Q2 2025 Home Bancshares Inc Earnings Call
Greetings, ladies and gentlemen, welcome to the Home Bank shares incorporated second, quarter 2025 earnings call.
The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued after the market closed yesterday.
The company presenters, will begin with prepared remarks. Then entertain questions.
M2 to remove yourself from the list.
Company has asked me to remind everyone to refer to their cautionary. Notes regarding the forward-looking statements
You will find this note on page 3 of their form, 10K filed with the SEC in February 2025.
At this time, all participants are in 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 over to Donna townsel, director of investor relations.
Donna townsel: Thank you, good afternoon and Welcome to our second quarter conference call.
Speaker Change: With me for today's discussion is our chairman John Allison, Steven Tipton Chief Executive Officer of Centennial Bank. Kevin Hester president and chief lending officer. Brian Davis, our Chief Financial Officer, Chris Poulsen, president of ccfg, and Scott wolter of Shore Premiere Finance.
Opening remarks today will be from our chairman John Allison.
Thank you. Welcome everyone. Uh, I want to thank you for joining today. Today is the 76th quarter that we've had the privilege to report to our shareholders since going public in June of 06.
Speaker Change: Have to say that we've come a long way since June of 06, and even a longer way from the Day in 1998, when my co-founder bunny Adcock and myself, made our original purchase of the 22 million. Holy Grove Bank in Hollywood Arkansas.
Speaker Change: We've come from 22 million in total assets. Then to almost 23 billion. Now, from 5 employees in to 2600 now, and from 1, small office, in Hollywood Arkansas to 217 banking offices in 5 States from a free tax. It's a free tax. Now, income of 400,000 Lynn to an after tax income of over 400 million now, and from our purchase price of 4.5 million dollars in 1998. To today's New York, Stock Exchange market cap of just short of 6 billion dollars, I have to say that Home Bank. Share story is certainly 1 for the record books. Many of you have been with us and enjoyed this amazing Ride Through The Years and we're extremely appreciative of your long-term loyalty to what has turned into 1 of America's Best in most profitable banks. For that money. Thanks you. And I thank
Speaker Change: My 2600 Associates. Thank you. We have moved from 1 of the smallest. It was about 10,000 vaccines that were called 2 number 64 in total asset size us. Why
Speaker Change: But with our 5.9 billion, New York Stock Exchange market cap, our company rocks. Number 35, in the US and market value,
I sat on the conference call last quarter that the second quarter would look a lot like the first quarter and we were right on the button. However this quarter was a little better with the record earnings of 119.44 million or 60 cents earnings per share. Reducing a return on assets of 2.08 versus last quarter. 150.2 million in earnings producing and return on assets of 2.07. Pretty consistent, I'd say.
Speaker Change: In the court, those were 9 Gap numbers but I'll take them.
Speaker Change: The 9 Gap rotce return. In case we kind of left it was 18.26 and 174.68 GAP, return on the tanks were coming. After all, ours was a mainstream at 186 ter, 1 Capital continues to build at 15.6%, leverage, Rosso for 13.44.
Speaker Change: Total risk based capital of 1943.
Speaker Change: Over the past 12 months, we have grown tangible, common Equity by 1.36 or 11.25% from 1208 to 1344. While at the same time, the company bought back over 3 million shares equally about 86 Million worth of our common stock and paid out about 150 million dollars in dividends for our shareholders all while continuing to grow. Casual common Equity, that performance displays the earnings power of your company.
Speaker Change: We continue to add more strength, to our already, Fortress balance sheet. And as we say, strength is no accident.
Speaker Change: And you never know when you're going to use it and it's comforting to know that you have it.
Speaker Change: Nice. Going to the reduction in the number shoots.
Speaker Change: In addition to that thing, 20 cents per share for quarterly dividends to reward our shareholders.
Over the last 8 years, we have bought back 520 million dollars of our stock, approximately 22 million shares and an average value of 22.60. While at the same time continue to grow tangible, common equity
Speaker Change: Dollar. It is what it is, so far, so good. I start to 2025 with already 233.6 million and 9 Gap earnings. And that certainly is a record income for this country last year. At this time, I think we're around 2011 and 9, Gap and 203 Gap. So for the first 6 months so far this year, we're up a little over 15%. I certainly can't ask for much more of these assets. We need to find something to buy that will be additive to our income. I was looking this year for about 450 million dollars in the income. And next year I kind of had targeted a half a billion that just raised the bell. With me still use the term 500 million and half a billion categories and Bell.
For 26, but we need to fire some more assets to get that done. We are presently looking at several opportunities and we will fix the best of the line to keep the Ford progress. Moving in the positive direction.
Speaker Change: The intention is to hopefully have an announcement before the next quarterly report.
Diamond: Back to you, Miss Diamond.
Thank you very much for a great report and a congratulations on a strong quarter. Our next report today will come from Stephen Simpson.
Stephen Simpson: Thanks Donna.
Stephen Simpson: Johnny mentioned the second quarter was another strong performance by home and Centennial Bank.
I lied about strong revenue and stable core expense Trends. We were able to produce an adjusted return on assets of 2.02% and an adjusted efficiency ratio of 42.01%.
The reported net interest margin came in at 4.44%
Stephen Simpson: In line with prior quarter, even with a lower level of event income.
Stephen Simpson: The core margin excluding event income, was 4.43% versus 4.42% in q1.
Stephen Simpson: And is up 20 basis points from the same period 1 year ago.
Stephen Simpson: I'm encouraged to see the trajectory of the margin in June, as we enter the second half of the year,
Deposits ended slightly lower in Q2 down 53 million as a result of seasonal tax payments. That occurred in April.
Stephen Simpson: But we are pleased to see balances grow in both May and June.
As we observe the deposit activity early in the quarter, we hated to see the money go out, but we are comforted to know that we have core customers that are doing well, making money and operating in Dynamic growing States like Arkansas, Texas, Alabama, and Florida.
And our other business lines, the trust wealth management and mortgage divisions continue to improve and show meaningful additions to the bottom line.
Stephen Simpson: I'd like to thank our regional division presidents. And all of our Bankers on another great quarter with that. I'll turn it back over to you.
Stephen Simpson: Thank you, Stephen. Next we will hear from Kevin Hester on the lending portfolio.
Kevin Hester: Thanks Donna. We continue to achieve recoveries from the charges taken in the fourth quarter cleanup.
Kevin Hester: This quarter, we recovered a total of 2 million dollars and we remain on track to achieve the expected 30 million in total Recoveries over time.
Kevin Hester: 1 large, non-accrual loan from that group remains very close to being resolved in a positive manner.
That that resolution will have to wait another quarter.
In addition, the multi-family Construction in the north part of the DFW metroplex is complete.
Kevin Hester: And we will begin leasing activities this month.
Kevin Hester: Asset quality metrics were mixed, but none of the changes were material in either direction.
Kevin Hester: The slight increase in npls was primarily due to a large Yacht for which we are in the middle of the arrest process.
Kevin Hester: We have possession of the vessel which is in very good condition. We expect a full payoff on this loan, once we exit the arrest process,
Kevin Hester: Solid loan growth. Split evenly between ccfg and the Community Bank complete, the results of another impressive quarter.
Kevin Hester: None, I'll give it back to you. Thank you, Kevin. And now Chris poulton will provide an
good afternoon.
Chris Poulton: Uptick in originations for Q2 led the portfolio growth for ccfg. For the quarter, we closed approximately 500 million in new commitments, which brought our year to date total, just over 800 million dollars which, uh, compares favorably to Prior years.
Chris Poulton: Portfolio grew by about 122 million during the quarter. Taking our total over 1.8 billion dollars and uh putting us in plus territory for year to date as well.
Our unfunded commitments approximately a billion dollars which has been fairly consistent over the past year as we look forward. We may see an uptick in payoffs during Q3, But ultimately, we expect the portfolio to be stable to up over time.
Chris Poulton: Donna, that concludes my brief update from ccfg.
Speaker Change: John Johnny, before we go.
Speaker Change: to the floor and to record, quarters back to back and we
Speaker Change: It was, I agree. Let's see if anybody in the crowd wants to send us a go find me this time. You'll find me in Click, I believe that was Michael Rose. I believe it was my cousin challenge extended. Yeah, well, it was a great, uh, great start for the year. The first 6 months are outstanding. So I'm, I'm pretty pleased with what's going on. And after the fact that the third quarter will
Could be on that like the first and second quarters. We've kind of had to wind our back to had a little extra income in both the first and the second quarter and we got a shot at having some extra income in the third quarter here too. So hopefully we'll continue to keep it strong until we find something else. We need to find something that that makes sense for us that's in our Marketplace or closed.
Speaker Change: Post driving Marketplace that we can be added to the EPS of this company. So, anyway, we're working on that and, uh,
I guess we're ready for Q&A.
Speaker Change: Thank you for our Q&A. If you would like to ask a question please press star. Followed by 1 and your telephone keypad.
If you would like to withdraw your question, please press star followed by 2.
Speaker Change: No 1 prep to ask your question, please. Ensure your device is unmuted locally.
Speaker Change: First question comes from Stephen with Piper Sandler. Your line is open. Please go ahead.
Hey, good afternoon everyone. Um, I wanted to start around loan growth. Um another really nice quarter, both ccfg here and in the community bank and in year to date, this is seems like the best organic loan growth. You guys have had and really as long as I can remember. Um and so I'm just wondering what you're seeing from your customer base. Um if there's been in kind of an increase in aggressiveness to to to drive that new loan growth or really, what might be driving the success there.
Kevin Hester: Hey Stephen. This is Kevin. So I mean I you know Johnny says we take what the market you know gives us. Uh I wouldn't say that we're more aggressive. I would say that we've
we've got some markets in which, you know, there's still some really good good things happening and our our folks are heading on, you know, all cylinders in in some of those markets
um,
Kevin Hester: You know, it is, it is tough. We've got some competition that I think has loaned into the the the rate cuts that have not occurred yet and tried to reach out and maybe lock some of that in for a little bit. So that's made it a challenge really across our footprint. All of our presidents are talking about that so that's a challenge. But um, we just had some, you know, we're in a lot of really good markets and including what Chris does with his group. We just got a lot of good markets to loan in and we're that's why we're here. So why why we're in those markets?
Kevin Hester: We had loan committee yesterday and and we had a almost a hundred million dollar project a couple of 30 million dollar projects. It was
Kevin Hester: pretty good loan committee. If there wasn't many loans, it was a lot of big loans. Yesterday we've been working on for some time and they just come to fruition. So, we're seeing that. But the, you know, we my, the rest of the market May Force us down at some point in time because they're, they're already already right? And that, you know, they didn't, they didn't chase us on the way up, because they, but they're leading on the way down. So,
I mean, the real truth is anybody giving away so
Kevin Hester: I'm not sure this is over yet. I mean I I if I think we're banking on Trump and pal having a
Kevin Hester: Having a drink together or something and, uh, Lord, right? So,
Kevin Hester: That may happen. It may not happen, but
Speaker Change: What? We don't need to happen.
Kevin Hester: That happened.
We take rates.
Kevin Hester: We don't need a quick drop in them, that would that could really kind of screw things.
Kevin Hester: well, when
Kevin Hester: Probably not on the, the whole bank. I mean, we, we looking for a whole bunch, probably not on the subsidiary operation or loans. We're probably not, I mean, not that we wouldn't do it, we just hadn't seen it. So, uh, if we saw it, Kevin look at it and let us know. But we are pursuing.
Kevin Hester: A couple of bikes to give us an opportunity to grow and we've seen a couple of we're going to talk about a couple of next week and then I'm going to see 1 next week so we we in a we're trying to find something you know you can't you run call it gap for non-gaap 202220208 Roa. You can't ask for much more than that out of your people. So we've got milked all we can get out of this turret so it's time to
Kevin Hester: Find something else for us to buy and, and we're, we're on the path. Just has to be a creative. Creative creative makes sense. And if somebody out there want you join a company that's growing and making lots of money and got a strong financial statement. We're the 1 so or we're 1 of there's we're not the only 1, there's more more than us but
I don't know if that answered your question or not. Yeah, it does. And and, and you kind of led to. My last question is just with the way the math works. Today, with with the, the marks and the interest rate marks still, do you think you can get a triple, A Creative deal still at this time? Or do you have to, you know, take a, a dominant amount of dilution to get something across the finish line?
We haven't taken solution before I interesting. You say that I went back and looked at these serial acquirers recently. If you go back and look at some of those, what am I looking back that out did me 10 years ago and the Stock's, the same price today that it was 10 years ago and the dividends the same price? They're paying the same dividend that they did 10 years ago and the people that
I mean they they bought the bank but they didn't do anything. I mean they nobody got any appreciation out of that trade. So you go back and look at those cereal delivers 5 and 10 years back. It is I just started looking 1 but I had those that beat us on some beds back in those days and actually this 1 is is is it the same price that it was 10 years ago? It was a buck and a half down but
Bank stocks have risen a little bit lightly so where I don't get into that game. I don't know what, I don't know what people are thinking when they dilute themselves into Infinity, we have no intention to do that. We're not going to do that. And I mean what I do 6-month illusion, maybe if it's the right deal. That was the EPS or creative maybe but to go out and dilute myself, I mean some of these people buy out and bought some of these deals that we've turned down. I mean we saw some of those deals and and we turned down and we saw about that.
Kevin Hester: Got a nice deal with a good company. That's a nice story for them. I congratulated them on that trade. So I we didn't, we were not on that trade but we were on 1 of the others that got done.
Kevin Hester: I don't know. You get me off. Get me off on that. When I look back, how we got out of bed on these deals? 5, 6, 7, 8 years ago, and the stocks less today than it was then, and they're still paying the same dividends, then nobody got anything, you know.
Kevin Hester: No problem.
Do a 4 your earn back to 10. Yeah I think I know the deal you're talking about in Florida. Right there you go. I think I remember the 1 you're talking about there so I think that's why you're stuck ready to where it goes honey. So
I appreciate, thanks for the time. Thank you, thank you for I appreciate our patience and
Our, our holding power.
Stevens: We now turn to my only with Stevens. Your line is open. Please go ahead.
Hey guys, thanks for taking the question. Uh,
Stevens: Probably for Tipton uh want to ask about deposit pricing in the footprint saw some good results and 2 Cube but just curious what you're seeing as far as positive pricing any. Any incremental pressure you saw during the course of of, of 22 and some of your peers have talked about
Stevens: The third quarter or or at least until the FED makes its next move, just curious. What you're seeing with respect to deposit cost competition in the footprint.
Stevens: Yeah.
Uh,
Stevens: Insane as as we talked about in the first quarter. I mean you kind of got some of the same guys running the same uh specials here that that they have been for the last 6 months or so you know our our folks negotiate against those well and we're able to you know, price them uh slightly lower than than you know what some some of the competitions do and we've got a decent. Um we've got a decent amount about a billion.
Stevens: 1 or so and CDs that mature in the second half of this year. Um and and hoping that we can optimistic that we can get those down just a little bit from from where they're maturing at
Stevens: Okay, uh, appreciate that Stephen and then I guess the other question is more for, I guess. For Johnny Johnny you mentioned that buyback yield uh in the press release. And in the prepared remarks
Speaker Change: Curious about, you know, your thoughts on the buyback and and and the million share Pace that you mentioned and 1 Q 2 Q. I just want to appreciate if you if you still have a similar appetite for uh that pace, even at these current valuations,
Well, that's a good question. We we we we're we'll see if we can put some money to work here in the next 30 days.
Speaker Change: Some Capital to work it.
Speaker Change: Having the we've continued to buy the stock back.
It has been diluted to us to buy it back as as we know we've had we have I think your group is running the numbers on that and also DDF running those numbers on that on the buyback yield and give us a better understanding of where we need to be. But as of right, we talked about a special dividend to all our shareholders. Actually, we're looking that was seriously considered and still in seriously considered a special dividend to our shareholders. But let's see what we get involved in the next 30 days here. And
Speaker Change: We maybe we'll have. We got about how much cash at the holding company right now about 400 million or 400 million. Well, that's a comfortable side but anyway, we we've got a few things. We've got to pay off 140, million 140 million. I thought that paid off July 1 it. Paid off July 31st, right? Right. So so that we got 140 million on to pay off, happy, sub debt and
Speaker Change: We'll pay that off when that comes up so we'll probably set for a little bit but actually we we've got so much Capital as I was going to reward our shareholders and we may do that anyway. Certainly a thought that that's on our minds to to do is is to do something with that.
Perfect. Okay. Thanks guys recorder.
Speaker Change: You very much.
Speaker Change: Our next question comes from Brett Robinson with host group, your line is open, please go ahead.
Brett Robinson: Hey, excuse me. Hey guys, good afternoon.
Wanted to.
I guess. First Johnny
You mentioned the 450 million this year and 500. Next year, you know, are those just kind of round numbers because that would imply.
Brett Robinson: A bit of, um, that income Mastery in the back half of this year.
Brett Robinson: 233 million today.
We ought to.
Brett Robinson: That's just about what we're running right. We're running about 110 115, 120 million dollars a quarter. So
Brett Robinson: That's annualized that that's about where that is. I don't think that's a reach. I think next year is the reach. I think next year is the reach. I mean we may not get 450 this year. Maybe 440 or maybe 460 depends on what happens between now and the end of the year. But
Brett Robinson: I think 500 million is realistic.
Brett Robinson: If we can get some assets undertone, we can get our hands on some massive, that's the key.
Brett Robinson: we can't, you know, I guess I said
Brett Robinson: I was there by conversation recently and I thought I can't ask our people for any more than a 2% Roi
Brett Robinson: And Donna said, yeah. But you do so, you know.
We'll ask for it but it's not realistic. So,
Speaker Change: Yeah, is that 450 is that on reported or the core?
Brett Robinson: Earnings.
Brett Robinson: It be reported already.
From shareholders, okay.
Speaker Change: Okay. Okay, it'll be better than that, bro. I think that was just a round number.
Speaker Change: Million dollar budget is and and I vote against them.
Speaker Change: And then it sounds like the the loans you know loan volumes are are still strong, but you're expecting some payoffs in 3Q. Um any color on the pipeline, you know, relative to 1 q and then, just what the production was this quarter.
Speaker Change: Hey Brett. This Kevin that pipeline is still pretty strong. You you are right? We had a couple of things that we thought would probably pay off in the second quarter.
Speaker Change: Then moved into third quarter.
so,
You know, last quarter I was saying we we had an uphill climb because of what we saw coming to pay off a little bit that pushed the third quarter but um, you know, production is is good, I think May a billion 1 last quarter.
um,
Speaker Change: pipeline is still, you know, still like it was
Speaker Change: okay.
Speaker Change: Um, and then maybe just last 1 around the margin, you know? And if the FED does cut in September, perhaps, how do you guys think about the impact to your margin?
Stephen Simpson: Hey Brett, this is Stephen, you know, I I think same thought process. We we communicated in the past. I mean, we still screen to be a little asset sensitive. But, you know, I think in, in the first, you know, 25 or or, or 50 whatever it is down scenario, you know, that gives us, uh, certainly some, some cover to to lower deposit rates. Um, you know, we've seen a little bit of sensitivity around, you know, 4% or 3%, uh, in some of the
Stephen Simpson: In some of our deposits and and going below there. And so I think, you know, if you see the FED make a move at some point, it'll that'll give us the
you know, that'll give us the news and the ability to, to be able to lower that and and hopefully be able to offset. You know what ours on on the loan side from the variable rates.
Stephen Simpson: You didn't ask this question but I have to get it out.
Stephen Simpson: Our expenses were high this quarter and they were high because of a lawsuit settlement that we had. They've been going on for several years. It was about 3 and a half million dollars actually expenses when you take the 1 timer out,
Stephen Simpson: According to Stephen what is 111,500,000? And I did the numbers myself and that's pretty close. When you take the 1 timers out. So the expenses, don't think the expenses have run off the rails. They haven't run off the rails so we we'll we'll do a better job next 1, but that was something big Brewing. We've been dealing with for years and we dealt with it and
Stephen Simpson: I want to expense that, but we also had something off the income item but
Stephen Simpson: We sold.
Stephen Simpson: Fintech operation out of happy bank. That brought us about 3 and a half million dollars in pre-tax income in. So, uh, anyway, the expenses will be back around the 11112 mark for the for next quarter. It should be
Stephen Simpson: okay.
Speaker Change: Good to hear uh congrats on the quarter and hope things cool off a little bit and Arkansas.
Speaker Change: They're not cool off here too hot.
Speaker Change: Tell us what was going on.
Speaker Change: 10th day advanced whether the the low is today at 96 or something, right? Kevin
Speaker Change: Correct.
Speaker Change: We now 10 on off. Strum with RBC, your line is open. Please go ahead.
Hey thanks. Good afternoon, everyone.
Hi John.
Speaker Change: Um,
Speaker Change: Hey um Stephen maybe for you just to clean up on the margin, in your prepared comments. You talked about um being optimistic about the June margin. Can you give us a little bit more detail on that? It it seems to indicate you think it's going to step up but I'm just curious if you thoughts on that.
Yeah, yeah, so thanks John. Um the the core name excluding event income in in June was 447. So it was up ample of basis points from uh, from where the the quarter averaged
Speaker Change: Some of that was loan. Yields were up a couple of bases points. Deposit costs were flat and then the investment portfolios performed a little better as of late.
Speaker Change: Okay, okay.
Uh, very helpful on that. And then, um, just a couple more smaller ones, but can you talk a little bit about the Mortgage Banking Outlook? I know it's a small line item.
Speaker Change: But you know, maybe it's symbolic of a little better activity in some of your Footprints and some of your footprints on housing, can you talk about that a little bit?
Hey John, this is Kevin. Um,
Speaker Change: Yeah, I mean, I think it's been, it's been up and down the, you know, we'll have a good month of of locks. And then the next month, we'll we'll not be good.
Speaker Change: um, I don't
Speaker Change: I don't know that there's going to be, you know, until there. There are some rate drops that get get the mortgage rates down.
Speaker Change: You know, below where they are today. I don't know that we're going to see any kind of real positive.
You know, multi-month Trend there.
Okay, this is Stephen. I I mean I was like we're and then just we're committed to
I'm sorry. Jon
I was gonna say we're committed to the to the space. We we brought a team in in DFW area on board kind of late first quarter of this year they had a good second quarter and are profitable already. So I mean I think we'll continue to be in that space and continue to try to grow it uh the right way.
Speaker Change: Okay, okay.
Um and then the small 1 on Shore. I know you, you mentioned the yacht. Um,
Is there anything else and there is that that's really substantially all of the change and non-accrual loans.
yeah, that was the that was the change for this quarter was that and that's been on our radar for
Speaker Change: um,
Speaker Change: for a solid 6 months that the arrest process takes quite a while. Takes longer than I would hope even even when it's here in the US.
Speaker Change: Um,
and so it, we we think we're in good shape, once we're able to do something with it, but right now it's
It's sitting in our possession and working through the legal process.
Speaker Change: It's uh, it's a $9 million yacht with less than 5 million dollar payoff on it. So it it's just a matter of getting your hand when you get your hands on it and get it solved.
There's not a lawsuit. There's not a lawsuit in this. All right? Maybe if it brings 5 million, we got legal fees, maybe some but there there should not be a lawsuit. Let me say that.
Speaker Change: just the process, we anticipate to take it but the process just can just continues on, but I think we're about to get
Speaker Change: It's the process is about override. The sheriff arrests. It takes, it puts it in then. The judge gives a next number of days to pass off, and they don't get us paid off and we get the boat. So we're we're at the we're at the point of getting the boat, I think Kevin we're closed, it's closed. Okay.
Speaker Change: Okay.
All right, thanks a lot. Nice job.
Thank you.
We nonsense, you Catherine, Milo with KBW. Your line is open. Please go ahead.
Speaker Change: Thanks, good afternoon.
Speaker Change: How are you? Um, most of my questions I'm I am great. Um, you did a really nice quarter, um, and most of my questions were asked and answered, but my 1 follow up is just on credit. Uh, you mentioned, you still have about 30 million left over of charge off, just from the Texas, clean up, a few quarters ago. Any update on the Cadence of that 30 million of how we should see that come through over time.
Speaker Change: Yeah. Just to, to make sure to be clear there. What I was mentioning was the 30,000 recoveries.
Speaker Change: That that we think that we recovery. Excuse me. Yes, I misspoke. Yeah. So that covers yes.
Speaker Change: Largely largely. It's a million and a half a quarter. There's, there's a couple of chunks in there, you know, we could get, um, if, if 1 works out,
Speaker Change: Uh, this quarter, we could get a million and a half on top of that. But but from a recurring standpoint it's a million and a half a quarter.
Speaker Change: Uh, on on 1 of the loans that we charge off.
Speaker Change: 1 more back on the buyback. Is I mean,
Speaker Change: Is you you've been really active you know in in lie of not having any m&a in the past few quarters is it fair to assume that that pulls back if you do announce a deal that you're looking at this quarter that we probably pull back on the buyback for a period of time just depending on what that looks like or do you think you you're you're outside of when you're not able to buy back stock just with a deal pending, you're just going to be continually buying back stock, you know kind of a long side m&a.
If we buy 4 or 5 6, 7 billion dollars worth of assets. So I I would
Stephen Simpson: we actually Steve and I talked about it nearly
3 or 4 times a week, whether we want to do it or don't want to do it, where we are, we have a 10 10 meeting executive meeting every day and we cover all those items. So to say we're going to quit buying back I wouldn't say that but to say we're going to buy a million I can't say that but uh
Stephen Simpson: I'm sure if, uh,
Stephen Simpson: We'll continue to buy back the stock. You know, I just I have a
Stephen Simpson: this non dilution idea that I don't want to dilute we don't dilute and then we turn around and buy the stock back. And we actually dilute ourselves buying the stock back and I
Stephen Simpson: I wondered sometimes if that was the right thing for us to do and we have a couple of companies running that analysis for us as we speak and go to make presentations to us. I want to see that, you know, the the I would I really wasn't familiar with the buyback. You. And we've seen the buyback here now and we we started adding it to our chart. It does add incremental, check to our shareholders but I said I said the dynamic. I said, did you feel that check last quarter and she said, no. And I said well if I did a
Big stock dividend. Would you fill that kick? And she said yeah, I would so
Stephen Simpson: The answer is, we'll probably continue to buy back stock, unless we need money for an acquisition.
That makes sense.
Well, especially given, I mean if you're and if you're saying you're looking at deals, did you say you're looking at that in 400 to 700 million in assets? I mean that's just a small given your your Capital levels.
Stephen Simpson: Because certain you'll have plenty of capital still, unless you do multiple deals, right?
Stephen Simpson: Oh, did I value you? I
Stephen Simpson: Say did I say, man? I'm sorry, very easy. 4 to 600 billion. Oh my goodness. Okay.
With by 4 million dollar worth, it was good enough to trade for us.
Stephen Simpson: It takes a lot of work.
But you and you're also not the kind that would issue cash with an acquisition, right? It's always stock for stock, giving your currency
Stephen Simpson: Cash in that position. Would you do cash? Oh well we have done we have to get delivered. Right gets really diluted our dollar bills worth our dollar bills worth 2 and a quarter.
Stephen Simpson: so,
you know, it it sure works better to use your currency and
Stephen Simpson: and do a trade.
Stephen Simpson: Yep.
Stephen Simpson: But with throw some cash in the deal, we used to throw cash in about every deal. We did we put 10 or 20% cash in. We're not afraid to do that, it does creep right up on the dilution. It gets there pretty quick, doesn't it Brian? Yeah, it does.
Stephen Simpson: Great. All right. Great. Thank you so much. Great quarter looking to see what you've got for us over the next few months. Thank you.
For such a support.
That's another reminder. If you'd like to ask a question, please press star 1 on your telephone keypad now.
Stephen Simpson: You're not trying to Michael rose with Raymond James, your line is open. Please go ahead.
Hey, thanks. Uh, good afternoon everyone. Um, just, uh, just a question on, you know, hiring? Um, we've seen a lot of banks, uh, disclose, you know, hiring plans some form or some informal just wanted to get a sense from you guys. What the, uh, what the hiring plans were for you, if you plan to accelerate them? Um, you know, I know the expense run rate will come down next quarter. We said earlier, but, um, you know, is there an opportunity here is it, is it a little too rich for uh what you guys are looking at at this point? Thanks.
Stephen Simpson: Sent hiring plan. Well, we don't, we don't, we don't hiring of lenders, is what I was referring to.
Stephen Simpson: We we don't do that. We that's not our style. I think that's chicken s***. Pardon my expression but I really do. I don't, I don't, I don't, I don't like that. And we've had
Stephen Simpson: I don't know over the years 7 or 18 teams in here, people wanting to walk out of their company, some of them, I don't know how you face those CEOs. Michael. I, I walked in, we just had them here in our office 1 time and we I went to a, a meeting in Dallas and I walked right into the CEO of the company they were leaving and and and and just something that that bothers me. You take a young loan officer and you bring him up through the ranks and you helped him build his his book and his portfolio. And then someone offers him another 200,000 and a bonus and they walk out the door. That's not our style. We don't do that. We'll be
Stephen Simpson: With somebody for another company but that's just not our style. We don't we don't do that. We don't plan on doing it. That's not going to be a a focus for us.
Stephen Simpson: All right, then. Um,
Speaker Change: Uh, maybe just just 1 more separately for, uh, maybe for Chris. Um, you know, obviously devastating, what happened out in California. You guys have an office out there, that's going to be some, some rebuilding, um, how much of an opportunity is that for, for you all. And um, is that something that we should uh consider as we're thinking about uh, growth potential over the next couple of years? Thanks?
Speaker Change: Yeah, thanks Michael. Um,
uh,
Speaker Change: I think it remains to be seen in terms of, you know, in terms of what kind of opportunities can be, it's a long term opportunity if it's an opportunity. Um, I think I read the other day, I was talking to somebody they've issued 50 building permits total
Since then, um, I find it very hard to believe. California will start rebuilding in the near term.
Speaker Change: All right, thanks for taking my questions.
Speaker Change: Yep.
We now trying to Brian Martin with Johnny Montgomery.
Speaker Change: The line is open, please go ahead.
Speaker Change: Hey, good afternoon.
Speaker Change: Good afternoon, baby.
Hey Johnny, maybe just 1.
You talked about maybe preferring some smaller deals as opposed to bigger deals, but you know depending on what's available and what you're looking at, I mean any any change in your outlook or just, you know, thoughts on just the, you know, the sizing of you know, things you're looking at near-term here uh what what they look like or you know, geographically and he's a little bit more color on that.
Speaker Change: No.
Speaker Change: They're in the, they're in the 2 to 6 billion dollar range and they're in our United States. They're either in or outside.
Speaker Change: Does that help you?
Speaker Change: Yeah, so, so 2 to 6 billion in the US and your preference in terms of multiple multiple deals versus, uh, 1 deal, is it, uh, any any preference there, still in terms of how you're thinking about that?
How does it? It doesn't matter, you know if if
That's probably what'll happen. We'll we'll we'll sign off a deal and then there'll be another 1 pop right behind it, but if it is a good deal and it works, we'll go ahead with it.
Speaker Change: Provided I Regulators will us to do that. I assume they will.
Speaker Change: You gotcha? Okay. Um,
Stephen Simpson: That's fine. And then how about just 1 for, uh, Stephen on the margin? Stephen, I think the uh, it sounds like the margin
Stephen Simpson: You know, it in, I guess where it exited versus worth that. Today it's up a little bit this quarter to date, or this, you know, this quarter to date. But on top of that, you've also got the
Stephen Simpson: The sub debt coming off, I guess so just the benefit. Uh I mean is your expectation then it's I guess. What's the impact of that? Subnet on the on the margin uh as you get into 3 Q,
Speaker Change: Sure, so Brian. And I were talking, before the call, it, it's about 5 or 6 basis points, uh, that it will benefit from them when it goes away again, it's it's going to go away into this month or first of August. So, you know, you'll have 2/3 of the benefit of this quarter, um, and then the full benefit in Q4, but, you know, absent, that. I mean, I still have to say, you know, please with with where June ended. But if we can hold in this, you know, 4, 455 range and then, you know, layer a little benefit, uh, from the sub debt. I think we'd be pleased. Uh, for, for that in Q3. I mean, we talked a little earlier about
What you're seeing on loan pricing and some of those things and you know, we'll see where that goes. But uh you know, very pleased with. I think we have just short of a billion dollars of repriced between now and the end of the year. Stephen H. Yeah, we got a, a little
Speaker Change: A little less than 800 million in loans, fixed rate loans that mature in the second half of this year. Those are coming off at 5 46, so there'll be an opportunity to get to get those up some. Um, we've got about a billion 1 next year. Uh, that's at 5.99. So who knows what happens with with interest rates? Yeah between now and then but certainly in the second half of this year I think there's an opportunity to sit to to get a little extra yield on what's maturing
Uh when you get down kind of that level this quarter Stephen what outside of the 3.3 million? You know, if you're 116 million in reported expenses absent, the the 33, you know what else comes out of that to kind of, you know, get down to that, uh, 111 million, this type of numbers is more core.
Speaker Change: Yeah, we had a million 3, a little over a million 3 in, in legal expenses, related to our West Texas lawsuit, and you talked a little bit about that. That last quarter, I think we had 1, 1 fairly large invoice in April, that was, that was from the prior month.
Um, those invoices have gone uh, down to to a nominal number now. So assuming you know, that we assuming we get that
Speaker Change: Settled in the near future. I would expect those legal expenses, go away and that that kind of gets you down into the you know 1 111 and a half range. 1 thing you do need to add back 1 thing, we do need to add back to the number is that we had that special assessment reduction. And so that was, um, FDIC number was down 1 and a half million dollars. Yeah. And if you look at, if you look at where salary expenses, uh, landed for, for Q2, they were they were a little elevated just from fee income um particularly at ccfg uh, incentive comp and then, you know, kind of same on mortgage mortgage had a good quarter. So, you know, I'm, I'm holding
Speaker Change: Holistically saying that, you know, incentive comp was up.
a similar number to what we had, uh,
Speaker Change: offset from the FDIC credit.
So there's about, you know, those those cancel each other out, there's about 4 and a half million that I would not expect to.
Reoccur.
Okay. So that extra the extra that's in there is in the salary line and that's how I think about that to kind of get to the corner number.
Yep.
Speaker Change: Yeah. Okay. Uh, and then Stephen just the the, the I think last quarter and maybe Kevin talked about this, but the the, the payoffs versus originations you guys, had expected some payoffs. It sounds like those, uh,
Speaker Change: Maybe are going to roll into the the next quarter. But just what were the the the the the payoffs in the originations this quarter um,
Yeah. Payoffs this quarter were 756 million.
Speaker Change: And you're right, they're a handful of those that that we expected to occur in Q2 that slid, you know, may slide into to early Q3.
Speaker Change: Um, so so 7555, there were about 650 last quarter. Um, and then origination Kevin mentioned origination volume was about a billion 1. Um,
Typically about half of that is funded uh, at quarter end.
Speaker Change: Gotcha. Um, okay. And then maybe just 1 for Kevin on on the credit quality. It sounds like, you know, I guess the, uh expectation was that the credit, you know, I guess there was maybe 1 large credit. I thought was going to kind of come off or maybe a couple they were going to come off. This quarter. Is that kind of the 1 you're referring to I guess at least when we think about third quarter kind of what the you know that
Speaker Change: Improvement. That was kind of expected. This quarter, would you, are you suggesting that that's likely in. I thought it was in the 10 or 12 million dollar range. Um, that maybe we see that type of improvement in in non-performing, in in the third quarter here or just some benefit there.
Speaker Change: Yeah, your own, your own point. The it is around 12 and and I really was hoping to be able to announce that that we had it.
Speaker Change: Uh, moved in the second quarter. But it, it looks like it'll be third quarter.
Speaker Change: Um, and then we got another 1 in oreo that, you know, I don't, I don't think it's quite time yet, uh, but we will be, we'll start Leasing.
Speaker Change: Uh the apartments this quarter and we'll see how that that takes off, well then it'll generate activity with somebody coming in wanting to buy it. So
Speaker Change: Um, we're we're making making progress.
Speaker Change: Gotcha. Okay. In the in just the uh the reserve level, you know. It kind of, you know, drifted down a little bit this quarter just
Speaker Change: This kind of this level is where you're comfortable for now and it just it kind of hangs around where it's at. Is that how you're thinking about it given?
The current, you know, credit Outlook.
Speaker Change: Yeah, it worked out.
Speaker Change: We're comfortable with with sperm accounts. Was our. We had an opportunity, we'll build it. We'll build it at some point in time. So I still like it 2% Reserve.
Speaker Change: and it's lacking, you know, and it's always running through zero and if I get a chance to build it for 2%,
Speaker Change: I'll I'll take it to 2%.
Speaker Change: I just sleep better tonight. You should to, but I sleep. Pretty good at 18 cents to 1855.
Speaker Change: Well I uh congratulations on the quarter and thanks for taking the questions guys.
Speaker Change: You bet, thank you for set your support.
Speaker Change: This concludes our Q&A. I'm a hand back to Mr. Allison for any final remarks.
Speaker Change: Good quarter.
Speaker Change: Thanks everybody for your.
Speaker Change: Release. And I guess next quarter will be 77. Is that right? Donna, excellent will be 77. So
Speaker Change: Bunny bunny is in here with you guys on the same phone. No, just, um, fantastic quarter. That's what I would say. I could say half of all the other board members were very, very, very proud of this group's in this room today and all that. You've done. Well, thank you appreciate it. Uh, Brian. Yes, sir. Got anything that you wanted to say or anything we left out, you think we need to cover know? I think we pretty much covered it all.
Speaker Change: Stephen anything else? Oh, good quarter Kevin. I'm good sir. Donna
Speaker Change: D d here. All right. Well, we're going to be gone. We'll see you and talk to you in 90 days. Thank you.
Ladies and gentlemen, space callers now concluded. We'd like to thank you for your participation. You may now disconnect your lines.