Q2 2024 Home Bancshares Inc (Conway AR) Earnings Call
John Poulton, John Tipton, John Allison, Unknown Executive, Donna Townsell, Tracy French, Stephen Tipton, Brian Davis, John Allison, Unknown Executive, Donna Townsell, Tracy French,
Unknown Executive: Greetings, ladies and gentlemen, welcome to the Home BancShares Inc. 2nd quarter of 2024 earnings call. The purpose of this call is to discuss the information and data provided in the course of the earnings release issued after the market closed yesterday.
Unknown Executive: The company presenters will begin with prepared remarks, then entertain questions. Please note that if you would like to ask a question during the question and answer session, please press star, then one on a touch tone phone. If you decide you want to withdraw your question, please press star, then two, to remove yourself from the list.
Unknown Executive: The company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You will find this note on pastry of their form 10-K filed with the SEC in February 2024.
Speaker Change: The company has asked me to remind everyone to refer to their cautionary note regarding forward looking statements you will find this note on page three of their Form 10-K filed with the SEC in February 2024.
Unknown Executive: At this time, all participants are in a listen-only mode, and the conference is being recorded. If you need operator assistance during the conference, please press star, then zero.
Speaker Change: At this time all participants are in a listen only mode and the conference is being recorded if you need operator assistance during the conference. Please press Star then zero.
Donna Townsell: It is now my pleasure to turn the call over to Donna Townsell, Director of Investor Relations. Thank you. Good afternoon and welcome to our second quarter conference call.
Speaker Change: It is now my pleasure to turn the call over to Donna Townsell director of Investor Relations.
Thank you good afternoon, and welcome to our second quarter Conference call with me for today's discussion is our chairman John Allison, Stephen King Chief Executive Officer of Centennial Bank, Kevin Hester, President and Chief Lending Officer, Brian Davis, Our Chief Financial Officer Tracy French.
Operator: after the market closed. Please note that if you would like to ask a question during the question and answer period, please press star then 1.
Donna Townsell: With me for today's discussion is our chairman, John Allison, Steven Tipton, Chief Executive Officer of Centennial Bank, Kevin Hester, President and Chief Lending Officer, Brian Davis, our Chief Financial Officer, Tracy French, Chairman of Centennial Bank, Chris Fulton, President of CCFG, and John Marshall, President of Short Premier Finance.
Speaker Change: Chairman of Centennial Bank, Chris Poulton, President of CCF G and John Marshall President of Shore Premier Finance.
John Allison: To open our discussion on the quarter today, we will begin with some remarks from our chairman, John Allison. Thank you, Donna. Welcome to the 18th year as a public company and the 26th year for us as a financial institution. This conference call is number 72 for those of you that have been with us since the beginning of the year. And I still look forward to sending our quarterly results. I'm certainly more comfortable to dive than I was. This June of those six when we first reported our quarterly numbers. I could not sleep that night. I was so nervous that I had my notes around, but I just had worn them out.
Operator: If you decide you want to withdraw your question... The company has asked me to remind everyone to refer to their cautionary note regarding, You'll find this note on page 3 of their Form 10-K filed with the SEC in February. At this time, all participants are in a listen-only mode, and the conference... If you need operator assistance during the conference, please press star 1.
To open our discussion on the quarter today, we will begin with some remarks from our chairman John Allison.
Operator: It's now my pleasure to turn the call over to Donna. Thank you. Good afternoon, and welcome to our second quarter conference call. With me for today's discussion is our Chairman, John Allison, Stephen Tipton, Chief Executive Officer of Centennial Bank, Kevin Hester, President and Chief Lending Officer, Brian Davis, our Chief Financial Officer, Tracy French, Chairman of Centennial Bank, Chris Poulton, President of CCFG, and John Marshall, President of Shore Premier Finance. To open our discussion of the quarter today, we will begin with some remarks from our chairman, John Allison. Thank you, Donna.
John W. Allison: Thank you Donna welcome to you as a public company and the 26 year for us as a financial institution.
John W. Allison: Welcome to the 18th year as a public company and the 26th year for us as a financial institute. This conference call is number 72 for those of you that have been with us since the beginning of the year, and I still look forward to presenting our quarterly results. I'm certainly more comfortable today than I was in June 2006 when we first reported our quarterly numbers. I could not sleep that night.
Speaker Change: This conference call is number 72 proposals that have been with us since the beginning of year and I still look forward to presenting our quarterly results I'm certainly more comfortable today than I was generally <unk> always said when we first reported our quarterly numbers I could not sleep that Matt I was so nervous.
John W. Allison: I was so nervous. I had my notes around, but I just had worn them out. We had just returned from a two-week trip with Stephen, telling our story all over the country. If you remember those times, not many IPOs were getting done. As a matter of fact, the company scheduled in front of us had pulled out, and the one behind us had pulled out, too. I was laughed at, yelled at, and even called a one-trick pony by a Dallas farm.
Speaker Change: Notes around but I would just warn them out.
John Allison: We just returned from a two week trip, went with Steven telling our story all over the country. If you remember those times, not many IPOs were getting done; as a matter of fact, they kept me scheduled in front of us and pulled out, and the one behind us had pulled out. I was laughed at, yelled out, and even called a one trick pony by Dallas firm. We traveled for two weeks and raised about $50 million, and I was not sure we were going to get it done. One of the investment banking firms that was in our syndicate sold the retail arm and dropped out of the bank space just prior to the offering date.
Speaker Change: We just returned from a two week trip with Stephens, telling our story all over the country. If you remember those times not many pls, we're getting done as a matter of fact, the company scheduled in front of US had pulled out and the one behind us It pulled out I was laughed at yelled out and even call. It a one trick pony.
Speaker Change: Dallas firm, we travel for two weeks and raised about $50 million and I was not sure we're going to get it done well the best one of the investment banking firms that was in our syndicate.
John W. Allison: We traveled for two weeks and raised about $50 million, and I was not sure we were going to get it done. One of the investment banking firms that was in our syndicate sold their retail arm and dropped out of the bank space just prior to the offering date. It was a terrible time to bring an IPO.
Speaker Change: So the retail arm and dropped out of the bank space just prior to the offering date. It was a terrible time terrible time to bring an IPO. However, we met many wonderful people and some are still major shareholders of our company from 2 billion to 23 billion water right. So let's go there for <unk>.
John Allison: It was a terrible time, terrible time to bring an IPO. However, we met many wonderful people, and some are still major shareholders of our company, from two billion to 23 billion. What a ride. So let's go there for so far, so good for 24 as we said in the first quarter, and I start to 24 and home's top care performance continues through the second quarter. Last quarter, I said to improve profitability. We simply need to reduce expenses and increase revenue. Easier said than done. So here's what happened on the expense side. We improved our efficiency ratio from 44.43 last quarter to an adjusted ratio of 4259 for the second quarter of 24.
John W. Allison: However, we met many wonderful people, and some are still major shareholders of our company. From $2 billion to $23 billion, what a ride. So let's go to the report. So far, so good for 24.
Speaker Change: So far so good for 'twenty four as we said in the first quarter Nast start to 'twenty, four and homes top tier performance continues through the second quarter last quarter, I said to improve profitability, we simply need to reduce expenses and increase revenue easier.
John W. Allison: As we said in the first quarter, NASS started at 24, and HOME's top tier performance continues through the second quarter. Last quarter, I said to improve profitability, we simply need to reduce expenses and increase revenue. Easier said than done.
John W. Allison: So here's what happened. On the expense side, we improved our efficiency ratio from 44.43 last quarter to an adjusted ratio of 4259 for the second quarter of 24. Add to that strong profitable loan growth in both first and second quarters allowed us to continue on with what is a great start to 24 in spite of the economic environment. Loans grew in the second quarter by nearly $270 million, and the strong margin was a strong 4.27, up 14 basis points from the first quarter of 24. Non-interest expense for the first quarter of 24 was $111,496,000, and for the same quarter last year, expenses were $116,282,000.
Speaker Change: Easier said than done so here's what happened on the expense side, we improved our efficiency ratio from 40 443 last quarter to an adjusted ratio of $42 59 for the second quarter of 'twenty four.
John Allison: Add to that a strong crop long growth in both first and second quarters allowed us to continue on with what is a great start to 24 in spite of the economic environment. Loans grew in the second quarter by nearly 270 million when margin was strong was a strong 4.27, up 14 basis points from the first quarter 24. 96 expense for the first quarter 24 was 111,496 thousand and the same quarter last year expenses were 116 million 282 thousand. We made marked improvements of over $5 million after adjusting for, and you'll hear this repeated several times today.
Speaker Change: Add to that a strong profitable loan growth in both first and second quarters allowed us to continue on with what is a great start to 2004 in spite of the economic environment loans grew in the second quarter by nearly $270 million. While margin was strong was a strong four two.
Speaker Change: Kevin.
Kevin: 14 basis points from the first quarter 'twenty for noninterest expense for the first quarter of 2004 was 111 496000 in the same quarter last year expenses were $116 million 282000, we made marked improvements of over $5 million.
John W. Allison: We made marked improvements of over $5 million after adjusting for, and you'll hear this repeated several times today. We had not, I guess we got another letter of invoice from the Fed for $2,260,000 for an additional payment to the FDIC Insurance Fund. I think we're done with that now. After pulling out the FDIC Insurance Fund of $2,260,000, actual expenses for the quarter were $110,925,000, a slight improvement from the first quarter of $571,000.
Speaker Change: After adjusting for and you'll hear this repeated several times per day.
John Allison: I guess we got another letter and invoice from the Fed for $2 million to $60,000 for additional payment for the FDIC insurance fund. I think we're done with that now. After pulling out the FDIC insurance fund of $2 million, to $60,000 actually expenses for the quarter was 110 million 925 thousand. From the first quarter of $571,000, but from the first quarter $5.3 million better. That's 20 million years in savings if we can continue to do that. Deluted Onyster Share will report it at 1001 million 530 thousand or 51 cents a share at sporting in our way of $179.
Speaker Change: I guess, we got another letter invoice from Lafayette for $2 million and $260000 for an additional payment.
Speaker Change: FDIC insurance fund I think we're done with that now.
Speaker Change: After pulling out the FDIC insurance fund of $2 million 260000 actually expenses for the quarter was $110 million 925000, a slight improvement from the first quarter of 571, but from the first quarter five 3 million better.
John W. Allison: But from the first quarter, $5.3 million better. That's $20 million a year in savings if we can continue to do that. Diluted earnings per share were reported at $101,530,000, or 51 cents a share.
Speaker Change: $20 million a year in savings if we can continue to do that diluted earnings per share were reported at $101 million 530000, or 51, a share at sporting and ROI of 179.
John W. Allison: That's sporting an ROI of $179. When adjusted for the additional $2,260,000 for the FDIC insurance fund, the company actually earned $103,916,000, or 52 cents a share, and that sports an ROA of 1.83. Adjusted earnings for the second quarter actually beat the adjusted earnings for the second quarter of 2023.
John Allison: When adjusted for the digital $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $ to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000 to $2,000,000,000 to $2,000,000 to $2,000 to $2,000,000 to $2,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000,000 to $2,000,000,000,000 to $2,000,000,000,000 to $2,000,000,000,000 to $2,000,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000,000 to $2,000,000,000 to $2,000,000,000,000 to $2,000,000,000 to $2,000,000,000,000 to $2,000,000,000 to $2,000,000,000 to $2,000,000,000,000 to $2,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 I don't think the bike crisis is over.
Speaker Change: When adjusted for the additional $2 million to safety for the FDIC Insurance Fund the company actually earned 103.916 million or 52, a share and that sports at an ROA of 183.
Speaker Change: Adjusted earnings for the second quarter actually basically adjusted earnings for the second quarter of 'twenty three 'twenty four B 23 of adjusted earnings were pleased with that having a balance sheet that supports superior profitability during their high interest rate environment that runs almost side by side with 2023 is very pleasing.
John W. Allison: A 24 beats 23 in adjusted earnings; I'm pleased with that. Having a balance sheet that supports superior profitability during this high interest rate environment that runs almost side by side with 2023 is very pleasing to our management team. With analysts projecting all bank earnings to be down 5% to 10% this year, being able to run a top-tier ROA allows management to be able to pull lots of levers for our shareholders, including dividends and stock repurchases, quarterly dividends of $36 million or annual dividends of $144 million.
Speaker Change: Management team with analysts projecting all bank earnings to be down 5% to 10% this year being able to run a top tier ROI allows home's management to be able to pull lots of handles for our shareholders, including dividends and stock repurchases quarterly dividends of $36 million our annual dividend.
John W. Allison: Plus, we repurchased $1.4 million for $32.5 million during the second quarter, and we repurchased $1,026,000 for $24,000,000 during the first quarter for a total of $56.5 million in almost 2.5 million shares. It was actually 2,426,000 shares.
Speaker Change: $144 million, plus we repurchased one 4 million for $32 $5 million during the second quarter.
Speaker Change: And we repurchased $1 million in 2006 thousand for $24 million during the first quarter for a total of $56 5 million and almost two and a half million shares. It was actually $2 million and 426000 shares that's a 1% reduction in shares outstanding in the first six months of the year.
John W. Allison: That's a 1% reduction in shares outstanding in the first six months of the year. As I said, there's an advantage to being able to run a 180 ROI because there are lots of panels that can be pulled to benefit our shareholders. That brings the total outstanding average number of shares for future quarters to below $200 million.
Speaker Change: As I said, there is an advantage to be able to run at 180, ROI because there's lots of panels that can be pulled to benefit our shareholders.
Brian: That Brian because the total outstanding average number of shares for future quarters to below $200 million over the past several years, we have repurchased many millions of shares and retire the stock and scale improved our tangible common equity in the last 12 months by $1 21, a share on 11.
John W. Allison: Over the past several years, we have repurchased many millions of shares and retired the stock and still improved our tangible common equity in the last 12 months by $1.21 a share, or 11.1%. We always try to do what's in the best interest of the shareholder. Some Wall Street talk is that all reasonable banks are in trouble and may blow up. I want to assure the investment community that Home is not one of those bad banks we're talking about. Due to the mistakes most banks made, many of the banks' only way out is to sell. They can't earn their way out. They can't earn enough money to get their way out of trouble.
Brian: 1%, we're always trying to do what's in the best interest of the shareholders from Wall Street.
Speaker Change: All reasonable banks are in trouble and may blow up.
Speaker Change: Want to assure the investment community that home is not one of those bad banks are talking about due to the mistakes. Most banks made many of the banks only way out is the sale they can't earn their way out they can't earn enough money to earn their way out of trouble.
John W. Allison: So they sell at some reduced price, or they bring in additional capital, but the dilution to the shareholders is extremely painful, as we've seen in some deals recently where the dilution was as much as 50 percent, shocking. They probably would have been better off to sell to a good bank and ride their bank stock up. Your home has a war chest of capital and continues to build month by month and quarter by quarter, having the ability to earn more than $100 million quarterly while maintaining almost $300 million in loan loss reserves.
Speaker Change: So a sale at some reduced price or are they bring in additional capital, but the dilution to the shareholders is extremely painful as we seen in some deals recently, where the dilution was much as much as 50% shocking.
Speaker Change: Probably would have been better off to sell their goods back and ride their bike stock up.
Speaker Change: Your home has a war chest of capital continues to build.
Speaker Change: And quarter by quarter, having the ability to earn more than $100 million quarterly while maintaining an almost $300 million in loan loss reserve couple that with the huge capital account and stable margins and are now presents you home bancshares.
John W. Allison: Couple that with a huge capital account and stable margins, and I now present Home BancShares. We truly are a reasonable bank, and many reasonable banks are in trouble, so it's our goal to separate ourselves from the pack while maintaining a fortress balance sheet and continuing to be a top-tier performer while remaining patient because patient capital is smart capital. I don't think the bike crisis is over; we've just been kicking the can down the road.
Speaker Change: We truly are a regional bank in many ways. The banks are in trouble. So it's our goal to separate ourselves from the pack, while maintaining a fortress balance sheet and continuing to be at top tier performance, while remaining patient, but cows patient capital is smart capital.
Speaker Change: I don't think the bank process is over we've just been kicking the can down the road not.
John Allison: We've just been kicking the can down the road. Not much has changed for a lot of these bikes, except more of the sign. They have improved the longer deposit ratio slightly, maybe by either allowing securities to roll off and or loans to roll off, or they've chased high price CDs to improve the longer deposit ratio. But either way, the odds of a quick fix are not likely. They may be able to improve the earnings slightly, but not enough to earn themselves out of the problem quick enough. Another dark cloud to me is coming to show up in February, March of 25.
John W. Allison: Not much has changed for a lot of these banks, except more of the same. They have improved their loan-to-deposit ratio slightly, maybe by either allowing securities to roll off and or loans to roll off, or they've changed high-priced CDs to improve their loan-to-deposit ratio. But either way, the odds of a quick fix are not likely.
Speaker Change: Not much has changed for a lot of these banks, except more of the sign they have improved their loan to deposit ratio slightly maybe either allowing securities to roll <unk> loans to roll off or they chased half priced cd's to improve their loan to deposit ratio, but either way the odds of a quick fit.
Speaker Change: It's not likely they may be able to improve the earnings slightly but not enough to earn themselves out of the problem quick.
John W. Allison: They may be able to improve their earnings slightly, but not enough to earn themselves out of the problem quickly enough. Another dark cloud for me is coming to show up in February and March at 25. That's when the end of the bank-saving Fed program called the Bank Term Funding Program, or BTFP, expires, and the problem banks have to pay the money back on the securities that the program allowed the Fed to loan the face value of the securities, which was much higher than the amount the market value was. How are banks going to make up the shortfall? Instead of rates going down, there is a chance that CD rates may go higher, which would not be politically positive for the Biden administration.
Speaker Change: Another dark cloud to me is coming to show up in February and March 25.
John Allison: That's when the end of the bike saving Fed program called Bank Term Funding Program or BTSP expires. And the problem bikes have to pay the money back on the securities that the program allowed the Fed to loan the face value of the securities that was much more important than that. It's higher than the market value was. How are banks going to make up the shortfall instead of race going down. There is a chance that CD rates may go higher. That would not be positive politically for the Biden administration; odds are against it. But in reality, it's certainly a possibility.
Speaker Change: That's when the end of the bank, citing bad program call Bank term funding program, our BT FP expires.
Speaker Change: The problem banks have to pay the money back on the securities that the program allowed the fed to loan the face value of the securities that was much higher than the amount the market value was.
Speaker Change: Our bias is going to make up the shortfall instead of rates going down there is a chance that CD rates might go higher.
Speaker Change: But that would not be positive politically for the bad administration odds are against it but in reality, it's certainly a possibility.
John W. Allison: The odds are against it, but in reality, it's certainly a possibility. If bank liquidity is in question and a bank has to have liquidity or fail, they'll pay whatever they have to pay for the money. That's exactly what happened to savings and loans in the 1980s. I don't think there's been sufficient time between the inception of the Fed lending program and March 25, when the program ends. That's why I call it kicking the can down the road.
John Allison: If Mike was fitted to years in question and a bank has to have a credit to fail, they'll pay whatever they have to pay for the money. That's exactly what happens to the savings loans in the 80s. I don't think there's been sufficient time between the infection of the Fed lending program and March 25 when the program ends. That's why I call it taking a can down the road. Many banks had negative tangible common equity, and many have less than three percent. I hope I'm wrong, but it could be a blood doubt if the Fed does not extend state to.
Mike: Mike was solidity is in question and our bank has to have liquidity or fail.
Mike: Pay whatever they have to pay for the money that's exactly what happened to the savings and loans in the eighties.
Mike: Mike there's been sufficient time between the inception of the fed lending program and March 25, when the program ends that's why I call. It kicking the can down the road. Many banks had negative tangible common equity and many had less than 3% I hope I'm wrong, but it could be a bloodbath.
John W. Allison: Many banks have negative tangible common equity, and many have less than 3%. I hope I'm wrong, but it could be a bloodbath if the Fed does not extend the quantitative easing. Stay tuned.
Speaker Change: <unk> does not extend the stay tuned.
John Allison: We're back, carefully looking for an acquisition that makes sense for a shareholder. We're also looking to March 25 because we think there will be opportunities that arise as the BTFP comes to an end. I'm sure one thing that banks will not be able to do, and that is to borrow $100 on something that's worth 50, like securities have turned into. Bingo, that's the problem for the bank to recognize loss on securities. If they have to sell securities and couple that would not be able to earn themselves out of the problem, this could get very serious, and many of them may be interested in talking to good banks.
Speaker Change: We're back carefully looking for an acquisition that makes sense for our shareholders. We're also look into March of 'twenty five because we think there will be opportunities that arise as the BT FP comes to me and I'm sure. One thing that banks will not be able to do and that is tomorrow $100.
John W. Allison: We're back carefully looking for an acquisition that makes sense for our shareholders. We're also looking to March the 25th because we think there will be opportunities that arise as the BTFP comes to an end. I'm sure one thing that banks will not be able to do, and that is to borrow $100 on something that's worth $50, like securities have turned into. Bingo, that's the problem forcing the bank to recognize losses on securities if they have to sell the securities and couple that with not being able to earn themselves out of the problem.
Speaker Change: We're 50 like Securities are turned into bingo, that's the problem for the bank to recognized loss on securities. If they have the sale of securities and couple that with not been earned if not being able to earn and sales out of the problem. This could get very serious and many of them may be interested in talking to get.
John W. Allison: This could get very serious, and many of them may be interested in talking to good banks. At home, we provide safety and security for our depositors, customers, and shareholders. I just have a couple of additional comments here. It's nice to see the bank stocks running, and everybody gets a little kick out of bank stocks. I just have several random things here.
John Allison: At home, we provide safety, security for our depositors and customers and shareholder. I just have a couple of additional comments here. It's nice to see the bank stocks run in and everybody get a little kick in the bank stocks. I just just got several random things here. We sold our building that has Ghostart Trust and Canyon, Texas, for a nice profit, and the Ghostart team moved into our large and real facility. We also leased the distance of 60,000 square feet in that headquarters building. If you remember, that's a 240,000 square foot facility. The town was an arbitrage around our neck, but as Ghostart has moved in and now we've leased 60,000 square feet, and maybe you have an opportunity to lease more.
Speaker Change: Signs at home, we provide safety security.
Speaker Change: For our deposit sources and customers and shareholders.
Speaker Change: I just have a couple of additional comments it was nice to see the bank stocks run in and everybody get a little kick in the bank stocks.
Speaker Change: <unk> several random things here.
John W. Allison: We sold our building that housed Gold Star Trust in Canyon, Texas, for a nice profit, and the Gold Star team moved into our large Amarillo facility. We also leased an additional 60,000 square feet in that headquarters building.
We sold our building that housed goldstar trusts and Canyon, Texas for a nice profit and the goldstar team moved into our large Amarillo facility. We also leased an additional 60000 square feet in our headquarters building you remember that's a 240000 square foot facility that kind of was an albatross around our mix, but as it goes.
John W. Allison: If you remember, that's a 240,000 square foot facility that kind of was an albatross around our neck. But Gold Star has moved in, and now we've leased 60,000 square feet, and maybe you have an opportunity to lease more. So it looks like we're turning a 240,000 square foot albatross into maybe a profit center over time. In conclusion... As I said earlier, the first two quarters were a very nice start to 24, with over $200 million in income and revenue of over $500 million and improving earnings per share.
Speaker Change: <unk> moved in and now we've leased 60000 square feet and maybe you'll have an opportunity to lease more so it looks like were turning a 240000 square foot albatross into may be a profit center over time in conclusion.
John Allison: So it looks like we're turning a 240,000 square foot arbitrage into maybe a profit center over time.
John Allison: And conclusion. As I said earlier, the first two quarters were a very nice start to 24, with over 200 million dollars of income and revenue of over 500 million and improving earnings for share. That brings 40%; that means we're bringing 40%, actually a tick over 40%, of the revenue to the after-tax bottom line. Good job for everyone.
Speaker Change: As I said earlier the first two quarters were very nice start to 'twenty four with over $200 million of income and revenue of over $500 million and improving earnings per share that brings 40% that means we're bringing 40% has to pick over 400% of the revenue to the app.
John W. Allison: That brings 40 percent, that means we're bringing 40 percent, actually a tick over 40 percent of the revenue to the after-tax bottom line. Good job for everyone. I had the privilege of visiting with Arkansas State University head football coach, Butch Jones, Tracy and I did, and sharing stories with each other about our respective businesses. And he left me with a quote that I've seen come true so often, and I'll share it with you. If you lower your standards, you're going to lose; you'll lose the winners. If you raise your standards, you'll lose the losers.
Speaker Change: After tax bottomline good job for everyone.
John Allison: I had the privilege of visiting with Arkansas State University head football coach, Butch Jones, Tracy and I did, and sharing stories with each other about respective businesses, and he left me with a quote that I've seen come through so often. Let me share it with you. If you lower your standards, you lose the winners. If you raise your standards, you lose the losers. He had many more quotes about share those over the year, but that one just stuck home with me. Patient strategy, conservative management, unwavering discipline, good efficiency, hard work, smart investments, strong capital, defensive reserve allocation, good asset quality, strong liquidity, have led our company to be one of the strongest banks of the nation.
Speaker Change: Had the privilege of this thing with Arkansas State University head football coach Butch Jones choice in ideas and sharing stories with each other about respective businesses and then lastly, with a quote that I won't have.
Speaker Change: I have seen come through so often and let me share with you if you lowered your standards.
Speaker Change: Lose the winners if you raise your standards you'll lose the losers.
Speaker Change: He had many more quotes from our share of those over the years, but that one does Stockholm with me peso.
Donna J. Townsell: He had many more quotes from our shared bills over the years, but that one just stuck home with me. Patient Strategy, Conservative Management. Unwavering discipline, good efficiency, hard work, smart investments, strong capital, defensive reserve allocation, good asset quality, and strong liquidity have led our company to be one of the strongest banks in the nation. And, as I said, we've been thrown into the regional bank basket. But all banks are not created equal. We'll continue to try to separate ourselves from the pack. And in closing, as I've said, there is no place like home. Donna?
Speaker Change: Patient strategy Conservative management.
Speaker Change: <unk> discipline, good efficiency hard work smart investments strong capital.
Speaker Change: Defensive reserve allocation, good asset quality strong liquidity.
Have led our company to be one of the strongest banks in them and as I said, we've been thrown in the regional bank basket.
John Allison: And, as I said, we've been thrown in the regional bank basket, but all banks are not created equal.
Speaker Change: But all banks are not created equal we will continue to try to separate ourselves from the pack and in closing as I said there is no place like home.
John Allison: We'll continue to try to separate ourselves from the back, and in closing, as I said, there's no place like home.
Donna Townsell: Donna. Thank you, Johnny. Congratulations on a great quarter, and thank you for sharing all that information with us.
Speaker Change: Thank you John and congratulations on a great quarter and thank you for sharing all that information with that our next report today comes from Stephen Tipton. Thanks.
Stephen Tipton: Thank you, Johnny. Congratulations on a great quarter, and thank you for sharing all that information with us. Our next report today comes from Stephen Tipton. Thanks, Donna.
Stephen Tipton: Our next report today comes from Stephen Tipton. Thanks, Donna. As Johnny mentioned, Home Bank Shares and Centennial Bank had another great quarter. Highlighted by continued loan and deposit growth, and expanding that interest margin and solid expense control. I'll start my comments with the net interest margin, as Johnny's already touched on already. The reported NAM expanded by 14 basis points in Q2 to 4.27%, all while continuing to maintain healthy access balances, cash balances that we discussed in detail on the first quarter earnings call. Excluding event income noted in the press release, the net interest margin was 4.23% for the quarter, an increase of 12 basis points from Q1, an exit of the quarter in June at 4.27%.
Stephen Tipton: As Johnny mentioned, Home BancShares and Centennial Bank had another great quarter highlighted by continued loan and deposit growth and expanding net interest margin and solid expense control. I'll start my comments with the net interest margin. As Johnny has already touched on, the reported NIM expanded by 14 basis points in Q2 to 4.27%, all while continuing to maintain healthy excess cash balances that we discussed in detail on the first quarter earnings call.
Stephen Tipton: Thanks Donna.
Stephen Tipton: Johnny mentioned home Bancshares, and Centennial Bank had another great quarter highlighted by continued loan and deposit growth and expanding net interest margin and solid expense control.
Stephen Tipton: I'll start my comments with the net interest margin was.
Speaker Change: Johnny has already touched on already the reported NIM expanded by 14 basis points in Q2 to 4% to 7% all while continuing to maintain healthy excess balances cash balances that we discussed in detail on our first quarter earnings call.
Stephen Tipton: Excluding event income noted in the press release, the net interest margin was 4.23% for the quarter, an increase of 12 basis points from Q1, and exited the quarter in June at 4.27%. The yield on loans excluding event income improved 15 basis points to 7.49% in Q2 and outpaced the increase in total deposit costs by 10 basis points. During the quarter, total deposit costs increased five basis points to 2.27% and exited the quarter at 2.30%.
Speaker Change: Excluding event income noted in the press release, the net interest margin was four 3% for the quarter, an increase of 12 basis points from Q1 and exited the quarter in June at 427%.
Stephen Tipton: The yield on loans, excluding event income, improved 15 basis points to 7.49% in Q2, and outpaced the increase in total deposit costs by 10 basis points. During the quarter, total deposit costs increased 5 basis points to 2.27%, an exit of the quarter at 2.30%. Our bankers have done an extraordinary job managing this interest rate environment and the seemingly endless advertising across our footprint for high rate CD and money market accounts. The pace of the increase in interest bearing deposit costs has been cut in half each of the past two quarters. We continue to negotiate pricing with core customers as we have been, but are encouraged to see the pace of increases on the deposit side continue to moderate.
Speaker Change: The yield on loans, excluding event income improved 15 basis points to 749% in Q2 and.
And outpaced the increase in total deposit cost by 10 basis points.
Speaker Change: During the quarter total deposit costs increased five basis points to two 7% and exited the quarter at two 3%.
Stephen Tipton: Our bankers have done an extraordinary job managing this interest rate environment and the seemingly endless advertising across our footprint for high-rate CD and money market accounts. The pace of the increase in interest-bearing deposit costs has been cut in half each of the past two quarters.
Speaker Change: Our bankers have done an extraordinary job managing this interest rate environment, and a seemingly endless advertising across our footprint for high rate CD and money market accounts.
Speaker Change: The pace of the increase in interest bearing deposit costs has been cut in half each of the past two quarters, we continue to negotiate pricing with core customers as we have been but are encouraged to see the pace of increases on the deposit side continue to moderate.
Stephen Tipton: We continue to negotiate pricing with core customers as we have been but are encouraged to see the pace of increases on the deposit side continue to moderate. On asset repricing, we have over $550 million in loans maturing in the second half of this year at a weighted average rate of 5.99%. And over the next 18 months, a little over two billion dollars maturing at a weighted average rate of six and a half percent.
Stephen Tipton: On asset repricing, we have over $550 million in loans, maturing in the second half of this year at a weighted average rate of 5.99%. and over the next 18 months, a little over $2 billion, maturing with a weighted average rate of 6.5%. Switching to liquidity and funding, deposits continue to be a key focus, now with three consecutive quarters of positive growth behind us, despite what is typically a seasonally tough quarter, with tax payments and municipal outflows. Now, presidents and lending staff are analyzing customer balance sheets and mining for additional opportunities on the deposit side. Total deposits increase $90 million for the quarter; the deposit mix movement was similar to prior quarters as CDs continued to be in focus for the consumer.
Speaker Change: On asset repricing, we have over $550 million in loans maturing in the second half of this year at a weighted average rate of 599%.
Speaker Change: And over the next 18 months, a little over $2 billion maturing with a weighted average rate of six 5%.
Speaker Change: Switching to liquidity and funding deposits continue to be a key focus now with three consecutive quarters of deposit growth behind us. Despite what is typically a seasonally tough quarter with tax payments and municipal outflows.
Stephen Tipton: Switching to liquidity and funding, deposits continue to be a key focus, although now with three consecutive quarters of deposit growth behind them. Despite what is typically a seasonally tough quarter with tax payments and municipal outflows, our presidents and lending staff are analyzing customer balance sheets and looking for additional opportunities on the deposit side. Total deposits increased $90 million for the quarter. The deposit mix movement was similar to prior quarters as CDs continued to be in focus for the consumer. Non-interest-bearing balances continue to be fairly stable and account for 24% of total deposits.
Speaker Change: Our president's and lending staff are analyzing customer balance sheets and mining for additional opportunities on the deposit side.
Speaker Change: Total deposits increased $90 million for the quarter. The deposit mix movement was similar to prior quarters as Cds continued to be in focus for the consumer.
Stephen Tipton: Non-interest bearing balances continue to be fairly stable and account for 24% of total deposits. Alternative funding sources remain extremely strong, with broker deposits still only comprising 2.2% of total liabilities. And the loan deposit ratio still stands well below historical levels at 87% as of June 30th. On the asset side, in period loan balances increased $268 million, highlighted by over 200 million in growth from the community bank regions, along with solid growth from CCFG and short Premier. On loan originations, we saw a volume of $1.19 billion in Q2, with a little less than half of that funded at quarter end.
Speaker Change: Noninterest bearing balances continued to be fairly stable and account for 24% of total deposits.
Stephen Tipton: Alternative funding sources remain extremely strong, with broker deposits still only comprising 2.2% of total liabilities, and the loan-to-deposit ratio still stands well below historical levels at 87% as of June 30th. On the asset side, the end-period loan balance increased $268 million, highlighted by over $200 million in growth from the community bank region, along with Solid Growth from CCFG and Shure Premier. On loan originations, we saw volume of $1.19 billion in Q2, with a little less than half of that funded at quarter end. Yields on originations remain strong, with an average coupon of 9.20% in Q2. Payoff volume was slightly lower from Q1 at a total of $508 million.
Speaker Change: Alternative funding sources remain extremely strong with broker deposits still only comprising two 2% of total liabilities and the loan to deposit ratio still stands well below historical levels at 87% as of June 30th.
Speaker Change: On the asset side in period loan balances increased $268 million highlighted by over $200 million in growth from the community bank regions, along with solid growth from <unk> and shore Premier.
Speaker Change: Loan originations, we saw volume of $1, one 9 billion in Q2.
Speaker Change: With a little less than half of that funded at quarter end.
Stephen Tipton: Yields on originations remained strong, with an average coupon of 9.20% in Q2. Payoff volume was slightly lower from Q1 at a total of $508 million, although we expect that to increase in the back half of 2024, particularly from CCFG. Closing with the previously mentioned strength of our company, all capital ratios remain extremely strong, with the tangible common equity ratio of 11.23%, leverage ratio of 12.3%, and a total risk-based capital ratio of 18%. Couple of that with the reserve coverage of 2% on loans, and over 340% coverage on non-performing loans, we're in a strong position to capitalize on future opportunities.
Speaker Change: Yields on originations remained strong with an average coupon of 920% in Q2.
Speaker Change: Payoff volume was slightly lower from Q1 at a total of $508 million.
Stephen Tipton: Although we expect that to increase in the back half of 2024, particularly from CCFG. In closing, with the previously mentioned strength of our company, all capital ratios remain extremely strong, with a tangible common equity ratio of 11.23%, a leverage ratio of 12.3%, and a total risk-based capital ratio of 18%. Combining that with the reserve coverage of 2% on loans and over 340% coverage on non-performing loans, we're in a strong position to capitalize on future opportunities. I want to thank all of our centennial and happy state bankers for their dedication and efforts in the first half of this year to produce such impressive results. With that, Donna, I'll turn it back over.
Speaker Change: Although we expect that to increase in the back half of 2024, particularly from CFT.
Speaker Change: Closing with the previously mentioned strength of our company all capital ratios remain extremely strong with a tangible common equity ratio of 11, 2%, 3% leverage ratio of 12, 3% and a total risk based capital ratio of 18%.
Speaker Change: Couple that with a reserve coverage of 2% on loans at over 340% coverage on nonperforming loans were in a strong position to capitalize on future opportunities.
Stephen Tipton: I want to thank all of our centennial and happy state bankers for their dedication and efforts in the first half of this year to produce such impressive results.
Speaker Change: I want to thank all of our Centennial and happy state bankers for their dedication and efforts in the first half of this year to produce such impressive results.
Donna Townsell: With that done, I'll turn it back over to you. Thank you, Steven.
Speaker Change: And with that Don I'll turn it back over to you.
Donna J. Townsell: Thank you, Stephen. And now Kevin Hester will provide some color on the lending portfolio. Thanks, Donna, and good afternoon, everyone.
Don: Thank you Steven and now Kevin Hester, who will provide some color on the lending portfolio.
Kevin Hester: And now, Kevin Hester will provide some color on the lending portfolio. Thanks, Don, and good afternoon, everyone. As Johnny mentioned, our ending loan balance is agreed by nearly $270 million in the second quarter, making it the fourth consecutive quarter of loan growth for home. While loan growth is not the first or even the second most important aspect of our strategy, it is impactful when it occurs, especially when we can string several quarters together like we have recently. Our consistent conservative approach to credit, paired with our forward-looking management during the rising interest rate cycle, have combined to facilitate this growth.
Kevin D. Hester: Thanks, Don and good afternoon, everyone.
Kevin D. Hester: As Johnny mentioned, our ending loan balances grew by nearly $270 million in the second quarter, making it the fourth consecutive quarter of loan growth for homes. While loan growth is not the first or even the second most important aspect of our strategy, it is impactful when it occurs, especially when we can string several quarters together like we have recently. Our consistent conservative approach to credit paired with our forward-looking management during the rising interest rate cycle have combined to facilitate this growth. We also benefit from a large portion of our banking activities occurring in the great economies of Florida and Texas.
Kevin D. Hester: As Johnny mentioned, our ending loan balances grew by nearly $270 million in the second quarter, making it the fourth consecutive quarter of loan growth for home.
Speaker Change: While loan growth is not the first or even the second most important aspect of our strategy. It is impactful when it occurs especially when we can string several quarters together like we have recently.
Our consistent conservative approach to credit paired with our forward looking management during the rising interest rate cycle have combined to facilitate this growth.
Kevin Hester: We also benefit from a large portion of our banking activities occurring in the great economies of Florida and Texas.
Speaker Change: We also benefit from a large portion of our banking activities occurring in the great economies of Florida, and Texas. This was not by accident and is an often overlooked reason for our success.
Kevin Hester: This was not by accident, and is an often overlooked reason for our success. As an equality remains a strength for home as well. Two occurrences are in play here: one continuing and one new. Continuing trend is that the majority of any new asset quality issues are tending to be from the acquired Happy portfolio. This is not totally unexpected given that, as we've said before, we knew that their leverage was higher and that they had relatively higher levels of asset quality issues than our legacy portfolio. Notably, though, we also experienced the significant level of their problem assets identified during early due diligence were resolved before closing.
Kevin D. Hester: This was not by accident and is an often overlooked reason for our success. Asset quality remains a strength for home as well. Two occurrences are in play here, one continuing and one new. The continuing trend is that the majority of any new asset quality issues are tending to be from the acquired happy portfolio. This was not totally unexpected given that, as we've said before, we knew that their leverage was higher and that they had relatively higher levels of asset quality issues than our legacy portfolio.
Speaker Change: Asset quality remains a strength for home as well.
Speaker Change: Two occurrences are in play here one continuing in <unk>.
Speaker Change: Continuing trend is that the majority of any new asset quality issues are tending to be from the acquired happy portfolio.
This is not totally unexpected given that as we've said before we knew that their leverage was higher and that they had relatively higher levels of asset quality issues in our legacy portfolio.
Kevin D. Hester: Notably, though, we also experienced that a significant level of their problem assets identified during early due diligence were resolved before closing. As a current example of this trend, we foreclosed on an incomplete multifamily project north of Dallas in the second quarter, increasing OREO by approximately $11 million. While poorly underwritten and originated at 80% loan to cost by the leader of the defectors on his way out the door just before acquisition, we still anticipate a reasonable outcome. We are less than 90 days from completion with the original contractor, who is also a customer, and have two serious LOIs that would result in no worse than a small loss upon achieving the CO.
Speaker Change: Notably, though we also experienced a significant level of their problem assets identified during early due diligence were resolved before closing.
Kevin Hester: As a current example of this trend, we foreclosed on an incomplete multi-family project north of Dallas in the second quarter, increasing Oreo by approximately $11 million. While poorly underwritten and originated at 80% loan to cost by the leader of the defectors on his way out the door just before acquisition, we still anticipate a reasonable outcome. We are less than 90 days from completion with the original contractor, who is also a customer, and have two serious allies that would result in no worse than a small loss upon achieving the CEO. This outcome is due to the excellent work of our special assets group and is underlined by the continued growth and strength in the overall DFW metrogiography.
Speaker Change: As a current example of this trend we foreclosed on an incomplete multifamily project north of Dallas in the second quarter, increasing Oreo by approximately $11 million.
Speaker Change: While poorly underwritten and originated at 80% loan to cost by the leader of the factors on his way out the door just before acquisition, we still anticipate a reasonable outcome.
Speaker Change: We are less than 90 days from completion with the original contractor who is also a customer.
Speaker Change: And have two serious LOI that would result in no worse than a small loss upon achieving the CEO.
Kevin D. Hester: This outcome is due to the excellent work of our Special Assets Group and is underlined by the continued growth and strength in the overall DFW Metro geography. The new occurrence I mentioned appears to reflect a shift in regulatory tone, which resulted in different outcomes for a small number of previously reviewed relationships compared to the last review cycle. This includes memory care facilities which we have discussed in the past, which were placed on non-accrual this quarter.
Speaker Change: This outcome is due to the excellent work of our special assets group and as underlined by the continued growth and strength in the overall DFW metro geographies.
Kevin Hester: The new occurrence I mentioned appears to reflect a shift in regulatory tone, which resulted in different outcomes on a small number of previously reviewed relationships compared to the last reuse cycle. This includes the memory care facilities which we've discussed in the past, which were placed on not a cruel this quarter. They continue to pay as agreed, and while they are actually showing recent increases in occupancy, this hasn't yet translated to positive cash flow. As for the numbers, NPLs and NPAs increase three basis points and seven basis points, respectively, due to the memory care not a cruel in the addition to Oreo, but criticized and classified loans dropped by $68 million.
Speaker Change: The new occurrence I mentioned appears to reflect the shift in regulatory tone, which resulted in different outcomes on a small number of previously reviewed relationships compared to the last review cycle. This includes the memory care facilities, which we've discussed in the past which were placed on non accrual this quarter. They continue to pay as agreed.
Kevin D. Hester: They continue to pay as agreed, and while they are actually showing recent increases in occupancy, this hasn't yet translated to positive cash flow. As for the numbers, NPLs and NPAs increased three basis points and seven basis points, respectively, due to the memory care non-accrual and the addition to OREO, but criticized and classified loans dropped by $68 million. Early stage pass dues are still low at 0.60%.
Speaker Change: And while they are actually showing recent increases in occupancy this hasn't yet translated to positive cash flow.
Speaker Change: As for the numbers NPL and NPA has increased three basis points and seven basis points, respectively. Due to the memory care non accrual in the addition to Oreo, but criticized and classified loans dropped by $68 million.
Kevin Hester: Early stage pass do's are still low at .60%. Overall, even with the noise around the occurrences noted above, asset quality is strong and not something that keeps me awake at night.
Early stage past dues are still low at <unk> six zero percent overall.
Kevin D. Hester: Overall, even with the noise around the occurrences noted above, asset quality is strong and not something that keeps me awake at night. Donna, that's all I have, and I'll turn it back to you. Thank you, Kevin. Johnny, before we go to Q&A, do you have any additional comments? I really don't.
Speaker Change: Overall, even with the noise around the occurrence as noted above asset quality is strong and not something that keeps me awake at night.
Donna Townsell: Donna, that's all I have, and I'll turn it back to you.
Speaker Change: None of Thats, all I have and I'll turn it back to you. Thank.
Unknown Executive: Thank you, Kevin.
Speaker Change: Thank you Kevin.
John Allison: Johnny, before we go to Q&A, do you have any additional comments? I don't really doubt it.
Speaker Change: Johnny before we go to Q&A and do you have any additional.
Speaker Change: Comment I don't really know labels.
John W. Allison: It's been a great first six months this year, and I'm very pleased with it. I think everybody's pleased. Congratulations to everybody. Hard work pays off, and she will still continue to work to separate herself from the pack.
John Allison: It's been a great first six months this year, and I'm very pleased to let again. Please, congratulations to everybody. Hard work pays off and will still continue to work to separate herself from the pack.
Speaker Change: It's been a great first six months this year.
Very pleased with I think everybody is pleased congratulations to everybody.
Speaker Change: <unk> pays off.
Speaker Change: <unk>.
Speaker Change: We will still continue to work to separate ourselves from the pack so with that if nobody else has a comment.
Operator: So with that, if nobody else has a comment, we'll go to Q&A. Thank you. If you would like to ask a question, please press star followed by one on your touchtone phone now. If you change your mind, please press star followed by two to exit the queue. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally.
Unknown Executive: So with that, if nobody else has a calm here, we'll go to Q&A. Thank you.
Speaker Change: We'll go to Q&A.
Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your Touchtone phone now.
Unknown Executive: If you would like to ask a question, please press star 4 by 1 on your touch-tone phone now. If you change your mind, please press star 4 by 2 to exit the queue. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally.
Speaker Change: If you change your mind. Please press star followed by two to exit the queue I'll finally, when preparing to ask your question. Please ensure that youll phone is unmatched it locally.
Stephen Scouten: And our first question today is from the line of Stephen Scouton of Piper Sandler. Please go ahead. Your line is open. Good afternoon, everyone. Appreciate it. I guess I'd love to start with loan growth, really nice number there, especially in light of what we're seeing for the industry as a whole, which I think is a bit weaker growth this quarter. So I was kind of wondering what dynamics kind of led to that.
Stephen Kendall Scouten: And our first question today is from the line of Stephen Scouten of Piper Samba. Please go ahead. Your line is open. Good afternoon, everyone.
Speaker Change: And our first question today is from the line of Stephen Scouten of Piper Sandler. Please go ahead. Your line is open.
Stephen Kendall Scouten: Hey, good afternoon, everyone appreciate it.
Stephen Kendall Scouten: I guess I'd love to start with loan growth really nice number there.
Stephen Kendall Scouten: Appreciate it. I guess I'd love to start with loan growth. Really nice number there. Especially in light of what we're seeing for the industry as a whole, which I think is a bit weaker growth this quarter. So I was kind of wondering what dynamics kind of led to that.
Especially in light of what we're seeing for the industry as a whole, which I think is a bit weaker growth. This quarter. So just kind of wondering what dynamics kind of led to that I know Stephen said pay downs were a little lighter this quarter, but.
Kevin Hester: I know Stephen said pay downs were a little lighter this quarter, but have you been able to pick off business from other folks stepping away from the market and getting a little more aggressive, or just kind of good blocking attack.
Speaker Change: Have you been able to pick off business from other folks stepping away from the market and getting a little more aggressive or just kind of good blocking and tackling.
Kevin Hester: Hey, Stephen, this is Kevin. So I think it's you who saw a good production from the community bank footprint. I think that's what we talked about last quarter that we were seeing. Yes, some really good opportunities in our community bank markets, and that I think that translated to some growth. Stephen did mention the lower paydowns, and I think you're going to see that probably pick up a little bit third quarter, maybe even fourth quarter, particularly for CCFG, but the pipeline's been good. It's a little bit lighter right now than it was this time last quarter, I think, but still good.
Speaker Change: Hey, Steven this is Kevin So I think it's you saw good production from the community Bank footprint I think that's we talked about that last quarter that we were seeing.
Kevin D. Hester: I know Stephen said paydowns were a little lighter this quarter, but have you been able to pick off business from other folks stepping away from the market and getting a little more aggressive, or just kind of good blocking and tackling? Hey, Stephen. This is Kevin.
Kevin D. Hester: So I think it's, you saw good production from the community bank footprint. I think that's what we talked about last quarter that we were seeing, you know, some really good opportunities in our community bank markets, and that I think that translated to some growth. Stephen did mention the lower paydowns, and I think you're going to see that probably pick up a little bit in the third quarter, maybe even fourth quarter, particularly for CCFG.
Steven: Some really good opportunities in our.
Steven: Community Bank markets in that I think that translated to some growth Steven did mentioned the lower.
Speaker Change: Pay downs, and I think youre going to see that probably pick up a little bit third quarter, maybe even fourth quarter, particularly for <unk>.
Kevin D. Hester: But the, you know, pipeline has been good. It's a little bit lighter right now than it was this time last quarter, I think, but still good. We have a lot of opportunities we're talking about in our markets with, so there could, you know, still be some good things happening that we don't have, you know, particularly on the pop. Okay, sounds good.
Steven: <unk>.
Speaker Change: The pipeline has been good at some it's a little bit lighter right now than it was this time last quarter I think.
Speaker Change: But still good we have a lot of opportunities we're talking.
Kevin Hester: We have a lot of opportunities. We're talking, you know, in our markets with, so there could still be some good things happen that we don't have, you know, particularly on the pipeline today.
Speaker Change: Our markets with so there could still be some good things happen.
Speaker Change: That we don't have particularly on the pipeline today.
Speaker Change: Okay. It sounds good.
Unknown Executive: Okay. Sounds good.
Stephen Scouten: And then just kind of thinking around M and A, like you said, there have been some capital raises that are seemingly a little hard to understand. I'm kind of I'm curious why those banks wouldn't sell, maybe Johnny, to your commentary there. And if for you guys that the math still doesn't work relative to where you've seen some of these trades go off. And kind of how do you think about that transpiring for you all?
Speaker Change: And then just kind of thinking around M&A.
John W. Allison: And then just kind of thinking around M&A, like you said, there have been some capital raises that are seemingly a little hard to understand. I'm kind of, I'm curious why those banks wouldn't sell. Maybe Johnny to your commentary there. And if, for you guys, the math still doesn't work relative to where you've seen some of these trades go off and kind of how you think about that transpiring for you all. Well, I guess I could use your own watch. You can't fix stupid.
Speaker Change: Like you said there've been some some capital raises that are seemingly a little hard to understand what kind of I'm curious why those banks wouldn't sell maybe guiding some of your commentary there.
Speaker Change: For you guys, if the math still doesn't work relative to where you've seen some of these trades go off and kind of.
Speaker Change: How you think about that transpiring for you all.
John Allison: Well, I guess I could use a wrong watch statement. You can't fix stupid. So, you know, I, I, I, they ran their banks, the long run their banks in the ground and now they run them in the ground again. You know, it just, it makes absolutely no sense to me whatsoever. So, one of my look that was interested in and made a call and started to bump that little bit, but I didn't want to get into the game. I stayed out of it. You know, it, I don't understand some of these people; the moves they made.
Well, I guess I'll get us wrong statement.
Speaker Change: You can't fix stupid.
John W. Allison: So, you know... They were riding their bikes, a lot of them were riding their bikes into the ground, and now they're running them into the ground again, you know, it just, it... It makes absolutely no sense to me whatsoever. One of them I looked at and was interested in, and made a call and started. Buffed that a little bit, but I didn't want to get into the game.
Speaker Change: No.
Speaker Change: They ran their bonds long run their bikes in the ground and now the random into ground began.
Yes.
Speaker Change: Makes absolutely no sense to me whatsoever. So.
Speaker Change: One of them I looked at most interested in and made the call started.
Speaker Change: Bump that a little bit, but I didn't want to get into the game has stayed out of it.
John W. Allison: I stayed out of it, you know. I don't understand some of these people, the moves they've made. They run it in the ground. They're the ones that run it in the ground, and then they're the ones that run it in the ground again.
Speaker Change: Yes.
Speaker Change: I don't understand some of these people's moves.
John Allison: You know, they run it in the ground. They're the ones that ran it in the ground, and then they're the ones that run it in the ground again. I said that twice, but it's pretty amazing to me. I don't know what they've done and how they go about it. So, they're, I mean, good luck to them. I don't know if you dilute your shareholders 40 to 50%. That's a major hint. And to overcome that is shocking. You know, so I can't, you know, I don't know. I really don't have an answer. I don't, you know, they've, they've actually give, they've actually given up control of their company to somebody else.
Speaker Change: They run it in the ground. They are the ones that ran in the ground and then they are the ones that run it to ground again, I said that twice, but it's pretty amazing to me.
John W. Allison: I've said that twice, but it's pretty amazing to me what they've done and how they go about it. So they're, I mean, good luck to them. I don't know if you dilute your shareholders 40 to 50%. That's a major hit. And to overcome that is shocking, you know. I can't act, you know, I don't know, I really don't have an answer.
Speaker Change: <unk>.
Speaker Change: What they've done and how they go about it so they're I mean, good luck to them I don't know if you dilute your shareholders, 40% 50%.
Speaker Change: A major hit and to overcome that is shocking.
Speaker Change: <unk>.
Okay.
John W. Allison: I don't, you know, they've actually given up control of their company to somebody else. And, We're going to give up control of this one. It's going to cost somebody to get control of this. I don't think it was a very bright move; I just don't believe it.
Speaker Change: I don't know I really don't have an answer.
Speaker Change: They've actually get back to giving up control of their companies to somebody else.
Speaker Change: Yeah.
John Allison: And if we're going to give up control of this one, it's going to cost somebody to get control of this one. So, I just, I don't think it was a very bright move. That's what I just don't believe that. And I think you're in agreement with me that some of these moves were watching out there. I'm not the best way to go about it. So, I mean, all banks are going to rise and fall together. So, if they merge with somebody like Home, then, and I think they're missing two or three point run, well, Home is going to get to two or three point run.
Speaker Change: If we're going to give up control of this one is going to call somebody to get control of this.
Speaker Change: I don't think it was a very broad move that's one.
Speaker Change: Don't believe that.
John W. Allison: And I think you're in agreement with me that some of these moves we're watching out there are not the best way to go about it. I mean, all bank stocks are gonna rise and fall together. So if they merge with somebody like Home, then and I think they're missing a 2 or 3 point run, well, Home's going to get the 2 or 3 point run. That's so, you know; it's as broad as it is long, and I don't understand why they don't see that.
Speaker Change: Thank you are in agreement with me.
Speaker Change: Some of these moves were watching out there I'm not the best way to go about it so.
Speaker Change: I mean, all bank stocks are going to rise and fall together so.
Speaker Change: <unk> merged with somebody a lot at home then.
Speaker Change: They are missing.
Speaker Change: Two or three point, Ron will home is going to get to two to three point Ron Thats. So.
John Allison: That's so, you know, it's as broad as it is long. And I don't understand why they don't leave it. If they think, maybe they think they've got a secret sauce and they're going to outperform home in the rest of the top performing banks in the country, I don't believe they're going to get that done. So, I mean, they... I won't say it again, but they didn't manage it in the first time very well, and they had managed the second time.
Speaker Change: It's as broad as it is long and I don't understand why they don't sleep.
John W. Allison: If they think maybe they've got a secret sauce and they're going to outperform Home and the rest of the top performing banks in the country, I don't believe they're going to get that done. So, I mean, they, I won't say it again. They didn't manage it the first time very well, and they didn't manage it the second time.
I think maybe they think they've got a secret sauce in neuro and outperform home and the rest of the top performing banks in the country.
Speaker Change: I don't believe they're going to get that done so I mean.
Speaker Change: I won't say it again.
Speaker Change: I didn't manage it in the first time very well Edmonton second time.
John W. Allison: Anybody, Stephen, you got a comment? Tracy, you got a comment on that? I guess it sounds like maybe for you guys, M&A is more of a potential $25 event if you see if the turmoil shakes out first from the BCFP and so forth, February, March, and then see where we go from there. Maybe at that point, we've had some rate cuts to make the math a little bit more palatable. Is that the right way to think about it? I think that's the way to think about it. I mean, we're interested and we look around a little bit. We're just kicking the tires. What I'm afraid of is being tied up in a deal.
Speaker Change: And so many other products that you guys can comment on that.
Stephen Tipton: And about Stephen, you got a comment. First, you got a comment on that. Thank you.
Speaker Change: I think it sounded like maybe for you guys M&A more of a potential 25 event you see if turmoil shakes out first from the <unk> and so forth.
Stephen Scouten: I guess it sounds like maybe for you guys, M&A's more of a potential 25 event with you. You see if turmoil shakes out first from the BCFP and so forth in February March and then see where we go from there, and maybe at that point we've had some rate cuts in the mass a little bit more palatable. Is that the right way to think about it? I think that's the way to think about it. I mean, we're interested in, we're looking a little bit. We're just kicking the tires.
Speaker Change: In February March and then see where we go from there.
Speaker Change: Maybe at that point, we've had some rate cuts and the math a little bit more palatable is that the right way to think about.
Speaker Change: Absolutely that's the way to think about it.
Speaker Change: We're interested in we're looking.
Speaker Change: Network, just kicking the tires, what I'm afraid of is being tied up in a deal you know, we got a war chest of capital.
John Allison: What I'm afraid of is being tied up in a deal. You know we got to work just to Capital. We're making good money, and looks like income is improving. So we struggled a little bit last year, but we had some women to wind our back in the second quarter last year. We had some of our investments really kicking a lot of money. But core income wise, this was one of the best quarters in the corporation's history. Maybe number two, and it may be number one. And we earned last year's income this time. And I see good things in the daily reports continuing.
John W. Allison: You know, we have a war chest to cap. We're making good money, and it looks like income is improving. So we struggled a little bit last year. But we had to wind down in the second quarter last year. We had some of our investments really kick in a lot of money, but we were poor income-wise.
Speaker Change: We're making good money and it looks like incomes improving so we struggled a little bit last year.
Speaker Change: But we had some women the wind are back in the second quarter of last year, we had some of our investments really kicked in a lot of money, but core income wise. This was.
John W. Allison: One of the best quarters in the corporation's history, maybe number two, and it may be number one. So we earned last year's income this time. So, And I see good things in the daily reports continuing. So we get that daily report, and I look at it every day.
One of the best quarters in the Corporation's history, maybe number two.
Speaker Change: And it might be number one.
Speaker Change: Earned last year's income this time so.
Speaker Change: And I see good things in the daily reports continuing so we get a daily report and I look at it every day I like what I'm seeing I like what's going on.
John Allison: So we get that daily report, and I look at it every day. I like what I'm seeing. I like what's going on. Kevin has been able his winning team has been able to provide lots of good loans to us over a period of time. And continues to do that. Basically, we get lots of looks at lots of stuff. And just to consider. We could have done more, but the conservative nature of the company is not finished. So we're going to.
John W. Allison: I like what I'm seeing. I like what's going on. Kevin has been able, his lending team has been able to provide lots of good loans to us over a period of time and continues to do that, basically. We get lots of looks at lots of stuff.
Speaker Change: Kevin has been able to his his lending team has been able to provide lots of good loans to us over a period of time and continues to do that basically we get lots of looks at lots of stock and.
Speaker Change: Just to confirm.
Speaker Change: Done more but the conservative nature of the company has not been so.
John Allison: I don't want to have my hands tied up, Steven, in the middle of a deal when real opportunities come up. And I don't mean this disrespectful, but if they run their bank into the ground. I'm going to bother a problem, and it's going to come on our books. And how long does that impact home bank shares before we come out the other side? I guess you can do the marks, and we can come out the other side pretty quick. But I just don't want to do anything to damage Home Bank shares where we sit right now.
Speaker Change: Our I don't want to have my hands tie that Steven in a middle of a deal when real opportunities come up.
Speaker Change: And I don't mean this disrespectful.
John W. Allison: I don't mean this disrespectfully, but if they run their bank into the ground, I'm going to buy their problem, and it's going to come on our books, and how long does that impact Home BancShares before we come out on the other side? I guess you can do the marks, and we can come out the other side pretty quick, but I just don't want to do anything to damage Home Bancshares where we are right now.
Speaker Change: If they run their buy in the ground.
Speaker Change: What are they are more a bother problem.
Speaker Change: And it's going to come on our books and how long does that impact home bancshares before we come out the other side.
Speaker Change: I guess you can do the marks and we can come out the other side pretty quick but I just don't want to do anything to damage home Bancshares, where we sit right now.
John Allison: Making the kind of money we're making and seeing the upside that we see. I think I told you that last year that home was sitting in the cat bird's seat. And we've really. We're sitting in a better position now than we were the first quarter. And I think we're going to be in a better position in the third quarter or a second quarter. So it just continues as long as Kevin's team and retail people control the cost of the funds. And Kevin brings the loans team brings the loan. And I think you're going to see good numbers coming from home.
John W. Allison: Making the kind of money we're making and seeing the upside that we see, I think I told you last year that Home was sitting in the catbird seat, and we're sitting in a better position now than we were in the first quarter, and I think we're going to be in a better position in the third quarter than we were in the second quarter. So it just continues as long as Kevin's team, our retail people, control the cost of the funds and Kevin brings the loans, the team brings the loans, and I think you're going to see good numbers coming from Home. Yeah, absolutely. Great quarter! Shareholders should be happy, and I'm sure your I'm sure your wife's still happy too.
Speaker Change: The kind of money, where Mike and seeing the upside that we see I think I've told you that last year. The home was sitting in the cat bird site and.
Speaker Change: And we've really sitting where we're sitting in a better position now than we were the first quarter and I think we're going to be in a better position in the third quarter for the second quarter. So it just continues as long as Kevin's team and our retail people control the costs of the funds and Kevin brings the loans team brings alone.
Speaker Change: Thank you you're going to see good numbers coming from home.
Speaker Change: Yes, absolutely great quarter shareholders should be happy and I'm sure you're I am sure your wife's still happy too.
Stephen Scouten: Yeah, absolutely great quarter; shareholder should be happy. And I'm sure your I'm sure your wife's still happy to.
John Allison: Well, we're going to look. Let me explain something. We're going to look at the dividend at the board meeting Friday. Maybe she, maybe I'm going to hug the kids when I walk in. There you go. Thanks for that. Thanks, guys. Thank you.
John W. Allison: Well, we're going to look, let me explain something. We're going to look at the dividend at the board meeting on Friday, so maybe I'll get a hug and a kiss when I walk in. There you go. That's worth it.
Speaker Change: Well, we're gonna look let me try something we're going to look at the dividend at the board meeting Friday.
Speaker Change: [laughter] Miami ship, maybe I'll get a hug the guests will not work.
Speaker Change: Hey, guys. Thanks.
Speaker Change: Thanks, guys for the time.
Speaker Change: Thank you.
John W. Allison: Thanks, guys, for your time. Thank you. Our next question today is from the line of Brett Rabatin of the Hovda Group. Brett, please go ahead; your line is now open. Hey, good afternoon, everyone. I wanted to want to just start with Johnny. I know your goal going into the year was, hey, let's make 100 million a quarter and 400 million for the year. And people were doubting whether they could do that or not.
Brett Rabatin: Our next question today is from the line of Brett Rabatin of Hope The Group. Brett, please go ahead; your line is now open. Hey, good afternoon, everyone. Hey, Brett, wanted to, wanted to start with Johnny. I know your, your goal going into the year was, hey, let's make 100 million a quarter and 400 million on the year, and people were doubting whether you could do that or not.
Speaker Change: Our next question today is from the line of Brett Robinson of the group.
Speaker Change: Please go ahead. Your line is now open.
Brett Robinson: Hey, good afternoon, everyone.
Brett: Hi, Brett.
Brett D. Rabatin: You know, given this quarter, I hate to raise the bar for you, but it feels like, with some loan repricings in the back half of the year, slowing increases in your cost of funds, it would seem like maybe you might want to tweak that, tweak that goal higher, any, any.
I wanted to wanted to start with Johnny I know your goal going into the year was hey, let's make $100 million of quarter.
Speaker Change: $400 million in the year and people were doubting, whether you could do that or not given this quarter.
John Allison: You know, given this quarter, I hate to raise the bar for you, but it feels like with, with some loan repricings in the back half of the year, slowing increases in your cost of funds would seem like maybe you might want to tweak that, tweak that goal higher. Any thoughts on full year expectations and maybe higher thinking about that. Well, you know, the big kid here is 111 million dollars in expenses quarterly, and we've been able to hold that, and I think we can continue to hold that. There's some things we won't be able to control, but so far, so good on that side.
I hate to raise the bar for you, but it feels like.
With some loan repricing.
Speaker Change: In the back half of the year slowing increases in your cost of funds.
Speaker Change: It seemed like maybe you might want to tweak that.
Speaker Change: Tweaked that go higher or any any.
Speaker Change: Thoughts on <unk>.
Brett D. Rabatin: Thoughts on full-year expectations and maybe how you're thinking about that? You know, the big key here is $111 million in expenses quarterly, and we've been able to hold that. And I think we can continue to hold that. There are some things we won't be able to control. So far, so good on that side. I'm very proud of our team and how much expenses we've cut out. And Kevin, you'
Speaker Change: Full year expectations, and maybe how youre thinking about that.
Speaker Change: Well.
Speaker Change: The Big key here is the $111 million in expenses quarterly and we've been able to hold that and I think we can continue to hold that there is some things we won't be able to control but.
Speaker Change: So far so good on that side I'm very proud of our team and how much the expenses we've cut out.
John Allison: I'm very proud of our team and how much the expenses we've cut out. And Kevin, you're right. I get it. I'm going to stick my neck out here, but he has, his team has produced and our retail team is having our cost of funds, and it's, it's what I were one of my directors said the other day said, I see that spark back in your eye, Johnny. And let me say we're looking at some really good stuff. So I'm optimistic, but I think Chris, Chris has about 300 million dollars or so and pay downs coming in in this quarter.
Speaker Change: And Kevin you're right I get it.
Kevin: Sticking my neck out here, but.
John W. Allison: I get it. I'm gonna stick my neck out here. But he has, his team has produced, and our retail team is handling our cost of funds. And it's what one of my directors said the other day. He said, I see that spark back in your eye, Johnny.
Kevin: He has his team has produced in our retail team is handling our cost of funds.
Kevin: And it's it's flat.
Johnny: One of my Directors said, the other day said I see that spark back in your AD, Johnny and I said were back home and again, the company's back company and so I like to see as Tom and I feel good about that I feel good about the company I feel good about what's going on it's just a matter of if we can continue to get the.
John W. Allison: And I said, we're back humming again. The company is back humming again, so I like to see us humming. I feel good about that. I feel good about the company. I feel good about what's going on. It's just a matter if we can continue to get the good loans to come in during the third and fourth quarter like we've been able to do during the first and second quarter. Let me say we're looking at some really good stuff, so I'm optimistic. I think Chris has about $300 million or so in pay downs coming this quarter.
Johnny: The good loans to come in over the third and fourth quarter like we've been able to do the first and second quarter and let me say, we're looking at some really good stuff. So I'm optimistic, but I think Chris Chris has.
Chris: About $300 million or so in paydowns coming in this quarter.
John Allison: But he's continuing to write business too, and we're continuing to write business. But it's good to see; it's good to see the legacy put put prick step up as strong as it has in the last two quarters. And now at, at Chris, I mean, Chris, you know, Chris, he's going to pay off. He said there's another one to get my money. So that's Chris's attitude, and I like his attitude. I get what you're saying about the increased profitability. I'm, I'm, I'm, I'm going to get too crazy out here right now. But let me tell you one thing: when they told me at the first year we were going to not make as much money as we did last year.
John W. Allison: But he's continuing to write business, too, and we're continuing to write business. But it's good to see the legacy footprint step up as strongly as it has in the last two quarters. And now, Chris, you know Chris, he's going to get a payoff. He said, "There's nothing wrong with me getting my money." So that's Chris's attitude, and I like his attitude.
Speaker Change #100: But he is continuing to ramp business too and we're continuing to write business, but it's good to say, it's good to see the legacy footprint step up as strong as it has in the last two quarters.
Speaker Change #101: Now at it Chris is just I mean, Chris craft seasonal payoffs you said theres nothing wrong, we get my money. So that's Christmas attitude I like his attitude.
Speaker Change #102: I get what Youre, saying about the increased profitability.
John W. Allison: I get what you're saying about increased profitability; I'm not going to get too crazy out here right now. But let me tell you one thing, when they told me first year that we were going to not make as much money as we did last year, I think you heard me. I said I couldn't get my arms around that. That's not how Johnny Allison thinks, so you know that.
I'm not going to get too crazy out here right now but.
Speaker Change #103: But let me tell you werent buying when they tell me. It's the first year, we were going to not make as much money as we did last year I think.
John Allison: I think you heard me. I said I can't get my arms around that. That's not how Johnny Allison thinks. So you know that. I don't think we're going to have less income. Excuse my expression. I call that BS. So, and we haven't, as you can see, it was a kind of personal challenge to me. And we've done a great job. So for my team has been really performed. Yes, definitely.
Speaker Change #104: You heard me ask that I cant get my arms around that.
Speaker Change #104: Not have Johnny Allison Thanks.
Speaker Change #104: That I don't think we're going to have less income.
John W. Allison: I don't think we're going to have less income. I excuse my expression; I call that BS. And we have, as you can see, it was a commercial challenge for me, and we've done a great job so far. Our team has been really... Yep, definitely. The other thing was just, you went through the asset quality stuff, guys. And, you know, I know, the past six months, you've kind of been dealing with some cleanup, if you want to call it that, in the Texas markets.
Speaker Change #104: Excuse my expression I'll call it <unk>.
Speaker Change #104: And we haven't as you can see it was John or some challenge to me.
Speaker Change #104: Done a great job so far my our team has been really performed.
Speaker Change #104: Yes definitely.
John W. Allison: Are we essentially, you know, kind of through with that and whatever else comes from here would be something you haven't seen yet or any color on the Texas cleanup from here, and what might be left to do? Hey, this is Kevin.
Speaker Change #104: Hi.
Brett Rabatin: The other thing was just, you went through the asset quality stuff, guys, and you know, I know the past six months, you kind of been doing with some cleanup. If you want to call it out in the Texas markets, are we essentially kind of through with that and whatever, whatever else comes from here would be something you haven't seen yet or any color on the Texas cleanup from here. And what might be left to do?
Speaker Change #105: The other thing was just you went through the asset quality stuff guys.
Speaker Change #104: Yes.
Speaker Change #106: I know the past six months, you've kind of been dealing with some cleanup if you want to call. It out in the Texas markets are we essentially kind of through with that and whatever whatever else comes from here would be something you haven't seen yet or any color on the Texas cleanup from here and what might be left to do.
Speaker Change #104: Yeah.
Kevin Hester: at this cabin. I'm not going to say that we're completely through. I think there can be a, you know, one or two things that we're going to continue to deal with. It's just tough when you, when you've doubled interest expense or interest rates over, over a period of time. You got some folks that are just going to struggle to it. I don't see anything that, you know, I think I went through the scenario that we, that we added this quarter and to be able to work through that and come out with, with a very, very small loss on, on a situation like that's a pretty good deal.
Kevin: Hey, this is Kevin.
Brett D. Rabatin: I'm not going to say that we're completely through. I think there can be, You know, one or two things that we're going to continue to deal with. It's just tough when you've doubled interest expense or interest rates over a period of time, you've got some folks that are just going to struggle with it. I don't see anything that... you know, I think I went through it.
Kevin: I'm not going to say that we're completely through I think there can be.
Kevin: One or two things that we're going to continue to deal with.
Kevin: It's just tough when you.
Kevin: When you've doubled interest expense or interest rates.
Kevin: Over a period of time, you've got some folks that are just going to struggle to it I don't see anything that you.
Kevin: I think I went through.
Kevin D. Hester: The scenario that we added this quarter, and to be able to work through that and come out with a very, very small loss on a situation like that is a pretty good deal. And that's the kind of stuff we're working through. It's not big problems, it's just distractions, it's things you've got to work through and work out. Okay, and we saw another multifamily project stick its head up, and we're working on that project, too. I haven't seen that one yet.
Kevin: The scenario that we that we added this quarter into to be able to work through that and come out with with a very very small loss on the situation like that is a pretty good deal.
Kevin Hester: And, and that's kind of stuff we're working through. It's not, it's not big problems. It's just distractions, as things you got to work through and work out. Okay, we saw another, we saw another multi-family project stick its head up, and we’re working on that project too. We, I haven't seen that one. I saw the first one and, I believe, I believe you'll be pleased. I believe we're going to have to be able to work that one out pretty well. You know, that, that it's a new construction. The other one was an older apartment unit that was referred, and I'm not sure about that one, but maybe a loss, and it may not be a loss in it.
Kevin: And that's kind of step we're working through it's not it's not big problems is just distractions as things you got to work through and worked out.
Kevin: Okay.
Kevin: And we saw another go ahead Jonathan.
Jonathan: We saw another multifamily projects take et cetera.
Jonathan: We're working on that project two week I haven't seen that one so the first one.
Kevin D. Hester: I saw the first one and, I believe you'll be pleased, I believe we're going to be able to work that one out pretty well. It's a new construction, whereas the other one was.
Jonathan: I believe I believe youll be pleased I believe we're going to have be able to work that one out pretty well.
John W. Allison: It's a new construction, an older apartment unit that was refurbished, and I'm not sure about that one. May be a loss and may not be a loss in it, but we'll analyze that. That one just kind of came up on us in the last short period of time. We weren't, we were not, that was not on our radar.
Jonathan: It's a new construction the other one was on <unk>.
Jonathan: Older apartment unit that were three firm and I'm not sure about that one but maybe at a loss and it may not be a loss in it but we will we will analyze that that would just kind of came up bonus in the last short period of time so.
Kevin Hester: But we'll, we'll analyze that. That would just kind of came up on us in the last short period of time. So we weren't; we were not; that was not on our radar screen. But, you know, it is what it is. And that's what we, we, we, we, we do a pretty good job of managing, managing our credits around here. And, and we don't get in a hurry as we didn't get in a hurry on this multi-family unit out of north of Dallas. We just didn't get in a hurry. When they finish it, they finish it.
Jonathan: We weren't we were not that was not on our radar screen, but it is what it is and as we do a pretty good job of managing managing our credits around here and.
John W. Allison: But you know, it is what it is. And that's why we do a pretty good job of managing our credits around here. We don't get in a hurry, as we didn't get in a hurry on this multifamily unit out of north Dallas. We just didn't get in a hurry.
Jonathan: We don't get in a hurry as we didn't get in a hurry on this multifamily unit at North of Dallas, We just didn't get hurt when they finish it they finish it and if we got to keep it and lease it up we'll do that without however, we've got three or four people very interested in that project with virtually no loss. So.
John W. Allison: When they finish it, they finish it. And if we have to keep it and lease it out, we'll do that. We don't, however; we've got three or four people very interested in that project with virtually no.
Kevin Hester: And if we got to keep it and lease it up, we'll do that. We don't, however, we've got three or four people very interested in that project with virtually no loss. So I'm pretty optimistic about that. We take, we take problem credits very serious around, seriously around here. And we won't know who made it and why they made the credit and why they made it alone. And did they is a danger to our loan officers or, in fact, the loan officers. So it is; it is a serious, serious. When you get a situation like that, we find a loan that you've never been made.
John W. Allison: I'm pretty optimistic about that. We take problem loans very seriously around here. And we want to know who made the loan, and why they made the credit, and why they made the loan. And is it a danger to our loan loss reserve? Is it going to impact our loan loss reserve?
Jonathan: I'm pretty optimistic about that we take we take problem credits very serious around seriously around here and we won't know who made it and why they made to credit and why they made the loan and did they is the danger to our loan loss reserve impact the loan loss reserve. So it is.
Jonathan: It is a serious serious when you get a situational act or we found alone which had never been made.
John W. Allison: So it is. It is very, very serious when you get a situation like, we found a loan that should have never been made. And we found some of those, but we worked through a bunch of them already. And Kevin's team does a great job.
Brett Rabatin: And we found some of those. But we worked through a bunch of them already, and Kevin seemed as a great job. So I don't expect. I sleep. Let me say this. He said he nothing keeps you up, and I that $300 million reserve gives me a good night's sleep. So I promise you that. Yep, I bet if I could sneak in one last one just on just back on the long growth topic, you know, given this quarter and last quarter, just kind of looking at the trends in the, you mentioned the payoffs. What would it be fair to say that you guys can, can grow mental digit single digit this year or any, any color on the pipeline relative to where it was prior to Q.
John W. Allison: So I don't expect, I sleep. Let me say this: he said that nothing keeps him up at night, that $300 million dollar reserve gives him a good night's sleep. Yep, I bet. If I could sneak in one last one, just back on the loan growth topic. You know, given this quarter and last quarter, just kind of looking at the trends, you mentioned the payoffs. Would it be fair to say that you guys can grow mid-single digit this year or any color on the pipeline relative to where it was prior to 2Q?
Jonathan: And we found some of those but we worked through a bunch of them already and Kevin's team does a great job. So I don't expect.
Actually let me say this I said he said nothing keeps him up but now that $300 million reserve. It gives me a good night sleep. So I promise you that.
Jonathan: Yes.
Speaker Change #108: If I could sneak in one last one just on just back on the loan growth topic.
Speaker Change #109: Given given this quarter and last quarter, just kind of looking at the trends.
Speaker Change #110: You mentioned the pay offs is would it be fair to say that you guys can grow mid single digit single digit this year or any any color on the pipeline.
Speaker Change #111: Relative to where it was.
Speaker Change #112: Prior to <unk>.
Brett Rabatin: Are you talking about the rest of the year? Are you asking for the rest of the year? Right. I think mid-single digits are going to be a little tie with the paydowns that I see, maybe lower single digits. Okay. And it will depend; it'll just depend on originations because I mean, we see the paydowns coming. And so it will all depend on, you know, what originations come in that can find. You know, a lot of stuff we're doing is construction. And so the thing that's going to get booked in the third quarter is not going to find until, you know, probably first quarters next year, when it'll start finding is they work through their, their equity.
You're talking about the rest of the year or are you asking for the rest of the REIT.
Brett D. Rabatin: Are you talking about the rest of the year, or are you asking for the rest of the year? Right. I think mid single digits is going to be, it's going to be a little tough with the paydowns that I see, maybe lower single digits.
Yes.
Speaker Change #113: Yes. Thank you.
Speaker Change #114: Mid single digits is going to be it can be a little tough with the pay downs.
Speaker Change #115: Did I see.
Speaker Change #116: Maybe lower single digits.
Brent: Okay Brent.
Kevin D. Hester: Okay, and it will depend, it'll just depend on originations because, I mean, we see the paydowns coming. So it will all depend on. You know, water originations come in, they can find, you know, a lot of stuff we're doing is construction.
Brent: It will depend it will just depend on originations because I mean, we see.
Brent: We see the pay downs came in so it will all depend on.
Kevin D. Hester: And so the thing that's going to get booked in the third quarter is not going to be found until, you know, probably the first quarters next year is when it'll start funding as they work. [inaudible] sale Texas asset quality, a lot of smaller things. It's a lot of it, but it's small things. Most of those, if I look back, were on the bank. Happy State Acquired. So it wasn't a lot of credits that they made.
Speaker Change #118: One originations come in they can find you know a lot of stuff. We're doing is construction and so the thing thats going to get booked in the third quarter is not going to find adult.
Speaker Change #118: Probably first quarter next year is when it'll start funding as they work through there.
Speaker Change #119: Their equity.
Kevin Hester: So it would depend on; it would depend on some things that fund, you know, on the front end. We're working on some stuff that funds pretty quick. Tracy, you know, I was just going to say on the Texas asset quality and blood of that smaller things. It's a lot of it, but it's small things. And most of those, if I look back, were on banks that Happy State acquired. So it wasn't a lot of credits that they made. So that part, it just takes a little bit of effort on Mad. And I go back here on the long growth.
The pin down it would depend on some things that fund.
Speaker Change #119: The front end, we're working on some stuff that bodes pretty quick infrastructure.
Speaker Change #120: Well I was just going to say on the Texas asset quality a lot of that smaller things, it's a lot of it but a small things.
Speaker Change #120: Most of those.
Speaker Change #120: Look backwards on banks that happy state acquire so it wasn't a lot of the credits that they made so that part is.
Speaker Change #120: Just takes a little bit of effort on that and I'll go back here on the loan growth that still.
Kevin D. Hester: So that part, It just takes a little bit of effort on that. Go back, I hear on the loan growth, it's still, we're seeing good opportunities, just still, and that South Florida's really seeing some good opportunities, North Florida and Arkansas staying steady. Central Texas is certainly getting some opportunities.
Kevin Hester: It's still, we're seeing good opportunities. I just still, and that's South Florida's really seeing some good opportunities. North Florida and Arkansas stay in steady. Central Texas is certainly getting some opportunity. I think John and everyone down to meet a new customer they brought in just last week on that aspect.
Speaker Change #120: Seeing good opportunities.
Speaker Change #120: And Thats.
Speaker Change #120: South Florida is really seeing some good opportunities north, Florida, and Arkansas staying steady.
Kevin D. Hester: I think John and I are going down to meet a new customer they brought in just last week on that aspect. I'm happy to do it. Thanks for all the calls. Our next question today is from the line of Jon Arfstrom of RBC. Please go ahead.
Brett Robinson: Central Texas is certainly get some opportunity to thank John and everyone nanometer new customer. They brought in just last week on that aspect. When my final thing to you Brett was thanks for raising the bar.
Brett Rabatin: I'm a final thing to you, Brett, which thanks for raising the bar. I'm happy to, I'm happy to do it. Thanks, thanks for all the money.
Speaker Change #120: Yes.
Speaker Change #120: [laughter].
Brett Robinson: I'm happy to I'm happy to do it.
Speaker Change #121: Thanks for all the color.
Brett Robinson: Yes.
John Upstrom: Our next question today is from the line of John Upstrom of RBC. Please go ahead; your line is open. Thanks. Good afternoon. Hi John. Can you talk a little bit more about the deposit gathering strategy? You referenced a couple of times the retail bank and their successes. It's kind of what's the strategy there, and how are you growing deposits?
Speaker Change #124: Our next question today is from the line of Jon <unk> of RBC. Please go ahead. Your line is open.
Jon Glenn Arfstrom: Your line is open. Thanks. Good afternoon. Hi, John. Can I help you?
Jon: Thanks, Good afternoon.
John: Hi, John can you.
Jon Glenn Arfstrom: Hey, can you talk a little bit more about the deposit gathering strategy you referenced a couple of times? The Retail Bank and their successes, just kind of what's the strategy there? And how are you growing deposits? Well, actually... We've never run a... I'll let Stephen talk about it, but let me start out by saying we've never run a CDA.
Jon: Can you talk a little bit more about the deposit.
Gathering strategy you referenced a couple of times.
Speaker Change #123: The retail bank and their successes kind of what's the strategy there and how are you growing deposits.
Speaker Change #127: Well <unk>.
John Allison: Well, actually, we've never run a. I let Stephen tell them that, but let me start out. We've never run a CD ad. We're on a strength ad because we're sitting six percent and five, 50s and five, 70s, and you can borrow money cheaper than that at the bank. So my point is there are so many of these banks in trouble that they're having to get the money and particularly make it worse because when they have to pay back this Fed program in February, March, I don't know where the world are going to get the money because the federal home on my, it's not going on on a dollar on something that's worth 50 cents.
Jon: Actually.
Jon: We've never run us I'll, let Stephen talk about it but let me start out we've never run a CDN.
John W. Allison: We're on strike. [inaudible] I don't know where in the world we're going to get the money, because the Federal Home Loan Bank is not going to lend it to us. So I'm not sure where that goes. We've just taken a path of taking one customer at a time, and the ads that are run by Home BancShares say that we can pay out all uninsured depositors, and I'm very proud of that, and we're not going to get ourselves in a position where we can't do that.
Speaker Change #125: We're on our strength.
Jon: Because.
Speaker Change #129: We're seeing 6% and five <unk> and five seven days and you can borrow money cheaper and that has to buy so my point is there is so many of these banks in trouble.
Speaker Change #126: Having to get the money and particularly might get worse, because when they have to pay back.
Speaker Change #128: Bed program in February March.
Speaker Change #128: I don't know where the world, we're going to get the money because the federal home loan bank is not going alone.
Speaker Change #128: Dollar on something it's worth 50 cents, so I'm not sure where that goes.
John Allison: So I'm not sure where that goes. We've just taken a path of taking one customer at a time, and the ads that are run by Home Bank Shares is that we can pay out all uninsured depositors. I'm very proud of that. We're not going to get ourselves into the decision that we can't do that. So I think that's extremely important. I don't know. We're making a lot of money, but it may be one of the safest financial institutions in the country because of the deposit base that we have. Our people, and on the retail level, know these customers.
Speaker Change #130: We've just taken a path of taking one customer at a time.
Speaker Change #132: And the ads that are run by home Bancshares is that we can pay out all uninsured depositors and I'm very proud of that and we're not going to get ourselves in a position that we can't do that so that Mike.
John W. Allison: So I think that's extremely important. Not only are we making a lot of money, but it may be one of the safest financial institutions in the country because of the deposit base that we have. Our people, and on the retail level, know these customers; it's not hot money; they know it's Mary's and Fred's money, and they're talking to them, and they understand, and we preach it: we're not going to be the highest rate in town; we're not broke.
That's extremely important I don't know were making a lot of money, but it might be one of the cypress financial institutions in the country because of the deposit base that we have so.
Our people and on the retail level now these customers, they're not it's not hot money. They know, it's Mary's and Fred's money and Theyre talking to them and they understand and we preach it we're not going to be the highest rate in time, we're not we're not broke.
Stephen Tipton: It's not hot money. They know it's marries and threads money, and they're talking to them, and they understand, and we preach it. We're not going to be the highest right in town. We're not broke. So many of these banks are in trouble, and they're having to pay up for money. And we're not doing it. It happens right here in our market, and we're not doing it. They know that their money's safe at Home BancShares. So we can pay every uninsured depositor, and I think Stephen and Tracy took a path while back to just one one.
John W. Allison: So many of these banks are in trouble, and they're having to pay money for money, and we're not doing it. It's happening right here in our market, and we're not doing it. They know that their money is safe at Home BancShares, so we can pay every uninsured depositor. And I think Stephen and Tracy took a path a while back to just book one-to-one, working the existing relationships that we have. [inaudible] Recently, I was in North Arkansas here.
Many of these banks are in trouble and they are having to pay up for money and we're not doing it is happening right here in our market and we're not doing it.
Speaker Change #132: They know that Theyre mining site at home Bancshares, so they can pay.
Speaker Change #133: Every uninsured depositor and I'd like to stay even and pricing took a path to fall back to just.
Speaker Change #133: Yes, yes, that's what I was saying.
Stephen Tipton: Yeah, it's going to say, working existing relationships that we have on the deposit and on the one side. We had a municipal relationship up in North Arkansas here recently that took some additional deposits in. We're actually able to reprise right down somewhat as well. And then we have an association banking division that we've had for some time now, and visiting with our president there in the last couple of weeks, I think there's paths of some pretty significant growth over the next year, year and a half as some of the other bigger banks shy away from some portion of that business.
Speaker Change #133: Working existing relationships that we have.
Speaker Change #133: On the deposit.
Speaker Change #133: And the loan side, we had a.
Speaker Change #133: Municipal relationship up and.
Speaker Change #133: North Arkansas here recently.
Speaker Change #133: Some additional.
Stephen Tipton: Transcripts provided by Transcription Outsourcing, LLC. rates down somewhat as well, you know, and then we have an Association Banking & Division that we've had for some time now. With our president there in the last couple of weeks, there's, I think there's a path. That's a pretty significant number. Thank you, growth over the next year, year and a half. The Other Bigger Banks Show, a portion of that. I know I can mention all of them.
Deposits in and we're actually we're able to reprice.
Speaker Change #133: Right down somewhat as well.
Speaker Change #133: And then we have.
In Association banking Division that we've had for some time now.
Speaker Change #134: And visiting with our president there over the last couple of weeks, there's I think there's a path to some pretty significant growth over the next year year and a half as some of the other bigger banks shy away from some portion of that business. So.
John Upstrom: So, you know, I mean, like I mentioned on the alone side, it's just we've got an opportunity as we work through new loan opportunities and see borrowers that have liquidity at other institutions to capitalize on that at the time that we're making the loan. Okay. Good. Thank you for that. And then, yep, yep. And I guess it ties a little bit, and it does tie into the margin. I guess you had a great margin quarter. And I asked you about this last quarter, and you delivered on it. But how do you feel about margin sustainability and maybe the margin trajectory from here?
Speaker Change #134: And then like I mentioned on the loan side. It just we've got an opportunity as we worked through.
Stephen Tipton: New Loan Operator, borrowers that have liquidity at other institutions to capitalize on. Good, thank you for that. Yes, yes. And I guess it ties a little bit, and it does tie into the margin.
Speaker Change #134: New loan opportunities and let's see.
Speaker Change #134: Borrowers that have liquidity at other institutions to capitalize on that at the time, but we're making a loan.
Speaker Change #134: Okay.
Speaker Change #134: Okay.
Speaker Change #135: Thank you for that and then.
Jon Glenn Arfstrom: I guess you had a great margin quarter. And I asked you about this last quarter, and you delivered on it. But how do you feel about margin sustainability and maybe the margin trajectory from here? Well, I don't expect margins to go down. They're all crawling on the table here, but I don't expect margin to go down. I expect margin, you know my thoughts. We ought to expand it a little bit, in my opinion. They are crawling under the table, by the way.
Speaker Change #136: And I guess it ties a little bit and I was talking to the margin I guess, you had a great margin quarter and I asked you about this last quarter and you delivered on it but how do you feel about.
Speaker Change #136: Margin sustainability, and maybe the margin trajectory from here.
John Allison: Well, I don't expect margin to go down. They're all crawling on the table here, but I don't expect margin to go down. I expect margin; you know, my thoughts. We are expanded a little bit, in my opinion. They all crawling on the table. And that's just my thought, you know. We, we, well, why wouldn't it, why shouldn't it change unless we want to change, right? Unless we want to change the rates we're charging, unless we decide to make a change. And at some point in time, we'll do that. You know, we'll, we'll, at some point in time in the future, we'll have a little more rate and we'll go pick up a bunch of businesses with a pre-time and only penalty on it.
Speaker Change #136: Well.
Speaker Change #137: I don't expect margin to go down.
Speaker Change #137: They are all on the table here, but I don't expect margins to go down I expect margin.
Speaker Change #138: We are expanded a little bit in my opinion, they all call a number.
Speaker Change #138: And.
John W. Allison: And that's just my thought, you know; we... Why would it, why should it change? Unless we want to change, right? Unless we want to change the rates we're charging. Unless we decide to make a change. At some point in time, we'll do that, you know. We'll, at some point in time in the future, we'll have a little right, and we'll go pick up a bunch of business, with a prepayment on it, and a penalty on it. That's a thought that we've talked about around here.
Speaker Change #138: That's just my thought we.
Speaker Change #138: Wow.
Speaker Change #139: Why should it change unless we want to change unless we want to change the rates, we are charging unless we decide to.
Speaker Change #139: Mike a challenge and at some point in time, we will do that.
Speaker Change #139: Well at some point in time in the future will have a lower rate and will pick up a bunch of business.
Speaker Change #140: With a prepayment penalty on that.
John Allison: That's a thought that we've talked about around it. We haven't done it. We haven't made that move. But at some point in time, we might, we might look at that. There'll be a time to do that. But facing what we're facing, John, with February and March and the Fed problem coming to an end, you have to think about that some of these people, that's why you're seeing sexism; some of these CDs out here now are over six because they're trying to get that money in, where they get the money to pay off the Fed. And they're just digging a bigger hole, but maybe some of them come around on the M&A side and we can make a traitor too, so I'm going to answer what you're all right.
Speaker Change #140: That's all that we've talked about.
John W. Allison: We haven't done it, we haven't made that move, but at some point in time, we might. We might look at that. There'll be a time to do that, but facing what we're facing, Jon... with February, March and the Fed program coming to an end. You have to think about that. Some of these people, that's why you're seeing sixes on some of these CDs out here now, or over six, because they're trying to get that money where they can get it to pay off the feds.
Speaker Change #140: We haven't done we haven't made that move but at some point in time Matt.
Matt: Look at that there'll be a time to do that.
Matt: But based on what we're facing John with February and March and the fed programs coming to an end.
Speaker Change #142: You had to think about that some of these people thats why youre seeing sexism in some of the Cds out here announced over six because theyre trying to get that money in where they can get the money to pay off the pad.
Jon Glenn Arfstrom: And they're just digging a bigger hole, but maybe some of that will come around on the M&A side, and we can make a trade or two. All right. Thank you, guys. I appreciate it. Yep. Yep. Absolutely. Yep. Absolutely. Thank you very much.
Speaker Change #142: And they're just taking a bigger hole might.
Speaker Change #143: Some of them have come around on the M&A side, and we can make a trade or two so.
Speaker Change #144: Right good answer what Youre alright. Thank you guys I appreciate it yeah, yeah, absolutely yeah, absolutely. Thank you very much.
Unknown Executive: Thank you, Katherine. Appreciate it. Yep. Absolutely. Yep. Absolutely. Thank you very much. Thank you.
Speaker Change #144: Thank you.
Speaker Change #144: Yeah.
Catherine Mealor: Our next question today is from the line of Catherine Mealor of KBW. Catherine, please go ahead. Your line is open. Thanks. Good afternoon. Hi, Katherine. Welcome. Thanks. I just had a follow up on the margin question. Just if we look at loan yield, Stephen, you gave some information on fixed rate loan repricing in the back half of the year, but we saw a really big increase in loan yield this quarter. So was all of that kind of natural. Is there anything kind of, you know, one time within that.
Speaker Change #146: Our next question today is from the line of Catherine Mealor of <unk>. Catherine. Please go ahead. Your line is open.
Jon Glenn Arfstrom: Thank you. Our next question today is from the line of Catherine Mealor of KBW. Catherine, please go ahead. Your line is open. Thanks, good afternoon. Hi Catherine, welcome.
Catherine Fitzhugh Summerson Mealor: Thanks, Good afternoon.
Speaker Change #147: Hi, Catherine welcome.
Catherine Fitzhugh Summerson Mealor: Thanks, I just had a follow up on the margin question. Just if we look at loan yields given you gave some information on fixed rate loan repricing in the back half of the year, but we saw a really big increase in loan yields this quarter. So with all of that kind of Nashville was there anything kind of.
Catherine Fitzhugh Summerson Mealor: Thanks, I just had a follow-up on the margin question. Just if we look at loan yields, Stephen, you gave some information on fixed-rate loan repricing in the back half of the year, but we saw a really big increase in loan yields this quarter. So was all of that kind of natural?
Speaker Change #148: One time within that.
Stephen Tipton: That may have driven that in what kind of maybe we're kind of piece of increase in loan yields would be fair to expect over the next couple of quarters. We did have we had one relationship in the quarter that that repriced. It was probably $175 million or so that we repriced 300 basis points or so, give or take. So that has kind of been out there for the last year or so that we knew was coming. So that that provided a little bit of a little bit of lift. This quarter, but yeah, I mean, we, you know, if I look across on a monthly basis, you know, over the last four months or so, we've seen, you know, the core loan yield, X of income, up six, seven basis points a month, pretty consistently and even into, you know, parts of last year, kind of the same thing.
That may have driven that and what kind of maybe what kind of pace of increase in loan yields would be fair to expect over the next couple of quarters.
Speaker Change #149: We did have we had one relationship in the quarter that that reprice it was.
Catherine Fitzhugh Summerson Mealor: Is there anything kind of, you know, one time within that that may have driven that? And what kind of maybe what kind of pace of increase in loan yields would be fair to expect over the next couple of years? We did have one relationship in the quarter that repriced, probably $175 million or so, we repriced. A little bit of a lift this quarter. But yeah, I mean, we, you know, if I look across on a monthly basis, you know, over the last four months or so, we've seen Core Loan Yield, X of Income. Transcripts provided by Transcription Outsourcing, LLC. 9 Plus, give or take.
Speaker Change #150: $175 million or so that we've repriced.
Speaker Change #150: 300 basis points, or so give or take.
Speaker Change #150: So that was kind of been out there for the last year or so that we knew was coming so that that provided a little bit of.
Speaker Change #150: A little bit of lift this quarter, but yeah I think so.
Speaker Change #150: If I look across on a monthly basis over the last four months or so we've seen.
Speaker Change #150: The core loan yield ex event income up 67 basis points, a month pretty consistently.
And even into parts of last year kind of the same things so.
Stephen Tipton: So, you know, loans that pay off are coming off in a lower yield as the new originations come on. You know, they're either, they're either funding. Out in the future at, you know, nine plus, give or take. So, you know, I think, you know, we should continue to the Johnny's point, and I think it's really relative to what happens on the deposit cost side, but I think we can continue to outpace the increases there with the loan yields. Great.
Speaker Change #150: Loans that pay off are coming off at a lower yield.
Speaker Change #150: New originations come on they're either or either funding out in the future.
Speaker Change #151: Nine plus give or take so I think yes.
Speaker Change #151: We continue to.
Stephen Tipton: This is Johnny's appointment, I think, really relative to what happened. And then just on balances for average earning assets, what would your expectations be for I guess, would you continue to expect a modest rundown in the securities portfolio, and then also on just the liquidity levels, which remain really high? What are your plans?
Speaker Change #151: To John's point, I think it's really relative to what happens on the deposit cost side, but I think we can continue to outpace the increases there.
John: With the loan yields.
John: Great.
Stephen Tipton: I assume plans are to kind of keep that elevated for the rest of this year until we pay off the BDFB early next year, but just kind of curious about excess liquidity. Yeah, that's the plan today, sitting on 900 plus cash or so today with the BTFP program ending in March.
Stephen Tipton: And then just from balances for average earning assets, what would be your expectations for, I guess, would you continue to expect modest rundown in the securities portfolio, and then also on just the liquidity level, which remain really high, you know, what are your plans, plans are to kind of keep that elevated for the rest of this year. So, essentially, until you would be at the BTSB early next year, but just kind of curious on excess liquidity balance. Yeah, that's the plan today. You know, we're sitting on 900 plus million in cash or so today, and with the BTSB program ending in March, we'd plan to carry, you know, this level of cash through to that point to retire it.
Speaker Change #152: And then just one.
Speaker Change #153: <unk> for average, earning assets what would be your expectation for I guess would you continue to expect.
Speaker Change #154: Rundown in the Securities portfolio and then also on just the liquidity levels, which remained really high.
Speaker Change #155: What are your plans.
Speaker Change #156: Plans are to kind of keep that elevated for the rest of this year.
Speaker Change #156: Until <unk>.
Speaker Change #157: Without the BTC early next year, but just kind of curious on excess liquidity on balance.
Speaker Change #156: Yes.
Speaker Change #156: The plan today.
Speaker Change #156: Sitting on 900 plus million in cash or so today and with it.
Speaker Change #156: The <unk> program.
Speaker Change #156: Ending in March with plan to carry this level of cash through to that point to retire it.
Stephen Tipton: And on the securities portfolio, we've really kind of been in mode of letting it run down some and use this to either fund loans or kind of replace any deposit loss, potentially, or that we had in the past. Yeah, that'd be a point where you know, for pledging. and things will need to be mindful of that, but it probably still has some room to come in. But we're looking; if we see something happening, we'll step up. If we see something, it makes some sense for us. We'll buy security. We look at different security; we have bought much, but we looked at one to die.
Stephen Tipton: On the securities portfolio, we've really kind of been in the mode of letting it run down some and using this to either fund loans or kind of replace a deposit. There'll be a point where, you know, for pledging purposes. We're looking. Please clear up the size.
Speaker Change #156: On the securities portfolio, we've really kind of been in.
Speaker Change #156: Mode.
Speaker Change #156: Letting it run down some and use this to either fund loans or kind of a replace.
Speaker Change #156: Deposit loss, particularly or that we had in the past.
Speaker Change #156: There'll be a point, where for pledging purposes, and things will need to be mindful of that but it's probably still.
Speaker Change #156: Has some room to come in.
Speaker Change #158: But we're looking for just wanted to dive.
Speaker Change #158: So if we see something Catherine.
Stephen Tipton: If we see something, Catherine, we'll... We'll step up if we see something that makes some sense for us. We'll buy a security. We looked at, I mean, we're looking at different securities. Haven't bought much, so, but we. We looked at wanting to die. I certainly wanted to die as a child. I don't know what the rights are going to come out on it, the citizens group doing the deal, some of that information. He's looking at her.
Speaker Change #158: We will step up if we see something that makes some sense for us.
Speaker Change #158: We'll buy security we looked at when we're looking at different securities. They haven't bought much so but we were we.
We looked at one to die as anyone today is looking at it.
Stephen Tipton: I said anyone to die is looking at that. I don't know what the rights will come out. The citizens were doing a good bank, not by some of that, if the rights are right. I don't know. He's looking at it, and I didn't hurt back for me. Okay, great, but still not as modest. Is there a size or kind of percentage of every journey assets? You know, you wouldn't want that to fill below. Of the bond book. Oh, the bond book, follow up. I mean, right now, we're just planning on letting it kind of run down.
Speaker Change #158: I don't know I don't know what the rights, we will come out to citizens citizens group doing a deal.
Speaker Change #158: Goodbye.
Speaker Change #158: Some of that if the rates right I don't know he is looking at it and I haven't heard back from them.
Speaker Change #159: Okay great.
Catherine Fitzhugh Summerson Mealor: Great, but it's still modest. Is there a size or kind of percentage of averaging assets that you wouldn't want that to go below? of the Bond book. Oh, Bonpole, Faleo.
Speaker Change #160: But it's still modest modest it is there is there a size or kind of a percentage of average earning assets.
Speaker Change #160: You wouldn't want that to go below.
Speaker Change #161: South of what.
Speaker Change #161: Of the bond book.
Speaker Change #161: Oh bond portfolio.
Speaker Change #161: I mean.
Stephen Tipton: I mean, wait, right now; we are just planning on letting it kind of run down. We may make some CRA purchases here and there. Yeah, Sarah and Bludgey.
Speaker Change #161: Right now, we're just planning on letting that kind of run that we may make some CRA purchases.
Stephen Tipton: We may make some adjustments to our eye purchases, you know, here and there, but when you're pledging... Yeah, sir, I'm pledging. Outside of that, we're just letting it run down. Unless, I mean, we'll pick one off once in a while. We'll find something to get out of balance and get good rights on it. We're getting a reset on some of that right now. We had about, I don't know, we got out of balance back a couple of years ago, and I think we bought about $150 million worth of securities, double-A and triple-A ratings, and they've reached a reset time, so they're going to go down a little bit on this.
Speaker Change #161: Here and there but.
Speaker Change #161: Right.
Speaker Change #161: Pledging.
Speaker Change #162: Yes, Sir I pledge outside of that.
Stephen Tipton: That's how that would've gone, wouldn't it? Unless, I mean, we pick one off once in a while. We'll find something; something gets out of balance, and we get a good race on it. We're getting a reset on some of that right now. We had about, I don't know, we'd got out of balance back a couple years ago, and I think we bought $150 million worth of transcripts, transcripts provided by Transcription Outsourcing, LLC. So some of that we kept, and some of that we took to cast.
Speaker Change #162: Run day.
Speaker Change #164: Unless it I mean, it looks like the one off once in a while we'll find something gets out of balance we get good rates.
Speaker Change #162: We're getting a reset on some of that right now we had about I don't know.
Speaker Change #162: Got out of balance back a couple of years ago, and I think we bought back $150 million six.
Speaker Change #163: Securities dominated triple bodies.
It's reset time, so they're going to go down a little bit on us.
Stephen Tipton: So some of that we kept, and some of that we took the cash. That makes sense.
Speaker Change #163: So some of that we tap and some of that we took today.
Speaker Change #167: That makes sense alright, great great quarter. Thank you.
Unknown Executive: Great, great quarter. Thank you. Appreciate it.
Thank you appreciate it.
Speaker Change #163: Yes.
Matt Oldman: Our next question today is from the line of Matt Oldman of Stevens. Please go ahead. Your line is now open. Hey, thanks. Good afternoon. I wanted to follow up on John and Catherine's question on the margin. We're going to kind of walk through the margin into next year, and we'll see some lower interest rates. I'm curious kind of what you think the banks, you know, the reaction would be to lower rates. And looking at the sensitivity and the exposure, it looks like the bank is still as sensitive, but I know these are just models. I'm just kind of looking for some color on what the margin could look like at the same order cut a few times next year.
Speaker Change #168: Our next question today is from the line of Matt Olney of Stephens. Please go ahead. Your line is now open.
Stephen Tipton: All right. Great quarter. Thank you. Appreciate it. Our next question today is from the line of Matt Olney of Stephens. Please go ahead. Your line is now open.
Matthew Covington Olney: Hey, thanks. Good afternoon. I wanted to follow up on John and Catherine's question on the margin. We're going to kind of walk through the margin into next year, and we're going to see some lower interest rates. I'm curious kind of what you think the bank's reaction would be to lower rates. And looking at the sensitivity and the disclosures, it looks like the bank is still asset-sensitive, but I know these are just models, so just kind of looking for some color on what the margin could look like if they were to cut a few times next year.
Matthew Covington Olney: Hi, Thanks, Good afternoon, I wanted to follow up on John and Catherine's question on the margin.
Speaker Change #166: I'll kind of walk through the margin into next year.
Matthew Covington Olney: We're seeing some lower interest rates I'm curious kind of what you think the banks.
The reaction would be to the lower rates and looking at the.
Matthew Covington Olney: Activity in the disclosures it looks like the bank is still asset sensitive, but I know these are just model. So just kind of looking for some color on what the margin could look like if they were to kind of few times next year. Thanks.
Stephen Tipton: Thanks. Hey, Matt. Stephen. Yeah, I think from a modeling standpoint, I think we show, you know, down four or five percent in a down 100 right scenario. You know, that's what the model shows. I mean, the conversation we've had around here just are around how aggressive we can be from a deposited standpoint. We've got five billion, give or take, in variable rate loans, you know, that adjust and within a quarter time. But we've got 11 plus billion and an interest bearing checking and savings, and a billion seven and CDs that will reprise over time. So I think some of that's a function of how aggressive we can get, what happens with the market, and how other banks, you know, may follow potentially on the deposit.
Matthew Covington Olney: Hey, Matt to Steven Yes, I think from a modeling stand from a modeling standpoint, I think we show.
Matthew Covington Olney: Thanks. Hey Matt, yeah, I think from a modeling standpoint, I think we showed you know, down 4 or 5% in a down 100 rate scenario, you know, that's what the model shows. And the conversations we've had around here just are around how http://TheBusinessProfessor.com calls it five billion, give or take in variable rate loans. 11 plus billion, for checking and say. Billion7, Reprice Over Time.
Matthew Covington Olney: Down four 5% down 100 rate scenario, that's what the model shows a map of the conversation we've had around here just.
Speaker Change #171: And how aggressive we can be.
Speaker Change #169: From a deposit beta standpoint, we've got.
Speaker Change #170: Call it $5 billion give or take in variable rate loans.
Speaker Change #170: That adjust in within a quarter's time, but we've got.
11, plus billion in interest bearing checking and savings.
Speaker Change #170: Seven in Cds that will reprice over time, so I think some of that's a function of how aggressive we can get what happens with the market.
Stephen Tipton: So I think some of that is the function of how aggressive we can get, what happens with the market, and how, you know, may follow potentially on the, uh, you know, deposit. We were just talking with one of our regional presidents this morning. He's looking at his maturing.
Speaker Change #170: And how other banks may follow up potentially on the on the.
Deposit pricing out there what adds and those types of things that we're able to run with but just talking with one of our regional presidents. This morning.
Stephen Tipton: and the pricing out there, what ads and those type of things that we're able to run with. But just talking with one of our regional presidents this morning, and he was looking at his maturing CD fully over the next couple of months, and thinks he has some room even right now absent, you know, any rate, rate increase yet to be able to lower some of those secrets as they come through. So I think it predicate a lot on that. And then we've got a decent sized book of index. Next deposits, municipal deposits that are tied to, generally tied to the, to the 13 week T-bill that, you know, will move when there's some, some conviction around interest rates.
Speaker Change #172: Yes. He was looking at is maturing CD portfolio over the next couple of months. Thanks.
Stephen Tipton: Portfolio over the next couple months, and thanks he has it right now. Great, great increase yet to be able to lower some of those. I think it predicates a lot.
Speaker Change #173: He has some room, even right now absent.
Speaker Change #173: Any rate increase yet to be able to lower some of those things as they come through so it predicates.
Speaker Change #173: Predicates a lot on that and then we've got.
Stephen Tipton: And then we've got, you know, a decent-sized book of, Generally Todd. 13-Week Tee Bill that, you know, we'll move. Having said all that, we're going to try to maintain or increase margin or increase it. Get me a bullwhip. Yeah, man. I believe it. I wouldn't doubt it.
Speaker Change #173: Decent size book of Index.
Deposits municipal deposits that are tied to.
Speaker Change #173: Generally tied to the to the 13 week T Bill that.
Speaker Change #174: We will move when its there is some.
Speaker Change #174: Some conviction around interest rates.
Stephen Tipton: Having said all that, we're going to try to maintain marginal or increase it, get me a little bit. Yeah, man, I'll get. I believe it. I wouldn't, I wouldn't that it.
Speaker Change #174: Having said all that we're going to try to maintain margins are increasing.
Speaker Change #175: Give me a bowl with yeah, Matt again.
Matthew Covington Olney: Give me a call.
Speaker Change #176: I believe I wouldn't I wouldn't doubt it.
Speaker Change #176: Yeah.
Matthew Covington Olney: [inaudible] I guess just changing gears, going back to the stock repurchase program, you mentioned it was active in 2Q, and now the stock is quite a bit above kind of those average levels in 2Q. Curious kind of what the appetite is at these current levels for buybacks and given the M&A thoughts you mentioned before about some kind of fertile market in the next year, should we assume the capital levels just continue to build in the back half of the year? I think that's correct.
John Allison: I guess just changing gears, going back to the stock purchase program, you mentioned it was active in two Q. And now the stock is quite a bit above kind of those average levels in two Q. Curious kind of what the appetite is at these current levels of the buyback and given the NBA thoughts you mentioned before about some, you know, kind of a fertile market in the next year. Should we assume the capital levels just continue to build here the back after here. Yeah, I think that's correct, but we never get out of, we're always in the market fast off, you know, maybe the blocks, maybe some blocks that come around, but we're always in the market to buy stock.
Speaker Change #177: I guess, just changing gears going back to the stock repurchase program. You mentioned it was active in <unk> and now <unk>.
Speaker Change #177: Talk us quite a bit above kind of above average levels and.
Speaker Change #178: <unk> curious kind of what the appetite is at these current levels of the buyback.
Speaker Change #179: Given the M&A thoughts you mentioned before about some.
Speaker Change #179: You know kind of a fertile market in the next year.
Speaker Change #180: Should we assume the capital levels continue to build here in the back half of the year.
Speaker Change #181: Yes, that's correct.
John W. Allison: But what we never get out of, we're always in the market to buy stock. You know, maybe there'll be some blocks, maybe some blocks that come around, but we're always in the market to buy stock. I recognize that Brian Davis says that's diluted for us, and he said, you always fight and say you're not going to dilute, and then you dilute yourself by buying stock. I think we'll probably, I think our board will probably look at a dividend increase tomorrow and, hopefully, that it's time for that. We had some people ask us last time, why didn't we do that?
Speaker Change #182: We never get out of it we're always in the market fast stop.
Speaker Change #182: But at least some blocks that come around but we're always in the market to buy stock and.
John Allison: And I recognize Brian Brown Davis says that's diluted to us, and he said, you always fight and say you're not going to dilute, and then you dilute yourself by that start with. I think we'll probably, I think I'm going to probably look at a dividend increase tomorrow. And hopefully that I think it's time for that. We had some people ask us last time why didn't we do that. And I was just a little nervous about what this year was going to be. I mean, it's been kind of everything's been a little squirrelly around the economy, but it appears to be settled down somewhat, particularly for us.
Speaker Change #182: I recognize Bryan Bryan Davis.
Brian S. Davis: Diluted to US. He said you always flat so youre not going to look and then you dilute yourself by buying stock.
Speaker Change #184: I think we will probably I think our board will probably look at a dividend increase tomorrow.
And hopefully that.
Speaker Change #184: It's time for that.
Speaker Change #184: People ask us last time and why did we do that.
Speaker Change #184: And that was just a little nervous about what was what this year was going to be I mean, it's been counted.
John W. Allison: And I was just a little nervous about what this year was going to be like. I mean, it's been kind of. Things have been a little squirrely around the economy, but it appears to be settling down somewhat, particularly for us. Things have settled down. And we've got a run rate out here that's really running well. So I think we're going to be all right for a while. And when they start moving rates up and down, someone said, "What do you want to happen?" I said, as far as I'm concerned, they leave things just like they are. Just don't mess with anything, because it's idiotic.
Speaker Change #184: It's been a little squirrelly around the economy, but it appears to be settled down somewhat particularly for US things are settled down and we got a run rate out here, that's really running good so I think.
John Allison: Things are settled down. And we got a run right out here that's really running good. So I think I think we're going to be all right for a while. And when they start moving right up and down, someone said, "What do you want to happen?" As far as I'm certainly leaving things, just like they are, just don't mess with anything, because it's it, it is. It's very nice to see what we're doing. And when you look at that daily report and it continues to improve over the same day last month, you just get a smile on your face.
Speaker Change #184: I think we're going to be all right for a while and when they start moving rates up and down somewhere to what do you want to happen as far as I can certainly leave things just like they are.
Speaker Change #185: Don't mess with anything because idiots.
John W. Allison: It's very nice to see what we're doing. And when you look at that daily report, and it continues to improve over the same day last month, you just get a smile on your face. Yeah. Okay. All right, guys. Thanks for my question.
Speaker Change #186: Very nice to see what we're doing and when you look at that Daily report and it continues to improve over the same day last month, you just get a smile on your face.
Speaker Change #187: Yes, okay.
Brian Martin: Yeah, okay. All right, guys. Thanks for my question. Great quarter. Appreciate it. Thank you.
Okay.
Speaker Change #188: Alright, guys. Thanks, taking my question great quarter.
Speaker Change #189: Great appreciate it thank you.
Matthew Covington Olney: Great quarter. Appreciate it. Thank you. Our next question today is from the line of Brian Martin of Channing Montgomery. Please go ahead. Your line is now open.
Brian Martin: Our next question today is from the line of Brian Martin of Channing Montgomery. Please go ahead. Your line is now open. Hey, good afternoon. Hey, Brian, say, just, hey, just maybe one, one question on the expenses. It sounds like they're, you know, a pretty good level, but Johnny, you mentioned some, you know, potential, you know, maybe I don't say pressure, but some, some things out of your control. I mean, I guess the expenses given what you've done, you know, I guess the outlook is maybe there's kind of sustainable around this level or there, you know, other things to think about as far as that drifting a bit higher.
Our next question today is from the line of Brian Martin of Janney Montgomery. Please go ahead. Your line is now open.
Brian Joseph Martin: Hey, good afternoon.
Brian Joseph Martin: Hey, good afternoon. Hey, Brian. Say just, hey, just maybe one question on the expenses. It sounds like they're, you know, pretty good level.
Okay.
Speaker Change #191: Hey, Brian.
Brian: Hey, just maybe one quick question on the expenses it sounds like they're pretty good level, but Johnny you mentioned some potential maybe I don't know say pressure, but some some things out of your control I mean, I guess the expenses given what you've done I guess the outlook, maybe kind of a sustainable around this level or are there other things to think about it as far as that drifting.
Brian Joseph Martin: But Johnny, you mentioned some, you know, potential, you know, maybe I don't want to say pressure, but some, some things out of your control. I mean, I guess the expenses given what you've done, you know, I guess the outlook is maybe there's kind of sustainable around this level. Are there, you know, other things to think about as far as that drifting a bit higher? Well, we made a pretty good cut here. We still are not where we were before that. We run a 42, run a 42 this month adjusted, once you adjust for that 2 million. Do all the adjustments. RONCON.
John W. Allison: A bit higher.
John Allison: Well, well, you know, we made a pretty good cut here. We still are not where we were before that, you know, we're, we're, we're around a 42, we're around a 42 this month, adjusted once you adjust for that, took me to do all of just our went on. That's pretty good. Can we improve that? We can't if we have to. I think, I think we need to hang in this 111 number. So hopefully we can hang into that 111. If we see it going up over that, we're trying to make corrections. Gotcha. Okay.
John W. Allison: Well.
We made a pretty good cut here.
John W. Allison: Still are not where we were before that.
John W. Allison: We ran a 40 to <unk>.
John W. Allison: <unk> 42 this month adjusted once you adjust for that $2 million.
All adjustments are wind com.
John W. Allison: That's pretty good.
John W. Allison: That's pretty good. Can we improve that? We can if we have to. I think I think we need to hang in there. 111 is my number.
John W. Allison: Can we improve that we can if we have to I think I think we need to hang in this 100 leveraged my number so hopefully we can hang into that 111.
John W. Allison: So hopefully, we can hang into that 111. If we see it going up over that, we'll try to make corrections. And I've just got my notepad, and I'm running, playing with my numbers.
We don't want to over that we've tried to make corrections.
Speaker Change #192: Got you Okay. That's helpful and then 800 linear.
Kevin Hester: 111. When I'm sitting at home and I'm just got my notepad and I'm running, playing with my numbers, 111's my number. Gotcha. Okay. In the, in, you know, I guess if you the payoffs, it sounds like, you talked about CFG having some, you know, payoffs in the second half. I guess there's a third quarter. Or is it just really 300 million? Is that kind you think in the second half of the year was that the third quarter type of number?
Speaker Change #192: When I'm sitting at home and I am just got my Notepad and I'm running plan with my numbers 100, Elevens My number.
John W. Allison: 111's my number, gotcha okay in the in you know I guess if you the payoffs it sounds like is it you talked about CFG having some you know payoffs in the second half I guess there's a third quarter is it just the really it's 300 million is that kind of what you're thinking the second half of the year is that the third quarter type of number, Hey Brian, this is Kevin. I'm going to let Chris cover that if that's okay. Yeah, yeah, sure. Hey, Brian.
Speaker Change #193: Gotcha Okay.
Speaker Change #193: And I guess, if the payoffs it sounds like.
Speaker Change #194: Is it you talked about CFT, having some.
Speaker Change #195: Payoffs in the second half I guess, there's a third quarter or is it just really a $300 million is that kind of if you think in the second half of the year or is that a third quarter type of number.
Speaker Change #194: Yeah.
Speaker Change #194: Hey.
Kevin Hester: Hey, hey, Brian. This guy, I'm all at Chris covered at it. It's, it's okay. Yeah. Sure.
Kevin: Hey, Brian This is Kevin I'll, let Chris Kimberly.
Speaker Change #196: If that's okay.
Ken: Yes, yes sure Ken.
Brian Joseph Martin: Yeah, that's kind of my number for the third quarter. I mean, some of that might slip to the fourth quarter. We already had a little bit of that, you know, this month and so forth. So I think that's a third quarter number. Again, some might flip to the fourth quarter, and then, you know, we'll have a little bit more in the fourth quarter. We didn't have a lot so far this year because we didn't have a lot scheduled.
Kevin Hester: Hi, Brian. Yeah. That's, that's kind of my number for the, for the third quarter. I mean, some of that might slip to the fourth quarter. We already had a little bit of that. You know, this month and, and such. So I think that's that's the third quarter number. Again, some might slip to the fourth quarter and then, you know, have a little bit more in the fourth quarter. We didn't have a lot so far. This year, because we didn't have a lot scheduled to, but I think Johnny mentioned earlier, you know, I like payoff. And we make the loan with intention to get repaid.
Speaker Change #198: Hi, Brian Yeah, that's kind of like number for the through the third quarter I mean, some of that might slip to the fourth quarter, we already had a little bit of that.
Speaker Change #198: This month and and such so I think that.
That's the third quarter number against that might slip to the fourth quarter, and then that will have a little bit more in the fourth quarter. We didn't have a lot. So far this year.
Speaker Change #198: Because we didn't have a lot scheduled to.
But I think Johnny mentioned earlier, you know I like pay off.
Christopher C. Poulton: But I think Johnny mentioned earlier, you know, I like to pay it off, and we make the loan with the intention of getting repaid. So when that happens, we don't tend to celebrate when we make the loan; we tend to celebrate when we get paid off. So I'll probably be celebrating a lot in the third quarter.
And we make the loan with the intention to get repaid so when that happens.
Kevin Hester: So when that happens, we tend to not celebrate when we make the loan; we tend to celebrate when we get paid off. So I'll probably celebrate in a lot of the third quarter. Okay. Good to hear. You know, I guess, in Johnny, I guess, your point about potentially lowering, you know, maybe loan yields. If not, I guess, are you getting any pushback today? I think he said that the yield was nine in a quarter. Maybe that was, maybe I missed that, but on new originations. You know, you're getting any pushback on that, such that if you start getting a few payoffs, just to kind of overcome those.
We tend to not celebrate when we make the loan we tend to celebrate when we get paid off or probably celebrating a lot in the third quarter.
Speaker Change #198: Okay.
Brian Joseph Martin: Okay, good to hear. You know, I guess Johnny, to your point about potentially lowering, you know, maybe loan yields, if not, I guess, are you getting any pushback today? I mean, I think you said that the yield was nine and a quarter, or maybe if that was, I missed that.
Speaker Change #199: Good to hear.
Speaker Change #199: Yes.
Brian Joseph Martin: But on new originations, are you getting any pushback on that such that if you start getting a few payoffs, just to kind of overcome those, you get a bit more volume? Or I guess, you know, I know some of that. You know, if you have M&A opportunities, you may push it back a bit. But is that that part of it here with some payoffs coming that, you know, these guys are trying to think about? and Maintaining the Origination.
John W. Allison: And Johnny I guess to your point about potentially lowering maybe loan yields at that I mean, I guess are you getting any pushback today and I think he said that the yield was nine in the quarter and maybe if that was maybe I missed that but on new originations.
Speaker Change #200: Getting any pushback on that such that if you start getting a few payoffs just to kind of overcome those.
Kevin Hester: You get a bit more volume, or I guess, you know, I know some of that, you know, if you have M and A opportunities, you may push it back a bit. But is that part of it here with some payoffs coming that, you know, they're trying to think about maintaining the originations? Well, this Kevin, I'll just say, yeah, we always get pushback registrates, but that's we ask our folks to do the best they do and because that they're going to get pushed back. You know, I definitely will say that. You know, Johnny mentioned lowering rates, and that's not something we're necessarily looking toward.
Speaker Change #201: You get a bit more volume or I guess I know some of that.
If you have M&A opportunities.
Speaker Change #202: They pushed it back a bit but is that part of it here with some payoffs coming that he's trying to think about.
Speaker Change #202: Maintaining the originations.
Speaker Change #202: Well this is Kevin I will just say.
Kevin D. Hester: Well, this is Kevin. I'll just say. Yeah, we always get pushed back to register. We ask our folks to do the best they can do, and because of that, they're going to get pushed back. You know, definitely will say that. You know, Johnny mentioned lowering rates, and that's not something we're necessarily looking for. I think what he was saying is that if there's an opportunity out there that we really feel like is a very good credit opportunity that requires us to lower a rate to get it, we have the ability to do that if we choose to do it.
Speaker Change #202: Yeah, we always get pushback register rates.
Speaker Change #202: We ask our folks because you have to do the best I can do and because of that they're going to get pushed back.
Speaker Change #202: Yes.
Speaker Change #202: Definitely we'll say that.
Speaker Change #202: Johnny mentioned lowering rates from them, but that's not something we're necessarily looking toward I think what he was saying is that if there is an opportunity out there that were really feel like is a very good credit opportunity that requires us to.
Brian Martin: I think what he was saying is that if there's an opportunity out there that we really feel like is a very good credit opportunity that requires us to lower a rate to get it, we have the ability to do that if we choose to do it. That's not an error. or something we've done a lot, and we wouldn't do a lot of it, but in the right situations to get a customer we really wanted to do something, maybe non-CRE that doesn't impact the concentration levels, then we certainly have the ability to. Got you, okay, alright, yeah I just want to make sure I understand. It seems like there's an opportunity, you know, at least on the M&A side, and you know we'll see how the loan volumes hold up here. But it sounds like the originations are still, you know, the opportunities are still there, so you know they'll be ten consider that. So, alright, that's all I had, guys. The other stuff was answered, thank you.
John W. Allison: The lower rate to get it we have the ability to do that if we choose to do it.
Kevin D. Hester: We that's not in our, you know, something we've done a lot, and we wouldn't do a lot of it, but in the right situations to get a customer we really want or to do something, you know, maybe non-CRE that doesn't doesn't impact the concentration levels, then, you know, we certainly have the ability.
John W. Allison: That's not.
John W. Allison: It's something we've done a lot and we wouldn't do a lot of it but in the right situations to get a customer we really want to be.
John W. Allison: To do something.
John W. Allison: Maybe non CRE that.
John W. Allison: It doesn't impact the concentration levels, then we certainly have the ability to do it.
Speaker Change #203: Got you okay.
Brian Joseph Martin: Got you, okay. All right, yeah. It seems like there's an opportunity, you know, at least on the M&A side, and, you know, we'll see how the loan volumes hold up here, but it sounds like the originations are still, you know, the opportunities are still there.
Speaker Change #203: Alright.
Speaker Change #203: To make sure I understand it seems like Theres, an opportunity at least on the on the M&A side, and we'll see how the loan volumes hold up here, but it sounds like the originations are still the opportunities are still there so.
Brian Joseph Martin: So, you know, there'll be time to consider that. So, all right, that's all I had, guys. The other stuff was answered. Thank you. Thank you very much. Appreciate it. With no further questions in the queue at this time, I would like to hand the call back to John Allison to conclude. Okay, back to me. Thank you. It was. It was a great quarter. Home's running very smoothly right now,
Speaker Change #204: There'll be time to consider that so alright, that's all I had guys. They stuff was answered. Thank you very much appreciate it.
John Allison: Thank you very much for sharing it. With no further questions in the queue at this time, I would like to hand the call back to John Allison to conclude. Okay, back to me. Thank you. It was a great quarter, and Home Zone Homes is running very smooth right now, so I want to thank everybody for their efforts and what they've done. We'll talk to you here in the next quarter, and I hope the next quarter is as good or better than the one we've just completed.
Speaker Change #204: With no further questions in the queue at this time I would like to hand, the call back to John Allison to conclude.
Speaker Change #203: Okay.
John W. Allison: Okay back to me.
John W. Allison: Thank you.
Uh huh.
Speaker Change #205: It was a great quarter.
Speaker Change #205: Homes on homes running very smoothly right now so.
John W. Allison: I want to thank everybody for their efforts and what they've done. We'll talk to you here in the next quarter, and I hope the next quarter is as good or better than the one we've just completed. Thank you very much. This concludes today's conference call. Thank you all for joining. You may now disconnect your lines.
Speaker Change #207: I want to thank everybody for their efforts and what they've done.
Speaker Change #205: We will we will talk to you here in.
Speaker Change #205: The next quarter and I hope the next quarter is as good or better than the one we've just completed.
Unknown Executive: Thank you very much. This concludes today's conference call. Thank you all for joining. You may now disconnect your lines.
Speaker Change #205: Thank you very much.
Speaker Change #206: This concludes today's conference call. Thank you all for joining you may now disconnect your lines.
Speaker Change #205: [music].