Cadence Bank (CADE) 20 Oct 202020 Q3 Earnings call transcript

Good morning. And welcome to the BancorpSouth Third Quarter 2020 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. to conference like Fisackerly. to now would turn over the Will I go sir. Please ahead,

and being senior Good will you thank morning for introducing today. members participating begin with the of team the management by I us.

We have Dan and Chief Executive Operating Chief Financial Senior Executive Officer, Chris and President Rollins; Bagley; President Officer, Vice and Chairman Chief Officer, and John Copeland.

Actual factors made or discussion certain from in forward-looking and/or If may variety these performance. be certain measures Form of future earnings materially be I’ll results find statements measures these of annual may containing release. future of be you during so, XXXX regarding the could remind begins, regarding reconciliation non-GAAP BancorpSouth’s report company’s XX-K. company’s those Before these the the quarter due the you financial differ forward-looking factors results financial of discussed on to third XXXX can performance. found the Information that indicated can risks. statements a in in Also call, company’s the certain

speakers prepared the slides to will be discussion. during Our referring

slides view find exhibit the find link his by And afternoon. them to X-K Rollins our on we turn the Dan to you clicking on bancorpsouth.com the for the comments our where Investor on can You financial to or filed yesterday webcast you’ll them and to Relations can page, going that results. to now, I’ll our

on our and development our be our detail management prepared John by joining efforts. an to team will you performance, results color After everyone. performance. in morning, the for Chris and Thank to will conclude third begin questions. Thank more business Good answer XXXX provide today our happy executive quarter update third will providing you, comments, we financial discuss Will. us I discuss will quality on financial financial BancorpSouth’s credit quarter some

slide talked to you contains presentation. all already Will’s Slide to legal about. reminders turn that two the Let’s the

let serve. markets highlights, about of general into me the comments make impact a the on the Before we financial continued and we get COVID-XX company few our

As a count teammate to continues our case company, rise.

have of Fortunately, teammates complications our from most virus. without recovered the serious

our support to continuing capability the are remotely. to While staff who operational work do most of have so

walk-in open fairly to continued are we light. quarter certain perspective, segments, and healthy. From footprint branches Loan has most including a speak markets be available are more the obviously, open have, for hospitality that There X.X% retail in appear however, spoke the traffic, fairly last a which portfolio of at will Our are, since come only be impacted been of our business to this and deferrals than moment. Chris more adversely to have considerably others. down to end. economies

on on to schedule We are our normal payment of P&I our schedule all a customers a virtually have type. and customers most of back some of pleased back

actively continue quality as will basis we’ll credit needed customers for to one We work one and with by monitor on assistance. a

continue that of earnings quarter of basis. the an to in this for is which year from this in items the generated This Let’s the financial quarter non-operating release. PPNR and million now credit is our in of $XXX adjust the the our losses, a the having our We report defined quarter. highlights for of quarter-after-quarter. totaling the strong of X.XX% slight on provision in X.XX% represents discuss we second record I’ll of we impact annualized X.XX% calculation three our third the financial quarter. year. on assets reconciled increase third and you for contains average last metric, pandemic quarter, Slide or remind Outside for performance results for

Earnings items fair is common the third were value by economic the common $X.XX immaterial per Both or time also shareholders other the the income share. diluted common was $X.XX record result GAAP were quarter of net available MSR so excluding adversely recovery reported per lengthening non-operating income, accordingly, our diluted million. forecast million impacted operating our CECL This we We net to for $XX.X provision the is for the MSR on the for adjustment quarter, also projected which losses of modeling. and horizon provision million, of that utilize $XX.X share. the of for $XX for credit and

or duration recovery the of in additional of been around are themselves extended, X.XX% the low of million PPP X has our net of process. basis and the the which net charge-off provision, allowance quarter, number under as resulted with coverage economic end very the of assumptions of loans indicators annualized provisioning our the leases, the estimates loans at the second This points end $X.X ranges forecasted in quarter. a within of the combined resulted to While the increasing modeling excluding

sheet the Let’s review our balance activity for quarter.

their this as funded to challenge. in operational We compressed August. PPP most our our I over relationship program of our Bank expired team second This time. occurred all the quarter, of over period staff the thank success While hands the for some making very early support for effort was a was truly of on funding activity over managers for again and loans our in totaling exercise on $X.X a deck loans in up and billion. an us the of origination would completed program to these and XX,XXX like we

new important are or customers. benefit our this of company, tremendous new growth repos increased it’s cultivate quarter and our deposits $XXX Bank. point customer loans a deposits believe provide we out to in solid were quarter think as success We deposit almost XXX relationships as roughly and that over consistently to X,XXX for will to customers -- million X.X% for We the are these third of strive and I some from new of these in having another had annualized. bringing

loan PPP program, to the outside liquidity While has increase achieve continues quarter-after-quarter. been difficult growth of to

those a margin. minute. dynamic mix our to details this interest have asset we interest income pressure over grow just While continues earning net continued net in go will to dollars, in John

As continues which and production our we quarter. around development servicing mortgage totaled $XX.X volume quarter. team revenue production business additional of representing but had the on quarter. the to of total elevated, to provide in XX% for purchase standout activities, our contributed as Refinance Chris another the will discussion second. money strong million $XXX mortgage the activity well is our for volume Production volume color continue million, a remain holding just again

our cost and continue our efficiency down. Finally, structure ratio we to improve drive

MSR excluding well for XX% ratio before was our quarter. This since first marks $X.XX time Our economic last efficiency the operating -- efficiency been the below quarterly that the XX.X% has cycle.

results and John. detail. our let little financial and more me over in Let a he’ll now discuss stop take John

Thanks, Dan.

Let’s into bit. a drill numbers down little

you’ll to In turn income million see If shareholders to statement to income per available our you’ll $X.XX statement. or diluted slide $XX.X quarter. share was net common the for common third four, summary the reviewing

First, immaterial share, third $X.XX per MSR adjustment remind comparability impact of merger shareholders second net netting to Accordingly, the as items slides per like compared quarter assets. earlier, year available other are this Texas $XX.X quarter, comparisons quarter income as mentioned closed the to as diluted excluding the sequential $X.XX average percentage also $XX.X merger for year, metrics on the net a terms diluted revenue information were for slide dollars Dan me, this As earlier, will This less impacted. all the financial not third quarter in the also of share to the of to or also and the you pretax the which common for common for than pre-provision of $X.XX the per well both common of of $XX.X close diluted XXXX. end $XXX,XXX. of the ‘XX share million million common XXXX. shown to at with Dan MSR and the January did -- subsequent million be Excuse valuation of or I’d that going non-operating the the to and that mentioned slide, quarter we X reported quarter highlights since operating $X.XX

a a us this standpoint. mentioned, quarter he As pre-provision for net record revenue was from pretax

challenge, in do it’s expect this the sustainable. that really we XXXX, revenue thus mortgage will improving anticipate provided real level this Given reasonable be will to is by going metric that a as boost mortgage far, of forward be -- probably not revenue

an In core headwinds year, some in each seasonality business. including other of book addition, insurance provides the fourth

of Our net interest and increased compared third quarter X.X% to XXXX by revenue quarter compared to the increased second the by X.X% XXXX. of

program. shift lack of We with continue asset see demand the earning coupled outside liquidity mix to resulting an PPP of from excess loan the

third ratio Our grow helped to in ago portfolio income. has XX% XX% securities year our them deposits a dropped and the our quarter, down deploy interest in and loan-to-deposit net ability our to from

margin interest already put However, the in environment. addition it our difficult to does rate pressure on

When quarter PPP, balance a a yield declined credible for a margin interest impact you really consider the net of the of pressure from our second mix X.XX% margin lot continued XXXX. X.X% of the quarter quarter moving the has Our excluding on and rates, to changes for parts. of sheet full

moment, year. quarter deposit from in by points total considerable pressure yields on discuss offset points declined our basis cost to the the X.XX%. for second was of a loan deposit quarter to PPP Our our the yields more deposits excluding for total somewhat but in basis declined The of XX from asset second will that X.XX% costs. improvement -- cost Chris XX

Chris for mentioned in of that XXXX of for the Before a earnings. on earlier the XXXX. We of the provision $XX credit more a you we to of the that can million see second for third in move of provision detail on expense, to the $XX million quality quarter provision non-interest touch on compared provision quarter, Dan revenue $XXX,XXX quarter a a and for can impact moment. had

streams. million the of turn you’ll of $XX.X for Again, million quarter to volatility of non-interest XXXX. the be the driver non-interest to you quarters. in that mortgage a was XXXX revenue for our totals revenue to quarter, and billion the for detail compared $XX.X see $XX.X slide continues revenue second across the these largest If five, of quarter third Total

quarter, business team of production revenue was Chris and discuss million the mortgage the but another can more servicing a mortgage in quarter. for dynamics outstanding record following $XX.X a moment, second quarter. Our had our

quarter compared of second XXXX million million expense result and insurance cards $XXX.X always, Total for quarter and for are expect million, the significantly within line a insurance You for portion we as for operating that remind again of items Totaled Slide including $XXX compared of third in items. salaries all, believe worth of you second sequential noting, the payouts not was seasonal quarter $XXX.X while they quarter the a of is revenue benefits six third of back are in of to XXXX. a will of lower result XXXX. book agency. renewal expectations as lower as decline items charge some we third number be of revenue of business. are FICA declined shown limits basis. presents each to to typical ‘XX quarter revenue million our which cycle considering improvement $XXX.X certainly producer here quarter items being that, detail employees, the of our look one-time service commission expense a merger-related couple fourth to million as non-interest was and we $XXX.X well factors, of million This the seasonally excludes expenses first of that the seasonal as with non-interest expense. would for other in trends. There I the $X.X a on We also million quarter a and the on raised notice levels, a other our when did our $XXX.X and line quarter, see pre-pandemic for

we -- foreclosed from obviously necessarily color large expense, ORE You’ll review run concludes That accrual perspective. sold one on our property expense rate both a our one Those can provide of development a and the items also matter had now activities. balances at property legal gain. a Chris outcome notice aren’t reverse some financials. business and had has small a litigation positive on credit that in we an sustainable

loan mix basis. reported and billion funding deposit and areas divisions, of Thank over include the you, growth Deposits our Starting North PPP We have the totals. annualized in of Hill Pine the Missouri, an for to grown seven, compared acquired a Those our and growth deposit standpoint. of our XXXX well $XXX XXXX. deposits, program everyone. slide liquidity past the standout third with customer XXth, $X.X Country year. these exclude John. geographic several Texas as quarter teams of this Alabama, from the million XX.X% additional quarter growth Belt, as you’ll division quarter and a great from a repo We organic organically to Mid-Mississippi, for September as from deposit kudos generated from quarter or the or repos Central part in to We second had Good perspective. morning, see X.X% Texas on quarter

of deposits basis second the points the we from our cost continue points total runway we declined Our XX deposits. believe basis from still have quarter some to quarter XX from of to cost and improve

have at of that time the X.XX% were pricing we $X.X and products average today those other deposits example, over currently For quarter cost in billion for in an the and are XX-basis-point range. CDs

eight. Moving to slide

for completion loan the quarter. our Dan second of XXXX. demand third declined mentioned, the loan quarter of the XXXX been quarter PX to September compared and see Total program. $XXX the following million portfolios XXth, You’ll loan the challenging has of third

our a to portfolio in light close to the current We just win hold have of the economic as used flat ability environment.

activity loans many pipeline. with been simply opportunities rates. term Despite at borrowers decline Texas and just the those don’t detail. of of as covers X% compete opportunities, nine mentioned, of XX% and $X.X this Northeast good isn’t sheets for largest still in to look in in XX,XXX I Slide information new, of total shared almost over the we our not time are have opportunities, on program, Dan as have of spend lot but total, rates with the PX generating our a While is Bank pipeline we billion. our amount originated at Texas more below Houston, at the Texas, divisions completed nominal this seeing When Dallas, willing Arkansas and slide experienced pipeline we quarter. we most and growth

one-third mention these on the the we communities roughly loans new for in As that Dan tremendous years the develop in I’d deepen this us like These and come. to programs benefit provided projected customers or to were serve, yield X,XXX, believe briefly of opportunity portfolio. loans we mentioned, to will relationships a Bank. to the

this as program the have that rather forward. we second Again, the and estimate of at from yield vendor these program invoices, Now the is X.X% end prepayments, initially of the include loans we settlements to create other yield closer well the than forgiveness as quarter. estimated timing which will to final X% have XXX, complete, we lumpiness doesn’t impact of the moving projected the SBA, the on updated in

applications actively received to SBA approved the processes million. Bank. as to XX funds move Of the a and out XXX XX,XXX that Treasury have and we received on $XX mentioned statistics point the loans, the forward SBA forgiveness count this and originated a the SBA, approving We started those simplified to been threshold applications of we begin announced dollar threshold under the XX% six The loans on like and forgiveness I’d process. the balance. point totaling Finally, submitted and been actually XX% loan have is recently forgiveness by few to are which total this process. by the of of We enforce under, We’ve for speak. of the the

Otherwise, cover considering our Moving provision a for our for highlights we the to slide modeling losses some a we XX, credit forecasted for quarter. recorded holding the credit process provision the $XX economic the recovery has of quarter, this credit up can are in that use necessitated quarter. period for allowance been million metrics linked forecast into well quality environment. We

increased been PPP charge-offs ratio low net the Our our from $X.XX result as X.XX%, The that $X.X quarter. actively low of X segments We’ll on as allowance the first remained points identified quarter the we’ve provisioning XX. the the coverage portfolio for pandemic monitor as -- million. to loans for at combined that the the net had continue risk loan higher of of excluding at end a or identified basis to quarter with charge-off the slide shown

a how are portfolio earlier, the essentially of zero Dan total our of most with barometer of borrowers mentioned and faring. As to are that’s X.X% our deferrals only back good

in totaled book. credits, hotel in borrowers work which a converted the to continue at These hotel small of XXth, we’ve loans our We $XX the These was are to excuse September credits number concentrated with million interest-only. million and $XXX me, portfolio. of

past through of deck high noticed an well these look we gas, investor the portfolios want at updated didn’t desire these given view the our Slide medical the You these, we the time last filed, those for but in are -- with may of time, and last you as additional as Currently, presenting of well combined removed that spend of XX portfolios, oil more amount these quarter risk in at versions this that to information to risk relative disclosures. performing this in quite have calls, on time we updated higher not from deferrals won’t we are the port spend I who slides XX time. the information of to loans it. a provide discussing to granular concern provide significance and provided this through us

on insurance. offering. Moving for mortgage five-quarter on each to Tables look and results our XX at provide product slide a

mortgage to operation production mortgage a and $XXX another revenue. the impressive million in banking contributing producing quarter loans million setting had Our servicing following in quarter $XX.X for quarter, record

capacity that’s Our volume coming way. to process to at team work our continues the full

strong totaling see to for the continue $XXX XX% the purchase of quarter. money total held elevated we While activity, million refi market quite volume the or

which slightly, the lower compared generally margin the to the level quarter. heading the decline quarter, $XXX second in Although, is seasonally compared contributed that quarter second of decline unprecedent see is our end the into declined pipeline a will fourth to you million This quarter.

to continue from remain elevated While a long-term sustainable it’s we and are levels feel the at not margins lower, that perspective. the margins still

million to of was Total insurance. for the second the for quarter quarter the and $XX.X third XXXX revenue XXXX. Moving $XX.X million, commission $XX.X quarter of on million for to compared

in renewal mentioned seasonality we each our same prior As given typically we quarter, cycles. the to benchmark the the quarter in year,

revenue with generated pleased X% we basis. comparable the growth quarter very We’re on a

have material Alexander $X You in recently Sanders seen may transaction from financial Agency the this at is Rouge. of annual not announcement Baton regarding & Insurance the million revenue. perspective approximately acquisition our Well, a

business practice bring well space. the team. well the they agency skill to very in can in mesh Wyatt would professional expertise in base. as set activities construction, we We’re be as really will our our Sanders about our specializes will book excited current liability, with which of this This construction team welcome to again like And to and our their access Justin team’s that believe customer as We and leverage with we area family. Sanders and their

Now to you over remarks. I’ll concluding turn it for Dan back some

Appreciate that. Chris. Thanks, Thanks. all

While sustainable report headwinds that performance in be We that XXXX probably mortgage industry of in continued not we front and economic long-term. the strong realized the for that is financial we and the won’t us. produced volume to have to quarter-after-quarter, immune are we revenue

as the difficulties In more there addition, a pandemic. time of result financial who customers prolonged may experience be as passes, nature of this

strategic we have and our our quality. efficient credit be and credit we ways and appropriately difficult as more assist working managing to and are process, light our budgeting work through administrators monitoring our financial Our we In customers reminded diligently to economic environment, working to team to relationship this order continue our maintain while performance. time, that the in have managers stressed find of on XXXX plan constantly to

either branches optimizing branch that new are our opening or work proximity. to high through in underperforming have close in toward areas, other locations while locations growth continue structure closing We

or actually be either locations during will year. During opened end identified the we’ve and of this XXXX, new before five locations closed closed that XX have the we’ve year,

part layers either headcount year of through number process already continue are of of this planning examples we’ve to the the identified as few Through to XX of FTE opportunities also early through quarters. could planning today. been teammates of next have who that strategic We staff a and teammates just our our process. people all our in over we’re organization, have approximately grooming Many of we or decided later working a bulk succession net couple who expect efficiency monitor These XXXX. on a these retire we a our actively replacements through of see are reduction this the process,

happy work While and answer With is proud I’m the Operator, that, earnings that our team capital through the and confident have outlook I’m for to of we anything to adequate strength balance challenging, we’d sheet questions. cycle. this the economic industry be

our Thank Hovde come will the And first Rabatin from you. Instructions] question ahead. Group. Brett of Please [Operator go

Hey. Good everyone. morning,

Good morning.

curious, First you third you you just going to of Is continue locations, congrats than the ratio I opening realized deposits. the getting efficiency into can end talk a but on maybe about year. by is opened Will network that and you’re the to below quite were a with the in rural you XXXX XXXX? got Dan. close about branch a I’m few continue XX mentioned, there less XX and five network. that you’ve for the $XX that of million plan --

Yeah. We’ve several last continued to do years. that for the

So much I several the different than XXXX is don’t that years. last that think

We continue for where to to look we consolidate opportunities can.

small communities is. significant right, those community communities. locations exactly to we’re in in efficient run lots They just size. of are where way. a those can going in We That’s only true grow to have be Bank never the very what one office we You

have we That’s it success this we margin, locations. reduce needed in the the where lessons to those need what locations, of us count vacating of and we that we take multiple some learned markets we’ve branch is altogether. So in locations. those pandemic don’t to to we’ve of many don’t Where thought with that locations, would some those I more some decided what through we’re see the the had of reduce markets as

don’t I about significant you’re us So on branch numbers. any is there talking whittle for to continue our down think count. opportunity to

for branches the in will those in use order growth we to I we to we’ve in opportunities have look be the high and growth higher we the moved that markets. markets big So, funding the as metropolitan to think expand we’ve capital to continue opened able to continue that have in markets, cost again, low into that funding

So we’ll It this six. down looks year. be like net-net

were down net-net year think I we two, in ‘XX. last

try game. So, I play think, will we continue to that and

Okay.

you about terms to what As the floor point, a a the can purchases you margin, it of in like at follow-up, some securities hope here margin? to talk portfolio core the in for maybe gets you now looks it maybe and did have look

Will, jump I’ll I in X% you Sure. that. let securities guys anything, were over John on We to securities yielded think as able don’t for or we and -- looking find John. that were

do did what money? that So we with

continue to everyone have Well, XXX range. the to on pressure, does obviously, it as we the investing work to XXX excess in cash putting in and portfolio

So somewhat. that tend does the to margin dilute

As the I can average current guess, over eroded The a over margin basis drop three the interest basis use net points. the margin has and if dropped it, only has last XX quarter I last that X been phrase, -- core quarters points. the

next XX like, am year, reached are guess, we and gosh loans, renewed I optimistic rate feel off I the in we’ve have $X.X loans repricing, We most numbers the X.XX%. back that at The over a next margin. may personally billion, billion new about loans have $X.X X.XX%. maybe So recent rolling we fixed do the to at months, are do and loans in a the coming close bottom variable they got

a much there. in drop So not that of repricing the

I’m So that. optimistic about

points historically, you basis years, if for maybe total significant costs. talking margin ‘XX. the lot the points of We’ve costs first the deposit do point guess, at I the can of deposit those, declines basis look several deposit or It low ability the costs lowest deposit course, quarter low, prevent of XXXX, about as does we on costs to a at what point. XX last Of were the was around up being with and end been depend over hold the the quarter fourth XX

couple excluding a go points, about of room in some but little you a bit it year, deposit bottom costs in did still to that, X.XX%. back I of second back rate XX core If of different then, before they have yields, down. our peaked at we basis years environment interest interestingly gosh, a quarter yields yields reach the believe do last loan accretion peaked, loan loans push peak those

month the we So far this that that’s not X.X at below are and peak.

So billion of loans have billion, And we of that good $X.X -- $X.X do portion and then are our billion at portfolio $X.X of have floating a $X.X I’m variable rate sorry, portfolio well. floors. $X.X we at plus million billion there rate optimistic rate about floors the as and of

a gives that us too. protection bit of little So

optimistic should level pretty So off quick. I’m that margin

Thanks Brett. That you? helped

Yeah. That was Thanks for great. color.

All right. Thanks your much. Appreciate interest.

question next Markets. Arfstrom Please RBC Our from come with will Jon Capital go ahead.

morning. Jon. Hi, Good

provision the Hey. could little you Good on extending then that magnitude morning. how on the want recovery. to the duration talk think about and you about talked quarter you I if of any the bit changes wonder Question a about the provision drivers? of fourth and us

into the to one have I have to Yeah. I deep to color data know a don’t I’d that. that think. figure have that I whole of dig out lot on of I the magnitude --

in X mean, don’t at I know game. points there us. back showing charge-off, basis monthly is converting is our because the -- early payment a that borrowers an onto we to think by allowance easy that’s type, don’t the armor when some Even reserved but and us for down see out portfolio but feel that and and into great in look we’re issues we’re I to converted what after of our I Everyone in of a provision, like quarter, less out into think still XXXX to to and questions know some though we you of well XXXX, or drag happening thought at think will to the forward losses are I that most forecasters manage regular second be that you that’s hospitality as what We forward-looking payment making I but today. that it’s you payment, have again, But than you, we have answer I good don’t else I be the net going little in there, way. We for we bit just continues we out of time which what like interest-only. could think, know today, a are end of closer forecast were of we the our of X% the deferral. in any in we others allows kind know numbers, year. the the on credit shape. be look do the chinks the a

this of is like in point ask from I guess of economic things are they fair? Yeah. view, way at your feels another that stay point the kind peak it of view, to near reserves, way if from is, or an we’re

Absolutely.

suspect extended would that in think, the you numbers go at reverse lower would the data provision in today, true the down or if if the see want quarter. deteriorated this economic would further I so duration not worse is where quarter. had we would further further of in fourth I hasn’t that, be quarter stays forecast of much if than a get we economic then it that out is the to than has have that, this end it the to the yeah, duration and The year saying gone path, appears the we

Yeah.

lot, Dan. fair. Okay. a That’s Thanks

you, Thank your Appreciate Jon. interest.

Catherine from come ahead. question KBW. with next Our Please go Mealor will

morning. Good Thanks.

hear to Hi. Good morning, Good from Catherine. you.

next of the personnel How reversal, expenses want to for circle way good run into one-time credits a OREO. oh, expenses. rate just going just quantify quarter? line? so any legal and get John, you to accrual John, back personnel kind to couple was a the a into can within much And there you mentioned I in we of mentioned, Is the line

don’t reversal I mentioned benefits salary I and line. in the think approval

Yeah.

I think Catherine. a that’s good number,

couple a doing there. of were we So things

some FICA taxes. of in up benefit You late the year off pick the

in number will go was XQ down number. the So XQ, think went down line a further but and I the in tax of rest the obviously XQ good in our

Okay. Great.

So to aware within any in big of and going swings mortgage be expense the what line? is on

No. Surprisingly headcount our basically stayed flat. mortgage has

-- working harder we’re So hours. people longer those just are and

you. bit -- folks take the expenses out that with But other in seen augmented we’ve We a that know had increase some report work. have by that I moving obviously there, -- into on we to don’t some to some the work capacity little net additional

of been those taken the is basically the to But there. loans cost same report cost that when some the as out margin -- producer and it’s the fixed producing it’s time. to cost already commission you. It’s for the the we through So the

So I don’t big see any run-up.

salary that. the back There have types for in and mortgage some, seen market competition certainly job would fall question. into your salary We certain is to

We’re seeing parts basis we’ve folks a trying up jobs. parts to in footprint hire regular and of and willing people so salary those for seen in some on folks escalation some of some to and our our pay

seemed then better. And topic of on buybacks, outlook mean, I one the Great. credit the just Okay.

the strong Your think quarter. really be will When core are comfortable do reengaging buyback? you earnings with you this

again great That’s intend Yeah. a question Board and next. meet we when certainly have with our discussion to Directors we of that

still we���re today. capital I change. where good the to I that, want numbers trying that I feel shape every to think personally, is pretty we’re do We so out just think time make said, in sure figure on I bottom think, like, the and safe. like you we’re

speak bring. I up jump would you. there may don’t that in we to I to it issues But We’re just intend or but future what hope for to keep know not from of We way, I have is our a any still today. a stays available the do program worry back quick credit and the that. market don’t answer when seeing a would active buyback us, perspective

Makes so Great sense. quarter. much. Thanks Great.

Catherine. you, Thank

will ahead. Our Kevin next Fitzsimmons Instructions] from [Operator D.A. go with Please question Davidson. come

Hey. Good morning, everyone.

Good morning, Kevin.

we’re, gotten. been this million to deferrals, even X.X% low the sense how Dan, maybe guess, and starting where loans and they’ve utter compare, like with but I on word, quarter, I’m we’re temporarily probably, next kind $XXX converted point going the that subject of of we to I not interest-only. getting of dollar XX, in the then can just contrast, deferral? slide you to looking amount that’s see on But this

So is going separate this -- diff is a report… and this is balance would from and the to deferral be new this guys just you -- apart is

Yeah.

paying, maybe … or of larger that original a to amount is not this terms? of but according some kind subset are of loans

Yeah.

So that’s a great question.

only appropriate making off to were these think that something that that payment would just payment converted and they’ve payment. to show We on to folks you normal deferral a reporting be have deferral we it been an if from P&I we are that and deferrals a take interest-only didn’t come now

when piece. base customers, the still needs what chunk do, big we’re we’re talk customer with through to determining are, higher $XX Kevin, of in we’ve actually million, than working you and is that of of working kind $XXX million their what our it’s today, So tried those with is know, as to a the hospitality because this and that

payments will just point, put instead normally forward get are for an at borrowers. the six normal payment with that back months to let’s and any hotels those and and said, all, of working and nine let year things on at look or interest-only be months, P&I making scheduled not that payment on. would where hopefully the We let’s out be make the you come next So of payment into cycle recovered have middle next better, you those

have to the deferred at to borrower felt payments. like of further continued We payments customer payments the not all. and a used had could better just So kind be we make have was idea some to those any making it

occupancy at I a than of zero page were pages back, less you occupancy to that hotels look XX% in couple think hospitality are are that XX, of quarter they today that numbers quadrant when a of our page, ago. the the

way would it next automatically today, is by they’re by the or so back that time And will summer set the there So flowing cash to be obviously interest-only clearly flow and make on on turn them back to the payments in it’s on. putting goal turn us. some up continuing

whatever you’re amortizing done by here of we’ve say, making now is, So, when we’ve payments. to months you the modified make What interest-only six just note, normal into are. the payments we followed going stop deferral, go

I those So in my mind, numbers add two together. would

our looking been credits, these done now X.X% deferral. the you’re to how of we in X.X% when we’ve converted and portfolio in portfolio handled at looking that have total and at what you’re have So interest-only as total we’ve a

want to our And there way? made there So any or of something your other, some change book had are that pandemic. business Chris, of out has bigger. of X% to add to was, subset question this in total, there it on you is because do in a no of are others the

not subset. is There a Yeah.

large. be back time. was be. of put banks The would Dan impact deferral the none that’s just that of economic universe, -- Most would us most activity bit the know, initially So didn’t knew banks a unlike little exactly what

we process, So approach a the no flexible but that deferment process took was deferment payments. to

And it challenging. started information we became round through second deferrals more that and worked so of collecting as

it’s customers for found better impacted. We were back customary apparent normal Hospitality’s able out We’re book. hotel that were the And one came pay are the measured many them are And most and them virtually moving that be philosophy was almost need supporting interest-only some guaranteed loans of by us. our files, fine. document able doing payment, were certain to that the to these way. willingness capacity in on their remember, it to them move sponsors. to to amortizing of helped more And all and on segments to

doing, a Dan, come a They the both that’s they’re deferments I But agree as capacity think the I and project that’s to, the and a that’s of of also think they’ve a the at off the impacted. and how indication numbers. as commitment then of would guarantors little I portfolio answer us to to reach of projects. their with combination kind interestingly, those and look support occupancy I improved bit and good and investors willingness level both so

Yeah.

XX% the the total almost different total We a of today in to is has total had way. out that book The that deferrals saying X% as XX% So book. at comparison plus, picked XX% change some And look on CRE. some the took subsets on it been or go to following, at basis. change that some out made we’ve you the slot forward when modification we or a

where the has our that having any little performed impact restaurant CRE very issues We book and frankly, front, side well. on have not very we’re in virtually

I’ve not our footprint some have personally our across do won’t eat As let to across my because folks of somewhere, been to while our that. footprint, in I me talk and wife been

every takeout time certainly taken full have out inside. I’ve has to into the We line, been every restaurant been and go I

world we’re come least in the So at part seeing of pretty restaurants back the well. our

feeling good. So we’re

that or what’s the question, the different the just through the CRE cycles you when XX services up these of retail think the up of is at So and all hotel percolate economic probably Whatever all percolates I personally food in going of of back line. to out in stress portfolio, look your the normal book. the rest to than is no loan that back slide accommodation

and good pretty focused hotels So are accommodation and rest book about. those feeling on the I’m very we

are these and but the banks where other lot being the really to has of translate these Dan. that Thanks, a How change of us loans this classification accommodations and the the together C&D are that in externally that at CARES of bit subject, substandard that And both up words, into relying looking does less, a helpful. on from we’re that sense looking noticed went little we’re don’t quarter word internal CRE. really starting your so how how using -- they’re now accommodations That’s downgrade they just we like, change some interest-only. deferrals process? Act So in that same other does deferral get on loans, point provision made. to that in of have a I And at

let’s some there of has interest-only, been So for to -- to kind what tied this today? been classify has maybe movement effort not like have these there to, internally things they an right, effort, but all look

and pandemic, the at watch a our of Remember is into grade, grade. of we Yeah. which pass beginning all the a moved hotels restaurants

Chris shape when us the that them showing be would to that willingness make is at okay a when there the movement capacity So reason the to any big process, to downgrade indicate grade. a we looking moved we’re we’re And and then as credits, credit. these and lowest normal pay would not that in said, is into the our watch, borrower which pass through to

if of elbows. is have into and flow hand, the in project sponsor borrower transitioned or you willing and that not credits. not that to credits for there other your to the the we the moved Chris, there cash On support concern is I substandard up or into some us know the the some middle

Yeah.

us for and that the of what mentioned, increases moving watch, does the monitoring. it to is Dan frequency it intensity As

with at restaurant then relationship looking we’re managers the every by on -- a XX book team. with credit the and lending So admin the days basis our hotel credit

get as is, unique worked there, from so of stay I think some that point some own through mean, we your taken. think, see their circumstances. loans downgraded some upgraded, is loans individual migration get I credits watched, And you’ll what and and well I the you’ll But see some

over total hotel little You’re right? talking XXX a loans, about

Yeah.

tell And about let you, getting me talked day. every they are

most generated cumulating migrated and about getting on most and quarterly more So information and get or statements. of and operating to to it financial is lot intense an a financial requests occupancy update annual we’ve the is current it’s a basis information relevant information,

the that’s credits us appropriately So grade as helping we go forward.

drive just relationship our having seeing see to managers in evenings and parking what Even the feeling. to and look by at kind we’re of lot the

thanks for Guys color. Okay. so Great. much you. Thank the

you, Kevin. Thank

Our from next Jennifer go come will question ahead. with Securities. Ms. Please Demba Truist

Brandon Hey. This Jenny. is King for on

don’t You like sound Jenny.

doing? guys you are How Good. Good.

Good.

Good.

as trend were normalized obviously was level? will high pretty And and also to quarter wanted X.X%. gain incremental going wanted sharp like and where you -- expecting a decline sale on it to an know a very a expectations touch or what mortgage. towards to I far quarter yeah, into XXXX. will be into the four as that well, more get Are So, around as volumes I is drop your I this was high had margin on

Yeah.

you’re can pipeline. that see at looking our You when

that’s there, page me where flip back is again, page, XX. that Let

the So $XXX when last the you’re the looking of at which million quarter. down million what the pipeline system, at is $XX was of $XXX quarter through from at the our the end coming end was so million,

on mortgages indicate, turn are XX-day process. So XX-day, these would XX-day, that a

fairly see the it you’re fourth be the in would the reduced we’re good comparing my that when to still million quarter to production we have pipeline, over some quarter, with certainly quarter volume if past. expectation ought a coming into $XXX in going we’re So to but

when conversations M&A, an over it. increase increase has an Got saying, few you there want Okay. months? be last acquired know seen been interest last big to or in or Got touch have on -- And it. changed in week, the deal you of you’re potential last also weeks banks I that announced had has

a anything’s is changed last in The fashion. since quarter that I in the we form our Yeah. in footprint transaction don’t any not referencing you’re quarter that or talked ago. know

there do all pain are of any in talking call, each doing more this points lead conversation other same it. exact ago from -- my to doing and conversations still you’re that most are and said don’t are certainly career talking want cycles way. more about in And the don’t around three credit has the I guys the interested. months up. going on think all and banker-to-banker, conversations talking to, experiencing could us increased just to to It situation unique bankers and when we talking general all talking each the differences there this is how and potentially footprint-to-footprint, It’s they to that or just decreased. each is. you’re gets bank-to-bank that you all in and us other haven’t what on. from what But things you’re then I level because know in we’re impacts So leads to you situation, and we’re other pandemic partner of that It’s about the as

Okay. Thanks so much, guys.

Thank you.

will next Stephens. come Please Matt go ahead. Our with question Olney from

morning, Good guys. Thanks. Hi.

Good morning, Matt.

deal a weeks insurance that guys most You on addressed small ago. few just wanted to have of follow-up announced my questions, the was

the remind different Thanks. just how and how insurance is what together? segments Bank M&A? the and Just us organic us remind complements also work insurance And these strategy growth the two

that. on off take I’ll Okay.

in. on jump Chris Chris’s team. Let That’s

insurance team. for and team CEO really a operation he strong Markham team of us. is great insurance runs our our McKnight is Our

We what the have and here expand are That’s little in up that of this looking expand product to small chance can partner that producer partners, give with historically been case. agencies to breadth little more able mix to happens a provide find a the somebody and bit.

our organization want have to product footprint. be some to where able part spread So being provide should also across customers tag take they bigger partnership that? more folks this are of of forward Chris, onto rest a we And can looking them. their to you an and then to utilize and with expertise in care a do the we is of footprint that that

Yeah.

expertise their industry Louisiana. -- construction book in liability there well our professional coverage in with Just underwriting especially around fits

same big really of comments. agencies They it’s Dan’s said small it’s as from footprint So add-on, turn number, pulling independent mentioned, the have important one the a few a the it not Dan here working obviously, into with and agency, to you last hard insurance us. a across larger over in years, all very direction. especially The leadership agency nice in is our to number worked

to job to Bank, great the not at we’ve but as with we’ve try pulling, all able we’ve those are type So processes good and to you and producers not progress through the large guys benefits, hard worked don’t the PMC, put synergize accounts new footprint. in individual -- know, pull done are them desk, across we these into to insurance we because time, that And together. off create the same the a branding ticket and employee but made synergies

forth. business within think the So Bank been think together, years that’s been synergies It’s referring And back our over I that’s or operate last going agents three many the positive happened as they both four I back insurance closer transition and for of very and our years. facilities a and work forth, segments. now going and

to go to do And great. That’s want back previous I then Okay. question. a

been you of for looking as as this, on highlight but apologize, question Brett’s duration portfolio been buying and the security there. was it far duration recent more I’m purchases? you active what and perhaps, I and think yields, just missed the I and pretty you’ve yields Can

want find that duration have John you X% that us. to we’re do a to not buy any assets but on a John, been earning to has for able bit, six but those under jump little months, of in of trying

are what doing? So you

think, about, to roll they’re off X%. next off in We’ve and got I $X at XX billion months the going rolling

I That’s difficult. It’s We’re come pretty back It’s tough. going to out at think. impressive X%. very

some have invested debt in X% X% in and X% between recently the range. We Bank subordinated --

The rates are Matt. ugly,

looking like football Texas and Oklahoma understand. teams you in at can ugly. put the this help you something It is year. that Let This seems me that

years. staying years to short three are we four And

it overall now? the now And of in in migraine what securities. I terms assets you the that at around loan see Do as if growth higher, XX%, anemic XX% our we’re is size, the think, of remains are

a growth. I on dependent deposit think that’s the

the still there, still deposit PPP is some to around that that bleed a of the going begin money the And year. is whole in way. growth a is in. out That’s there this unknown seeing stick money around up out going So for short. is have another with making is flowed money industry there discussion is duration of reason lot that deposit lot ballooned an that or that that is questions sure to There

grow continue because deposits continue loan to then to think book with grow our to to difficult if significant going security way. is be in So I grow it, going any it’s to the portfolio

a had couple that it quarter. of Again, we in the or by growing Our footprint Texas is team particular X% right you. territory states we growing in very on by were And in focused the at break again, loans. once, out for quarter, grew

So our parts make grow of we sure to to protecting the ability other some just the need parts of the footprint. have in that we’re We footprint.

it. Got

That’s guys. for Thanks Okay. me. all

Matt. right. All you, Thank

will Please come question Arfstrom next RBC Markets. Our Jon from ahead. with Capital go

Hi, Jon.

Arfstrom… Mr.

Jon. Hello,

… your line is open.

Sorry about that.

quick to kind to like path back ones. the about the two pre-pandemic? yet. that but looks some fully back, come service you customer do starting you John, there not to think -- But what charges of you of with fees -- where deposit talked the Just were

pages. is He flipping

at me a stab just Let take the overall economy.

Card volume big way. come that. back, piece is is a the pieces all not has and of it So card multiple but there volume of

get ahead. normal than our help some that So fees. around just people John to deposit you’ve and then they again, think, I got of go are to moving more

People don’t the the or flush in cash card now. that use with debit There number. They have of that card. is to some credit

volume So that is down. purchase

average account up, our balance which deposit And down also normal just is pulling is charges.

Yeah.

down schedule I XX%. but time some over, come that to I year. when down is back quarter XX% XX% from think economic -- a know our depends over extent. So lot to on well, don’t XX% says quarter I’m fully, it sorry, This last going we’re this quarter-over-quarter, forecast up down

a When in it as soon -- have lot -- it a back vaccine for we everyone. can put as come

can’t a good an somewhat I answer of that, unknown. to give it’s you because

It’s on its way back though.

We just when. its on You’re it’s back. way don’t saying, know

Okay.

what is That it is. Yeah.

right. Yeah. That’s

I Okay. just And you’re insurance sure then what I on want to understand saying. business, the make

typical seeing to the changed You’re it in than more business seasonality, nothing’s but make really typical.

past You’re just quarter? we year-over-year up like this flat of saying kind of kind to saw

Yeah.

a So for or remember us. fourth quarter is low always watermark low quarter

So trail off. XQ should

in XQ last So I two the did rules that would ‘XX years. in almost back place for are and we recognition in at implemented look now what revenue I year we guess been

can’t So is that typically recorded kind out spreads But that I have with continue there. in of in customers last the year. The just the mix But hang revenue in difficult business up customers of building first you of when actually with and we and we’ve nice can. the team get new lumpiness to the part to everybody expect would out more that book the of like won environment just it quarter. new it’s some business a out

Yeah.

the All Thanks Okay. for right. help.

you, Thank it. Appreciate Jon.

turn any the session. conference Rollins go I Please to for to This concludes like over Dan our sir. ahead, back would question-and-answer remarks. closing

much for All you today. joining all right. very us Thank

with If again soon. participating. much Thank hesitate to you you us. forward questions, or need all we’ll don’t to very Otherwise, to speaking additional for out look information you have further reach please any

conference The now attending concluded. has presentation. Thank for today’s you

now may disconnect. You