Q3 2024 Home Bancshares Inc (Conway AR) Earnings Call

Greetings ladies and gentlemen, welcome to the Home Bank Shares Incorporated 3rd quarter of 2024 earnings call. purpose of this call is to discuss the information and data provided in the course of the earnings release issue after the market closed yesterday. The company presenters will begin with prepared remarks then entertain questions.

Unknown Executive: in 2024 Earnings Call. The purpose of this call is to discuss the information and data provided in the course of the earnings release issue after the market close yesterday. The company presenters will begin with prepared remarks, then entertain questions.

Unknown Executive: 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 to remove yourself from the list.

Speaker Change: Please note that if you'd like to ask a question during the question and answer session, please press star then one on a touch phone. If you decide you want to withdraw your question, please press star then 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 on page three 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 notes regarding Ford-looking statements. You will find this on page 3 of their Form 10K filled Piled with the SEC in February 2024.

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

Speaker Change: At this time, all participants are in a listen-only mode, and this conference is being recorded. If you need operator assistance during the conference, please press star then zero. It is now my pleasure to turn the call of the Donna Townsell Director of Investor Relations.

Donna Townsell: It is now my pleasure to turn the call after Donna Townsell, director of investor relations. Thank you.

John Allison: Good afternoon, and welcome to our third quarter conference call. With me for today's discussion is our chairman, Jon Allison, Stephen Tipton, Chief Executive Officer of Centennial Bank.

Donna Townsell: Thank you. Good afternoon and welcome to our third quarter conference call. With me for today's discussion is our Chairman John Allison. Stephen Tipton, Chief Executive Officer of Centennial Bank.

Unknown Executive: Kevin Hester, President and Chief Lending Officer; Brian Davis, Chief Financial Officer; Tracy French, Chairman and Chairman of Centennial Bank; Chris Poulton, President of CCFG; and John Marshall, President of Shore Premier Finance.

Donna Townsell: Kevin Hester, President and Chief Landing Officer, Brian Davis, our Chief Financial Officer, Tracy French, Chairman and Chairman of Centennial Bank, Chris Poulton, President of CCFG 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, Jon Allison. Thank you, Donna. Welcome, everyone. Welcome to Home Bank, Chair's third quarter 2020 Orange Releasing Conference Call. You company had another great quarter. The quarter was very strong and would have done this is one of the best effort.

Donna Townsell: To open our discussion on the quarter today, we will begin with some remarks from our chairman, John Allison.

John Allison: Thank you, Donna. Welcome everyone. Welcome to Home Bank Chair's third quarter of 2020's full orange releasing conference call.

Speaker Change: You can't really have another great corner.

John Allison: That was until the last few days of September, when the first to tune disaster's hurricane to the swap across Florida, where home has a little over $1 billion in customer loans. We felt it is prudent to move into hurricane mode as we have in past years, when weather events affected the area where we did considerable business. Some of our customers are still involved in litigation over the claims from the last hurricane. We closed the books for the end of the first quarter after the first hurricane, when it was our investment that we made we thought was reasonable, and then here comes Milton number two, hurricane.

John Allison: The quarter was very strong and what up then, is one of the best effort that was until the last few days of September, when the first and two disaster's hurricane to the swamp across Florida, will home have a little over $1 billion in customer loans.

John Allison: We felt his freedom to move into Harkin' mode as we have in past years when weather events affected area, where we did considerable business. Some of our customers are still involved in litigation over the claims from the last hurricane.

John Allison: When close the books were the end of the first quarter after the first hurricane when it was our investment that we made, we thought was reasonable and then here comes Milton number two, Hurricane, and by the way in two weeks.

John Allison: And by the way, in two weeks, we're always trying to get out in front of situations that might affect our earnings or our company in any way. We've dealt with these events over many years. We even have hurricane procedures, and we've practiced for years. That includes phallot phones, electric generators, 1,800 wellness check-in number for employees, customer extensions, and the reality of losses. We would infer to have 5% plus reserve for the main area of the storm. We already had a reserve of 2% for the area, and we're optimistic that we may not need over an additional 3%.

John Allison: We're always trying to get out in front of situations that may affect our earnings or our company in any way

John Allison: We've dealt with these events over many years. We even have hurricane procedures and we've practiced for years that includes satellite phones, electric generators, 1,800 wellness check-in members for employees, customer extensions, and the reality of losses.

John Allison: We referred to have 5% plus reserve for the main areas of the storm. We already had reserve at 10% for the area, and we're optimistic that we might not need over an additional 3%

John Allison: Failure's crossed. As a result of our needed reserve, we will hopefully be in the $20 million or less lines. Please don't hold me that escalated because it's early, and it's a fluid situation. We'll keep you updated as we hear more information, and I would expect it for all of us to improve. And by the way, Kevin updated me. It's not only the hurricane; it spun up around tornadoes out of that. And our orange grows that we've had for years, sent some pictures of some of these orange trees that were damaged, so we don't know the extent of that as of yet.

Speaker Change: Fader Frost, as a result, by a native desire, we will hopefully be in the $20 million less ones. Please don't hold me that effort with the Coliseus, it's early, and it's a blue situation.

Speaker Change: We'll keep you updated as we hear more information and I will expect it to all of their for most of the, by the way, Kevin updated me. It's not only the hurricane, it spun up a little tornado without fatt of that, and our orange grow that we've had for years, sent some pictures about some of this orange trees that were damaged, so we don't know the extent of that as of yet.

John Allison: As the quarter was coming to an end, I was very pleased with the results I was seeing. But you and all this were nicely above forecast, and September's data report was also running ahead. I was expecting 55 to 56 cents for the quarter. One should never count his money until all the haze in the barn. I knew better, but things were running pretty smooth. So I made them fake and counted the money. We reported a 1.74 return on asset. And without the $16.7 million reserve, our income would have been 112 million 578. That's an annualized income for the company of over $450 million in our way of 1.96.

Speaker Change: As the court was coming to an end, I was very pleased with the results I was saying with you and all this, we're not actually above-worked and September's day to report, we're also running ahead. I was expecting 55 to 56 cents for the court.

Speaker Change: Once you've never kept this money until all the highs in the barn, I'm new better, but thanks for running for this smooth, so I'm making the stock and cam in the money. We're reported at 1.74, return on asset, our way.

Speaker Change: and without the 16.7 million dollar reserve, our end count would have been 112 million five-seven-eight.

Speaker Change: At an annualized anytime for the company of over $415 million in an hour away of $1.96. You can see miles excited and then bam, here's the hurricane. A little disappointing, but as always, we did work for the best interest of our shareholders' period.

John Allison: You can see why I was excited. And then bam, here's the hurricane. A little disappointing, but as always, we did what's in the best interest of our shareholders. Period. Well, here's the numbers, and I think you'll agree with me. It was a good quarter X hurricane. Total revenue was $258 million. I didn't check, but that may be a world record brand. Is that a top number? It is on core earnings. We had one quarter about two years ago. We had a $15 million win ball. That would be slightly harder on core earnings. That is a record.

Speaker Change: Well, here's the number that I think you'll agree with me. It was a good quarter at Hurricane. Tell Revenue was 258 million. I didn't check.

Speaker Change: but that may be a world record brand and then it's a top number, it is on core earnings, we have one quarter about.

Speaker Change: Two years ago, we had a 15 million armament ball, not at least slightly hard, but on cornings that isn't correct. Okay, well, I think that, on cornings, that was the best ever, so that's good. TPNR was 148 million, pre-taxed pre-provision that income.

John Allison: Okay. Well, that's the core earnings. That was the best ever. So that's good. PPNR was $148 million, pre-tax, pre-provisioned that income. When you think about that, you put an hour away to that. That's $2.57. That's pretty impressive. We played with some numbers. I saw some analysts that Catherine sent out using that number. And so I put it in, it's $2.57 million. When you think about that, that's $57.36 million. The number of percent of total revenue goes to pre-tax, pre-provisioned. That might be another world record. I don't know.

Speaker Change: When you think about that, you put it in our way to that. That's 2.57. That's pretty impressive. We played with a number of ourselves and analysts.

Speaker Change: that Catherine sent out using that number. And so I put it in, it's 2.57 for her. When you think about that, that's 57.36% of total revenue goes to pre-tax pre-provision. That might be another world record. I don't know.

John Allison: Steven will cover the numbers more specifically, but I'll just kind of take a broad brush to it. Margin was up for the quarter; yellow loans improved quarter over quarter. After spreading the profits, had a slight increase just to take. Non-interest expense for the third quarter or 24 was $110 million versus the second quarter or 24 at $113 million. And the same quarter last year was $114.7. Much improved. The efficiency ratio of $41.42, also good improvement. Non-performing spend as we continue to work through the Texas credits. We told you about the resolution of those credits will hopefully be resolved either in this quarter or the first quarter of 25.

Speaker Change: state would pa the numers more specifically even obgaddress to kind of take a broad grush to it margin that for the quarter the one loans improved courarter over court after sping deposits had a sflat in per it to take nineon interests expense for the third quarter of twenty four was one hundred ten million dollars versus a second quarter or twenty four and hundred thirteen million and the second quarter last year was one hundred and fourteen point seven much improveved patiency r show forty one point four to also good improvement

Speaker Change: Non-performing SPAC as we continue to work through the Texas credits, we told you about the resolution of those credits will hopefully be resolved either in this quarter or the first quarter of 25. Because by strong balance sheet, we're able to take a time and work through several of these credits, reducing the loss exposure versus having a sale that has fed immediately. That may have resulted in much bigger losses. Stay tuned, Kevin will talk more about that in the report.

Speaker Change: Strong Captain Rose Show, I thought we're going to catch Jamie Diamond with Denden. We're 14, 47 for E.T.1, and he jumped on me. He was at 14, 47, and he jumped to 15, 43.

John Allison: I think he's a pretty graduate. The loan losses are standard to 2.11. Times will look for the third quarter or 24 was $12.67 versus $10.90 for the third quarter or 23. That's a $1.77 improvement year. We used it. $1.77 of that came from ALCI and the Dollar Tate from the Tain Army. We earned $100 million and 50 cents a share act reserved for the third quarter. So for the first recorders worth $3.16 or $1.51 for share through the first nine months. Loans continued to grow in our legacy footprint, $131.6 million increase, while CCFG and 89.1 decline in balances; they still remain with $2 billion in outstanding loans.

Speaker Change: I thank you for flying, we're after it.

Speaker Change: The load of officers are standing at 2.1-1, times will look for the third quarter 24, was $12.67 versus $10.90 for the third quarter 23. At the buck 77 improvement year or year, 77 cents of that came from AOCI and the dollar paid from the tiny earnings.

Speaker Change: We earned $100 million and 50 cents a share act to reserve for the third court.

Speaker Change: So, for the first three quarters, we're 31 sets, or a dollar fifty one for share to the first nine of us.

Speaker Change: Loans continue to grow in our legacy footprint, 131.6 million entries, while CCFG, at 89.1, the climb in balances, they still remain with two billion dollars of outstanding loans.

John Allison: We were disappointed last year by missing our goal with $400 million. Do the circumstances are outside our control if you remember that being an attainment to the Fed for the Fed box plus the damage for the West Texas headwinds. The Fed also charged us with an additional assessment this year of approximately $2.3 million that we overcame early in the year. But the hurricane reserve could cause us to miss for the year; hopefully not.

Speaker Change: We were disappointed last year by missing our goal of 400 million. Those circumstances are outside our control. Do you remember that being an assignment to the fans of the failbox plus the damage to the less Texas headlands?

Speaker Change: The fan also charted us with an additional assessment this year of approximately 2.3 million that we all retain early in the year. But to her, preserve, and causes the midst of the year, hopefully not. All in 24 shaping up to be a good year at her again.

John Allison: All in 24 shaping up to be a good year at hurricane and okay year with hurricanes in spite of all what's happened.

Speaker Change: and O'Keyyear with our days, in spite of all what's happened in 20 days.

John Allison: In 20 days, I'm probably going to get off on a political race, but I got to do this. In 20 days, I'm going to elect a new president of the United States, and I think that we have them that will have a major impact on all our lives and the futures of our children and our grandchildren. One of the candidates wanting to substantially raise all taxes and even taxes on unrecognized gains. Inflation has already taxed the American public over 20 percent, created by the crisis, crazy spending, and firing up inflation like we've not seen for the late 70s.

Speaker Change: I'm probably going to get off on the electrical race but I gotta do this in $20 and I'm going to let the new person in the United States and I think that we have a major impact on all our lives and our futures of our children and our grandchildren

Speaker Change: One of the candidates who want to substantially raise all taxes and even taxes on unverk enough again.

Speaker Change: Inflation has already packed the American public over towards the same, created by the crisis, crisis spending, and find up the inflation likely not slingser for like seven.

John Allison: The coup was thrown in Joe Biden in the ditch and crowning a new candidate that absolutely has no financial experience and appears to have no idea of what's going on. Whether you like Donald Trump or not, I believe he has to win the race. We know what he did last time, and he was business friendly. Watching both candidates from this short campaign has been very painful for all of us, but after watching, I cannot imagine anyone voting for Mr. Harris. It's not about Democrats or Republicans; it's about fun in our country. I think she will destroy all good work that Chairman Powell and the committee has done to fight inflation.

Speaker Change: The King was throwing Joe Biden in the ditch and crowning a new candidate that absolutely has no financial experience and appears to have no idea what's going on. Well, do I not fall for him out? I believe he has to win the run. We know what he did last time and he was better this friendly.

Speaker Change: Watching both candidates from this short camp time, there's been very time before all of us, but after watching, I cannot imagine anyone voting for Mr. Curtis.

Speaker Change: It's not about Democrats or Republicans, it's about fighting our country. I think she will destroy all good work that Chairman Powell and the committee has done to find inflation. I think she will allow the snake to raise his head again. We have not killed the snake, but we may have to ampat. Point for our basis for its problem would have been better than 50.

John Allison: I'm afraid she will allow the snake to raise his head again. We have not killed the snake, but we made an impact. 25% of racist sports probably would have been better than 50, but I think that may have been politics, as usual, usually happens during election years. Taxes, crime, immigration, gangs, open-border sex trafficking, increased regulations, inflation, and need I say more. We need to vote to stop the chaos.

Speaker Change: But I like that may have been politics as usual. Usually happens during the last years.

Speaker Change: Taxes, Crime, Immigration, Gangs, Open Border, Sex Tracking, Increase Regulations, Inplacet, Linda St. More.

John Allison: Would you hear Walgreens announcing the closing of 25% of their 8,600 stores, and one of the main reasons is that should tell us all we need to hear. If that's not enough, suddenly an ABC host attempted to minimize illegal migration gangs taking over apartment complexes in Aurora, Colorado, saying the incidents were limited to a handful of apartment complexes, and Donald Trump is the problem. I mean, you can't much just stop us.

Speaker Change: We need to vote to stop the challenge. When you hear Walgreens amassing the close in a 25% of their 8,600 stores and one of the main reasons is fat should tell us all we need to hear. If that's not enough.

Speaker Change: Sonny and ABC House attempted to minimize illegal migration gangs taking over apartment complexes in Aurora, Colorado, saying the incidents were limited.

Speaker Change: To a hand-to-to-the-part and complexion, Donna Trump is the problem.

John Allison: Enough of that. Our Texas lawsuit, we're totally engaged and await our day in court and let a jury decide the amount of damage done by what we perceive to be illegal activity by some West Texas inhibits. On stunt my back, the company purchased $1 million shares for $26.9 million. That should put us below $199 million shares. Brown money, where are we now? We're like $198, $198. So, we have continued to buy; Stephen Zach Rex continues to be in there. We have a 10B51 plan in place. It's not been active over the last couple of weeks.

Speaker Change: I mean, you can't make this stuff, enough of that. Our textures were totally engaged and a way that our day in court and led a jury decide the amount of damage is done by what we perceive to be a little activity by some West Texas individuals.

Speaker Change: and Scott Mab back to County Purchase, one million shares for $26.9 million. That should put us below $199 million share. Brown, what do you wear all we know? We're like $198.

Speaker Change: 888. So we're continuing to buy Stephen's act of rest. We haven't been in there. We haven't. We have a 10B-5-1 plan in place. It's not been active over the last couple of weeks. Plan two once we get out of the blackout.

John Allison: Plan two, once we get out of the block out. I don't know where we're going with that, but we continue to buy stock, and I guess we'll continue to hang in there. Our goal was to get it to 200. We've got it there. Now we're at $199 million. We may go to $199. I don't know if we'll see. We'll talk about it around the table.

Speaker Change: I don't know where we're going with that, but we continue this last talk and I guess we'll continue to hang in there. Our goal was to get it to 200. We've got it there. Now we're at 199. I don't know if we'll talk about it around the table.

John Allison: It was a good quarter. Thanks everybody for their support. Thanks, everybody, for the hard work that everybody put in. It was when you have those kind of revenues and you control the expenses, it rolls in to really a good quarter.

Speaker Change: Ecosodrit come over.

Donna Townsell: Thanks everybody for their support. Thanks everybody for the hard work that everybody put in. It was when you have those kind of revenues and you control the expenses, it rolls into really a good quarter. So the dollar is back to you. Thank you, Johnny, and our thoughts are certainly with all of those in the past of the hurricane. Our next report today comes from Stephen Tipton.

Donna Townsell: So, Donna, back to you. Thank you, Johnny, and our thoughts are certainly with all of those in the path of the hurricane.

Stephen Tipton: Our next report today comes from Stephen Tipton.

Stephen Tipton: Thanks, Donna. Mr. Johnny mentioned Home Bank shares and Senior Bank had another great quarter. Congratulations to all of our bankers and employees for continuing to make Home and Centennial Bank one of the top forming banks in the country. As Johnny mentioned, total revenue increased again in Q3 to $258 million. Adjusted PPR increased to $146.6 million, which is a 17% year-over-year increase. I'll start with the net interest margin, as Johnny referenced in his comments. The reported then expanded one basis point in Q3 to 4.28%, while we continue to hold healthy access cash balances. Excluding the event income noted in the press release, the net interest margin was 4.27% for the quarter, an increase of 4 basis points from Q2, an exit of the quarter in September at 4.300%.

Donna Townsell: Thanks, Donna. This Johnny mentioned Home Bank shares in the Sanio Bank at another great quarter. Congratulations to all of our bankers and employees for continuing to bank home and Sanio Bank, one of the top performing banks in the country.

Even Tipton: As Johnny mentioned, Donna revenue increased again in Q3 to 258 million, adjusted PPNR increased to 146.6 million, which is a 17% year year increase.

Speaker Change: I'll start with the net interest margin as Johnny referenced in his comment.

Speaker Change: The reported them expanded one basis point to cue three to four point two eight percent while we continue to hold healthy access cash balances.

Speaker Change: Excluding the event income noted in the press release that that interest margin was 4.27% for the quarter and increase of 4 basis points from Q2 and X to the quarter and September at more point 3 on percent.

Stephen Tipton: The yield on loans, excluding event income, improved 10 basis points to 7.59% in Q3, and outpaced the increase in total deposit costs by 6 basis points. During the quarter, total deposit costs increased 4 basis points to 2.31%, an exit of the quarter at 2.29%. Leading up to and since the recent FOMC announcement, our bankers have done an excellent job managing interest rates while being mindful of liquidity and the overall customer relationship. We've worked through most of the negotiated deposit pricing, and thus far it appears we've been able to offset the decline in rates on the asset side.

Speaker Change: The Yield on Loans, excluding event income, improved 10 basis points to 7.59% and Q3.

Speaker Change: and outpace the increase in total deposit costs by six basis points.

Speaker Change: During the quarter, total deposit costs increased four basis points to 2.31% and access to the quarter at 2.29%.

Speaker Change: Leading up to and sense the recent FOMC announcement.

Speaker Change: Our bankers have done an excellent job managing interest rates, while being mindful of liquidity and the overall customer relationship.

Speaker Change: We've worked through most of the negotiated deposit pricing, and thus far in appears we've been able to offset the decline and rates on the assets side.

Stephen Tipton: Switching to liquidity and funding, deposits continue to be a key focus with our management team as they review lending opportunities, as well as cross-selling opportunities, on nearly 5,000 accounts that we open each month. We continue to emphasize the strength of home and the comfort that that provides. Total deposits decline 250 million for the quarter, most of which occurred in our Florida regions, as seasonal outflows occurred with property management companies and municipal relationships. Non-interest bearing balances ended at $3.94 billion at a count for 23.5% of total deposits. Alternative funding sources remain extremely strong, with broker deposits still only comprising 2.3% of liabilities.

Speaker Change: Switching to liquidity and funding, the deposits continue to be a key focus with our management team as they review lending opportunities, as well as cross-selling opportunities on nearly 5,000 accounts that we open each month.

Speaker Change: We continue to emphasize the strength of home and the comfort that that provides. Total deposits decline 250 million for the quarter, most of which occurred in our Florida regions, as seasonal downloads occurred with property management companies and municipal relationships.

Speaker Change: Non-interpreting balances into the 3.94 billion at account for 23.5% of total deposits.

Speaker Change: Alternative funding sources remain extremely strong with broker deposits still only comprising 2.3% of live abilities.

Stephen Tipton: And the loan to deposit ratios still stands below historical levels at 88.7% as of September 30. The loan increase, $43 million, highlighted by nearly 100 million in growth from the community bank regions, along with solid growth from short from year, offsetting what we see as a temporary decline in CCFG balances. A loan originations, we saw volume of 1.13 billion in Q3, similar to Q2, with a little more than half coming from the community bank regions. Yields originations remain strong with an average coupon of 8.96% in Q3. Payout volume picked up slightly to a total of 699 million, although a portion of what we expected to see this past quarter appears to have pushed into the floor.

Speaker Change: and the loan to positive ratios still stands below historical levels at 88.7% as of September 30.

Speaker Change: On the asset side, in period loan balances, increased $43 million, how lighted by nearly $100 million and growth from the community bank regions.

Speaker Change: Along with solid grains from shore from here.

Speaker Change: Offsetting what we see as a temporary decline in CCFG balances. A loan originations, we saw volume of 1.13 billion in Q3, similar to Q2, with a little more than half coming from the community bank regions.

Speaker Change: Yields of Reginations remains strong with an average coupon of 8.96% in Q3.

Speaker Change: Payout volume picked up slightly to a total of 699 million, although a portion of what we expected to see this past quarter appears to have pushed into the fourth place. Closing with the previously mentioned strength of our company, all capital ratios improved and remain extremely strong.

Stephen Tipton: Closing with the previously mentioned strength of our company, all capital ratios improved and remain extremely strong with the tangible common equity ratio of 11.78%, leverage ratio of 12.54%, CET1 ratio of 14.65%, and a total risk-based capital ratio of 18.28%. Couple that with reserve coverage of 2.11%, and over three times coverage on non-performing loans, we're in a strong position to capitalize on future opportunities.

Speaker Change: with the tangible common equity ratio of 11.78%, leverage ratio of 12.54%, CET1 ratio of 14.65% and a total wrist-based capillar ratio of 18.28%.

Speaker Change: Coupled that with reserve coverage of 2.11% and over 3 times coverage on non-performing loans, we are on strong position to capitalize on future opportunities.

Stephen Tipton: With that, Donna, I'll turn back over to you.

Unknown Executive: Thank you.

Kevin Hester: And finally, Kevin Hescher will provide us with some color on the lending portfolio. Thanks, Donna. Good afternoon, everyone. We all have discussed that one of the strengths of our company is that we have multiple engines or regions that can independently help us reach our combined goals. As Steven mentioned, this quarter was Texas, Arkansas, and Shore that drove our loan growth. At other times, CCFG and Florida are the drivers. This kind of diversity is a real positive for our company.

Speaker Change: with that Donna I'll turn back over you.

Donna Townsell: Thank you. And finally, Kevin Hester will provide us this new color on the lending portfolio.

Kevin Hester: Thanks, Donna, good afternoon everyone. We all discussed one of the strengths of our company is that we have multiple engines or regions that can independently help us reach our combined goals.

Kevin Hester: Stephen mentioned this quarter was Texas, Arkansas, and sure that drove our lung growth. At other times CCFG and Florida are the drivers.

Kevin Hester: Of note, late in the quarter, I noticed a slight slowing of early deal flow, and it is beginning to show in our pipeline for this quarter. Combined with an increase in projected payoffs, I believe that fourth quarter could be flat to down slightly. Moving on to asset quality, the metrics declined slightly this quarter with increases in non-performing loans and assets of 10 basis points and 7 basis points, respectively. This is due primarily to a Texas hotel moving to non-performing that is one of a trio of hotels to a related ownership group that we've been working with for a few quarters.

Kevin Hester: This kind of diversity is a real positive for our company.

Kevin Hester: Of note, light in the quarter I noticed the slight slowing of early deal flow and it is beginning to show in our pipeline for this quarter. Combined with an increase in projected payoffs, I believe that fourth quarter could be flat to down slightly.

Kevin Hester: Moving on to asset quality, the metrics declined slightly this quarter with increases in non-performing loans and assets of 10 basis points and 7 basis points respectively.

Kevin Hester: This is due primarily to a Texas hotel moving to non-performing that is one of a trio of hotels to a related ownership group that we've been working with for a few quarters.

Kevin Hester: One of those hotels sold this quarter, and another is in the process of selling, so we're hopeful that we can continue to achieve a good outcome with this relationship, but it could take some more time. We expected to complete the construction of the multifamily project that is in Oreo, which is located north of the BSW of Metroplex in the third quarter, but a delay with an unreasonable local utility has pushed this completion into the fourth quarter. The timing delay does not appear to change our overall outcome, which will be to move it out of Oreo by year in to a buyer that we have ready to contract.

Kevin Hester: One of those hotels sold this quarter and another is in the process of selling, so we're hopeful that we can continue to achieve a good outcome of this relationship, but it could take some more time.

Kevin Hester: We expected to complete the construction of the multifamily project that is in Oreo, which is located north of the DSW Metroplex in the third quarter.

Kevin Hester: But it delay with an unreasonable local utility as such this completion into the fourth quarter.

Kevin Hester: The timing delay does not appear to change our overall outcome, which will be to move it out of Oreo by year-end to a buyer that we have ready to contract.

Kevin Hester: We continue to expect no worse than a small loss on this exit. Other Texas issues that we've been working through, including completed multi-family project closer to the BFW Metroplex that is experienced to decline in occupancy and a South Texas C&I relationship that has had multiple recent opportunities operating issues, but has a very profitable history. These regional issues have our full attention, and as Johnny said, because of our strong balance sheet, we were able to take our time and work through these credits in the best way possible. The considerable experience that we gained working through sales bank portfolios serves us well in working through these issues.

Kevin Hester: We continue to expect no worse than a small loss on this exit.

Kevin Hester: Other Texas issues that we've been working through include a completed multi-family project closer to the BFW Metro Flax that is experienced at the client and occupancy.

Kevin Hester: and a South Texas C&I relationship that has had multiple recent operating issues that has a very profitable history.

Speaker Change: These regional issues have our full attention, and as Johnny said, because of our strong balance sheet, we were able to take our time and work these credits in the best way possible.

Speaker Change: The considerable experience that we gained working through failed bank portfolios serves this well in working through these issues.

Kevin Hester: Lastly, the California office that is in Oreo continues to improve. I can see it's approaching 70% after an existing tenant took another half of one floor, and it is cash flow positive.

Speaker Change: Lastly, the California office that is in Oreo continues to improve. I can see as approaching 70% after an existing tenant took another half of one floor and it is cash flow positive.

Kevin Hester: We are negotiating with another potential tenant that would take it above 80%, switching to discussion regarding the recent hurricanes. We are thankful that none of our employees were injured by hurricanes, Helene and Milton, and that the damage to our branches is limited in nature. This is clearly not the case across all of this widespread area impacted by these two storms. Hurricane Helene took a swipe up the west coast of Florida, where we have a substantial presence, and then proceeded inland into Georgia and North Carolina, where it inflicted major funding damage. We have approximately 1.5 billion in loans in these counties within the FEMA designated disaster areas from Helene, with almost 90% of those loans in Florida.

Speaker Change: We are negotiating with other potential tenants that would take the above 80%.

Speaker Change: Switching to discussion regarding the recent hurricanes, who were thankful that none of our employees were injured by hurricanes, halene and Milton, and that the damage to our branches was limited in nature. This is clearly not the case across all of this widespread area impacted by these two storms.

Speaker Change: Hurricane Helene took a swipe up the west coast of Florida where we have a substantial presence, and then proceeded inland into Georgia, North Carolina, where it inflicted major flooding damage.

Speaker Change: We have approximately 1.5 billion in loans in these counties, within the theme of the designated disaster areas from Poulin, with almost 90% of those loans in Florida.

Kevin Hester: Less than two weeks after Helene, Hurricane Milton cut a swath west to east across the peninsula of Florida, hitting some of the same areas on the central west coast of Florida hit by Helene. But continuing through to the Atlantic coast side, remaining a hurricane through its exit of the mainland, we have 1.8 billion in loan in the FEMA-designated disaster areas from Milton. There's about $1.1 billion in loans that were subject to both hurricanes, so the total in loans that subject to either one of the hurricanes is about $2.2 billion. We dusted off our disaster deferral procedures and have them implemented on these loans, and as you saw in the press release last week, we established an approximate $16.7 million reserve for the loan subject to Hurricane Helene.

Speaker Change: Less than two weeks after Haleen, Hurricane Milton cut a swath west to east across the peninsula Florida, hitting some of the same areas on the central west coast of Florida hit by Haleen.

Speaker Change: The continuing through to the Atlantic Coast side, remaining a hurricane through its exit at the mainland.

Speaker Change: We have 1.8 billion in Florida loans in the FEMA designated disaster areas from Milton.

Speaker Change: There's about 1.1 billion in loans that were subject to both hurricanes, so the total in loans that subject to either one of the hurricanes is about $2.2 billion.

Speaker Change: We dusted off our disaster, the federal procedures and have been implemented on these loans. And as you saw in the press release last week, we established an approximate $16.7 million reserve for the loan subject to hurricane halene.

Kevin Hester: Areas from Tampa Bay, north were the hardest hit by Helene, and we were assessing damages in that area with Milton threatened less than two weeks later. A late turn to the south by Milton took the brough of the storm south of Tampa, and areas from Brayden to South were to appear to be the worst hit there, along with random places across the interior of the state hit by tornado spawn from landfall. We're continuing to reach out to affected customers, we're touring damage where possible, and we're implementing our past playbook. Past history tells us that it takes 6 to 12 months to fully assess the credit impacts of these events.

Speaker Change: areas from Tampa Bay, North were the hardest hit by Helene and we were assessing damages in that area with Milton threatened less than two weeks later. A late turn to the south by Milton took the brough of the storm south of Tampa and areas from Braydenton, South were to appear to be the worst hit there along with random places across the interior of the state hit by tornado spawn from landfall.

Speaker Change: We're continuing our reach out to affected customers, we're touring damage, we're possible, and we're implementing our past playbook.

Speaker Change: Past History tells us that it takes 6-12 months to fully assess the credit impact of these events.

Kevin Hester: I know it's hard to imagine, but we still have customers who are dealing with insurance claims from past hurricanes. The cleanup and rebuild is a long process, but this is not new to us, and we are confident that the areas will come back stronger than before.

Speaker Change: I know it's hard to imagine, but we still have customers who are dealing with insurance claims from past hurricanes.

Speaker Change: The cleanup and rebuild is a long process that this is not new to us and we are confident that the areas will come back stronger than before

Kevin Hester: None of that's all I have, and I'll turn it back to you. Thank you, Kevin.

John Allison: Johnny, before we go to Q&A, do you have any additional comments? No, this is the right quarter. If we haven't had the hurricanes, we would have ruled in an outstanding quarter. As you can see, I've got exciting. I counted our money. Count how much money we're going to home before we define how to save up the quarter of the hurricane fence. So a little disappointing, but it wasn't easy. Our people did the job. I mean, I'm sure people did a hell of a job for the core, great, great run rate, great numbers, all good, and we'll overcome it.

Speaker Change: and Donna, that's all I have and I'll turn it back to you.

Donna Townsell: Thank you, Kevin. John, you look forward to it, Stephen A. Do you have any additional comments? No, it was a decision, right before we had to head to Arkansas. It would have been an outstanding quarter of that.

Donna Townsell: As you can see, I've got excited.

Speaker Change: I counted our money, and my money was a home before we decided to stay out the quarter of the hurricane, so a little bit disappointing, but our people did the job, I mean, how much of the people did to help the job, for the core, great run, great numbers, all good, and...

Unknown Executive: You know, maybe we get lucky and we put that back in income someday or, you know, if we have to make more a better allocation, we'll do that too. Whatever's in the best interest. Of our shareholders. Anybody else got anything? Try to, you got to comment. No, good. All right. No, but it was a good quarter. So even you get anything else to say. I know. Now you're going to work it up.

Speaker Change: We'll overcome it, you know, when we get lucky, we put that back in the end count sometime, or, you know, if we have to make more a better allocation, we'll do that to whatever is in the best interest of our shareholders.

Speaker Change: Anybody else got anything? Tracy got a comment? No, good to go. Brian? No, I thought it was good quarters.

Speaker Change: Stephen, you guys may have to say, I know

Unknown Executive: I guess we will turn it over to the operator for some Q&A. Great. Thanks, Donna.

Christopher Poulton: Christopher Poulton,

Christopher Poulton: John, you can work it up. I guess we will turn it over to the operator for some Q&A.

Unknown Executive: If you would like to ask a question, please dial Starflow by one on your telephone keypad now. If you change your mind, please. We start Starflow by two to exit the queue. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally.

Christopher Poulton: Great, thanks, Donna. If you would like to ask a question, please don't start for it by one on your telephone keypad now. If you change your mind, please don't start for it by two to exit the queue.

Speaker Change: and finally went to pairing to ask your question, please ensure that your phone is unmuted locally.

Stephen Scouten: Our first question today is from the line of Steven Scoutson of Pythasama. Please go ahead. Your line is open. Thanks. Good afternoon, everyone. Appreciate the update here this afternoon, curious Johnny. Kind of how you're thinking about M&A today. If there's any change to kind of your outlook. Your views on what BTSP could do in the first part of next year.

Speaker Change: Our first question today is from the line of Stephen Skeleton of Piper Sammer. Please go ahead, your line is open.

Stephen Skeleton: Thanks, good afternoon, everyone.

John Allison: And then maybe conversely, if you know, if Trump does win the presidency, if you think, you know, any regulatory release could kind of propel you to be more aggressive on the M&A front or, or maybe what it would take for you to get more aggressive. Well, we're looking today. I mean, we're looking at opportunities today. And to get more aggressive, they just have to, they just have to work, right? They just have to work. Everybody, you know, everybody's price is going up; ours is going up; everybody else's price is going up. That probably will, will make more people think about doing M&A.

Stephen Skeleton: Well, uh...

Speaker Change: We're looking to that, I mean we're looking at opportunities to die and that.

Speaker Change: to get more aggressive than they just have to work. Everybody's process, Donna, ours is Donna, everybody else's process is going on. That probably will make more people think about doing them and I suspect that we'll hopefully find something.

John Allison: And I suspect that we'll hopefully find something.

John Allison: If not this year or next year to do regulatory wise, it was much, much easier to do a transaction when, when President Trump was in, we had better support there. And that'll take a while to change if the administration changes. But I'm optimistic that we could see I can be, could be a kick to M&A activity if Trump wins comes back in. Yeah, they've been really slow; where they've been slow on the proven deal. She might have gotten a little quicker later, lately, doesn't it? Did you guys think that they moved on some that some that were hanging out there for a long time?

Speaker Change: If not this year or next year to do. Regatory lines, it was much easier to do a transaction when President Trump is laying. We had better support there.

Speaker Change: That'll take a while to change if the administration changes, but I'm optimistic that we could see that could be a check too.

Speaker Change: M&A activities in front winds, tells me I can't, they've been really slow, the regulators have been slow in the proven deals.

Speaker Change: Tim Lackley got the little quicker lighter, slightly done it, did you guys have seen that they moved on some, some that were hanging after it for a long time, they finally got them done and got them close.

John Allison: They finally got them done and got them close, so I don't know if that answers your question, but we're certainly looking, as I said last quarter, and I'll say it again this quarter. When you run basically without the extra reserve of 196, our way on 23 billion dollars with assets. This team just needs some more assets. So, you know, we just need to clean, get find the right trade and pick up some more assets and let them fix. I don't care what kind of shape the banks in. We just need them to fix it; depends on the price, right?

Speaker Change: I don't know if I'd answered your question, but we're certainly looking, but as I said last quarter, I'll say it again in this quarter, when you run, basically, without the extra reserve of 196, our way on 23 billion dollars, where the assets, this team just needs to more assets.

Speaker Change: So, you know, we just need to be playing, you find the right trade and pick up some more assets and let them fix.

Speaker Change: I don't care what kind of shape the mindset and we just need them to fix it because on the price right? We'll buy anything from something that needs help to something that's really operating in a good fashion. It all depends on the price, Stephen, you know how we do.

Stephen Scouten: We'll buy anything from something that needs help to something that's really operating it in a good fashion. So, it all depends on the price, Stephen. You know how we do? So, we'll work with your people on some stuff. Makes sense. Okay. That's very helpful, Johnny.

Stephen Tipton: And then maybe one probably more for Stephen, I guess, is just kind of can you talk a little bit about how you think the name can trend from here if we get what's called a hundred hundred fifty basis points to cut? How you're thinking about loan betas and deposit betas from here. I know, I know, Johnny, you look at the name on like a daily basis, but you know, how do we think about that over the next, let's call it 12 to 18 months. Yeah, I mean, I think I think a win there would be, you know, flat from from where we are today. You know, our model shows down four or five percent.

Speaker Change: McSense, McSense, okay, that's very helpful, Johnny, and then maybe one, probably more for Stephen, I guess, is just kind of, can you talk a little bit about how you think the name can trend from here before we get, let's call it 150, based on what the cut, how you're thinking about.

Speaker Change: Loan Baiters and the positive Baiters from here, I know John, you look at the name on a daily basis, but how do we think about that over in the next two, it's called 12th 18 months?

Speaker Change: Yeah, I mean, I think I think a win there would be flat from where we are today, you know, there.

Stephen Tipton: I think in a down 100, but if we're able to pass through deposit rate cuts, which we are being done a great job so far. And, you know, there's probably still some opportunity in the back of it that we can work down. So, you know, I think predicated on that would be pleased to see us in line with where we are today. I know it's early in the quarter, but the first thing days or so of the quarter were actually a little ahead of where we were last month. So, we've had adjustments as you in loan yields and cost of funds.

Speaker Change: are models shows down 4% I think in a down 100 but if we're able to pass through deposit rate cuts.

Speaker Change: which we've our team done a great job so far.

Speaker Change: Yeah, there's probably still some opportunity in the back of it that we can work down so yeah, I think predicated on that, I'd be sure.

Speaker Change: Police to see us in line with where we are today.

Speaker Change: I know it's early in the corner.

Speaker Change: But the first 15 days or so of the quarter were actually a little head of where we were in the last month. So we've had adjustment as you in low meals and cost of funds.

Stephen Tipton: And it looks like we're almost matched up. We're up a couple hundred thousand dollars is all, but looks like they're matched up. So, I'm pretty pleased with what that's early, right? So, there will be a lot of adjustments and that, but that as a right now, it looks pretty good. Steven. Got it. Okay. That's helpful.

Speaker Change: and it looks like we're...

Speaker Change: Thomas Mach stop and we're up a couple hundred thousand dollars a zone but it looks like they're mached up so I'm pretty pleased with what that's already right so we'll be a lot of justness in that but that as a right Matt looks pretty good, Stephen.

John Allison: And not, you know, I don't think you, I don't think you're guilty of counting the hay before is in the barn. The hay's in the barn. It just might not be a net income, but it's still in capital. So, let's build the bank money in the great quarter. I was, hey, I was, I could stay high excited. I was watching those numbers coming in the first two months of the quarter. And then I'm watching my daily report. And I'm saying, we're going to ring the bell with quarter. We're going to ring the bell. But it's you're at the hay selling there.

Speaker Change: Got it. Okay, that's helpful and not, you know, I don't think you, I don't think you're guilty of counting the hay before it's in the barn. The hay's in the barn. It just might not be a net income, but it's still in capital. So let's feel the bank's money in the great quarter. Well done. I was, hey, I was, I could gay high excited. I was watching those numbers tell me in the first two months of the quarter. And then I'm watching my daily report. And I'm saying we're going to ring the bell with quarter. We're going to ring the bell. We're going to ring the bell. We're going to ring the bell.

John Allison: You're at the hay selling there just in a different, different category right now. Thank you for that.

Speaker Change: But that's it.

Speaker Change: It's your hat, the high cylinder, you're right, the high cylinder, just in a different category right now.

Unknown Executive: Excellent color.

Speaker Change: Thank you for that.

Speaker Change: I'm sorry, color, color.

Brett Rabatin: Our next question today is from the line of Brett Rappers and off to group. Please go ahead. Your line is open. Hey, good afternoon, everyone. Wanted to just start on the long growth outlook, and it sounds like CFG, you know, might continue to have some playoffs and four key years that'll keep the fourth quarter anyway flatish, maybe down a little bit. Can you guys talk about the outlook for 25?

Speaker Change: Our next question today is from the line of Brad Pappetant of Officer Group. Please go ahead, your line is open.

Speaker Change: Hey, good afternoon, everyone.

Brad Pappetant: I wanted to just start on the long growth outlook and it sounds like CFG, you know, might continue to have some payoffs and four key that'll keep the fourth quarter anyway flatish to maybe down a little bit. Can you guys talk about the outlook for 25 maybe I know a little bit early and there's obviously a lot to figure out with where rates end up and all that kind of stuff but is the pipeline for CFG strong enough to outrun any payoffs as you guys see it. It passed the fourth quarter or maybe just any color you guys see this you think about one generation of the 25.

Kevin Hester: Maybe I know it's a little bit early, and there's obviously a lot to figure out with where rates end up and all that kind of stuff, but is the pipeline for CFG strong enough to outrun any payoffs as you guys see it past the fourth quarter, or maybe just any color you guys see it as you think about lung generation of the 25?

Kevin Hester: Hey, Brett, this is Kevin. I'll give a little bit of color from our perspective on the community bank side, and then I'll let Chris talk about New York. We've had, as you saw this quarter, we've had a good year in the community bank footprint, and I think that will still continue. I think there's a little softness this quarter. I can't really pin it on anything. We've got a couple of regions that are still, you know, they're still pretty hot as far as opportunities go, but just across the group, I'm seeing a little bit of softness this quarter.

Kevin Hester: Hey, Brett, this Kevin. I'll give a little bit of color from our perspective on the community bank side and then I'll let Chris talk about New York. We've had, as you saw this quarter, we've had a good year in the community bank footprint and I think that will still continue. I think there's a little softness this quarter. I can't really pin it on anything. We've got a couple of regions that are still, you know, there's still...

Kevin Hester: Pretty hot as far as opportunities go, but just across the group, I'm seeing a little bit of softness this quarter. I do think that that will come back next year. And obviously a lot of this depends on how much the rates drop, what the expectation of that's going to be. And so, you know, I can't really tell you what that looks like, but I do think ours in 25 will see in the community bank footprint a continuation of what we've been doing the last, you know, four or six quarters. Chris, you want to get in some color on what you're seeing.

Kevin Hester: I do think that that will come back next year. Obviously, a lot of this depends on how much the rates drop, what the expectation of that's going to be. I can't really tell you what that looks like, but I do think ours in 25. We'll see in the community bank footprint a continuation of what we've been doing the last four or six quarters.

Christopher Poulton: Chris, you want to get in some color on what you're seeing? Sure, happy to. Thanks for the question. We certainly hope we have payoffs because when we make the loan, we intend to get repaid. And so I think we've always said that the future of the business, we make, we make shrink a little bit and then grow. I think that's generally what we see happen. We've already originated this year over a billion dollars, which is generally what our sort of yearly target is. So we're running quite ahead. We emptied out our pipeline a little bit in the third quarter because I want to move some stuff out and get focused on the rest of the year.

Speaker Change: Fierre happy to.

Speaker Change: Thanks for the question, I.

Speaker Change: We certainly hope we have payoffs because we'll make the loan we intend to get repaid. And so I think, you know, we've always said that's a feature of the business. We make, we make shrink a little bit and then grow. I think that's generally what we see happen. We've already originated this year over a billion dollars, which is generally what our sort of yearly target is. So we're running quite ahead. We emptied out our pipeline a little bit in the third quarter because I want to move some stuff out and get focused on the rest of the year. I think we'll have a pretty good solid into the rest of the year and build a pipeline going into next year. So that's a long way to say.

Christopher Poulton: I think we'll have a pretty good solid end to the rest of the year and build the pipeline going into next year. So that's a long way to say. My guess is we probably come down a little bit from here and then go back up. You know, growth's never really been our goal. We're going to put good assets on. We're going to get repaid. We're going to put that money back out, and good Lord Willen, over time that's resulted in growth. So my expectation is I don't see anything different about that. I think we'll probably slowly grow over time, just as we've always done.

Speaker Change: My guess is we've probably come down a little bit from here and then go back up.

Speaker Change: You know, growth has never really been our goal. We're going to put good assets on, we're going to get repaid, we're going to put that money back out and, and, and, you know, the Lord willing over time that's resulted in growth. So my expectation is I don't see anything different about that. I think we'll probably, you know, slowly grow over time just as just as we've always done, but in between that we may be up down a little bit here and there, but we don't look at anything as, as, as having changed dramatically.

Christopher Poulton: But in between that, we may be up down a little bit here and there, but we don't look at anything as having changed dramatically.

Brett Rabatin: Okay, that's helpful, guys. And then just on the deposit side, you know, I know flows were lower this quarter, and there was some municipal drawdowns. How much was that? How much was the drawdown away to municipal?

Speaker Change: Okay.

Speaker Change: that self guys and then just on the deposit side you know i know flows were lower this quarter and there wassome missibook drawdown down how much was was how much was the all toim school and then just as you guys see it you know any initiatives to go todeposits from here in any business l ines or anything that would that would bolster your your deposit if not that not the balance sheet needs the excess liquidity but just was just curious you guys think about the funding base from here

Brett Rabatin: And then just as you guys see it, you know, any initiative to grow deposits from here in any distance lines or anything that would bolster your deposit growth, not that the balance sheet needs the excess liquidity, but just was just curious how you guys think about the funding base from here. Sure. Hey, Brett, let's see. I didn't; I couldn't hear your first question on municipal. Is it on the overall size of that book? Well, just, just how much it came down this quarter, and then, you know, just, yeah, a link quarter balance would be great.

Speaker Change: Sure, hi, Brad, let's see that, I didn't check.

Speaker Change: Good to hear your first question on municipal. Is it on the overall size of that book?

Brad Pappetant: Well, I'll just, just how much it came down this quarter and then, you know, just.

Stephen Tipton: Sure. We've been in the three billion dollar range. So, um, so some of that normal, some of that normal flow, normal spend just at, at times, um, throughout the year, you know, in terms of overall strategy, I mean, I think we're, you know, we're staying the course with, with select opportunities here and there. I mean, a lot of, you know, we've spent for a long time in the counties that we operate in in Florida, or are very liquid and at times have opportunities to bring some of those in. You know, conversations with our lenders and our presidents are ongoing every, every day, every week at that loan committees.

Speaker Change: Yeah, I've been in court about, so be very accurate. You know, you these were down about 150 million or so for the quarter. I think we're in the 930 at a blowover 2.8 billion we've been in the 3 billion dollar range.

Speaker Change: So some of that normal, some of that normal flow of normal space just at times.

Speaker Change: throughout the year. You know, in terms of overall strategy, I think we're, you know, we're staying in the course with, with.

Speaker Change: Select opportunities here in the air. We set for a long time in the county that we operate in and floor our very liquid and at times have opportunities.

Speaker Change: to bring some of those in, conversations with our lenders and our presidents are ongoing every day, every week at that loan committees and so I think that's still our approach and we'll...

Stephen Tipton: And so I think that's still our approach, and we'll continue to work that base as we have. We'll see it. Okay. Great. Appreciate how they're calling. They're still, they're still running at. These people are still running at. I think some of the money may deposits are back up. That's kind of the back up this month. So that's kind of the effect of it. They're real customers doing real business with us. And we don't; some of that money may have gone out. We may have lost some of that money that went out to some of these people trying to cover their, for the program that they got to pay off in March and next year.

Speaker Change: We'll see it. Okay, great for you all the call. They're still running out. These people still running out. I think some of the money may deposit some back thought.

Speaker Change: Kevin, Rebecca, this month, so let's count on that.

Speaker Change: The Effect of it. They're real customers doing real business with us and we don't, some of that money may have done that out. We may have lost some of that money that went out to some of these people trying to cover their,

Stephen Tipton: They're the Fed lending programs. So we may have lost some money to some of those people doing that. Well, honestly, what we predicted was that they may have been happening to us a little bit because they want to get our, our right CD right now, lock it in as rates are coming down. So what we thought might have maybe happened to us a little bit. So not much, but some of it could have been. Yeah, sure.

Speaker Change: for the program that they got to pay off in March and next year, the Fed lending program. So we may have lost some money to some of those people doing that. Well, honestly, what we predicted was, they've been happening to us a little bit because they want to get our right CD right now, lock it in.

Speaker Change: as Rachel Cuffer coming down, so that was it. What we thought might happen, maybe happening in the last little bit, so not much, but some of it could be.

Unknown Executive: It's been interesting to see some banks still being pretty aggressive in rates. Appreciate all the color and congrats on other, another good, good number. Thank you. Appreciate it. Hope you get feeling better. Thanks for joining.

Speaker Change: Yes, sure, it's been interesting to see some banks still be in pretty aggressive rates. Appreciate all the color and can grab on another good number.

Matthew Olney: The next question today is from the line of Matt only, with Stevens. Please go ahead. Your line is there. Hey, thanks. Good afternoon. I wanted to ask more about the operating expenses. I think the core was $110 million, down 4% year over year. So really good cost controls. Any more color on just the drivers of where you're seeing the cost saves. The bank already has an efficient platform. So I'm just surprised you're continuing to find more opportunities there.

Speaker Change: The next question today is from the line of Matt Olney with Steven's please go ahead your line as soon as possible.

Speaker Change: Hey, thanks. Good afternoon. I wanted to ask more about the operating expenses. I think the core was $110 million down 4% year-over-year, so really good cost controls. Any more color on just the drivers of where you're seeing the cost saves. The bank already has an efficient platform, so I'm just surprised you're continuing to find more opportunities there.

Stephen Tipton: No, hey, Matt, this evening, you know, obviously some of the edge and blows with the headcount, which is the biggest, the biggest driver of an interest expense. I'd say, you know, looking forward, you know, we're at a good base there. There are a couple of large. I.T.

Speaker Change: David. John, hey Matt, this Stephen. You know, obviously some of the engine blows with head count, which is the biggest.

Speaker Change: and Dave Straber of Nine Interesting.

Speaker Change: and I'd say you're looking forward, you're at a good base there, there are a couple of large.

Stephen Tipton: Contracts that we're working through that we're not there yet in terms of final pricing and negotiation, but there's some potential there for some meaningful savings to take place at some point in 25 and beyond. Okay, appreciate that, Stephen.

Speaker Change: I teach contracts that we're working through that we're not there yet.

Speaker Change: in terms of final pricing and negotiation, but there's some...

Speaker Change: Thom, there's some potential there for some.

Speaker Change: and meaningful savings to take place at some point in 25 and beyond.

Kevin Hester: And then, I guess also on the credit front, I heard the prepared remarks talk about, you know, stuff battling some of those legacy credit issues we talked about for a few quarters. I'm curious if you're seeing any new inflows of new problems, or is it just the same legacy problems, mostly in taxes, that we've discussed before. Hey, this is Kevin. No, I mean, we may, I think we may have added one to the list this quarter that we're discussing with you guys, but primarily it's the stuff that we've been talking about the last two to three quarters.

Speaker Change: Okay, appreciate that, Stephen, and then...

Thom: I guess also on the credit front, I heard the prepared remarks talk about, you know, still battling some of those legacy credit issues we talked about for a few quarters, I'm curious if you're seeing any new problems or is it just the same legacy problems, mostly in Texas that we've discussed before.

Kevin Hester: Hi, this Kevin.

Kevin Hester: I think we may have added one to this quarter that we're discussing with you guys, but primarily it's the stuff that we've been talking about the last two to three quarters.

Kevin Hester: And as far as the resolution on some of those, it sounds like we should expect some kind of resolution in the next quarter or two on a number of those. Did I interpret that right, Kevin? Yeah, certainly one of them and possibly a second one. You know, some of these things, they just take a little while to work out. You think you see a path and you're working towards it, and you think that path leads you to 90 days, and it turns into 180. But, you know, we're still in each of those situations; we're on track and we're working, working through the plan, and sometimes the plan just takes you a little longer than you'd like.

Speaker Change: and as far as the resolution on some of those, it sounds like we should expect some kind of resolution in the next quarter or two on a number of those. I interpret that right, Kevin.

Kevin Hester: Yeah, certainly one of them and possibly a second one.

Kevin Hester: You know, some of these things, they just take a little while to work out. You think you see a path and you're working towards it and you think that path leads you to 90 days and it turns into 180. But, you know, we're still in each of those situations. We're on track and we're working, working through the plan and sometimes the plan just takes you a little longer than you'd like. [inaudible]

Kevin Hester: I think I look a little different into the first quarter. We, we, we, we were just got to get the issues resolved, and I think there were most of them are basically resolved at this point in time. The hotel deals, the one hotel got sold with other ones. We put the non performing and I think that's going to work itself out also. These are just some Texas hotels that we did a while back, so. Okay, all right, guys, thanks for the color. Great quarter. I know that I'm seeing what we put it to you that way, nothing knows that I'm seeing.

Kevin Hester: I think they look a little different by the end of the first quarter. We just got to get the issues resolved, and I think they were, most of them are basically resolved at this point in time. The hotel deals, the one hotel got sold, the other one we put to non-performing, and I think that's going to work itself out also. These are just some Texas hotels that we did a while back, so. [inaudible]

Kevin Hester: Okay.

Speaker Change: All right guys, thanks for the color, great quarter.

Unknown Executive: Same stuff.

Unknown Executive: The next question today is from the line of John asked from obviously. Please go ahead, your line is now open. Hey, thanks. Good afternoon. Just a quick fall up on those. Hey, hey, how larger those? Can you remind us all large those potential resolutions are. I know you said timing is up in the air, but just an idea of the materiality of those. From the loft perspective on the one north of Dallas, $67,000; maybe $15,000, $15,000. All together, we're talking about $200,000,000 all together.

Speaker Change: The next question today is from the line of John Arthstrom, obviously please go ahead, your line is now open.

John Arthstrom: Thank you, thank you for coming back for new.

John Arthstrom: Just a quick fall up on those. Hey, how large are those? Can you remind us how large those potential resolutions are? I know you said timing is up in the air, but just an idea of the materiality of those from the loft perspective on the one north.

John Arthstrom: Dallas.

Speaker Change: Six or seven or a half thousand dollars might be over.

Speaker Change: 15, 2015, and all together, we're talking about.

Speaker Change: 200-ish Marion all together.

John Allison: Okay, that's helpful. Another thing I want to clarify, Jon, you said in the prepared comments something about maybe 20 million needed for the hurricanes, and I didn't know if you, if you're signaling that there's another elevated provision to come for Milton next quarter, or that you feel like you already have it enough in reserve. Can you just clarify that? I said we might have to have, we might have to have an additional 20 million is what I said. I don't know that. I just, I would just kind of get an out there, just throwing it out.

Speaker Change: OK.

Speaker Change: Good, that's all for.

Speaker Change: Another thing I want to clarify, Johnny, you said in the prepared comments something about maybe 20 million needed for the hurricanes and I didn't know if you're signaling that there's another elevated provision to come.

Speaker Change: for Milton next quarter, or that you feel like you already have enough in reserves. Can you just clarify that?

Johnny: I said we might have to have an additional 20 millions, what I said. I don't know that. I would just kind of get an out there. Just don't know that. I don't know that. It's too early for us to discipline the time. Might not be anymore. We had some performance that got the most damage, Kevin. And Marie Allen. And Marie Allen. Yeah, we got pretty... I talked to him yesterday, our customer.

John Allison: I don't know that we; it's too early for us at this point. It may not be anymore. We had some, what was the place we got the most damage, Kevin? Ann Marie Allen. Ann Marie Allen, yeah, we got pretty. I talked to him yesterday, our customer. He said, "I'm going to be fine," and he has business eruption in addition to coverage on these units, so that's good. He said, "I have that with their food." I do business eruption with every house. He has a bunch of house, a bunch of big, big in the room probably, so primarily single family, single family and a few hotels in the owns, but he didn't save, he wasn't there.

Johnny: He said I'm only fine and he has business eruption in addition to kind of a journalist's unit. So that's good. He said I have that with their, I do business eruption with their house. That's a bunch of house, a big, big, big, big river property. So.

Johnny: from primarily single family, single family, and a few hotels in the owns.

John Allison: He was actually in Arizona. He said, "I said, I only think I can do." Larry said, "I just want their own for a few days," so he doesn't seem to be worried about it at all. That's, I wasn't sure if he had business eruption on it's going to make sure he did. So, could there be a loss there somewhere? Maybe. I always suspect there's going to be a loss; something's going to sneak up on us that, that happens, that just happens. What we don't know is how the insurance are going to play with each other.

Johnny: He didn't say anyone there, he was actually in the...

Johnny: and Arizona.

Johnny: He said it. He said, I only think I can do that. He said, that's what they're alone for a few days. So he doesn't seem to be worried about it at all. That's, I wasn't sure if he had business interruptions, that it's one of my true ideas. Yeah, so.

Johnny: Coulderbele, all Sirs, somewhere, maybe, I would suspect there's going to be a lot of something's going to make up on us that happens, that just happens.

Speaker Change: What we don't know is how the insurance is going to play with each other. This appears to be more of a flood event, rather than wind and flood generally has lower thresholds and lower, lower payouts, so we'll just have to see in each individual case how these folks are able to.

John Allison: This appears to be more of a flood event rather than wind, and flood generally has lower thresholds and lower, lower payouts, so we'll just have to see in each individual case how these folks are able to access their insurance. I think every situation we've seen so far, they had insurance in place, so question is, you know, how's that going to work and the flood fight wind and vice versa, and that just takes time to play out. When you think about it, the number of hurricanes we've had over the years, we've really had been fortunate, had really metal walls.

Speaker Change: to access their insurance. I think every situation we've seen so far, they had insurance in place. So, question is, you know, how's that going to work? And this flood by wind advice versus that just takes time to play out.

Speaker Change: When you think about it, I've got a number of heartaches we've had on videos, we've really had been fortunate to have really met on walls.

John Allison: So, unless something really jumps out at us somewhere, I'm optimistic that we won't have big losses. But if we do, that's what we got reserved for.

Speaker Change: So, unless something really jumps out at us somewhere optimistic to go.

Speaker Change: We won't have big losses.

John Allison: Yep. Okay, that makes sense. And then, on some of your early comments, Johnny, you were talking about what you thought would be a better quarter without the provision. Do you feel like that's the kind of run rate the company is on, mid 50 cent type run rate, or that you feel like there are any threats to that type of a run rate other than maybe these elevated provisions? I think that's probably pretty close. So, I think 50, 3, 4, 5, 6 cents. I think that's about where we are right now until we get, I mean, John, think about it.

Speaker Change: Board of Trustees. But if we do that's what we're going to have to do.

Speaker Change: Yep, okay, that makes sense. And then on some of your earlier comments, Johnny, you were talking about what you thought would be a better quarter without the provision. Do you feel like that's the kind of run rate the company is on mid 50 cent type run rate or that you feel like there are any threats to that type of a run rate other than maybe these elevated provisions?

John: I think that's probably pretty close, so thank you, thank you 50 years.

John Allison: 3, 4, 5, 6 cents, I think that's about where we are right now until we get, I mean, Jon, think about it, that's a 196 ROI.

John Allison: That's a 196 R08. I can't ask for anything better than that, really. So I need to get this team to my assets. They get another two or three, five, seven billion dollars with assets. It'll take them a while, as it always does, this group, to get it where they want it. And that would be mine. That's what we'd be looking for. We'll be looking for something in that size. Two, three, four, five, six billion dollars in a month. The market that we think is a good market, either in an existing market, or maybe something outside of that touches one of the markets we're in.

John Allison: I can't ask for anything better than that, really.

John Allison: So we need to get this change in my sense, is they get another two or three five seven billion dollars worth of assets, they'll take them a while, it's an always does, this group to get it.

John Allison: and we're like, morning, and uh...

John Allison: That would be mine and that's what we'd be looking for. We looked for something that's 2, 3, 4, 5, 6 billion hours in a market that we think is a good market. Either in an existing market or maybe something outside of this.

John Allison: So, I mean, when they brought a one nine and six, we get another five billion dollars with assets. You can see what happens. So. Yep, they're hungry, Johnny. You got to feed them. Get them some assets. I'm going to get them. I'm going to burn them up for a month. I'm going to throw them together here for a while.

John Allison: that touches one of the markets we're in, so...

John Allison: I mean, when they grow up in 96, do you get them another 5 billion dollars with ass that you can see what happens so

Speaker Change: Yep, they're hungry, John, you gotta feed them.

Speaker Change: Gimmsum asset. I won't give it, I won't be driving about coming out of Donna's problem together here for a while.

Unknown Executive: Okay, all right. Well, it's a good. Thank you. Yeah. Yep, thank you.

Speaker Change: Good morning, John Tipton. Good morning, John Tipton. Good morning.

Catherine Mealor: Next question today is from the line of Catherine Miller with KBW. Please go ahead, your lines over. Thanks. Good afternoon. Hi, Catherine. Thanks for. Appreciate your ROI. I appreciate your ROI on the. Yeah. Well, you're the one giving us a 250 PPR. So it's not, it's not me. It's you.

Speaker Change: Next question today is from the line of Catherine Milet with KBW. Please go ahead your long-spoke.

Speaker Change: Thanks Dr. Nude.

Speaker Change: Hi, Catherine. All right. Thanks for the help. I appreciate your ROI. I appreciate your ROI and me thinking in all.

Speaker Change: Well, you're the one giving us a 250 p.m.r. so it's not, it's not me, it's you.

Catherine Mealor: But I want to take into the margin a little bit. You know, your assets sense that you can really high margin, your assets sensitive. And so I think it's natural for us to want to model a margin that moves down over the next year, so higher than peers, but you know, kind of trend down. And you know, you're, you're blown into positive data has been evenly matched both at about 40% over the cycle. And so as we think about this using cycle, is it fair to think about one of the positive data can still at that 40% beta, or is there maybe some kind of maybe you have to talk about especially on the loan set.

Speaker Change: Sorry, I hope they're on.

Speaker Change: But I wanted to take into the margin a little bit, you know, your assets, you're a really high margin, you're assets, something else.

Speaker Change: and so I think it's natural for us to want a model of margin that moves down. Over the next year, it's still higher than Pierce, but, you know, kind of trend down.

Speaker Change: and you're right, you're blown into positive data that has been evenly matched, but it's at about 40% over this cycle. And so, as we think about this easing cycle, is it fair to think about? What are the positive data still at that 40% data?

Catherine Mealor: I'm also pleased to talk to a lot on the loan set on this call on just the benefit of fixed repricing and new one origination pricing. To that, is there a chance of the loan data could be actually a lot lower as we move into the next year. It's given that also. Catherine, this season. Yeah, there's still, there's still some opportunity on the low repricing side. We've got about 300 million or so this quarter that's below 6%. We've got a couple hundred million. I guess all until there's probably a billion over the next three quarters that, you know, is in the low, low to mid sixes that we should get some left on presumably.

Speaker Change: Catherine of the state. Yeah, they're still, they're still some opportunity on on the low repriting side. We got

Speaker Change: About 300 million or so this quarter that below 6% we've got a couple hundred million.

Speaker Change: I guess all in total there's probably a billion over the next three quarters that

Speaker Change: You know, as in the low, low to mid-sixes that we should get some left on, presumably. You know, I guess we had to talk to competition wise, but we're starting to hear from...

Stephen Tipton: You know, I guess we had talked competition wise, but we're starting to hear from some of our presidents are different, but for it's that competition's pricing out the curve now. We're starting to hear from some of our presidents are different. Allen, you're seeing some stuff in the 60s and 70s, but we'll have to deal with that. But there's still some opportunity there on the free pricing side. Yeah, I think we said earlier on the call. I mean, I think it's flatish in the range that we're at today, you know, I would be pleased with. I think it depends, you know, how deposits behave and liquidity profile.

Speaker Change: Simovar.

Speaker Change: Transitants are different trips that competitions, you know, pricing out the card now and you're seeing some stuff in the 6th and 7th, but so we'll have to deal with that, but there's still some opportunity there on the free pricing side.

Speaker Change: Yeah, I think we said earlier on the call, I mean, I think.

Speaker Change: It's a flat-ish in the range that we're at today.

Speaker Change: Yeah, it would be pleased where the thing...

Stephen Tipton: And if we're able to continue to be aggressive on dropping rates on the deposit side. And on the one side, I used said before that about 34% of your loans are floating and reprised immediately. Can you kind of break that down to, is that mostly tied to sofa. And then, and then maybe give us the next bucket of adjustable or available rate loans versus six. If there's a way to kind of get through. Sure. So about five and a half billion or so that are variable rate, you know, change in the next two quarters or so. We've got some adjustable stuff in there too, but just talking about what's strictly purely variables, about five, five and a half billion.

Speaker Change: It depends, you know, how deposits behave and liquidity profile and if we're able to continue to beat.

Speaker Change: Gratio de Lange.

Speaker Change: on Drop and Rates on the...

Speaker Change: and John Tipton, John Tipton.

Speaker Change: And on the one side, and I've said before that about these 34% of your loans are floating in reprison media. Can you kind of break that down to, is that mostly tied to so-for, and then, and then maybe give us the next bucket of adjustable or real-buried loans versus fixed? If there's a way to kind of give us through that, yes.

Speaker Change: Sure, so it's about five and a half billion or so that are variable rate, you know, change in the next.

Speaker Change: Two quarters or so, we've got them adjustable, stuff in there too, but just talking about what's, you know, strictly purely variables about five, five and a half billion, there's two point eight billion that's tied to Wall Street Journal Prom.

Stephen Tipton: There's 2.8 billion that's tied to Wall Street Journal Prime. And the vast majority of the rest is tied to sofa. All of Chris's portfolio, you know, one, nine, two billion, is tied to sofa. And then we've got about, we've got about 700 million or so in the community bank group that's tied to Sofa. Okay. And where is that yield today on average? What's the spread to sofa typically? The vast majority is going to be four plots, you know, probably four, four, four, four crisis sides, Chris on Chris's side. And on our side, construction would be in the 350; is probably average over.

Speaker Change: and the vast majority of the rest is time to suffer.

Speaker Change: All of Chris's portfolio, you know, one-nine-two billion is tied to so far, and then we've got about 700 million or so in the community bank group that's tied to so far.

Speaker Change: Okay. And where is that yield today on average? Let's just spread this effort typically.

Speaker Change: Make, the vast majority is going to be four plots, you know, probably four, four, four, four quits aside, Chris on Chris aside, on our side and construction would be in the 350-ish problem average.

Stephen Tipton: We're starting from a high 8% to 9% yield. Yeah. Okay.

Speaker Change: Coburn.

Speaker Change: or Sturton from a 5.9% yield.

Stephen Tipton: Great. And then any commentary on what products within the deposit side, you've been successful at lowering rates on for this first 50 but move. Largely negotiated money market type products, you know, we've got a kind of a standard corporate product that we've used for years now that has about a billion three in it. We're able to pass essentially all of this last rate increase to the balances there. And then, you know, utilize negotiated checking, savings, money markets. Yeah, you're, you're to the point earlier on, on CDs. I mean, we've seen rates come in some there, but you've still got, you know, peers here locally doing 460, 470 and, you know, some, some communities back here.

Speaker Change: Yang Jian.

Speaker Change: Okay, it's great.

Speaker Change: Um...

Speaker Change: and then any commentary on what products within the deposit side you've been most successful at lowering rate on for this first 50-bit move.

Speaker Change: New Arms League, the negotiated money market type products.

Speaker Change: We've got a kind of a standard corporate product that we've used for years now that has about a billion three in it, we're able to pass.

Speaker Change: Essentially all of this last written crease to the balances there and then you know, you utilize associated interest rates and checking savings money markets.

Speaker Change: Yeah, you're here.

Speaker Change: To the point earlier on CDs, we've seen great come in some there, but you still got peers here locally doing 4, 6, 470 and some community vats here and there that are close to 5%.

Stephen Tipton: There that are still close to 5%. So our group's done a good job in terms of being able to negotiate there and keep the overall, you know, in the sub 4% sub 4% range.

Speaker Change: So our group's done a good job in terms of being able to negotiate there and keep the overall, you know, in the, so, you know, 4% 7% 4% range.

Speaker Change: Great thing, so we can wrap on a great quarter.

Speaker Change: Hope you're all done. Thank you.

Speaker Change: Yeah, well, you'll trace your attorney that you run the models based on what it looks like today. He asked me what's going to happen. It never turns out, it never turns out that way.

John Allison: I just made what's going to happen; it never turns out, it never turns out that way. So I'm going to believe we're having a game right now, and we'll stay ahead of the game. Until it spends so much after, we'll stay, stay against what we're doing. It's working so far. Thanks so much. Thank you. Thanks, Catherine.

Speaker Change: I'm a believer where I have a game right now and we'll stay ahead of game so...

Speaker Change: and Taylor, it's been so many after we'll study against what we're doing.

Speaker Change: It's working so far. Thanks so much.

Brian Martin: The next question today is from the line of Brian Martin with Italian PBA. Please go ahead. Your line is open. Hey, good afternoon, guys. Say Catherine just covered some of mine on the margin side, but just maybe one question, Stephen, in terms of on the funding side. Can you remind us how much, you know, the liabilities are indexed, you know, that move immediately that, you know, kind of the ones in, you know, repricing, you know, negotiating. Sure, yeah, there's about 3 billion or so that's tied to either. Either, either 91-day fee bill or reference to Fed fund.

Speaker Change: The next question today is from the line of Brian Martin with Etao PBA. Please go ahead to your line and open.

Brian Martin: Hey, good afternoon, guys. Catherine just covered some of mine on the margin side, but just maybe one question Steven in terms of on the funding side. Can you remind us how much of the liabilities are indexed that move immediately? That aren't the ones you're repricing negotiating.

Speaker Change: Ider 91 Day TV Bill or the reference.

Stephen Tipton: Most of that is, most of that is municipal, but we've got, we've got a few other products that are directly indexed to those. Okay, and I think you mentioned, I think it's about a billion dollars of loans. I think maybe the last quarter at the reprise, so in 25, you know, I guess the what the new rates today, kind of you're hearing from your president. I mean, you're thinking of, you know, before the rates were around, you know, pick up might be going around 9%. I mean, where are the more the newer rates today that you're, you know, kind of thinking that, you know, the ones that are repricing will move up to.

Speaker Change: Tipton Tipton, most of that is...

Speaker Change: Most of that is municipal.

Speaker Change: But we've got a few other products that are directly indexed to those.

Speaker Change: Okay. And I think you mentioned, I think it's about a billion dollars of loans. I think maybe the last quarter at the reprise so in 25, you know, I guess the new rates today, kind of you're hearing from your president. I mean, you're thinking of, you know, before the rates were around, you know, pick up might be going to about 9%. I mean, where are the more the newer rates today that you're, you know, kind of thinking that, you know, the ones that are repricing will move up to, you know, what type of range you're thinking is reasonable given what you're hearing now. Now in terms of the rate environment. [inaudible]

Stephen Tipton: You know, what type of range are you thinking is reasonable, given what you're hearing now in terms of the rate environment. Well, I'm on renewal. I mean, we should, you know, we should be able to, you know, to land in the 818, the quarter range, but, you know, again, I think a lot of this is kind of subject to what we hear and see from the competition.

Speaker Change: Well, underdoodle, I mean, we should be able to land in the eight, eight, and the quarter range, but again, I think a lot of this is kind of subject to.

Kevin Hester: Let Kevin give a little more color on what he said. I think that a minute ago, we're beginning to see some folks go out, go out the curve a little bit and try to fix at a, you know, in the hot six is low to mid sevens and extended out a few years with some repayment penalties. I think we're seeing some of that, and I don't know how much of that will continue if you get another rate drop here before the end of the year. So that will be part of the things that we're having to fight for sure.

Speaker Change: to what we've here in Stephen, competition, let Kevin get a little more color on what he's seen.

Kevin: I think Stephen said a minute ago, we're beginning to see some folks go out, go out the curve a little bit and try to fix at a...

Kevin: You know, in the hot sixes, low to mid sevens and extended out a few years with some prepayment penalties. I think we're seeing some of that and I don't know how much of that will continue if you get another rate drop here before the end of the year. So that will be part of them.

Unknown Executive: Yeah, okay. All right.

Kevin: The things that we're having to fight for sure.

John Allison: And maybe just one for Johnny, Johnny, just on the MNA. I mean, in terms of, you know, kind of opportunities, you know, whether you're, I think you're seeing if can you just remind us is there. You know, market wise, you know, where you're kind of more focused today, and then just maybe the kind of size of transactions, you know, the kind of drifted smaller versus bigger, just how are you or the opportunity today to guess maybe it's better question. Well. Now, one end presently, we're looking at one end market, one out of market. So, there would be end market, would be, of course, our market.

Kevin: Well...

Kevin: One in, Presently, we're looking at one in market, one out of market. So there will be...

John Allison: Outside would be something that is a state that touches the state we're already in. So, we wouldn't, we wouldn't be leaping over a state-owned bank. So, we're just playing with it right now, looking to be, it's, it'd be interesting to say, I think we're going to see some more of the directors telling management that, you know, I think we're, I think we're going to say, hey, we just slept through another one here with this tough time. We're going; we need to, we need to get somebody, get it in good strong hands and get a good strong dividend.

Kevin: Inmarket would be, of course, no, our market. Outside would be something that is a state that touches a state we're already in, so we wouldn't, we wouldn't be leap and over a state or anything like so.

Kevin: We're just playing with it right now and look at it. It'd be interesting to say I think we're going to see some more directors tell it management staff. You know, I think we're, I think we're going to say how we just slept through another one here with this tough time. We're going, we need to, we need to get somebody get it in good strong hands and get a good strong dividend and. [inaudible]

John Allison: At least that's my belief. Where we go from here, I don't know, but one's outside and one's inside the market. Okay, and if you go out of market, it's got to be bigger, just have enough scale, or I guess is that fair to think about if you're, you're going to, you know, go outside. Well, I just like to one is that I'm not going to like their footprint. I like, I like their, I like their footprint. I thought it looked; I thought it looked intriguing. You know, the market has gotten good. So, I mean, we look at everything, and I would just read him about this one out of market, and I kept reading about it, and I thought, you know, that's really a pretty interesting story there.

Kevin: at least that's my belief.

Kevin: where we go from here on another one's outside and one's inside the market.

Speaker Change: Okay, and if you go out of market, it's got to be bigger, just have enough scale, or I guess it's as if you're to think about if you're going to go outside.

Speaker Change: I'd like to reflect for granted. I thought it would be good.

Speaker Change: and Bennett looking to read you.

Speaker Change: in America, it's got a good book.

Speaker Change: I mean, we look at everything and I was just reading about this one atom work and I kept reading them out and I thought, you know, that's really pretty interesting story there.

Unknown Executive: And I verified that the information was correct and out what kind of roleplay we're getting there. Just got my. Okay, and then.

Speaker Change: and I verified that their formation was correct and out what kind of growth they were getting better.

Stephen Tipton: Yeah, and got you in the last two, which is on the, on the expense side, I think you said that the, maybe I missed, I didn't hear what you guys said earlier in terms of, you know, kind of the outlook on inexpensive kind of really good progress and runs here. Kind of the current levels are sustainable. Is there something to think about, you know, embedded in the numbers that we should think about as you go into 25 or kind of levels. I think we have a little windfall less quarter. I think the 111 and change numbers are good numbers.

Speaker Change: Scott Martin Tipton, and then...

Speaker Change: Yeah, and got you in the last two, which is on the, on the expense side, I think you said that the, maybe I missed, I didn't hear what you guys had earlier in terms of, you know, kind of the outlook on on expensive kind of really good progress and trends here, just kind of the current levels are sustainable is there something to think about, you know, embedded in the numbers that we should think about as you go into 25 or kind of level is okay. I think we have a windfall is quarter. I think the hard limit. And challenging to numbers is a good number.

Kevin Hester: You know, we, you know, we said 111 numbers, so 111 and change is, is, is, is probably the realistic number. Got you. Okay. And then just bigger picture on credit, maybe someone asked this, but just in terms of a few things to work through here, but, you know, no, no significant spikes expected. I guess in terms of, you know, additional non-performing is kind of what you have is in front of you. And now it's just working through that. And really nothing, you know, coming, coming on, on board that you're expecting. Well, there's always a flow, you know, how they transition.

Speaker Change: You know, we've asked that, it was last one, we said 111s a number, so 111s and change is probably the realistic number.

Speaker Change #100: Got you. Okay, and then just a bigger picture on credit, maybe someone asked this, but just in terms of a few things to work through here, but you know, no significant spikes expected. I guess in terms of, you know, additional non-performing, it's kind of what you have is in front of you. And now it's just working through that and really nothing coming coming on board that you're expecting. Thank you.

Speaker Change #101: Well, this is the...

Kevin Hester: They go from past, dude, and they go to non-performing. And then they go out the door. Right. So, I mean, it's always a transition of those things working right through. I would have thought that we would have had strictly that the project north of Dallas, because it's finished and we had two offers and we're a contract, I think, on that. So what I thought that would have been going on, but that'll go out somewhere to come in. I think we've got about 200 million probably told that we're dealing with that will be going in and out and around before it's all said and done.

Speaker Change #102: There's always a flow, you know, how they transition. They go from pass-do and they go to non-performing and then they go out the door, right? So, I mean, there's always a transition of those things working the way through. I would have thought that we would have had strictly the project north of Dallas, because it's finished and we had two offers and we're at contract, I think, on that. So, what I thought that would have been gone, but that'll go out, so it might have come in. And I think we got about 200 May and probably tow.

Speaker Change #102: that we're dealing with.

Kevin Hester: So do I think there's any giant loss in any of it? One credit could have some loss in it; bothers me, but outside of that, I don't think there'd be much loss in any of these credits. One of my, we've got a apartment project that we can lose a couple of million dollars on that deal. I think that can happen. Big, we've only got one big one out there that concerns me. And we'll just have to wait and see how that worked out there. They certainly improved what they were doing in the past, they're getting, they're getting better.

Speaker Change #102: It's that we're going in and out and around before it's all said and done.

Speaker Change #103: Do I think there's any dad lost in any of it?

Speaker Change #103: One for any could have some walls in it, bothers me, but outside of that, I don't think there'll be much loss in any of these credits. One of my, we've got a part of the project, we could lose a couple of million dollars on that bill. I think that can happen.

Speaker Change #103: Big one out there that concerns me and we'll just have to wait and see how that worked out. They'd certainly improved what they were doing in the past. They're getting better. So, they're we're seeing improvement in that credit. So that one may not be a problem in a month or two or maybe a problem. Just have to say.

Kevin Hester: So they're, they're, we're seeing improvement in that credit. So that one may not, may not be a problem in a month or two; it may be a problem, it is actually. Hey Brian, Kevin, there they're all. I'm just going to say they're all, they're all substandard. So, you know, we'll work them. They could; there could be some level of it that goes to not a cruel before it goes out of here. As far as loss goes, I think John is giving you the thoughts we have on losses. And ultimately, that's the biggest concern, right? Yeah, no, for sure.

Kevin Hester: Hey Brian, that's Kevin there, they're all.

Kevin Hester: I'm just going to say they're all such standards so we'll work there and they could be some level of it that goes to not a cruel before it goes out of here As far as law scows, I think John is giving it the thoughts we have on losses and ultimately that's them.

Speaker Change #104: The Biggest Concert Wrap.

Kevin Hester: Got it. Okay. And Steven, just last one, just thinking about it right, I know your expectation or your hope is, you know, the plan to hold the margin, you know, kind of worth that here, just kind of, you know, fighting the rate cuts. Yeah, I guess the risk that, I guess, where's the bigger risk if you're not able to, you know, biggest risk to not holding a stable, you know, kind of where is the, you know, what is the rubber meets the road there in terms of, you know, if you don't, you know, you need that objective, you know, what's the biggest risk to not achieving that.

Speaker Change #105: Yeah, no, for sure. Got it. Okay. And Stephen, just last one, just like thinking about it, right? I know your expectation or your hope is, you know, the plan to hold the margin, you know, kind of where it's at here, just kind of, you know, fighting the rate cuts. I guess if the risk that, I guess, where's the bigger risk, if you're not able to, you know, biggest risk to not holding its table, you know, kind of where is the, you know, what is the rubber meet the road there in terms of, you know, if you don't, you know, meet that objective, you know, what, what's the biggest risk to not accept? Not achieving that. Thank you.

Stephen Tipton: I mean, today, probably on the loan side in terms of pricing, you know, we're going to protect our base and, you know, do what we do. But again, you've already, we've seen a few instances where, you know, we have customers getting quotes or maybe in the pay off pipeline now that, you know, pricing in the, you know, six is for a mini term, okay? Yeah, so from the good, you know, good standpoint is from Chris's portfolio, and then from our construction portfolio, we're going to do a spread over, so for, and that spread's going to stay pretty much where it is.

Speaker Change #106: Tom, I mean, today, probably on the loan side in terms of pricing.

Speaker Change #107: You know, do what we do, but again, you've already seen a few instances where, you know.

Speaker Change #107: We have customers getting quotes or maybe in the payoff pipeline now that.

Speaker Change #107: You know, Brian in the sixes.

Speaker Change #107: for a main term.

Speaker Change #107: Turn.

Speaker Change #107: Yeah, so from the good, you know, good standpoint is from Chris's portfolio and then from our construction portfolio, we're going to do a spread over sofa and that spread is going to stay pretty much where it is. So, you know, right, you're going to come down, that right's going to come down with it, but it's still going to be the spread that we've been enjoying largely, I believe. So, and that's a, that's a big chunk of our business. It's the many harm stuff that Stephen was talking about. That's the stuff we'll have to compete with the rest of the market on. And.

Kevin Hester: So, you know, right, you're going to come down; that right's going to come down with it, but it's still going to be the spread that we've been enjoying largely. So, and that's a, that's a big chunk of our business. It's the, the mini firm stuff that, that Stephen was talking about; that's the stuff we'll have to compete with the rest of the market on and, you know, we typically do a good job on that and get the most we can get. So, I think we'll continue to do that. Yeah, Kevin, what's the breakdown on that in terms of, you know, what piece is a mini firm piece versus the, you know, that Chris, Chris's piece is what about a billion nine, I think, you talked to someone said mentioned earlier.

Speaker Change #107: You know, we typically...

Speaker Change #107: Do a good job on that and get the most we can get, so I think we'll continue to do that.

Speaker Change #108: Yeah, Kevin, what's the breakdown on that in terms of, you know, what, what piece is the mini-perm piece versus the, you know, that Chris, Chris is pieces of what about a billion nine, I think you talked to someone said mentioned earlier. Yeah, Chris, I mean, Chris, two million, two billion range and constructions, two and a half ish, maybe a little higher than that. So, I mean, you're talking about probably five billion. Yeah. Yeah. Yeah. Yeah.

Unknown Executive: Yeah, Chris, it means Chris to me and to be in range and constructions to in a half-ish, maybe a little higher than that. So, I mean, you're talking about probably five billion. So, you're talking about, you're talking about, you're talking about, you're talking about, you're talking about, you're talking about, you're talking about, you're talking about, you're talking about, you're talking about, you're talking about, that is tied to a margin over sofa, and we'll continue to do what we're doing there. Gotcha. Okay. All right. Thanks for taking my questions, guys. I appreciate it. Thanks, Brian. Thank you.

Speaker Change #108: that is tied to him.

Speaker Change #109: Margin Oversopher, and we'll continue to do what we're doing there.

Speaker Change #110: Gatship, okay. Alright, thanks for taking my questions, guys, I appreciate it.

Michael Rose: The next question on the line is from Michael Rose with Raymond James. Please go ahead. Your line is open. Hey guys, good afternoon. Just two quick ones.

Speaker Change #111: Thank you, Brian. Thank you.

Speaker Change #112: The next question on the line is from Michael Rose with Raymond James. Please go ahead, your line is open.

Michael Rose: Hey guys, we're off in here.

Kevin Hester: Any impact to Shore Premiere Finance from the hurricanes is related to either credit quality or maybe the at least the near term demand or potential for for growth. I would think that this would, you know, at least in Florida, you know, have some, at least some, some near term impacts. Yes, as far as what we have in the portfolio, I've not heard of anything so far. You can imagine his; his stuff is spread out quite a bit. We've got dealers across the country, and we've got credit across the country. So, I've not heard of anything so far.

Michael Rose: Just two quick ones. Any impact to shore premiere finance from the hurricanes is related to either credit quality or maybe the near-return demand or potential for growth? I would think that this would we support, you know, have some near-return impacts.

Speaker Change #114: As far as what we have in the Portfolio, I've not heard of anything so far. You can imagine his stuff is spread out quite a bit. We've got dealers across the country and we've got credit across the country. So I've not heard of anything so far as far as damage goes. As far as the market goes, the may not.

Kevin Hester: As far as damage goes, as far as the market goes, I mean, I can't really think of anything negative. I mean, this is kind of the boat show season. So they're in the middle of doing a lot of their boat shows for, and you know, planning for next year. So, I've not heard anything negative from this perspective.

Speaker Change #114: Um...

Speaker Change #114: I can't really think of anything negative, I mean this is kind of the boat show season, so they're in the middle of

Speaker Change #114: Do a lot of their boat shows and planning for next year.

Speaker Change #114: I'm not hurting anything negative from this perspective.

Unknown Executive: All right.

Kevin Hester: And then deal with the. The bombshells coming out of it, Michael. I mean, some of these boats got. Yeah, right. So there's going to be some new sales now.

Speaker Change #115: All right, I'm in a deal at the other end. These are the top sales coming out of the Michael. I mean, some of these belts got, I'm sorry.

Speaker Change #115: The Bobby's new sales can now this.

Unknown Executive: Got it.

Stephen Tipton: The only other thing I picked up on is that, you know, the monitor deposit ratio is a little bit higher than it's been in a couple of years. I know, historically, you guys have run, you know, closer to 100%. But any any concern there. Or is that kind of a comfortable, you know, place to be. I just worry about its loan demand. You know, it does pick up. I know we're not trying to push any ropes right now. But, you know, at some point it's likely will, and just wanted to get a sense for, you know, if there's any discomfort.

Speaker Change #116: Got it. The only other thing I picked up on is the, you know, the motor deposit ratio is a little bit higher than it's been in a couple of years. I know historically you guys have run, you know, closer to 100%. But any, any concern there? Or is that kind of a comfortable, you know, place to be, I just worry about if loan demand, you know, does pick up. I know we're not trying to push any ropes right now, but, you know, at some point it's likely will and just wanted to get a sense for, you know, if there's any discomfort, if the loan or deposit ratio were to fire. Thanks.

Stephen Tipton: If the longer deposit ratio wouldn't require.

Stephen Tipton: Thanks. Hey, Michael. No, not necessarily. And you mentioned we've been a little while, but we've run well over 100 years fast, and more approved limits are in that range. Yeah, I think what gives us comfort. You know, near term is, you know, barring about availability. What I mentioned earlier about, you know, just the liquidity and some of the markets that we're in today. It's out there and, you know, you may have a pay price to get it, but there's certainly liquidity in the markets that we're in. We've just, we've just chosen to kind of stay hooked to our strategy here over the last, you know, many number of years in terms of just dealing with customers one-off.

Speaker Change #117: Hey, Michael, to Steve. No, not necessarily. And you mentioned we've been a little while but we've run well over a hundred years fast and more approved limits or in that range. I think what gives us comfort near term is borrowing about availability. What I mentioned earlier about is just the liquidity in some of the markets that we're in today. It's out there and you may have a price to get it but there's certainly liquidity in the markets that we're in. We've just chosen to...

Speaker Change #117: kind of stay hooked to our strategy here over the last year.

Stephen Tipton: So, you know, and 88, 89, I didn't give us any discomfort today.

Speaker Change #117: Many number of years in terms of just dealing with customers one off, so, you know, at 8889, I didn't give us any discomfort today.

Unknown Executive: All right.

Michael Rose: I guess that's it; other than Johnny, I'm a little surprised that you said a 1.96 R.A. was good. I've never heard you say, "It's good enough." So, a little surprise that you're not setting the bar higher.

Speaker Change #117: All right. I guess that's it other than John, I'm a little surprised that you said a 1.96 R.A. was good. I've never heard you say it's good enough, so we'll surprise that you're not setting the bar higher, but certainly anything. Thank you, Michael.

John Allison: Thank you, Michael. I heard that too. I agree with you.

John Allison: I'll work on that.

Unknown Executive: Thank you guys. I appreciate it.

Speaker Change #117: Thank you guys for your time.

Unknown Executive: With no further questions in the queue at this time, I would like to turn the call back over to Miss Allison, to put some closing remarks. First simple, we're going to get that.

Speaker Change #118: With no further questions on the queue at this time, I would like to turn the call back over to Miss Allison for some closing remarks.

Speaker Change #119: Thank you everyone. Good for you. We have another good corner next week. I hope our people in the Carolinas and Georgia and Florida come through this without it's pretty tragic for that, certainly in the mountains of the Carolinas. So, anyway, wish them the best and that.

Brian Davis: Brian, do you got any comments? No, I don't think I have any comments. I think you all got it all covered. Well, thank you all.

Unknown Executive: Talk to you next quarter.

Unknown Executive: This concludes the Home Bancshares Inc. Third quarter, 2024 earnings call. Thank you to everyone who was able to join us.

Unknown Executive: You may now disconnect your lines.