Prosperity Bancshares (PB) 25 Oct 232023 Q3 Earnings call transcript

Hello, and welcome to the Prosperity Bancshares Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Charlotte Rasche. Please go ahead.

Thank you. gentlemen, Conference to Call. and Quarter Bancshares ladies Earnings XXXX morning, and Prosperity welcome Third Good next Rasche, This Officer; Chief website Counsel today available the is and is of H.E. will weeks. I'm call being here Senior be for broadcast Prosperity Bancshares, David replay with and Zalman, Vice Executive President Executive on and our few General Charlotte me for and Chairman Financial Officer; Officer, President Timanus Hester, Eddie Dowdell, Vice Strategy; Tim Osmonov, Jr, Merle Hanigan, Operating Asylbek and President. Chairman; Officer; Director Officer; and Lending Chief Chief Credit Mays Randy Chairman; Chief Kevin Bob Chief of Vice Safady, Karnes, Executive Davenport, Corporate will recent highlights off lead review a for Zalman quarter. of the the David with our discuss He Timanus, and will be lending by our Osmonov, followed quality. of financial who recent Tim Asylbek will who including some activities, asset statistics; review will

questions. open for Finally, we call will the

me unknown which the performance or Before laws, known factors, or matters presentation in by this the expressed we usual of results to or statements. begin, may federal of forward-looking purposes let Prosperity forward-looking results disclaimers. may uncertainties risks, Certain involve discussed as for such, the such Bancshares constitute future actual materially make may of the statements and and be implied cause performance different and from other securities

qualified Exchange with by forward-looking expressly statements and factors we have can Securities be statements cause information All materially our the in and including actual statements. these the with their other cautionary could SEC. forward-looking those and that XX-Q the in statements and Additional different found concerning results Forms filed entirety to are than reports be filings XX-K in Commission

call David Zalman. turn over me the let Now to

call. compounded quarters. good X XXXX the the company I to everyone Directors confidence pleased annual $X.XX to rate the raising that morning of approved I'm to and declared and conference The to $X.XX fourth in growth third continued was our would per Charlotte, markets. The dividend prior share XX.X%. paid quarter the share thank like from quarter that dividends announce Board Board our increase everyone. XXXX in per our you, in the Thank was listening to welcome to has reflects XXXX XXXX and from

share of success and opportunistic continue with our continuing the also shareholders We repurchases grow through while our our to dividends payment stock to capital.

stable tangible income the same September XX, This this is capital our September during quarter after of XXXX $XXX amount net repurchasing XXXX. $XXX of prosperity XX, stock million Our the million and Prosperity compared $XXX reported million increased for September $XXX in million million common XX, earnings. Prosperity from in paying dividends the with for retained $XX reflecting period, XXXX. XXXX period ended

$X.XX Our in the $X.XX was primarily The earnings net period per quarter were compared margin. the Prosperity's income same share for XXXX for lower-than-normal diluted with by XX, impacted a September ended interest common XXXX. net

levels interest lower XX-month the period normal as improving than reprice is rates. models, like, our news we our margin our Although net and is that in our margin our to on market good based interest a to time show XX-month net assets we more would

than annualized Prosperity stable for of and and quarter XX, However, third change. The for the September on X.XX% X.XX% for to on could operating returns X XX.XX% basis June ended we tangible of continues exhibit XXXX. assets XX, the of if solid months rates more with equity X on ended XXXX. a was metrics compared tax increase the interest anticipate XXXX, equivalent X.XX% net with months margin this when

at June XX, on X% were XX, $XX.X $XX.X loans Our $XXX billion XXXX, a from the decrease or September of million XXXX. billion

September compared XX.X% billion $XX.X or XX, with on billion $X.X XXXX. increased loans Our

compared loans XXXX, and on acquired production first primarily on compared September with a partially the in deposits deposits, or since XX, decrease $XX.X program X on loans, by new First acquired with and or XX, compared X.X% or have compared million XX, grew September May our with growth $X.X actions. due warehouse $XX.X loans of lending June deposits a by challenging X.X% economy the were decreased with to $XX XXXX, large of in XXXX. funds, quarter. XX, the grew increased deposits during moderating the Excluding basis public continued stabilized public operation $X September excluding to business the XXXX, XX, September and due and bank more year June and time increase points failures Total in XXXX. Interest quarter as $XX.X outside X.X% XXXX, billion Federal $XXX decrease fund third are increase, acquisition, offset and billion during an XX, in $XXX rates intended billion slowing deposits. After Reserve's loan the X, or of merger markets, million XXXX, the signs purchase million billion the the billion Deposits acquired Deposits annualized Capital and of Prosperity's the on to a quarter. there by

deposits. Importantly, any purchase achieved broker the this without of was

XX.X% noninterest-bearing total a strong deposits of deposits. Our represented

basis assets totaled on interest-earning XXXX, the average during XX, of assets The due real nonperforming average increase other basis quarterly million quarterly assets on XXXX $XX million June primarily an of Our assets ] and points [ interest-earning of or September September $XX.X XX, XX $XX million increase on points and points merger or XXXX, to estate. interest-earning was in XXXX. compared basis or XX quarterly with XX, average X

the quality on XXXX. asset losses credit for sheet loans sound, $XXX Our XX, million remains allowance and was off-balance credit and on September exposure

last conference full mentioned as loan closing reserve the of balance our is booked at changed. set rules, to As and loan accounting has aside. new each call, Under loans the acquired acquired needed for the accounting in

nonperforming million bank the X appropriately loans Our accounting. based acquisition. closing assets at on $XX.X The for include from First reserve approximately these Capital day

charge in next If to quarters. allowance are fully we reserved Again, losses occur are loans. collateral into for [Audio the loans for a doing the for these appropriate, However, downs now alternatives several liquidation Gap]. the credit and these dive deeper values may

Our Bancshares of receipt Lone is Star acquisition pending regulatory of the approvals.

in to The termination soon complete continue parties XXXX, March in to the transaction together to anticipation XX, to We possible, as following the and date the Star closing. agreement Lone work with and prepared of are approval. the extended have as merger the are transaction regulatory of receipt committed

date conversion quarter operational XXXX. is for second Our set

We regulation. continue costs, to taxes all requires people regulatory business with opportunities. considering believe Oklahoma increased continued higher loans to benefit continue We funding and relocating loan point to a more consolidation. The and economies competition, This, and moving costs Texas salary have burden, driver planning conversations housing increases, concerns for increased bankers with technology succession from and states infrastructure, with the higher states opportunities. and combined from additional companies to that

economy continued your the growth bank located our loan prosperity. Thanks believe Although in slowing for there for and company. is moderating, future two of again the growth are be our can of I support we and best signs states of

discuss turn we the me financial over Let achieved. to Asylbek results Officer, discussion some our Financial of Osmonov, Chief specific to our

Asylbek?

$XX.X million million XXXX Mr. period million Zalman. compared June million ended the was for September for period before for quarter equivalent basis net or and X XXXX, XXXX. X.XX% and the $XXX.X same to XX, for income $XXX.X XXXX, of an X.X%. The compared $X.X Good you, $XXX.X XX, interest or increase months of to on ended the compared XXXX, everyone. Net morning, the X and for for X.X% and tax a September decrease the to Thank XX, was ended provision interest in quarter X.XX% for XX, same the June X.XX% months million XXXX, credit a margin ended losses in

September XXXX, the third X $XX.X the months cash X.X% period million Excluding XXXX. Period-end purchase XX, flows accounting $XXX the for September ended adjustments, the compared for in quarter for primarily ended the expense quarter quarter XX, $XXX.X the quarter the in compared for merger-related for primarily decrease period June quarter million decreased $XXX.X to and and the margin million from in to was XXXX, XXXX, acquisition. for period September portfolio. was quarter First XXXX. the XX, million XXXX, million Capital months same was X.XX% ended million Bank months X.X% and XXXX, second the by expenses to June $XX.X same XX, XX, Noninterest The the the linked XXXX, the net interest for in June $XXX.X during the same XX, compared to X for the income of million borrowings ended bond Noninterest was related funded ended to $XX.X for XXXX. X ended XXXX, due

of turn be XXXX for June the XX, the years September And million XX.X% in the in projected X expect of was ratio For $XXX The XX, $X.X approximately September same million. asset to The to and bond weighted XX.X% for quarter cash some XX.X% annual and and at of loans quarter over to metrics portfolio range average for period a for that, with XXXX, the flows fourth quality. life compared let Timanus details XX, XXXX, the expense months me noninterest on the X.X Tim efficiency ended to ended XXXX, XXXX. billion. presentation showed we $XXX

you, Thank Asylbek.

XX, taken of June million new XX, the up loans, for that million at $XX.XXX $X,XXX,XXX resulted $XXX a No X% XX, during in addition at it Loans the were real There turn into This First Texas. rate XX, to ended decrease $XX.XXX Rasche. ended of at loan to XX, a made nonperforming XXXX, is during decline Charlotte totaled September to quarter of the the loans during Bank production September allowance of million ] allowance compared end and loans. I ended monthly XXXX, quarter XX, was to XX and comprised in charge-offs total XXXX, quarter a X no XXXX. The $XX.XXX other months XXXX assets XXXX. $XX,XXX to $X.XXX linked-quarter an September estate XX% [ loans, a basis net loan the was the the billion Capital allowance was ended June XXXX. for nonperforming quarter over for The Our rate to basis. total September real to compared addition points XX, for compared of fixed and from million the September June in approximately ended from is outstanding XXXX. repossessed increase. assets XX, XX% This variable $XX,XXX,XXX June XXXX, $XX,XXX,XXX $XXX XXXX. The million loans June dollars basis or basis. XX, will the [ credit to quarter for $X,XXX,XXX XX XX, other at ] billion charge-offs the of [ quarter average XX% is rate $XX.XXX acquisition XX% floating were This estate. Net XX, linked XXXX September for XXXX a points $XX,XXX,XXX represents ] now the ended or ended September XX, September compared losses on income on asset XX, quarter XXXX, compared quarter

we Thank you, questions. to At prepared this Tim. are time, your answer

MJ, will help questions. Our call with operator, us

first Today's comes Instructions] with KBW. from Brady Gailey question [Operator

the we've dynamic repricing, in net interest talked pushing I about know past, asset of the the margin higher. the

a margin forward? like I a margin about still think a previously, Is X.XX% talked of right a of upside and frame to going within years. amount that X.XX% you the the seeing way year X% couple NIM to you're within

Every XX, feel there to I yes. answer of general we're at. again, models answer our be numbers where Brady, like just still some X looks months get is But I a months XX supposed cautious question, you increase showing was we now. months, I the right the based just kind showing time. still out on mentioned. we're ran we the We are we've XX time be this on 'XX, in from bottomed counsel as feel models, that numbers our again of in will all -- in the our room and decent September I and we're that showing of that And mean, my

Okay. could that's restructure if get the there bond And opportunity. you such tomorrow a big book you

EPS costly in on You accretive with up if thoughts consider just bond restructuring rates how Maybe but excess have updated we've you know be guys or like would trigger. pull restructuring? the tick something thinking to bond the it that also about the it's doing just clearly more more a just a seen, possible capital gotten you're that. I partial

you at again, would it so you be for numbers. And looked either get the hold mean, them voodoo your for accounting, such I has [ through I began, It your mean, more we've from your than to our sell and back to $XXX million, accounting your those propel money loss back $XXX ] either of primarily where that's earnings bank, under to ]. but that, our HTM sale just always accretion, the in we're bonds years next me, will get now X again, an because bank at watch right put just this or we from you again, were or kind earnings to year would million $XXX-and-something you and really. accounting, take have earnings. Well, and at maybe available you money accretion But we it. bonds And just take [ or since have capital. acquisitive -- we propelled an million

And so the our to of have take didn't that we we never lot have capital when capital account. could chances in big a changes much

much So of all XX% probably pretty put [ ]. our of we HTM in plus securities

did ] do it, really if you an did it standpoint, change it, everything. and you once couldn't do you from So [ it accounting would

HTM. the to back go couldn't You

partially, to the the have can That's just have if said portfolio, correct. And whole you to you you his do question, think Brady, to XXX%. I add

"You have off and with do reprice the portfolio our and determined not?" the being would want years, the think X, and can X leave cash for just use duration flows let point, it So I cash we borrowing. all whole And paying to we the at within take it that short, decision the to or get

Yes.

Okay. on you mean about about for like quick And $X of charge-offs, me, $X built million. by looks one then net reserve finally provision. booked just a you the million it I

been would would provision I but have $X million, the it's So $XX or million thought zero. have like

on there. So must be there something going

Yes.

was in of did FCB our we that's were earlier, put a to them put had million little bit of but for to $X about as the On related $X $XX so charge-off million. it's of kind we'll mentioned loans additional million related the only in provision, -- comments and we dive $XX we overdraft Brady, million some FCB, and additional at

overdraft but of a stuff amount it of -- of majority through probably lot time just to and It's goes category, of like crazy that that. lot a a times a that is

] $X our being then model anything have don't overdrafted million allowance balance. appropriately that we material, Unintentional are determined we this [ loans, not And provision Yes. need to shows And quarter. we

credit allowance $XX in We have million in million $XXX losses nonperforming. and for

say probably. I'd pretty good covered we're So

for color. strong. great, pretty All the right That's thanks

I million Capital. First say exact reserves put mean, would that mean I a lot so that I again, know in was the money, numbers of of of we don't some reserves. Capital -- that $XX or First money for I

Including the -- yes, everything is about $XX million.

million. $XX

[indiscernible] the in Including

we matter those no it, decided charge look look million, But at $XXX but you to we even some off, if how at of things.

$XX I still think strong you still have $XXX million ], and million [ a position. very

comes question from with Rochester Point. next Compass The Dave

you into expecting term? What to are ] next year? some for near Appreciated the the here outlook, it's have and asset that side. NIM repricing at bottomed and just opportunity makes update Fourth given expecting the way put you that the sense NIM point has on guys parameters hear NIM guys the this on more to around that expansion longer-term you're in Any good [ here

Yes.

for look the at the If we quarter, a what probably quarter, moderate -- balance you perspective. see at have increase we -- sheet, -- the we bottom on based third look I NIM we as would believe, we fourth is our from say,

as So going now to from balance off flow the to cash we're bond standpoint, our portfolio borrowing. our continue to higher we optimize we're pay sheet using --

third we saw, off As or you now in right the $XXX quarter. million paid

us. standpoint. reprice that do will to sheet help as time, optimization that that accretive to that continue that continue the So be And should us we'll of NIM loans over for balance from grow we will

quarter sheet right moderate described a what fourth in optimization. all I increase So with now with would say balance the I

see more potentially? you a for I right? pretty should mean normally that there is growth, -- borrowings deposit down seasonal strength those normally good pay it's help of XQ then some some quarter And

It will.

we'll text usually moving So we we're first the fourth fourth I public million to see the the not of deposit see that in also funds, see. But what impact know we'll because keep be -- usually increase usually how fourth to of of some $XXX used more end quarter But of public see other significance don't think but much of a in about in benefit they're they of the because ] the as it longer or seeing January. their the fund but see December we'll funds. It's the $XXX in the growing to we payment. quarter, public tax the I quarter. deposits as tax not the probably like And they end areas, [ due to pool from quarter, million and collections

just move they and that lot but left X% may a of can cautionary, ] they that quicker us again, X%, get now But money too. with times, [ it they

timing be out they'll be keeping is the once the ]. the moving they to higher-yielding they'll think of export short probably I very [ [indiscernible],

in from that growth, and dependent expansion core stabilization about that kind XQ the isn't deposit like. you're repricing sounds it And of on more side? talking That's of the asset

and that's is That's X.X% But of we keep cash portfolio yielding. $X loans cash $X.X out correct. and our billion, portfolio to to portfolio, we X% you look bond paying billion that probably the flow reprice. off portfolio, loan loan said with flow if variable Especially have of you our going at mind have that loan the what to -- on on billion have XX% fixed at from about about $X in we

XX% in So we out based so And we quarter. yes, a now. floating, and that. to -- we're already replace they're But get the not modest going increase the but and fourth benefit X% see a what the to on right is X.X% going of see,

Right.

saying in to still that loan are yields X% range? new You're X.X%

is. seeing, we're what That's it

capital. on more great. Okay. just Maybe one

you Seems was your stock on flexibility that deploy. with know [ excess to the now. that the can through here near ]. XX% but a deal in the you a capital here some I back you've will lot what of CETX of got thoughts wondering gives I coming were $XX million go buyback XX% closing like about there. of just You're right lot up,

I So wanted just your to updated thoughts. get

have a lot doing we're not capital. people more lot do why of know I time. on. a the of We a are going questioning lot same at There's

I same capital capital. use and we mergers said acquisitions for building are At again, to primarily that dividends. always truly our the think I've also like time, we increasing and that,

mean after thing quite retained regulatory their we right You we've our can stock, now see But not ever our looking with at year's better I looking would we're a is are, I've right one than that opinion. ] it sharing best I even one repurchases. under you would be seen it's now a at even my XXx is next of what so it been -- one that and still bit a couldn't earnings share the time like years, on mentioned, least agencies dividends cheapest in [ buying hesitant. new things the requirements be be time. This of be

to now, we're part right they're losses in not just your -- they capital, what going from what capital. the how -- think they're consider a their are I part to new we're to consider that going your to be, regulatory going really standpoint, requirements see trying of bond portfolio, of

any But think do least it to see It be out now, going change. right right a look is this -- going or, calculation. on your you waiting number HTM At like Ours there's now everything sale, could that we However, be just just with does the seem to of that. capital that, an part opportunities right And things we're of have anything, bonds there is it's happening. if with your doesn't now. like change for available on block to

high-class funds excess be. to right a bad is place not having now. problem So a It's

Raymond comes with James. question Michael next The Rose from

quarters. as here. has you I of your A business on that the how just guidance Kevin, and spot Can on, lot about and But to was wanted couple crystal asked over have answered. while comment we pretty think on next quarter the ball much just see warehouse? I is Your been looking you last

from Michael, XX the significantly. million days $X.XX. better shade for the closed off warehouse. we We down night, average We [ at said $XXX a about I pretty think so than almost ] the yesterday that probably that. average it's dropped through out in million exactly we'd quarter, just is it's to last million, down ago, $XXX $XXX [ did ]

I neighborhood first we're So -- quarter, year's $XXX unlike in probably the unlike think million the looking and on not quarter, two for more of last average. fourth

coming to to use. of not, terms we'll we'll going quarter. we're If would in if kind any shortfall a the there's the funds pay go come going of Home in public couple So production, have we fourth liquidity down the warehouse of off loan of Federal out here gotten million that Bank hundred there's Loan have production, the excess borrowings. loan We're

uses will for it. So it we've be down, got some

then just on production. And Helpful. maybe the

your pretty You we markets, aggressive growth you year, those seems for on year, it see your to guys wanted And get a bit of think rate guys? for a to kind consider I this competitors have year? the but that dislocations some and especially had in little where for Texas competitors, you've starting of decent kind of what of should next growth this are some some more guided growth mid-single-digit just to of leaves like

Yes.

I quarter. sell of or I brought rather And And into there's demand, lot to that our mid-range. We've that say, over from would relatively just out things Michael, us tell last I'd just a don't at loan much rates month deal. harder that take them. so. so equity seen mid well decision said what It's or of low some and real off into to to done. pencil deals And mid last the to these get is a weaker think, recapping, that's than was part mortgages I portfolio you by that

down it's it's borrowings. would So more that money to great. on if will the that mid-side And lower pay be the used be on the side, be if look, can that

say I'd forward, looking just to So mid. low

their loans have because we with have with loans, we And trying at a that were have is now us or with to with in we kind the not complete deposit today ago, lot lot ourselves relationships everybody relationship. months of And loans and of being because banks deposits, kinds reduce all people deposits we getting we're X like a it relationship some were not made flushed borrowing restricted has we us. don't would whether of didn't a [indiscernible] looking just normally when

our this So too. some making, is own by of

guess I [ in running I we where of to we So finally were -- end settles, the where went all ] and spectrum, that how guess up. spectrum the depends dust we we end the another

might of lot have and where minuses, people are move really opportunity. and and think a need basically having XYZ pluses There's right? into our There's us adjusting we're that interested. pay creates a to lot which your to I restricted hey, is Bank if we're the you're with have here, or done down, to used And you think deposits you you while not XYZ, requirements of, coming borrowers historically of getting from period this up shut market to

us we'll people adjustment that if as speak. to there are pay but. for deposits, and through going move we willing we're be So up And period them

of are ask of not about wanted -- always X us, and like would to want if deals still they're was total And participate participating we've do I lenders banks rate customers, rate of about always plus one willing of good yesterday guess are anyway, anymore the with credit that has came that line was I been always I the but and to X.X%. said in X.X the us their in, to ] that point the or sulfur one participate. we was [ it asked business And this think, and short. X the to guy what

back I said, we'd X.X like says, come and always we about well, he it. do us So the And higher really said, to lender asked to -- are. like point still you're

do the take if cost, think, the risk we it that more we and time. where same so pricing see So better, at I becomes may

And final one one maybe David. me, for just

for potential as we You a threw out lot M&A drivers move forward. of

quick kind how on Just And it the give if about broadly speaking, want quarter. it if Star plays a what's deal holding just you has of see all maybe you I update us think I up? Lone this anything then and could you changed. know to out? just last do talked

some hoping FDIC were of on line, people Well, the I service. was on that loan approval they could maybe that about answer the

it, working where but on with lot just they the approval the it's Star were still I'm a we're are completely than to are a get that to ago, times, I'd Lone We times hoping to get done. still year regulators say some we more done different like deal. hopefully, to those can to out that it be that And committed trying We'd also. move there will we're looking and like get hopefully, there with forward thing at. approved we're opportunities

The next Peter question from D.A. comes Winter with Davidson.

Tim, I to just resi selling back want the comment to mortgages. about go

resi all end the from quarter sell? in You growth here that of for a just strong and terms the accelerate about and talked it pretty but loan originate had of that last quarter And this quarter, towards was will quarter. I'm mortgage happened wondering, is kind of

to growth the pipeline. funded. I you're unusual and from XX days actually think It's to application that date not take loan to already closed seeing a XX the getting of that the was lot in of

quarter really quarter. what I And if forward, a prior was see So for you'll makes that this seen sense. think the carryover more from a of going lot you've moderation

just No, in Yes. does. the of number estate, can about And multifamily articles commercial in particularly pressure, Texas quality and terms it then a -- real ask what been of about office? talking There's credit I market. seeing office particularly within you're

obvious for I that. seen And are We think none. time, few point reasons problems this a almost there really few up have in to very

reasonably we have X- take been office you nonowner small first, to occupied. that opposed owner-occupied have been X-story If involved to done as typically in And we've facilities. type the projects

office nonowner-occupied not large market the in been. really never we're So really have

loan, that any has we've to referred to through think that us in terms certainly benefited of out, insulated somewhat with our be careful, And the I very opportunities in obviously, always you've of weeding but office. And us. multifamily. problems them way tried with So multifamily, from has checking those and

in developers projects own. There pretty population. markets our be got holding are we've their of that done growth and business with continues the have decent terms far, So in to

the So that of multifamily hasn't piece certainly it. hurt

a reason So a see that in, to disconcerting that now, And right I just it's I going that in don't directly and to those change are that's Obviously, markets stable world, there anytime don't But any we soon. and in think affect Texas standpoint so lot see speak, a of overnight. Oklahoma. big out don't macro the in of really the we're from think change to there most things.

forward. think So we stable it's pretty going

last one then question. And

strong. Just -- is credit, very obviously,

coverage longer do take reserve you to nice you much can have a You think? how zero loans. nonperforming there -- provision But is expense,

and I'll factors. lot based minute a that a is make is I was to there the there. is that some some do mentioned out And And Well, just it end more on There we comment. what affecting those environmental there in and to than concerned A possibility I up about. they us call date, knows, are quick what have things ago weakness be saying. world, reserve who of but

and about a asked You good it's office I example. mentioned pretty the market,

tend not for And if But the to statistics, into to look in trying we're segments, other future you that they're a they're reasonable at we creep way. If significant know. where good. our per we not any is don't And that prepared the that. now we real on the I think of appropriate. are on calculations, models our anytime see think reserve we right wouldn't and And all change be soon

to based right on of We we're expecting reserve. what to we reserve not out huge either any take see don't now. the the So money additions see

while. So steady where are, and we goes for I comfortable think it as we feel with it's think a little we

reserve like think there's a to that Peter, things, probably us losses X.X% compared banks many I historically. had most carrying ] the we've [ not reserve remodel probably at

to referring environmental the in there a a piece probably factors, larger when piece our the reserves So a factors. probably is big I lot Tim's and there's if think for environmental

money. number X of back we're income. we've pulling So banks reserve or out a of year left a did never into We that ago, money we're and that, the putting

So like out don't we money money at to different consistent. in, with putting like really that to be We'd play times. taking pretty

for don't the do don't next putting feel us reserved, in putting XX I -- catastrophic we me. well in that's unless months, we we're So just happens, see I shouldn't something money see and money

from Truist with next The question Brandon Securities. comes King

year, a wanted although get experiencing thoughts growth case on revenue you're softer is But about Prosperity. how thinking much the expense your growth just industry I as for not and next next outlook So a you're want of But manage get of about want year? to restructuring. sense banks lot going to how announcing forward. I just what you to other thinking know a initiatives expenses

I'll So talk the fourth about a term, Brandon, short in quarter.

going think line in I be quarter. had it's we the third to with what in

environment million But right out to think it's now we mentioned, you increases go the merit we for I are As XXXX, $XXX our million $XXX I inflationary with annually. do and if [ ].

assessment. that's if few for the But expect we're next a mitigate had but expense next would excluding that automate be probably is get year, I not to to in have the special cost. but I assessment year including FDIC nothing So X% the for to lot trying to guidance to a that X% things, initiatives, that's a of quarter, that X% increase, trying special growth, to first we we're X% would but come going significant

say, So to I X%. would X%

how much that is And FDIC?

calculations, our annually going million about $XX FDIC be -- based think I to assessment. on on the initial So special

had addition, so. million is $XX In already costing another XXXX, we which that assessment in

$X.X about So extra million an quarter? or really, talking so a you're

million FDIC $X quarter That's to expenses. yes per $X.X Yes, on million, the assessment.

it what over flows cash security me, from if are for next but the sorry you lastly then already, And months? and expecting I'm XX I maturities missed

flow, So next it's $X.X XX cash the months. billion our about in

on loan. That's security the

the I'm loans, about billion. it's sorry, on $X

that. of portion some again, But

Manan from Morgan comes Gosalia with Stanley. question next The

some us percentage X-ish set end mentioned more loans expecting the loan in higher. fixed of you repay loans But fixed repricing rates long-end or [ points about repricing detail percentage rate you're XX% are dollars dynamic? next your rate the in ] to of [ dynamics I know to variable how give you ]? repricing higher And the from result Can and the on now between that as duration of increase impact much in how year? a does that

a we all including the looked in and the than flow first would say higher the already that duration be portfolio we when the cash have half in second the cash So billion, little flow, but our is would I at essentially, $X evenly. half, bit maybe from loan

It's would $X.X information. we billion; in billion. last -- you X just what gives in had -- happened QX, I give numbers back look QX, you in the maybe If the some $X.X billion; you and and that had we quarters, in we $X.X the in had like QX,

see based months. So flows, flow, XX cash on going that's you to the can actual that see that, that cash you can over evenly be distributed

points loans that's And percentage X-ish higher? about repricing

by and is but it's additional XX% it's -- variable at the Yes, that's priced. fixed of loans, the billion, rate the On out -- that floating X%, -- floating, repricing it's There's $X the already so market Yes.

you quarters through help were Or numbers you the the can repricing those meant points Or of percentage was for X it all of think that? only us gave that? I half higher? last Sorry, X

the that's percentage same as well. think I

XX% $X.X ] or billion, $X.X is is of that repricing billion variable [ that higher. fixed

is XX% so. other floating The

had The cash composition what expect. is flows we we what very experienced and similar to

think time in maturing your through much of And the over how it. for Got frame, we is X, securities funding paydowns to improve coming and loans? XX-month higher-cost NIM model XX from improvement in versus as and repricing that

say Manan, sheet the that we the -- disclosed, balance bond getting billion would $X.X and -- billion what we balance $X the have I we portfolio in on sheet, fixed that model have loan. that's static this

but also -- the So and deposit with there that make we're competition significant where our static don't But the sure all that cost. or know model. to and be, no in that's in assumes deposit and that's going flat, I'm you sorry, is repricing -- -- assuming bond model that, stayed the just

a that's variable So we use.

net deposits. up. home I brings duration money amount of of what everything amount mean, saying is federal and of bank amount just repricing changes loan of margin loans, static, interest that basically, This we're is the

That's correct.

just And get a clarification. I if could

think I because higher anticipate, either than mentioned imply be you mean repricing? would dynamic? because comments, rates of of increase lower it would NIM that that the could more you because rates Does Or that higher if then anticipated would are the repricing deposit change. prepared in it trajectory be the than that if you or NIM of duration

I pretty on mean are that we neutral our sheet, standpoint. balance

But higher longer have right benefit but we repricing with the So it's a what now assets have us than for is our the little deposits. CDs. increases that, -- if in because reprice assume for other bit on we just think a don't longer deposit, I and time additional any to stays we of rate mature

To term a -- is in make in an XX-month least overall and statement the that the more what have higher the in does you, rates I'm margin still net model at or increase still X- it significant where on time lower short rates, at looking affect the we horizons.

same. they So a look if might you do if at you might the $XXX better do [ you actually than XX-month, are down stay better, you ]

It's On basis the up we other going over XX still months, interest or of XXX complicated. rates do points. better, down, hand, kind

Yes, I overnight going tomorrow, to the it if Fed cuts mean benefit rates is. borrowing our is we'll be repriced because lower.

better like bit We actually if they a -- looks do points, interest down do cut XXX actually we went rates it if -- better basis do little better.

next comes Carcache Wolfe with Bill Research. from question The

years on you X and a of longer, or keep debate continues under were not been from the customers to which of when the we couple, think do isolated As ago for around swaps. handle X on will higher your customers say, have impact Fed far so good still have put using swaps the you [indiscernible] rates your long rates higher how a

risk curious sort base? customer about commercial you're thinking your across of Just how that interest rate reset

that of a we the for the We on days or years. our repricing people have today. are when X can don't years rate swaps offered And books. ton This them we out opportunities Kevin. swaps, just straight early X of fixed talking Yes. question is wisdom were those In a about the

have clients of educating smaller So companies, just to sophisticated Most swaps the the there's the for of you're not are larger middle of where -- swaps swaps. is negligible. generally the we our have them enough tend amount not is on we ones we on in do in a pretty but don't have swaps. The We opinion, market lot we have book client a base books.

market There's you ones, larger most really really our swaps -- lending, in middle of smaller the some our mean but have are I customers.

dollars. clientele, market it's middle a notionally, hundred but million it's Larger couple -- of

now. that Yes, lower it's I actually I it's. think than think

right. You're

has them recently of One off. paid

Yes.

think I $XXX down it's below million now.

Yes.

pretty. it's So

following to And that your around at next terminal base. that comments a then could Okay. see just Maybe any whether you Understood. you made the drift if That's these to hold the speak deposit just beta little bit expectations up to maybe if were risk on really have year current helpful. -- rates higher you could levels?

Yes.

is what look competition you at think have doing. to the I

had might what if I increased had quarter, cost quarter. the a environment. -- first the our what our in rates mean, driver. it. we of think main look look of third that's second if it last in cost you we than you has we But for seen the the in -- quarter rate in at the the just being second increase saw quarters, But less quarter longer, at increase I stay we've because deposit the significant the impact had We I'll few deposits. last on actually

forego forward. down a increase already the So -- that to on to reprice there we think reprice, then then in who took slow want we it's I is slow I think the because deposit to to that on further going going believe of increase bit the increase the deposit optimistic we're down they everyone is little level going opportunities

Asylbek, it we I up but post freeze at agree levels, it's pauses, to to with a as I they not if nominal to said rise use an Fed atypical history [indiscernible]. reduced betas rates. once not but immediate vastly on it's the completely months again, may rise, continue the And X for pause, guide, for

then And Got it. helpful. That's lastly.

point. last one Just

size, lot to lot rates. sensitive call, a smaller pretty a I really significant, be that of town have unlike banks to have less -- what our a retail of we a would seem really We deposits

Understood. Yes, sense. lot that makes a of

one new us to be next last is talk look going positive could squeeze heard other positive leverage year. understand operating We've year as could achieve given one. moving parts? Maybe in how just to Finally, you if difficult if banks I help operating about the you you're about all leverage thinking to how the

operating by positive mean you do leverage? What

have for than was revenue faster to and little a if potentially stronger. your your to effectively so grow if expenses manage growth revenues to to room slow environment the expenses invest were revenues ability revenue By more cut bit the or expenses

outpaces revenue Just growth so the idea growth. expenses, expense of that managing

think out almost that's advantage is else there our story where maxed to the already, their have going whole We're mean rates the they're taking hit of that's because rates. higher I beauty already just bank. it. the everybody I whole of

strides and than -- models even our we whole to we have But is going will the everybody and expenses is this challenge, beauty to should really else if and better. probably of anybody, better be everything We going though have where we goes work the doing higher that. just manage much of into that continue expenses, we'll bank will do be

Yes. We're some expecting positive operating leverage.

have efficiency from declines [ million to Our $XX million the gone largely ]. of ratio NIM because $XX

-- a play because of just that's our probably have. levels, As ratio going to XXs, NII and repricing we it, [ improves kind that normally back ] NIM low is drop where returns down we this function and of efficiency our of asset that's normal to really late-stage just what

doing we'll [ turns be Once ] clean Marry better. the

UBS. comes next question from with The Brody Preston

expense I to something that special guide? on you X% wanted Is said excluding inclusive of be Star the guidance, the to think Star for next assessment. Lone that expense would X% to just or year, clarify I additive Lone

That giving, it. Lone Star of added was top was core a be on number will I

I in guess when to Lone hazard kind perspective? if purposes, for our a Star And of you it's know we it. timing should a Got but do from modeling closing think challenging, had you layer

We're I'd to rather than sooner say it's hard hoping later. say.

Our is them latest March XX? extension through with

Right.

are companies both before getting it them. think I on So done focused

clarify just moving so to quarter Is pretty the the a well, even securities that as it. did flow cash of from timing million forward? I want about And the Got book. $XXX on

Yes, that's even.

earlier, I could bit of have off pay it any a it. kind think keeping over muni of bit you And there strength left run said more third the down cash Is next little to quarter the year. typically, you and was given thought the first just fourth a little that quarter seasonal just Got for maybe that eventual in deposits. quarter, just through

have up don't you runoff do XQ ]? that [ you of take borrowings to So next get in case year muni

Yes.

keep from they're cash funds to public the in don't will I we coming think long keep it probably know probably not term. it, going long how we'll but definitely, -- the

keep investing. going from But be [indiscernible]. I increase yes, going ballpark So don't to cash a significant we'll same. we're significant I of we're decrease or to not think it think standpoint, amount that

I to -- is the don't want mean $X We bottom we line don't be borrowing billion.

uncommon Our back, I being $X we billion $X to but billion don't bank if -- you $X historically, go -- never like see not it's or guess billion. we $X billion a we or

maybe yield once And borrowings what portfolio so pick about down roll-off could think think when Is at I'm to you up would perspective, gets on it reinvesting I again. point, flows? start of securities about kind cash that guess, some of trying from those to just zero? the close the back to

me payments of the to debt going see I now, all reduce I Right couple quarters, maybe. in being ask see, don't a so our

money I probably while spoken a has for here. the think

think I reinvesting. of instead

Yes.

I the just continue think at this going to down borrowing paying we're moment.

in a is loan be that too. factor going And demand to

Tim. may cut get down. that's decide increase may that's mean pricing if conditions things, we does getting moderate and even a it we've to that good tried We Well, we demand, if we've loan true. like, point, want finally to so and tried the to I though terms the good, it, we're that,

future here, but you? some gives you the maybe in HTM of start you kind book any than on more in do as securities stay to when to those thought the to decide AFS putting sorry flexibility given just of to And reinvesting, the weeds give

No.

Got want noticed the just some looking was First to there drove was when also deposit that? strength press Capital Anything on I from side at I it. ask, that I And that specific release. the

money and that sheet. has of it -- at chunk subsequently they customer off I the a has end, business of think right moved moved had balance good quarter Most sold this that money. size pretty was

And history, value. a try on bit chart cheapest get ever this and Max, per And to book one. just David, up a stock hit little at then the wanted book just just least to your question back price to view. buy differently. long-term tangible price pulled this to tangible the been SNL's last I is I my the has SNL on is

expires And so is HTM get cheap. but of do authorization how I or winds in you if not shares stock for in terms you've you the that the included you left you'd it like you're And as the right a think in re-up to got of just whether feel January. in buyback? capital. now. capital, assume are way be be lot X.X noted, that the doesn't very I that that clarity going aggressive you looking blowing got is million would on existing the

you get And more typically aggressive so perhaps be look even you've would once the we to that than been in past? clarity,

best the that that anything our we've I we mentioned into had earlier, and I stock. buy [ could ever right in is price think this now ]

I we the of be A time, hand. think So on possible the acquisitions other in would it same interested lot purchasing and more too. depends at on mergers

So think really think, money of stock it into those to our we both acquiring is to more have buy back another we better can bank. consideration, we keep I or make buying do by or

have hand not you those hand in that's hard. but know loss be you go that need, a their I can of [ buy are themselves the It's and what HTM stock don't -- so really how much those both number think going don't how giving the by we back truthfully I think. on And really I Fed ] trillion impacted -- balance mean, on sheet. we we're much to I $X.XXXX

they So somebody that when time got we've that But a big such else loss. -- it'd will Fed's -- work a hard the be know spank such when got to and out.

issue. going think be I So don't an that's to

going So I we [ regulatory -- would at time, again, same at to be out we prices. we're banks talks in soft the more that. with think But and are these still constantly be impact ], that where buying too, once especially interested in would really other we find do

on do that not buyback. realize bank, value bank we transaction look much integration that we versus doing tangible statement It size, particularly to would look on there's be risk buyback. book And a in say when at a fair we a buying at another earn back of

So bet. safer a it's

on to you'd more the than suffer own dilution be willing would So your you on deal bank [ buying ].

And before, M&A banks have ever losses than when this or with acquiring what's in time, bank it's you're think, a their I portfolio. in been looking at different merging

being somebody acquisition, capital recommended of market. merger, and of some call, capital We're in net a portfolio. the not an you willing you what your bond to beginning instead take your is at of So market positive redo the But don't just that. a do why got to

get to we that. So capital down, capital will we quickly. you're going the mark their money although back which that bring overall really down, would get will

just So considerations. are those the

appreciate. which I something would I just up buyback, the that the know just would like is so the not But relatively of experience simple the due with seems merger. you're route factors for tied extended be just warranted. given control I of kind and be it's Lone not outside and deal, shareholders Star Yes. It that that and like your to your think safest been a would may easiest with are

If there's me back we'll buy that. say nothing our stock, let else,

The Olney next Matt comes from Stephens. question with

deposits on time do prices, and just being any the time bek you have near rolled in over term, here Just the following off dollar [ the on the color up yields ], that? those deposits. the Also coming amounts

I months introduced program X-month our X we CD mean Yes. special ago.

saw in a with but see back Matt, months I over, first an from I need specifics renewal dollar-wise, increase in on of much the we of that you. we we level I of see we I one. rolling growth, the. don't have the don't as And think and So what X the good see mean it. From those to get on -- growth,

is product? much we How that in that in sold

About $X.X.

$X.X that. Yes. like billion, billion something $X.X

years. that X And beyond go have we hardly don't any CDs

they're Our right total I of in now. what XX% doubt CDs are our.

special we It's not grows [indiscernible]. they that but XX%, higher and that program in just renewing than it is what XX%, see X-month only that

uncommon But or Remember, over the bank continue of have us for I to you it before in the went a to grow. certificates deposits. if see will XX% rates money rates stay their CDs deposits of time, higher, like wasn't to XX% percentage zero, to think of

see So over change time, I think could for sure. that you

X-month Right. billion confirm on Yes, Matt, the $X.X specialty. the is

of the position, And then be if most, the color all I borrowing are eligible on here? paid any duration these $X not down on term? near assume billion the in to

HLB Fed billion Yes. off We them pretty pay $X -- ] that with overnight much. rest essentially, the can any we time we of from have and [ a

So all day need a $X billion can we if to. be paid off in

XX flows, those that months. And cash over maturities? the expect on then $X.X the on those or give billion us you the next commentary far Asylbek you Any as can you mentioned color yields as

X.X% [ ].

It's same shows our exactly pretty with the exactly. around portfolio Yes, much X%.

with next Jon The Arfstrom question comes Capital from RBC Markets.

Real in billion is quick, -- little noninterest-bearing the do like noninterest-bearing $XX over feel terms of the deposits, it a you that outflows? floor? -- Is over $XX a billion in

really -- say know it that yes don't is, to Anybody that. first but The would like we

high. stay we're it market something money $X $XXX,XXX? normally, see rate, I what, about over, or have or think think because million That's that if money you I would in it's X%. paying interest moving rates if our you When

the X% [indiscernible]. For

$XXX,XXX, Yes, Okay.

have much more. I would when [ and billion have see at we -- think noninterest X money in ]. where go starting money. they're points, not that is to would interest-bearing have But just be or leaving the $XX money people work basis only it, XX these categories actually how to huge that So we go that the another really treasury amount of the I a we are But -- look those bearing, their checking you that's maybe XX buying from paying that are to another XX,

the to year bank to see by to So X% all. buying you deposits. has at -- and I going of of will and bank, treasury organically accounts rate or seen we higher John, out either see haven't the money come question the itself, historically, And time. the in think a X% will same those at that course, I our is, guess in probably CDs answer grown buy he Hopefully,

hoping a is look start bottom Maybe that is feel around will are point, working So to is Asylbek at on. But really into and turn gut I'm start. people money. interesting just because I the their offset it. this will what's going building we some that This to -- line, ask people bank, again,

And the grow the add then, the Our bank money year bank helicopter XX% to you to with organically every course, on Asylbek deposit money. X% all helicopter would before gains you had you went took historically growing if X%. all we never the back side. drop today, First of money X% of that place. Capital. it X% out And still lost and XX% But had from of We're the acquisition we're came and we've believe that or about the the about money to taking have would kind same not, money helicopter in

-- bank. a whether it has So left money the the looks like of lot

kind we're right If money have where we to with. esoteric, of begin look at would been that's wouldn't it you had really with I but we wanted probably the all begin to to getting that. helicopter know

back so that you. ain't other to get that So to -- is what I think still category the future we'll

deposits at future some organically You point will in time. start in again going the banks see

Okay.

normally XXX more wouldn't ask than acquisition driving up or random it, but that more that? employees, [indiscernible] what's FTEs that's and two [indiscernible] I Just ones. were normal. about is

Yes.

the [ I impact on ] average. had think an SCB acquisition it because because

So a of X impacting. that the acquisition SCB people had that's months from

I they're think BSA, you harder in -- but governance, we pushing they're are that, harder data have also for harder have regulators the in pushing compliance. pushing

that. you're think I seeing all of

people I them Now department, reassess mortgage offset the the that by mortgage, think the go in probably could some we're department. letting mortgage of be or

might we regulatory that. But to burden too. offset of able part just So is be that

just the it's nobody and -- bigger would it's get you As bigger, believe burden crazy. regulatory

working at. that. something they your XX Yes, payroll you financial on remember for had you I David, once the that's instead but government, new what government, was I wondering. were after the saying getting like employees the what of That's crisis, I was

just was XX now. This

Probably over XXX now.

just loans cycle Do you're and the But Okay. anything, guys of around more you expect cycle? do not at look I'm look to guys you and credit proposals other can take that credit, and from the peers sounds some And at this on making curious, but when for one credit be look you industry quick. a you're the banks. like it you seeing loan your you expect

probably I'll first more credit regional is too. be going think other But mean, and guys the I answer the to the cycle be then to I can answer in nature.

or I and I moving those think you impacted, are that think going out, are in populations office the New to more that so if Francisco you're York San be probably than. have from especially space. And

I think seem at and Oklahoma, we're properties A affected -- Texas be what to all. seeing don't in

office the people but deal never moving quick, jumped maybe that we or see nursing fact, had that rid I get it's our came in really commercial if gun C sold office A from impacted. they to what so are estate the anything, you acquired, we a charge-off that do couple think to home real up really do like just that And right B we and a really the due, that not the I problems problems. are and and we we [indiscernible], stuff. -- too some They're are past it always properties the more X-deal of really do had Bank see and more seasonally think quarter problems But last In properties, homes so away. bigger nursing we from popping that of was Capital First

spotty care, retail. acute some

think banks with it it so that too. the a underwriting that the you're the and see from took and located. also lot of where we risk comes So has I But do to

to circumstances it. lot your you around, think I add a

I the I banks good outflow, had where good states that going The bad always probably will going underwriting, had both underwriting that banks regional, it's the in to they're underwriting going fine scenarios, banks just fine. be So they're underwriting have banks the have and think good that in are historically located have bad to back. go but too, to seeing of think they in growth states be that are be those

just it's go going That's I really. underwriting think to your to back me.

our call hand remarks. Rasche to for session. concludes question-and-answer the closing This I to now like Charlotte back would

to on continue gentlemen, Thank value. our taking you. support ladies shareholder company, we participate Thank your of will today. appreciate work time you, and to We our building the call for and in

for now The participation. you your conference concluded. has Thank

You disconnect lines. may your now