CapStar Financial (CSTR) 26 Jul 192019 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to CapStar Financial Holdings Second Quarter 2019 Earnings Conference Call. Hosting the call today from CapStar are Claire Tucker, Chief Executive Officer; Tim Schools, President; Rob Anderson, Chief Financial Officer and Chief Administrative Officer; and Chris Tietz, Chief Credit Officer of CapStar Bank.

Please note that today's call is being recorded and will be made available for replay on CapStar's website. Please note that CapStar's earnings release, the presentation materials that will be referred to in this call and the Form 8-K that Capstar filed with SEC are available on the SEC's website at www.sec.gov and the Investor Relations page of Capstar's website at www.ir.capstarbank.com.

Also during this presentation CapStar may make certain comments that constitute forward-looking statements within the meaning of the federal security laws.

current and respect its CapStar's things among reflect events future financial statements views to with other Forward-looking performance.

projections Forward-looking and statements of and are facts today. as based upon are CapStar's expectations not historical estimates

guarantees not assumptions predict risk many and are statements CapStar's uncertainties forward-looking of performance subject and difficult and are which control. future of beyond to are to Accordingly,

statements. different or implied expressed results Actual the from may prove to results the be forward-looking materially by

only as are not speak forward-looking place statements reliance undue any today. cautioned on of You to which

Except any in disclaims result or whether as events, law obligation any Capstar a future otherwise required forward-looking by or to update otherwise. of as this revise new information, contained statements presentation

certain the directly comparable In measures to presentation and the in The this financial most the measures. and reconciliation to and non-GAAP the are forward-looking referred measures addition earnings include presentation risk measures financial of release statements this the of presentation non-GAAP and non-GAAP in included uncertainties may GAAP assumptions impacting call. the materials

CapStar The is earnings by website. located responsible provided Capstar's edit not archived transcripts teleconference of does third-parties. guarantee on and accuracy authorized and nor transcription its live webcast are Finally, only for not

turn Capstar's With going over now to Claire Tucker, presentation that, Ms. Chief I'm to Officer. Executive the

Thank you, operator.

appreciate we quarter XXXX participating each earnings all, of in First call. you of our second

already Tim a from of Tim welcome CEO begin the Schools, would experiences. of know and the banking discussion introduce new you we CapStar. like Before quarter's results, his to I of prior Many

out the several key and over investors get next Our meet plan equity is on the him to road to months. analysts

have be Tennessee collaborative on experiences with continue Middle report to the I customer our developed focus bank. exceptional good that occurred delivering teams partnership with since between with pleased East all the the on to We our have and relationships very fronts. primary news many

sound of performance have some direct second I in that attention drivers presentation with of of are Page profitable may of reflective you share growth. in I front you, our quarter, your which you of X the If deck strategy the to so the stated

Certainly, the the with our Federal Athens performance. materializing in of partnership benefits are financial

income the we Tri-Net Additionally, that including are in Farmington and significant contributing drivers revenues. made Financial investments noninterest

share program implementation residential which $X.XX mortgage for earnings loans for includes per the hedging sell. intent a originated of $X.XX totaled with Operating to

are Rob Excluding hedging this year-over-year mortgage detail provide program our minutes. we in in few a XX.X% reporting growth EPS. on will more

XX.XX%. Operating on was was X.X% return tangible return and assets on average average equity

growth first average We are over the double-digit XX.X% of particularly pleased deposits XXXX. of in with the quarter

accounts bankers have relationships. growth continued our expand Core double-digit non-interest-bearing had as NOW to and

income we banner just loans mark well to assets the the generated in quarter, closed CapStar reached billion as the Additionally, X.XX%. non-interest of record non-interest residential mortgage under unit which average during our both resulting in as in income TriNet $X.X

have loan low that more our market growth do Finally, of we while on surface, on progressing versus that may business in one the goals stated market of our we appear are to and front. out was

levels. XX.X% Athens, importantly, low growth classified loans loans be to and Excluding continue from and criticized was prior in-market from our loan at year

X, received page want CapStar major that the with recognition recently to you I has national to on and share Moving local marketplaces. in some

a was their local views East This work. regarding First, CapStar base the great surveys XXXX. was by CapStar to employee top based our Middle workplaces media in as place by for Tennessee, both recognized completed recognition on and is upon

move credit us responsiveness quickly approval and the of the from asset which a on and Five-Star based Bauer Program status is capital a Credit awarded quality, rating from CapStar Financial Office was earned Bauer division Management, Risk Preferred more Lending our profitability, the process also liquidity. versus Capstar distinguish our of Effectively, in will designation SBA the Small for prospects, customers this enable Business from competition. to request Administration. and in team adequacy,

United small the the in Leader field business leadership Excellence experience. the recognizing customer Customer our banking, of Greenwich a States in important is commercial CapStar lastly, increasingly And

operating our the X, outlined of some that measures Turning highlight have sound to profitable we page key growth principles.

We these into will just more in get a minute. detail on

provide Rob now around detail to will financial performance. more our ask I

and morning, Claire, good everyone. you, Thank

You some to of deposit we noticed front. our the reorganized closer wanted have we've standard may and that slide our slides, to put

period team For a built talking some sustained has high-performing time and now, internally our about over how been banks are time. long of

building turn deposits of discussions, low-cost deposit core our of at top of a is each the these full base At out list.

sooner outcome, do desired the we our on reached yet is not priority. have storyline remarks prepared in placing we how While the this symbolic

So let's see how did quarter. the for we

annualized over quarter. deposit on our grew XX.X% basis On the prior balances an average

shows to chart growth, see If end-of-period an on you our the the basis. point-to-point bottom-right prefer growth on the

Excluding day XX.X% from with organic the growth Athens, one was deposits from year. deposit average prior our partnership

to While deposit for with continued our in costs balancing this we need quarter, deposit check. on the growth remain increase of focused costs challenge deposit the core keeping

So to on let's move loan growth.

permanent are refinanced being near but You due lenders or pay and payoffs not payoffs businesses. term call, downs. recall non-bank of CRE pay C&I number a our said with from first going more by because typically loan to sold financing be and downs healthcare I outright. the are to challenge would due growth a loans or CapStar, sale and with of We're sooner to These dissatisfaction projects also quarter paid seeing off

down growth quarter X.X% and In the basis. an was terms average X.X% loan EOP annualized first of results, on from

a them of experience of payoffs with While borrowers. occurred did and pay downs, we majority out-of-market number the

our are business one we do in-market that out-of-market front. have versus stated was We and to on more that progressing goals of

If declined an on million look can of loans chart X% out-of-market the you total our basis. on have $XX EOP the you lower-left, or at see our to loans

Athens. from excluding prior in-market growth the year, XX.X% the was resulting loans The loan from

the and market. aligned loan principles shift the growth than a disappointing, out to the is mix more was operating in-market surface, our of on bit but our So, believe encouraging, growth is underneath headline we

only credit for year-to-date. X So totaled as let's been have to year point spot This basis charge-offs quality. move on this bright has a us net

loans remained and our X.X%. Additionally, criticized classified at low

increase loan. the million the viewed periods, from not a normal $X is one is to number and prior of spread transactions two slightly fluctuation of linked as approximately over While this elevated

profile and Each loans classified plan weakness is that much these have those the and plan a secured on criticized our prior to and better action this of borrower-specific general, monthly address reviewed In a updated loans inherent periods. has than needed. is as

noted As remains XX of graph, points. assets in the the NPAs ratio basis to lower-right low at

million a reserve. upper-left, if the basis the in and allowance acquired is noted fair XX the losses to roughly for value or XX loans, points, mark As XXX our add for loan current we $X.X equates in on basis it

loans the first quarter slide, of an it is from last is was noted not while ratio was release. the in improvement This in press Finally, the XXX%. This when night's information to XXX%. allowance non-performing included

we continue be In our summary, core pleased emphasis on primary continue credit these and to metrics. soundness, with with

internal remind and also as health our believe loss our a that sound not will our support quality you time. and experience capital increased delivering continue we have lending over asset We has of predictable to our limits more that disciplines from grown prior systems and years, goal

X.XX% move let's points for prior loan the yield So, down was to on quarter. from yields. and loan the basis X The quarter

and fees decrease see X bps, in the can the decreased bps loan a lower-right, volume the accounting decreased point. decreased accretion X As with basis loan one mix on you month LIBOR purchase chart by

is slightly The were production on lower. and new this the yield move lower-left X.XX% to than curve loan the reflective prior on of Yields And quarter lower movement. continues in the chart quarter. the

lower curve. portfolio in last yield yields three production the concert our moving new of trend the quarters of been has indicative on is with loan lower Although, the above market average, a

for So a see margin, let's then how discuss impacts rate are lower environment. can this we we our positioned and how

margin left decline. we points prior to basis deposits able Our higher chart. This this In contributed in short points X.XX%, from were to interest to net components X grow bottom down drove was at XX basis that quarter. the outlined are although the movement a the cost. The

to things. With the we do able in increase two were deposits,

but back -- in clients the gave we points to and sale in points, basis yields. investment we lower loans basis extending held First, for margin held increase both for average new The increased our quarter. X borrowers X credit our our helped average balances loans and with our

and $XX basis Next repositioned we points. and margin costs Last, investment portfolio balances securities basis borrowing’s was that wholesale helped down our our points. in priced rates us X at of we decline also X million the paid our which

rate let's So with balance talk current that about environment. our the light in sheet of position

time we have bank. we told some you are For an asset-sensitive that

the over acquisition the has and With of year. Athens, have less mix become asset-sensitive book of loan the past we our changed

decreasing dynamic our the with shows loans loan rate total XX% variable The book. chart of to our this upper on left

X/XX, others. risk on the position in If chart when lower are risk interest the you to banks, we the rate various look on showing outsized not left compared at

you of curve As is the months. you the to from next cuts rate rates are to anywhere over decrease some rate four two forward from predicting modeling know Fed XX and the

lower will hence alone We are in be the second following very rates not and soon this and have camp in quarter. the actions taken believe

with force. First fixed emphasizing we rate sales our are lending

allocation We which lowering to also X% fairly all X.X during securities to of by rate slightly $XX restructured of duration securities still floating extended million measures the our portfolio our and quarter short. our is years

on rate time clients floating opportunities Relationship lowered of optimize potential managers X swaps, costs million with shortened under wholesale We rates cuts. with liabilities are to fixed on unwound notional deposits rate proactively interest and to meeting XX deposit to months. rate duration

non-interest income. So let's move our on to

bright average spot deposit income the non-interest assets Our X.XX% for continues quarter. service a Treasury demonstrate and charges and was to to growth. management was

their in As or clients in and our deposit or we hard pay have treasury commercial charges past can fees. balances fees the stated management

saw fees prior versus we in in smaller quarter explained to fees and the relative This deposit the more quarter. balances and growth growth the deposits

the on we work already have small we the this reposition. but discussed on did portfolio, recognize a investment did loss We

environment overall will net margin rate new sector. how the and for banking impact this about the us interest the talked have We and negatively

benefit However the fee rate lower line from our next in actually a will two businesses environment. items

down a pricing high-quality we are in on top for first of had loans. rates some we widened record these With which China for saw going quarter. is growth seeing institutions, record and loan tougher getting the a quarter

end as of local with especially expect our we million robust volume Nashville. With well. the seeing on refinance lower are be at in balance means third markets And interest more a sheet in purchase loans $XX we strong along Tri-Net very to rates with quarter our volume quarter

likes will with of announcements and in of Alliancebernstein, the jobs For have interest our Amazon, fluctuations Mitsubishi been Nashville regardless busy others of recent up you mortgage rates. keep from those group the keeping who not

from basis we Additionally, efforts during the primary second loans on a mortgage selling moved best to delivery. mandatory residential quarter

sophisticated we With change line are for with is operations. in forward and at fair change, more mortgage this locking held more recording loans sale pipeline our mortgage the larger value. in This

Additionally our earnings by $XXX,XXX or of earnings quarter the impact the for this share. favorably impacted $X.XX change per

all this rates, from with to that pressure amount revenue have our change income forward, face we margin going streams average that been with will have this lower rates. X.XX%. will is but our takeaway non-interest would Excluding in benefit in assets The also the diversity we

offset We fee margin expect to businesses going earnings help our momentum the keep to forward. pressure our

to So on let's expenses. move

operating Our operating million $XX.X ratio non-interest expenses in XX%. with efficiency came at of an

is our line individual items the compensation at Looking expense up slightly.

is this coming number with Schools, notice our will although we open You Tennessee of backfill obvious the new FTE East is hire, count some up our roles. FTE Tim from one below did CEO out have and and the some FTE movement

on is really data equipment the items: the and increase line quarter and the processing Moving of two software the first item. majority line on from on

vendor are changing up onetime other ramping down. we we $XXX,XXX costs expenses and there out is $XX,XXX are vendor the and Within expenses some is one of have ramping numbers a these IT double vendor as an while bubble

make new We did to upgraded equipment put necessary we tools overall for the to in some core associates modules our to clients. sure execute East better our that our serve Tennessee our enhances clients. in And have platform

quarters So has by expense in the our XXs line end be run should low the noted. our two said efficiency to the of our ratio some with coming down you in and specifically down to expect been goal items to previously year. just as this rate overall the the stated Again, trend

going to but if all wrap item be to line forward As up expenses, here on this now. negligible and zero our it this from merger have we relates not believe we

move let's to on capital. So

well-capitalized On announced above $X a of we All attractive robust basis, we repurchased is XXX,XXX and repurchased guidelines. levels shares valuation capital December. ratios buyback and capital million we our improved quarter. we the With the year-to-date stock of in very feel CapStar remain our from $X.X a have in prior quarter stock that million regulatory that

Additionally, I'll and the quarter. remind was to $X.XX from in that you dividend increased $X.XX the paid

comments. closing it for some With that, let turn to me Claire back

of this reported XX clean profitable investor metrics attention the the in Thank direct one We CapStar's I we believe you, of the as to reflective sound results demonstrated loan remains that that strategy. Thursday afternoon Rob. of portfolio financial your now page credit and deck. strategy are our growth.

committed of meaningful build the which pleased We medium-sized with and employees consumers, out local results been unparalleled particularly of our to in continue outreach businesses, all a their shared and experience small owners of to and the strong I've client-centric target connectivity model an and serving our deliver associates in goal financial shareholders communities for we our each customer operate. in to markets.

across bankers penetration attracting activities. as our prospect of expanding business on customer share franchise further the through Our well are focused existing new as through market business

franchise. strategies to support grow improving and the are ability will low-cost we Importantly, that our of believe a consistent earnings stable these stable enhancement We deposits.

CapStar, and organic growth. product our of management received received that We share Associates provide that excited our to East the treasury about continue our this our from excellence continue our diversification differentiating is to revenue through very East believe We're with to offerings legacy goal opportunities balance and competition. our for SBA Tennessee consistent customer believe streams for market Tennessee and recognition increasing well by will The new sheet provides Greenwich from be bank customers. CapStar

core to Maintenance of a remains sound credit strategy. profile our

opportunities as pursuit relationships Although this passed of and our We on consistent considered level on are second full loan that to principles those in but the of focus transactions of pricing in continue as bankers terms deal soundness we've to muted with quarter bring that our and discipline increased of growth requested maintained has was structure. CapStar. intend tactic XXXX, we the

opportunities potential value. previous of have strategically And franchise shareholder noted in -- our M&A as that and to aligned we've enhancing continue will noticed calls, we building financially the core explore and attractive

support investment CapStar this our of very in company. you and of have made We appreciative on continued of that are the many call your

to Thank call. you. Operator, lines we're now ready open for questions on the the from participants

from comes Instructions] KBW. Our first [Operator with question Catherine Mealor

Good Yes. morning.

morning, Catherine. Good

Good morning, Catherine.

you've some lot start margin the got going lot big I'm of One question of to the pieces rate is know you've a kind of moving a pressure, fine, of below Clearly, picture the help NIM on you -- levers just below you're this and we're now guidance, we're further don't think previous out the deck, -- offset cut. thinking information now guidance with about gave you your I I guess still quarter that. and NIM within I think that. but of follow-up great to which is but taken of kind which

So in of is stable as some keep margin we pressure of with from you the from you here to just prevent out laid think Or cuts about like everything it further the have feel more contraction? -- downward here? about these you do kind still your still margin margin all Thanks. rate more that

Catherine. Sure, Yeah.

of the mean, moved I in advance cut for July. one, So LIBOR has and anticipated down already Fed

to probably further lower that. in those cut other expecting go July like rates than Fed the many banks to So we're and

the quarter but a We're balance outsized some. show reposition a to to sensitive we certain still asset of sheet we in extent, the don't took So actions second lot risk.

cut the expect Fed I margin continue going of a our that. think things and would to to do does to help compress we're mitigate if number to we

So XXX% banking we $XXX at million in business. have That's about beta. one correspondent our is,

the that Fed. So with is reflects really

book the deposit So know Fed Fed. when that will that we cuts, the reprice with

beta on a ability force more piece second customers to deposit is customers. sensitive typically The on our We contingent XX% with probably our going our book. in really their be modeled on and sales rate work to

slide on actually calculated below deck, the if cycle think that you if I back to you that. rate the we're last and went

guide think we're But down, XX% rate boost overall. drop continue asset-sensitive ways our and I to a at I our businesses also work the beta. would to is and a deposit but mitigate would and offset that And our headline drop So less help help you we also, – margin to and other profitability that be looking to anticipate on on fee to to to some. piece

So banks to the other us out going and a there. for it's be challenge all

and what got seeing we're different some that. has mentioned non-interest Rob reinforce, good Tri-Net income pleased we're get said also to of the that the And sources of revenue the to would on focused profitability We're really at Rob for treasury some we've and there's our mortgage, I particularly East just ways company. Catherine, traction in add with that but Tennessee offering.

that streams, So we feel we diversification balance while sources. certainly we're income about good non-interest to major table brought of the with the term's revenue in our the pretty sheet-dependent

any that to in quarter? And us Great. No, what's book I'm really healthcare loan mostly around can growth, you helpful. And disclosed the that give color maybe SNC. turning this that's that's assuming just then you've out-of-market

So two do over to so? get then And one down year you the is hope that it book where true? call that or next to

Yeah.

our of So about decreased down $XXX $XX book SNC. was line $XXX million which that have is of million $XX that C&I actually, you million actually about X/XX. healthcare million. the And to at in It's item that

million. about Our book total SNC $XXX is

Our whole than market market. point more is to out in be of grown

down loan profile. the a that in So has riskier more piece those and that We're think stuff as $XX takeaway reduced. I view is market. doing growth doing the SNCs lending healthcare that is our more million less on We're for been out-of-market

two-thirds of market. Yes. Chris. Laurie our roughly is also the out I'll And is this healthcare point that in Nashville book

it by is one we other loans we there clients in treasury fact technically SNC. largest are relationships the just is management But where definition But a a to have is full in as those think core thing some that our Catherine, identified definition that considered of are by are And that market. us SNC.

treasury have relationship. the full We

you SNCs, are So SNCs not will. if all bad

Thanks. right, sure. All quarter. Oh, yeah, color Thanks the great. for and for great for sure,

Catherine. you, Thank

Laurie Our Point. next comes Hunsicker Compass with from question

Good morning. Yeah. Hi.

Laurie. morning, Good

on just healthcare staying wonder a for Just minute.

look of your we if $XXX So at million. book

said of are You located two-thirds it Nashville. in

That's right.

is like in number? two-thirds And is Greater what all of the Or that Okay. sort Tennessee that component? Nashville

of that Nashville In the XX% healthcare terms book proper. is is almost

sorry. so Oh,

of $XXX XX% that. the So million of

No, that's Nashville no. $XX in two-thirds so the market is and I'm roughly there. million it right sorry

it. Got

it. Got Okay.

have million. you C&I, then care around at have And Last update it? you was And within are it? terms that substandard can is just what substandard quarter in what then Okay. loans substandard of the $XX you moment. right it us if health total component your is if what And

Yeah. Okay.

maybe looking So I at think you're non-impaired the substandard.

So million. substandard $XX.X our total is

it you referenced non-impaired. impaired that we was think X/XX little that of I and million to The So up a $X.X bit million increase. non-impaired moved million between an cut $X.X at roughly $XX.X

I not And They're Laurie spread increased would quarter-to-quarter. component handful point a of out healthcare-related. that classified over that its The healthcare credits. of increase hasn't

Got it. And what healthcare is component? that

one-third substandard about of loans. That's the

one-third. It's

Okay.

one-third million the also it's So of the million? $X.X of one-third $XX.X

It about little $X.X quarter-to-quarter. than more was over because had you got been it would of it $X.X non-healthcare diluted a downgraded have million, got that credits six a credit million bit because –

Okay.

Okay.

then guess, more about And book been are your over to down how next going? running months? as great. to you want I that Okay, the broadly forward thinking think XX healthcare roll we as it's book just X about do that and you you see Where

continue business believe we is line business for CapStar. a to great healthcare Laurie So, of the that

you're seeing are bit our that Chris the of considered before lot healthcare the say this with opportunities of credits referenced us proportion that there here. heard a of a in We are You've think probably healthcare family shrink. market. a Nashville capital,

market. East over healthcare-wise in also some great have We Tennessee opportunities

are of the So very much healthcare business. we fans

They've any the we I fund a their They've their done expanding there. our base. good terrific. -- things. our than together, good probably team job we a expect across deposit more think They businesses really wonderful of of units that company. across put And is our there the job loans leadership of done have

to that So business. we're on continuing very focused grow

Okay.

So not sell pieces. at you're or this that it point looking time, wind to correct? Is further in down any

mode other business we I just model. continued our would like say of with that, growth we're in are components a with healthcare

one ahead. Okay. go just got a -- And then

credits versus expect local just relationship. what would would more out all that the ongoing overall, I an is profile deals on should have from Laurie, smaller risk. that And evaluating us for of you the add deals say of basis market, market in we're and I

So, we're all relationship. the about

think $XXX to I book SNC -- So, I overall, grow We're think SNC looking million. our is total SNCs. not book is

schools, Hey Laurie, what I'd said. echo this Tim is and Rob

United a stated Lynn they on this reflect were million cited billion you SNCs they Jefferson and market Community's all was if bank. in the think And in in I I relationship. $XX have release of week, all $XX they think number

are that So, like SNCs. Claire said, there classified are many as

that some call and -- think we largely transactions. would financial But I are are But that have do I ours way.

need do or that XX you focused want again, don't so, think, to overnight. job and do on date don't do those Tennessee a in It don't want call that to I really I it. -- why I ones anything was I'm we do But financial would really East Tennessee. Catherine next I put do of know And transactions. the great we Middle said think to months. need what either we I a a we see on that I

you'll $X million of to then, revenue borrow to model. bank the borrow we time, says come anywhere and many $X and about like it over I that that in would have think a some more that's even shop. do million I talking commercial good. a be even to and I great lot go mean million. not going don't be $X in changing and deposits. all what in jump going Tennessee to from coffee $XXX I for so, can of do middle, and modestly But need people always there's million that We're because we job really banking down smaller, after it a of and many described a there's And to when to a there see them business the it a Lynn book And from huge sudden Rob Jefferson Middle to some in call And companies more. East think revenue Tennessee we company

of So, it I can we some over time. replace think

Okay.

Okay. That's helpful.

income the your for on over And certainly fees amazing. thinking we should about to touched Tri-Net going was you How just XXXX? statement. China this, be then And Okay. Rob,

Yes.

little obviously I of think We've more this that. has prior year recorded on years. been a numbers robust than record bit quarters two

So, us, stuff be I would asked we're think don't of that can institutions to And hey want show of are and it. for seeing to it and you why what high-quality But is out Laurie. guys it's or we've investment-grade institutions demand hold is said guide say from for this loan a higher good growth. this at a level that more premium People lot hard I that tenants. paper have originations, its is this? for good There a people willing market to a paper demand and their increased pay

I it's the that higher be because, such second than goes. think would this We'll below uptick stronger hate how that XXXX, guide at where I current any levels I'd half or a guide, point. For to would just see at

$X.X $X maybe million maybe that? So, million something like

But going very Chris, level. in that things I'm for not -- to group recurring. can mean details. you comment get on I the just high two are briefly

you almost people preordering. The demand describe You that? that said product. Can his for

we're able margins. is to some to demand we're work strong, and The Yes. transactions able is seeing get margins. what the demand get because higher higher is the to We've strong been

over with part those one it quality. sale. basis in providing is demand we is of terms of our stick of get of going to we or in to margin-driven rate that And change just strong We're part a could premium it in market So time. curve. now, to either shifts discipline demand to Right of that the continue have and is volume volume-driven, manage the shifts on on

to Any sooner. get banks in line are that actually purchases trying

That's correct, right.

Okay.

Okay.

our And shortened and make we've what the sure on considerably. sheet Laurie that duration means balance is

Right.

the thinking mean of is million Is of income rate just how run mean I But not annual $X a that correct? $X.X plays the I to million Okay. through about statement. sort it ballpark. out

That year usually a if of at $X.X that double to a on for quarter $XXX,XXX you a million. last has of our over lot mean for mean loans little the it. the books year, half I mean I provision $X.X $X high institutions just at little quarter you million numbers, million And that's want this the fourth don't domain. I a a been look that's the end put because

So is the little smaller. quarter fourth typically bit a

caution I'd on those little a down arrives numbers little a So bit. bit

That's helpful.

the moving on your expense of parts of inserted are then Athens point? lots at obviously, cost saves Athens And this all Okay. side, realized on in,

see basis, third left, think a to a rate I think amount the where run you're I going a dollar that We're And ourselves to that. talent. do a synergies. and we solid I and on little expect hiring grow do for bit good looking have we think on salespeople cautious be We from a are. talent. there's to quarter on to continuously. good see to fourth tick little you'll always going that we from But for bit left have the down I'm look

if XXXX running look where different we quarter conceivable $XX you're the And equipment coming just at it expense and fast of tech low to mid Is see going mean, a I we're that forward obviously, got through. rate? noninterest run software you've then, Okay. expenses million? to clean first

in our -- on can low I goal be And our get think the is efficiency basis. XXs near-term think an that's to fair. bank we

is numbers So those that manage we're stated of you going for it But I to part think growth. modeling are our purposes. reasonable

Okay what great. there? And then just rate, more questions. using be should two we tax On

a I'd flow XX%. is to to I I'd little XX% realistic. ebb around mean and right it's bit. say anywhere But from going XX% say

which great. active guess really Obviously buyback, come the you're in all Okay to great. to Claire And then your your to is been you. But $X completion you of starting question last have I million.

management, ongoing Is Thanks. thinking that all How an about refreshed something that? that's So how part should now and that? that? you is to think we are about likely do how thinking or be you about of be capital

basis. long-term meet. I board management continue we we think our the review capital other things certainly look to capital consider the quarterly will And we will part among of that time of that we're board use that's optimizing I we at, on level that that and to every the think sure a our want at make

you. leave it I’ll thank Great there.

Our with Daniel next Raymond from question James. Cardenas comes

morning, Good guys.

Dan. Morning,

Dan. Morning,

a maybe focus as the XQ. of of into growth given shrinking color how second bit in on area the coming just look kind the expectations year a pipelines And loan So half of for to little out of portfolio? the

Sure.

nice done Nashville a being the near-term some We the I to lot being projects quarter; hot. be may prices. think are going to projects, it's to we're that see estate getting the see pricing sold on sold at be of -- commercial third they're halfway real continues payoffs. continue businesses but

is So and I estate commercial loan think to I near-term. going real muted going to be forward some say would I growth our expect have would payoffs

QX? you the do to is turn around has in that that tell? to too soon Or think potential And

Tim. is This

I but think don't permanent particularly so customer, I seen Hunter term, rates. think to at in me low X%. a the commercial had tell, I've what customer remember systemic. extremely is Lee those long-term [ph] estate soon And out was but like project. came rate I it's markets with transaction, forth are a are The I it really I offering remember commercial don't know anything market. exact but it's permanent the who and And to I don't the to a mean great take too real insurance it's companies

deal still really And that to I think was relative market. good our the rate on

got I was but think fixed long-term rate. offered the customer X.XX%, it X.XX% X%

need to say hey really And so to that. that's and way, your you customer a need you take great times when there's support

that. but a but period. I that we're we'd that's But There's production we good is something not really extended it's that facing offsetting that's go a for that. of so And that think don't some see huge happening production number

line been And how run-off All Is better-than-worse? side? with what have that And in expectations update growing? footprint that on maybe right. Athens, an on seen you is the

The a East lot a on partnering had and them systems have got doing great have to like management great. we have Tennessee in job there. teammates steady going there any in recognition. I'd treasury we're balances business bumps major over the held grown. not road, expectations there's attrition did conversion And great some that's very well. over customer cases got or are have We've give and been to the partners and a We've Yeah. in the of little We but always

think a that didn't ways. that outlined in of synergies synergies working but we number had of have part more the also business have upfront Tennessee. title we are They we cost, identified a Middle revenue both I that done

a SBA had that status. We an platform Tennessee preferred got now management their not. in We Tennessee just Middle lending did had East platform treasury that

So both revenue market sides opportunities we a lot that earmark I our when And about that's can an have But we are or think have that of we announced to an deal. expectations. institution the creating grow. the enthused,

think to you you bear revenue do your when begin earmark that will fruit And the for guys? opportunities

a that referenced already three ago this I Daniel, just the treasury this is Well of we're side we've wins on process implemented. had in few quarter minutes getting the those good management in Claire. and last

to to think pretty remarkable. be able conversion midst that the doing do in is core So, I of a

size that it going little opportunities not quickly. it's some that would materialize for do I'm will great to So, -- I we've there got you premature. But begin think be pretty a that to

an environment the maybe front, on looks for Is me question Okay. like? there M&A then Great, of the to on the lot and how chatter marketplace? as going in a update last

say I compliance that word the or and know a organization. the There I use of organization and their certainly cost. liquidity I'd shareholders don't fell myself, activity an or that This out -- if succession is is is planning smaller chatter, either but leaving the multiple just Tim. would there the

view the as I much don't as that issue. really

liquidity strategy. its really not in smaller think companies, succession I planning a having or shareholder growth just

dialogue I So, is it there. say would out active

I All now. right, great right step for back

Daniel. you, thank Okay,

Stephen from Sandler comes Scouten with O'Neil. question next Our

It's guys. actually Stephen. Peter on morning, good Hey, Ruiz

Peter. Hi,

Hi, Peter.

back the mitigate things kind forward. about just kind how following been that appreciate doing the to on you compression the have of up Hi. maybe But, here guys cost are I thinking just deposit and Most play going the of out. NIM of questions answered.

But, competition assume they given the creep overall deposit higher? look in have like Nashville continue of to costs what to I would the near-term? over kind

say on probably deposit calmed the cost, six eight a to the Well, last down for it's weeks, I lot. would

dialoguing with actively I they understand a about comes expecting cuts. to be rate cut. are that the rate some with we're more -- especially think clients movement our a we Fed clients And with gave Fed a when going increase rate rate sensitive that cut are

best environment. the force did And work to with rate-up largely then on give the indication what depend with is sales and it how we to kind So, that, say our work to on ability is to would it's you the going customers. I of our

I'd deposit up. And mean model to on down. still one that's the day beta guys If rates done going you you the the at told looked XX% our on guidance from slide, I XX% model better way think Peter. so we're then we've we've cost beta you we get And I that. to than And

I have had se. the products I I deposits growth our this our marginal necessarily And on per its of know came rate -- It's just some think not of cost lot break deposit down went the really that been of And cost. the quarter the that to higher up. haven't in a categories. time don't pressure it increase cost may it's

rate brought grow average grew money competition down, I since actual we two. But, of or we settled rate market in the quarter the did CD pressure and that weighted up. think and in So last the has sort

thing, this go of one But -- should this say, earnings. but out it is was would loan driving I I I the And the machine. deposits think on focused site don't mean doesn't just certainly left be strength company towards

lot And I of was got before show our the Fox great deposits. quality of progress Treasurer there deposit. Daniel joined one doesn't even of the it we've a And the is today, things really up here on

million deposits. was had, quarter, In we growth have we this deposit reduce Tennessee. of to pledged funding of lot allowed quarter, to of that wholesale us a state that this $XX had So pledged the the

the deposits, on the rate deposits, of liquidity amount to we the our but of So, of to also the quality work deposits, ratio. improve want

great. Okay it for That’s thanks. me

Peter. you, Thank

time. any further showing not questions I'm at And this

know with lot If the Claire there's there's here questions, no phone people that more worked I long have of on time. a a for

years. So, the the leaving last bank. with sort going the to this She's us at She's next be of is two least quarter. not

helping We're her in management. out development relationship really business and excited about

only a bringing phone Rob, But done I I've She's So, with is time job for in. same Claire. I the of days. way. great the on the know grateful don't want I me feel Chris, know everybody known to her thank. for just XX

Claire, on hosting working the calls. great these absolutely, and you with it's Yeah, been calls

good great think call. smooth this I glad quarter transition with we and a Tim been been on ended your I'm partner last You've on a has

around as be Tim with us for we time forward you'll and know look I still aboard endeavor long and well. a So to welcoming your new

Thank you, all.

all if and other to participating Thanks just today you give us questions. have you a of shout

this presentation. concludes and Ladies gentlemen, today's

disconnect. Have now wonderful day. may a You