FB Financial (FBK) 16 Apr 242024 Q1 Earnings call transcript

Good morning, and welcome to the FB Financial Corporation's First Quarter 2024 Earnings Conference Call. Hosting the call today from FB Financial are Chris Holmes, President and Chief Executive Officer; Mr. Michael Mettee, Chief Financial Officer. Also joining the call for the question-and-answer session is Mr. Travis Edmondson, Chief Banking Officer.

and earnings available financial page www.sec.gov. on company's at Financial's morning's and of FB and website are Securities presentation the www.firstbankonline.com note, release, website information supplemental this the Exchange Please Commission's the at on Investor Relations

Financial's which of FB Today's FB comments the may forward-looking Instructions] the recorded presentation, call. may federal replay being hour take securities make an is will be [Operator approximately call for statements under after Financial -- available constitute and on website the conclusion laws. During

on statements are current Forward-looking and assumptions are to based uncertainties. management's and expectations and risks subject

such Other factors factors are statements. FB or differ undue performance Financial cautioned Many Financial's may and beyond to such or place control to ability are cause reliance by actual statements. materially listeners from differ on expressed predict, forward-looking forward-looking materially of not results and FB to such achievements any to results implied or

may other filed with A more in as Form reports except periodic current detailed including that is and expectations differ FB law. description results and required XX-K, Financial's contained the of risks materially from by to Financial's cause recent most FB these SEC, actual

or update future in result any of FB events any obligation new or whether as Financial disclaims to forward-looking contained information, presentation, statements revise this a otherwise.

by In addition, these G. Regulation SEC defined financial include certain as remarks may measures non-GAAP

and on SEC's non-GAAP Relations of information the www.sec.gov. which A the of GAAP to the available the FB reconciliation financial release, measures the at GAAP company's measures earnings website page morning's and at supplemental of measures presentation most Investor presentation www.firstbankonline.com the comparable available Financial's on directly comparable are website and this is in financial

Mr. ahead, turn the now Chris go President Financial's like to would and sir. I CEO. Please Holmes, over presentation FB to

morning. always you, FB Thank morning, joining your Financial. Good for We interest appreciate right. us you and Chuck. everybody, thank this in All

annual We've $X.XX. EPS AOCI, per growth of book of our grown we impact rate value $X.XX reported compound of the and share, EPS quarter, since excluding a our XX.X% For of adjusted the tangible at IPO.

and for on our progress results peer-leading return as with an towards reported assets adjusted on X.XX% share of to believe we of pleased financial relative that We're year-ago earnings the by average show X.XX% return XX%, average PPNR grew at fourth quarter quarter. performance adjusted adjusted of this relative our strong of and assets XX% they goal XXXX per quarter to and the

our call, on the enviable for those and noted When an I prior we've that sheet, [ convicted years the spent experience. our operating with foundation even my I'm position first our after points due to provided quarter. strong outlook to I that we ] in were more past beginning XXXX reinforcing balance bank on was the momentum X the earnings which

now improve. loan Our a capital and ratio tangible a XX% our have is of tangible of common of ratios a CRE to total capital our The towards and continue mix equity and ratio XX%. as risk-based to We trending of capital. concentration portfolio growing with concentration assets operating markets our a bank our of construction of of optimal for risk-based XXX% development percent size a XX% in

lines ratio beginning by first year. our quarter improved a first core team -- to efficiency the over also from associates. across through direct our a are in procedures well, come more The and of XXX as established the cohesive points office there's basis performing we're quarter efficiencies cohesiveness and back communication between last improved Operationally, and the been customer-facing processes have as of

sorry, interest net this noninterest noninterest trends income I'm on saw And we momentum, quarter expense. -- income earnings finally, net our margin, positive interest broad-based for and

of cost quarter's for investment for our versus interest quarter margin margin, in yield in contractual X.XX% net steady outpaced increase last on held the the interest at our loans the And was X.XX%. a row. deposits net the interest-bearing our second in On increase

to Mortgage contribution which as on amount income, initiatives had testament million, fee because we first expense contribution the year, quarter a contribution. a For same our was of solid $XXX,XXX of approximately with the a that last when of a had is only pretax revenue quarter $X.X

XXXX. noninterest $XX down operating The was driven of of adjusted in and quarter growth million over platform to year-over-year. segment before, strong. the Banking income that efficiencies in first down compared fourth X.X% that expense to quarter also And that led I XX% of in our net the XX.X% All fee fourth from produced our by the mentioned pre-provision was quarter core the revenue

levels So direction quarter historical a strong our the we trending that is of at while in results not that wanted profitability, of to. operating

look built the effectively be we order remainder year, to can the As that we've in on focused the create capital we we'll of deploy long-term shareholder how value. to

always was was we that first, organic ingredient to which from target quarter. seek this we our missing As growth one that capital, performance deploy

we're in strong which construction as comfortable not customer million it quarter, it our was the decline at a of lending was thrilled $XX way, the one While few SNC relationships, $XXX as contraction with bank. relationship balances during driven the we very was a that million the we're of acquired, in our experienced million by with with $XXX payoff loan by

but a was know. geography against we SNC As in with partners of based, meets of this a criteria few have relationship lending, we bias that those that reminder, our one very

growth of of Excluding on slight around annualized. those [ portfolio circumstances, we our ] X% two the experienced remainder

the feel intend as our historical footprint, return and to mid-single-digit target in we we XXXX. targeting to confident for organic XX% our growth to XX% the We're to organic loan of year about economic health growth continue

a for in additive of hired quarter, handful revenue producers we've look end, that and footprint members. our To first across we team continually seasoned the

teams delivering come pitch [ by relationship ] our excess Given and markets model strong building leadership and our managers capital, share prospects, operating and our our to market strong metropolitan we're footprint, join across our presence authority to in size team. our long-term our local headed a

expect We XX% in our become intend relationships. construction buckets or around and operating over-concentrated in We range of XX% XXX% not operate the those concentration name growth. on less accounts, to to continue to C&I C&D and our and concentration will and ratios to focus concentration in on moderate CRE CRE the more of the

to we're to have very internal capabilities in and be treasury share continue strong We changes. commercial and across footprint strong of will some corporate to from a larger that our relocations experiencing M&A management competitors addition influx from and team continue taking benefit by disrupted that

a for smaller our for priority banks partner strategic is deployment M&A. and positioned around second in capital of Our as footprint. We're well potential

capital and allow significant absorb be today's M&A. excess will have functions operating we to believe very us have the We risk compliance in mark environment. the prevalent that strong navigate current and that operations, we should able to interest regulatory rate And

and deployment net transaction priority proceeds executed and is his just in balance sheet earnings as we as over saw, our quarter, Michael the improving through in of third pickup $XXX transactions. one and for optimization Our the for a reinvested capital million Late securities such sold X.X%. team spread capital you likely of

would to with risk. $X no annual execution we further pretax transactions. real capital that impact And and risk that's integration under just of million, comes an allocate With similar money income no of

around stock plan of our in we quarter. have $X.X purchased to repurchase reapproved that quiver in Additionally, arrow And order had million in this recently plan repurchase we ] our also. current stock -- [ $XXX million worth

our So summarize, team this to results proud of the quarter. I'm for

foundation. platform strongly the we and the Our are be I have the to profitability direction. team, on continue feel metrics this right that trending able to in build the footprint to

I'm going it Now to over turn the little Michael on results. more to give to a detail financial

million this earnings. $XX.X walk reported Reported adjusting interest We and Thank minute of morning, and core income million. Chris, [ take about good a on restructuring income quarter's I'll trade noninterest you, for ]. $X the related to the REO first of securities of $XXX,XXX everyone. loss our sale was net million, to $XX.X through

of $X.X expense. was reported million of Core special expense came Core came We million, noninterest million of adjusting from Banking. FDIC assessment which from noninterest of million, $XX.X which $XX.X million income noninterest million for Banking. expense $XX $XX.X $XX.X and was

net net pre-provision pre-provision Altogether, $XX.X revenue and adjusted were earnings segment were adjusted Banking revenue earnings million. $XX.X million,

loan margin detail of net with at relatively fee X.XX%. on X.XX%, yield XX the Contractual loans those into a the offset update basis X points, a our but flat interest of prior held due were on gains loan by points increased deferrals. margin fees held by quarter's our in Going to more methodology investment for decline basis

cost in quarterly loan anticipate fees have having and Meanwhile, the we seen quarter. past. the increased less by volatility of than forward, X remaining band interest-bearing deposits the same points relative in Going we our basis in

in March for held loans new For of X.XX% around the yield yield in about on March, coming and X.X%. commitments on contractual our was month investment were

with billion of rates. our rate As $X.X move-in a ] XX% those $X in interest loans [ and the of change rate, those repricing loan immediately billion variable loans within rates with reminder, remains repricing days XX of a of portfolio floating

billion the yield remainder with fixed-rate $XXX over Of a of our of maturing $X.X have we loans, XXXX of million X.XX%.

versus of For the was quarter. the X.XX% cost month [ for X.X% March, interest-bearing ] of deposits

the last funds at with as Those deposits index balances the on will stood significant target As change Fed first that [ call, have I of in rate. end quarter's billion, immediately quarter. now of the amount we mentioned of reprice a ] a $X.X

mentioned, on continuing building are focused are to we customer Chris operating and As target accounts. deposits

We seasonally to third the and the over into course quarter. will also of build public that the anticipate quarter begin funds second

our X has will build As that dramatic the past effort past. we reliance than over years, years made us funds in to focused be been minimize on a the less public it for

the funds quarter. $X.X quarters billion of billion the third at second the that to to the And we the billion had out range in we end first $X.X our anticipate on public $X.X and the balance as compared sheet topping

And securities ] little occurred yield second [ trade X.XX% very million of just reinvested securities the in at a the so over the years. benefit portfolio, transaction saw proceeds a half sold On That first in of from X.XX%. the that $XXX the X little we a we estimate quarter. was earn-back March, and with of we

to look share. in deployments sacrificing capital growth, order value intangible per for without book earnings profitable of improve continue longer-term We'll to but

rate cuts pieces, those mostly to quarters stay offset of the absence margin other. as flat yields deposit repricing of and the relatively moving any all the continue expect costs over loan coming each With rising in to we

noninterest million remain and income $XX minus to range, for perform remainder the band $XX to continues in the or income. of million to Moving the noninterest plus we'd it that expect to Nonmortgage year. in

], were very Mortgage a contribution million with which turned really of pleased total pretax [ strong corner we $X.X with.

rate interest contributions the quarterly given Mortgage, the for $X For we on environment expect to quarter. any in million year, would in activity the remainder seasonal range million the $X of depending and

Our $XX.X down million to quarter, of expenses quarter million changes bring million. noninterest compared past and the XXXX. made see over was years. few operational for of of to guidance for the range And $XXX our million the million million our point, in as [ prior million to banking the from $XX.X segment the to prior XXXX expense we core benefit in $XX.X continue fourth $XXX the quarter $XXX At of ] $XXX Banking first this to expense

points On and again for credit X as nonevent basis this was charge-offs. mostly credit of allowance we the a quality, credit losses experienced quarter

made couple continued our on that our As improvements years, portfolio internal over the to operational credit we've of of the improve. past analysis part

while up ticked confident we're that over we reserved. feel As the quality past portfolio, well have very such, paying of and and that close the we year reasonably we attention comfortable feel while are with nonperformers there, our

in those further allowance, continued X loans ACL during commitments unfunded to in to a but unfunded provision the commitments. increased the was X.XX%, basis our our a on led million held $XXX,XXX $X.X release for as more expense to quarter Speaking points only to decline investment reserves

as capital, now XX% very strong assets Chris we tangible ratio On is TCE developed over ratios and X mentioned, have XX.X%. of that with common to capital Tier equity

shareholder the CAGRs goal earnings capital optimizing values consistent earnings excess for balance strategic and building share. sheet growth long-term through restructuring, continue both retaining share strong and per value of and for balance, with through against We per to tangible organic book near-term

that, With Chris. the I'll to turn call over back

proud we're to conclude, for To company they're strong building. a the year that for and start Michael. you, Thank team right. our of the All

our thank concludes Again, at up interest. we'd like you everybody questions. open line your operator, And prepared the So point, to this for for to that remarks.

come will question Montgomery first the And Janney Instructions] with [Operator Feddie Strickland from Scott.

of to guidance. expecting clarify impact? the NIM flat on that remain Just want securities including Are that sort you to restructure even

little XXX bit a of same that think mean XXX, little offset, stay get have that you in but Yes. funds public is I mean, in, of we range. going Feddie, which range. to an it's bit a I coming

Got in funding term other I it Did a funding know was there quarter. borrowings side, was it. before also something bank linked else? guys the Or And that on tap you jump closed?

did days actually the of last couple We XXXX. on Yes. that of

for done you ]. with yes, So capped see average before in it -- quarter, first for that quarter. $XXX the didn't million-ish actually it fourth it was balances but in And that's the was [ your

Got it.

I some last Just of know in there's for whether trucking at deck? in maybe finance, your seeing you weakness that assuming weakness and segment you you of to step particularly in you're in break in speak your me, out question I'll equipment correct equipment have that transportation trucking over any that there? the Can back, I peers. road been finance, one Am some some the

I'm no we haven't you some long-term We X the X frankly, that don't I space, trucking in on say, And sizable, -- but equipment will a just clients. comment. Travis, are we let's companies. have let comment seen leasing that leasing do do to privately or are make is, companies owned but And or in long-established clients. do companies, And don't equipment -- have any we we Yes. that answer, trucking weaknesses do those going

very talked earlier mean Yes, clients, The through have that no from this is our reports well-established we've one year, down. But we about this several Chris. is been cycles I recently, them. we here with them, see that's good obviously and up trucking correct, with clients issues. and that industry we trucking actually some

from will Group. Rabatin The Brett next with come question Hovde

to double have guys abatement, growth double-digit construction come in growth double talk Can you're It's could I more to loan the the that mid-single-digit loan going mean with to how low wanted be, digit. you this core obviously closer portfolio to this your about construction digits does here? year mid-single start guidance of expect 'XX, on you -- much And a year. low also in then growth for that if basis, number? it's

Yes.

on to for XX% off on operate. the XX%, XX% probably really first of we're good And -- capital. a us So we that. something risk-based would to at concentrate It's make the concentration, spot like

may than would I maybe, this to want environment, and than go that way, see -- you Sometimes support things this even sometimes lower especially in could going that. lower some

actually that you geography, at well; you you feel look long-term in it good number and we clients that geography, continues live in-migration of so If and our we you know our have know at that geography, level. the the our in pretty

commercial way Same rate the and fair thoughtful risk concentration. estate us. level XXX% on We for think that pretty just concentration a real is

your target. will but those, that's answer that's those And of targeted, are kind Does that plus so places we -- be where minus on we that the question, or Brett?

extent, some to Yes, that's helpful.

folks demand, maybe I waiting talked some you. if thinking are it, So rates, I'm loan about think for what have about we

strong as is folks lot as not so -- might demand end up. And maybe of saying a are it

here? of a guys are expecting up in you I demand you and selective? new -- pick project. new get downtown loan get big demand going with that we from to to expecting a terms saw growth What you highest loan drives Are we're tower being

Yes. on one, that know. so We're not just you

I know one. that its big on project. a who's yes,

for We're not on one, the just record. that

it -- softer. the It's is demand across so, say, I'd yes, not hasn't it's softer. board, it's but generally And softer. evaporated,

do go there's because And a bit so mid-single guess, it way out hope and in that, would year, put demand. digits look of little I the when is we see we for softer I we the

some not do Middle it parts just comes of We're myself ]. Tennessee. [ demand. do seeing we we're East Georgia seeing Tennessee, repeating in North And from it it in seeing footprint, in again, but here, but -- our Alabama. We but see it all kind still of We're

those all And so we're seeing in it places.

We Tennessee, West footprint. steady a from have which legacy a flow is

kind on this would so that? of color you that's And Travis, at any flat add point.

compared disciplined softened lot gangbusters. was demand not still be we've the think and relationships a after I mean in but I going see continued of opportunities, XXXX-ish transactions. Yes. when everybody has We to growing to

as continue well. do part it that. that's And we so of will And to

And replacing where ADC, we we'll more we're on ADC to on getting point the it start runoff some CRE will with more but now have relationships. and

contrary quarters. as hope has is we that the few as So the been that not from it just last significant in

helpful. relative then to dollar-wise around Okay. That's the impact was And question, much quarter change my just the and other there. fees Michael, margin, How the that, loan XQ? or did

million. question, offset bit about good It's a little But Brett. $X on it's expense a the It's side. Yes.

your of loan P&L. through net part your it's just originate, the it's process, a So to durations. look cost normal neutral a you And

And amortization, fee some a that both of so couple we was but pushes so sides. the on it of recognition, million our modified some and of

way quarter, that So XX.X%. I the at we're fourth to the think about relative

at been you'd right interest income. XXX.X-ish that So ] [ on

come KBW. The will with next question from Catherine Mealor

want you've that you $XXX the I few bit just had Chris, Michael, But a $XXX this core target know know by revenue to I little also producers bank, quarter. I million. that to you to ask on million expense lowered for that a expenses. the hired mentioned --

And curious the gave, fully there and so while just give And hiring? that you're about maybe ramping that places cutting. take kind you're new still cut expenses of of hires all talk in and your able up Michael bit reflected how little a you're as guide the on to

Yes.

last So that we reductions you significant and as we and as year, in side as investments. through we planned hire last some -- fairly some hires also were revenue we year, we -- expense on the but know, some some planning -- underwent for

it so cut thoughtful process. a was And

team and bankers have in leadership we'll we do Now, when expense chance regardless to to of the footprint, I we say will environment. we'll them Catherine, them, our a We'll it add we take a though, take time. any our to say, our get to managers, that,

And that adjust could it so some.

quarter, get outside X. we've but don't into expenses little that. chance bit, hire might it And got say, be hire think we built I a chance Let's or X hire huge to but some could our we XX plan. we're a our that have of that get to to because to impact chance got and of us the a we the this wouldn't would hire XX, impact XX, going

change it Okay. so so more anything Michael, conversation related a ago, maybe was then fees the change, a that to Great. main than as to -- just And the minute then fee the else? expense follow-up really deferred guide in

quick say you quarter, and down, it's we us So known you've partially, we're to I'd for the And change. or probably a said last it deliver this was a while, talk was so, and it. If right? part then math, it of go is, XX% of fee it about then going

And to mindful getting expense management numbers better the continue so of through to try we be every it process. those day and about

delivery, over So then little it of loan it's a and change fee -- little deferral a of bit is deferral. bit the

we growth the it balance? continue as fair buyback of kind move that you'll Or that is That's growth Perfect. this you how you growth first comes a of until on and that Okay. in -- Great. and buyback said to buyback. just year as organic organic think It the bit But -- rest after helpful. we remains back. through the little active quarter. it's back? do maybe about comes M&As see when was be you know I the to And really to slow, How maybe think great that then buyback

And like stock other you Yes. impacting the active buy, I like a M&A approval. extent say it's of we buying your when really an an you you Otherwise, that would that's have feel of when be and impacting part I'd price. we -- back function to feel -- is factor. And the discounted, be so factor. good is probably would will then a

back And as buy so our -- stock so be that in we'll as discounted continues the continue to long to opinion.

we on things, we an Catherine, And certain comments, them kind the when tap -- things of on we we Michael's exclamation do comes especially at thing just parameters. one point to of don't on don't on capital, ] and it [ end. side, expense the those that back and to tap initiatives, stay of really earn-back one look within really put the I'll end, front maybe always We other say expense on [ like kinds ]

-- it's us it's we've that million said the we to in we're million, know on when Then going going that or ought got that. long -- but we you've confident to call, we at last of -- time, more. we $XX known Whenever got be million we say so taken we've But rate. run quarter again, that our a you $XX least means be $XX a to out call

partly additional that's so little this guidance And a quarter. why gave we

you're yes, And on right sense. that. makes That

Scouten next will from come Stephen Sandler. question The with Piper

kind Chris, so hires want does, that I I opportunities of growth then if kind to such, want earn-back and year any think you lift-outs to might environment, play M&A correctly, through might of seeing into include versus even about this talk remember that I given you new that talk team if 'XX? occur? these you're that about kind and remember, and when you on the organic how And and such securities And how maybe first, and could today, that. confirm out of rate

Yes.

do. the good it's anticipate you way But will, whenever make first. on that a yes, and thinking it bring it in bring of people opportunities you just -- the about when those those we're you very there moves, organic and expense and return talking capital, takes. is -- course, if the the capital pays So we're on, -- teams you when part about growth, the relative always on we're about anything -- new we what -- there on the When on to off if when you that, that of new -- can you doing bringing folks

associates for kind market, looking of the value what size disruption it some like that's places folks, to think are from so some the out reaching some we've when to tailwinds sits be, frankly, feel from standpoint, now, always And with looking We've do. tailwinds. got tailwinds And got company other are long-term where from And to from our a good there's for so to we Right comes feel in we we there. we that that proposition some us. that.

that's so optimistic. why And we're

front, and that's execution thoughtful a easy. lot that, us And risk a not in risk then in it if of you -- for of there's level, have M&A that. we always line the execute on high there a because up, the at to is approach Even numbers a is lot

we focused or so, well stay the And we don't the anything that's that already on pretty targeted versus reason work folks that and comes auction us things up that calls we fielding pretty from for any think know just well. for

And you in -- very reason us, talk like calls, -- one a capital interested. things make to you've that's some we something to where part is happen we're to that of marks your have becomes those against us maybe very, today, ourselves in, available the but wants position that you in so got even can balance then going it's get on of sheet. time to that we to big And be and we of one going the so got that or those if be we're that if AOCI work

So...

pretty close to do an it, of this can quarter? another from what base bottom mid-single-digit appreciate still and Yes. NII guidance think kind the here Or quarterly perspective Can helpful this thinking I'm million a And then your maybe are year, NII grow on growth we as reached way, or flattish of maybe you kind Chris. from think grow throughout was you a that's that, 'XX? for NIM you do I said $XXX No, about color. of the then loan have around that about off you basis? --

we We NII Yes. of on side. going at on that depends can depend where how much -- it the -- grow is to the asset we the side from deteriorate asset shouldn't some a really and Growth what much place think from here, here. does happens we're what on growing

but going that's rates asking same we're us to what's the -- know -- course, Stephen. of ourselves Of happen, none always question, are

when quarters. why the guidance And optimism got that's -- been do have we've that, of next given probably -- guidance haven't Michael's And over that But we also realism some Notice, around few aggressive it X the X can or dose also we we overly that. aggressive. do we're hasn't a overly quarters. wasn't that gosh, last, we

we generally, noninterest more beat being net income, optimistic on we interest margin us much on everything. -- income. did hear and that pretty in on had expenses You We

And so X. pretty much that's the big

And good growth about so that -- that. comes -- growth just grow the maintain we we're and And that. to of to then I thinking continue got build spots. we able and about relationship-based feel And now to some and loans said, we pretty being got like how core to and good in at so right grow We've from deposits, this point.

you Feddie's have But interest -- deposit say, trade really new I of I Stephen, so still will And portfolio not mentioned, loans. may impede about answered mean benefits on your well. are because the just some on Yes. deposits, of are investment yields, margin, net grow nice-size Hopefully, can you to Chris talking -- earning I just as X.X% kind add I question, commitments we loan that growth expensive. offset as it that to income. the we're with was back you new Certainly, that. interest deposits net it

works, can But growth. you say deposits that. are free, find So math the I'll the if

and a an there bit in unknown. balance a little there's of So

It like this Yes. at an would question time? quarter, from I point a -- seeing this mix the my end-of-period not shift And much. noninterest-bearing are in deposits maybe very looks on that be kind -- down brings mean you last perspective what of were up basis

stabilize earning -- we've from shift deposits? mix think the a a noninterest percent of you what we're past of think there kind those And of lot do you seeing you around Do perspective? are here maybe XX-ish outflows? Or deposits can

Yes.

were went of is of we up above. this back where think -- a dipped from we right And slightly it the I mix. the down. on from We're prior-quarter number reality the quarter, most a quarter end the quarter,

with pro combination when that marker XX% XXXX. that That's so it Financial back our where to, something pointing about Franklin I to. out And keep I forma-ed is back in think

probably hope. get So floor say that, above stay working the every I day and we're accounts. there, would core I'll operating those But to that's it,

fairly So it's remained consistent.

was it's -- going we to every Thanks, I Yes. say, day. watch it

of And up. like first so generally was I quarter, up the quarter mean, it the last to it's Michael's said, see -- literally quarter, and I then point. the it's of you the dropped. new a point most then And week just guys of week -- And the

versus where now, right it it at the so quarter. would up be And of was end the

say, that so I comes to be all where we're to where stable I bearing. in it think the we when the noninterest we're say zone And to fairly are, going right

The next with JPMorgan. come from Alex question will Lau

I contribution about what this to million positive think the ahead? derivatives about Mortgage. $X start $X quarter? Can and quarters million in And the talk you want off in quarterly the do loans in of how expectations change the with from fair the to value contribution drove you to

Alex, a good that's Yes question.

job, growth. If new a did Mortgage guess, rate a during XX pipeline the really better function you I slide, team look quarter. lock in deck, on than of -- actually it's really commitments The XX, or the good Slide on the it's expected,

basis drives some the call pull-through and the mortgage higher the lock. you income a, rights, recognize had million it, we pipeline, rate a increase fair So in on which value $XXX on

really done as also So I well. that the continuing was the driver other And side, expense there. a job for them management, good credit they've give

and company, total goal continued a lot get but which about they've is more segment certainly We Banking and appreciated. talk to expenses efficient, a

marketplace. decline, about the first quarter that activity in going question, expected then quarter point, half we than the was probably think the forward? on of how second the the I And think seasonal better it fourth low do

kind even-ing of up actually a that and lot little a pop quarter. out and you'd Rates little see end. And in here. bit, popped third since the have we second that quarter bit not -- see Typically, a

so moderated bit. And that's a

the through And to works total its see so for environment. kind how have we'll rate of just interest that in way

pipeline. part to bit is you've of -- reason that the on what that's what Michael your forecast got Well, little first a hard mark-to-market is said the

] And that's is a pipeline so bigger, [ you. positive for as your to go getting maybe going generally,

that's the you. to a our going quarter. bigger end of negative be generally, smaller, As your goes And a pipeline pipeline was the at little for

cautious cautious asset classes the to on loss to you how you economy. the what loan the normalize? to outlook? explain your also, into translate more on? when being you your reason commentary release this adding And for moving does is expected your credit, And And in charge-off regarding mentioned are can reserves, press on this to net And

Yes.

but We classes, we're still as Alex, at listening comfortable a -- have commercial boss So right now, we we've little higher. got our do pretty look with you asset estate. if we're to -- -- real some recent remember, so concentrations your

all assets some we're among overweighted, commercial we among but we Again, of the -- have not estate. office, that among multifamily, way types real that's distributed do our We like like there.

of goes on a come -- we other types, housing that on also a asset the do performs and us. we housing, X% with that. look that generally reserve. lot especially when We side if reserve have well manufactured consumer we at consumer heavily, a our reserving like books, portfolio you manufactured the that Actually, that division, we're our But one for

So...

mean, the that -- it the all there, of because CRE flat, in funded bucket, it necessarily just saw a problems increase kind unknown are there, hold saw just in to quarter, an there's on just construction given the XX the trying slight in add, we And multifamily that noise nationally. commitments I which uptick the of our Alex, Page in space percentage-wise. you if wasn't portfolio. you And It's deck. Yes. I'd look

projects the footprint. on just of the question type but contagion aren't any in being those around Brett's big cautious here in mentioned ours, Nashville,

this the We're says, we years, X per the outlook. in basis had our we've start XX averaged of commentary deck yes, points think question, charge-off there. "Hey, second And was year." off our pretty And right, a half I to decent

We that's is debate to when return. all as time what this normal going to internally the and

basis we if perspective, guard from points. there the we an normal see to off, yet, XX we -- through there's for look a we're industry to is from so And trying that don't out something industry, portfolio, say it probably we're bit But would but ways whatever XX off against. the is,

XX-year that a Yes. points got Michael actually a highlighting. there. averaged under It's -- got you that housing it's over shade XX just if portfolio highlighted we've basis charge-offs, for manufactured we something we I in a X mean average. And been go -- we've tough one, remember, and a

on not Think every take -- -- we take say, portfolio. quarter, charge-offs part a we single some taking unlike, the we're something. or that of So that some piece of credit card

it's a So some charge-offs consumer every piece, just where have you're to quarter. going

don't when it we don't returns, We when of ourselves But being look almost just nothing we returns. count we and don't decade. had know we outside that's know will like normal. think normal for what normal so that, And it prepared. And a

does So to plan prepared. we whenever return, it be

are prepared. we So

for on And the What outlook a follow-up this year? your for you just guidance. NIM rate cut assume do

X. had We

backloaded, we've November. We X, and had have and both they're September except X,

So minimal. it's very

think we I worse if rate in interest aware, all are we've And probably probably been rates. outlook. even we forecast we on are our credit, an you -- outlier can't

give I'm built back of and August and cuts cuts, back rate but in back a put X one to budget we 'XX. are, in November; September We the because Michael in little in and team one had to September, going 'XX. credit they September, when and August They August rate

we've our So happen, was budget. that time was but that. we that, just that into certainly We've know haven't what's the built consensus it changed. And going to at -- kept don't like we not

will question from next The with Matt Olney come Stephens.

then But by this back you more came back driven is it many? mid-single-digit briefly. go taking year you they to of want think from, a hires the bank Just geography made, those the guidance, on guidance new new on how any discussion touched And of and type to around what what step much hires? that color the for just loan on how the just growth I

Yes.

where So they've come from. banks bigger is

so And bigger of banks... -- all that them

X of banks the smaller and So bigger is of X they're both are -- X them X banks. --

it. Got

no, mid-single-digit it's it's were contributor, the one not That's not a about growth type of data business -- guess, we're that's contributor. or on saying picture. but point coming the talking So organic I And combination we when growth. -- one -- piece of we're both. It's not

of -- Some taking and growing [ share own business. their ] growing folks our that is

us Our folks have been for decades, so... with

you opportunity there, How bank kind of set Okay. [ opinion bringing new up hires, opportunistic out what's mentioned you the over in ] is And of new the now on would side? talent production terms before there. always following the just characterize for Chris,

Yes.

I of there's terms never think -- because in to been that. a do better positioning our us time for we've

they If size, here. can and get you that competitors enough done their we're consider bigger hire we from business can big

is local like. is experienced really on which one model, bankers is heavy that authority, Our

folks. think -- calls seeing from get. you're I the inbound meaning way. we with you're to out everybody we and folks is calls by the than market. that doing as And inbound we're just always traditionally -- I We're of else, talking number that just It's We're in more getting mean get. business the

we a that seems So see made always other have be But now an indication reason, there you bankers. looking whatever to they be, -- few would more move. for that to

nodding is and thumbs that. affirmative a Travis giving on me up

I would same thing. the he think say So

obviously, And you're months, last been from I'm M&A hearing deal a few back Okay. there to was a that That's great but going color, Chris. a what the discussion, of quite and you're curious, M&A night. view? it's And I announcement guess seeing what point then

I'm what And remind So kind comes just is it's curious, when that good there to it us strategic a hearing your seeing? still priorities of M&A. some of and reminder you're M&A.

us first. go be front. sort question and back Strategic comes the that is that take I'll back into -- culture then sure. of Yes, -- priorities would to for always

are bases. at side places for so the of of -- secondly, look are deposit that in to similar things interested similar love want in the legacy those And that us then thinking. And to sheet. really look are their balance we We to deposit we way

base -- is have We about deposit half retail. of our

they retail it. if love have component we so And

smaller don't good metropolitan. and geographically, -- pretty then well in as markets -- So as we're we

So smaller which where sometimes we to it, there's base. retail-type find market you mind that don't will is a if component

consider. are those so And things that we

always anywhere. Of to has to going the to financial go at work look course, and it for management you're the side,

and So contiguous geography. that's to we looking contiguous strategically. And what think we're what for we to geography our is our about. strategically then look And geography, geographically, in

part lot And then there's was I -- think interest harder of interest environment. regulatory environment. a first it's and environment. the operating think environment. out it's the a the environment, driven operating harder harder I with is And it's there of The question in a by a environment overall that overall And

have next they -- or were their options in much years, want as of and deeper and forward partnering. teams not conversation look this maybe couple by thinking a they're it think I looks might what about forward, decide And going like the they to -- over were be look are, they fun

think a on. I there's And that of so going lot

it's think I hard.

One But that -- have considers regulatory today to are of you out fewer I qualified fewer do weeds banks start of of get when there everybody those buyers traditionally for that sure buyers. are be the are the been things to that a again, to I'm think able than is there look not buyers, size some at reasons. they lot and have it approval,

might more. not be tied And a to gets then they for up, buyer once or able year do a anything

an going of of there's all a those think I lot so dialogue on. environment create things And where

Steve James. next Moss Raymond question from with The will come

it's credit Maybe increase, drove know related here, this what just reserves curious but to quarter? as NPAs for just also that if construction? in just increase to just wondering, small going to was back a And in increase -- the the I the

Steve. us; we several anything increase all-clear We Lending haven't Yes. frequently. sign, the the of was, systemic, see don't NPAs of as several gotten you like in our upgrades slight, noted, just Bowers, quite it's we And portfolio. normal coming Chief Officer, churn also we but The had tells really the Greg but and out additions, had it.

we also we we have attention about attributed our it last being year, us years than portfolio we talk need around our in quite put we that recognition And of on as eyes second probably of over then that's And timely specifically loans more the And the frankly, in defense. some just infrastructure years earnings release, in to. line to pay have really more to past. X.X a

the In economy. it's the your of Steve, that increases just where -- function responsible the the NPA, driver major certainly for increase the bucket. reserve a mean calculation. line risk may not construction the be in the driver. But that's of and model And directly wouldn't impacts the increase, I

Page Okay. helpful. portfolio, portfolio, helpful. I the weighted I in X see of of Class office that the the your C the are see the here And But in XXs. curious terms deck disclosures then -- occupancy and average That's B on just with

of Just how curious, normally where think just of rates that is effect performance? Or rental? to an Just kind that about of curious, and those is office credit occupancy come they lower kind on?

C, the underperforming lot office maybe especially and B use value-add, where those more expertise a them of their get and performing. buildings to the in Usually buy Yes. relationships are people

lower. is to frankly, a underwrite lower bit that very we And for a occupancy reason. rate little it occupancy the So

And then like in Okay. have to of terms the regard the sounds that you transaction Great. for pulled additional with appreciate I serious doing the you quarter, it appetite an sheet that. balance here the guys -- restructuring have in transactions.

maybe of -- how and Just changed has know looking moving a curious, here few quantify I we've weeks if more much you of do you're a could lot like the kind or ago. to versus that rates, had dynamic

the capital we was that did would find Yes, and did want few sure it Chris say it's than priorities, right really ago. make in in that to if those like look less good exciting it it, combination. a I'll then weeks we when balance organic a a We're it's Yes, can mentioned, lot partner, glad first. opportunities you that. Steve, we And

balancing the yes, on well it of be do common portfolio show, and be So restructure Tier so a we we we kind capitalized "Hey, ." equity be well at XX.X% it, could still of then, And then looked tell the would entire and X, and But a priorities above, I'll could XX.X%, quite it. there. look [ at opportunities may every we you, EPS, out matter thing. it at and ] accretive it's be at day. entire what to We've look we

And so a discussion. it's daily

add. just I'll Steve, Yes.

easily return so on because to we're at look mean much our our equity. the really tangible most that common not are is one metrics, -- our poor, earnings you tangible I but sitting If the equity, is because on me and maddening common

our we how so every We are tangible about book thinking diluting that. hate to day value. And deploy

it. Michael ] [ And earn-back tangible book so with we're as very thoughtful this before had we X.X take to dilution his said year in comments, value, on any

And so we'll that. do

as -- weighing and And entire we the endanger think anything, we will dilution said, transactions, and that's capital easily think way not ratios. portfolio, we about our about that on And we versus get how the Michael do that it. accretion we're including and those restructuring can we much that

trying all common so suggestions, will so that but we better any equity clearly think to about we'll take we'll we're return And figure right -- is now" get to on our and that, makes we things but a by tangible the how trigger way. sense, the the and out, pull too, do "Hey, --

to This question-and-answer our ahead. concludes turn I any like Please over session. the would conference go concluding back Mr. remarks. to for Holmes Chris

And us we'll next appreciate in And for of all questions. today. speaking All Thank Financial. FB to some to always but color, be additionally you -- the Really appreciate we sure to your you. right. you we interest you will talk again Thank joining get quarter. for I'm additional

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

disconnect. now may You