Q3 2023 Origin Bancorp Inc Earnings Call

Your line is muted.

Good morning, and welcome to the origin Bancorp, Inc. Third quarter earnings Conference call.

I'll note that this call includes prepared remarks on the company followed by a question and answer session.

Please note that all participants will be on a listen only mode until the Q&A portion of the call.

Please note this event is being recorded.

I would now like to turn the call over to Christopher <unk> director of Investor Relations.

Please go ahead.

Good morning, and thank you for joining US today, we issued our earnings press release yesterday afternoon, a copy of which is available on our website along with a slide presentation that we will refer to during this call.

Please refer to page two of our slide presentation, which includes our safe Harbor statements regarding forward looking statements and use of non-GAAP financial measures.

Those joining by phone. Please note the slide presentation is available on our website at Www Dot origin got bank.

Please also note that our safe Harbor statements are available on page five of our earnings release filed with the SEC yesterday.

All comments made during today's call are subject to safe Harbor statements in our slide presentation and earnings release.

I'm joined this morning by origin, Bancorp's, Chairman, President and CEO Drake Mills, President and CEO of origin Bank Lance Hall, our Chief Financial Officer, Wally Wallace, Chief Risk Officer, Jim Crotwell.

Our Chief Accounting Officer, Steve Brolly, and our Chief credit and banking Officer Preston Moore.

After the presentation, we'll be happy to address any questions you may have.

The call is yours.

Thanks, Chris origin reported solid earnings this quarter as our team remained focused on executing our strategic plan and delivering for our customers and communities economic activity is robust throughout our markets and our credit metrics remain clean as.

As we've seen throughout the industry the deposit environment remains extremely competitive.

Even with that I'm optimistic that our bankers will continue to bring new deposit relationships to the bank.

This quarter's results exceeded our expectations as pre tax pre provision upside was driven by margin stability.

We executed a trade in our securities portfolio late in the quarter that will benefit our net interest margin and EPS moving forward and allowed us to pay down borrowings, which reduced our asset size.

As I discussed last quarter, we remain strategic in managing below the $10 billion threshold through this year.

And finished the third quarter with total assets of $9 7 billion I'm also extremely proud about.

Credit trends as classified assets decreased 20% from the linked quarter and NPA is were stable both tangible book value and our tangible common equity ratio grew again this quarter ending the quarter at $26 78, and eight 7% even with broad uncertainty from a macro perspective, I'm confident in origins ability to deliver.

Value for our stakeholders, we have strategic options to drive positive financial results and our increased focus on pricing discipline is paying off we are effectively manage our operating expenses, which will have additional benefits moving forward.

As I have consistently communicated we are uniquely positioned throughout our footprint to capitalize on growth opportunities in the major metros and expand market share in our more rural markets. We have the right bankers in the right markets to drive long term value for this company and I'm very confident in our ability to be successful now I'll turn it over to Lance.

Thanks, and good morning.

Drag is correct that the battle deposits is fiercely competitive throughout our markets origins makes a rural deposits as well as our deposit focused incentive plans, coupled with treasury management and deposit focused calling officers benefits us in a powerful way. We're competing every day to protect valuable relationships and are doing a good job of driving new.

Deposit clients to the bank.

The June 32023, FDIC annual deposit market share report highlights our value proposition and the strength throughout our dynamic markets.

<unk> ability to maintain deposits has been dramatically better than the banking industry as a whole in our footprint.

During the 12 month period, where industry deposits declined eight 7% year over year, even backing out our broker deposits origins deposits declined by just 0.8% over the same period.

Digging deeper into these numbers the Louisiana results continue to show the value and strength of our rural deposit base.

With number one market share across our six parishes combined we were able to grow $24 million, excluding broker deposits, while overall deposits and these parishes dropped $1.1 billion.

I'm proud of our team for the results and what they continue to do to drive value for this company to help further strengthen these positive trends this past quarter, we implemented a new deposit initiative that and since our bankers on core deposit growth. This is in addition to our existing incentive plan, there's already weighted toward deposits with this new.

Initiative, we have seen success throughout our lending and retail teams as our net new account openings continue to grow up eight 2% year over year also new customer acquisition accelerated in the third quarter up 35% year over year.

We continue to target our loan to deposit ratio of 90% or less excluding mortgage warehouse and ended the quarter at 87%.

We remain focused on client selection and have been disciplined in our loan pricing with new loans, yielding over 8% throughout the quarter.

Our focus on deposit gathering and loan pricing should continue to support our efforts to stabilize our margin moving forward.

Now I'll turn it over to Jim.

Thanks Lance.

As reflected on slide 12, I am pleased to report solid credit metrics for the quarter as evidenced by stable levels of both past dues and nonperforming loans and a decrease in our level of classified loans.

Past due loans held for investment came in at 0.27% as of September 30th which is right in line with the 0.26% reflected for the prior quarter end.

Nonperforming loans as a percentage of loans held for investment declined slightly coming in at 0.42% as of September 30th compare 2.44%.

As of June 30th of this year.

I'm, especially pleased with the reduction reported in classified loans held for investment from 1.11% last quarter, the 0.85% as of September 30th as.

As we discussed last quarter, we continue to diligently monitor our loan portfolio and proactively address any identified issues.

As a result of these efforts for the quarter, we were able to achieve a $20 million reduction in classified loans, which were primarily due to payoffs with upgrades providing additional benefit.

I would also like to mention that during the third quarter, we completed our annual third party loan review.

The outcome of this review was only one writing the adjustment in the past category on a $250000 credit.

I continue to be very pleased with the effectiveness of our internal loan rating process and portfolio management.

Annualized net charge offs for the quarter came in at 0.14% compared to a level of 0.10% for the prior quarter and was in line with expectations.

For the quarter, our allowance for credit losses increased $824000 to $94 $2 million, increasing from one point to 4% to 1.26% as a percentage of total loans held for investments.

Net of mortgage warehouse, our reserve ratio reduced slightly from 132% as of June 30th% to 130% as of quarter end. This reduction was primarily driven by the improvement in levels of classified loans mentioned previously.

As to reserve levels and as discussed in previous quarters, we continue to balance our sound credit quality and the resilience of our loan portfolio with continued economic headwinds.

On slide 13, we have updated the additional information on our CRE office portfolio that we have shared for the last two quarters as.

As of September 30th this segment of our portfolio totaled $363 $5 million with an average loan size of only $2 $1 million. The credit profile of this segment continues to be sound, reflecting a weighted average loan to value of 63% no past dues no classifieds.

No nonperforming and no charge offs.

This segment of our portfolio continues it sound performance driven by our constant focus on relationship banking.

In summary, we continue to be pleased with our credit performance and our strong and stable credit profile.

I'll now turn it over to Wally.

Thanks, Jim and good morning, everyone turning to the financial highlights in Q3, we reported diluted earnings per share of <unk> 79 cents one.

On an adjusted basis Q3, EPS were <unk> 71, after excluding a $10 1 million dollar write up on an equity investment and a $7 $2 million loss on securities sold during the quarter.

Starting with deposits total deposits declined one 4% during the quarter, we continued to see a shift of noninterest bearing deposits into interest bearing accounts noninterest bearing deposits declined five 4% this quarter and the mix fell to 24% of total deposits in Q3 from 25% in Q2.

<unk> and 28% in Q1.

Importantly, the pace of the decline in Q3 was a slight deceleration from the pace. We saw in the first half of the year and was better than our expectations, though we do continue to forecast some additional mixed pressure over the next couple of quarters to our noninterest bearing deposit mix.

Ultimately combined with the continued need to price up interest bearing deposits. Our total deposit beta increased again, though at a slowing rate from 35% in Q1 to 42% in Q2 and 47% in Q3.

We continue to expect our deposit beta will increase in the fourth quarter.

<unk> loan pricing discipline, and a positive shift in the earning asset mix helped offset funding cost pressures and drove stabilization in our net interest margin, which contracted just two basis points during the quarter to $3 one 4%.

Excluding net purchase accounting accretion of $530000 in Q2 and purchase accounting amortization of 38000 in Q3, our adjusted NIM was flat at $3, one 4% for both quarters better than our expectations.

As Drake mentioned earlier at the end of the quarter, we decided to execute our strategic trade in our securities portfolio, We sold securities with a book value of $182 million at a realized loss of $7 $2 million and we paid down FH L. <unk> advances with the proceeds.

This strategy served a dual purpose of one boosting forward margin and EPS results in a financially attractive manner and to providing ample balance sheet room to manage our assets below the important $10 billion threshold through year end.

With the net interest income benefit we received from the trade we estimate a standalone NIM benefit of 11 basis points and a 1.7 year earn back period on the realized loss, while our continued expectation of deposit mix and pricing pressures will eat away at some of the 11 basis point NIM benefit provided by the trade.

Our current expectations are that three Q NIM of $3, one 4% may represent the trough.

Shifting to fee income, we reported $18 $1 million in Q3, excluding the previously mentioned $10 1 million dollar write up on an equity investment and $7 $2 million loss on securities sold our adjusted fee income was $15 $2 million in Q3 flat from $15 $2 million in Q2.

<unk>, which excluded a $471000 gain on the retirement of sub debt.

Our noninterest expense also remained relatively stable at $58 $7 million in Q3 down slightly from $58 $9 million. In Q2, we remain focused on operating expense management and continued to expect relatively stable expense levels in the fourth quarter.

Turning to capital we note that our TCE ratio remained above 8% for the fourth consecutive quarter ending at eight 7% has slight growth intangible common equity coupled with a decline in tangible assets due to the securities trade at the end of the quarter.

Furthermore, as shown on slide 22 of our Investor presentation, all of our regulatory capital levels at both the bank and holding company levels remain above levels considered well capitalized even if we were to include our OCI loss in the calculations.

As such we remain confident that we have the capital flexibility to take advantage of any potential future capital deployment opportunities to drive value for our shareholders with that I'll now turn it back to Drake.

Thanks, Wally our story is unique and we have proven throughout our history that we can successfully navigate cycles, we operate driving growth markets with diverse economies. We have a seasoned management team that is committed to our culture and has a shared vision of who we are and what we can be our credit profile is strong and our rural deposit base has provided the foundation.

To capitalize on growth opportunities.

I am pleased that the understatement as I think about our company's trends and the overall performance of our people in the midst of current conditions.

Thank you for being on the call today now we'll open the call for questions.

Thank you.

At this time, we will conduct the question and answer session.

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Our first question comes from Matt at Stephens, Matt Your line is open.

Hey, Thanks, good morning, everybody.

Good morning, Matt.

Okay.

Wanted to start on loan growth saw some really good trends in the third quarter and it sounds like some of the loan growth trends in third quarter, maybe even.

Surprised you guys.

Anything to note there are especially in the utilization rates any any shift there and then as you look at the pipeline. How are you thinking about loan growth in the fourth quarter and into 2024.

Yeah, Hey, Matt Good morning, this is lance.

It was a little bit of timing, we picked up probably a little bit more in Q3 that we thought would be in Q4.

I looked at the line utilization is right at 50%. So it was a 1% change from 49 to 50, so not not a big shift there. Thank.

Thank you just the timing around some projects.

Wally and his team have already forecast in Q4, and we're looking at about one 2% growth in the quarter for four which would be right under 5% annualized.

Which I think is kind of right in line with where we thought we would we would be.

Yeah.

And lands as you think about 2020 for any any shift or updates from that kind of that mid single digit range.

For the fourth quarter.

Can we assume that trend can hold maybe for a few more quarters beyond that.

Yeah.

I would as I sit here today I think that's what we're going to think about for 'twenty four and again as we've talked about for US. It's all about our ability to maintain the right loan to deposit ratio, making sure we're getting the right loan yields and manage into the appropriate name.

You know, it's a challenge and the fact that we have dynamic markets and we continue to see.

Growth opportunities in the in Texas that are attractive.

But we've got to be very strategic and smart in the way that we manage our loan to deposit ratio.

Matt This is Greg I really more like a point again I did last quarter that strategically we are committed to and are focused on managing sub 90% loan deposit ratio ex mortgage warehouse. So that's as I've said in the past three years, we had to run.

Higher levels than that because of our expansion into de novo markets, but we do feel like long haul multiples are better in that space and we're going to commit to that strategy.

Yeah, Okay I appreciate that Rick.

And on the credit front.

Really good report on the classified loans coming coming down this quarter I think a lot of your peers are going the opposite direction. So that's great to see Jim I think you mentioned that the payoffs were a big part of that any more color on that did those borrowers pay off the loans themselves with a refinance at a separate bank just kind of any.

Any any color on that drop of classified loans.

But most of that was I would say a bit split between just refinancing into other financial institutions and also we had one relationship where they actually sold a portion of their business and so it results in proceeds from the sale. So.

Just really good results, Matt from a lot of work over the last several quarters that came to fruition for us in the third quarter and we saw some nice reductions in some and some credits that we would like to see some reductions and so it worked out well.

Okay I appreciate that and then just lastly, I heard well always comments there at the end about being ready for for capital deployment opportunities kind of a broader comment didn't know if a while your drag or anybody else wanted to.

Kind of just stack order or kind of update us on the kind of capital strategy.

Deployment thoughts here. Thanks.

Yes.

There is.

A number of opportunities that continue to present themselves.

And I'm not going to stack.

Rank these opportunities, but we certainly have conversations around M&A that continue disconnected from from a couple.

We also have market expansion opportunities through a lift out scenarios that could come our way that are very attractive. We also are starting to look at.

Sub debt as an opportunity to deploy.

Excess capital as we look at the burn off rates of capital utilization of those opportunities.

Also looking towards 25% and 26 as we see some of the sub debt start to reprice. So.

We think there's a number of opportunities that we are going to make the best effort to deploy that capital. That's most beneficial to our stockholders at this point, but we're really pleased with the overall opportunities as a whole.

Your line is muted.

Operator: Good morning and welcome to the Origin Bancorp in third quarter earnings conference call. The format of this call includes repair remarks from the company, followed by a question and answer session. Please note that all participants will be on e-list and only mode until the Q&A portion of the call. Please note this event is being recorded.

Okay.

Okay. That's all from me thanks, guys.

Thank you Matt.

Thank you.

Our next question comes from Michael <unk> at Raymond James Michael Your line is open.

Chris Reigelman: I will now like to turn the call over to Chris Reigelman, Director of Investor Relations. Please go ahead.

Hey, good morning, guys. Thanks for taking my questions.

Well I think if I heard you that you said that the third quarter may be the trough for for the NIM I just wanted to get a sense if that was inclusive or exclusive of the of all the restructuring.

Chris Reigelman: Good morning and thank you for joining us today. We issued earnings press release yesterday afternoon, a copy of which is available on our website, along with a slide presentation that we will refer to during this call. Please refer to page two of our slide presentation, which includes our safe harbor statements regarding forward-looking statements and use of non-gap financial measures. For those joining by phone, please note this slide presentation is available on our website at www.

And then maybe separately just on the betas I think you guys had kind of talked about 50.

<unk>, 50%.

Beta by the end of the year is that still kind of in the thinking and kind of what are your expectations for kind of niv mix as we move forward.

Chris Reigelman: Origin.bank. Please also note that our safe harbor statements are available on page five of our earnings release, filed with the SEC yesterday. All comments made during today's call are subject to safe harbor statements in our slide presentation and earnings release.

Yes, good morning, Mike.

So maybe the way to think about this is is take the securities trade out of the equation right now in that scenario. We do we are modeling that the noninterest bearing deposit mix will continue to decline.

Drake Mills: I'm joined this morning by Origin Bank Group's Chairman, President and CEO, Drake Mills, President and CEO of Origin Bank Land Hall. Our Chief Financial Officer, Wally Wallace, Chief Risk Officer, Jim Cropwell. Our Chief Accounting Officer, Steve Wally, and our Chief Credit and Banking Officer, Preston Moore.

We're going to stick around the same level that we said last quarter, which is low twenties.

That that on a stand alone basis would add pressure to the net interest margin, but then you add in the 11 basis points from the Securities trade and we think net interest margin expands in the fourth quarter.

Chris Reigelman: After the presentation, we will be happy to address any questions you may have. Director, the call is yours. Thanks, Chris.

Probably get more than half of that 11 basis points and.

Drake Mills: Origin reported solid earnings this quarter as our team remained focused on executing our strategic plan and delivering for our customers and communities. Economic activity is robust throughout our markets and our credit metrics remain clean. As we've seen throughout the industry, the deposit environment remained extremely competitive. Even with that, I'm optimistic that our bankers will continue to bring new deposit relationships to the bank. This quarter's results exceeded our expectations as pre-tax, pre-previsioned upside was driven by margin stability.

And then I.

I think we are in the process of bottoming and we don't see the pressure going down further than where we reported in the third quarter. So so we think that third quarter could be the bottom for us because of the benefits of the securities trading.

Very clear thanks, Wally and then just maybe as a separate I know, Matt asked about loan growth, but I just wanted to talk about the warehouse, specifically and what the expectations.

Drake Mills: We executed a trade in our securities portfolio, late in the quarter that will benefit our net interest margin and EPS moving forward, and allowed us to pay down barings which reduced our asset size. As I discussed last quarter, we remain strategic and managing below the $10 billion threshold through this year. And finished the third quarter with total assets of 9.7 billion. I'm also extremely proud of our credit trends as classified assets decreased 20% from the link quarter and NPAs were stable.

Might be.

You know as we move forward.

It is striking black is doing we ended up the quarter I think around 286 million and where we think in the fourth quarter will come in between 225 and $2 50.

Based on a couple of scenarios, we're still looking very closely at quality of those relationships and are we at one point had a high of I think 43 relationships are clients now we have 35. So our team has done an excellent job of each one of our better ROA errors in our in our organization so they reduce.

Drake Mills: Both tangible value and our tangible common equity ratio grew again this quarter, ending the quarter at $26.78 and 8.7%. Even with broad uncertainty from a micro perspective, I'm confident in origin's ability to deliver value for our stakeholders. We have strategic options to drive positive financial results and our increased focus on pricing discipline is paying off. We are effectively managing our operating expenses which will have additional benefits moving forward. As I've consistently communicated, we are uniquely positioned throughout our footprint to capitalize on growth opportunities and the major metrics and expand market share in our more rural markets. We have the right bankers and the right markets to drive long term value for this company.

Like I said, it's a 35 clients I'd say the bottom was 225 and maybe the upside is $2 50.

Very helpful. Thanks strike and maybe just finally for me.

You guys have an insurance business, we've seen a couple of sales here.

Just doing some back of the envelope math looks like.

You can get about 120 million Bucks, if you sold it at a five times revenue multiple just wanted to get your thoughts there and.

Just just general.

What do you think about the insurance business.

You know I still believe there's a lot of value in noninterest income and continuing to push we have some opportunities to I think in 2014 and potentially enhance our levels of non interest income of like that business, a lot and I like the.

Lance Hall: And I'm very confident our ability to be successful now turn it over to length.

Lance Hall: Thanks and good morning. Drake is correct that the battle of deposits is fiercely competitive throughout our markets. Origin's mix of rural deposits, as well as our deposit-focused incentive plans, coupled with Treasury management and deposit-focused calling officers benefits us in a powerful way. We are competing every day to protect valuable relationships and are doing a good job of driving new deposit clients to the bank. The June 30, 2023 FDRC annual deposit market share report highlights our value proposition and the strength throughout our dynamic markets.

The relationships, we have within those agencies.

I Love. The fact that we are able to cross sell those relationships, we have a great relationship out of Shreveport, Bossier and the poorly White group that.

Does a great job, we're going through a potential branding opportunity here. So you know for me long haul I love the business I Love what it does for this organization.

I just wouldn't say that that's something that we're truly considering at this point.

Lance Hall: Origin's ability to maintain deposits has been dramatically better than the banking industry as a whole in our footprint. During the 12-month period where industry deposits declined 8.7% year-over-year, even backing out our broker deposits, origins deposits declined by just 0.8% over the same period. Digging deeper into these numbers, the Louisiana results continue to show the value and strength of our rural deposit base. With number one market share across our six parishes combined, we were able to grow $24 million, excluding broker deposits, while overall deposits in these parishes dropped $1.1 billion.

Alright, thanks for the color I appreciate you taking my questions.

Thank you.

Our next question comes from Kevin at D. A Davidson Kevin Your line is open.

Hey, good morning, guys.

I'm just curious about you mentioned earlier about one of the considerations with.

Paying down borrowings with the bond restructuring proceeds was that keeping.

The balance sheet.

Size below 10 billion as you cross year end.

As you look out with one quarter left.

Do you do you feel incrementally more comfortable at coming in below that or there or are there other.

Lance Hall: I'm proud of our team for the results and what they continue to do to drive value for this company. To help further strengthen these positive trends, this past quarter we implemented a new deposit initiative that has since our bankers on core deposit growth. This is in addition to our existing incentive plan that has already waited toward deposits. With this new initiative, we have seen success throughout our lending and retail teams as our net new account openings continue to grow up 8.2% year-over-year.

Kind of.

Yeah.

Things you need to be looking at this next quarter in terms of does it limit the amount of loan growth you put on does it just just trying to think through.

What.

Restraints you might have this next quarter to insure.

You meet that goal thanks.

Good morning, Kevin.

I think if you look at the size of our balance sheet at September 30 after we.

Lance Hall: Also, new customer acquisition accelerated in the third quarter of 35% year-over-year. We continue to target a loan deposit ratio of 90% or less, excluding mortgage warehouse, and end of the quarter at 87%. We remain focused on client selection and have been disciplined in our loan pricing with new loans yielding over 8% throughout the quarter. Our focus on deposit gathering and loan pricing should continue to support our efforts to stabilize our margin moving forward. Now, I'll turn it over to Jim.

Paid down that <unk>, we feel highly confident that we can stay under $10 billion without having to.

Make any decisions that would that would limit growth in the loan portfolio or anything like that we feel pretty comfortable where we are.

Okay, that's what I thought I just wanted to make sure.

And you mentioned earlier I think Drake might've.

I Might've mentioned earlier that.

Expenses are a priority and youre looking at that.

Jim Cropwell: Thanks, Lance.

When revenues are under pressure, obviously, you want to limit that growth are there any.

Jim Cropwell: As reflected on slide 12, I am pleased to report solid credit metrics for the quarter as evidence by stable levels of both past dues and non-performing loans and a decrease in our level of classified loans. Past due loans' help for investment came in at 0.27% as of September 30, which is right in line with the 0.26% reflected for the prior quarter end. Non-performing loans as a percentage of loans' help for investment declined slightly, coming in at 0.42% as of September 30, compared to 0.44% as of June 30 of this year.

Specific initiatives that you have going on right now or are contemplating.

That you can give any color on that thanks.

Yes.

We are.

There's no stone, we're not turning over to look at opportunities right now from an expense standpoint, Lance and his team I think are doing an awesome job of.

Everything from personnel, our nonproductive people to another different things that we're doing and add our focus here is to try to create a flat expense environment over the next several quarters and what I mean by that is.

Jim Cropwell: I'm especially pleased with the reduction reported in classified loans' help for investment from 1.11% last quarter to 0.85% as of September 30. As we discussed last quarter, we continued to diligently monitor our loan portfolio and proactively address any identified issues. As a result of these efforts, for the quarter, we were able to achieve a $20 million reduction in classified loans, which would primarily do to pay off with upgrades providing additional benefits.

As we have opportunities to do a few things that would increase expenses, but yet long haul significantly increase revenue opportunities for us. So if we can mine the expenses at this point and create this environment moving forward in a flat environment, that's a big win for us because we are.

Creating what I think our ROE opportunities for us utilizing expenses, but yet on the backend cutting out nonproductive expenses.

Jim Cropwell: I would also like to mention that during the third quarter we completed our annual third party loan review. The outcome of this review was only one rating adjustment in the past category on a $250,000 credit. As such, I continued to be very pleased with the effectiveness of our internal loan rating process and portfolio management. Annualized net charge loss for the quarter came in at 0.14%, compared to a level of 0.10% for the prior quarter and was in line with expectations.

And draped those opportunities I'm, assuming are kind of like lift out.

Potential like you cited before.

Yes.

Okay.

And one last one for me just and I apologize if you covered this already earlier, but just in terms of credit quality credit quality, we've had some.

You know.

Instances.

Seeing some some problems spiked up.

Jim Cropwell: For the quarter, our allowance for credit losses increased $824,000 to $94.2 million, increasing from 1.24% to 1.26% as percentage of total loans held for investments. Net of mortgage warehouse, our reserve ratio reduced slightly from 1.32% as of June 30 to 1.30% as of quarter end. This reduction was primarily driven by the improvement in levels of classified loans mentioned previously. As to reserve levels and as discussed in previous quarters, we continued to balance our sound credit quality and the resilience of our loan portfolio with continued economic headwinds.

Granted we're coming off a low base.

So maybe if you could just address are there any areas you are.

Specifically concerned with and limiting your exposure to and if you could also address.

Your snick exposure and what that is as a percent of loans just given that we've had some larger banks report.

Sure.

We are involved in our problem loan there. Thanks.

Okay. Thanks.

Yes.

There was.

And.

A more precise way to tell you. This is where I'm very concerned about credit it's amazing how resilient.

Jim Cropwell: On slide 13, we have updated the additional information on our CRE Office portfolio that we have shared for the last two quarters. As of September 30, the segment of our portfolio total $363.5 million with an average loan size of only $2.1 million. The credit profile of this segment continues to be sound, reflecting a weighted average loan to value of 60.3%, no past dues, no classifieds, no non-performing and no charge loss. This segment of our portfolio continues its sound performance driven by our constant focus on relationship banking.

I said office was a big concern of mine.

Certainly for US, we're not seeing any deterioration in that area and we continue to stress those levels pretty heavily we're fortunate that we don't have a lot of concentration in the metro.

Office.

Ed anything that had to do with consumer spending and retail, especially around the restaurant and motel I'd be concerned about we're not seeing deterioration there which is surprising.

We're seeing a little bit of a little bit a lot of weakness in the automobile area. Our dealerships are holding up well, we don't have a tremendous number of those had a conversation with a dealer and it is really impacting those sales but overall.

Jim Cropwell: In summary, we continue to be pleased with our credit performance and our strong and stable credit profile.

There's not a single area.

With the exception and we cleaned that up of assisted living and we just have a couple of credits left in that portfolio. So.

Wally Wallace: I'll now turn it over to Wally. Thanks, Jim, and good morning, everyone. Starting to the financial highlights in Q3 reported diluted earnings per share of 79 cents. On an adjusted basis, Q3 EPS were 71 cents after excluding a $10.1 million write-up on an equity investment and a $7.2 million loss on security sold during the quarter. Starting with deposits, total deposits declined 1.4% during the quarter. We continued to see a shift of non-intersparing deposits into interest-bearing accounts.

I'm very pleased with not only the.

What we're seeing as far as quality, but the depth of analysis that we're doing from a stress standpoint in our portfolios and how well those cash flows are holding up.

We continue to stress them up but.

From that I think Jim would you be able to address the snick percentages because we just don't have a big snake portfolio Julien good morning, Kevin.

Hello.

Good morning, Kevin right now, we only have 11 relationships.

About $153 million and the snake portfolio and I would say these are really relationship driven opportunities that we have so while they meet that criteria, we have relationships with all of these so.

Wally Wallace: Non-intersparing deposits declined 5.4% this quarter, and the mix fell to 24% of total deposits in Q3, from 25% in Q2 and 28% in Q1. Importantly, the pace of the decline in Q3 was a slight deceleration from the pace we saw in the first half of the year, and was better than our expectations. Though we do continue to forecast some additional mix pressure over the next couple of quarters to our non-intersparing deposit mix. Ultimately, combined with a continued need to price up interest-bearing deposits, our total deposit beta increased again, though at a slowing rate, from 35% in Q1 to 42% in Q2 and 47% in Q2.

And to Echo what what drags said as we go through the portfolio and look at the various areas, obviously, where we're relationship focused in <unk>.

I've shared before when the analysis when.

When we look at sectors and look at the overall guarantor support.

It's just really really does point out.

I think the resiliency of the portfolio and in the relationship focus that we've had so be happy to address any other questions. You may have but right now we feel really good about the resiliency of our portfolio.

Wally Wallace: Secretary. We continue to expect our deposit beta will increase in the fourth quarter. Importantly, loan pricing discipline and a positive shift in the earning asset mix helped offset funding cost pressures and drove stabilization in our net interest margin, which contracted just two basis points during the quarter to 3.14%. Excluding net purchase accounting accretion of $530,000 in Q2 and purchase accounting amortization of $38,000 in Q3, our adjusted name was flat at 3.14% for both quarters better than our expectations.

That's great thanks very much.

Thank you.

Once again, if you would like to ask a question. Please press star one on your telephone keypad some into the key.

And if you have joined by with please press the <unk> and icon on the right hand side of your deal richest screen.

Before let's briefly to allow any questions to generate.

Wally Wallace: As Drake mentioned earlier, at the end of the quarter, we decided to execute a strategic trade in our securities portfolio. We sold securities with the book value of $182 million at a realized loss of $7.2 million, and we paid down FHLB advances with the proceeds. This strategy served a dual purpose of one boosting forward margin and EPS results in a financially attractive manner, and two providing ample balance sheet room to manage our assets below the important $10 billion threshold through year end.

Our next question comes from.

Graham at Piper Sandler Graham Your line is open.

Hey, good morning, guys.

Good morning Graham.

I just wanted to circle back to the bond transaction quickly.

Obviously pretty attractive financially, there's a little bit of a capital hit but you guys have plenty of that.

Wally Wallace: With the net interest income benefit we received from the trade, we estimate a standalone benefit of 11 basis points and a 1.7 year earnback period on the realized loss. While our continued expectation of deposit mix and pricing pressures will eat away at some of the 11 basis point NIM benefit provided by the trade, our current expectations are that 3Q NIM of 3.14% may represent the trough. Shifting to fee income, we reported $18.1 million in Q3.

Right now would you consider doing any more of this or similar transaction in the future I know borrowings arent huge anymore, but maybe you could pay down some brokered or reinvest the cash flows elsewhere. What are your thoughts on I guess additional.

Transactions like this one.

Graeme the way the way we are approaching that decision strategically is.

Clearly around the period of time it takes to payback the realized loss.

Wally Wallace: Excluding the previously mentioned, $10.1 million right up on an equity investment and $7.2 million loss on securities sold, our adjusted fee income was $15.2 million in Q3. Flat from $15.2 million in Q2, which excluded the $471,000 gain on the retirement of sub debt. Our non-interest expense also remained relatively stable at $58.7 million in Q3. Down slightly from $58.9 million in Q2. We remained focused on operating expense management and continued to expect relatively stable expense levels in the fourth quarter.

We believe that if we have the opportunity to deploy capital in a manner that would payback a loss less than two years that that is an attractive period that we should consider rates.

Rates have obviously moved against us so far this quarter.

But but if we see opportunity we will jump on it.

Okay. That's helpful.

And then I guess just drag I think you mentioned some lift out opportunities and maybe some market expansion opportunities.

What sort of markets are you interested in today and what would be the size of the scale of the level of team you would want to bring on.

Wally Wallace: Turning to capital, we note that our TCE ratio remained above 8% for the fourth consecutive quarter, ending at 8.7% as slight growth in tangible common equity coupled with a decline in tangible assets due to the securities trade at the end of the quarter. Furthermore, as shown on 522 of our investor presentation, all of our regulatory capital levels at both the bank and holding company levels remain above levels considered well capitalized even if we were to include our AOCI loss in the calculations. As such, we remain confident that we have the capital flexibility to take advantage of any potential future capital deployment opportunities to drive value for our shareholders.

Yes, that's it.

Kind of open and as you know, we're highly interested in Texas invested in Texas.

Continue to see significant growth I think 90% of our loan growth. This past quarter was Texas. So.

There are Texas opportunities that we will continue to look at and you know.

It's the size of these teams aren't going to be something to the point to where we look at many people. We don't really look at the deposit portfolio and also their relationships on the loan side do they fit with US is it C&I. That's what we look for and in these cases I would think if I was investor I am.

That it's much easier to look at a billion dollar team.

Drake Mills: With that, I'll now turn it back to Drake. Thanks, Wally. Our story is unique, and we have proven throughout a history that we can successfully navigate cycles. We operate in thriving growth markets with diverse economies. We have seasoned management team that has committed to our culture and has a shared vision of who we are and what we can be.

That has.

Less sight deposits in C&I loans and be able to manage through that stood a M&A deal. So we've got a couple of opportunities that might add up to that but again, we're still in negotiation process.

Drake Mills: Our credit profile is strong, and our rule deposit base has provided the foundation to capitalize on growth opportunities, to say I am pleased as an understatement as I think about our company's trends and the overall performance of our people in the midst of current conditions. Thank you for being on the call today. Now we'll open the call for questions. Thank you.

Okay I appreciate it all my other questions have been asked thanks, guys nice quarter.

Thank you.

And one small if you would like to ask a question. Please press star one on your Philippine keep headwinds of Q.

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Operator: At this time, we will conduct the question and answer session. If you would like to ask a question, please press star one on your telephone keypad for the key. Or if you've joined via web, please press the raise hand icon on the right hand side of your door at true screen. Again, that's star one on your telephone keypad for the key. Or the raise hand icon on the right hand side of your door at true screen.

Our next question is a follow up from Matt of Stephens Your.

Your line is open.

Yes, thanks for taking the follow up I want to make sure I understand these new disclosures.

Around repricing the loan and securities portfolio on Slide 15.

And it looks like Youre expecting the cashless since curious portfolio around call it $290 million over the next year I guess the first question is can we just assume that these maturities will continue to help fund the organic loan growth during this time.

Matthew Olney: Our first question comes from Matt at Stevens. Matt, you're on long growth, soft and really good trends in the third quarter, and it sounds like some of the long growth trends in third quarter may have even surprised you guys. Anything to note there, especially in the utilization rates, any shift there, and then as you look at the pipeline, how are you thinking about long growth in the fourth quarter and in the 2024?

Yes, Matt that is exactly what our expectation is we as you know the deposit side of the institution.

It's where the battle is we're basically governing our.

Our loan growth.

Lot of excellent opportunities in our footprint and we don't see that necessarily slowing down so any opportunity we have to redeploy.

You know at 2%.

Lance Hall: Thanks. Yeah, hey, Maggie, more in this land. I think it was a little bit of timing. We picked up probably a little bit more in key three that we thought would be in key four. I looked at the line utilization and it's right at 50%, so it was a 1% change from 49 to 50, so not a big shift there. I think it's just the timing around some projects. Wally and his team, Varty Forecast and Q4, and we were looking at about 1.2% growth in the quarter for four, which would be right under five percent annualized, which I think is kind of right in line with where we thought we would be.

Instrument into eight 910% loan we're going to take advantage of that and Thats. Our plans at this point.

Matt.

You bring up a good point I think it's important too to remember the.

The asset side of the NIM equation.

As we continue to have deposit pricing pressures, we have been extraordinarily focused.

And the pricing of new loans, and we're pretty proud at how disciplined our lenders have been new and renewed loan yields are coming in in the mid eights as Lance mentioned in his prepared remarks.

Lance Hall: And what land did you think about 2024? Any shift or updates from that mid-single-digit range for the fourth quarter? Can we assume that trend could hold maybe for a few more quarters beyond then? Yeah, I would sit here today. I think that's what we're going to think about for 24. And again, as we've talked about for us, it's all about our ability to maintain the right loan deposit ratio, making sure we're getting the right loan yields and manage into the appropriate meal.

And obviously as Drake mentioned securities roll off in the twos, that's a pretty attractive redeployment opportunity. So if you look at.

The fourth quarter and next year, we have a sizable amount of principal coming out of the securities portfolio and principal coming out of the loan portfolio that will give us the opportunity to reprice.

Lance Hall: It's a challenge in the fact that we have dynamic markets and we continue to see growth opportunities in Texas that are attractive, but we've got to be very strategic and smart in the way that we manage our loan deposit ratio.

On an average basis.

Price coming off is in the fours and it's coming back on in the in the eights. So that's that's what gives us.

Pretty good comfort and our commentary around the <unk>.

<unk> margin moving forward.

Mhm.

Yeah. Good point swallowing. Thanks, I appreciate that and I want to make sure I understand the disclosures on the loan repricing side.

Drake Mills: And Matt, this is Drake. I really want to make a point again. I did last quarter that strategically we are committed to and are focused on managing sub-90% loan deposit ratio X mortgage warehouse. As I've said in the past, for years we had to run higher levels than that because of our expansion into the noble markets, but we do feel like long haul multiples are better in that space and we're going to commit to that strategy.

I think we're all trying to appreciate for origin in other banks the level of the fixed asset repricing, we should anticipate going forward and looking at slide 15, I see theres about $3 4 billion of loans are pricing over the next year and on the right hand part of that slide it looks like there's about $3 three.

<unk> of loans that are floating.

So I guess the question is.

I appreciate kind of how much of those loans that are repricing, but are not floating is is it just the three point for my three three so call it.

Drake Mills: Yep. Okay, I appreciate that, Drake. And on the credit front, really good report on the classified loans coming down this quarter. I think while your peer is going the opposite direction, so that's great to see. Jim, I think you mentioned that the payoffs were a big part of that. Any more color on that? Did those borrowers pay off the loans themselves with a refinance at a separate bank? Just any color on that drop a class five month.

$100 million of fixed rate loans set to reprice over the next year is that the right way to look at that.

I'll make it I'll make it easier for you Matt.

Over the next five quarters.

We've got $500 million to $600 million and principal comment out of securities and loan portfolio.

Drake Mills: By most of that was, I would say a bit split between just refinancing into other financial institutions and also we had one relationship where they actually sold a portion of their business and so it results on proceeds from the sale. So just really good results, Matt from a lot of work, you know, over the last several quarters it came to fruition for us in the third quarter. And some nice reductions in some credits that we would like to see some reductions in, so it worked out well.

Five to 600 and that includes loans and securities.

Yes.

Perfect. Okay, that's what I'm looking for.

I appreciate that Wally and everybody else and thanks for your time.

Thank you Matt.

Thank you.

This concludes the Q&A hunting.

How do you get back to Drake Mills for any final remarks.

I want to thank everybody for the time of day.

I want to close with saying.

That I am extremely positive about the outlook for our company when you look at.

Drake Mills: Okay, appreciate that. And then just lastly, I heard, always comments there at the end about being ready for capital deployment opportunities, kind of a broader comment. Did you know if Waller, Drake or anybody else wanted to kind of just stack order or kind of update us on the kind of capital strategy deployment thoughts here. Thanks. Yeah, Matt Drake, there's a number of opportunities that continue to present themselves. You know, and I'm not going to stack rank these opportunities, but we certainly have conversations around M&A that continue, disconnected from a couple.

We are in the process of really getting the first year behind us with our Bta's transaction, what a wonderful group of people that we brought on what they bring to us in East, Texas Dallas Fort Worth has been extremely valuable. We appreciate the process. We've gone through there we've been very successful with that.

Our geography stronger economies attractive demographics our team.

Drake Mills: We also have market expansion opportunities through lift out scenarios that could come our way that are very attractive. We also are starting to look at sub debt as an opportunity to deploy the excess capital as we look at the burn off rates of the capital utilization and those opportunities and also looking towards 25 and 26 as we see some of the sub debt start to reprise. So we think there's a number of opportunities that we are going to make the best effort to deploy that capital that's most beneficial to our stockholders at this point, but we're really pleased with the overall opportunities as a whole.

There have been more proud of the experience stuck adhesive.

Work that we have just a true love for each other that we worked through our credit profile strong client selection is really good we're focused on yields our teams are doing extremely well deposit base rule deposits continued to show their value. We are deepening relationships on every side of each one of our markets.

The opportunities we have in our geography and the opportunities we have to for expansion continued to impress me. So I appreciate very much. The investments you have the time today and we are open for questions at any time appreciate the relationships and thank you for being on the call.

This concludes today's call. Thank you.

Have a great day.

The host has ended this call goodbye.

Matthew Olney: Okay, that's all from me. Thanks, guys. Thank you, man. Thank you.

Michael Rose: Next question comes from Michael at Raymond James, Michael. Hey, good morning, guys. Thanks for taking my questions while I heard you that you said the morning, the third quarter may be the, the trough for for the name. And I just wanted to get a sense of that was inclusive or exclusive of the of all their structuring quarter and then maybe separately just on the, the beta is I think you guys had kind of talked about, you know, 50%, you know, beta by the end of the years that's still kind of in the thinking and kind of what you're, are your expectations for kind of NIB mix as we move forward. Thanks. Yep, morning, Mike.

Wally Wallace: So, so maybe the way to think about this is, is take the securities trade out of the equation right now. In that scenario, we do, we are modeling that the non interest bearing deposit mix will continue to decline. We're going to stick around the same level that we said last quarter, which is low 20s. That that on a standalone basis would add pressure to the net interest margin, but then you add in the 11 basis points from the securities trade.

Wally Wallace: And we think net interest margin expands in the fourth quarter, probably get more than half of that 11 basis points. And then I think we're in the process of of bottoming and we don't see the pressure going down further than where we reported in the third quarter. So, so we think the third quarter could be the bottom for us because of the benefits of the securities trade. Very clear. Thanks, Wally.

Matthew Olney: And then just maybe is a separate, I know Matt asked about long growth, but just wanted to talk about the warehouse specifically and what the expectations, you know, might be, you know, as we move forward.

Drake Mills: And it's straight in my eye doing. We ended up at the quarter, I think around 286 million and where we think into fourth quarter will come in between 225 and 250. Based on a couple scenarios, we're still looking very closely at quality of those relationships. And we at one point had a high, I think 43 relationships or clients. Now we have 35. So our team's done an excellent job. It's one of our better R.O.A, ours in our organization. So they've reduced it. Like I said, 35 clients. I'd say the bottom was 225 and maybe the up size 250.

Matthew Olney: Very helpful. Thanks, Drake.

Drake Mills: And maybe just finally for me, you guys have an insurance business. We've seen a couple sales here. Just doing some back of the envelope math looks like, you know, you can get about 120 million bucks if you sold it at five times revenue multiple. Just wanted to get your thoughts there. And, you know, just just general. What's the thing about the insurance business? Thanks. You know, I'll ask you, I believe there's a lot of value in non-instinct come and continue to push.

Drake Mills: We have some opportunities to, I think in 24 and potentially enhance our levels of non-instinct come. I like that business a lot. I like the relationships we have within those agencies. I love the fact that we are able to cross sell those relationships. We have a great relationship out of three-port bosier in the pulley white group that does a great job. We're going through a potential branding opportunity here. So, you know, for me, long haul. I love the business. I love what it does for this organization.

Matthew Olney: And I just wouldn't say that's something that we're truly considering at this point. All right. Thanks for the call. I appreciate you taking my question. Thank you.

Kevin Fitzsimmons: And next question comes from Kevin at the 8th, and Kevin your line is open. Hey, good morning, guys. I'm just curious about, you know, you mentioned earlier about one of the considerations with paying down borrowings with the bond instruction proceeds was that keeping the balance sheet size below 10 billion as you cross your end.

Kevin Fitzsimmons: As you look out with one quarter left, do you feel incrementally more comfortable at coming in below that or there or are there other kind of things you need to be looking at this next quarter in terms of, you know, does it limit the amount of loan growth you put on does it just just trying to think through what restraints you might have this next quarter to ensure you meet that goal. Thanks.

Kevin Fitzsimmons: Good morning, Kevin. I think if you look at the size of our balance sheet at September 30 after we paid down the FHLB, we feel highly confident that we can stay under 10 billion without having to make any decisions that would that would limit growth in the loan portfolio or anything like that, we feel pretty comfortable wherever. RGR. That's what I thought. I just wanted to make sure.

Drake Mills: You mentioned earlier, I think Drake might have mentioned earlier, that expenses are a priority and you're looking at that. When revenues are under pressure, obviously you want to limit that growth. Are there any specific initiatives that you have going on right now or are contemplating that you can give any color on? For that. Thanks. Yeah. We are. There's no stone. We're not turning over to look at opportunities right now from an expense standpoint.

Drake Mills: Lansing is team. I think we're doing an awesome job of everything from personnel or nonproductive people to another different things that we're doing. And our focus here is to try to create a flat expense environment over the next several quarters. And what I mean by that is we have opportunities to do a few things that would increase expenses, but yet long haul significantly increased revenue opportunities for us. So if we can mine the expenses at this point and create this environment moving forward in a flat environment, that's a big win for us because we are creating what I think are our we opportunities for us utilizing expenses. But yet on the back and cutting out nonproductive expenses. And Drake, those opportunities I'm assuming are kind of like lift out potential like you said it before. Yes. Okay.

Kevin Fitzsimmons: And one last one for me just and I apologize if you covered this already earlier, but just in terms of credit quality, we've had some. You know, instances of banks, things some some problems spike up, granted were coming off a low base. So maybe if you could just address are there any areas you're specifically concerned with and limiting your exposure to and if you could also address your sneak exposure and what that is as a percent of loans just given that we've had some larger banks report or be you know we're involved in a problem loan there.

Kevin Fitzsimmons: Thanks. Okay. Thanks. Yeah. You know, wish there was in a in a more precise way to tell you this is where I'm very concerned about credit. It's amazing how resilient. I said office was a big concern of mine. Certainly for us, we're not seeing any deterioration in that area. We continue to stress those levels pretty heavily. We're fortunate that we don't have a lot of concentration in metro office. I said anything that had to do with consumer spending and retail especially around the restaurant and motel I'd be concerned about.

Kevin Fitzsimmons: We're not seeing the deterioration there, which is surprising. We are seeing a little bit of not a little bit a lot of weakness in the automobile area. Our dealerships are holding up well. We don't have a tremendous number of those had a conversation with the dealer and it is really impacting those sales. But overall there's not a single area with with the exception and we clean that up of assisted living and we just have a couple of credits left in that portfolio.

Kevin Fitzsimmons: So I'm very pleased with not only the what we're seeing as far as quality, but the depth of analysis that we're doing from a stress standpoint in our portfolios and how well those cash flows are holding up.

Jim Cropwell: You know, as we continue to stress them up, but from that, I think Jim was going to address the sneak percentages because we just don't have a big sneak portfolio.

Jim Cropwell: Jim. Good morning, Kevin. Right now, we only have 11 relationships, about $153 million in the Snake Portfolio, and I would say these are really relationship-driven opportunities that we have. So while they meet that criteria, we have relationships with all of these. So, you know, in the echo of what Drake said, as we go through the portfolio and look at the various areas, obviously, we're relationship-focused. And, you know, I've shared before, when, you know, the analysis, you know, when we look at sectors and look at the overall guarantee of support, you know, it just really, really does point out the, I think the resiliency of the portfolio and the relationship-focused that we've had.

Jim Cropwell: So, be happy to address any other questions you may have. But right now, we feel really good about the resiliency of our portfolio. That's great. Thanks very much. Thank you.

Operator: Once again, if you would like to ask a question, please press star one on your telephone key, if you have joined by with, please press the raise hand icon on the right-hand side of your deal-richest screen. It will pause briefly to allow any questions to generate.

Graham Smethurst: The next question comes from Graham at Piper Sandler. Graham, your line is open. Hey, good morning, guys. Good morning, Graham. I just wanted to circle back to the bond transaction quickly. Obviously, pretty attractive financially. It's a little bit of a capital hit, but you guys have plenty of that.

Graham Smethurst: Right now, would you consider doing any more of this or a similar transaction in the future? I know barrings aren't huge anymore, but maybe you could pay down some broker or reinvest the cash flows elsewhere. What are your thoughts on additional transactions like this one? Graham, the way we're approaching that decision strategically is purely around the period of time it takes to pay back the realized loss. We believe that if we have the opportunity to deploy capital in a manner that would pay back a loss less than two years, that is an attractive period that we should consider. Rates have obviously moved against us so far this quarter, but if we see opportunity, we will jump on it.

Drake Mills: Okay, that's helpful.

Drake Mills: Then I guess, Drake, I think you mentioned some lift-out opportunities and maybe some market expansion opportunities. What sort of markets are you interested in today and what would be the size or the scale of the level of team you would want to bring on? Yeah, that's kind of open. As you know, we're highly interested in Texas, investing in Texas and continue to see significant growth. I think 90% of our loan growth this past quarter was Texas.

Drake Mills: There are Texas opportunities that we will continue to look at. The size of these teams aren't going to be something to the point to where we look at many people. We really look at the deposit portfolio and also their relationships on the loan side. Do they fit with us? Is it C&I? That's what we look for. In these cases, I would think if I was an investor, I am that it's much easier to look at a billion-dollar team that has, let's say, deposits and C&I loans and be able to manage through that, through the M&A deal. We've got a couple opportunities that might add up to that, but again, we're stealing the negotiation process.

Graham Smethurst: Okay, I appreciate it.

Graham Smethurst: All my other questions have been asked. Thanks, guys. Nice corner.

Operator: Thank you.

Matthew Olney: And once more, if you would like to ask a question, please press star one when you're going to follow up from Matt Stevens.

Matthew Olney: Matt, your line is open. Yeah, thanks for taking the follow up. I want to make sure I understand these new disclosures around repricing the loan and security portfolio on 515. It looks like you're expecting the cash flow from some security portfolio around, call it $209 million of the next year. I guess the first question is, can we just assume that these securities will continue to help fund the organic loan growth during this time?

Matthew Olney: Yeah, Matt, that is exactly what our expectation is. We, as you know, the positive side of the institution is where the battle is, where we're basically governing our loan growth and a lot of excellent opportunities in our footprint. We don't see that necessary slowing down. So any opportunity we have to redeploy, you know, two percent, you know, instrument into a 8, 9, 10 percent loan. We're going to take advantage of that.

Matthew Olney: And that's our plan at this point. Go ahead. Matt, you bring up a good point. I think it's important to remember the asset side of the NIM equation, you know, as we continue to have deposit pricing pressures, we have been extraordinarily focused on the pricing of new loans. And we're pretty proud at how disciplined our lenders have been. New and renewed loan yields are coming in and the mid-8s, as Lance mentioned, and his prepared remarks.

Matthew Olney: And obviously, as Drake mentioned, as securities roll off in the two, you know, that's a pretty attractive redeployment opportunity. So if you look at the fourth quarter and next year, we have a sizable amount of principal coming out of the securities portfolio and principal coming out of the loan portfolio that will give us the opportunity to reprice, you know, on an average basis, the price coming off is in the fours and it's coming back on in the eights.

Matthew Olney: So that's what gives us a pretty good comfort in our commentary around the margin moving forward. Yep, good point, Swally. Thanks. I appreciate that. And I want to make sure I understand the disclosures on the loan repricing side. I think we're all trying to appreciate, for Origin and other banks, the level of the fixed asset repricing, we should anticipate going forward. And looking at slide 15, I see there's about 3.4 billion of loans repricing over next year.

Matthew Olney: And on the right hand part of that slide, it looks like there's about 3.3 billion dollars of loans that are floating. So I guess the question is, you know, trying to appreciate kind of how much of those loans that are repricing but are not floating, is it just the 3.4 minus 3.3? So call it a hundred million dollars of fixed rate loans set to reprice over the next year. Is that the right way to look at that?

Matthew Olney: I'll make it easier for you, Matt. Over the next five quarters, we've got $500 to $600 million in principal coming out of securities in loan portfolio. Five to six hundred and includes loaned and securities. Yes. Perfect. Okay. That's what I'm looking for. Appreciate that, Wally and everybody else, and thanks your time. Thank you, Matt. Thank you.

Drake Mills: This concludes the Q&A. How do you get back to Drake Mills? Pretty final mocks.

Drake Mills: I want to thank everybody for the time today. I want to close with saying that I am extremely positive about the outlook for our company. When you look at, we are in the process of really getting the first year behind us with our BTH transaction. What a wonderful group of people that we brought on. What they bring to us in these taxes, that was Fort Worth has been extremely valuable. We appreciate the process we've gone through there.

Drake Mills: We've been very successful with that. Our geography, strong economies, attractive demographics, our team. I've never been more proud of the experience, stuff adhesive, you know, work that we have. Just the true love for each other that we work through. Our credit profile is strong. Client selection is really good. We're focused on yields. Our teams are doing extremely well. Deposit base. Rule deposits continue to show their value. We're deepening relationships on every side of each one of our markets.

Drake Mills: The opportunities we have in our geography and the opportunities we have for expansion continue to impress me. Our appreciate very much the investments you have the time today and we're open for questions at any time. Appreciate the relationships and thank you for being on the call.

Operator: This concludes today's article. Thank you. Have a great day.

Operator: The host has ended this call. Goodbye.