Allegiance Bancshares (ABTX) 30 Oct 212021 Q3 Earnings call transcript

Good day and thank you for standing by. Welcome to the Allegiance Bancshares Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, hand President Courtney Accounting would to conference and I Officer. speaker your Theriot, Instructions] like the to over Chief [Operator Executive Vice ahead. go Please

and our to Thank Officer Executive be will CEO President Steve Egge, of the who you, company of thank of of by This President Akin, you and Vice CEO and Ray operator have earnings Paul and led joined Bank; company; call and Retzloff, call Kuzdzal, the President today. Okan Executive Vice morning's Vice Allegiance and all Vitulli, of Chief Shanna Risk Bank; CFO; and President President the Counsel. Allegiance Executive General company

management's information required subject see release about change. additional in except website disclaim the made the obligation the statement defined the beliefs forward-looking any guidance with which of factors statements. covered everyone that Also We we text provisions any allegiancebank.com, publicly to last earnings at that risk by some be results, give constitute by remarks forward-looking of page this in statements I XXXX is we of for to morning's law. intend reflection act. Securities if all safe the such of the as the contained our today available to update Please the note statements as Reform We is on Litigation a harbor only as beliefs future in such may at forward-looking about be to associated Before statements, Private for begin, the amended. Act and remind that made statements need time forward-looking are guidance is

presentation an website. on provided have our also investor We

remarks, today's is over now as for will Retzloff. the at it we CEO, questions. time to a for used our I open the At guide being review Although conclusion line the our allow comments, of Steve not and it for this time. turn available is call

call conference attendance. everyone, to Courtney. you, and our your we Thank Welcome, appreciate

As as the our reflected release loan morning, liquidity will the the funded very portion but to the press a continued reflects per front-end of growing $XX.X PPP new results Allegiance efforts core net brand results color our to a this quarter. the numbers in slightly quarter has scale. income on it by third strong commend as Funded and community believe offset and our $X.XX in of continued income of strong loans share or seen market premier Net investment diluted due of continuation I entire provide very expanding Ray effect during loan team an local securities grew provide the of is higher-than-historic which our forgiveness and I paid-off for portfolio bank production, additional position position. the loans. the significant we the grew of cycle increased region's third million prudently

headquarters and stars I to Packard do recruit the of the from Center related Port shining recent transition for Houston a business." an Hewlett continued recent stated, remain the Houston's others announcing energy broader strong representative national metrics reserves Other local gains relocation minimal pace for growth. of leadership, "Houston with months. could with Houston great improvement our place sectors, towards as retain ratio with the an averages. Houston, Our energy rebounded Upon assets. continues to such improve charge-offs to and asset has attractive in quality projects, reflect modest and Texas of him diversification at the Medical and said, more. pandemic Actually, the to coverage CEO improvement non-performing agree not talent the and MSA steadily job efforts That to improved and economic excluding a market economy of more is initiatives us

and grow strong and Both to to Ray with review is position cover in we productivity operational Paul, combined a centrally, expand us our detailed the field even improve from core are Finally, of financial and our grow liquidity, our loans. a our for to provides capacity our which position over great working by to turn with that, it to results, followed more With more who handle growth. will results. I'll capital

Steve. Thanks,

pipelines expand the over and good to pipeline the Our second million fourth record bankers previous in as pleased lending originating quarters core attract quarter. are with staff and healthy are third quarter with $XXX XXXX new set new very both few entering business. the surpassing And set past experienced another has rate record relationships was our the quarter the continue by closure in with we the that seen we in loans, loan our momentum.

is Another mix of area external XXXX. five this September nice hires the so Many lender so both highlight from bank three XX, saw homegrown, it Through development far hired healthy we've to see our producers top also lender promotions our additions. are our program. internal to is lender lenders outside in and from of but

quarter the to Total loans, our billion, quarter. results. operating of now ended PPP Moving during $X an loans second the at excludes which increase quarterly core $XX.X million

$XXX the weighted loans core average June rate charged second quarter million X.XX%. funded by weighted new loans on was eight to XX in million decreased core Carried a lending of weighted booked The interest rate and million quarter ending quarter paid-off when previously of of weighted a compared second All million quarter to new points, million average to $XXX to loans at X.XX% advances were at compared basis $XXX $XXX generated X.XX% a The on June in compared the of rate and loans mentioned XX, rate $XXX to quarter. team level million XX. in, funded loans X.XX% of of level charged of XXXX. to overall million $XXX Paid-off funded that $XXX paydowns quarter on average loans by the the loans of $XXX weighted had third the the charge which average weighted first of in which end X.XX% core staff new Our core million of core X.XX% September quarter million second a were loans new average the core core our X.XX% a third the as $XXX average quarter core X.XX%. during of period the compared of rate of experienced a were rate and at XXXX.

$XX.X $X.X the at $X.X annualized during Non-performing down million charge-offs upgrades the basis were to quality. asset minimal quarter both of $X.X Non-accrual September ORE, million to points quarter quarter points and $X.X of offset rate a four XX to primarily of in from by is $X.X $XXX,XXX to at comprised due $XX.X in second ended payments, residential basis loans third total properties. Turning points. ORE million assets, million XX non-accrual million partially on payoffs, loans two including in from accrual, in in additions. net million basis assets. the the million, in and decreased placed of of XX And an back charge-offs quarter $X.X for million

X.XX% XX. terms watch of total the June XX. loans decreased of total compared at a of broader to XX.X% ended loans quarter our reserves decreased of percentage at X.XX% June Specific reserves at X.XX% from X.XX% compared loans our XX individually to for XX. XX.X% XX Criticized loans at September evaluated In June list, as of to as to classified September as total of loans

X.XX% funded At categories various levels. the a return eye would risk where hotel quarter loans, of weighted a it due We result to stress continue for marketing the our pandemic, September the on that LTV in In see our shortfall or portfolio average a million as $XXX of more manageable time position. plus on our will X% LTV have our categorized loan totaled remained A may a XX% we $X expenses end pre-COVID portfolio. to to quality aggregate, million including XX.X% on a asset hotel keep with portfolio, the close feel heightened at on that's in CRE. performance take to financial XX, in million $XXX test

we up the over million ago $XXX increase saw second front, an year million third the $XXX the deposits the quarter in On total from and quarter by deposit in quarter.

increase, as higher with to ago to accounts our that, see September continue and bearing deposits XX deposits the total growth as June solid carried bearing new non-interest balances the in compared With our year customers XX.X% of associated non-interest that deposit ratio the XX XX.X% quarter-to-date primarily to to accounts. We for PPP well quarter. contributed for in for result was XX%

evidenced U.S. the to with recently publications. by primarily a Intellectual the Innovation While published and the we driven XX the XXXX see patent finish are research filings as diversify oil Global prices results pleased Property Organization, by top region to Houston in XXs, World Index scientific in by continues

city excess highest-ranked XX the Houston and the month global in goods-producing With the XXth of Index ranking in Purchasing And signal marked in XX, of is the X Managers Houston to ranking XX.X the of was Texas. of threshold sectors. economic PMI expansion the in the September straight of which U.S.

Houston-based bank their and CFO, it and to provide turn us their employees. our serve the more businesses, Paul. the for As now opportunity community region, these is focused that largest on Houston over owners trends more I to

Ray. Thanks,

$XX.X as of million second quarter were quarter and $X.XX part of by funding income $XX.X share per per in results million million net PPP-related the $X.XX for to the revenue per third $XX.X as in lower in as We well provisioning of compared diluted to another quarter or quarter. third costs, are report loss or diluted with share credit earnings, $X.XX the share in XXXX. driven These pleased solid or diluted

the once the another we $XX.X PPP million million million for $XX.X owned. $X.X PPP income our second expense during the Recall quarter million related power on the to the an year ago interest net third where the in and revenue loans pretax was quarter. third record other second to Our pretax to X.X% write-downs as into Net recognized prior interest increase interest quarter. the million million that $XX.X quarter key due quarter, $XX.X income real from primarily in $XXX,XXX quarter, pre-provision represented estate to lower quarter. from pre-provision $X.X income increase of second the ago revenue to PPP Total quarter fee the earnings million compared million, quarter recorded during higher during driver the on to a the compared the a third in year was quarter and quarter, $X.X or third in in $XX.X Interest we $X.X saw for loans at in during decreased million again recognized quarter. by expense $XXX,XXX

the $X.X $XX.X Before into related after moving we recognizing net to loans approximately of for Yield for million second deferred quarter total PPP income quarter and that of of was third on, million the a I the as net in to $XX.X yield of third quarter as had should quarter. during the ago PPP quarter year-to-date. X.XX% note X.XX% X.XX% year million and fees on end, the remaining fee compared loans

CD been on from ago year Excluding third repricing. the PPP of quarter lower-yielding basis yield quarter. downwards of was third have the XX basis related in and and and in X.XX% a for XX ago the the and X.XX% in and the XX basis XXX primarily interest-earning X.XX% for loans reflective versus for loans quarter second interest-bearing ago changes The towards trend basis in XX by in to X% the our This points respect points on down quarter, overall the earning the was cost to year X.XX% interest quarter, our funds the for second quarter from proportion cash is driven the track quarter of the liabilities quarter. the revenue, mix to second for yield base cost assets in quarter securities. continued third points basis points Total year would in third X.XX% second quarter. quarter growing expense, principally higher With of asset points of

expect see by costs our continued going improvement forward to continued funding CD optimization. in repricing and driven We

equivalent a compared X.XX% net expense -- composition the of as assets, in help to So X.X% recognition earning significant PPP net in the in quarter, and third quarter. ago with the X.XX% the interest increased year offsetting the quarter our the margin and of quarter for in was interest of shift PPP lower second taxable fee income

net the interest third quarter Excluding of to a been larger income PPP in second pleased income net due mix interest to to see quarter-over-quarter, Notwithstanding was down to thanks for structural mix, to asset go-forward X.XX% the from quarter. decreases our Non-interest decreasing in nonetheless, X.XX% for the our factors. NIM and related growing $X.X from we for million the revenue, have profile due loan million are earning sheet. the balance would margin average quarter $X.X quarter second slightly third balances

year-over-year largely to operating million professional [indiscernible]. the see compared interchange improve pleased third non-interest strategic million in quarter, to quarter initiatives our to in tied are in quarter, increased due to increases the things. to $XX.X expense Total to the in leverage among We during significant $XX.X second other fees

professional uptick for to quarter. expenses. in XX.XX% be wealth, we to to the ratio from second slightly XX.XX% the line compared the for which fees be consider Aside decreased quarter the we XX.XX% the are holding efficiency Accordingly, prior our quarter and third on from the pleased year to

other evaluated in for provision Moving uncertainty charge-offs in million loan net unfunded of significant on in during loans allowance the factors just to for losses credit the should to individually of losses $X.X things. driven provision The to balances; provision the related under and during among to not loan I was credit; due the losing $X to related increase in COVID at related increase spike we qualitative recorded of quarter by quarter, a during we rest the note an commitments. an our elected quarter, quarter, that million end. the reserve cases to model

of our loans So points Bottom the XXX third basis core and representing notwithstanding credit and an line, some year Quarter dividends book at loans. solid ROAA approximately points per quarter million, non-PPP XXX respectively, tangible or quarter $XX.X ended quarter, share the losses XX.XX%, since our share loans end to and of allowance ROATCE on on came and metrics year. representing basis for X.XX% repurchases both the $XX.XX, results. making ago XX.X% last over was for increase total value

in Steve. look and we will building XXXX capital and as I out momentum XXXX. now levels with we call billion move back we out prepare the to assets, as So We to forward XXXX, close highs. at are to liquidity or profitability, near $X.X at over turn close our into all-time over

the that, the for call line will I open questions. turn operator now With Paul. the Thanks, over to to

[Operator Feaster Instructions] Our question from David comes James. first Raymond with

open. is line Your

And I I do from insights everybody. set to are your morning, some that think follow-up great guys new hires wanted I you in is production this. improving expect the just from to hear good is client PPP origination. to continuing just driving economic the of touch trend how to improvement just to versus what and mean perspective Hey, general new wanted whether the acquisition? to continue. It's much backdrop wanted just get on on you the you records. into this

part, last expect continue. I the to yes, David, it to

is are their stats are the And I pipeline about sentiment future. the that on think it extremely all do Customers getting there of Houston entire what's economic have closed. out conditions strong. working good still we lending our pipeline have driving and in --

first we in the the these we results. going quarters excited two what to million we've extremely into that seen similar to and pipeline produced set And the we're So when it records. about $XXX looks at fourth originated that continue quarter, look that

in XXXX taking it knew upticking weren't that through by our but year. distracted we're toll by little These And really out would helping even making turned sights that a that early we bit that. it PPP, are start we've knew a encouraged also And happen. seen we was work; we there it. guys really little this so after in During customers to we

PPP still needed or whatever add, PPP, Those originations were opportunity first with on David, we -- just in somewhat the us. a from would still And we're an they place. with I the still are dealing that's loan why customers for flush

think I So more opportunity. that's just

from have this much originations side record -- PPP see meaningful don't yet. doesn't record. the really The is You

heard stable. I it yields impressive. makes think been loan but new hear like We loan of I And get correctly it just even your great, extremely yields pretty landscape wanted That's to a competitive pricing which more on from I competition the sounds stable that's lot a have of standpoint. encouraging. pulse new

whether you're it Or competitive landscape structure still? the on is pressure to seeing pricing more you're mostly standards? on see and what curious and Just on starting

this There's originations strong. three the provide for loan last we field the tribute X.XX%. to competition see uptick it's proposition a a extremely I of customers. kind value quarter's mean in the quarter and That's basis significant versus pleased there. work point just the were still out very We in to at

is -- ticked look another kind related one saw payoffs a although we tad. down refinance, it a -- saw If of you just mix of at -- we the to the a bit that's little way little bit were high, payoffs of to

a that's quarter but little -- still competitive it's be of that that sign there bit rate said, on it's little might of maybe it's just So but good bit side. relief being another a seeing -- we're that the still a one

Yes, we touch Yes. is cognizant then that want and an the did input, the that go And to makes an just some output, of on I margin sense. puts not as forward. takes

earning PPP we asset at more trough the compression? takes securities -- we have purchases, stabilized? about the just and see as some see I guess do could growth mix puts loan we additional do how think to as as improve you margin more of just look should some this set forward? Or yields and get and some with and the is new least Just probably think you forgiveness deposit the be

it feeling haven't What drive Really, we've it payback a on as it's I'll doing that but the relates agency we're as anyone. much And David, an and take the funded much we're and we're margin industry-wide rates for. putting those largest over the control to story. is as on the phenomenon story been that's what had as books on originating we funded the to that. dynamic good really growth, core loan loan And darn core is going job growth.

funded than hoped by growth a of loan showed this All would of paydown. of quarter our we byproduct way great core as a less little work have

assets of an to and story. any with of total core assets -- pre-COVID represent our and of about of standpoint, core sheet loans, profitability we're you're able be that's a being it's extent an a loans our XX% So And is core be anywhere growth -- output, And larger from levels the core to right, get towards which NIM close NIM driver our our is of a forward XX% progress largest loans. NIM loan from cooking if input. balance when, to really not down we'll gas. being the going core We're to part

absence core paltry sitting yield without meaningful loan you're Fed at levels going rate risk ultimately profile. meaningful taking to the of build cash basis that to So going of returns incremental of at see levels in growth, be loan the XX the to comparison liquidity our that by core at securities and alternatively, Or -- are on points. interest

helpful. everybody. that's Okay, Thanks,

Thanks, David.

next comes Our Sandler. question Milsaps with from Brad Piper

Your line is open.

in COVID morning growth you you're Allegiance haven't pieces 'XX. place achieved When you good to do that maybe things reasons level a I I growth. got guys. or stalled seems bit around I accelerate feel in production. bigger the I throw just of XXXX of look the type think uptick notwithstanding. you've Hey, It knows. of think growth really off picture, can the have mean, the first quarter been for even everyone sort levels Steve, seeing? if the like out the since Ray commentary out single-digit, window guys low high we Obviously, back, I I But appreciate double-digit loan for about think of

Yes.

the -- with starts it about with the this So starts loan when we how I we mean it get the talk -- origination. to growth,

talked lending paydowns number million then with after to out had core originations. the loan the just as know if a uptick in to an we in and higher a and team our that, get unfunded. are core generate you $XXX be So growth amortization some as of where can we little organization, quarters and and advances portfolio order that take a -- loan mean for happy has of real I about quarters, we

quarter we're still what get the it and I based that just So may we're think more get single there. And And this it have originations to focused we positioned loan think do to on high-digit to mid- that's back to I take comes team originations to that it. and on. growth

to We $X funds have combination we it higher the of unfunded possibly when a even as and our have of probably that and now. right line some straight it's unfunded is bottom the And do embedded fund originations well which in going to just billion capacity about unfunded as seeing up. be to goes having

we couple slightly would and this of what And number in Ray, of maybe of terms we're growth? territory. alone, exploring larger be loan was a quarters percentage the ago, we've... kind mentioned relationships just that year entertaining that From we

XX% -- are Yes. up of relationships up now We're larger we -- this what year. about relationships our over

origination helping that's So on both and... side the

pretty And it's a coming off of base. small

room lot and even a potential much. size there's that kind So in to loan relationship a a of move bit of size of for lot or larger little us for

working hard country, so rest We paydowns up. like time. pretty the the on it's unfortunately, And this -- of showing we're particular in just point we're at all fronts and seeing

helpful. that's Great,

still guys back that kind it. you growth. over the about may build bit single-digit mean longer still type just high take It of to up little a term, think to up I So would,

believe that's I statement. a Yes. true

Yes.

I lot that that's the going about deposits you Obviously, in you much control into cash, how growth with almost add the of that that than are doubled did almost are the of quarter? Does your your think that Just And average just thinking portfolio the loan of Fed? curious out little and then -- you're thinking but are Or lot down coming million kind do potentially of alluded bond knowing that significantly hold continue? of But the represents you quarter liquidity average. fairly think this $XXX Okay. you period doubled to a more linked a the bank. the to the a cash at how you this average was interim, Paul, bit road. cash, higher in

Absolutely.

And And did be all-time to that all put overall to with PPP have want putting too fill cash we invest In forgiveness in what of levels been in had once. volume deposit we securities. lot phenomenal growth. we can't cash and of interest a don't Otherwise, portfolio. we really a position go as measured securities up at come highs. necessarily interest into about And rate not risk securities really -- we just mindful activity have We the want we pretty We our addition, it dynamics putting that don't much to put ourselves rate into of that long in we're securities. idealizing. the byproduct -- risk too an particular,

So ultimately, it's dynamic.

We want will unfunded and the market. liquidity continue valuing into our up having billion to leg $X securities fund We to to origination. excess -- commitments the we're potential in support

have So now, whether thing as you good of liquidity definitely both but much flexibility [indiscernible]. we're a and be of pretty right positioned testing support well feel we the well taking liquidity of capital from standpoint to plenty we by like the it too as beats And without financial may adage of alternative. way can growth

the -- about of quarter? buying some you about bought you yields Can talk or you're talk of bonds you that third okay. the the that Can in

really average The And in now than, for yield we putting -- on exciting, call kind and our on steepness front end mean curve. That's because a we're went it, because yield as the impact up we're yielded, we're super want of a overall not end securities seeing weighted not points, XX the you story have in not on in incremental and IRR on our weighted account a the we it's take that basis it, a what's of We don't -- average Granted, on more $XXX basis books into granted, you're meaningful now barbelling XXX duration weighted million that's what's going more that that would putting and call that's seeing end. books. we're when But and front thankfully if the it's the back invested doing, is basis, some curve profile. basis. securities the points. average yield. that on I to on the it relates the particularly dilution why have securities

the why those So right to relatively some now, point, profitability purchases. seeing much. in we've you're been necessarily move up this That's staying that -- that as needle not of short proverbial

kind maybe that kind And me. -- also there core Anything the are fees sense for quarter, reverse be. might to where Paul. you of final might we linked one of then, get doubled sort of should wanted thought great. of be saw expense Okay, aware kind that I of out? rate professional a Just what

Definitely expect that to one-off. be

it So back run second rate. run the was -- to pivot rate would quarter your

Great, the I appreciate thanks guys. color.

Our KBW. Brady next question comes Gailey with from

Your line is open.

good guys. Hey, morning

Just that expense question. on a follow-up

if you the little reverts to number guys? a professional levels fees, So for that back -- million rate. and I mean that $XX XQ put run it a Is expense that'll like under you on quarterly right feels

intent fees, be professional go as in line forward. uptick actually pleased the that's that Absent pretty we're Yes. to holding proverbial the and we on expenses

remaining, think the the Or quarters? those in fees the realize you three that happen does $XX of to the like fourth you And can next PPP two majority do million quarter? over Okay. of more

timing There's the happen that. down granted third quite of I will a slowed was in it much customer-initiated third this outside is is not have so really so that it of directionally If relates don't the but receipt record. as our far, our like forgiveness. same. is we to say the a over the control it control will the quarter, fourth quarter quarter quarter fourth Ultimately, the the workflow; of so majority has

well. materially our XXXX and record we third would less as less change in to definitely were of leave fourth quarter. than recognition a some, quarter but go considerable amount So things that the expect into And of course, to

Post announced for the I on so since or you've front, M&A still And it's then front? been, three right. that mean, on targets? possible Are new years deal. looking All Oak closed actively Anything you what, and the

we definitely as actionable candidates there kind from say will we're is it's 'XX, interested perspective, move -- -- a look to our mind. that and Nothing we would something come them out it's an very that's on of point today all of that front way. of I acquisition there but still there prospect. And at there's report in this into at that

know while to but you you I under $X headwind the it about really And notable Allegiance. more for need or have to Durbin billion how impact about you for there. guys peers? I that be a billion you're with all do is $XX mean line until Is a worry in Okay. going because think

is not retail-oriented For us, deal for as big a as it it's banks. more

last a is Now -- lower positioned is we're of an to beyond. we're than and standpoint income banks, feel XX on thresholds less interchange most income the we lot our haircut business kind as XX% take here infrastructure increasing the than or But towards kind for us mix. relative the for threshold impact so from on we income look it's to hard see interchange actually interchange banks we in well would a increase that working our pleased would of pretty months. some with and be otherwise forward different $XX But it and like -- billion still

on on now? And guys where are basis annual interchange fees an roughly right you running

And that only pleased. basis, year-to-date and to -- that year, recent for $XXX,XXX. Our is We close million. That's were year, interchange line line million. ATM $X.X release year-to-date we income. on is and to break at we're pretty this card debit started On effectively quarter a out quarter press $X.X last last actually most our we're card

that have meaningful to to it's this line a base So on from growing but growth successful point item. pretty initiatives small been initiatives, drive up

color. Thanks right, All great. for the

All right, thanks.

comes [Operator with Stephens. Thank Matt Olney from next question you. Our Instructions]

open. is line Your

a trying this year $X guys. Paul, that appreciate billion can Thanks. ago a to unfunded we comparable is. of you move more? just appreciate Good in morning, how you I'm commitments. Do have so a big number mentioned

around me it but make past. than is to have in significantly the to dig going higher You're

driven of Well, even a reserves big were that. our by portion

asked but question outlined discussion. Yes. a haven't the all commitments. increase Actually, it reserves by driven kind $X an in our you of unfunded reserves was of on in we million Nearly

$XXX,XXX that the commitments. of and driven was unfunded by increase in change So $X.X million,

Yes.

today. things was think to at -- about Just year. of $X.X billion Matt, $X It billion the the as end clarify, $X I It's the unfunded. billion

Okay.

year, So was billion is $X.X I'm and XX/XX that right? sorry, it's billion at today last $X it

right. That's Yes.

Got it.

these the the that stay expense. like commitment from it this provision originations of I question making is, million provision level at they The around elevated mentioned is new could going also it Is assume Okay. maintain And for fair you this around progress of sounds in the the was quarter to some third million $X the some then you're unfunded expense and if $X a hires. while? levels, that give to guess growth. of

a forth is growth, very very that is reserve loan -- only funded. for of it this many that funded interesting of that of attributable is less to the unfunded there's What's we provision The of course, here is level that need quarter, as funds, for need and for The play. is unfunded I'd $XXX,XXX at meaningful. unfunded. of But a $XXX,XXX are There provisioning forces put net the dynamic. then, provisioning so say, or in about, so

So you really, but gets $X.X in it so much that call it, to, down goes into million provisioning.

layer we what to ultimately all really provisioning up of Delta quarter, our the level key elected, those to factors. and along loosen those variant some factor point in and third at this provisioning And of X on least banks in CECL due Now our is model. lines, not to or the qualitative the of to reserves in things

effect a potential to it things sentiment ultimately is we're for where a with goes little And will the to a there point So that probably if the greater our going used provisioning -- because this levels. have lot a way down, it has introducing That's loan reserve we'll uncertainty. economy CECL a X slows and has And growth. be loans as where the funded of CECL our way goes the factor function to have to as getting it's levels to reserve need to -- paydown. to relates bit funded to more of relates increasing. presumably real drive is of that of But on going be up

yes. Okay,

activity appreciate top the Now an about third What don't much any it, on I in to saw of I the commentary. I plan? so quarter. easy least, it's the not repurchase but I a get nuanced outlook stock to say there think the have

what is Just that and the near then become to -- the more in term. active the us here the in is remind what on authorization appetite

Absolutely.

of first and hierarchy to market. appetite capital million share authorization into what third But again loans. and which the absent potential once get good our to We have on want loan a And use growing it's meaningful our growth drive to is for, feel is we our is core said, probably the of that one we be that wildcard core payoff, about using best funded foremost, and highest capital.

scale we the And kind of increasing is share the third, we engineering is a what that from M&A capital then market where is preserving strategies such get repurchases. of real and financial in importance. of course, is Next as return meaningful benefits think flexibility

around. on high very and thoughtful is it that option definitely So minds our we're very an it's

I'll core to aspect I And predict. Okay. put discussion for a going liquidity then, the the given that, and the that's back moment tough aside around to margin guess

PPP think points basis yields I and about six or I the down core were loan if accretion. seven remove

lockstep pressure the additional few about like interest-bearing lowering third -- -- it there pretty two core think it's decline that relation other? you to it be the be Do expect deposit continue lowering quarters? about Can will of core could loan you the to we be you those as for yields would talk think similar the greater you Or deposits? costs. benefits bps further next think just in relates one to the X do on quarter. saw than the I there cost, sounds deposit And relief the on the and in

more that of to loan we're With of be the on three I tandem this with originating and lockstep loans close a unfortunately, to as likely lot notwithstanding a pricing pressure. deposits, that side, to little folks could over a it fact be to we although originations, are able there ought get are the handle more think having to whatnot. pressure record relates there in the continue level lower who to with the lot of of there's a moon but are a zero, they pretty bound just be

good We our really power. about pricing feel we So feel great about our originations.

extremely growing output, all NIM this on focused we're just as of So level as line and exceeding that is NII expectations. an liquidity really recognizing just especially

for me. All right, that's help. for Thanks your Okay. all guys,

you. Thank

from a question Sandler. next Milsaps Our Brad is with Piper follow-up

is Your open. line

if early or follow-up. taking curious were you the Hey, to, raise a XXXX, just might kind funds. rates how Paul, of basis curious, Fed in margin thanks just you react increase late Fed XX XX think kind to us and point if of for remind your could next year, the say, loan portfolio

-- see as to new to have nature actually to to not a try to like portfolio an start lean little neutral overall net XX what a securities in going thrilled loan And in us. say, level sensitivity neutral of stay should bit profile, see be of we would of for we but is funds. from to Fed towards our increase We kind we're basis in we as a rate or our point asset well which profile such the income position NIM We're meaningful feel I meaningful variable are overall as a XX interest improvements reprice, we immediately. see IRR with now

perspective, Not -- of look the not to as what an of industry, but interest interest we're rest the sensitive well positioned we benefits a it. absolute like we, come. for revenue as about but So would that potential higher value that from And as sure with rates. forward comes that rate we're on measure the cheer quietly most

in balance you Okay. average And have of the the PPP loans then, just housekeeping. quarter? Do

not let... do I'll have. That I

what, know number? do It started at what you that and ended

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Yes.

I it You're it my quarter consistent fingertips apologies had for not last -- and at in this having quarter. I'm that

No follow-up, I problem. can Thank it. No problem. appreciate you. We

Thank you.

like to Retzloff showing this time. closing currently the Thank you. questions to remarks. And for call turn back at I'm I'd no over Steve

and quarter. speaking your joining appreciate this and just to we Well, want look to next you attendance to thank I forward meeting for everybody

much. thank you all So very

conference This today's concludes Thank for participating. you call.

now disconnect. may You