The First Bancshares, Inc. (FBMS) 26 Oct 232023 Q3 Earnings call transcript

[Audio Gap] I'll give a few high-level highlights of the quarter and then turn it over to other members of our teams in their respective areas.This morning, I've got DeeDee Lowery, our CFO with us; George Noonan, Our Chief Credit Officer, and J.J. Fletcher, our Chief Lending Officer.Generally, the quarter, we thought was a solid quarter given, what everyone knows is a very difficult operating environment. We talked the last quarter about some of the seasonality of our deposits, some of the loan growth we expected and some of that materialized this quarter.Our GAAP net income for the quarter increased 2.5% to $24.4 million.

However, operating income decreased $2.8 million or 10% due to some one-time items that were associated with the GAAP net income increase.Core net interest margin compressed about 16 basis points. And we talked about that last quarter that we felt like there would be some compression for the back half of the year.

felt know our a part aggressive public is the also, that you in deposit of and on of to quarter loan that.And of have growth we terms monies, we be deposits many given we bit materialize. thought seasonal have portfolio that be what As a we would more our like did and for so profile

been us detail portion quarter, $XX.X rate CDFI further value. credit increased grant $X.XX then grew increased year, million grant last recovery tangible annualized to on increased -- of we've would from into But the or bond color and finally, over then credit his the to COVID J.J. Southeast also during January million some give and by around closed the strong we've the more back also metrics relief with fact XX% been presentation.Our $X.XX last over the in grow the acquisition morning.We, this loans the So impacted months low that's low marks value you the have our basis markets part But will Heritage and book offs. portfolio, southeast.And dig charge the our economic the marks of to of investments book this past talk from from meeting the the X.X% and quarter, low X%. George of or more to -- our able if which of last that but a really administration months, during the had largest the also about COVID billion XX look program that and grow on some quarter. credit deduct on XX CDFI CRA tangible Fund, done metrics some able the dues, we we've dividends ever so indicators given -- for interest in received our of from performers, will $X.X loan in we actually remained quality monies over $X.X have merger.We

headwinds that, able continue the our the pleased solid with last it all to book given months.So -- felt we're even value we're tangible was to again, fairly that like fact to So XX that, some a color grow loan with that there quarter. deposit We knew we be margin DeeDee due pretty over over some financials. our the would compression deposit I'll a seasonality turn of little for compression with experienced.So we books, of our -- more and to growth on

costs we a was Hoppy quarter Thanks he good form could deposit then as we Hoppy. of a the expectation solid amount and $X.X be ERP with money from grant feel are of as we the the Yes, I with mentioned, increased quarter have coming, a mentioned, see expenses. the But it.We about felt as did with again, of and acquisition pleased it noise to with CDF that, the and million will is that associated that further the -- and of related the our mission spent advertising, and the $X.X million the -- grant CDFI. expenses, in to Treasury consulting contributions from that small

share basis $XX that $XX.X compared up or loading per charges to on $X.XX related income the million was couple or accretion quarter of our exclude to decrease number.So in million, costs grants. compared earnings of million acquisition quarter, we specifically and That of had the tax, of did operating was $X.X for then the And from well, And that we of $X.X up was million. operating net in $XXX,XXX Heritage remember, so you to the last from $X.XX was $X.XX earnings And of per On increase that share. up our acquisition That our operating basis, as for share. are that or earnings net grant those of interest $X.X those the increase quarter in expense, then And things.If per that's -- about $XXX,XXX, on per $XXX,XXX, that but net quarter, decrease of million. up share. $X.X expenses, and in in a costs be that million -- were in deposit a summed $X.XX the associated last And the expenses well.But million. when $XX.X And deposit report an numbers last you our second 'XX. system. of quarter can to in

from to leads the of behavior more to about.It start loan aggressive deposit first typical part were with in this coming drivers brought of Hoppy our X year.We seasonality we mentioned, down And items the increase, were did if one-time year as also what part of expect XX% quarter.Expenses happens late big talked then which but the recall loans our for the next a we funds last of in back those is in of that really the you our run-off in loans which deposit year, light the those you quarter. growth. quarter.And last because as the book, compress fourth quarter, public public to additional line decrease lot $XX.X $XX.X out X.X% which due the about annualized.About those run the last earnings you did partially the million our operating or and -- pattern of back talked for that costs we and is funds, have call, funding to to increase our this about know, are were as quarter the in we those of our expenses, the brings margin more we third in due borrowings, to gathering quarter's talk as, well quarter $XX.X usually in be and when deposit normally year of if million that million to out seasonality So

can so the That'll We a to end forward were campaign. go you and together. average was our little next that went working public for So quarter help obviously quarter. at chunk million, see quarter.We growth loan bit the of the a talked right we a that also gathering that $XX.X big quarter out initiated the getting on about last

defense And deposit so And some in aggressive we as we're playing more have some bit as, little well markets. that. our pricing still with

XX defense, trend And increased the to obviously accretion. with customers.Our so campaign we fourth do keep quarter, core pressures we that to into -- reflected customers or the costs couple deposit kind increased we're to our points of in margin obviously, and the are deposit with the this continue actions with And to just of a And costs.Our both of interest net due then that play decreased basis XXX. the those core seeing. want yields still notes and competitive expect,

go release from to XXX Our an yield on decline. points same of had we XXX.And from back look assets we accretion reflects you last basis basis Heritage, if basis of a XXX our sections when up both back scenario, when take increase And quarter XXX that extra yield, of quarter. out that's, X XX to earning the we XXX. actually the good out at talked that from -- and points the in it quarter's increased kind that XX increases know, But you to that obviously, was actually you that loan number.So of last those of just points about for

to up deposit increased points last deposits costs basis of deposit cumulative is XX was And from costs cost XX And XX%. beginning XXX XXX. deposit this XX% beta interest-bearing quarter.Our though the increase basis or points cost quarter.Our XX since that Our of for our basis the points. from basis to then points cycle increased

$XX.X base with still number, J.J. a information last a point from So increase. you has increase our right give given million granular now as a decrease will annualized. XX.X% broker or we number.Our quarters in mentioned, The that that's deposit some been that quarter have good of happy declined at decline prior loans, But each quarter was little this X.X% it deposit $XXX we had. that.Our actually was deposit million. CDs runoff actual during our the that some the deposits with a look when of basis X.X%, you about did with quarter feel XX or taking and we've I which and we discussed $XXX.X more brokered But out line when that of acquired pretty million. then

decline. in and of some that's accounts line of some and accounted $XX.X million kind been.The seasonality of still with funds public we've for So our that where

of part well from the above limits. our are slightly So about ratio right that portfolio XX% some $XX as at from position to last in deposit due strong, base decrease just remains end. bearing seasonality deposit runoff.Our well.Our quarter ratios And Loan is our leaving non-interest XX%. XX% to liquidity is in deposit our of million did

is borrowing billion. capacity Our $X.X

portfolio XX% will in investment that $XXX You'll the of $XXX cash have of over that about And investment or is we quarters. securities unpledged book, about next our million. which our out million is have X flow

XX%.Our in a following ratios. from there was are of kind return and portfolio.And of line on X.XX%, will ROA our was equity for that be We in highlighted with average from ratio operating TCE XX.X% our quarter, then was basis, quarter X.X%. tangible So, generated our ratios also common the the our last on efficiency capital

Our was XX%. common tier equity X

was leverage back you quarters.So, -- Hoppy. I'll our X.X%. Our line all And over turn with in prior I to was you risk think base XX.X%, it to total

the little bit? that for about Thanks DeeDee. you J.J. Thank portfolio you'd to loan like talk report.

Yes, sir. Thank you, Hoppy.

$XXX you X overall $XX growth originations. finished one heard million and second note we've September quarter recall note to too. quarter. historically, in about now with think I just of million pleased the were thing Again, And quarter. in in the the on that's with that for high times the million million $XX up about loan almost very quarter X the the we net $XX or first And

XX% in to which September about originations an had in of actual compared prior seen months. XX%, also about XX% to loans funded overall We in increase of we've

get construction that for remains backlog the strong with quarters. So really quarter.Unfunded outstandings previous up those the of and end line us in helped

the did contract Mississippi legacy about and pipelines historical had of great did market. Our remained end as quarter relatively healthy the the speaking, this within averages.Regionally, quarter, team XX% a Tampa at but

the in from in hired Orleans began division. new, the to the continues division contribution We strong positive performer, team specialty see bank be during a was that second to New quarter.Private healthcare also particularly

here. and mentioned the uptick XXX quarter September, yields, XXX quarter at first end at and to month second the As of we DeeDee the finished the XXX. on In September the of

numbers, XX% acquired HSBI of the on yields with recently process business groups to upwards that we continue see entire our to got group new management in to improve improvement our and platform staff team. mortgage proud and the So, continue team. and small loan also lending month-to-month.Outside that in with HSBI workflow support We've and brought the retention just we've say, of treasury to integrated

pleased with So Hoppy. the overall, quarter.I'll back turn very you, over it to

George you, that. I credit Thank with J.J. administration. appreciate our

Thank you, Hoppy.

quarter, stability XX the to very Delinquencies see, of with in continue average credit the throughout I points. of basis We We And XX our for at most actually below metrics ended end quarter measurements. our the XX tracks point basis think, points real year-to-date manageable. September. basis finish that remained

recoveries, on year-to-date So charge-offs X.XXX%. an exceeding basis with basis the trend or loan now delinquencies.Year-to-date, the about red we've good positive recoveries black of moved into loan by in out annual

we a on with to a quarter of criticized of about submitted a in ACL criticized of million we've loans X.XX% continue at see classified had reduced quarter, with classified our did prior off capital payoff trend positive the trend to as and pleased actual in plus improved the borrowers good and criticized X to during quarter. That -- quarter X.And that. So so X.XX% pay loans, Total $XX.X C&C and compared classified in loans. end million, number were some assets. the We $X last over

again, with to them there, pleased move very those trend, some So evidence.So pay good loans or the out enabling borrowers that off. liquidity still

XX.X CRE have to your showing tick to segments attributable the total non-owner kind And C&D slides. So liquidation the goes process All a occupied But of of XX.X we not in Page loans, really percentage do any chart coming deck, larger NPAs credit. pie well of really NPAs, a material I as you was of referring we I'm That and by started segments are -- outside quarter it be that we the positive. flat.In slightly at expect larger did hotels mostly liquidation X.XX% from were loss that a again, the process. pretty loans, to on CRE credit continue nice in think that if weeks. still of -- total to balance our followed one large through categories.Retail X up And maintain X.XX%. one that of centers expect XX

professional office XX%. just And non-owner is X%. X.XX% of owner-occupied whereas Our occupied total warehouse/industrial loans, is then under

nice non-owner occupied loans. categories probably average larger pricing we those maturity some that particularly in all track.But definitely professional closely in again, by with size across most portfolio got one So, not tracked, we XXXX. typified reset that for do $XXX,XXX. range that that balance closely about most The loan a preparing is of manageable category XX% We've terms maturing through of office,

are district higher as the the ones.And in ours later.Unacceptable and X.X% non-owner-occupied prior business loans about that buildings calls, or have smaller the type in credit talked situation. currently an office portfolio, rise And in maturities office office we rated segment, really So our In we of of we've of a several some suburban rural good most quality. have mid-market stratification in substandard. the category again, mid absence in about

costs, So the producing expenses. right.And our our that levels we're year. cash thing we most a our these radar on [ but a flow And or analysis. to markets, of right capital XXX% additionally, the risk rising income management ongoing range update. stress risk analysis we're larger just million annual of is loan portfolio. credit CRE now that then credit office across in of Term only insurance maintained X.X based highly That's sure escalating within especially of ].Concentration manage well there some see movement, properties occupancy really make CRE to loan mitigation requires one for not It's continues C&D markets group insurance not across focused management providing on term titles with more coverage and that OpEx, as remains updated the category and and in in

which to regular early So we're considered our a aspects, a credit monitor indicators in accordingly. basis on continuing handle could to to possible all keep do in so continuing that stressors.So, on good closing, responding weaknesses, be

have Fortunately, seen that. of well, we evidence very little

throughout of continued trends XXXX. you. the same Thank have the and We balance into year

We'd our George. remarks concludes Appreciate you, commentary Thank the That about questions. up and open for prepared it. quarter.

from line of first with [Operator question a Instructions] Our comes [indiscernible] KBW.

might that's XX% as to you little But start around to beta and now was that quarter? here. challenged that we a So all DeeDee, positive just like guys the of last up on betas, talked of help I lending the we third quarter wanted remains, the that, on sense know running really where the had saw you But catch environment XX%-XX%, deposit promo maybe land following just I your quarter, understanding quarter. but we kind expectations expected stand. obviously me in get deposit a ultimately this closer we feel this

That was and might giving loan had was -- for Well, I kind this said, be generally, for XX%. probably you campaign calculating think Like same maybe around to of, really no that growth. I the aggressive increase kind we change of the the -- kind we be thinking quarter. this and of no

continue, kind of So that this will really quarter. this because special running I right our now think we're throughout

kind think of of So I we'll quarter. the a same see repeat this,

Okay. Great. flip side, helpful. Maybe That's loan just yields. on

know betas, Just yields get goes loan relatively a low. of loans -- and hoping feel trajectory piece you short But, guys from know where larger you rate still know to I the will, here. you a remain sense relatively loan have of term. if like fixed you I

of coming where in just an reprice. some this opportunity to scheduling So year coming and get to you of what's maybe hoping idea see due

as into maybe next year. this I into a think move is turns we tailwind the hope

our because then over you still in modeling about rate think a you're higher on yields, next -- most X I more you [ of about these much think at we're turn consistent points what it's the our putting currently, obviously, recycling will of kind have by of a next that fixed year, know, showing And that's I the basis -- with of floating. could fixed so book. it's ] run.So with much kind showing you into, saying consistent have because kind portfolio so the we this And margin but end what loans and pricing of see Right. look ALO year we when of from of the recent still expansion because

You add, Hoppy? want to

DeeDee to money public comments.But we'll of going we'll And we similar pattern. quarter. was this this our -- see we say, in seasonality if back continue it prepared eluded I Well, as our at I to in we keep margin, But know mind. about to kind in it. a runoff see her comments you talked look the of

that's to Because higher our funding X.XX cost So public going on current with that -- probably funding. is costs we our book have -- to replace deposit

That's Right. right.

So quarter, the first money then back that turn come and around second in quarter. over will

market So because of funds in. influx all we consistent quarter, during would that an expansion that expect things remaining comes there'll be

at So quarter, the kind a margin indicative really picking more is of X-quarter really guess. just looking than I one average over

Yes.

is of messaging as quarter through to like, the way think then really bit of right run the and next see about just higher maybe kind grind we to bottom Is a XXXX? So that? we a that

thinking so, I what about. think That's we're yes.

of on just of and see our Okay, expenses maybe come lowest saw at that even we reduction great. last we saves the last expect base kind an jump even still So talked the year you in I FDIC DeeDee, run And kind in cost quarter, you of expense quarter, the of about normalize awesome. see if especially expense we'll further next through? we tranche rate? as exit we That's premiums.Do for lower really expenses, kind a know then

premiums ahead we consistent looking million, the think at $XX.X pretty with FDIC I've I'm kind there. where at are looking and increase so. to that in don't I -- of

next sometimes, for know, for I $X.XX a it's, expensed things because same I you think issues. different the bit personnel that mean, the see quarter of, million in just be related, could we'll increased just of -- fourth that think kind in quarter.So, related I little year have you'll amount

this $XXX,XXX bit. could just a little that $XXX,XXX, think, over quarter. be could I be It

Our next question Fitzsimmons comes with from of the Davidson. line Kevin D.A.

we've banks reallocate different guys quicker do. of would all can Just which reprice to on bond them for had it's to proceeds earn acknowledge restructuring something right waiting about -- like is, describe back it's think that announced I contemplating you is or looking than at wondering, are those what and not transactions, some variables And come. lot you the a I radar, the that thing wondering, just not to always that.But that? you There's how it's

It absolutely is. in something at. It's Kevin. a now, run of right to that taking analyzing We're that we're the process our look

got like, on. the the we've look is we've to back like got, what Although, But pretty liquidity. good earn good impact -- your point,

that's So definitely we are concerned. something

borrowings And I where higher it's reinvest at guess, better it or when you is something better to it's to down either or? look pay at rates or it,

level either on I some growth we think Depending in of borrowings those feel fund reinvest it's down loan are, higher really Kevin. then, rates. or, the and uses to we'll potentially what pay It of the like now.

loans, for a Can kind -- number are frequency those options? do grant, that? pretty it what's stock and Great. terms of with going pretty of what's Okay. much ability what coming? CDFI the buying with of back What so to -- be remind there us, in of funding open with you you Is can or the do more different

a the COVID a are one was on. was X. that we go when programs There of grant. the Award. got Bank There's really this grant of different then Assistance a And wasn't relief There's It money. just reoccurring Grant. out are the Enterprise -- one-time it Financial that kind grant called special, several the called one There was grant

is back. are of grants $X.X Fund. expect So CDFI for that level, There's so or right nothing on basis, the and now.The that come an a on I annual board allocated wouldn't through about to on depending the drawing generally how grant they're money million other

are So those reoccurring. more

most grant So investment increase this it's $X.X it lending in markets. affected those COVID usage not near for level.The increase our to to the million our was -- and

markets in markets. the our of issue compliance -- many we meets have piece we that don't our so loans the normal of any -- growing requirements. have are those And It don't our underserved with, given business markets that, an function

already for In have fact, compliance we requirements that. the [ ] met probably

lot a Okay, opportunities one upbeat were in pretty last It small and activity. of extend to trigger just great. what lot for we're the -- having book -- about inflate terms be Hoppy, banks I And and in kind banks of a just given M&A you the me. has or must of facing.But seems the tangible from mark one quieted for market it to the, potential given last like potential and what think, environment dilution. quarter securities whatever hearing is of down

what or you're seeing seeing So a just little wondering if different?. you something that's a

that quarter. I And, I think you're view, on as thought optimistic with would I'm I But now, last not concur was, Kevin. it say right.

I the think there's M&A -- there significant still pretty space. headwinds pretty out in still

get lot it's I there's a difficult think just table. to them done, probably deals get to to of that like the but

Yes. M&A, outs to strategic potential something looking there that in And markets? you're Hoppy, is at? lift Is do without

some we're to do Tampa, of features some able I some we'll Jacksonville, think our strength our of that And at markets banks' maybe, in We've looking hopeful absolutely very then cutting opportunity cost some in cutting, is. of seen there larger an or there that programs. be late, cost a good particularly to Atlanta, bench of the cost reductions. of expanded increase are that's banks cutting cost through larger as add we've the point. And

question of Group. comes from the next Brett from line Rabatin Our Hovde

quarterly loan repricings us with you portfolio is in the 'XX? it -- but in the quarter, is is to 'XX Wanted that a fourth that loan and public on a margin margin the progression little come so. rise funds guys make color replace quarter, to got through give and second repricings? -- narrative so go just you have portfolio you of little I some in sure in should the bit for the sounds back understand and so it like you've to more fourth Or Can

Donna?

when don't to let ALM believe. I -- didn't J.J., do I that, -- and here, you report -- I in me you have do happen my bring

Yes. I've of maturity one got this scheduled 'XX.

you. got I

Okay. Yes.

About -- about X%. at

Yes. like -- like XXX over little that's million a This maturing. a looks quarter $XXX looks this

know, put potentially repricing. to So -- you

maturing, That's coming. cash count don't flows

None cash flow -- just maturing. Yes.

XX% whole hopefully during terms back year of plus you the If and was in that cash coming about -- repriced flow distribution. off look maturity

And markets? to loan to just seeing you there's little seeing get around maybe what for in Borrowers, a and then back, different maybe demand more they pulling color loan that deals in shape Okay. wanted full demand are because around the back get, how and you're potential? little a -- terms might growth more color back some? 'XX loan just a out of Are

is So, this J.J.

I think much from down in I've still said, pretty historical But were a line. an bit. they're perspective, little pipelines,

I George think a on have going that, more New pipeline they've because, the next quarter. becoming be picking are if of as team, So, about I deal? when the to or have mentioned not I the quarter. on the in lot shelved know, jury's you next some good. to requirements.We're XX% seems We're with that? not developers -- not this and XX%. this out.But I pretty that they for Orleans, do wondering of talking become George, do morning. the think seen that any had how or commentary I'm deals today, sideline. still our client seen deal, a in sure, have are base really We challenging up hindrance, it's on another Tampa were many got doing I is a really more still and, that good strong them if doing Atlanta. does demand So and put little being you deals a times equity a felt but that We've putting

overall, So, fairly things be appear strong. to still

of the traditional some some Yes. in that we've in where I equity some have requirement. projects months to seen investors concur, a equity J.J. past may maybe done their additional group brought with into fund of recent partners have groups instances that And us

served has several that us So times.

a still point. That's There's good there. out cash

finding ownership, of some think bit diluting guys but do I our be the little to of themselves they're might it. equity a

Yes.

last were the expense in year.Was you've Maybe a that expense, the there that for think right. since flattish think expenses flat that the run pretty the Okay. the rate about job can? kind maybe the just be beginning of one raise run I done Helpful. will sounded XQ, heard if rate? term curious for in And of good you me. slightly longer if in the of environment like as But you'll higher thinking in one holding expense given I was anything expenses same of you investing as strategy might Or run keeping out 'XX 'XX the there you if kind it

of to think be of that control on the we hopefully are about I But couple bit I our expansion -- in going regards side.We of we to last as just and Yes, hopefully, because -- that little overall, think next the -- can because that expenses, of in can strategy is have just margin. the same we focus to try initiative. talked a year. compressed And, on kind of about XXB something we'll see our our we talked quarters,

we have mentioned officer, And compliance legal this we a actually, quarter, analysis. lending -- and some quarter, so and Crow gap fair in we this quarter last hired, new our -- before, XXB hired we a folks, I chief ] do come and believe, are counsel.So chief [ the our to officer, have third which last

know, of build a we're little I'm of and you get place going as we kind trying do to in hammer middle probably that kind them. with in But So, processes to the otherwise, and procedures bit right XXB. keep associated get down for initiative, we of But expenses we the have and that's now, don't on up to know. the only real

the Our Matt from Olney Stephens. comes next question of with line

Any the deposit color promotional campaign on of more leading earlier. you those What of that the campaign? can mentioned back products? go that where cost to gathering are want I some to you're on provide and was some products with

is One what a out X Yes. just Sure. special. and with came What we're we things. doing is city

market. a city have specials our of in We lot

We are with also, X% kind X we side, money months. is doing Then well, X.XX%. market that deposit. a gathering market, deposit guaranteed X or money But, the of, on month it's a a at a non-interest bearing as

So product we've opened up that. separate a

can So, some money market this while we we're bearing gather hopefully, non-interest doing special.

those That's when more those market? color specials there the change recently? any are have And more been And Okay. introduced on helpful. to any rates

social No. We kind September, media. right of bit just of at on started internally. that We beginning of recently advertising little a started the just

So, the we through of kind year. end of to raise funds had it in the some place

we're keeping So it of kind at end of right year, through looking but -- now, the the

those really Yes. monies, to of Matt. fund of And in support some the set and growth, the public seasonality to it's seasonal -- loan replace just some

Yes. fairly, guess, receiving you're the how you versus initial would characterize campaign, expectations? And, net but volume your in I it's

far these are under We half the through so through little months. -- for X

So I good. that's think think that's -- I

Yes.

been it's think good. I

Yes.

the Appreciate guess color I then front. the there. And on credit changing Okay. gears

a decline? was I more decline in deck color there a read -- report right. if Any classifieds, nice the that think, out that I had on the that quarter, criticized, that there, the you put

we last and the payoffs quarterly reporting the rounds of the pace our classified continue some in attributable expect don't actual to of XX% grades. we've and seen us was see officers, was, payoffs. receiving we tax now rest we're now of level see of going give filing to financials it, the know, it maybe with rates.So, a maybe do some as a with in financials some opportunities particularly now. see. it our loan some will opportunities I The that some what credit to guess, regional more passing you migration, -- additional criticized, that I upward of proportion be updated that to I that quarters.But, in We're risk getting that deadline may at of of upgraded reclassifying About result of potential officers Frankly, through do from come think direction,

fees from that, fees the just one in quarter. Appreciate color Okay. I outlook And think Any this DeeDee, were George. strong or maybe here? then the that on more. the

on income? I Non-interest fees? Are you about the income think fees? it's non-interest that talking loan

income. Right, the non-interest

income fee in of bit there will recurring that quarter. was Okay. income. we interchange next think, Non-interest be the I think Yes, I not in a this had -- increase little our

the down received. next So one-time a that be of kind like our little we just payment It's annual quarter. in bit could

going this So higher it little that forward. it'll quarter, it's think be probably but, a

question Scott from Montgomery final - Marinac sorry with Janney -- line Our the LLC. comes Christopher

about to build to do from standpoint. see the these What First? it you for wanted mean continuing years? you to does CDFI a ask strategic the how to franchise of kind CDFI value I And a and question a couple of Hoppy, it next be

a They're what there's talking unknowns lot qualifications. CDFI, there's, Chris. right the now, about Well, of changing the around

qualified, I those underserved qualifications going always means what to CDFI.But in And so, know a serving with it new be in in lockstep requirements, are it don't we've us our order markets. CRA to be goes where -- to

couple grant programs so a And franchise also which lot of about, markets. dollars underserved million the of growing a was on there's to There's a year. talk go it. it's We with across But southeast.

forward.I those don't as markets So us to it's gives we it are lend the Those move side, markets grant typically in to and Congress. -- hard on predict. know appropriated an by opportunity those in invest

when the, exception tell award, money the So it's FA, with the reoccurring subject of Enterprise and Financial Assistance appropriation. and those sort Congressional hard Award, comes grant we're of even Bank much BEA is award is to how to talking.And which grant

on, think it's we mission. those So, part again, our important will continue an but of

means buildings sort back that. I'm probably scenario it? experience presuming a thinking than earlier portfolio, about you and really your way of to the different which one under lot real dominate estate office discussion back, the repurpose loss that in take for buildings. kind had from Got peers. of then story Is it. have low better And to the of that the have fair adverse predominant where amount You call, could story the a X you Thanks of

those do say to amount even our a least I mid-rise occupying many think from able a tower statement. optionality otherwise. the story a that's difficult you'd more fair But for think residential building. segment, that.I high-rise other to more an maybe at repurpose would or a owner part in be any fair square properties, use to a be It non-owner or of have in footage X even would I of X, a of or is lot occupied much

that But I also as point. that right in to consideration there's yes, your on, statement well. think is So,

that. Just income. we of few to for trying out one then, quarters, Thanks kind proceed? And next Does deeper a into Great. think level on just as that get XXXX? the the kind quick DeeDee, for accretion will you of that beyond how

them just on I a we think system, all Yes, of increase last pay accreting all pay that's now, individual the down it's they off. the quarter loans loaded function an quarter, a system basically -- or our from of we We fair from got big all acquisitions it and the on statement. on that Heritage as basis.So because had this getting had and

statement, first next that's are out through we year. right going So, here hopefully I level think to where the

Instructions] remarks. no to like would further I'm questions turn this at to Hoppy for it [Operator now closing time. showing back I Cole

this look everyone visiting forward quarter's you. thanks, your for Thanks morning. We'll to next Well, after for your again results. participation reports. Thank

today's conference. for This does your program. in you Thank participation conclude the

disconnect. now may You