FB Financial (FBK)

Chris Holmes President & CEO
James Gordon CFO
Wib Evans President, FB Ventures
Catherine Mealor KBW
Tyler Stafford Stephens
Peter Reese Sandler O’Neil
Daniel Cardenas Raymond James
Call transcript
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Good morning, and welcome to the FB Financial Corporation’s First Quarter 2018 Earnings Conference Call. Hosting the call today from FB Financial is Chris Holmes, President and Chief Executive Officer. He is joined by James Gordon, Chief Financial Officer; and Wib Evans, President of FB Ventures, who will be available during the question-and-answer session. Please note, FB Financials’ earnings release, supplement and financial information and this morning’s presentation are available on the Investor Relations page of the Company’s website at www.firstbankonline.com. Today’s call is being recorded and will be available for replay on FB Financials’ website for the next 90 days. participants placed all mode. a time, this have in been listen-only At call questions for be the The open after will presentation.

listeners disclaims by are risk statements During make as this actual factors future predict Financials’ risks FB results FB reliance detailed or of obligation a information, revise subject results or forward-looking of or may from events any whether any is Financial comments will statements. Many Financials’ statements and cautioned implied to discussion are FB and such such otherwise. the more which new Financial constitute and the in XX-K expressed are to facts in presentation result forward-looking such undue statements. cause update filed FB not to that A statements. this and forward-looking beyond other the ability uncertainties or presentation Financial contained to any on by forward-looking put of the of to achievement materially contained other performance and All or differ these FB forward-looking SEC. control

Chris to www.firstbankonline.com. of Holmes sir. to FB turn of In most financial FBs certain comparable remarks may presentation measures CEO. I comparable financial defined directly President the go the reconciliation non-GAAP these SEC on presentation GAAP ahead, measures at G. the Financials’ measures measures Financials’ A non-GAAP would and by GAAP over regulations website addition, is as available to now like Please include and the

Chris Holmes

your want exceptional service, to the additional quarter over for financial of diligent, our questions. our FirstBank our who thank this James to thank your call of adjusted in Chief of I quarter. first for results Officer, call, associates comments Financial. delivery results the We're Good our us to I'll the Stephanie. financial each $X.XX XXXX. interest review results and their on highlights is results on customer going review On FB quarter and of quarter, turn going which morning to with today's joining the with our outstanding first for in Gordon, I'm you, pleased satisfied Financial the then and of EPS Thank We appreciate you provide for our continued the our followed diluted We're by performance. call dedicated

first strategic plan. grew loans Our execution by our grew the XX%, customer reflects quarter performance of continued XX%. deposits We

average our reported Our tangible on common assets X.XX%, return and adjusted adjusted NIM was X.XX% equity on our return XX.X%. was was

goals two, to through exceptionally particularly our our team. simple proud two type We and that growth deposit difficult They sounds of XX% direct balance One, are We're between are of customer important versus our our across expect against markets. numbers peers, and we our strategy growing those And business. on customer but our of execute. and sheet continue competitive up deliver non-relationship wholesale to on balance given growth the our profitability. environment business proud deposit components

to Importantly our we more sacrifice than didn't though, achieve growth.

range target for are XXX improving slightly fourth over our still operating the is X.XX% a point the overall non-accrual also and for adjusted X.XX%, I NIM was leverage enough XXX and accretion our recoveries above Our and critical reiterate XX-basis to how to improvement profitability. quarter.

of banking improving overall basis points by efficiency enabled as XX.X%, to the our committed We XXX was which since at performance strong XXXX. is by we Our efficiency grow. quarter decreased segment core remain ratio first

or revenues over in conditions, led which XXXX. to up had banking X.X% face lock of a The Our XX.X% $X.X the over challenging of increase was commitments, volume of quarter billion rate the XX.X% of interest XXXX. the first producing mortgage in quarter mortgage team good quarter first market increased

margin of which in revenues X.X%. driver the rate in was line growth While correspondent commitments This our rates the lowest behind between of channels, of delta lock increased of the is channel drove most the growth showed XX.X% growth correspondent primary mortgage and volume our interest our across volume with we volume. our expansion of

to the to that difficult continue full forecast year, we XXXX. will be results to pretax mortgage contribution relative believe to XXXX balance While in year of similar our our

demonstrate XX HFI improved the underlying of the non-performing first recoveries basis the quality points. with noise quarter quarter, basis fourth points from points were non-performing to quarter points Mae Our XX the asset continues of loans, total basis and through to our X assets ratio net Ginnie the slightly XX cutting loan of to from basis for assets rebooked

believe be operating and earnings, solid and driven produce loan turn shareholder profitability sheet growth quarter James to growth core leading margins, for place interest This tangible to our tax on to excited Board XX.X% evidence leverage. continued common more share our continue strategy common the was by support total by demonstrating deposit solid reported to equity tangible call we remains profitability the detail. for April federal reform of We recent net well as us for driven balance Overall, and targeted and some financial momentum I'm our peer this payment assets which a return positive continues the generation capital our shareholder to as the solid XX.X% approved coming focused to growth capital dividend execution continues as has per capital announce the of shareholders of of also as initial record to in going to the We're review that With quarterly the over generation. XXXX. enhanced of as periods. by growth, to Directors quarter. risk-based in of the - balance Our profitability further to record of capital our in results of of overview, $X.XX foundation as company's XX, remain of to the

James Gordon

and good everyone. Thanks, Chris morning,

our three. to as quarter the I on for operating want First, results highlighted recap slide

delivering $XX.X diluted on an earnings outstanding adjusted common of adjusted $X.XX adjusted tangible XX.X%. were X.XX% equity and of return of million assets income Our return adjusted per on and an share net

double net performance illustrates year-over-year driven to income performance solid the the the the the demonstrates Clayton by consistent targeting. Reform are of underlying that we enacted Bank's organic more and and growth, acquisition trends the fundamental Slide was four year-over-year. allowing profitability Tax company's benefits than from recently Our

margin. income, risen portfolio. been non-interest our loan strong control deposit for Our fundamental quality. core stable assets five credit of has yields, interest quarter and fees the profitability. customer adjusted particular, to our presents deposit as elements low-cost base, balanced by first This Slide healthy to by net low-cost consistent on margin sound and fundamentally In X.XX% and and has growth return we growth, strong strong stable our the profitability expense continue improvement achieve supported a driven

and the Our reflection deliver is team NIM of our we exceptional a efforts services to for to value and strive the whom build of relationships customers, our trusted collective advisers.

is yields, interest confident for our our a cost and rate to tick balance competitive we range. Going up and the loan overall environment, rate X.X continued in remain short-term X.X forward, sheet but remain continue rise interest anticipate to we deposit guidance well-positioned rise we to environment. in net And to due current cumulative margin that in our that will base expect some improvement

net our We balance will between balance continue to margin sheet interest the maintain and growth.

growth targets opportunity meet the performance overall us current to these adjust supports our to our and profitability. targets Although

growth XX% Moving previously we in term quarter solid XX% loan as slide growth line mentioned, we on this have to target the and our next slide, range. six, long to with on And consistently loan perspective are growth. too quarter. by we get X% about our concerned a loan highlight, growth But apply and continue to a we longer-term typically don’t to XX% excited quarter

driven by This quarter is competition, future the within outside pricing forces the market such as we and credit can relative envision range, quarters risks. range being

Our objective focusing nearly not consistent, quarterly growth targets. is driven profitable relationship on

with to tied our concentration relative construction share loans longer-term. corner, to And XXX% the we construction and top remain development regulatory of development the of committed guided continue this to level quarter. commercial Moving be and real on regulatory to the in loans our staying We estate over XXX%. we right on guidance line

slide to seven. moving Now

in merger, federal year fourth growth XX.X% XXXX. the basis we deposit All this point cost quarter of balances and the up to temporary larger saw increase some of XX% deposits some XX% basis from variability the beta funds accounts of and deposits roughly these benefited Our inflows, in, of rates first X billion, total related the to previously they along disclosed on relative We from customer $X.X were up annualized deposit in equating quarter the during quarter customer going larger to from the forward. XX an basis last increased period and caused quarter. with our this deposits points target

cost year-over-year and half Bank acquisition. about our rates to is basis the half points XX Clayton's to the due due up Although are

beta our confident steady a base a on growing but focus As will environment, potential we slightly customer strength. continue [ph] pick we competitive that in for see deposits key remain up our funding remain to to

core term as deposits well We of maintain forward. to have introduced as products new the deposits funding overall going specials to

As as comment, quarter operations mortgage of despite tightened a eight in on Chris good competition. this we market banking shown opening had noted from our slide

Our first million XXXX, mortgage banking income quarter of is X.X% up of the basis. a $XX.X was in which year-over-year

as expanding build production anticipated out sure make overall mix margin the of correspondent in well As channel, shift compression. they're the in

know retail footprint pre-tax quarter Although the first of pre-tax total our approximately it important that mortgage including to represents is of X% contribution mortgage results.

XXXX, relative to revenue quarter to we quarter reminder, XXXX. decline expected fourth first had of a As the of in

and to volumes in of build third XXXX seasonality. second expect Going quarter forward, the revenue due we and to

earnings fully. change first create servicing, income from As forward. not adjusting believe we asset are going and quarter, the assets, our We as in state is value that in the disclosed previously excluding this have this volatility we the we will which mortgage less have of the fair

However, comes of line actual net negative quarter value moving from goal remain the $X.X closer segment. operating for This during XX% banking first record quarter-over-quarter quarter slide during a projected banking and [ph] of higher the pre-payments leverage risks the per our quarter. improvement adjustment million and of rates spite related year. slightly this we each benefit, XX.X% in ratio servicing segment near-term from On to typical a the XX.X% impact mortgage nine, due quarter to to efficiency in prior our our with did the impact in seasonal slight

Our corresponding ratio and continued channel higher the quarter-over-quarter primarily volume mortgage segment's pressure. marketing to in flat efficiency due was

see up. volume of second pick and other We to improve into of channels third expect back efficiency as quarters we ratio the XXXX move and

Our effective million in plan $XXX,XXX lower distribution XX.X% $X.X our additional first or benefit. rate benefit quarter tax based deductions for related on tax equity to totaling of is roughly the

lower we our XX.X% our previously the As tax rate will believe be in of end previous XX.X%. XXXX disclosed, effective guidance to full of year

to on to total optics assets of nearly the provides loans recording for remains related the previously asset XX, -- Next, quarter this as quality our strong as Non-performing longer assets shown sound company. rebook and no for and decrease slide decreased discussed. the our entirely foundation is the

underlying in by true Our quarter. is as which remains quality unchanged our great basis from XX loans asset classified of loans non-performing evidenced and points term last X ratios points basis down shape in of

on slide growth acquisition. Next our strategic through enabling and the XX, strong both level future remains capital organically

structure to share giving our remains sources XX% the IPO, flexibility almost financial that non-common by Since following quarter capital add $X.XX $XX.XX quarter to simple value per Our results. by relatively driven first strong our equity during our needed potentially the is us increased the or as needed. book tangible

assets capital. to the are now servicing revisions of management affect continue servicing that ongoing might to III discussions rights will our risk-based capital closely mortgage and of also regarding follow mortgage We treatment total the Basel

turn As to share, for your equity in the approximately With dividend to over portion this of Chris the initial our comments then XX% earlier, going shareholders' to open of we closing of call represents quarterly ratio and detailed are a to of that per call overview, to quarter. we'll Chris our form which a able be payout back the return for questions. I'm $X.XX pleased

Chris Holmes

James. first We to and quarter an outstanding had deliver profitability. continuing balanced you, Thank growth

strength in your that Our Financial solid investment highlighting FB performance our of Georgia appreciate interest was and franchise and We this business look open Operator, up my morning's for to and completes like our to diversified questions. next our Tennessee, of the call. our on markets quarter And across and now forward Alabama. the in remarks expectations growth. call updating we'd you for continued


take We'll Catherine from Instructions] KBW. with [Operator quarter you. Mealor first Thank our

Catherine Mealor

Thanks. Good morning.

Chris Holmes

Catherine. morning, Good

Catherine Mealor

Is targeted Can you've range, it you talk XXX that your about accretable Thanks. or kind been that to James, lower XXX downward? NIM mentioned of bit in remains quarters. above the X to a past the brings but range? is that XXX or really just little back your mostly for it yield you margin outlook deposit betas, down what from pass

James Gordon

so accretion, It's the betas deposit at the going this we're targeted beginning beta. on really XX not goes really range the outlook could I'm state really more It's for so take Yeah, XX to like X as at funds the cumulative basis It's points it's due straight due exclude to say to exact that that. to up more quarter. that to it betas. while see just cautious quarter

overtime, basis have in You've us that rates XX points look really well Bank. to Clayton the XX and help and in we or I up got check blending to come from roughly another XX as fairly XX up think

on full the So, due balance thoughts times longer-term Federal our over rates coming rates - causes with the through asset two, three, I cautiousness not side on mean the of the to pricing, benefit near-term competition that that due initial and really really raising four lease from is that may sheet. and really the deposit it get the reserve where not outlook, the to of

really the So, interest and rates with deposits. and really outlook associated cautious beta a loans on is it's

Chris Holmes

that just out line Catherine, Chris. And don't way we're of think here.

as - to said that ex and non-core So, James that's the XXX accretion. is XXX

last this we're quarter And at XXX, XXX. at we range, in were quarter the so were and we so

So that's just range. the above

range close And to core the the at look high-end when we're of just you the so, NIM. pretty

Catherine Mealor

points, terms can keep that for you're bps clarification. what that yields it. the of Any and you loan to yield, Got commentary on on some mean about was in Thanks color although And competitive of getting more are your loan just you're hearing terms loan ex-accretion. on this rates that We asset data, the how now? higher in your thinking forgot right more I and Thanks. but moving I quarter, X increased loan give yields and seeing that side. competition there? then

James Gordon

Yeah, the competitiveness the a little loan color side. just on on

not we I guess a what see are of to think we're lot you same hopeful. seeing up maybe loan similar thing have the We're on we the - movement I we thing, both mentioned. side,

we're maybe up. to any It's moving optimistic have it And quite that evidence both the tangible tangible don't so when duration. on rate the but it's we and put -- much way, stay we say, competitive

to still we're - that willing And longer-term the on how to far we're -- term competitive we're we go and that we this deals our the term. some are marketplace so, frankly, front. fixed can't see in surprising on still rate But somewhat

we differentiation don't we've I said get so, any we And think real from what hearing. been

Chris Holmes

are we're Catherine, XX-XX lowering add fixed variable. some of also at the seeing even I'd we tightening credit or And roughly And on still spreads variable side.

points portfolio yields was basis the that through where So, contractual our probably existing majority of the X quarter-over-quarter. on came

continue And paid until as so well that those hopefully. will pressure to be difficult

Catherine Mealor

last of James construction kind capital. is my your mentioned of same topic. then XXX% the portfolio And that on you nearing a question

managing enough feel this other So, growth that outlook level you categories still to or got maintain rate? impact do to you've momentum like your in growth

James Gordon

adding asked have, non-construction growth our We to on it but more Yeah, they're it haven't your we capital or we've related. and than be aware have them. so have if we capital the out also we're lot the look in market into consideration. at that's of but is, since Because a of a relatively anything in market rate, construction M&A lot it make sure of let to Catherine focusing little and it teams our building try fast But affect banks that generation manage we outlook. there do a are to M&A it

a $XX we've this say around had had And happened to And to the my our was this also consideration quarter, and in are what capital reduced lost from capital ratio. in so, in the volume volume, dollar roughly in I'd comments mentioned disallowance that on $XX by also, keeping it two make. impacts risk-based we those million that the or risk-based XXX rates, - really I could that's about into alterations the the We or that total mortgage million MSRs pick quarter focus that which a that total particular, have stay I time because going hopeful be tighter around we're servicing calculations we put forward. to below we that pressure. or capital longer and full And that helped the and will relief where a would in that really long-term by and little until think that be reason we MSR XXX% happens - are could term

Catherine Mealor

great Make and much sense. you, Thank quarter. so

James Gordon

Catherine. On our the we've range because And about up it, won't to for those management you, stay just - We long over term, just XXX%, that that own regulators we perspectives. in that. with relations. talked But either on prudent one don't just for we management, think Thank just want the from that's of we another. risk internal also but take don't risk parameters regulatory make

Catherine Mealor

Thank Understood. you.

James Gordon



Stephens go with next Inc. Stafford We'll to Tyler

Tyler Stafford

Hey, good morning guys.

Chris Holmes

Tyler. morning, Good

Tyler Stafford

Nice the the servicing portfolio you just closed size comments on of at of end the What's quarter. start MSR. to with Maybe around quarter? the

James Gordon

Little over billion. $X

Tyler Stafford

I've up at So was year-end? from that billion that $X of $XXX end the was X.X million, year. got the

James Gordon

little it's over is asset the $XX sorry I'm Yeah, million. $X and billion

So It because during was due maybe fair that. misspoken as assets written the the is that sorry. to as quarter offset I well --. of production increased value the up up I'm primarily

Tyler Stafford

Can your long-term any are the the you'd that and to size of over become, you this sell year? portfolio. servicing about just, How plans that that some like comfort of talk there there to level James with large

James Gordon

direct we our Yeah, from to. There and from why of be not as regulatory relationship But and want of our into that kind well portfolio previous in on customer retail will market are also a it to of that the levels we production that keep ultimately some do plays indirect focus. if providers are third-party looking comments so get. sale certain relief any in on segments we

that relief get into playing be that that. or will looking capital So, we with also any are we to hold probably shrink and the

as opportunistically that are of portions we move portfolio forward. sale up So, we to looking potentially

Tyler Stafford

it. Got

Okay. Yes.

Chris Holmes

the the something conversation. something having it's to the three, the have four our case. will grow something it's asset. not even profitable along of we in of love of it's look that in that that gotten internally but merits not really goes we're part Where do conversations our we with be - board. as and because the debate grow that It's looking that it But like footprint, generally, business. to regulatory we we relief We it where asset, if at topics even approach, We asset, not up

Tyler Stafford

that operate it Is really the above Okay, thanks Catherine's for the near deposit betas to range bit term little a higher maybe I much question Chris. from I deposit would the would Maybe that maybe or think long-term market. to be read back your accelerate you that going least margin. to commentary to fair I in not about at XXX% it have would near here? as harsh pricing Nashville mean from the be thought as until

curious could is I'm positioned the in range they above fair a that. will it where just now is are you So, operate think doing you term? long-term increase, near missing? there course I'm bit that that above little something to slightly that maybe but Yeah, of Or

Chris Holmes

I can bit certainly little in operate near a we higher the think No, term.

at the at possible. look to as look and much the will much both out take volatility way of that be And deposit you constructed, we've meant then changes. our It's portfolio. betas the as try you If with deposit rate out the to of following

on the actually management if bit commercial balances where are particularly with deposit a – pretty side lower were our about pretty it's say -- as probably our which you little is say wealth which those the betas to the look competitive book, and of having some nice we're the for fairly got the on having - I'd competitive. retail quarter. and at betas little of stay type betas staying we're a XX% larger pretty competitive, larger And we're bit to so, maybe We've

got actually so, And lower. pretty book. good we've was retail retail And little

side. it is of funding stay balance our we're sheet, on your while there a can So, that to we're which that two multi-deposits a are got for answer balance and to we've where committed sheet maintaining customers - we're balances has or growing three the do depositors and up, funding we question, we're optimistic And in also balance on higher have but - in so that both that loan we both creates important end, they that side, dynamics rates we sheet, are move some are as there sides few us. on and the side larger the also

relatively we'll deposits is, to large balance and out movements the of they And as to move have so, in we our can so funding, other And we'll broker dynamics that. have continue wholesale continue mature. leave sheet some to

in pricing. And reasonable growth general deposit seeing so, but we're with

So, price. mix. we're deposit really reasonable growth good in We're the pretty seeing all thrilled with

Tyler Stafford

Chris. thanks Okay,

James Gordon

was near And hopefully opportunities million Yeah, we well. that. broker we the the, can the still I think on I reprice side or in can There think about so I have as for do near-term rate term that down bigger where think opportunities are last operate some and that that we XXX got keep well as some quarter. about $XX could

Some asset into relative deals ultimately that where competition. also of are to the go will the play

really So, would a come stay could and into that upon in and competition near-term overtime to the where higher moving we we that forces. depending market parts of lot expect to the that down it's

Tyler Stafford

loan thanks one James. Maybe Okay, that things. the growth side of on for just

What's consumer loan the to be few portfolio? of the growth. running And consumer in there been how headwind less remixing the off where closed. of kind quarters somewhat more since is the we'll that headwind of Clayton portfolio go then has last to in from a So, that, of much a

James Gordon


banks, and business. most consumer and little and loan is so, deposit markets growth doing that generally we from -- concentration the out brought I'd through got community high probably of same get loans. that's home Our retail our higher that business a probably markets us less growth our places other like and to installment consumer business. But type it's reference We are business that banks of lot -- we're coming retail of less for that typical got equity portfolios of us that a are doing it's are are within in say a have

projections always move And We in forward. to growth, with that something a we flat. lot built we near-term of least will in least be hold at we're happy doesn't in our growth flat. That we not in had relatively to built near-term it but it's be the going at that, into it's trying the so, as mean that

portfolio. it that loans The impacts into mix fall the with a whether consumer other can land is Those retail or depending mortgage on housing either associated the thing there manufactured it. mortgage is on and

a So, it a we growing versus has the components grown the change little on headwind been and acquisition. than flow And better mix. and retail do that. the the and that that's not of housing consumer mix, of is mortgage the where since has that we expect more just closed we but to mix and that bit changing the on of slightly the that But in manufactured depending customer to really true kind mortgage a continue side the side consumer, side of like

Tyler Stafford

Okay, very housekeeping. just from good. me one And just last

there Is was The more one-time quarter-over-quarter. so $XXX,XXX that? in or line up item other anything expense

James Gordon

equal. that expenses and other - normally would I $X.X to we about would from And a the call paid and being being bank we that the from it that believe be. there will kind non-interest kind adjusted side, in first talking quarter that the on quarter call million up wouldn’t the down would We also total would quarter the that in so it mentioned expenses, extended in just we million in of be will instead more upward. improve make continue say I all first of call I seasonal expect happened time on would more run be I’ll it things we to our base cost seasonal but the on things rate that incentives

Tyler Stafford

up. guys. Congrats quarter, Okay, very clearing nice good. for that Thanks on

James Gordon

Thanks Tyler. All right.


to Peter Sandler Reese next go with We’ll O’Neil.

Peter Reese

Morning guys.

James Gordon

morning, Good Peter.

Peter Reese

of the answered, little in mortgage been questions obviously, just and guess you going of held in pricing of what kind but volume pretty kind and color are dynamics I pricing the terms think a well, the pricing give the was forward? have around what Most bit or maybe floor a but of for down of my if just this can you do you

Chris Holmes

Wib going here our is manages mortgage segment. I'm Thanks, Peter. to Wib, let who

you pricing? why don’t Wib So, on that comment

Wib Evans

is that across so we continue to the I footprints volume. see would but be we’re we'll to to ourselves continued Peter, down see as very volumes minimal how to well think competitive margins we’re both we’re you and I price, what about Yeah, cautious some even to have we seeing everybody is overall floors so that some seeing and as have and across closer just in our pressure continue that industry pressure and expect and on pressure, industry with for we get going is those compete obviously the

James Gordon

was did quarter comment we that. a And that in of we one fourth have mentioned unusual one of dollars we analysis the margins that kind fourth that that had a of plans got the our so quarter thicker in as event well, bit previously little added million or

drop, didn’t it in on the kind quarter totally business. the reality from of probably fourth just it the was elevated So, overall

Chris Holmes

a Peter texture. we towards mix or see further in bit comment changing that more lower you’ll the the across too, that on area things one in has little being weighted margin is heavily changing have one our channel correspondent which group the And that of our across a

Peter Reese


couple that’s any And the just in quarters, near Okay, of outlook great. kind next great? terms do be kind there maybe holds color the for at it any accretion, current of would range of of least you there, think

James Gordon

the us so will remember be wealth begin of to beginning in in you is to get a of amount slowly gate a I from the accretion ago is kind but it begin have reason the will off, fair tail routine with of that kind of logistics. should the Northwest level. something other to unless or tail of which tail normal that trend It down, it Georgia lot large two mark a those acquisition one significantly. out the and It to prepayment calculated call from there not years off of off will relative like tail we’re begin also off

Peter Reese

the just asset I -- on just I with that repricing to was one side. does sorry last like mean look kind rehash But hikes? additional the you be what less that forward see Okay. the Do little points you of here. X is it bit basis side up commentary of quarter-over-quarter of contractual on feel upside And yield asset the or you so think like a a kind maybe one maybe rate of your magnitude was going less NIM

Chris Holmes

as We’ll the continue rates rates see move see portfolio that variable up up. variables, of up our to about roughly move we’ll so on side XX% move

we’re significantly haven’t On the fixed hopeful. we moved seen we’d more moving, that it Again, we this and point. it hopeful side, thought just seen now so right at move than but we we’re have haven’t see we

James Gordon

We some of the growth. cases to pressures long or in competition maybe than would equal the deposit are say greater

Peter Reese

thanks much so guys. Great,

Chris Holmes

Pete. Thanks,


We’ll Daniel go Raymond James. next Cardenas with to the

Daniel Cardenas

morning, Good guys.

Chris Holmes

morning. Good

Daniel Cardenas

question or loan on pretty your sequential some much the in this there decline is banking planned or community pay-offs markets, where looking kind is paydowns at the of quarter Quick balances, surprise that quarter?

Chris Holmes

paydown are and generally we markets that those could continue we a that markets markets an little make Yeah, what that we smaller we a but the in we're and plan small one of one a working growing of a up, wouldn’t and never as and to and significant on. to a in will – those that then perhaps it’s more continue, so see have are loans paydown maybe markets go those we some most - also margin have we with certainly particular built good be do trend places in, one they get to trend overall loans but always basis, they numbers on we it’s work a not that of it's it's in down, some larger been but occasionally in go so,

Daniel Cardenas

it’s And you. like quick that on now maybe side, from M&A go levels putting Thank through valuation color would nice the mean a then I it a see update M&A, I imagine of right excess some priority, just given buybacks what dividend, looks and some that on you’re little maybe to a probably are to there? capital be use that

Chris Holmes

Sure, Daniel.

are interested M&A on active front, On we M&A in front. the the

go are liquidity look for and of – or down scale then a are us. for we through and continue at obvious culture and self-explanatory look our when necessities we way We geographies, agriculture at the of take a things kind go to profitability and the series kind geography think I we that look some priorities and it first the

typically and little and hurdle, we then we and now have types other discriminating then on half given even down profitability, allow of the institutions. and because of frankly gets parts and competing the sometimes so of of to market can, down where liabilities competing terms not it’s to and not that will into you expanded get APAC, liabilities a we don’t assets a those, into not sheet them that investors a you we wholesale frankly pay do for capital closely can we are least they tough balance few take only better the where assets less the dilution. Alabama significant to trade, wholesale it geography frankly profitable premium so our willing and our and so two that those pay are they for less that EPS higher premium get Carolinas are that, that, are they against at these that markets. generally we lot liquidity take and be And Virginia that half When we there we a higher valuable/. look to against to competitors the banks a even And a them into at want goes some Alabama, and over As Western accretion Georgia will performance also take of out when

like and So, loans sheet customer made deposits. we’re banks us that balance a for up have a that looking

if and something find frustrating eye we and come can said, could replace and that gone option can those we you active, pretty as take But, help we're figure lot those would have do balance are to that us little institutions keep bringing try us, summer to – we don’t discipline we looking these cases there. discriminating, investment some us. current you're [indiscernible] be the can did dilution we would material acquisition competing are We way. will a really be capital focus not we to -- so, of that we hope on capital against really we an when that can I to are you and drill quality our - it opportunities. strategic take looking. are capital we’re competing can in us. grow but when some against and so making bit strategic mediocrity those the very a room we just think high capital only it and sheet bankers to be good And all keep institutions because that's right capital some now they continue do dilution, it things where it were that acquisitions. in at partners a be out with to show some are for being little difficult But going that's how So, or high-quality out We as We investors, only by discriminating the and to they

Daniel Cardenas

quarter. questions Congrats good All great. on answered. other Okay, a my been have

Chris Holmes

All right.


[Operator follow-up Inc. Instructions] We'll Stephens from a take Stafford with question Tyler

Tyler Stafford

just Hi, was just into me a the there to for that grow you you around ratio overtime more guys targeting? that If dividend. guys, would like payout one

James Gordon

kind to of a XX% about, for and a sense We XX%, at just as ratio, about thought the thought We think set was what doing looked payout also we start. that's others looked at are LC us haven't really and makes we second.

well. you typically to always and and and slower view our the dividend lower to at the out look the board trends we at If as our continue you we trust ourselves have way started look or history, improve that's

future But it never got map we to moving course of set that if out targeted overtime. of any ratio. so, plan up payout And goes plan, something haven't we specific which to on we according

Chris Holmes

want in The to use because to returning Tyler XX% our shareholders still on keep whether that that, other we thing it to we want acquisitions greater. our organic growth, return wisely, and it's intangible capital or

on as of it's our of a the mixture that depending growth things the those that a balance and of well bit like targeted So returns. and acquisitions profitability as

Tyler Stafford

Thanks, Very guys. clear. Understand.


no further additional for the questions, Holmes Chris There remarks. Mr. closing or to turn like back over call are would I any to

Chris Holmes

Thank joining call. us all you on for Stephanie. Thanks the Okay.

always, company. forward good a investors. the your we support We you in to very the we as Thank move one. appreciate As your had And we we appreciate interest quarter next much. think and


will you conclude your participation. for call. Thank This today's

may You now disconnect.