CapStar Financial (CSTR) 21 Oct 222022 Q3 Earnings call transcript

Good morning, everyone, and welcome to CapStar Financial Holdings Third Quarter 2022 Earnings Conference Call. Hosting the call today from CapStar are Tim Schools, President and Chief Executive Officer; Mike Fowler, Chief Financial Officer; and Chris Tietz, Chief Credit Policy Officer. Please note that today’s call is being recorded. A replay of the call and the earnings release and presentation materials will be available on the Investor page of the company’s website at capstarbank.com.

During this presentation, we may make comments which constitute forward-looking statements within the meaning of the federal securities laws. differ subject cause and the forward-looking the achievements CapStar are factors and performance statements. statements expressed of may those that actual to forward-looking to by uncertainties, risks other or or All implied from such materially results and Listeners to statements. not cautioned undue reliance are forward-looking on place CapStar’s these the with Securities Exchange Commission. A of risks, and filings and more detailed factors public uncertainties, other description are contained in and forward-looking to required otherwise CapStar applicable made update or presentation. by any obligation as Except disclaims revise law, statements this during any would presentation also other forward-looking financial refer of We you to and slides statements, X Page measures, information. the regarding for disclaimers non-GAAP With that, Executive presentation Chief Officer. to I Tim the over Schools, CapStar's and now will President turn ahead. please Sir, go

appreciate ahead little in to X everybody's I’m going Okay. from time, COVID I’m of and congested interest a bit. participating Good morning, and We you CapStar apologize thank coming ago, so about for too off I’m weeks of call. on our

we that. $X.XX So for I share. reported per apologize In third the quarter,

earnings moment unrealized Tri-Net. markdown losses to since restart in of $X.X Our loss the that million produced or was Tri-Net will $X.X risk Tri-Net balances. and of no if the remaining seized date. further $XXX,XXX a will second has and million quarter or we related high production to accreted anything there's included: into to as of incurred pre-tax is earnings at It uncertain early are back our there's when be sale that July probability over time. loss on a in been first,

tracked IP and it perpetrate trying The showing seeing system and that banks. individual for insurance FBI address their are recovery. across is system of wire a our to Second, fraud. the a the have provider We claim loss core banks, $X.X and provider up our many core an million seeking pre-tax is filed

future. and and our a prevent do in procedures situation the our everything have to We similar in reevaluating processes are to power

account. believe our depository a responsibility we of was the unrealized forward on were time pre-tax the this or inquired and and in Lastly, I At recovery. going at the is $XXX,XXX a I at loss I -- better. take council details that into CapStar cannot pursuing I Tri-Net par we loss when aware going made $XXX,XXX incidents. personal a operating are right for get was but production about informed I the to May, at we in would these take. stopping time, be time, everything

had the volatility better clarity. have markets, With and total should the used until judgment production I we of pause

and voluntarily my so do bonus the for establish can other of my legal the prevent executive this two culture million accountability, total such followed, team need we about forfeited fraud questionable $X and advice, will to and in XXXX To involve While better I year. to a incidents. doing

we company We are shareholders our recognize deserve and oriented a better. shareholder

Additionally, employees much assist our earn With said, been for XXX the great are we ROA. performing. the per they getting achieving. having excited to we're pre-tax possible. pre-provision EPS, assets $X.XX that our I'm lowering at performing a Adjusted a our and is them team as deserve incentive more earn for share incentive incentive results high-level incidents, at on corporate With and ROA, in will high-level to based and our these as

mortgage only of Importantly, and share a $XXX,XXX, me, contributing assets pre-provision contribution is per from X.XX% was quarter bank The pre-tax loss equates -- division X.XX%. third that the excluding our excuse $X.XX with to quarter and second no to a was mortgage Tri-Net. which loss net

an mortgage the As annual expenses of operating reduced the our about division aside, toward end $XXX,XXX quarter.

years our is contributor I set a X be I over ago, and the a That about pre-tax franchise, and to When the valuable piece people hard continue mortgage outstanding will division positive to long-term. an We pre-provision it and it questioned of joined have believe of several the do. a to X.X% and said to was would time X%. target X.XX% at was assets be

proud improved which prospects our CapStar. higher a challenging important perform power for pre-tax created our capital generate the to costs. well assets competitive but in at pre-provisioned good growth for are more profitability returns level is It as as we've credit of We bring to also for improved to times, earnings more higher have times,

comment it little trends. turning I'll on Mike, to a over current Before

relationship in banker Asheville, First, correspondent in a an commercial second we this we've added commercial and Knoxville, manager a manager additional relationship fifth all added quarter.

now, tempered with our most at loan and they CRE the interest demand the of to level fast rates And beginning and in rising is are slow. like Second, pace we've banks, construction.

transferred adjusted quarter, over, we X.X%. average Tri-Net our the the was growth for that loans loan During

the With sales of our team of been and our markets, strength could have much it quality the higher.

best this market However, with not challenging rates believe is the extremely loan in rates competitors at to and at pace patient I time. be in raising the cautious it current of economic uncertainty, environment, deposit

Third, deposits are extremely competitive.

recall which caution. sharply, rates might a in anticipated risen aggressively rate expressed other were firms rates the You are deposit With year, having U.S while more customers time first higher years. Brokerage brings remainders Treasury quarter and growth last at the for additional the I offer commenting banks challenges. on moment of shopping

we are need and metrics most the deposits address. last at to refined have step We really CapStar

lending on We've tremendous remain have focus metrics As funding. built opportunity. Fourth, of on on working time, was culture younger been bank, with a we very strong. believe I credit and CapStar balancing over less a our

the increase PPP and remainder about are for highlights timely due we're The secured. that of now in which that classified the years. fully loans strong cover a about bit the and loan feel We you'd being is largest Mike, been a X of of loans end, renewed, again, substandard essentially our upgraded position with matured we quarter. dues has troubled Past not on for for relationships an for unusual both. included at one criticized Our two past. which three little to loans, please up XXX,XXX financial to improved and if quarter level ticked were

you, Thank morning, everyone. and Tim, good

on key performance highlights. So a X, Page few

basis In a terms X.X% XX as of from profitability, up Efficiency year quarter, margin XX.X%. ago. quarter, from points X last the interest points up the reported, ratio, net was basis in

As reported, Tim assets, efficiency the on adjusted touched adjusting was the for the quarter X.XX%, as three unusual XX.X%. unusual items, X.XX%. Return for ratio for on earlier, the three items

share, available to the In losses X/XX, have we ago. $X.XX book versus quarter, X.X% tangible solid for for value very terms per of continued share, $XX.XX Earnings of share growth, the loans adjusted on unusual from And of for investment portfolio was the last up from to items a excluding as of of per after as held-for-sale held-for-investment. as loan $X.XX a a Tri-Net tax the of $XX.XX growth, and share. adjusted sale impact transfer up the $XX.XX year and

In credit soundness, noted terms metrics remain system solid. of

see being our X rate two, continue further For by interest margin loans; the feds to quarter, On cash points rate us Based the income $X.X moves. don't we loans assumptions versus redeploying combination on this nonperforming and we had at benefiting number increase an of assets million modestly materially X million margin XX points we of up of XXX, was by Fed run rate a further The impacted the very continued last annualized basis time, the levels. strong basis charge-offs; of capital was from with and $XX.X of move to points net and of X, hikes. to basis Page driven quarter. --

have recent continue the the this We in pressure. last loan in see increases. to also point as not pricing seen headwinds catch at competitors we And cycle, to pricing up months market we increase few some rate surprisingly deposit

the that. X, early expected, materially. interest We as our cycle moves, deposits move opportunities increased moves and early the betas our income to, deployed correspondent look alluded As liquidity. for million which to the markets. many turning movement some industry excess Fed into customers There the on quarter. seen their as of forward million balances deeper we as declined have around Fed fed Page loan $X very did have was average $XX as that do within to Corresponding But We Tim markets, points banker. an the recent continued strong basis correspondent were as business we correspondent was flat, points into season like addition Tim a we've of our deposit of in versus in growth. quarter basis for XX On deposit good for -- our production provide of not hiking roughly continue expand rates XX total new down the costs increase pipeline mentioned The net leveraging QX. the

customers, trying balance actively to continue on retaining profitability. competitive, optimizing customers growth, remaining continue On disciplined Page to And We X. while balances. attracting especially operating we target also deposit deposit focus pricing, to

the held-for-investment. for million. $XXX the average We $XX into of pipeline have continue million strong of the movement adjusting above to pipeline, loan Tri-Net commercial have We did for the growth production, remains quarter,

real and loan commercial economic As due Tim to limiting noted, growth. and deposit estate to we the better our are align outlooks

yields Our loan the increased XX. Page funded of versus basis match rates average our home versus spread average loan spread. X% On quarter. near prior better With X.X%, points XX target or an

we revenue. In terms interchange see income, noninterest and stable of continue to deposit

through with rise mortgage hitting of terms In X%. rates the as you're industry, seeing mortgage to continuing

expenses adoption discussed, On for recent and very Adjusted the losses pursuing operational Mortgage QX which and held-for-investments opportunities. over basis revenue our Chris down with for transfer management's XXX $X.X exceeding turn ongoing Strong about quarter On discuss in Page Page to the versus well a organization, related year a outlook bonus markets. fees of management. discussed, $XXX,XXX remaining first and versus mindset call, for an consistent as potential waiver, were rates a loss, QX fixed homes last impacted market in prior combination team on for are will future loans ago. as $X.X have loss Tim SBA efficiency sum voluntary of million XX. XX. And quarters. we limited higher the recoveries. to to with up on operational mortgages are to quarter. our Tim continue sale the XX-year rate solid expense Actually, excited Total the from throughout and productivity the with to focus has versus supply expenses SBA points been we and sale discipline of second demonstrated the due our mentioned, Tim are of risk we For with Tri-Net it the up as the million are by hires. losses progress to this and I Tri-Net the

Right. Thank Mike. you,

to quality. XX, let's Page asset Turning discuss

emerging. hand in levels. impaired upper migration by past reductions let As noted million in increased $XX.X is two graph, the in noted improvement, insight. that loan is issue not due what overlap and overall have QX, with pervasive improving, Since quality Of loan and me these levels. past drives outcomes give there is left asset them, criticized there some or some dues reflected additional a classified with you and continued systematic in the Even

While administration than could guarantee. we this, XX% separate borrowers, two believe we an better half have with $X.X relates million. total the of a SBA transaction million this of more with to result Of SBA is relationships, $XX.X $X.X totaling a million borrowing delinquent improved few

these classified with guarantor we substandard, million year, has accounts believe review of single for by not impaired enhanced Since While delinquent filed increase the a not institution. ratio by subjected in rated work will our and estate to doubtful low towards This an rated of real with by relationship is came acquired as this is is note, borrowing component represented quarterly trend. been secured since borrower and and there value $X This relationships last of loan a the loan loans. to loan and resolution. that substandard loss we each as the Of loans bankruptcy. be borrower impaired. has delinquent support, is

relationships to in past, we classified enter to and noted this in of resolution. more these and reduction we've influence reported while bring economy. loans. achieved two good a while our loans successful that attention uncertainty work in to loans continue levels have loans As to anticipate is delinquencies our as the substandard level coming time months, classified our with out, endeavor of overall require period them within classified the substandard glad criticized criticized we low, will and in migration and still to we criticized an XX% of Even We're grades, we new such

low traditional on to recent at smaller the left better to and graph, profiles, In including exceptionally in our secured a of as strategy, borrower losses. loss rates banking of annualized evolution points. result hand lower Moving basis years pursuit our community a X remain

overall drivers to asset level Turning Page believe XX, to maintain allowance while is a quality improved, are of the provision prudent. we of same

turn is driven and Tim. to relating I'll supplement With economic slide, environment. factors, the net back the for pandemic loan over growth As noted factors the in adjustment by this the improvements qualitative historical in despite provision it loss current to and

Chris. Thanks, Okay.

proud Thanks, our of of Chris. really I'm core strengthening the bank.

allow in certain by are those and working markets. are prospects will excited and the and presentation, to that We us be thank challenges. on. we're time, Once current questions. answer we any are well-positioned happy team through We're concludes capitalize optimistic to your support. position The things will improved our your our the also our for of and appreciate there environment brings That you some again,

Instructions] first D.A. come question [Operator of will Our Kevin Fitzsimmons from Davidson.

open. Your line is

morning, good everyone Hey, guys. well. Hope is

morning. Good Hey, Kevin.

Good Tim. morning,

I to how Because view dollars the and actual a sounds -- all NII with to and somewhat, signaling But that to lot the margins take just forward. betas in growth that be growth is accelerating. the front. but of NII does more margin your to banks expansion, to remain big back wanted loan we out want be challenge of disagree net how view don't the on your more on and it's of trajectory it putting a like ability I the should mean, a going I that you're and cautious up going percentage prudent get So step with going to kind are stable, just mind? probably probably But I soften deposits loan careful are Thanks. grow

better known Thanks, second in other a person. banks And you quarter perspective, second each don't go a you're not on risk of the year. look of you're rate just second CEOs be been really assuming margin. sheet, also to are And shocks. a I And XX-Qs quarter. cautious assumptions balance the When may your we've do. the you into long XX-Ks, deposits half are a said, know, on many think CEOs so assuming my you're may than going Kevin. But But they challenge to and went Yes, I've be, for other lot that. be what And or cautious ours well, many static cautious the than that growth and be, a I'm sure. down go might were I time, And look, you and balance betas assuming sheet, much as second one that, they in guess know, may say. there calls, will conservative on static worse that's comments more up I'm or what banks what right, on they want interest

have easier, fix You're with little thinking about how you. a customers up. might behave variable that's contractually the loans and will existing go because that stay, And will

one not the market of we pace been budgets, have And spreads. CapStar certain the for You competitors those assume some have at cash, don't of rates get when our is that yield. you off, rates. we've the to three raised things extra saying that we're won't quarters don't doing those they if in of new On loan upside and people last loans pay know production, the

spreads, the yield. is absolute on So thinner new production at forget coming

curve, target. a FHLB If year, sort what their That's basis banks we rate not last XXX use base year-to-date, we more raising are other prices. it's third of again, you And XXX not wanted, XXX. been what to quarter That's points. got because we of

work complex. to -- IRR it's love so complex, easy. and but mean, whole it's as tables, I so out it we'd all -- our And like not it's a very it's exactly

market don't going got in banks. have And challenges. be a and CapStar's don't I I seeing any you. are think But than So it's for I'm challenges to period. an think different other you've macro I the answer exact the

be the hard love say, going this, they X% at at last doing X%. think to I have I depositors X%. a continued while have to competitors the deposit we it's get margins, quarters, is and are but two I for treasury us, money mean, do I raise mean, six to bank, X to I'm take to expanded call months, a month loans need X-month account I I to expansion that out treasury. the going hate when buy industry think that tough. the I can hey,

you much margin would that's macro I would the want. at think I expansion, do not I think be or maybe be So not a know industry level, as flat. But and that answer taper

to a healthy XX%. I find to grow grow that. can I the And to could fund little being down, on probably a you And going could it's balance cutting grow today, In quality got really challenge conservative. loans The so you then in sheet? markets, XX%. come we this is environment, teams your we've think got to think that's environment, loans more with and the today we funding XX% back

if So because funding right economic our outlook the had maybe hey, of and back growth, on sort with our for single challenges. the of digits think call, in loan the Investor the we just some you Deck, we last remember high to changed now, outlook of

So that's maintain would you're deposit be the more with at but you very And think on a point, the, more. winded, track expanding loan this on the probably single-digit issues. now, growth would the, right higher know, still margin outlook long stabilized growth I and macro not I

enough healthy into that economic a vibrant think, do the heading called it time? about for keeping feel that just your being you Thanks. you have forecast, low. growth now we're it And the and credit, building Okay, at just but this ratio very the detail Tim. at enough helpful, period on how may the great. maybe -- markets it's same? a versus are loan prudent where I I all keep do you provide past nonperformers, there's that's given Or not appreciated where is. reserve the But due That's know, and we the think to where to are you charge-offs But in situation remain to -- mentioned historically looking

Well, even that's will X clear it. think driven Controller qualitative here are got our we'll migrating that of I a on would don't factors Moody, allowances on allow going I a -- that. and so on of January to and lot that There leeway. model interesting, you more but I'm Kevin, conservative, now change do that's more a be We've where CECL. Jeff right? mean, answer Mike, driven not today, are if expert the be you And rates. bit to unemployment some to Being either, But not have they’re little you

And really unemployment has go for rates to That's right? so happen prospective, that up. even actually something to not is

I for a other than just if any rates So sense, common there's room are set bit little probably you're higher. indicators now qualitative right factors. But to want it's think aside, do don't that period see cautious we a you more

the the to we're portfolio those So Fossil beginning that, finalizing basic or with amount. do be happens. case customers X. loans, more higher, and ask will stressed? and companies. that just just bank, So We've just Work sectors but adoption are management, question, up like less, that I to? always that disclosed higher. really variable trying don't we're to adjustment say not any are almost really on And January rate operating prices for we're doesn't are get that that could on prepared what not CECL, to could someone strong them pandemic on fuel in with before cautious. early we're going are focus And people we that's got great a lead good people be their underwriters. hurt spending We've payments so that what we're

for in industry So don't will to the what has book been, I publicly be like analysis our our adjustment that it's that averages. do will within to like on But reasonable hit averages looks a say very with one-time value line looks want industry call.

Thank you, Tim. Appreciate Okay. it.

you, Thank Kevin.

come Instructions] will of from [Operator PSC. next Graham you. Thank question Our Dick

open. is line Your

good Hey, guys. morning,

Graham. morning, Good

few risk pricing? I ever what that's But liquidity, have on I And mean, I can your wondering that get pretty think don't bad pricing little or more what be to the longer to start guess talking outlook adjusted longer to you to term to is be on relative market. bond I'm these about wanted then that. So here. I look touch just your you just to also, lift compelled what current, be their you could you do so just the it's net allowing is a even if they outlook know returns about? loan from Like, I'm in were guys guess, think down wondering versus were talking if if and for there what do to the range will competitors the I adjust, you them any quarters back margin excess interest aggressive. say a term this? there color get line, I guys upside, guess just

question. Yes, so good

than some year. And I or that was that's think not half already X,XXX banks And of the operate not first there's all it great in every I the some probably whatever, some others. of not they're in changing. and every feel. pricing, mean, bank there's of Nashville. -- discipline use worse something, base XX gut bank sophistication just than more banks, the sort but more funds have against use has some others, Not transfer rate, benchmarks that

into competitor, that. net we a were also that risk. [ph], But up would on could for discipline into inputs, run starting would always want calculating come the benefit do getting you those to for really margin. many do gives we certainly so, reasons, the so go commercial I loans, loans all go that of for Down but it's profitability that against as there's XXX But aspects, think an using other which road, margin additive. that's that credit interest -- pretty well Graham, some. as to things And be if we're spreads there's That there's loud

higher higher right? are So you lower. They with that model, would But should when more. very worth hate just little to I that. factor to would are in worth margins DDA for I take rates, were lead be that generally one hate -- rates

rates I equal, it was little I a I that coming reading guess think would So this with just morning short-term were early stocks down. all bit benefit. things being up

margins had thought some that's would my So I right -- benefit had now. think and higher probably that curve steepness that if but stayed the

just hikes of Can into just seeing, what head Okay, the costs. like, give have get on recent guess, a I on don't wanted XQ guys any the more to through that's color And me the deposit been expecting year, little end Maybe of we I in I you're you beta? that? what you idea know, of rate helpful. as kind of on terms

Yes, to comment, I'll service banks, they I But a you banks can subscribe that as quick go do. what process. he a you most we Mike to we competitors details, then and called make of give because seen the [ph], a explain give RateWatch have the at you shop, is what just want, our want. bank manages you lot them them as the give well market you And

Chattanooga a we we what get a report, weekly report they're report, And pick We we the report so Knoxville want branches report So, paying. on national forth. and competitors get a of there. those

And disciplined that have meets very so process we a every week.

the below we all want be sheet is can that Our we we And a number be and want And one, look shows have base markets. be monitor goal don't top at it to in rates. then we also our specials. We to sort to don't the third best average. actively of we

And done. do what want understood. he that And to seeing so a seeing, make the I've what process to ground? I'll talk of just in Mike, I But pretty Mike maybe sure any you're has but that on he's been comment you want that's standard bank let sort on about

Sure.

money seeing movement. is deposit say aggressive we're about portfolio would XX% of which I the most guess are where I portfolio seeing, are markets, our we -- So

betas, Our checking, XX% around to assumptions third about there which betas a small And of balance, XX% XX%. our interest is about average roughly. assume on portfolio, we assume we XX% are saving

feel those manage I part are we So we’ve But that come the through this levels up. of certainly cycle. those that seen can we think

great. I’ve that here. adding then helpful. team another one here guys just are got at SBA. And looking Okay, you quick Saw That's one more on

the might -- Just in I range [indiscernible], mortgage. of some there be the what there to to that think softness said in is how size to the gauge trying terms added offset revenue wondering of it of potential the you potentially XQ of

guidance Yes, We this too to believe this on of is don't settle we that I get I we our had QX year first QX saw need the to of last we the Again, predictions. exceeding in start -- making Chris. into indicated want for half quarter the year. specific and staffing aggregate before though, should say time, our we'll that build with more predict our I we time, where can't goal will want recruiting that. I is successful I I because than can't to we now. be control our solidly will I now growth in efforts. forward. what are expectation over that say going be over that, cautious And we right on right

All understand. right. Well, thank you guys. Yes,

Mealor you. Our Instructions] next question Catherine will [Operator Thank come KBW. from of

line open. is Your

morning. Good Thanks.

Hey, Catherine.

this quarter you some kind on just of really expense Just made about, important that earlier question back and at that to headwinds. offset of picture adjustments the big kind profitability Kevin of talking was look the some as I

think to brought entering with market. And expense loans of great the we had in year, But that was that thesis this your was the those rate, going next the at leverages revenue of story going too to a some part and appreciated. expense build I bring be So growth so to maybe or you on are was was much look build of those hires operating as of growth new going the higher on that of a teams what on to I really of margin. we think and kind just were kind much higher in because

$XX.X the you expense growth, about to do kind margin And like million as flatter highlighted -- guess that you your how now look that in do expenses rate can year? there is next slower guidance So, and there of a think presentation. you anything I the are over balance bank you only what

before there's think core been, is there's always our in spring been opportunity. I've I've of I material XXXX. contract there. Everywhere savings mentioned the

room there's me, So on always that. to

think done good I we've job. a

think the I maybe efficiency XX% it's when came, XX%. I was ratio and now

an this efficiency I XX%, grow could just and environment, be could in wish perfect. you grow reality. you would DDA you these of ratio could the mean, So, [indiscernible] one have not loans XX%, that And that's is every XX% world of you

we're I So different thought. think than that any don't we

the at over margin grow loans hold that say, think X%. grow at, could that and a X% I to this X.X%, XX% close next if expenses in we where year, we're environment, at and to

a I $X.XX just mortgage earning that with this right quarter costing think $X.XX. already now $X.XX. be we'd is breakeven, they we're If at company

more really expenses we're think diversified people has revenue. we're already got at our that are more got can We've I don't at. we So excited We've our all. run all in rate. changed view their where much contribute, thesis that

so to being growth not expenses in if great our moderate the that can cautious of have make we've sure and we'll overly XX% again, got already we're aggressive manage we that year. let's it, think environment so and And and this X% a grow down, we we being

of of more out it. had put for provision you you that's [indiscernible] of look is Got super kind And In earlier. that this this helpful. kind to then know a think some projects new year? target profitability Yes, there, on targets is levels profitability reasonable environment, I there

start see minus. there this XX,XXX don't got on large change go items know were it's think sensitivity. down, from all quarter are aware that do quarter think down more down banks There's should I a that don't rate excited now complex, to I this current to that the XX they'll not I'm but we're an if about don't asset means I'm because this need why -- one-time companies sensitive, here bill, going plus or lot from also. you think our to was that don't other I But much. came pre-provision everything. do to that months there's we or rates have XX go or going asset I don't thinking I sure about -- right here. pre-tax of expansion here. run everybody any margin

want So range to -- we've that don't now in that, in right front isn't really It's would or low. can we've to been charge-offs. long that's we current environment, gotten XXX. that stay excluding hope, realistic at have we it's we again, low XXX would hope now for like but XXX our environment, why in time. a XXX company Catherine more I the run And but not I Maybe or ROA in mortgage, in that back have XXX, charge-offs me, a that sheet hold so and maybe XXX, this that that of gotten it it my XXX that cover that. could they'll I that range that it And

depositors think at. So years year I you again, we've COVID, in probably and X But the high rate little we're markets high now up going we're time digits. all that XX%. more I or it -- over grow think environment cautious place, another XX where and before we're were And patience looking and just before a for would bankers back and I the just got and that if single it's in pleased to Fed a things the COVID, the very environment think be

Great.

totally I have is makes cautious, more appreciate Okay. -- And Yes, follow-up -- we'll capital of maybe stock that still and lot I But tone all sense. your just do you is the Any your make which all a appreciate on cheap. buyback. thoughts and sense.

think about this buyback in a supplement you the So of kind as environment? how do

cash, Yes, a I I mean, think buy so for many it's I'm uses would strong. so I buyer, is, deposits one aren't it. There's definitely right? a So price

I $XX So stock, economic funding you'd the of I $X we and $X million, it it's have we a -- be Right now wholesale take I more buy million $XX $XX not mean, get. would that's decision. million, million, million million, good think could into world. mean $XX to go

$XXX it and that $XXX million myself, that or not had got $XXX I'm unrealized I and back reserve it of of that of up losses only again, I million XX So I've kicking I'd not stock. that that there's caused have losses done more capped books where my part some Well, Tri-Net realized on of funding. loan core is, and million growth, buy million XX also and could take took per market million personally

here. stock working weighing cash. definitely that just the different priorities buyer the of we're And utilizing our on just through So I'm a

All That’s Thank I you got. right. so all much.

just I I that Hey, you actually COVID your before college. you let got know go, at

Parents So that present was my Weekend. for visiting

I bet was [indiscernible]. it

it Yes, you. Thank All right. was.

you. you. Thank Thank

of Group. Instructions] will [Operator Rabatin Hovde come And our you. from Thank Brett question next

Your line open. is

morning. good guys, Hey,

Brett. Good morning,

with forward? that the margin their that non-maturity deposit the posted rapid and assumption that this the is acceleration for What around assume a the deposit that flattening? well first betas growing that point, the Tennessee out the to a you middle from of rates assume been or I as rates as I I ask What wanted flattening What aggressive can here. to XX% is is of kind you've of Is margin that? at got see running peers kind at that going beta know assume on as point some flattens of some on other well. continued in positive the their have clip

Yes.

acceleration not would So, Brett of I on Mike. say betas. an this We're that. assuming is

think the I have optimistic moves. Feds seeing betas say, betas accelerate we're early that from recently. But we that can assuming been did rate hold and we and the we

for be have beta that we're And in deposits not. There around that. would are markets about are there on with banks others the are aggressive, blended don't been that XX%. our optimistic So a beta. our factoring a that liquid deposits certainly manage overall rates, probably we XX% but more some I CD have can and that liquid

instances where relationships. So as or But flexible we seeing opportunities to more we are also where less attract relationships much retain aggressive. for are is deposits, new we're situations competitive see we pricing seeing to be being

forward think earlier we again hold we was more So can near-term. it betas it's mix going seen we've year. recently But that the this than

or loan things impacted? forward? people to could to coming. Dimon the is or said was about more seeing that loan -- Okay. [ph] this on et Is you categories at JP hotels, prepare concerned Any calls as there that whatever avoid cetera. talk in is think you getting guys were are is looking And office, going then want you storm anything of again, would Some Jamie terms as obviously, classes either Chris, that for be we

into I all, the analysis, perfect did lot losses. But pandemic we Well, a like we presume, declining I first a in would a environment, categories. sure bank, of same a say be I'd things, couple not I'll have we're Chris, the we're I'm and let it's because Chris increased that get would assume would that

reviews. They’ve positive looked portfolio credit generally of in at just target the XX% they’re And was I years. And more a as in the a everyone was done national a in is haven't We weren't X%. think top know, underwriters. and portfolio good our of less on year. don't Enterprise in national credits with this and lot our than our of the had Wednesday, that, has was their in us Board on two lender credits quarter I knows, we've lot of The of Pinnacle, here culture firm, at credit. four site There -- we're they last done strong loan national FirstBank, one think done profile shared the our which that shared of they don't participations a CapStar now now the our I think review Houston. completed of former XX% St. Louis, changed on years. those even national we meeting we've X generally, underwriting. I BKD, a and X view portfolio, loan shared Cadence

material different, markets, more we're won't builder level on that's I'll go secure, so large we're customers really more done bad. guaranteed. more our But finance. is mean before profile comment more our in myself, they're of never a has A&D, granular, that CapStar That is even make been profile good they're the that a any or last So bank

A&D pandemic. And sector. but expert have, to are in that Chris, maybe aren't the about then, so, sectors builder get hit the hard to Chris exposed finance I, we talk than two of bad really an areas from And is tend that like economies, and we more

Sure.

highlight. mind those that are What sectors your that you are on

question a forward a bit little Yes, Brett, good looking. it's and

one show. than guy's it's I can empirically opinion that something really So rather

all, of we projects for market, time a requirements first first interestingly seen I'm -- equity break response, that's development So that is that stay the we we would and to And that So back space. But about new to not talking creates these talking the disciplined. space, okay? I'm that are and our the projects residential construction the you get in we are them, normal big activities. on failing in underwrite have to if normal stepping the have raise more disciplined into that a go commercial

is We've even to about estate going we've our many that. quarters, high model equity talked stuck As period. a the before cash for commercial real pandemic, back model

been well, category. bit. the let be portfolio. only the pandemic deal the and anything, we've it there. we have have Areas loans criticized XX well for back. If estate step time. classified has back a economies portfolio, that you that resilient real categories shrunk do commercial us, also or a for have in concern. exceptionally in the through back even that grown pandemic. of little our of a deemed performed high markets and we our be But during commercial me go to of to specific not portfolio Hotels, just we Of concentration that we of Multifamily would If -- continues within a through going points performing long basis risk It portfolio, have very component

retail, place. of the more we through again profile. long-term retail program, exposure triple lease of comes equity the cash some has with which a net to we're what portion credit have A also of national leases but have XX% We in sticking average good tenant weighted in Tri-Net

yes, want And over So that question, don't more that don't there. your but the have into -- is that there can I'll concern answers over is resilient office, give by equity but you believe in we that again, cash transactions. any we color high primarily we I if be might those going that we time. that know mitigated managing

Appreciate it. Chris. helpful, very That's

address And I'm one I the Tim didn't -- issue. sorry,

kind We can risks manage, we environment. continue activities. acquisition of The not just this development kind of as with and to that something conservative we be in that exceptionally It's being long-term. particularly see

to conservative with So residential there, we'll and be continue activities. construction

But Do project. Kevin I us. one Brett, newer don't kind all was say large let of development, it a kind the one to was operating cost? you opportunities So resort kind Lambert here. some [indiscernible] be example right don't market, if Kevin the deposits, but two And we've I I or looked that Kevin, to loans. think some now and don't want what they hope of then a Kevin, that and a to is companies Pretty large -- customer environment. it who came large we said, in details. was doing moved it a remember cost some of It construction before thing. was give that of last got customer X the don't out hotel construction. chain. two you owns And large a I it's and got it. store whatever, grocery really back and me remember in somebody And, the we've and weeks, I suspect I And on range, kind in was would And what called this great warehouse, remember it lease be a long-term generally management, resort where cash to should us at

he's got we know, existing he two warehouse So operating it's for a -- leases a a And one, customer has time. proven tenant number out, that it's that long then proven companies. a had

that So we one. did

though being like where didn't selective the project and probably has prospects. an we're was very first environment. a Even great great So it sounds one for think We great very example long-term this that's of and choosy.

Okay, that's appreciate on very helpful. color I that. all the

Just one last one.

the I CapStar, obvious you think I needed culture. you to the thing to lending think, was first as got change that Tim, when

you was And thing so and first of I the focused on. foremost that think kind that

hear in like As in a we or bring be culture that culture how deposit be, think building gotten the feel got if to realized And CapStar. needs were also -- caught maybe from I you to But you you where wanted past needed any focused to do some don't deposits? if thoughts if perspective. think something well. work still it the to the just I relationship, to you've And probably as folks you that to at as few quarters, around on you deposits with that up you know that maybe

joined 'XX. of Yes, I ironically, in May

spoke most X call woke Kings listening. here was up. me informed a this he the And really Jerry can and first me he people months, the on see one glad been he's I'm so I And and and great, of [ph] the that so up

the took challenged I it better, King. months Jerry make would that me take analyze came to first he And the so company, to and what from it -- X

of project. were Brett, deposit peer a national 'XX, I clearly incentive actually, fall what is in I wholesale whole the were. bank a participant We started so And got plans. we

you excess was the total. it. then change laid same a in. we personal we initial the you next so bank And within million we pandemic started. we company And do how incentive funding How deposits I just out own you some started turn to to remotely, $XXX actually progress. laid out that plans, And safety, changed And and to run good we came time. needed I employee mean, about And safety, that at XX the talking months started And environment? in think good exact X months, your make actually, run of do a we

-- it want both So like I to about October I that talking you the right. to as and left, turn I million, that with well would I'm say I I out. as $XXX million pandemic do the of to we say it, lend that and in you it's started don't basically And not can 'XX. to to $XXX that mean, trying what would probably really I of get say found Well, mean disruption comfortable banks the say internally -- that not investors from all but

to it original Certainly set his would we've bank done and that. I approach. achieved I out want Like balanced say a at And deposits. great Southern to job the they part Art that for it culture. Seaver of so don't a everything say not mind just wasn't got was But First our do. has grown we've And just And way bank. way year to loans XX loans model in time. I growing branches. and deposits a years. or X% they found to markets, they're bought he found his hasn't us, grow banks, X% urban he's a he's And a He's limited like to have XX%. a fund a been long for they're think don't

of to a and doing back really self reflecting that. we're lot getting So

a that of above And it a school we there, very I'm can company. there's side, So plans. was person owns [indiscernible] the is adapt Florence, early. everybody the I would If you Alabama. And what we've with on bank in say Tennessee And went give I'll phone we bought And the innings. I about it's to it's for our customer need the game, branches. this and Waynesboro bankers high on first got, down incentive of in example five to think one excited three we say do. very baseball One

five management five million that were had we locations. big we to But mean, get So confident $XX $XX company wasn't would small got we've we the of enough I needs, bought just that. it. bank we've to depository loans, and serve million that cash -- got

got hours bankers of it They school their was to with in there in owner, jet One slam a don't we First there within dunk. flew Service there. went our an from the high First Service Birmingham, relationship. thought and have office X

so those was have it done. we up to do company. But set go bit And a And so it a to customer. we to we've change have have -- we we proactive to don't we incentive to shows got offensive need just can the markets that of can our mindset about get need CapStar and wasn't think, I CapStar way. how little Brett, work that branch plans, built to next be change a to there. right and

great. Okay, That's color. Thanks. good

Thanks, Brett.

Tim turn remarks. for that conference Q&A now session. the Schools, I like will And closing back you. the Thank end would to to

all we're to the we to next forward call will talking Yes, -- again, And it that's have. look progress. be guess And pleased your XXXX. our you, We support. actually really appreciate with we will I

talk a holiday have then. to you a Thank everybody we'll So good you. and good and fall

today's This enjoy conference day weekend. your you. and concludes a pleasant Have call. Thank