Q1 2024 Simmons First National Corporation Earnings Call

Operator: Good morning, and welcome to the Simmons First National Corporation First Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's remarks, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I'd now like to turn the conference over to Ed Bilek, Director of Investor Relations. Please go ahead.

Good morning, and welcome to the Simmons first National Corporation first quarter 'twenty 'twenty four earnings conference call.

All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.

After today's remarks, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now.

To turn the conference over to Ed Bilek Director of Investor Relations. Please go ahead.

No.

Edward J. Bilek: Good morning, and welcome to Simmons first National Corporation first quarter 'twenty 'twenty four earnings call.

Edward J. Bilek: Good morning and welcome to Simmons First National Corporation's first quarter 2024 earnings call. Joining me today are several members of our Executive Management Team, including our Executive Chairman, George Makris, CEO, Bob Fehlman, President, Jay Brogdon, and CFO, Daniel Hobbs.

Edward J. Bilek: Joining me today are several members of our executive management team, including our executive Chairman, George Makris, CEO, Bob Fehlman, President, Jay Brogdon, and CFO Daniel HOPPS.

Edward J. Bilek: Today's call will be in a Q&A format. Before we begin, I would like to remind you that our first quarter earnings materials, including the earnings release and the presentation deck, are available on our website at SimmonsBank.com under the Investor Relations tab. During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections, and outlook, including, among others, our outlook regarding future economic conditions, interest rates, lending and deposit activity, credit quality, liquidity, and net interest margins.

Today's call will be in a Q&A format before we begin I would like to remind you that our first quarter earnings materials, including the earnings release and the presentation deck are available on our website at Simmons Bank Dot com under the Investor Relations tab.

Edward J. Bilek: During today's call, we will make forward looking statements about our future plans goals expectations estimates projections and outlook <unk>.

Edward J. Bilek: <unk> among others, our outlook regarding future economic conditions interest rates lending and deposit activity credit quality liquidity and net interest margin.

Edward J. Bilek: These statements involve risk and uncertainties, and you should therefore not place undue reliance on any forward-looking statement, as actual results could differ materially from those expressed in or implied by the forward-looking statement due to a variety of factors. Additional information concerning some of these factors is contained in our earnings release and investor presentation accompanying our Form 8K today and our Form 10K for the year ended December 31st, 2023, including the risk factors contained in that Form 10K.

Edward J. Bilek: These statements involve risks and uncertainties and you should therefore not place undue reliance on any forward looking statements as actual results could differ materially from those expressed in or implied by the forward looking statements due to a variety of factors.

Additional information concerning some of these factors is contained in our earnings release and Investor presentation furnished with our form 8-K today and our Form 10-K for the year ended December 31st 2023, including the risk factors contained in that Form 10-K.

Edward J. Bilek: These forward-looking statements speak only as of the date they are made, and Simmons assumes no obligation to update or revise any forward-looking statements or other information. Finally, in this presentation, we will discuss certain non-GAAP financial metrics we believe provide useful information to investors. Additional disclosures regarding non-GAAP metrics, including the reconciliations of those non-GAAP metrics to GAAP, are contained in our earnings release and investor presentation, which are attached as exhibits to the Form 8K we filed with the SEC this morning and are also available on the Investor Relations page of our website, SimmonsBank.com. Operator, we are ready to begin the Q&A session. Thank you.

Edward J. Bilek: These forward looking statements speak only as of the date. They are made and Simmons assumes no obligation to update or revise any forward looking statements or other information.

Edward J. Bilek: Finally in this presentation, we will discuss certain non-GAAP financial metrics, we believe provide useful information to investors additional disclosures regarding non-GAAP metrics, including the reconciliations of those non-GAAP metrics to GAAP are.

Edward J. Bilek: Contained in our earnings release, and Investor presentation, which are included as exhibits to the form 8-K, we filed with the SEC.

Edward J. Bilek: This morning, and are also available on the Investor Relations page of our website Simmons Bank Dot com.

Operator, we are ready to begin the Q&A session.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone, if you're using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Operator: To withdraw your question, please press star then 2. In the interest of time, please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble a roster. Our first question comes from David Feaster from Raymond James. Please go ahead.

Speaker Change: In the interest of time, please limit yourself to one question and one follow up at this time, we'll pause momentarily to assemble our roster.

Speaker Change: Our first question comes from David Feaster from Raymond James. Please go ahead.

Unknown Executive: Morning, David. Good morning, David.

David Pipkin Feaster: Hey, good morning, everybody.

David Pipkin Feaster: Morning, David Good morning, David.

David Pipkin Feaster: Um, maybe let's just start out with loan growth, you know, that was great to see, you know, it was above forecast driven by construction funding and the pipelines growing. You know, I'm just curious.

David Pipkin Feaster: Maybe let's just start out with with loan growth you know that was a great to see you know it was above forecast driven by construction fundings and the pipeline has grown.

David Pipkin Feaster: I'm just curious how do you think about loan growth, what's the pulse of your clients I'm, just trying to get a sense of whether the increase in the pipelines driven by increasing demand you know whether it's increased appetite for credit on your end or just you know just any thoughts on the growth outlook would be helpful.

David Pipkin Feaster: How do you think about loan growth? What's the pulse of your clients? I'm just trying to get a sense of whether the increase in the pipeline is driven by increasing demand, you know, whether it's an increased appetite for credit on your end, or just, you know, any thoughts on the growth outlook would be helpful.

David Pipkin Feaster: Yeah. David This is Jay I'll jump in with some initial remarks on that we were pleased with the loan growth in the quarter and in particular I'll call out you know in the fourth quarter again. This quarter are these are sort of seasonal unfavorable periods of time from an AG perspective, and so we should see some tailwind from that too.

James M. Brogdon: Yeah David, this is Jay. I'll jump in with some initial remarks on that. We were pleased with the loan growth in the quarter and, in particular, I'll call out the fourth quarter and again this quarter. These are sort of seasonal unfavorable periods of time from an agricultural perspective, and so we should see some tailwinds from that through about the next couple of quarters. So to see some loan growth in the first quarter, you hit it on. I mean, a lot of it came from the construction bucket.

James M. Brogdon: The next couple of quarter or so to see some loan growth in the first quarter. You you you hit it on I mean, there's a lot of it came from the construction bucket you know I'll I'll point out some of that is you know fund ups of unfunded commitments right and so keep that in mind, you know our pipeline I'd say is not.

James M. Brogdon: You know I'll point out some of that is you know fund-ups of unfunded commitments, right, and so keep that in mind. You know, our pipeline, I'd say, is not a change in our outlook from a credit perspective. We are seeking loan growth. We are being incredibly disciplined both from a credit and from a pricing point of view. So I'm pleased to see some expansion in the pipeline given that discipline, but it's really not indicative of, you know, a change in our outlook or optimism or aggressiveness around loan growth.

James M. Brogdon: A change in our outlook from a credit perspective, we are we are seeking loan growth, we're being incredibly disciplined both from a credit and from a pricing point of view. So I'm I'm pleased to see some expansion in the pipe one given that discipline, but it's really not indicative of a change.

James M. Brogdon: And in our outlook or optimism or aggressiveness around around loan growth I just put it you know more toward the category of disciplined execution at this point when I think about I'll I'll kind of wrap my comment up with this David when I think about the outlook for loan growth in the balance of the year you know what.

James M. Brogdon: I just put it you know more toward the category of disciplined execution at this point. When I think about I'll kind of wrap up my comment with this David, when I think about the outlook for loan growth and the balance of the year, you know what it is. It's a balanced outlook. We continue to sort of think in that that you know the low single-digit kind of range is, we think the right range.

James M. Brogdon: It is a balanced outlook, we continue to sort of think in that that you know low single digit kind.

James M. Brogdon: Kind of range is we think the right range there are.

James M. Brogdon: There are some fund-raising efforts we'll continue to see on the construction side. We'll see some success pulling things through the pipeline, but we expect some healthy paydowns from some of the existing projects that are out there that will hit the permanent market, etc. And you know, when you think about a higher rate for longer environment, that doesn't make me more optimistic about loan growth. Again, we're seeing borrower demand out there, but you know, we put all that together and continue to think that we'll need to stay focused to deliver on the loan growth that we expect in the balance of the year.

James M. Brogdon: Some bond ups will continue to see on the construction side, we'll see some success pulling things through the pipeline, but we expect some healthy pay downs from some of the existing projects that are out there that'll hit the permanent market et cetera, and you know when you think about our rate higher for longer environment.

James M. Brogdon: That that doesn't make me more optimistic about about loan growth again, we're seeing borrower demand out there, but you know we put all that together and continue to think that we will need to stay focused to deliver on the loan growth that we expect in the balance of the year.

David Pipkin Feaster: Okay, great. That's helpful.

Speaker Change: Great. That's helpful and then maybe touching on the other side the funding side.

David Pipkin Feaster: And then maybe touching on the other side, the funding side, just curious how you think about deposit growth. You've been pretty successful, especially on the money market and savings account side. Supplementing that with, you know, higher cost wholesale funding, you know, on the CD side. Just curious. What's your deposit growth strategy today? And then just any thoughts on the NIB trends that you're seeing and how you think about funding loan growth going forward.

Speaker Change: Just curious how you think about deposit growth you've been pretty successful, especially in the money market and savings account side.

Speaker Change: Supplementing that with you know higher cost wholesale funding you know on the on the CD side, just curious how do you. What's your deposit growth strategy today, and then just any thoughts on an N I be trends that you're seeing and how you think about funding loan growth going forward.

Speaker Change: Yeah, I think we have seen some success in the interest bearing side of the equation and so that that's a good thing will continue to stay focus there we have considerable.

Unknown Executive: Yeah, I think we have seen some success on the interest-bearing side of the equation, and so that's a good thing. We'll continue to stay focused there. We have considerable efforts around combating the NIB trends that the industry is facing right now, and so we think we've got some levers we can continue to pull there to combat those trends. So we're very focused on that, and will continue to be.

Speaker Change: Considerable efforts are around combating the N O b trends that the industry is facing right now and so we think we've got some you know some levers we can continue to pull there to combat those trends. So we're very focused on that and will continue to be to give you a glimpse Dave.

Unknown Executive: To give you a glimpse, David, of some of the trends, really, if I look back throughout the quarter, think of it kind of on a monthly basis, really, the only month worth noting for deposit or NIB migration happened in January. So unfortunately, from a NII or margin perspective, as it relates to the quarter, that event took place early in the quarter. You've got to pierce through some seasonality, both in Q4 and Q1, to really kind of get a sense of what the core trends are.

Speaker Change: But if some of the trends are really the if I look back to throughout the core think of it kind of on a monthly basis, the really the only mine.

Speaker Change: Worth noting of deposit or N b migration happened in January so unfortunately from our margin perspective as it relates to the quarter that event took place early in the quarter, you've got a peer through some seasonality both in Q4 and Q1 to really kind of get a sense of.

Speaker Change: What the core trends or but when we look at you know February March and even to date in April we see a lot better friends and N B's than what we saw in January so that makes me a little bit optimistic I'm still gonna be cautious again, given some of the seasonality and just saying same pressures I mentioned from a rates higher for longer on the on the <unk>.

Unknown Executive: But when we look at February, March, and even to date in April, we see much better trends in NIBs than what we saw in January. So that makes me a little bit optimistic. I'm still going to be cautious, again, given some of the seasonality and just the same pressures I mentioned from rates higher for longer on the loan growth side, that's going to be a threat on the deposit migration side. But the last few months have been favorable toward us, and hopefully, we can see that kind of continue over the coming months and quarters.

Speaker Change: Loan growths odd you know, that's that's going to be a threat on the deposit migration THAAD, but yeah. You know the last few months have had been favorable toward us.

Speaker Change: And hopefully we can see that kind of continue over the coming months and quarters.

Unknown Executive: You know, David, one thing I'd point out too: we track the number of customers, and we're seeing a continual increase in our number of customers, so it's not decreasing customers, and we point this out each quarter. You know, our customers, just like across the country, everybody has less money in their accounts, number one, from inflation, and number two, they're looking at moving their money to higher rates out of non-interest bearing So we're all dealing with it.

Speaker Change: David One thing I'd point out too we track number of customers and we're seeing a continual increase in our number of customers. So it's no decrease in customers and we point this out each quarter.

Speaker Change: Customers just like across the country, everybody has less money in their account number one from inflation and number two they're looking at moving their money to higher rates out of noninterest bearing so we're all dealing with it as Jay said, we we feel we had a little bit of optimism in February March don't know, if that's a trend yet, but that's a hard one to control.

Unknown Executive: As Jay said, we had a little bit of optimism in February and March. Don't know if that's a trend yet, but that's a hard one to control. What we can control is taking care of our customers and getting new customers, and that's what we're focused on today.

Speaker Change: So what we can control is taking care of our customers and getting new customers and that's what we're focused on today.

David Pipkin Feaster: For sure. And those are some encouraging trends. Maybe just putting it all together, just curious, how do you think about the margin trajectory? I mean, last time we talked, we're kind of expecting a modest improvement over the course of the year. Curious how you think about the margin trajectory as we look forward, and then how you think about managing the balance sheet? I mean, you're structurally well-positioned for a higher-for-longer environment, just given the core deposit base and the earning asset repricing side. So, just curious how you think about managing asset sensitivity at this point, you know, given we're pretty rate new.

Speaker Change: For sure and those are some encouraging trends.

Speaker Change: [laughter], maybe just putting it all together I'm just curious how do you think about the margin trajectory in the last time, we talked.

Speaker Change: Kind of expecting a modest improvement over the course of the year I'm curious, how you're thinking about the margin trajectory as we look forward and then how do you think about managing the balance sheet I mean, you're you're structurally well positioned for a higher for longer environment, just given the core deposit base and in the earning asset repricing side. So just curious how you think about managing the the the app.

Speaker Change: Asset sensitivity at this point, you know given where pretty rate neutral.

Unknown Executive: Yeah, I'd say, David, a couple of comments on that to try to unpack. First of all, I think the guidance or the outlook that we sort of gave back in January is generally still intact. You know, we talked about the first couple of quarters this year sort of being a little bit range-bound from a margin perspective. Down a couple of basis points in the first quarter is, you know, sort of within that range in my mind. I expect that to sort of be the same case in the second quarter.

Speaker Change: Yeah, I'd say, David a couple of comments on that to try to unpack for first of all Yeah. You know I think the the guidance or the outlook that we sort of gave back in January is generally still intact. You know we talked about the first couple of quarters. This year, you know sort of being a little bit range bound from.

Speaker Change: A margin perspective.

Speaker Change: You know down a couple of basis points in the first quarter as you know sort of within that range in my mind I expect that to sort of be the same case in the second quarter. You know if we again the majority of that headwind in the first quarter was from January and I'll be declines, but we haven't seen as much of that since then and so we're doing our best to kind of hold.

Unknown Executive: You know, if we, again, the majority of that headwind in the first quarter was from January NIB declines. We haven't seen as much of that since then, so we're doing our best to kind of hold the line in the first part of the year here, and the expectation for, you know, margin expansion throughout the balance of the year, the second half of the year, and sort of increasing expansion in the next year is still our expectation.

Speaker Change: Belong in the first part of the year here.

Speaker Change: And the expectation for margin.

Speaker Change: Margin expansion throughout the balance of the year, the second half of the year and sort of increasing expansion into next year. It is still our expectation.

Unknown Executive: You know, a couple of things that I would sort of footnote to all of that. One is that we have some liability sensitivity in the balance sheet, and so, you know, that is going to be a macro factor that we don't have full control over, you know, what the Fed's going to do nor when the Fed's going to do it, but we do expect to have some benefits when rates do start coming down. The second thing I'd point out is if you isolate deposit migration, NIB migration in particular, and just look at the repricing of assets and liabilities throughout the year this year, you know, that would naturally lead toward, as we look at all of that, margin expansion, and so we think that's a good setup for us throughout the balance of the year.

Speaker Change: Things that I would sort of footnote to all of that you know one is we have some liability sensitivity in the balance sheet and so you know that that is going to be a macro factor that we don't have full control over you know what the fed's going to do more when the fed's going to do it.

Speaker Change: But we do expect to have some you know some benefits when rates do start coming down the second thing I'd point out is if you isolate for deposit migration and I'll be migration in particular, and just look at the repricing of assets and liabilities throughout the year this year.

Speaker Change: That would naturally lead toward as we look at all of that toward margin expansion and so so we think that's a good setup for us throughout the balance of the year. The wildcard in the most difficult one really to predict is the level of then I'll be migration.

Unknown Executive: The wild card and the most difficult one, really, to predict is the level of NIB migration. So that, you know, that'll be the one, I think, that really helps further shape that inflection and how steep or not that inflection is over the balance of the year.

Speaker Change: So that that'll be the one I think that really helps further shape that inflection you know and how steep or or or not that inflection here is over the balance of the year.

Speaker Change: That's very helpful. Thank you.

David Pipkin Feaster: That's very helpful. Thank you. Thank you.

Speaker Change: Thank you.

The next question comes from Woody lay from K B W. Please go ahead.

Operator: The next question comes from Woody Lay from KBW. Please go ahead.

Woody Lay: Hey, good morning, guys.

Woody Lay: Good morning, Brian.

Woody Lay: One of the things we start out on deposit costs. I know we sort of had a wave of CDs maturing in the first quarter. Could you just talk about where those CDs priced up to and whether your current CD offerings changed much quarter over quarter?

Woody Lay: Wanted to start out on deposit cost I know, it's sort of in the first quarter had a wave of Cds maturing could you just talk to where the C. D price up too and have your current C D offerings changed much quarter over quarter.

Woody Lay: Yeah, I'll take that yeah, So hey, Larry this is Daniel.

Daniel Hobbs: Yeah, so hey, this is Daniel. So if you go back and look at our customer CDs over the last 30 days-ish that we have priced, that's in that 350 to 360 range. And then naturally, if you look at the brokered CDs, that's going to be, you know, more of a wholesale wholesale level. And so if you look at page 15, in our second quarter, we've got about $1.8 billion that's going to reprice.

Daniel Hopps: So if you go back and look at our customer Cds over the last 30 days ish that we have.

Daniel Hopps: Have have price that's in that three call it $3 50 to $3 60 range.

Daniel Hopps: And then naturally if you look at the brokerage Cds, that's going to be you know.

More and more of a wholesale wholesale level.

Daniel Hopps: Level.

Daniel Hopps: And so if you look at on page 15.

Daniel Hopps: And our second quarter, we've got about 1 billion eight that's going to reprice now.

Daniel Hobbs: There's a piece of that that's probably going to be more than $350,000. There's one particular customer in there that's a public customer that's going to be higher than that. So I would tell you that group is probably going to reprice in that $375,000 to 4% range. But absent of that one customer, we have, call it $1.4 billion, that's going to reprice in that $150,000 range. $350,000 range. Yes, excuse me. $350,000 range. New production goes on like historic production in the last 30 days. We think there's some opportunity there at the margin.

Daniel Hopps: There's a piece of that that's probably going to be more than that $3 50, a theres. One particular customer in there that's a public customer that is going to be higher than that so I would tell you that group is probably going to reprice and that $3, 75% to 4% range, but absent of that one customer we have a call.

At 1 billion for that's going to reprice and that $1 50 range and so $3 50 range, Yes, excuse me $3 50 range and so if that new production goes on like historic production in the last 30 days, we think theres some opportunity there to the margin.

Daniel Hopps: [noise].

Woody Lay: Yeah, so do you think it's fair to assume that, you know, the pace of the deposit cost increases begins to moderate in the second quarter?

Daniel Hopps: Yeah.

Speaker Change: Do you think it's fair to assume that you know that the pace of the deposit cost increases.

Speaker Change: It begins to moderate in the second quarter.

Unknown Executive: I would say so. Yeah, I'll jump in on that.

Speaker Change: I would say so yeah I'll jump in on that I think that's fair I think we're actually seeing that and it kind of goes back to my comment just a couple of minutes ago to Davids question. You know, if we isolate or just repricing not not volume or migration and look at asset and liability repricing, we think theres some theres some.

Unknown Executive: I think that's fair. I think we're actually seeing that. And it kind of goes back to my comment just a couple of minutes ago to David's question. You know, if we isolate for just repricing, not volume or migration, and look at asset and liability repricing, we think there's some opportunity on both sides that are favorable to margin as we move forward.

Speaker Change: Opportunity on both sides that are that are favorable to margin as we as we move forward.

Speaker Change: Got it and then last for me I just wanted to shift over to credit I. Appreciate all the detail you breakout on the on the MPA segment, but I was just curious on any trends youre seeing in bag in the criticized or classified segment in the quarter.

Woody Lay: Got it. And then last for me, I just wanted to shift over to credit. I appreciate all the details you break out on the MPA segment, but I was just curious about any trends you're seeing in the criticized or classified segments in the quarter.

Unknown Executive: So, what I'd tell you, and I appreciate that question, classifieds on a linked quarter basis are essentially flat. So, when I think about leading indicators from a credit perspective, the couple of metrics I focus on are classifieds being flat linked quarter, and then past due loans are actually down linked quarter. And we were pleased with our level of past due loans at 24 basis points in the fourth quarter. Those came down to 19 basis points in the first quarter.

Speaker Change: So what I'd tell you I appreciate that question classifieds on a linked quarter basis or essentially flat. So when I think about leading indicators from a credit perspective.

Speaker Change: A couple of metrics I focus on our classifieds being flat linked quarter, and then pass to past due loans were actually down linked quarter and we were pleased with the level of past due loans at 24 basis points in the fourth quarter those came down to 19 basis points in the first quarter. So overall credit bill.

Unknown Executive: So, overall, credit feels very stable to us. We're certainly focused on a couple of pockets within the classified portfolio, and we'll be, as we historically are, we will be conservative in how we deal with those classified areas. I'd maybe give you one sub-bullet on the past due trends, just to further shape that. At 19 basis points, where we ended the quarter, of that, within the commercial portfolio, which is obviously the much larger dollar volume of our total portfolio, we're at a kind of mid-single digit level of basis points of past dues. So, overall, I feel pretty good about the credit picture as it relates to the broader core portfolio.

Speaker Change: It's very stable to us we're certainly focused on a couple of pockets within the classified portfolio and will be as we historically or we will be conservative in how we deal with those classified areas.

Speaker Change: I'd, maybe give you one sub bullet on the past new trends.

Speaker Change: Just to further shape that it at 19 basis points.

Speaker Change: Where we ended the quarter of that within the commercial portfolio, which is obviously the much larger dollar volume of our total portfolio. We're at a kind of mid mid single digits level of basis points of past dues. So overall feel pretty good about the credit picture as it.

Speaker Change: Our lights to the broader core portfolio.

Woody Lay: Alright, that's helpful. Thanks for taking my questions.

Speaker Change: Okay. That's helpful. Thanks for taking my question.

Speaker Change: The next question comes from Thomas Wendler from Stephens. Please go ahead.

Operator: The next question comes from Thomas Wendler from Stevens. Please go ahead.

Thomas Wendler: Hey, good morning, everyone. Good morning. I wanted to start off with operating expenses that came in around 2% of average assets this quarter. Is that how we should be thinking about them moving forward?

Thomas Wendler: Hey, good morning, everyone.

Thomas Wendler: Good morning.

I wanted to start off with operating expenses. They came in around 2% of average assets. This quarter is that how we should be thinking about them moving forward.

Thomas Wendler: Yeah, Hey, Thomas This is Daniel Yeah, I think that's fair you know it may be slightly slightly above that as we go for about I'll take you back to kind of what we guided last quarter.

Daniel Hobbs: Yeah, hey Thomas, this is Daniel. Yeah, I think that's fair, you know, it may be, you know, slightly, slightly above that as we go forward, but I'll take you back to kind of what we guided in the last quarter. We told you that we'd be down one to two percent from our Q4 adjusted annualized number, which is about five hundred and sixty six million. So you can do the math and that'll get you to that 555 to 560 number for the year. And then if you take where we came in for the quarter, we're at 137 or 138. You can just kind of do that math.

Daniel Hopps: We told you that we'd be down 1% to 2% from our Q4 adjusted annualized number which is about 566 million. So you can do that math and that'll get you to.

Daniel Hopps: You know that $5 55 to $5 60 number for the year and then if you take the where we came in for the quarter were $1 30, 37, 138, and you can just kind of do that math. So we feel pretty good about the quarter, we feel good about the forward view of that.

Daniel Hobbs: So we feel pretty good about the quarter, we feel good about the forward view of that, you know, and, you know, we have a long-term goal to get our efficiency ratio well below where it is today. And obviously, there are two components to that.

Daniel Hopps: You know and we have a long term goal to get our efficiency ratio.

Daniel Hopps: Well below where it is today and obviously theres two components to that there's the revenue side. If we can get some rate and time to help us there.

Daniel Hobbs: There's the revenue side, if we can get some rate and time to help us there. And then on the expense side, we feel really good about our ability to manage expenses. I think we've proven that over time with the Better Bank Initiative, and we've got a number of things that we're still having to hoop that we're looking at, although we are making investments. We don't want to be lost on that. We're making investments in people, process, and tools across the bank.

Daniel Hopps: And then on the expense side, we feel really good about our ability to manage expenses I think we've proven that over time with.

Daniel Hopps: With the better Bank initiative, and we've got a number of things that were still have in the hopper that we're looking at although we are making the investments we don't want to be lost on that we're making investments in people process and tools across the bank. So I would tell you.

Daniel Hobbs: So I would tell you, you know, our guide doesn't change. There may be a little bit of seasonality. The first quarter had some payroll taxes and 401k, that's generally higher, but then in the second quarter, you've got merit that's going to come in. So, you know, we'll stick to that guide. But I think back to your original question, 2%-ish is probably a fair place for us to be.

Daniel Hopps: It doesn't change there may be a little bit of seasonality in the first quarter.

Daniel Hopps: Had some payroll taxes and four one K, that's generally higher but then in the second quarter, you've got merit, that's going to come in so yeah.

Speaker Change: I will stick to that guide.

Speaker Change: But I think back to your original question.

Speaker Change: 2% ish is probably a fair place for us to be yeah, and the only thing I want to further emphasize there Daniel hit it but you know were making investments all across the bank. Our focus right now is pretty relentless in self funding those investments, where we can and we've had good success with that.

Unknown Executive: Yeah, and the only thing I want to further emphasize there, Daniel hit it, but you know, we're making investments all across the bank. Our focus right now is pretty relentless on self-funding those investments where we can, and we had good success with that last year and into this year, and we'll continue to be very, very focused on that as well.

Speaker Change: Last year and into this year and we will continue to be very very focused on that as well.

Speaker Change: Great I appreciate the color there and then just kind of shifting gears here can you give us an idea of your appetite for repurchasing shares at current levels.

Thomas Wendler: Great. I appreciate the color there. And then, just kind of shifting gears here, can you give us an idea of your appetite for repurchasing shares at current levels?

Speaker Change: Yeah, I'll, just kind of reiterate kind of what our strategy is on our capital right. Now you know first off it's our dividend to our shareholders and providing enough capital for organic growth that was our number one priorities for us. The next priority right now is our balance sheet optimization.

Unknown Executive: Yeah, I'll just kind of reiterate kind of what our strategy is for our capital right now. You know, first off, it's our dividend to our shareholders and providing enough capital for organic growth. Those are our number one priorities for us.

Unknown Executive: The next priority right now is our balance sheet optimization. You know, in the fourth quarter, we had a bond sale. You know, we would have liked to had another bond sale in Q1. The rates kind of moved against us as the 10-year moved up. You know, we're going to time those when it's right to do them, not just do them to make them happen. We could, what we call, rip the Band-Aid off today.

Speaker Change: Fourth quarter, we had a bond sale, we would have liked to have had another bond sale in Q1, the rates kind of moved against US as the 10 year moved up we're going to time those when it's right to do it not just do them to make them happen, we could what we call rip the band aid off today, but we think theres a lot of analysis that we go through.

Unknown Executive: But we think there's a lot of analysis that we go through that shows it's better to be prudent and do it balanced over a period of time. So we continue to look at it. We didn't repurchase any shares in the first quarter.

Speaker Change: That shows it's better to be prudent and do it balanced over a period of time. So we continue to look at it we didn't repurchase any shares in the first quarter.

Speaker Change: We're we're kind of in a wait and see where we put that capital used to going forward as you know.

Unknown Executive: You know, we're kind of in a wait and see mode as to where we put that capital used going forward. Is it, you know, balance sheet optimization? Is it debt retirement? Is it stock buyback? Any of those is where we'd like to put that cash and capital.

Speaker Change: Balance sheet optimization is it debt retirement is it stock buyback any of those is where we'd like to put that cash and capital to use.

Speaker Change: Alright, thanks for answering my questions guys.

Speaker Change: Thank you.

Speaker Change: Again, if you have a question. Please press Star then one.

Speaker Change: Yeah.

Speaker Change: There are no more questions in the queue. This concludes our question and answer session I would like to turn the conference back over to George Makris for any closing remarks.

Thomas Wendler: Alright, thanks for answering my questions, guys.

Operator: Again, if you have a question, please press star, then 1. There are no more questions in the queue. This concludes our question and answer session. I would like to turn the conference back over to George Makris for any closing remarks.

George A. Makris: Well. Thank you very much for joining us. This morning as you can tell our industry still has a lot of uncertainty and speculation.

George A. Makris: Well, thank you very much for joining us this morning. As you can tell, our industry still has a lot of uncertainty and speculation. associated with it, and we're looking forward to moving to a more neutral interest rate environment in the meantime. As we wait for this normalization, our focus is still on our solid principles of asset quality, capital growth, and flexibility. I think you've seen that in our performance, and I think you will see that going forward.

George A. Makris: Associated with it and we're looking forward to moving to a more neutral interest rate environment and in the meantime.

George A. Makris: We wait for this normalization of our focus is still our solid principles of asset quality.

George A. Makris: Capital growth and flexibility thank.

Speaker Change: Thank you you've seen that in our performance and I think you can see that you're going for.

Speaker Change: I appreciate all of the work of this team.

Speaker Change: And we appreciate your participation today. Thank you very much and have a great day.

Speaker Change: The conference.

George A. Makris: I appreciate all of the work of this team, and we appreciate your participation today. Thank you very much and have a great day. The conference is now concluded.

Speaker Change: France has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Yeah.

Speaker Change: [music].

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Copyright 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.

Speaker Change: Yeah.

Speaker Change: [music].