FB Financial (FBK) 17 Oct 232023 Q3 Earnings call transcript

Good morning, and welcome to the FB Financial Corporation's Third Quarter 2023 Earnings Conference Call. Hosting the call today from FB Financial are Chris Holmes, President and Chief Executive Officer; and Michael Mettee, Chief Financial Officer. Also joining the call for the question-and-answer session is Travis Edmondson, Chief Banking Officer. Please note FB Financial's earnings release, supplemental financial information and this morning's presentation are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the Securities and Exchange Commission's website at www.sec.gov. Today's call is being recorded and will be available for a replay on FB Financial's website approximately an hour after the conclusion of the call. [Operator Instructions].

During this presentation, FB Financial made comments, which constitute forward-looking statements under the federal securities laws.

of or on risks, expectations that uncertainties cautioned expressed forward-looking actual such undue and forward-looking based are on not assumptions beyond may to by are factors or predict statements. Financial results statements. Many to to such Financial's FB subject and performance statements management's materially and put current and ability implied control such cause and to are Forward-looking differ of from achievements results any other of FB factors listeners are reliance FB A risks and or more presentation, is results differ information, to Financial disclaims Form and recent of with detailed contained description a otherwise. of including most any reports expectations current that to revise in this these forward-looking law, update statements, whether contained other SEC from as periodic actual events or may new result XX-K. Except Financial's as the cause Financial's filed future in by any FB FB materially obligation required

over at this website supplemental Chris www.sec.gov. I the Investor Holmes, Relations would company's are like In directly measures defined most Financial's financial page by to the to GAAP information morning's SEC's and addition, G. measures available financial CEO. in now measures available measures the Regulation and of include turn of on FB as may non-GAAP and A website presentation earnings GAAP which a these presentation, release, reconciliation SEC financial comparable in and presentation of the non-GAAP the the Financial's FB at President is to comparable certain remarks www.firstbankonline.com

call always your all Thank for interest you, in Thank joining this us morning. right. Financial. All the appreciate on FB Good We morning. you Jason.

share, sheet and of the of of on significant procedures and $X.XX annual the and we rate reported progress compound growth excluding improving efficiency IPO. In book $X.XX. with per impact balance both [ quarter, value of I've internal of adjusted discussed made EPS the XX% the of strength quarterly per AOCI of those the a calls, since grown We've priorities our tangible goals at We've For share processes EPS of an recent maintaining our scalability. and priorities. ]

me let sheet. balance the talk First, about

board, of a positions equity of CETX held are X.X% our strong XX.X% tangible a in we any including and assets ratio to available-for-sale tangible haven't as across of Our the and securities common doing that, to maturity. reclassified capital ratio

we as our capital to Our reserve for don't levels conditions as and difficult but the severe are for. allows become economic prepared times, expect preparation

is continues financial which provide XX loans supplement strong. plus percent each the a our keep our our We securities base. we overleveraging from detailed Page to Our on of near deposit or portfolio liquidity under as XXX% deposits that quarter position, to of be keep

in find very of the a us banks, our consider among deposit This that to we you brokered strong and is you'll use levels make our granular the leverage position. deposits. keeps deposit If often -- compare lowest base have that internet our base When quite metric of liquidity little one you of that we and lowest use on peers.

HFI did seen haven't well, well credit, that we're an positioned significant Our changes our portfolio Outside Again, quarter. move portfolio. although very continues of loan to the loan of we ACL perform in nonaccrual we of C&I X.XX% credit quarter-to-quarter. to X with

our will exposure the construction year. level construction the over long-term CRE and be X end We reduced also our within there of by the tolerance last quarters. CRE and

us. From feels We feel sheet And quarter, increase of we fourth the improving an we're late lie we quarter, positioned. some third as revenue so the about there to perspective, executed opportunities well the and and expenses. built momentum early on and that and have profitability excited pieces both the of reduce as ever we're we balance we growth enter and fourth broader operational In as focused strong on returns. initiatives X ahead

majority will quarter, taken were third the of actions beyond. benefit the be felt fourth in While the quarter in and the

for the $XX.X tweaked been the seen have profitability. The forecast in net been ways in we some as interest cases, enhance in trade margins strategy but a this the as resulted let to that executed becoming pretax forecast in securities expense net slowed across going not margin continue third release, as inbound only to in discussions. revenue NIM and overhauled quarter seem achieving million in look the we compares expenses, in on discussions our our confidence million. our detail, rate difficult earnings and $XXX million analysis we're ourselves the volatile industry, in costs up to late relative increasing. Funding QX XXXX, Again, -- some expect quarters quarters. and we the $XX and in will variables I'll of to also reduced deposits banking of increase X noninterest engage to the materially annualized. M&A is picking banking his of next will models provide we so in for total. or to has in million lead on our and of million in calls in rate a expect additional those Michael core somewhat annualized as we deeper $XXX and annualized $X band expenses a same On expect increasingly loss in in million of that run core quarter of income Michael in in QX. couple of change expenses environment, is the By on those side, we've and by quarters, banking be in margin trade the We you've last based long the so our October, million million conversations remain to for realization of $XXX had of improvement rate velocity the The receiving in core others continue noninterest reductions, increase with expenses but have currently XXXX, we because less to to in several interest couple an savings remain last months expense the well more significantly, to benefit we the third we there discuss has begins With most mid-January, to for $XX.X of slowed, $XX to asking but experienced anticipated over which peers. the commentary. On continue

be said the fits. and before, and strategic cultural respect of we've acquiring our geography in we size, some across great would our banks we asset believe sake As are growing but that there don't for believe

scalability of couple to very right we're efficiency in and our over M&A initiatives arise. confident effectively Following on last the opportunities the internal execute should years, ability our

time, I ourselves process, us, execute great operational built placed that ourselves At call our and resources strong bank the for that may reserves maintained spent for over before returns way. summarize to We attractive a better capital, profitability focused So And to to in we're improvements and internal sheet. same we've the our to we for customers, to time our better balance opportunities Michael, focus on made enhancing our we improved are work and in and a liquidity hand ready efficiency. put on place position. Increasing come and in a associates. our our

go going results our in financial detail. into little Now more I'm Michael a let to

to securities It's everyone. morning, due good and our Chris, our to noisy quarter and related the a bit you, a efficiency of trade initiatives. Thank charges

the expense the adjusting So quarter's income for and Reported million. $X.X OREO. a was million $XX.X to banking. We on this securities, the income $XX.X net take adjusting million. Of million, noninterest in $XX.X reported efficiency that from of minute came through sale We core income million. banking. expense $X of I'll million $XX.X $XX on walk of charges had Of related sales and for million loss that from $X.X came $XX.X million noninterest million, of gain initiatives. had reported interest We $XX.X earnings. We noninterest core core million, of noninterest $XXX,XXX $XXX.X million to

core we of earnings pretax consolidated pre-provision core million. earnings million banking of So $XX $XX.X pretax pre-provision delivered and

million income interest margin, touch more of of our September. and We a million first end $XX.X I'll $XX loss the on on into sold securities pretax at securities our Going detail trade. net at

interest did liquidity. our expected options met a over the as with trade $XX accretion back, point, we're see next duration, dilution. that So in to trade would in approximately and given earn million should the how At quarters. $X parameters of wouldn't on be not the deliver do as to be examining capital another capital there parameters timing, the this from our the loss transaction. The our couple million meet will not million trade increase on comfortable in income $XX quarter can any that annually. We to third many yield net benefit deploy range continually real income additional we we We interest net our would earnings

our basis contractual during to loans the X.XX%. Next, yield points XX by on increased quarter

the of half September, million For in $X.X the yield XX% Remember, which on the that loans, month our of rate our we X.XX%, yield million with loans $X.X with portfolio the X.XX% yield were new remains for of floating month X.XX%. coming the a over loans. on at $XXX commitments X%. September yield a of $XXX was have a of XXXX fourth about billion about rate, X.X%, of in $XXX Of billion million of yield of held about fixed half maturing rate 'XX quarter little in contractual loan in leaves in of first maturing a second and fixed maturing

as we've X.XX%. Cost of seen maturing a million recently. of about at moderate yield $XXX of that XXXX year-end about But mentioned, to weighted Chris through rate deposits continue So increase rise. average

by quarter, to deposits increased points our of cost the basis interest-bearing For X.XX%. XX

X.XX% of month and September, X.X%. deposits the sheet cost to September for the July, were of at of coming interest-bearing and Incremental around our respectively. For on was August month X.XX%, the interest-bearing deposits balance X.X%,

back gives couple reminder, that With expect flat our being over the the I accounts million quarter. laid the at we'll quarters. second million $XXX a onto in out of public and the would to fourth to funds moving little with cost next fourth X.XX% have in the X.XX%, takes the quarter. $XXX come We anticipate Those the X%. balance quarter left of margin pieces all above, As build effectively quarter margin for range a we for for X.XX% to to sheet begin a the in

continues or million expect noninterest quarters. $XX we few in minus remain Nonmortgage, in $XX income. the the band, income the noninterest that to to and to to million Moving range, next perform plus

out We've than voluntary $X early also million this of Our in our closure acted a realized limiting is and in of retirement combination come a and explanation reductions September program still expenses also of utilization by through professional this the more noninterest some come At of early the have communicated quarter. expense realized cancellations. Most taken reductions of of of annual internally be $XX will reduction eliminations, and from customers. occurred of annual run be a renegotiations to typical processes, additional that will branches, October. expense which an and we've needs in redundant million at we These most which have X on to rate, January. point, position reduction end expense services and contract

million we For noninterest expect costs. the range with banking took be quarter, in achieve and in expense third quarter million banking XXXX, $X.X To million to in $XX for early severance charges fourth million. to the retirement and related this we the $XXX of program reduction, $XXX $XX connection anticipate annual noninterest expenses million to a in we the

related We also the million project to in quarter. charges second this took $X.X in

$X million as and So focus the to in on so fourth efficiency million profitability. charges and we're at additional continue anticipate million far. We quarters through an we our about first $X.X $X

increased in ACL or investment On million basis for the net million ACL loans the quality, our allowance. of points $X.X that the and by increase for Much credit held quarter X $X.X a that credit to for loans Chris this million for on was also responsible held entirely That increase related the specific almost was credit quarter. in nonperforming investment the our earlier. $XX.X reserve mentioned

our investment economic in prior have indicators quarter. with roughly flat Excluding would this as remained remained ACL line to for held loans credit, the

made XX we've and liquidity our by the capital and we've of I'll strength close through past risk-based increased TCE recent our past XX year months, capital that on assets XXX In balance sheet total points. basis in the speaking to by points basis the management. by to progress priorities tangible

XX% have deposits from to XX%. loan to Our declined

target XXX% X bank quarter from months to to closer for XXX% of development Tier of to XXXX construction capital operating and the our liquidity increased XX% X.X% have liquidity assets Our allowance $X.X sheet today, declined tangible sources move available ratio and to billion XX% has continue of from grown today. our ago in from On XX lower XX%. to to billion plus has third long-term balance and we to will that level $X.X

for downturn feel is milder that be and well said, our we than will we any experience prepared we for. Chris any have view very As prepared current economic downturn what

to I'll back call the Chris. now turn over

All right. color. on Thanks, our situated strength. that we very prepared excited And in to questions, perspective, that And on focused sheet We're improving summarize, way. future. feel balance a to from returns. Michael, before come our profitability for and going position the financial execute may into about a opportunities of any We're

So both operationally. and financially

And Again, So lines concludes operator, remarks. thank interest. that we'll open the our for for up prepared questions. you your

Sandler. first from Our Scouten comes Instructions] [Operator Piper question from Stephen

more the I to information get some wanted sale. on security

you in that of And that the That kind back of the what back. securities a higher on it kind were of couple of what was your said be I to duration would XXX of you think bands like you yield? did -- quarter, is a this at sell looking reinvest sort book. did longer portion curious longer X a was than helpful. months securities looks that. Kind where of It little that you XX last earn things, earn precipitated maybe had it

and Yes, over XXX we in move what it rate went with a be was even about Stephen, the longer. as little so rates down securities sold, -- through mostly us little any a we environment. thought we if bit the would -- points, CMOs And are X-year back. which earn yes, It's basis we process, and some mortgages a

the that So paper just not as type get calling so kind there. our rid and risk FHLB duration, extended of so made to kind of the some within agency, Reinvestment internally. I'm well credit It's far securities any came and from, that seeing have range. although it all yield agency market that we of where in sense stuff, dogs out that's are all guidelines them of extra government current

Okay. That's move a the into the you if what you the about that there, helpful. can give lines information and metrics. X encapsulate noted additional other of kind kind that sector credit sectors? of And there's just along C&I of of same that then that is kind and lingering us then maybe any credit similar thinking lot Any issues

well. Officer in Sure, Chief here Chris. Stephen. It's And with our us as Travis Edmondson, Banking

was familiar -- So you're a make a a bankruptcy comment. was as It's I Mountain mean credit just bankrupt C&I with reportedly Express. there that a

are we that that think, We involved that you a not all. that as to in client. of was client credit bankruptcy, a in at do I guys, no, were not which they have involved vendor We

in that that guarantors that is, for actually and major C&I X on well our And not, goes conservative is there's fairly as bankruptcy. of $XX the million credits all but about into it of it credit credit this But has vendor was pretty roughly it so And just a type once we're is us. due. bankruptcy, secured and at

with And those. we how so we handle are fairly conservative

took so it. pretty on ahead though extra put and went and optimistic it, reserve nonaccrual some we are on we even on And it just

it. Got

Okay. think And in your X scenarios, light underlying changes but of I economic obviously, ACL kind no charge-offs. said you I took of reserve and mindset -- only the Michael know up real points basis of in even an

And end. forward? you the build is on way down a right like that that it would expect most Is -- feels is your coming you Or to just we it? reserve conservatism really know don't think what know the of So additional moving about lot never pipe.

Yes.

Go ahead.

credit portfolio. you'll It of positioned, sort of I But a with up said, range. Stephen, range. move stay where this are. deterioration the seen we evaluated comfortable I like didn't about feel We think loan. think the talking And we're well I haven't individually in because think and Well, we're we this I in

And stay. range where where so we'll is right that now, we've likely million $XXX been

and than our more reserve, get Stephen, to don't I difficulties will. for and allows both things capital really that We get I for would add they forward. actually difficult we levels expect just comments, to both in things this our But and preparation difficult. Michael anticipate we're moving to prepared alluded

The comes Mealor Catherine next question from KBW. from

wanted outlook balance ask about for sheet just your I to growth.

growth couple conservative back past really this your on the again sell loan of been over loans quarters. You've pull quarter. outlook And for

your would balances many how that loan in to curious decline that a Just see before see more kind gut be again? quarters growth of hit and start we'll we inflection

Yes.

comments. Catherine, So just a of couple

You're right.

about we've right and us, I talking We deposit I when said have was talked base. -- the been And side. overleveraging about liquidity, loan for conservative the growth not on our now

real for And so governor us. a that's

and We construction been taking not we down, side. some still And we're still overall our particularly remember, opportunities growth. that we're balances also so portfolio we our see have on CRE conservative in growing see portfolio. But and

probably expect dynamics but going muted to 'XX. So quarter, X, when some maybe for another in put you there, it's in those do be we growth

-- we'll economic And on see on like into economic seeing to and so C&I see not through deterioration it again, recession. clear like circumstances. be we'd and increases in rate through I'll And a Also, clear depends different kind also significant to some position. and come drawn-out of interest we'd

you to So add anything that do -- Travis, have that? is to

add to to Catherine, much not talk that. to nothing you to

where point internally. turn future, initiatives I and a opportunities decide see the more self-imposed more in looks in and still when lot will markets. We're can of the growth lot us, Birmingham, that growth into Memphis, governor spot markets, We the clearly It's list we a economies think this we have on at we for of you're Knoxville, our goes more a better and of some on. Huntsville, on on.

construction of C&I in landscape seems what Can generally really like right It not your now. about the in just CRE on you is kind talk Are opportunities lending talked side? -- today? about you're lending you seeing that C&I and the you

seeing Yes. of We're lot a opportunity.

there's what sheet and space a course, million C&I doing. we're by lot committed of to in last But of seeing institutions opportunities actually lot balance a $XXX other space we're are the that A over their in we've Of competition balances of today. little similar derisking lot a grown quarter.

we continue So momentum. engage really and to some seeing space we're in that positive

deposit you're talk really your costs of ease, you're of then seems Can of where guide stressed seeing deposit we're where your of helpful cost kind incremental just which in great. NIM just is kind And you the the and Great. and stabilizing, was really behavior on seeing higher Okay. are about in deposits just deposit the most like what versus starting things maybe one, maybe the type. most within clients, -- or terms product maybe the to of side,

and quarter Travis in. Catherine, $XXX our around so were funds, third but it's outflows of outflows start million, in million can funds, public then Michael. in public I $XXX most the mentioned of it that I'll jump deposit that. centered all down

X% mentioned As those come be on, minus I those range, little bit. mostly a are to back Fed expected funds

And repricing community request for has months, competitive, So challenge rate retail. smaller deposits about you look or getting so we've larger velocity X.XX some highly tackets banks increases full have then this corporate institutions, still get percent of across talked you is the rates the moderated. commercial, as customers, or balances. The X%. and over market CDs whether seen slowed expecting we at because large and What impacting before, of banks, on that community the know the we've are I that's that's stuff right? their you expecting face, constant large X-plus market And have of they're our money our banks the footprint, priced or X

they as that. there's And see you I new expect so as deposits, benefit. And that's But think new market rates. to long stability, continue a customers, been

Correct.

yield to year few X%, of incremental chasing thing as lot where not been could last time you right? the much quick last add. there's somewhat people get the it's that in one Just many to yields A stabilized X.XX% they where and from chasing higher people go might yield, talking the We're to were from this footprint. X% X.XX% over quarters,

us little bit. So that's helped a

great. That's Go Chris. ahead,

change we look has one want so the Michael really make forward, I Yes, said, -- slowed. as as velocity to of

out and public for some as back is the some sometimes way funds we quarter, next of flow as -- the we funds come our over those play key the the funds see most One time, and and a quarters, when those then highest say, third sometimes us folks of I'd the come see share to entities tend there public of a of they variables the and for second at not higher, that market of of in quarter, out flow they in priced. into back public in X that's the a and fourth come our all reporting making be well purposes are in the combination

and through fourth so manage we're the quarter. And going to in that third

so that it's So but of retail a be Would modest pressure in fair core public function of back year of and comment? a really your more customer half the the base? driving margin than your that are some more funds kind

That's right. Exactly.

next The Brett Group. question from from comes Hovde Rabatin

I I know tribal season. And some And speak. been it's wanted FBK call in the that quite followed back a to know bit. playoffs, desire to to there's so get college guys off, you I start

feel to what expenses, and in do? you've back if else wanted you able the playoffs And ask, portfolio the instead. done the is obviously what and XQ playoffs the like you in considering to to some if in in Or on in And doing 'XX get what taken offense securities kind of you're to see might defense 'XX? actions you've wanted up with so maybe here be I

is Chris. Yes. this Brett,

right, the of season, we it morning Monday do football college we fans everybody in. is are ribbing losing have You're that's only and

no day and out lose it's Monday So you relative to -- how when day perform. it's fun in banking in we you no here out final lose when and hear morning

start at if actually historical the go if And further book just talk value Since of we or and go is. about call, the book company, performance, back our so become we of rate doesn't growth than back X years, look it back our you and a annual we when go to actually we we where our X value you -- tangible and -- look compound go performer. public we that back back premier stock X, of a over things going a one to are need lead tenants the is here said, be -- say, sure foundations we to X we our last quarters, And key hey, to so, I'll be. the there been always where do that's scalability quarters performer. We of foundational did we've we're or in the need make company that they X some and that the have the of to company of our

some So we off hurt when things performance. foot done and moving we moving to about we spent some accelerator, taken money, about confidence have hopefully, knew our forward we talk hear which as feel what momentum our you're we we our talk we beginning forward. And would we -- took some and say, the we've

we'll -- the back competing the are playoffs be in We for and championship.

saw And quarter improvement standpoint, from so that's standpoint, metaphor game your on meaningful. just was it's game you last on our that from our there, with keeping

meaningful. improvement some quarter see You -- was improvement this that

that going the to are see 'XX. in You improve steps already next quarter

our than that returns is bar -- have shareholders our sheet. we're investors we we to can to -- to strengthening we so sure those And as balance improve make about our generate have out What of 'XX continue are and higher is and where be. profitability the returns there. wanted we our are we We're any talk they go When through doing leverage. pull we creating -- levers

higher Our than investors. any the of internal bars

play and at And we [indiscernible]. competing so point the the metaphor this and for are caliber again, off appreciate we the

wanted like that's so That's be 'XX you're hear. on ask good I sounds to to lot It to credit. hear. good to expecting improved, back

about I'm about You've would we at just But in to wanted have the smaller, might XX weakness kind hotels curious, slightly actually consumer-driven any if be office actually seem risk. hotels. somewhat like got year, deck but the slide portfolio. And in it's of the the ask actually next months

And any how on so or if was have portfolio book? and that about hotel work the RevPAR you you I guys occupancy for cushions curious think done maybe

Yes.

restricted comparative we that all have us don't do us things we have today. areas. is a of and of watching a it on one those district, pretty also years little strong offer -- terms that bit haven't key don't you have the We've specific kind and where much have stuff good have when been hotel there Again, not do new business the do over nice we but I and really some central flags to hotel in a we're got we we few, of for don't suburban stuff, I'm can Hampton a central but thinking got stats credit our ones of, got but that hotel district a if think I So couple we've that that just with frankly have been sits so.. doing I last outsized the flag for business something tried book. we we've of of much the in mentioned. But in it's -- type We basis.

to is would everybody's time wasn't too ago, analysis was is Brett, thorough we that asset this were able borrowers going I to they class were it add everything was pandemic where hotels during did they found we said And borrowers withstand our that the in long very And that thing that sure mind. we what did on other Travis. that a One to this have strong do. it were make pandemic. frame

continue We seeing to monitor to We're RevPAR. that on any not date struggles portfolio.

need something mindful we on. We down definitely consumer the our that's this time. no alarms keep in as But at spending 'XX, to goes eye are

I Michael, and would remind just me. Yes

high One, it's had done and can in -- have extremely Hilton expectations it, around it's say I it's fantastic months. last, again, for I the guess crashed just XX we -- a year, room. and a it. say, we parameters the We That has

only recently. the one it's that's again, -- And so done very we've here

So...

Okay. sounds one if M&A. around just like Chris, I last it sense interested could makes one strategically. you're If more sneak in expansion And in it

you thing the would environment the or that's dilution to relative tangible is about tough of marks book you you sheet. to think Can on the everyone what think kind Chris, about in realizes just so And kind be to I talk balance the opportunity? parameters maybe of acceptable an how guys or

Yes. that of and Brett, a there's lot that picking seem a be there's Certainly, up lot to to going be on. conversations seem --

are folks think I thinking.

I is that. I and And forcing strategically. a have that. landscape think to you think I the to strategically. 'XX lot And is lot going to continues of think a I force And know are of and change having think more it more to think folks

think only it, made and I it we we about about comment, As strategically. this think

in So it makes don't a thinking just asset we're good don't about way. us, for size, sense -- we we not really engage unless strategic deep

it, so be And so -- to tangible -- properties. strategic. going call usually, think be valuable about those we value think And it's and aren't going we because type deals when I'll them be going then they're book when to to

always and this tell out of they And so X-year deal kind here. that that bankers on -- tell out everybody I X-year say of so thought will you earn the calculate is things automatically go on just then we've we a and where investment because and line. and frustrating therefore, is, I that, most we back one the draw as the hear go call they and book a value tangible with about it is

around that house, sometimes. And that. lot, is is to to worth conversation pay doesn't a to they generate again, in if house necessarily comps your you're what can the house your so what on musk for mean Here's is interested you line your pay And doesn't we around often that afford afford worth than selling then analogy the what can I afford we you because I more conversations have that's can but that's house. meet draw he your pay and of use the and

And so we get that. into

But we does. to tends because and and you'd create -- smaller and think institution, EPS that be to really reasonable to what on but think level. again reach I because it part could it suppose we not about, that, it, to It that us? kind a -- tangible on you're GAAP happens when tangible cases, to you a we much than it this obviously, EPS that parameters in we're value alluding harder over never impact. that. is double-digit some -- that's is accounting. strategically in but thinking It about is what focus back parameter, mean way so of us more really up what one on see then of you're hey, about institution, have we be quite dilution, might computation then that there our could just it comes also back we to, about the what point accretion. And that a does in your AOCI that as think that on like take the our has. get want want size quickly And it used to book And And But accretion the we other in earnings of can we to more what capital come a that's that it to doesn't for

So...

Alex from from question The next comes JPMorgan. Lau

office. from now? And of color back What seeing front office, are much the the types projects key the how this back what putting that or some give or to cuts coming for areas the burner reduction you're you bank you're of also, coming from? investments on as expense the are where are Can retirement of

leadership Yes. you company, in Michael. reduction broad-based end, some across, again, we've the we've relationship front office, so more seen was back Alex, back very look end, it's front had across some office. But retirement change, positions and mean as loan much. not it's but managers, activity. I slower Early type probably growth, stuff it's obviously, management-driven

environment. is And that some of a product just the of

back-office I But larger, you we're ourselves becoming mean investments think of the if I've still just a institution. scalable more I That's made. a about mentioned And stuff. positioning the Chris branches. it. other for think projects, mentioned then piece some we've

of a in lot audit functions. we've a management, lot a risk So data invested in lot

just those place sustainable, operationally. We're scalable continue. point so this at really a in And

looking we're year and yes, capitalize on so sure And it's the that to after. years that. But we're next for well positioned making just

Alex, if a just of just could couple add I comments.

XXXX, of it. some we we expense our in late in quadrupled since -- we the of remember, did the size. -- comes reduction this from have Some over IPO Remember -- --

one made our XX% have We of acquisitions. X size. last The being

-- a that. right And pandemic we -- then went and so after then -- and that we through

And all lot do so together. you when you that, a put

thoughtful about, lot build around built as a been anticipation that time execution try about so -- -- reductions, comes has something we have we it's been and and -- now expense have well. haven't up that a notice been And very over this we frankly, months been to and of the of we've thoughtful because did very over which number the

and so And so geographically how as of well -- both they those. come the in across Board, as operationally terms

we put burner. the And mention on that won't a of -- then back investments I couple just to want that we

mentioned we you manage what do. scale of investments plan again, some the I have, you and we services. said data been talking making we're about we the think larger we have the I of we've going, talked side investments, models, have we substantial tweaked particularly in data. liquidity of spent gets or substantial the just third company frankly, one one what -- business. overhauling other our not years. And and we've that other I'm in made the company management data table right really if talked And sure -- have those have Michael, have comments as here, and the risk a the sure of lot business, we've defense from -- we of side as think been ones I X-plus The to when the actionable been investments line was one my can't professional ones, -- And were of so business to can't but the you looking -- foundations last over data of and That's made have making sure that some done the You substantial and that about around that actionable of about overhauled. the said models we we

lot as One of the spent services. reductions big in professional we've a

that in got intentional make on look consultants we from our spend if right. of and You line out that wanted of international can see was that expense again, best there at there see to sure we the some you actually, decrease the things you'll that supplement,

think I lot only put expansion to a on that's done it frankly, when so thing about back be thing back the of would the comes of. one burner, We -- burner. And branch can can't I would think of hadn't what we

that sale. as the for on current what is a curve? And back in parameters you earn did bond yields securities? quarter had the the and at you in separately, the I rising acceptable look the Can terms of on you in question us update more then when appetite sales quarter, were an security And period yield for sell these

of environment, little didn't a of years. matter haven't just were the off did because, Yes. want a was the duration yielding securities rate bit the parameters the be mentioned really much. We that couple so kind duration. We around low that it I to the Really sold move earlier, changed as we that

saw some and we of going on it's opportunity. XX-year September of think in the But as at shot it's so be sold forward, kind year that we look -- the And couple to before range in everything was earn-back. probably up middle it and I We end.

we weeks. about really we mid-September reinvesting. of paused and $XX couple in work And paused so last to We million put that

points. back down XX years XX, XX basis come Now the subsequently,

finding So the right in but we're comfortable it's this range, about investments.

options XX.X% Our of other It fine. portfolio are. total depends smaller. what on assets. That's about gotten has It's

it We're X, book this not And so stay shrinking and the not growing will range. the in to XX%. we're

follow-up the public a then on just funds. And

year? going the look there you something $XXX on Is million fourth If a year's at grew that that amount assume the is in fair in range. to quarter, last different Or fourth quarter? for this

Yes. That's fair.

million yes, profitability with million and $XXX $XXX and competitive We managing so. we expect environment. we're And liquidity or that to

it's that's as through So yes, we're moving pieces there. we say. I'll expect that's out, kind daily we'd the all and of grunt -- what managing kind of But forecast a

it's in it say, mean we Well, what range. that's our Yes. say I'd I anticipate will yes, you're Yes, right going just that I'd be. on Alex, right assumption. to be

Kevin The Simmons question from Davidson. from D.A. comes next

-- Just but a want correctly. just to on this, this want -- few I'm I to make we've think I got sure know so about questions thinking

of to So transaction, quarter from going drag for in we're a the margin velocity a or coming a shift, increases by outweighed funds, pace this and we being right? is continue cost fourth the in. And deposit terms higher still right? being Being see on securities rate seems the -- But the have abating. saying. deposit however, positive is you're the like to but It of public in mix tailwind

the are -- in but is the 'XX if the that's public start of I'm big next just quarter I margin preamble. effect half look going that catching sure at -- variables. I point or a X make funds, margin to So here we're apart we from first appreciate a maybe of and we expanding. all to know to the the range, trying I'm trough then in where position

all preamble. the talk about are things those the appreciate I -- Because yes. we

got I think you it.

one those and you that I I outweigh funds outweigh And will thing should X other. public there you think said nailed would it. trade something each it. totally with certainly it the say the Michael, against was it was will securities work

securities of a the Xx, the volume on come Xx challenge, public to volume the funds expect rate. rate Yes, we it's of is right, because kind

Yes. That's true.

going filter us after so -- of getting as use you -- 'XX. a of other the would But is I why kind where quarters. to factors, model and case we it it next that's those And which a And said begin preamble, headed the which the forecast it's what's and couple that we've on. but we'd into it's described think and Kevin, -- but the range, help were the of and over called expect at bound rest that, range that, it be to again, then -- you and into to increase,

a I has think of quarters been in couple well. from interest-bearing noninterest-bearing will you moderated as now. range to about if this XX% say We've shift, the for mix

to the Franklin, the with we have moderate as back or be deposit XX%. of of around well. number talked pre-pandemic to We've that I point we seen velocity increases kind about the that slowed. combination rate velocity as always expected So of

little but anymore outflow we're to CDs, but earlier, say then much short. keep treasuries. some mentioned too there, banks competition I But in trying those and to treasury, as not as fairly would see do about feels to more products, interest-bearing. money to from interest between this I So We NIB so, range bit some migration move market right a checking for community

in in over them much and there the M&A. you've to one matter long-term have mind when sound sell. And you certain kind ask follow-up willing coming. you -- described to guys be time horizon, I be it. time wanted Got past, the it's confident but about more to for it yet Chris, as will right targets of of opportunities a a And

the of spectrum so have you're to you of opportunities. in, that of getting or ready and/or guys some matter are position that the -- that conversations properties just sense potential environment given starting a and of attractive And is having getting kind these or are a you're expanding

we -- still the institutions -- we a limited there's that that not means that And that so It's really same things it's for. when going we're looking to the be -- for. we're have look we're the former that of have parameters that number

think is the changed. So time really conclude to and when the just to in some for going with talk are everybody think seek out happen. on it's hey, of ourselves my options. look hasn't and out We in that that what to industry just to we 'XX we list we likely -- those It's decide, -- and that

okay, either for. a not going, from our parameters or we're from what latter. It's we're expanding really And expanding not we're looking the that perspective so geographic it's and

Yes.

Got it. last And one thing. Okay.

all that not what recent prepared, quarters Is to we're but you observations You as the a like, times, as ongoing something going you're couple thought? of feel difficult based of mentioned won't couple on been balance times have you an that made thought moves be things might but that that now probably get these ago. feeling we is that a Or for right, deliberate glad bad we of difficult. likely to more that strengthen sheet it's

they'll prepared for. that Yes. we're get going as And for little think just difficult to to get things bit say as prepared a difficult. alter to we're don't We I'm

get and us. in we think prepared we March XXXX And happened that going well again, we're of what comes like think in because things get feel we're our so point, to prepared not this We year, on back kind be And at back environment, we -- ourselves for that this we're prepared we'd if for 'XX, if whatever we stuck think point at of find happen. wood. things We saying gets which is, things here, bad really slow But we we're okay? slower for do soon. get don't actually We that, don't prepared think prepared those we okay? things if So we're really as or as slower. it it do -- that difficult, we're think don't to going anticipate are will really getting from

don't think doesn't it's going to mean that slower. we get So

Okay.

next Stephens. from question comes The Matt Olney from

and I just M&A we've talked about want conversations to transactions potential the for capital follow up up. additional on securities discussion, heating

that's So can the in of we that program assume that characterize repurchase near of to going the would any how as term, you as appetite buybacks? be kind far less share the likely? Or

just world, That's did that's out got a credit raise likely that. for whole if wouldn't really now -- goes up, if think back if not and don't capital less the and started to related to we and that to being after somebody had anybody, look if really want we to again able the difficult I too predict buying we smart we And went future.

the peak. going is we so are again, perspective. we this a we brighter want that And to hit conservative we're be interest credit there industry rates, -- their like use capital that have think until we to from -- And how so on feel rates sure feel interest make we

I the on That's Chris. And Okay. discussion. deposit helpful, then guess circling also back

public below dynamics bit you term? walk near Can most for through funds customer That good the on of What the details lots think the in average there's and I focus billion a peers. rates that customers? And you're I where deposits? now. the that's think a seeing is gave repricing the of kind cost quite time just kind $X.X of current us more about are your maturing you with around the balance. feels what of there your still quarter third then

kind last campaign in CD Matt, this remember, October was XX-month, we had some year, -- of did CDs, Yes, year, decent XX-month that specials is deposit a if fairly we paper. some September, XX, sized you it and Michael. last We

And And time those rates. of cost kind we off weighted haven't average in the whole seeing XX So moved months. we're renewal about term historic rates is market, now renewals lot. the a was at the still

I it's And CD mentioned some just been rates, of in but kind we've certainly term. so earlier, raised shorter this

So if actually you want higher the -- and rate, shorter-term at we inverted. like bit curve a is it CD slightly yield looks little customers come in see a a

And so stick can you're care those our that stay that situations take course, terms in we of they competitive to were focus very getting need customer by model customers is year, And that. a and so rate. you you as field similar if in of in last

customer, right So that by right the company. we're the doing by

there. there's so And flexibility some

And on then that. to follow just up Michael,

volumes the -- quarter As lines, set evenly you you is quarters? time few to look next or more see there there the be of price? Or at where some any spread is is X in renewal it

fourth It's evenly of spread There's quarter next a and Yes. year. little bit of the second pretty a lump first. in

what's fourth So it's -- than in higher-priced stuff but it's and renewing the already first quarter.

deposit That's sticking theme, kind pressure rural communities. a metro also and And footprint more Okay. helpful. guess, mix then pricing good some of is markets I the your on of

was? is deposit and the maybe any as repricing great it's pressure pressure once your Just we markets, where general it general think commentary about in us greater today some where of not for as as

fabs. out Travis. the seeing regional now rural putting really most It's saw larger initially, some the from This kind the smaller we is interesting the markets. specials the of in pressure communities, We're some banks

we're range in specials. across deposit either to on X.XX% pressures. really all that that board, rural it's the And or X.XX% So the urban they're seeing generally

question next Raymond James. The Moss from from comes Steve

my So answered most here. asked and have been of questions

here. to office just on one want thing -- Just

you to start in portfolio that And that the Just around give there? curious any when if for up rents renewal? as could dynamic any color come color to

am Chief generally rate portfolio renewal, not our kind say I our Officer just office -- I is Steve we went on specific. Michael on were not of sorry, through where will fixed And Credit here. is

at the And thinking I'm when thinking did not about about loan so we renewals. rent renewals, office, -- was and look I

And information that Travis, you, so back little I'd have -- you. fair? a detailed to more get to get is Does that and

fair. That's

Great. Okay.

Montgomery next The Janney from from Feddie Strickland comes Scott. question

borrowings just during deposits, that Did declined so I'm to XX%. you given cost of off funding in CDs the brokered you've future quarters, side. around loans I rolling more on could saw off, to the those wanted start see sure quarter, just helped mature didn't I which them? renew and got and And we

Feddie. Yes. That's right,

rolled coming due them and off more of have in Some we November. some

you so of we is on deposits. retail it If mentioned frankly dry last just sources liquidity, Chris was need Quite some increased powder leverage than this our quarter, because cheaper remember and we of keep and we that it to. to want we and that, so when can

market brokered cheaper or is So that. do is when cheaper, sometimes we'll funding see we FHLB

of so lot have, it's there freed as by there. it, well not I during rolling renew do whether $XXX we from And create we your out in quarter, standpoint good liquidity. of point, levers need November, or to TBD, certainly team million a But to sources believe, off as it we the collateral further that up the liquidity work a don't

bit here. little a gears switching And helpful. That's Understood.

these in expense that a by on, about with securities -- at core coupled look so the ex we we restructuring As and from going peg get some range and margin mortgage else the, can other do talked at trends think, you reductions, today. the think the efficiency of portfolio everything I around the end of into XXXX bank mid-XXs is the XX% the

core the the answer. think get below we We Yes. We bank? -- do Yes, just can mid-XXs, the even. on we core, is think

come to And expect the unfunded commitments it. the one last question in should see like we loan Got space CD down. me. It to sounds for continue

to As reserve commitment as we'll continue think a do you well? consequence, see the unfunded decline

right. That's Yes.

the you'll but If look you strictly actually ACL we bucket, the construction our released at on see increased volume. the due to the from we slide, reserve unfunded

Tier then you'll XX%, to would there. we'll so in see probably it land that decrease, And plus continue from XX% range that normalize X and ACL and

Piper next Stephen Sandler. The follow-up question from a from is Scouten

if exposure exposure number, wanted I you have have of that guys you up, SNC you if And SNC had total of the lead on much you just as follow you so, may loan to some numbers the have. C&I that sure in to exposure? how went -- not credit industry you of but SNC kind like referenced, I'm had bad. this your the But do that

Yes. Stephen, it's Travis.

million that roughly approximately We is of for numbers. have round lead $XXX in We $XX million SNCs.

-- for enter And that some don't and into only SNC. we've do compelling any SNC a the clients got there, we SNCs We growth. us -- don't importantly or without so we SNCs do some some that -- relationship because gets

significant I'll specific client so -- using of without you examples, give And our X names, one footprint. couple and here examples a in

We the -- owners the credit. to officers said, know we -- the want and we our you in company know the -- know owners the they really of have We want we of we company. you really

And so would major in -- because we we're got the credit in everybody our know name a it's geography. that

bulk it. company. is banked We Those Second have until of their operating we a X from now they credit of lead one, part start-up their examples. over the deposits, a of became -- company of their still we that don't the the $X We the be line account, publicly would We but company SNC. billion. still including traded have

we it's And -- get on put adverse we the I SNC generally are those that we compelling reason When put it, do don't because so only says we to into. need just -- we -- it. some do of have is we way for SNCs this. We -- that it's kinds would

back question-and-answer conference turn concludes for session. our Chris Holmes any like to the to I remarks. over This closing would

company. need Thanks, and We today. anybody appreciate, to. on we're again, Okay. get appreciate we need We phone everybody's clarification, glad we the with if questions And things that interest answers have to everybody. in the really your that

day, of of So a don't season. have rest rest great hesitate have reach -- great to you a analysts out. earnings right. got your Everybody, and you All your

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

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