

As you know.

We're on a trade with a great great people great.

Great market.

Speaker 3: It just then as rates have gone up.

It just.

As rates have gone up.

Speaker 3: it had just killed their mind book. So it makes it, it makes it, it was possible one important time, but since we met them, I mean...

Yeah, just kill their money.

Good books, so it makes it it makes it.

It was possible at one point in time, but since we met them.

Brady Gailey: Our next question comes from the line of Brady Galey with KBW. Your line is now open. Hey, thank you. Good afternoon, guys. I wanted to start on M&A. I know Johnny, you mentioned, you know, having a couple recent conversations. And you also mentioned some banks out there with negative teams will comment equity. You know, those fields even possible to do without government assistance. Does the math even line up for that to make sense for a strong buyer like home?

It's probably impact of another couple of hundred million dollars. So just tough I mean, its tough I feel I really feel for them that good people good markets.

Speaker 3: Just tough. I mean it's tough. I feel for, I really feel for them. Good people, good market.

Speaker 3: Good bank, well, they just made them stug. That the people who are no longer there are made in the stug, not the people there are made in the stug. The people that are gone made in the stug. That's what they do.

Good bank well off they just made a mistake that the people who are no longer there might've been stagnant stable there might just start with the people that are that are gone study at ESMO.

That's what that is.

Speaker 3: They don't work. They don't work. And I hate it. I really was excited about the opportunity in these months.

They don't work they don't.

I hate it.

Really was I was excited about the opportunity in these markets, but they don't work.

Speaker 3: That one didn't look like we were really involved in three transactions at the time and

That one we looked at we were really involved in three transactions at the time.

John Allison: No. I mean, they get to a point. They get to point with it that you can't do. I mean, they just, you know, we're on the trade with a great, great people. Great market, but we just then as rates have gone up, it has just killed their mind book. So it makes it, it makes it, it was possible at one point in time. But since we met them, I mean, it's probably impacted another couple hundred million dollars.

We were so focused on the bigger one that when it reached a point of no return so to speak.

Speaker 3: We were so focused on the bigger one that went in, reached the point of no return, so to speak.

Speaker 3: but we let those others run off and we match at a move to one of those. I haven't heard...

<unk>.

Let those others run off and we match it to move to one of those so I haven't heard it either one of those other two so again or not.

Yeah.

Speaker 5: Okay. And then moving on, it feels like you'll have a shot and hit your $400 million in earnings for 23 gold, which is great. Any idea what that gold will look like next year? It feels like another 400 million would probably be tough to hit, but any idea about your gold or the way you're thinking about next year?

Okay, Alright, and then move it all you know it feels like you'll have a shot at hitting your $400 million and earnings per 23 goal, which is great.

John Allison: So just tough. I mean, it's tough. I feel for really feel for them. Good people. Good market. It's a good bank. Well, they just made a mistake that the people who are no longer there made a mistake. Not the people that have made a mistake. The people that are gone made a mistake. They just, you can't, they don't work. They don't work. I hate it.

What that goal will look like next year. It feels like another $400 million would probably be talked to it but any idea about your goal of the way youre thinking about next year.

We don't normally go backwards I'm not again.

Speaker 3: We don't normally go backwards, I'm not a guy that looks at going backwards, I look at going forward.

Backwards I look at going forward so.

Speaker 8: I would expect something better, we expect something better, wait.

I would expect something better we expect something better.

John Allison: I really was excited about the opportunity in these markets, but they don't work. That one that we looked at, we were really involved in three transactions at the time and we were so focused on the bigger one that, that when it reached the point of no return, so to speak. We, we let those others run off and we might should have moved on one of those.

It has been frustrating here for the last three quarters watching the interesting Smith, Keith Nip and even though we're getting I mean were a record revenue.

Speaker 3: It has been frustrating here for the last three quarters watching the entrance Even though we're getting I mean we're in rapid revenue. It's just entry

It's just the interest expense nip it in.

I think that has slowed that interest expense has slowed and I don't like the fed is going to rise I don't think they're going to raise rates. So I think we may be stabilizing in here somewhere and we've got some.

Speaker 3: I think that is slowed, that entrance expense has slowed, and I don't think the Fed's gonna raise. I don't think they're gonna raise right, so I think we may be stabilizing in here somewhere, and we've got some, as we continue to repost.

John Allison: So I haven't heard of either one of those other two sold yet or not. Okay, and then moving on, you know, it feels like you'll have a shot at hitting your $400 million in earnings for 23 gold, which is great. Any idea what that goal will look like next year, it feels like another 400 million would probably be tough to hit, but any idea about your goal or the way you're thinking about next year.

As we continue to reprice our book.

Speaker 3: and the new loans coming on stream are all in the tens range. And I have ten range plus... ...and the new loans coming on stream are all in the tens range.

The new loans coming on stream are all in the teens right now and have 10 range.

<unk> phase so.

I'm optimistic that we can do that and <unk> committed to decrease in the expenses here at this company. So we're going to work on that we have not done that in years and it's not Lucas.

Speaker 3: optimistic that we can do that and Tracy's committed to decreasing the expenses here at this company. So we're going to walk on that. We have not done that in years and it's not that we don't pay attention to it. We just let it creep up on us over a period of time. It's time to re-evaluate every segment of this company and determine if we want.

John Allison: Now, we don't normally go backwards. I'm not a guy that looks at going backwards. They look at going forward. So I would expect something better. We expect something better. It has been frustrating here for the last three quarters, watching the interest expense keep nip and even though we're getting, I mean, we're in record revenue. It's just interest expense nip at it. And I think that is slow that interest expense has slowed and I don't think the fed's going to raise.

Not that we don't pay attention to it we just let it creep up on this over a period of time and it's time to reevaluate every segment of this company and determine if we want it.

Speaker 3: to keep her right over there. What we want to do is just that kind of time. I see where everybody's doing that, not only us, but I see it being done everywhere. I saw where FBK took 20 million out. The knife.

To keep or get rid of it or what we wanted to do just that kind of that I'd say, where everybody is doing that not only us, but I see it being done everywhere.

Our SDK to $20 billion 20 million ounce with NASA.

Speaker 6: We did some, that's Chris did a nice job. We did some fed me something million dollars with a bond, our securities, any, that $20 million in expenses out of his $12 billion asset.

We did some thus Chris did a nice job there <unk>, some $77 million worth of bonds or securities and E.

John Allison: I don't think they're going to raise right. So I think we may be stabilizing in here somewhere and we've got some as we continue to reprise our book and the new loans coming on stream. Or all in the tens range nine and a half ten range plus fees. So I'm optimistic that we can do that and Tracy's committed to decreasing the expenses here at this company. So we're going to walk on that.

$20 million of expenses out of his 12.

$12 billion of assets company. So hopefully we can find some some some room in there to cut some out and pick up some.

Speaker 6: Hopefully we can find some some some room in there that cuts on that.

Speaker 6: We haven't looked at that in a long time and we're diving in.

We haven't looked at that in a long time, and we're going to we're diving into it.

And so expenses are an opportunity when you just mentioned a bond restructuring or is that something.

Speaker 5: And so expenses are an opportunity when you just mention a bond restructuring. Is that something that potentially would be on the table as well for home?

Potentially it would be on the table as well for home.

John Allison: We have not done that in years. And it's not, we just, not that we don't pay attention to it. We just let it creep up on this over a pretty time. And it's time to re-evaluate every segment of this company and determine if we want to continue to keep it right over there. What we want to do is just that kind of time.

Speaker 6: Well, it's interesting, we have an executive call every day at Kenton and a couple days they'll praise him, mention that. And he said, we looked at that a while back and I said, yeah, we didn't get too sure to talk about it.

Well, it's interesting we have an executive call everyday it can turn into a couple of days ago, Tracey mentioned that and he said we looked at that a while back and I said, yeah, we didn't get too serious about it.

Speaker 3: After watching what FBK did, they did a pretty nice job with it.

After watching what fak data they did a pretty nice job with that.

John Allison: I see where everybody's doing that not only us, but I see it being done here where I saw where FBK got 20 billion, 20 million out. The math, they, they redid some, that's Chris did a nice job. They redid some fed and some million dollars worth of bonds. There's our securities and he kept 20 million dollars and expenses out of his $12 billion asset company. So hopefully we can find some, some room in there to cut some out and pick up some expense.

Speaker 3: We're looking at some, if you replace a 2% bond with a 10% loan, that's a pretty, that got my...

We're looking at some if you replace a 2% bond with a 10% loan.

That's a pretty.

That got my attention. So I've asked our securities Barbara to look at that and bring it to the executive Committee and let's see what makes sense what doesn't make sense. So the answer to that is yes, we might look at that.

Speaker 6: ask our securities barber to look at that and bring it to the exact committee and let's see what makes sense please

I mean, if we got some 10% loans out here, we can take some 2% securities and sell them I don't know how much will also be on but.

Speaker 6: I mean, if we got some 10% loans out here, we can take some 2% securities and sell them. I don't have much to lost to be on, but, and if they're short.

John Allison: We haven't looked at that in a long time. And we're going to, we're diving into it. And so expenses are an opportunity to just mention a bond restructuring. Is that something that potentially would be on the table as well for home? Well, it's interesting. We haven't exactly called every day at 10 and a couple of days they'll probably see mention that. And he said, we looked at that a while back and I said, yeah, we didn't get too serious about it.

And if theyre short, maybe it's not a lot of levels, but.

Speaker 6: Put them back into 10% yielding securities. You get arm back pretty quick. We're looking at it.

Put them back into 10% yield and securities that would be you get earn back pretty quick.

We're looking at it already.

Okay, great. Thanks for the color.

You bet.

Thank you. Our next question comes from John Armstrong with RBC.

Speaker 12: Thank you. Our next question comes from John G. Arftrom with RBC. Your line is now open. Hey, thanks. Good afternoon.

Your line is now open.

John Allison: And... After watching what FBK did, they did a pretty nice job with that. We're looking at some, if you replace a 2% bond with a 10% loan, that's a pretty, that got my attention. So, I've asked our securities barber to look at that and bring it to the Executive Committee and let's see what makes sense, what doesn't make sense. So, the answer to that is yes, we may look at that. I mean, if we got some 10% loan, the loans out here, we can take some 2% securities and sell them, how much will also be on, but if they're short, maybe it's not a lot of loss, but put them back into 10% yielding securities, that'd be, you get herm back pretty quick. We're looking at it, you already.

Alright, thanks, good afternoon.

John Allison: Okay, great. Thanks for the color. You bet.

Hi, John .

Okay great.

Speaker 9: Just want to understand the, just so I fully get the change in non-performer, so that the California building...

Just wanted to understand.

Just so I fully get the change in non performers.

Unknown Executive: Thank you.

California building.

Speaker 9: And the Miami property are the two that went into non-performing loans. Is that right? That drove the $30 million increase those two.

And the Miami property are the two.

That went into non performing loans is that right.

That drove the $30 million increase those too.

Okay.

Plus the Marina.

Yes, the marine the marine Okay.

Speaker 5: Yeah, the three credits that I talked about are the three that are the new additions of any size.

Yes, the three credit for that.

I talked about earlier, the three that are the new additions of any size.

It is the okay all right.

Speaker 6: office building that we have, which we got about 20, 25 or so.

It's office building that we have that you've got about 22, 5% in something in it's the Marina that just popped up out of Dallas I can't imagine.

Speaker 3: the marina that just popped up out of Dallas, I can't imagine.

You know I'm a boat for it so I can't imagine, losing money on a marina and it's indicated to us that the guy had other problems that causes problems. So I don't know about that we'll look at that and the other was we've been messing around with this property down in Florida for some time.

Speaker 6: I'm about for it, so I can't imagine losing money on a marina.

John G. Armstrong: Our next question comes from John G. Armstrong with RBC. Your line is now open. Hey, thanks. Good afternoon. Just want to understand the, just so I fully get the change in non-performer so that the California building in the Miami property are the two that went into non-performing loans. Is that right? That drove the $30 million increase those two. Plus, plus the Marina. Yeah, the Marina. Okay. Yeah, the three credits that I, that I talked about earlier than three that are the new additions of any size.

Speaker 3: indicated us that the guy has other problems

Speaker 6: I don't know about that, we'll look at that. And the other ones we've been messing around with this property down in Florida for some time.

Speaker 3: about 7 million and we have an offer on that that is above our charity value.

About $7 million and we have an offer on that that is above.

Carrying value of $7 million, so hopefully that might be gone here before too long.

Speaker 3: That's the three cases of property. So I've seen, I haven't seen them earlier, but I'm gonna go see it. I know the Florida property and I went to look at the California property. I just wanted to see it. It's the first office building we've ever had. I just wanted to go see it. Touch it, feel it.

That's the three pieces of property.

I haven't seen the marina, but I'm going to go see it.

The Florida property and I went to look at the California property I just wanted to say, it's the first office building we've ever had I also wanted to touch it and feel it.

Speaker 3: You can tell by the address at 1733 Ocean Avenue. So it's all no. It's, I mean it's.

You can tell by the address at 17 33 Ocean Avenue.

John G. Armstrong: It is the, okay, all three should. It's an office building that we have, which we got about 22, 5 or 7 something in. It's the Marina that just popped up out of Dallas. I can't imagine, you know, I'm a boat for it, so I can't imagine losing money on the Marina and it's indicated us that the guy had other problems that caused this problem, so I don't know about that. We'll look at that.

Oh no.

All right.

This class a office space.

Okay.

Speaker 8: I like it. I don't think we're going to have loss in that problem.

I like it.

I don't think I don't think we're gonna have a loss in that property.

Okay. So next quarter 30 million rolls out of NPL.

Speaker 9: So next quarter, 30 million rolls out of NPL into Oreo.

The Oreo.

But around that level is that is that the right way to think about it.

Speaker 5: Around that level, is that the right way to think about it? At least 20. Not sure about the...

John G. Armstrong: And the other one was we've been messing around with this property down in Florida for some time, and it's about 7 million, and we have an offer on that that is above our charity, you know, 7 million. So hopefully that might be gone here for too long. That's the three cases of property. So I've seen, I haven't seen them earlier, but I'm gonna go see it. I know the Florida property and I went to look at the California property.

At least 20.

Not sure about the run rate at this point.

It's still early.

The other two are further along than that.

Okay.

Speaker 13: Anything else in credit? You're worried about, and I know you're prepped for it. And...

Anything else in credit.

Youre worried about.

Youre prep for it in.

Speaker 13: You know, I've been through Florida with you guys when it was really dire, but you know, anything else that you're concerned about.

I've been through Florida, with you guys. When it was really dire, but anything else that youre concerned about.

John G. Armstrong: I just wanted to say it's the first office building we ever had. And I just wanted to go see it and touch it and feel it. And you can tell by the address at 1733 Ocean Avenue. So it's all no. It's, I mean, it's, it's class A office place. Yeah, you're moving ahead. I like it. I don't think I don't think we're going to have a loss in that property. Okay.

Speaker 13: And when you look out in the future, Johnny or Kevin or Tracy, what do you think credit looks like in 2024 for you in the industry?

When you look out in the future Johnny or Kevin Tracey.

Do you think credit looks like in 2024 for you in the industry.

Speaker 5: John , I want to make sure I had the right number on the, on the MPAs. It's two of the three credits, 23 and the seven will, will move in the fourth quarter. The nine.

John I want to make sure I had the right number on but selling the npa's. It's two of the three credits 23 in the seven will move in the fourth quarter the nine.

Speaker 5: The Marine I'm not sure about. As far as the rest portfolio and past dues are, you know, they've been up a little bit, a couple of quarters a quarter ago. They were back down this.

The marine and I'm not sure about.

As far as our risk portfolio and past dues are you there.

John G. Armstrong: So next quarter, 30 million rolls out of NPL into Oreo around that level. Is that, is that the right way to think about it? At least 20. Not sure about the rain at this one. It's still. Okay.

<unk> been up a little bit a couple of quarters.

Order ago, there were back down this quarter, the only thing I see is that.

Speaker 5: The only thing I see is that, you know, our portfolio mortgage product has a little higher pass dues in the middle of the quarter.

Our portfolio mortgage product has a little little higher past dues in the middle of the quarter.

Speaker 5: Some of it is the foreign national portfolio product that we've done in Florida for

It's some of it is the foreign national portfolio of product that we've done in Florida.

John Allison: Anything else in credit you're worried about? And I know you're prepped for it. And, you know, I've been through Florida with you guys when it was really dire, but, you know, anything else that you're concerned about. And, you know, when you look out in the future, you know, Johnny or Kevin or Tracy, what do you think credit looks like in 2024 for you in the industry? Yeah, John, I want to make sure I had the right number on, but on the MPA's is two of the three credits, 23 and the seven will will move in the fourth quarter, the nine, the marine I'm not sure about, as far as the portfolio pass do's are, you know, they've been up a little bit a couple of quarters quarter ago.

For a decade.

Speaker 5: For a decade, those are at lower loan devalues than the rest are our portfolios. So, and they're in Florida, so I'm not concerned about them, but they have picked up past the wise, a little bit the last couple of quarters. Other than that, it's just these.

Those are at lower loan to values than the rest of our portfolio. So yeah in there in Florida, So I'm not concerned about them, but.

They have ticked up past due was a little bit the last couple of quarters, but other than that it's just.

These.

Speaker 5: This is the three credits that we've, you know, we've talked about for the last couple of months.

The three credits that we have.

Talking about for the last couple of months.

I don't know if your AUM, we have and also Kevin is an offer on the Florida property for more than a turn.

Speaker 3: I don't know if you're on we have an offer, Kevin has an offer on the Florida property more than our chair and value.

And I don't.

I mean, I'm very pleased with that.

Thank you properly match you can tell I only have one property.

Speaker 3: You can tell I only have one property. I already knew the Florida property.

The Florida property.

Probably to look at it so I wanted to look at it I'm going to walk it through it smell it touch it.

Speaker 6: I want to go look at it, I want to walk it, walk through it, smell it, touch it, and...

John Allison: They were back down this quarter. The only thing I see is that, you know, our portfolio mortgage product has a little, a little higher pass do's in the middle of the quarter. Some of it is the foreign national portfolio product that we've done in Florida for a decade. Those are at lower loaned values, then the rest of our portfolio. So, you know, and they're in Florida. So I'm not concerned about them, but, you know, they have picked that past due wise, a little bit last couple of quarters.

And.

And I'm pleased with what I saw so.

Speaker 3: work, we're now 70% long the value in an indecent prize which is me a

And we're now 70% loan to value in this appraisal what she is a recent appraisals. So we feel good about that you would think about it and we've done 80 20 would be upside down that we did.

Speaker 3: feel good about a plan. You know you think about it and we're done 80-20 would be upside down now but we're dead.

Is it 50 50 on most of them right.

Speaker 6: Anyway, I think we're good shape. I can serve myself with a little bit of a guy with 4.5% loan and suddenly it's nice.

Anyway, I think we're in good shape.

I concern myself with a little bit of a guy with a four 5% loan and suddenly it's not.

John Allison: Other than that, you know, it's just these, just the three credits that we've, you know, we've talked about for the last couple of months. I don't know if you're wrong. We have an offer. Kevin has an offer on the Florida property for more than our care and value. And I don't, I mean, I'm very pleased with that. Like taking property back, you can tell, I only have one property to go, I already knew the Florida property.

Speaker 3: Kevin said if you don't like that spoon, not create some problem somewhere, you're being awfully naive. So we're insane it. We have not...

As Kevin said, if you don't think that's not.

Not create some problems somewhere you'd be an awfully light. So we haven't seen it we have not seen it in.

Speaker 6: And all of this, all this rating for East is not priced in right now. I mean, we're continuing to increase and we got a billion dollars worth next year to reap.

All of this rate increase is not priced and right now I mean, we're continuing to increase and we got $1 billion worth next year to right Bryan. So you know.

Speaker 6: You know, it's not all in the marketplace, yeah. So these people who are sitting out there with a 4.5% loan to die are pretty, or 5% are pretty happy with that. Even though they fussed at the time, they want a loan right. They're pretty damn happy with the right loan at now. So I don't anticipate, you know.

It's not all in the marketplace, yet so at least people are sitting out there with it.

John Allison: One property to go look at. So I want to go look at it. I want to walk it, throw it, smell it, touch it. And I'm pleased with what I saw. So, and we're now 70% loaned value in this appraisal, which is a recent appraisal. So, we feel good about that. You know, you think about it. At we done 80, 20 would be upside down that we didn't, you know, we did 50, 50 almost.

5% loan to die or 45% are pretty happy with it even though they bust at the time they wanted a lower right there.

Pretty damn happy with it or right on it now so.

I don't anticipate it.

Who knows but.

Speaker 6: Who's in better shape? Who's in better shape in the country? To pop that battle in home if there is.

<unk> is in better shape, who is in better shape in the country.

That battle and home if there is a problem.

We went through the loans.

Speaker 5: We went through the loan that reprised the third and fourth quarters. We went through those and had a significant increase come and we went through those two quarters ago. Didn't see a significant issue. We're doing the same thing now for the credits that mature next year that Stephen was talking about that 800 to the end. We're looking at the larger ones of those now.

Reprice.

John Allison: Anyway, I think we're good shape. I, you know, I, I, I can serve myself with a little bit of a guy with four and a half percent loan. And suddenly it's nine. And as Kevin said, if you don't think that's going to not create some problem somewhere, you're being awfully naive. So, but we haven't seen it. We have not seen it. And I mean, all of this, the lowest rating for each is not priced in right now.

The third and fourth quarters, we went through those and had a significant increase come in we went through those two quarters ago didn't see a a significant issue. We're doing the same thing now for the credits that mature next year that Stephen was talking about that 802 billion.

We're looking at the larger ones are those now just.

Speaker 5: to see if we think we're going to have any issues and that way we'll be ahead of...

To see if we think we're going to have any issues in that way, we will be ahead of it.

The curve if that happens to be the case.

Speaker 6: The curve, if that happens to be the case. You know, you take a bad dollar with loans and you raise it four to 500 basis points and generate lots of money. Four to five.

John Allison: I mean, we're continuing to increase and we got a billion dollars worth next year to reprise. So, you know, it's not all in the marketplace. Yeah. So, these people who are sitting out there with a four and a half percent loan to die are pretty, or five percent are pretty happy with it. Even though they fussed at the time, they want a little right. They're pretty pretty damn happy with the right on it now. So, I don't anticipate who knows.

A billion dollars worth of loans.

Racing four to 500 basis points it generates lots of money.

Alright.

Mystic will catch it.

Okay.

Speaker 13: It's good, you were careful 12 and 18 months ago. I know you've talked about that in the past. Just one more. Yeah.

It's good you were careful 12, and 18 months ago, I know you've talked about that in the past.

So just just one more.

John Allison: But who's in better shape, who's in better shape in the country to fight that battle in home if there is a problem. We went through the loan that reprised the third and fourth quarters. We went through those and had a significant increase coming. We went through those two quarters ago, didn't see a significant issue. We're doing the same thing now for the credits that mature next year that Stephen was talking about that 800 to Betty.

Yes.

Speaker 13: Yeah, yeah, I know it was hard at the time, but because we'd ask about long growth every quarter and you weren't doing it, but it makes sense today. Yeah.

Yes, yes.

No. It was hard at the time, but because we'd ask about loan growth every quarter and you werent doing it.

Makes sense today.

Yeah, John we're just.

One question.

Speaker 3: We're going straight into Bitcoin and Fintech, like I told you to Arbor.

We're going straight into bitcoin and Fintech like I don't you to RBC.

Speaker 13: I'm a finance

Alright.

Yes.

Yeah.

Got it.

Speaker 13: You just resisted all of the temptations, which is good.

You just resisted all of the Temptations, which is good.

John Allison: And we're looking at the larger ones of those now. Just to see if we think we're going to have any issues and that way we'll be ahead of the curve if that happens to be the case. You know, you take a million dollars or the loans and you raise it for the 500 basis points, it generates lots of money for a lot of money. Right. So we're optimistic we'll catch you. Well, it's good. It's good. You were careful 12 and 18 months ago. I know you've talked about that in the past.

Chris.

Uh huh.

Speaker 13: Chris, what do you see in on your pipelines and the quality of the pipelines? And that's all I have, which is curious.

Chris what are you seeing on your pipelines.

The quality of the pipelines.

That's all I had but just curious.

Yes sure John .

Speaker 9: Yeah, she's done. You know, we look at a lot. You know, we get the phone rings a lot. We take a look at a lot. What we, you know, we have some growth. This growth, this quarter was all the growth was in our facilities, business, on the real estate side. So we have, you know, we have facilities out to, to lenders and insular liqueirs, et cetera, and they're active.

We look at a lot when we get the phone rings a lot we take a look at a lot.

We have some growth.

<unk> growth this quarter was all the growth was in our facilities business.

John Allison: Just just one more. Yeah. I know it was hard at the time, but because we'd ask about loan growth every quarter and you weren't doing it, but you know, make sense today. Yeah.

Now on the real estate side. So we have we have <unk>.

<unk> out to.

The lenders and serial acquirers et cetera, and they are active.

Speaker 9: Especially on the low and on the low side.

Especially on the loan on loan side. So the most of the growth we had were.

Unknown Executive: Jon, we're going to just one question. We're going straight into Bitcoin and Fintech, like I told you, RBC. All right. I'm funny. You just resisted all of the temptations, which is good. Chris, what are you seeing on your pipelines and the quality of the pipelines and that's that's all I had, which is curious. Yeah, she's done. You know, we look at a lot. You know, we get the phone rings a lot.

Speaker 9: Most of the growth we had were banks aren't necessarily getting aggressive on things, but that opens up opportunities for non-bank lenders.

So arent necessarily getting aggressive on things, but that opens up opportunity for non bank lenders.

Speaker 9: You know, those people need friends too and we provide back. I like that trade today because it lets us come in at a very, very low basis. And it's helpful to the borrower as well. Our product is useful to the extent that we can help people achieve their goals and their returns. And sometimes a senior loan at...

Those people are new friends, too and we're and we provide backup I like that trade today, because it lessens come in at a very very low basis.

And and it's helpful to the borrower as well.

Our product is useful to the extent that we can help people achieve their goals and their returns.

Sometimes the senior loan.

Speaker 9: You know, five over at 40% cost isn't going to help, you know, the underlying bar, like, achieve their goals. But partnering up with some non-bank folks that go make that loan a little higher leverage, a little higher cost and a little different structure and then we come in behind that lower, a lower leverage, we're helping everybody. So we're seeing, you know, good demand for that product. We like it. We'll continue to probably, well, at least the pipeline today, there's a number of asset ads on our facilities that we'll look at today. We're continuing to...

Five over at 40% cost isn't going to help the underlying borrower.

Achieve their achieve their goals, but by partnering up with some nonbank folks that you'll make that loan a little higher leverage of the higher cost and a little different structure and then we come in behind that at lower and lower leverage we're helping everybody. So we're seeing good demand for that product we like it we will continue to.

Unknown Executive: We take a look at a lot. What we've, you know, we have some growth. This growth, this quarter was all all the growth was in our facilities, business on the real estate side. So we have, you know, we have facilities out to the liners and interior requires et cetera. And they're active, especially on the loan on loan side. So most of the growth we had were, you know, banks aren't necessarily, you know, getting aggressive on things.

Probably.

When I look at the pipeline today, there's a number of asset adds on our facilities that we will look at today, where we're continuing to.

Speaker 12: to look at other single asset new opportunities. I think somebody mentioned earlier about long growth and about getting aggressive for long growth. You know, I think you don't need to get aggressive the data to make launch. You need to be patient today to make launch. And I think that's what we're seeing more than anything is we'll be patient and we're happy to help people achieve their goals, but we're not gonna get aggressive.

We look at other single asset new opportunities I think somebody mentioned earlier about loan growth and about getting aggressive for loan growth.

Unknown Executive: But that opens up opportunities for non bank lenders and, you know, those, those people need friends too. And, and, and we provide back. I like that trade today because it lets us come in at a very, very low basis. And it's helpful to the borrower as well. You know, our product is useful to the extent that, you know, we can help people achieve their, you know, their goals and their returns. And, you know, sometimes a senior loan at, you know, five over at 40% cost isn't going to help, you know, the underlying bar achieve their goals.

You don't need to get aggressive the data.

<unk> launched you need to be patient today to make loans and.

I think that's what we're seeing more than anything is we will be patient.

Sure happy to.

We're happy to help people achieve their goals, but we're not going to get aggressive.

Okay. Thanks for everything I appreciate it.

Thanks, John .

Thank you. Our next question comes from Michael Rose with Raymond James Your line is now open.

Speaker 1: Thank you. Our next question comes from Michael Rose with Raymond James. Your line is now open.

Unknown Executive: But my partnering up with some, you know, on bank folks that go make that loan, a little higher leverage, a little higher cost and a little different structure. And then we come in behind that lower, a lower leverage. We're helping everybody. So we're seeing, you know, good demand for that product. We like it. We'll continue to probably, well, I like the pipeline today. There's a number of asset ads on our facilities that we'll look at today.

Speaker 9: Hey, good morning, or good afternoon guys. Thanks for taking a quick question here. Just Steven, I just wanted to dig into...

Hey, good morning, or good afternoon, guys. Thanks for taking a quick question here just Stephen I, just wanted to dig into that.

Speaker 7: The deposits, I'm sure like everybody else, I'm getting bombarded by 5.5 and 6% CD rates.

The deposits.

Sure like everybody else I'm getting bombarded by five 5%, 6% CD rates and your loan to deposit ratio has crept up a little bit obviously, the mix has changed a little bit I just wanted to get some assumptions and kind of outlook because if you think about.

Speaker 7: You know, your loaned deposit ratio has cropped up a little bit. Obviously, the mix has changed a little bit. So I just wanted to get some assumptions and kind of outlook, because we think about, you know, next year's relates to BATES, where that mix could trough and what you guys are doing to, you know, just make sure that loaned deposit ratio doesn't, you know, really accelerate from here. I know it's not a lot of long growth, so that helps. But, you know, I just wanted to see what the strategies are on any updates on the deposit. Thanks.

Unknown Executive: We're continuing to, you know, to look at other single asset new opportunities. I think somebody mentioned earlier about, you know, long growth and, and about getting aggressive for long growth. You know, I think you don't need to get aggressive today to make lunch. You need to be patient today to make lunch. And, I think that's what we're seeing more than anything is we'll be patient and we're happy to, you know, we're happy to help people achieve their goals, but we're not going to get aggressive.

Your next year as it relates to betas were that Mexico could trough and what you guys are doing to.

Just to make sure that loan or deposit ratio doesn't.

Yes, it really accelerate from here I know, there's not a lot of loan growth so that helps but.

Just wanted to see what the strategies are on any updates on the deposit side. Thanks.

No that's fair Hey, Michael.

Speaker 4: No, it's fair, Michael. You know what I mean? Certainly, if you look back over the first part of this year, we were clipping 10 to 12 basis points a month in terms of an increase.

Certainly if you look back over the first part of this year, we were clipping.

Michael Rose: Okay. Thanks for everything. Appreciate it. Thanks, Jon. Thank you.

10 to 12 basis points a month in terms of of an increase on.

Michael Rose: Our next question comes from Michael Rose with Raymond James. Your line is now open. Hey, good morning, or good afternoon, guys. Thanks for taking a quick question here. Just Stephen, I just wanted to dig into the deposits. I'm sure like everybody else, I'm getting bombarded by five and a half and six percent CD rates, and you know, your loaned deposit ratio has cropped up a little bit. Obviously, the mix has changed a little bit.

Speaker 4: on interest bearing deposit costs, that's slowed a little bit. Just in terms of the number here lately, the calls and the conversations haven't necessarily, so maybe that's just something as yields have drifted up over the course.

Uh huh.

Interest bearing deposit costs that slowed a little bit just in terms of the number here lately in the call.

And the conversations haven't necessarily so maybe that's just it.

Michael Rose: I just wanted to get some assumptions and kind of outlook as we think about the next year's relates to betas where that mix could could drop and what you guys are doing to, you know, just make sure that motor deposit ratio doesn't really accelerate from here. I know it's not a lot of long growth, so that helps. But, you know, just wanted to see what the strategies are on any updates on the deposits.

Ah, yes, something as yields have drifted up over the over the course of the year I mean, we I think we've said for the.

The better part of the year. So we were at.

Speaker 4: 20 or 21 I think percent.

'twenty or 'twenty, one I think percent.

Speaker 4: you know, non-intersparing deposits to total kind of pretty pandemic. And so, you know, it's logical to think that maybe it drifts back that direction, but, you know, it's certain-

<unk> bearing deposits to total kind of pre pandemic.

And so yes that said, it's logical to think that that may be it drifts back that direction, but.

It certainly is the number one conversation we have.

Speaker 4: you know, on a daily weekly basis with the presidents, the folks that are out driving the business in the field. And like I mentioned at loan committees in terms of deposit gathering and opportunities there, we've had a nice relationship.

On a daily weekly basis with their with the President's to folks that are out driving the business in the field.

Michael Rose: Thanks. No, it's very Michael. You know, I mean, certainly if you look back over the first part of this year, we were clipping, you know, 10 to 12 basis points a month in terms of an increase on on interest bearing deposit costs. That's slowed a little bit just in terms of the number here lately. The calls and the conversations haven't necessarily, so maybe that's just a, you know, something as yields have drifted up over the course of the year.

And like I mentioned at loan committee in terms of.

Deposit gathering.

And opportunities there we've had.

Nice.

<unk> relationship.

In Texas that.

Functionally started from scratch give or take.

That's grown to.

To be a good 2000 and $30 million relationship today, just over the last month or so so it's.

Speaker 4: to be a good 20, 30 million dollar relationship today just over the last month or so. So it's those targeted type things.

It's those targeted type things that are tied to.

Speaker 4: You know, low in relationships that are probably going to drop, you know, volume over.

Loan relationships that are probably going to drive volume over time at least at least we think.

Michael Rose: I mean, we, I think we've said for, you know, the better part of the year. So we were at 20 or 21, I think, percent, you know, non-interest bearing deposits to total kind of pretty pandemic. And so, you know, it's said, you know, it's logical to think that that maybe it drifts, you know, back that direction. But, you know, it's certainly it's the number one conversation we have, you know, on a daily weekly basis with the with the presidents, the folks that are out driving the business in the field.

Speaker 8: Great, that's helpful. And then maybe just to follow up, you know, Johnny, at the beginning of the call, I think you've obviously pointed out something that's fairly obvious to most of us that the only way to extend profitability is to either grow revenues or cut expenses. You know, you spend some time maybe talking about the expense side, but you know, just maybe as it relates to the fee income side. You know, are there areas that you can invest in or deepen your presence in? You know, that might help just on the revenue side. Thanks. Well, we're being honest primarily.

Great. That's helpful. And then maybe just a follow up Johnny at the beginning of the call I think you've obviously pointed out something thats fairly obvious to most of us.

The only way to expand profitability is to either grow revenues or cut expenses. You spent some time, maybe talking about the expense side, but just maybe as it relates to the fee income side.

Other.

Areas that you can invest in or deepen your presence in.

That might help just on the revenue side. Thanks.

Michael Rose: And, you know, like I mentioned at loan committees in terms of deposit gathering and opportunities there, we've had a nice relationship in Texas that, you know, functionally started from scratch give or take that's grown to, to be a good 20, 30 million dollar relationship today just over the last month or so. So it's, it's those targeted type things, you know, they're tied to, you know, loan relationships that are probably going to drive, you know, volume over time, at least, at least we think.

Well its primarily.

We have not bought a security so to speak of right now primarily that.

Speaker 6: primarily, um, that's in Mountain World because roll faster than the Okia Centrum 48 no

Some opportunity <unk> owns several loans.

The advantage. We have is we've got the ability to fund them and not everybody's got to build it out there today to fund these loans and.

Speaker 6: And not everybody's got the ability out there to date to fund these loans.

When you start talking about.

10% of loans.

That gets our attention here.

It's a good long period, we underwrite we don't we don't we don't change our underwriting standards, because it's got a tenant from them and I can assure you that so I think thats, primarily what we're gonna go look around for other opportunities where cost and looking for other opportunities there's got to be some more fallout through this crisis Michael.

Speaker 6: We don't change our under running standards because it's got a tenant program, but I'm sure you...

John Allison: Great. That's helpful. And then maybe just a follow up, you know, Johnny, at the beginning of the call, I think you obviously pointed out something that's fairly obvious to most of us that, you know, the only way to extend profitability is to either grow revenues or cut expenses. You know, you spent some time maybe talking about the expense side, but, you know, just maybe as it relates to the income side, you know, are there, you know, areas that you can invest in or deepen your presence in.

Speaker 6: I think that's primarily what we're gonna go. We looked around for other opportunities. We're constantly looking for other opportunities. There's gotta be some more fallout through this crisis.

Speaker 6: Michael, you see it like I see it, there's got to be some more fallout and got to be some opportunities coming up. I mean, our regulators told Tracy said, I think I said...

Do you see you see it like I said, there's going to be smaller fall out and you got to be some opportunities coming up.

John Allison: You know, that might help just on the revenue side, thanks. Well, you know, it's primarily, we've not bought any securities to think of right now, but primarily that's an opportunity on several loans, the advantage we have is we got the ability to fund, and not everybody's got the ability out there today to fund these loans. And when you start talking about 10 plus percent of loans, that gives our attention here. It's a good loans period.

Our regulators toe prices said, either and I think I've said this before but just months ago and save you money, but I've talked to some people lightweight it might be some more stuff come on I think there is another bucket we're up here in the last week or so and it will be.

Speaker 6: Topps is some bit of lately. It may be some more stuff coming. I think there's another bind that grew up here in the last week or so and there'd be...

I think there'll be more coming so hopefully we will get an opportunity to play in that arena and we got we got the muscle to play so that's.

Speaker 6: Hopefully we'll get an opportunity to play in that arena and we got the muscle to play.

You got to be careful you spend your spend your money spend it properly in the right direction. So.

Speaker 6: You gotta be careful, you wanna spend your money spend it properly in the right direction. So.

You remember in.

Oh wait 910 11, how much money, we made on those trades in that time. So I believe that I believe there's going to be another bite at the Apple here before long.

Speaker 6: 8, 9, 10, 11, how much money we made on those trades in that.

John Allison: We don't change, we don't change our underwriting standards because it's got a tenant probably not going to show you that. So I think that's primarily what we're going to go. You know, we looked around for other opportunities. We're constantly looking for other opportunities. There's got to be some more fallout through this crisis. Michael, you see, you see it like I see it. There's got to be some more fallout and got to be some opportunities coming up.

Speaker 3: I believe there's going to be another bite at the apple here for the fall.

Speaker 6: M and I is kind of off the table by the time you mark all this stuff. It makes it really difficult.

M&A is kind of off the table by the time you Mark all this stuff. It makes it really difficult. So maybe it's going to be government kind of stuff that you do.

We're open to whatever makes sense you know that you know, how we're business people or something microsecond. So.

Speaker 6: We're open to whatever makes sense. You know that, you know how we're business people not for something like a second. So if it's an opportunity to make sense for home, we'll do it.

It's an opportunity that makes sense for home, we'll do it.

John Allison: I mean, our regulators told Tracy said, I think I've said this before, but just months ago, we said, save your money. But I've talked to some people lately. Maybe some more stuff come on. I think there's another bite that grew up here in the last week or so. And I think there'll be more coming. So hopefully we'll get an opportunity to play in that. And we got we got the muscle supplies.

I don't know if I got you.

Alison Park.

Speaker 7: Yep, yep. Now I totally make sense and hopefully make some money in this property I know she's having. It looks pretty sweet, a lot better than my office here in Gray, Illinois. So thanks for taking my questions.

Yep Yep, no it totally makes sense and hopefully make some money on this.

Property and I was just having a look so that's pretty sweet a lot better than my office here in Gray, Illinois. So thanks for taking my question.

Speaker 3: If you want to move out there to that property, we'll outflod you out and we'll get the inside of the lease. I'm thinking about Chris Moot his office in there so the bank is based. I'm thinking about charging him up on the bank. It's based to get it cash flowing buzz.

If you want to move out there to that property will outfly, yet and we will get it signed a lease I'm fighting back.

John Allison: So that's it. We got to be careful. You want to spend your spend your money, spend it properly in the right direction. So, you know, you remember, away 9, 10, 11, how much money we made on those trades in that time. So I believe that I believe it's going to be another bite at the apple here for the fallout. M&A is kind of off the table by the time you mark all this stuff.

Chris moved his office in their silver budgets by as I'm thinking about charge. They ended up on the vacant space to get cash flow positive.

Yeah.

Speaker 7: I got all the property taxes I need here in Illinois. So I'm good. Thanks guys. So, okay.

I got all the property taxes I need here in Illinois, So I'm good thanks, guys.

Uh huh.

First of all.

Yes.

Thank you. Our next question comes from the line of Brian Martin with Janney. Your line is now open.

Speaker 1: Thank you. Our next question comes from the line of Brian Martin with Jamie, your line is now open.

John Allison: It makes it really difficult. So maybe it's going to be government kind of stuff that you do. We're open to whatever makes sense. You know that, you know, I will business people know for something like a second. So if it's an opportunity, it makes sense for home will do it. Oh, if I got you. Yep, yep. No, I totally make sense and hopefully make some money in this property. I know she's having it looks pretty sweet, lot better than my office here.

Speaker 11: Hey, good afternoon guys. Say, most of mine have been answered as to few few items here just back to the fee income for one section. It was a pretty notable decline in the other line on them in the fee income section. So I thought maybe you could give a little bit of color on that. I think Brian talked about last quarter, the equity investments were a bit elevated, but even with that, it still seemed like it was greater decline on the fee income side. I'm not sure if there's anything else in there.

Hey, good afternoon guys.

Most of mine have been answered just a few a few items here.

Back to the fee income for one section.

It was a pretty notable decline in the other line item in the fee income section. So I thought maybe you could give a little bit of color on that I think Brian talked about last quarter. The equity investments were a bit elevated but even with that it still seemed like it was a greater decline.

John Allison: Great Illinois. So thanks for taking my question. If you want to move out there to that property, we'll outfly you out and we'll get the inside of ladies. I'm paying back Chris moved his office in there. So I'm thinking about charging him up on the blanket space to get it to get it flowing positive. I got all the property taxes I need here in Illinois. So I'm good. Thanks. I'm first. Thank you.

On the fee income side I'm curious, if there's anything else in there.

Now I'll give you the answer to that is down $9 million and you're right. We had $7 5 million in our equity investments last quarter versus 858. This quarter. So that's a decline of $6 6 million. The other piece of the decline as we had boley life insurance income from a death benefit last quarter of $2 8 million.

Speaker 8: Now, I'll give you the answer to that. It's down 9 May and you're all right. We had 7 and a half May and in our equity investments last quarter versus 858.

Speaker 8: million. The other piece of the decline as we had boldly life insurance income from a death-minus-bit last quarter of 2.8 million and we had another one this quarter and it was over a three hundred billions of workers high.

And we had another one this quarter and it was 338000 and Thats a decline of $2 5 billion.

Speaker 14: of 2.5 billion, I mean 2.5 million in sales.

Brian Martin: Our next question comes from the line of Brian Martin with Jamie.

$5 million and so those two combined are the primary decrease of $9 million.

Brian Martin: Your line is now open.

Brian Martin: Hey, good afternoon guys. Say, most of mine have been answered is to view a few items here just back to the be income for one section. It was a pretty notable decline in the other line on them in the fee income section. So I thought maybe you could give a little bit of color on that. I think Brian talked about last quarter. The equity investments were a bit elevated, but even with that, it still seemed like it was a greater decline on the fee income side.

Got you. Okay. That's helpful. I appreciate it Brian and then just on maybe over I guess for the the.

Speaker 15: Gotcha. Okay, that's all by appreciate Brian . And then you know just on maybe over you know, I guess for the The criticizing classified trends. I mean, can you give any color on the trends this court? Obviously with the MP is going up the classifies, but maybe just criticize or that you know Similar similar trends that you're seeing there and anything on the criticize side

Criticized and classified trends I mean can you give any color on the trends this quarter, obviously with the MTA is going up the classifieds, but maybe just criticize or is it.

Several similar trends that you're seeing there and anything on the criticized side.

Speaker 5: That you know it's been a little bit from a from a smaller standpoint nothing

There's been a little bit from a from a smaller standpoint nothing.

Brian Martin: Not sure if there's anything else in there. Now, I'll give you the answer to that. It's down nine million. And you're right. We had seven and a half million in our equity investments last quarter versus eight hundred and fifty eight this quarter. So that's a decline of six point six million. The other piece of the decline as we had bully life insurance income from a debt benefit last quarter of two point eight million.

Speaker 5: Nothing that I would call systemic, but it's just some of the smaller stuff.

Nothing that I would call systemic but.

Some of the smaller stuff.

Both of them are classified and criticized I mean, I think you'll see those numbers.

Speaker 5: both on a classified and criticized. I mean, I think you'll see those numbers.

But I mean, we've been we've been really low over the past four to eight quarter. So yes.

Speaker 8: But I mean, we've been really low over the past four to eight quarters. So, you know, anything, anything, an increase, you know. We had got you. Okay. So small. We had some. We were so.

Anything anything is it an increase.

Brian Martin: And we had another one this quarter. Carter, and it was $338,000, and that's a decline of $2.5 billion. I mean, $2.5 million, and so is those two combined or the primary decrease of the 9 million. Gotcha. Okay, that's helped. I appreciate it, Brian.

Okay.

We had gotcha, okay. So small.

Yeah.

We had some of them were very solid property and he left and criticized.

The member care deals just to be sure of the abundance of safety.

Brian Martin: And then, you know, just on, maybe over, you know, I guess, for the, the criticizing classify trends, I mean, can you give any color on the trends this quarter? Obviously, with the M.P, is going up the classifies, but maybe just criticize, or is it, you know, several, similar trends that you're seeing there and anything on the criticize side. That, you know, it's been a little bit from a, from a smaller standpoint, nothing, nothing that I would call systemic, but it's just some of the smaller stuff.

Speaker 5: Yeah, those are the member care deals we did two quarters ago. And I mean, we still left them in there just because we want them to prove out, right? Even with the new equity.

Yeah that was a those are the memory care deals, we did two quarters ago and I mean, we still left them in there just because we want them to.

To prove out right, even with the new equity in.

And everything we expect there so.

Speaker 5: and everything we expect there. So as we do with everything else, we're pretty conservative in our grade.

As we do with everything else, we're pretty conservative in our grading so.

Speaker 15: Yeah. Okay. Thanks for making sure that. And then lastly, just to have the right numbers, on the loans that are renewing in the fourth quarter, what's renewing in the fourth quarter versus all of next year? And then they're just all roughly going from, you know, 5% type of level to the new rates are 9 1 1 2 10. Is that accurate? Yeah, that's...

Yeah, Okay, I just want to make sure of that and then lastly, just so I have the right numbers on the loans that are renewing.

In the fourth quarter, what's renewing in the fourth quarter versus all of next year and then it was just all roughly going from.

Brian Martin: Both on a, on a classified and criticized, I mean, I think you'll see those numbers. But I mean, we've been, we've been really low over the past four to eight quarters. So, you know, you think anything, anything, an increase, you know, we had got you. Okay. We had some, we resold the property, and he left him criticized over the, remember care deals, just to be sure it was among society. Yeah. And those are the, those are the memory care deals we did two quarters ago.

5% type of level, two and new rates are nine five to 10 is that.

Accurate.

Yeah, that's Brian it's Steven I think there's about 200.

Speaker 4: 200 and a little over 200 million, 203 million, that's five range or below that's to mater in this quarter and then it's a little over 800 next year.

200 <unk>.

A little over $200 million $230 million.

That's five range or below that's maturing this quarter and then it's a little over 800 next year. So.

We should be okay.

We should be able to pull those up.

400 ish plus basis points.

Brian Martin: And, and, I mean, we've still left them in there just because we want them to, to prove out, right? Even with the new equity and, and, and everything we expect there. So we're, as we do with everything else, we're pretty conservative in our grading. So. Yeah. Okay. Thanks for making sure that.

We talked about earlier got it.

Speaker 15: Yeah, okay. Perfect. That's all I have and thanks guys.

Yeah, Okay perfect. That's all I had thanks guys.

Thank you.

Thank you there are no questions registered at this time, so I will pass the conference back over to Mr. Allison for closing remarks.

Speaker 1: Thank you. There are no questions registered at this time, so I will pass the conference back over to Mr. Allison for closing remarks.

Brian Martin: And then lastly, just to have the right numbers on the, the loans that are renewing in the fourth quarter, what's renewing in the fourth quarter versus all of next year? And then they're just all, you know, roughly going from, you know, 5% type of level to the new rates are nine and a half to 10. Is that accurate? Yeah. That's Brian and Steven. I think there's about 200 and, uh, 200 and, a little over 200 million, 203 million, uh, that's, that's, you know, five range or below, uh, that's mater in this quarter and then it's a little over 800 next year. So, you know, we should be, okay. You know, we should be able to pull those up, you know, 400 plus basis points. We talked about earlier. That's it. Yeah.

Speaker 3: Thank you very much. I really think we've said it all today. I keep for your attendance and

Thank you very much apparently like we've set at all today.

For your attendance.

Brian Martin: Okay. Perfect.

Let's say Hello to our friends in Lubbock, Texas today, they are on the phone so.

Speaker 6: say hello to our friends in love with Texas today. They're on the phone.

Speaker 6: Anyway, I appreciate everyone's support of a bunch of shares and give us.

Anyway, I appreciate everyone's support of home Bancshares and Uh Huh.

Give us.

We'll talk to you in 90 days. Thank you.

That concludes today's call. Thank you for your participation you may now disconnect your lines.

Speaker 1: That concludes today's call. Thank you for your participation. You may now disconnect your line.

Brian Martin: Uh, that's all I have. And thanks guys. Thank you.

John Allison: There are no questions registered at this time. So I will pass the conference back over to Mr. Allison for closing remarks. Thank you very much. I think we've said it all today. I keep for your attendance and, uh, we'll say hello to our friends in Lubbock, Texas today. They're on the phone. So, uh, anyway, I appreciate everyone's supportive home by chairs and give us, uh, we'll talk to you now. He does. Thank you.

Unknown Executive: That concludes today's call. Thank you for your participation. You may now disconnect your lines.

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