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FB Financial (FBK)

Participants
Chris Holmes President & Chief Executive Officer
James Gordon Chief Financial Officer
Wib Evans President of FB Ventures
Catherine Mealor KBW
Peter Ruiz Sandler O'Neill
Tyler Stafford Stephens, Inc.
Alex Lau JPMorgan
Christopher Marinac FIG Partners
Daniel Cardenas Raymond James
Call transcript
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Operator

Good morning, and welcome to FB Financial Corporation's Fourth 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 Financial’s earnings release, supplemental financial information and this morning’s presentation are available on the Investor Relations page of the company’s website at www.firstbankonline.com and under SEC's website at www.sec.gov. Today’s call is being recorded and will be available for replay on FB Financial’s website approximately an hour after the conclusion of the call. participants placed all mode. a time, this have in been listen-only At call questions for be the The open after will presentation.

to forward-looking to federal During put make filed this other performances laws. SEC including risks facts statements. other the is by more results cause undue contained as uncertainties comments may subject All securities recent FB update and in Many to any Financial's with which in control constitute that detailed the XX-K. most FB risk presentation, implied by FB Except or forward-looking periodic achievements FB or forward-looking statements of this expressed beyond result Form reports and FB statements listeners and Financial events as or A predict and statements otherwise. are a description presentation FB forward-looking future of or current are of and Financial actual on forward-looking revise to reliance to required of statements. any these Financial Financial’s are information such results or contained disclaims Financial’s factors differ ability obligation may materially from whether under law not such any new such cautioned and

SEC's President to Chris presentation would at financial In measures www.firstbankonline.com to Relations GAAP release, Holmes, earnings the GAAP are website Regulation measures on the as include Investor under website of comparable morning's and over G. the FB page addition, these reconciliation the measures most which presentation certain available SEC to comparable remarks a information measures defined on FB I A turn the company's CEO. supplemental by Financial’s now may at non-GAAP www.sec.gov. financial this directly and presentation available and financial non-GAAP like and is the of Financial's of

Chris Holmes

We the Gordon, Officer, then you for our morning, in and additional appreciate Thank be highlights fourth of then James quarter analysis and you, on turn fourth call, questions. Chief On quarter XXXX. Financial results today's review our thank I'll your and of the call results FB by over I'll to will Financial. call to for review us Good your that financial joining Jane. our the followed who this will on provide interest our

This balance growth. quarter continue we to see sheet strong

Our deposit same team the and that. I'll I covered to while true main and Well update themes and to an also on those, transaction and hold branch the add experienced. want assets M&A and of due the we're margin; Capital we each address growth profitability and with XXXX fourth, second, than our credit; annual themes equity loan less growth third, company: quarter continues great deliver a mortgage I'll mortgage; capital. since have margin First to signaled were outstanding heading organic pending, we also of Atlantic proud we a Those previously returns fifth that Last on those, solid provide topic quarter’s tangible results this for results recent of for into and quarter, growth I as compression some balanced primarily our foundation four have but

growth margin, once again over robust our growth and we sheet XX.X% with third First, showed balance loan covering growth annualized quarter. the

future. strong robust to demand and loan the opportunities expect markets about resulting with see in We're very companies For increasing for to XX.X%. with and grew given strength good the our vibrant core loans economies fortunate be steady for the supply demand of we a continue to investment markets, lending year, held of our foreseeable we in

deposit we of management growth on we margin. relationships within process to additional to tweak XX% target intend to manage and bring continue our as focus XX% to that and We loan the long-term range

deposit has customer X.X% side, XX.X% liability annualized quarter. fourth robust On XXXX been at for the for the and growth

customer has the growth cost over most the our with quarters time year the incremental growth last of the of deposits. However, challenge deposit coming in biggest higher in become form low-cost couple of

Our over the business it be, a years statement execution on portion been as but because the execution, focused of that's have not not deposit has and of our last on the a fact. couple positive didn't to it’s

high to future deposit core growing deposits that a business quarters. Success we relationship in comes relationship for results most So slowly, result priority managers. show in over is our of but a expect

Capital We to deposit of by competitors liquidity to by The to on recent background the also to institution. our organic our acquisition for us is understood partner with embraced interest loan is deposit growing accrual new deploy close to demonstrated another transaction. over slow We're very for criteria for leading The but decrease growth, focus addition, is with of the many lower funds viable and once we margin the be we’re Atlantic that margin pay the the the collections viable and more borrowings look will high in will the X.XX% than our deposit quarter. to down which as deposits Capital this the important seeking the to funding non community Atlantic pressure current many range. first through quality our X.XX% liquidity we our branch loans than in close sorry because to long continuing quarter a I'm decrease transaction transaction cost term the acquiring geography spreads. is -- yield -- on most the banks to decrease core and of is growth, as X.XX% in the term. the yield, is decreased relationships in of to one accretion our higher believe flexibility excess of in the to margin deposit short we'll loan cost less throughout growth acquiring our or deposit branch for once of the and our us the Atlantic excluding loan the banking on opportunities. model less put solid In we net With we Capital the Since see M&A opportunities growth our portfolio the pressure the in evaluating to and NIM us that and portfolio core give for cost loans it activity. acquisition We continue will us bolster customers avenue deposits experience incremental are anticipate our

a like a million XXXX. away shaping currently for the going contribution Our year mortgage $X.X the else in $X capable retail income and million pretax operations loss the fourth to to of for second quarter XXXX footprint million challenging contribution reliability, industry, a half full to up including $XX.X is for quarter any be year total of contributed planet in XXXX view. mortgage the the compares XXXX We stay of our million so year. are $X.X not we're of of This the and of on mortgage to from everybody degree predicting volumes for that. similar our with

to job of deteriorating credit don't mortgage business and loan metrics in the our loan in in owners than growth, be evaluation we demand markets. Our in We're credit. XXXX high strong is We a with employment environment. good benign signs confidence portfolio to our continued seeing Credit have on ongoing performance results of similar reflect to focus delivering mortgage and this XXXX. expect quarter continue better

approach Timelines, is are position all in and to manage and the our transaction, Capital conversions tool part growth to with that quality especially conversion. pleased margin those of maintained in table. Atlantic will we expenses. levels returns about Board the of of Georgia authorization that scheduled. Atlantic and as have people excess FirstBank our We're delivered previously Both from teams have the bring East our transaction Speaking that with this and are briefly the managed of use excess corporate solid of in we the strong addressing attitude but build a with M&A as summarize, of and and branches loan quarter, quarterly Capital. dividend be buyback integrations Tennessee equity, The to everything approved that acquisition that and as that Capital's the a strength of on joining one announced our Atlantic are capital. of deposit and North capital our capital, assisting our capital the the Directors solid remain for the To another those continue $X.XX

typically over deal our in those more We're With results store. than less between we overview, compressed results about the results were our XXXX in in and I to turn detail. to organic some our has to what excited we're branch James our so our prospect, want for of growth year that delivered the review the in call team our margin, returns outperformed results full Our delivering proud of and mortgage but even most peers. Sydney

James Gordon

Thanks, Chris, and everyone. good morning

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

Our per on net of on year. share X.XX% return common on assets adjusted adjusted of we an adjusted equity $XX.X return return adjusted and assets XX.X% on produced diluted tangible an X.XX% earnings delivering income of full adjusted $X.XX common an XX.X% tangible were million, of an on and and of return adjusted for equity the

organic last Our our driven loan of mortgage performance by as $X.X $X.X loan provision as and to fourth by year higher quarter loss our the XXXX million, was growth robust of for versus costs due outstanding operations. funding growth primarily fourth well quarter losses million from offset

versus XXXX months primarily rate of for well was the performance more full seven tax the mortgage lower Our by XXXX by as driven Bank of year of growth, Clayton the acquisition decline as the overall. organic offset

demonstrates performance that underlying four. and targeting. slide illustrates fundamental company's the on the consistent It we the trends Now profitability are of

level elements yields, increasing of franchises' which deposit healthy highest margin Our was for growth, costs. of remains with offset sound control quality, and our sustained adjusted and balanced challenging presents five margin. fundamental core The earnings X.XX% return our environment fees credit strength core interest profitability. Slide net demonstrating being and while expense the profitability a by growth consistent portfolio. mortgage a In durability fundamentally and loan the by on has and of among our enables loan particular, power, the the deposit that average peers, XXXX, driven assets been our slightly

from As accretion interest the along minute due margin collections customer X.X% quarter. deposit million the Chris the with remains balances third the loan full full strong of interest excluding to our a quarter. fees But that margin, we $X.X mentioned, impact at to net Accretion the partially rate interest the speak this decreased in collections. our our third the about X.XX% quarter, last increased of time nonaccrual nonaccrual and deposit in the or and Taking cost relates time of deposits quarter. impact felt

income interest December since of lost the One towards at that lower we at cumulative the remained rate is our of margin for had interest third the think the loss net margin approximately XXXX portfolio data and X.X%. quarter upper our increases due began in the to peers and in impact is However, end million balance. fourth mortgage XX% income our related I In we to interest quarter, $X sale than times is left piece production. that had

balances we've of we additional to mortgage, lower recently approximately million some that As in at and the asset increasing the year. portfolio in of shift forward purchased That $XXX contributes go the the decline margin. anticipating securities earnings mix end

that impact now, forward the to five Atlantic considering that the any margin points without approximately and closing Right basis that is we the from Capital net interest inclusion item accretion Another diluted the to transaction. of going will will XX after acquisition. our be margin estimate

markets about the rates. feel through beliefs continue Feds throughout we headwinds of cost ongoing the margin, rate anticipate of for We funds continuing their particularly good our strength seeking raise customers target if the to XXXX, but relative from our our higher to across to

slide onto six. Moving

believe Chris growth at we another range. but of As XX% settle XX% mentioned growth, previously, robust XXXX. that XX% to to will finished quarter organic in We XX.X% the the back growth in we long-term we loan our XX% produced target above year

not costs. and Our objective consistent, especially remains funding given profitable growth, increased on focusing targets, merely relationship our hitting quarterly

to expanded not thresholds on Overall, construction development real comfortably levels ratios. regulatory estate costs. similar commercial also concentration deposit loan the pricing We in at stayed has and within

of However, from our have portfolio variable being approximately to we XX% or prime tied LIBOR benefited REITs. primarily

curve side, have yield and pressures. fixed-rate flatter seen the the On not due overall same we competitive lift to a

moving slide seven. to Now

of X.X% in an customer third X% and of $X.X quarter quarter noninterest by that Our year basis escrow were growth the was impacted decline deposit quarter partially impact annualized deposits. this million servicing customer $XX.X quarter. a from had growth range up decent this more the deposits We was fourth mortgage in bearing XXXX. for Without the up XX.X% the on from billion, last

we quarter, deposit a third this from ran up the the half of promotion move that the increase costs of we deposit second that believe the more the saw was we during While the catch-up quarter. magnitude of result

however to will to We loan base grew our continue deposit as increase fund costs deposit see we our growth.

to the we year, pending latter However, by we since end we bring promotional of have excess quarter. little In see mentioned. XX been to XX time deliver basis the rates deposits home third million able deposit of of half as Chris to points as expect from our $XXX relief the of a this deal approximately the branch bit

Turning X. to slide

During mortgage the our fourth retail operations included. quarter, is $X.X pre-tax when loss our total a had footprint million of

is our only approximately total income mortgage XXXX, For in company's pre-tax from X.X% equaled the adjusted which contribution XXXX. of down XX.X%

competitive the billion to pressures in weighing on towards margin. year, expense quarter quarter declined some and strives rightsizing reduction the $X.X billion quarter. the both serious are last from $X.X volumes We took environment REIT during Our $X.X last to compared channels pricing of lock billion the during and quarter fourth the and volume

overall XX.X% expenses quarter near the Banking market We this in compared our movement target. XXXX of slide compared quarter-over-quarter need in to XX% prior should this the is see by to the while for segment improvement of hopeful primarily full to margin segment our steps from monitor operating are with as but modest ratio explained slightly quarter for On be XXXX leverage which that taken, efficiency X, decline continue our XXXX. mortgage The staying show the additional year ideally pay-off to – declined were we if XX.X% stable. to Banking

interest technology revenue across grow in range in expense digit We mortgage expect mid net the producers growth XXXX. of excluding expenses segment additional Banking related to single relative investments and and

effective for tax Our was rate the XX.X% fourth quarter.

expect range. tax we to XXXX, rate XX.X% effective to be For our XX.X%

quarter our XX, Non-performing legacy own couple we the with shape. our and to on non-accrual, in one on remains assets downgraded loans on a company. picked remains our the bit the whole strong as shown provides for up had Slide a a quality assets As sound asset solid foundation for going credit of but portfolio

of loss the five by of loan for driven of quarter charge-offs acquired basis basis six loans points As growth, largely compared net as the points of and XXXX previously renewals loan to our and expected, average charge-offs strong six fourth of $XX was million and linked-quarter for loans provision net of quarter respectively.

driven after the share by organically shown on $X.XX strong non-common Capital X.XX% our add increased Our results and book at accretive flexibility enabling potentially first future through transaction capital XX quarter quarter relatively Banks $XX.X, and structure levels both during the Since has Our as Atlantic as and equity IPO – financial the this needed remain us growth remains slide capital or the to sources. simple our tangible by Clayton year strong our merger. value per giving

in to ratio common branch to closing transaction expect second the the settle X% following tangible the into immediately of our range X% equity We the quarter.

we of selling rights mortgage of manage million our capital associated approximately $X first Additionally, levels. quarter, overall servicing servicing with in billion $XX regulatory the to are

expect We transaction. gain alone from no that material to experience

repurchase Our authorized board a previously share $XX program. million

the deal, Chris the turn we comments call exercising However then to that the back with maybe and question. million pending to the plan of we'll your don't open $XX future that branch anticipate for let's over in million. $X near overview, With closing call much to

Chris Holmes

expectations morning's completes appreciate open investment of All in Financial call, right, for your remarks for questions now quarter you thank growth. look James. forward to the your next it to continued interest. very would Operator, and FB on my the questions. we updating and much, and We and you up like We our this your our appreciate

Operator

take We question Mealor ahead. you. Instructions] [Operator the from KBW. Thank Please first go Catherine from will

Catherine Mealor

Thanks, good morning.

Chris Holmes

Good morning

James Gordon

Good Catherine. morning, How are you?

Catherine Mealor

the wanted that your forward-looking of cost like that believe margin, of I'm quarter. -- you It branch year start and [ph] expected FBK assessment? do feels comments the of before feels on [hold either some I what that to since the on how the rate it that from – guidance? just your Good. up] the deposit some of part comes deal deposits. [indiscernible] online, it hearing some pressure in kind fair cost like before down of how CDs beginning promotional into have Is given third the should And your that this of just that -- your does come maybe of moderate and hikes rates a factor ACBI

Chris Holmes

high grow guess we and a that Yes, And again transaction. transaction, we we or a us that's in over and it a this in the funding calculated I we the was. and that's so cost $XXX management that's that of that bring that is that moderation doing branch we cost moderate of to the do moderate acquisition, we we had And moderation what But some a think that campaign something From we one continue to and be did Catherine do said good relatively and going at moderates that and move ran branches, was to though pretty to what at was promotional than that some loans, when -- we sheet you that this that with was the as more fact even rate bring three allows reached think we're partially down -- a million partially ACBI some fair on deposits approximately ACBI important some of into a I associated at so allows we end and what the rate. there we brought high in $XX million to XXXX. at assessment mean that continue there reasons the incremental a I to in pretty of balance quarter. higher hard that's us. thought quarter because seeing end knew for perspective, in expect And funding to

James Gordon

Yes, we've I seem think although to at somewhat abate overall Catherine level. rates higher the seen

does continues customer Fed I do has the if there's what been most baked to raise, rate part the the mentality? in the customers think for environment. I our in by a cumulative that to think catch-up

we better XX% we growth off control range some funding can the absolute grow on take we the think in additional that can I So sheet to have we plus that pressure as XX% where on funding we to -- raised balance the side. loan continue

Catherine Mealor

it. Got

to range, year? your the for And big X.XX%, so X.XX% a about how as think of with range that thinking are NIM ACBI range it's about we guided you so

Chris Holmes

Yes.

think look quarter so we ACBI of the range So up half And to the we saying thinking bring as we next I that remember we're that Clayton we adjusted the at we you immediately, acquisition. probably then range, X.XX% when first, in lower X.XX%. were if as on did

is at coming ACBI, less Their are their net but If cost, actually spread what's than our is than deposit yield. deposit ours. their you look cost than yields less on loan our less loan from

So points don't our that's a between margin not points things today. the can it know and -- little move in basis what to to Keep we estimate like. around will announcement That's will look We're decrease mind, in basis bit five ultimately close immediately. XX our estimating range. that

some flexibility, side, so. So we're our that funding kind said, is as XX and then we points basis basis immediately the on excess give on happen to today that again to what cost in. maybe plan flexibility came to some it use funding get would some us of lowering on when And longer-term us points saying five estimate I've

Catherine Mealor

you. Thank helpful. really That's

James Gordon

of -- half About

Catherine Mealor

ahead. Go

James Gordon

maturities the we'll of cost I was months, those quarter, renewals in early in through down start with billion half so in production manage to CD the of that XX the about we that flexibility say or have to flexibility of XXX probably third latter the was year. that so of can some half the coming start that going more about

Catherine Mealor

little That's a any there? great. still then non-performers levels, low really Okay. but bit, think $X And I you're about anything increased linked quarter, just million commentary

Chris Holmes

put one million. commentary. loan we non-accrual, plenty $X.X glad Yes. you actually Yes. loan and about that I'm on we asked, of so one had it's Yes,

a for characteristics, couple quick been has it and got in in collateral time. than performer; our we frankly, have some Just years been back And marginal longer around it additional a went portfolio some portfolio, has back. on long been been a it our of

positions But put the Frankly, not any worked actually nonaccrual So them good so stopped not we we position. of any loss through having quite any. entity the loss until about feel get having material disposition. if sort we operating good we about feel and

Catherine Mealor

All Thank right. Great. you.

Chris Holmes

Thanks.

Operator

take question [Operator ahead. the next will Please O'Neill. Sandler Instructions] from from We Ruiz go Peter

Peter Ruiz

Good morning, guys.

Chris Holmes

Good morning, Peter.

James Gordon

Good morning.

Peter Ruiz

but seeing it answered, How to slowdown color there? hear is heading just but shaking the just pipeline Most are you of out? you're any commentary, What And moving the wanted of kind my still into questions or sounds XXXX, you're of competition bullish your in still been markets? seeing on at market-wide like parts all? kind any

Chris Holmes

demand. guess -- commentary pop actually a We're actually to robust see I couple see some of Peter, demand. continuing to key to that mind. continuing Yes. notes strong We're

And optimistic. be seem Customers seem Customers good positive. so, to be liquidity. to customers seem to have

all pretty And I'd that's say good. so that's much our And across market.

have deposit growth So talking well. side. in the robust think to But and that XX% term One to I current the when sure hopefully a the loan the were environment XXXX notice the demand, manage XX% said growth be growth almost XX% managed when we XXXX would we are was XX% we -- where on side, we're our of in used much as looks we're XXXX We was year markets. That I think that in XX% be range, to a almost economically were last in certainly goes cycle. pretty on that not XX% about year later across lot -- I we cycle. with I great

margin. to a trying both how manage us -- prudent sheet wise on is forward. flashing going strong really But growth think we rate, still that our XX% we there strong to allows on focus is a So about forward, range going probably XX% everything balance That's sheet of balance and caution to sides [Indiscernible] a the part green. is be just more our

we feel forward. as how we really that's go so And

as competitive we're problems seeing say things not want more or our reemphasize, portfolio say And more I'll and comment. I'd we make things I any do see and in I problems market. We in that want as We we last that appropriate wouldn't still one hit to do importantly, the that's our but range. with why the do get So growth think no and we problem, to in some into manage think head is see managed and that we don't I XXXX. targets

Peter Ruiz

maybe efforts terms leg And with you hoping changes just where in that maybe a on of keep Thanks. of material the mostly in restructuring kind another in there? happen any quarter and leg anything Great. Are first are? just mortgage, guys kind volume done to down that assuming need is additional shift there there down, this like that. guy's Are things they or to of you

Chris Holmes

Couple with we're one, from where done of – a profitably happy of and done. standpoint not and are there, so – couple we say things never we we a Yeah. never I'd

we'll look operations. on challenge so to ourselves continue the and And

I'm challenging – certainly – fourth and the sorry quarter continue looking we'll first into into so And the quarter.

continue so – we will continue looking, be we we'll So will challenging.

We are difficult the couple appear it's for to to less tad factors, and interest basically us predict of you to interest to but difficult because they’re rates, going so be volumes, other maybe – rates for of closer heavily all to it's to predict. mortgage

million I XXXX. full will in losses too you of as a when forward, we're staying making move we mortgage so prediction of hope into quarter quarters that expect business we And the bold this there. say, $X.X the look we don't certainly from away going

Peter Ruiz

now. back step I will Okay. for Thanks.

Chris Holmes

Thank you, Peter.

James Gordon

you. Thank

Operator

[Operator Jennifer Instructions] go take We Demba next Please ahead. from from SunTrust. will now the question

Unidentified Analyst

actually This is on Steve Jennifer. for

Chris Holmes

Good morning, Steve.

Unidentified Analyst

quarter? guys for to full that year First off, the was How the X.XX% see the I are margin you that guys? the gave clarification the X.XX% or you guide

Chris Holmes

Quarter

Unidentified Analyst

the we that the move deposits as Okay. does Is the hikes? on there through any we'll year? that forward guys And Does catch see? your rate you include kind still about think of how up a margin commentary change

James Gordon

our are will We some obviously impact as XX% rate we loans think there. I in is we are re-pricing, also but is don't variable. environments of there the drastically catch-up think the mean,

kind that So a in – of the mind we've even – rates does rate year. brokerage abatement customer's rates unknown of in the we with that factor those the should couple CD latest of it of of have out weight half somewhat what some hikes it was some think is is cumulative abated later seen the the those things offering

forward that a So customer would the will say that, behavior because but hikes behavior. rate of impact on optimistic the we're pretty the And well. again going cautious have significant I as competitor

Chris Holmes

Yeah.

a reasonable and that expectation. James weeks – customer last in maybe And of the up there little So has close practically neutral at terms data less – over recent And our higher, but it's cumulative speaking, there. catch-up kind beta low. caught with quarters expectations. we're was few certainly I constant more very think those – quite our probably seen abatement rates we've is least beta much been to cumulative got We've in our of still customer

that So will the not quite hikes as from a that impactful four it's beta rate come, on and hopeful standpoint. are perhaps carry into we as

Unidentified Analyst

Perfect. Thanks guys.

more anything of guys Looking are practices, certain or changing deposits kind competition deposits? of of types in you your at XXXX any targeting kind

Chris Holmes

Yes.

I line, the the goals. it's be not because our required been intensity few robust had but that last quarters we're because say we've got else take -- We've to on haven't markets. same careful this time, every will make our Our ultimate great ever deal hasn't been it's at -- I and but of to we to -- it's the over all want loan the say easy, to just it's in employees and how and growth everybody never has it been easy and

haven't had as intensity excess had And side on so we've been we deposit prudent much funding. -- But we been there. thought the because we've we'd also

say how to with not generation. are change. where model talk good totally the our we do around or and like that’s that’s will change And deposit having we or what a it’s is so do, doing what so we be what change, intensity so a operators there And everyday executors and an that. what That’s really and I’d incremental transformational anything we evolutionary good change. something that’s about if we manage that’s not an It’s

Unidentified Analyst

Okay, up bit. one M&A perfect. I a little guys just you guess And brought question, more then

what’s underway Just wanted do integration line be of think the well you see another or you to Would kind to have acquisition? you on to wait time today for this? take to capacity ACBI for have

Chris Holmes

at so you we’re you our we acquisition, Yeah, -- look acquisition thoughtful at that. if history, and prudent if about look our

deals. -- XXXX. change a of expect history reasons. just one did for for We XXXX. that a closed one One, so to And looking on deal. couple we we’re in up we So did late every not haven’t in XXXX is what like one XX in really XXXX and backing and did I We had of don’t

is important private of our balance as of Our bring criteria sheet the we that side part is on. reference this

and the create don’t here; ego. go bad It shares some got valuable of pricing we a see banks And in dilutes XX% most that think deals see that -- frankly at over of that And from could table. or we operators them at that. because long-term -- meet both deals deposit contacted We taking then you get for as ourselves standpoint. we around and not a is of to to conference as so that short-term see criteria value but so for we don’t integrating constantly and those us look the sitting of it is secondly constantly continue and a and I just we And if to we'll get operating And And that probably in then some on room pricing shareholders the to third not do out levels the oppose things, close mean shareholders. do measured the a some we easy is disciplined part but high we continue do be in -- and our right way. don't at so will we'll look, and the

moderating as that's a And so factor us for well.

James Gordon

And close just out I for you will simultaneous, other transaction a M&A the to so thing one one for convert and months branch be. normal along Steve would or three might happens much point and five conversion whatever will closing of be than the integration the the farther where deal, four, be not

markets our business to down more will that we shortly one which once So close and handle. be after will that the -- integration,

free along. Chris So those would of like That made deals that some to that it the said. were come sense up resources

Unidentified Analyst

time. guys Thanks Perfect. for the

James Gordon

Thank right. All you.

Chris Holmes

Steve. Thanks,

Operator

We'll next go Please Inc. from ahead. now from Tyler Stafford take question the Stephens,

Tyler Stafford

Hey, guys. morning, good

James Gordon

Good morning, How you? are Tyler.

Chris Holmes

Tyler. Hey,

Tyler Stafford

kind deemphasizing? to that manage portfolios at understand of this and to But point XX% that more out if look competitive just comfortable for be of loan growth growth. feel earlier you're that commentary managing kind kind kind of some that portfolios down you growing? mid-teens I'm towards going you the some you to to the stronger Yes. XX% And there at here. to it's Thanks of in there's understand that you're what comfortable, XX% range. going rapidly you engine cycle growth question. if of and growing about then that on that this prevent point know growth Hey, trying as less you Great. that towards But down XX% to range from that wanted made dynamics I evident some back talking still feel have the I are that's I start of certain guys just growth produce the to could

James Gordon

that Tyler. described all think Yes, you appropriately. I Yes,

portfolios, remind pretty like community ability are there we about very And to measuring bank. bank, well. shown at have have we everybody, certainly relatively as rate. We the in. a are we're we to yes, I things carefully that staying, to a before operate we so community when grow think grow those go we're We ability attractive always

we're and don't of we're We do know us liners customers a so We time. And to what that. we go, wasn't getting off, we not where because to need out you or That out relationship-based. we we're We're your long our asset pay this class. people. types not red on for hey, sort say, asset getting know products you of and go

And so what they if do. we industry, accustomed in get to hospitality know are them We us. know deal They them. with we

now. something These asset while the we and larger increasing while and that so it. deal typically we we've same, inch Yes, larger a on way days those. is continue will to multi-family in square familiar And to We're folks now. don't on careful others. very a multifamily we've we seen do that's Land, constructions. of. do we careful are to on them, we It's with got on like something careful been that land not deals. construction, land the for know that every same just opportunities being said, it. with are other or classes careful Hospitality We're for been on careful that is be we've That

And we large holding use on. And our generating we given so manage of to things portfolio the thing size, and be we're caution extra that those Tyler capable other that we and the -- credits. would is the of we have an then some do measure

just so, are to down we risk those factor. a careful And mitigation as again sell

And into be want who end don't with much down. and credit up solid or star around some be, that here deal single we'll our a hold conversations we is to of solid get that that generating we so interesting to but $XX just RMs selling so million may

Can a partners that, even we out that hey, we've quite that that so our deals, community risk do of are mention saying sure of for and consistently The C&I. to more on continue bit something? was that And do will didn't types And something there I done we thing we're these so that. of you And maybe you clambering frankly mitigating got one me? do have have making bank sell just our there. some me

with balance competitive are C&I We we're sides we that but those. that we're we those bring the to that of to grow because want like operating cases, going in. the portfolio grow going the else. to They like to continue be those We C&I some -- and outcompete sheet we continue for both deals we with folks because are portfolio. everybody deposits always like them competitive, and those In companies obviously to are brings

Tyler Stafford

you. be last very on clear And Chris. mortgage, was That the for just helpful. to Thank the want one me is. expectation just what on

structural mortgage the group guys talked kind So press or the you handed the with of out that changes and release. about operational in in

in expectation? Is produce XXXX. mortgage that the should changes contribution relative pretax to XXXX those slightly So better

James Gordon

you indeed -- year of about we the mortgage be XXXX which attest $X tentative you and at look That's last for great. the going XXXX. was We million. Yes pretax at look Yes. of last mortgage the to nature our if similar half And year of is think my yes.

one we so this out we are look is or year, beat whether backing and we that $X $XX And off. to hope where million million in which that's

off. say Let's we're where backing

that we holding where reemphasize because you see for and absolutely is point. had the the a normalized $X.X and and while year this I a a that's of we I'll being And X.XX pretax on at much will we're competitors So in just kill a of lot a this the given loss similar terms color in it to got additional know mortgage we would last ROAA, margin. this quarter with ROAA say X.XX mortgage in really year provision. million decline

And you into in if our better turn loss so then take that more. pre-tax just much just substantially that even if you a it breakeven you a it's quarters into substantially profit it can turned better

of produce months. balance terms optimistic And to improving for results, reposition about done sheet then some that's of funding XXXX in we've the three the we've last trying or we of consistently moves the and good pretty and in into add four so where we made are begin of some looking us things being to the some feel create we to

Tyler Stafford

the I was and back to that back XXXX year the appreciate half saw slight that there of you you're not make difficulty slight can saw. commentary the XXXX's the loss that half the I sharing -- was just the want helpful loss XXXX sure That's you expectation. mortgage full forecasting relative to

helpful. That's for. Thanks that. for clarifying it that's So

Chris Holmes

Yes and is that right. Okay.

got You've when restated right that you it.

James Gordon

Tyler. Thanks,

Operator

Please from now go will question take the We ahead. Lau next from Alex JPMorgan.

Alex Lau

morning, guys. Good Hi.

Chris Holmes

Alex. morning, Good

James Gordon

Good morning, Alex.

Alex Lau

are quick checking is you how CD it like of seeing new some on accounts? it from sense want question campaign, from So much come balances just to of existing your interest a a get of money versus

James Gordon

the was either to else, more money bulk was million other it than obviously, which the targeted $XX that the there, The We markets of but on rates it lowered quantification probably relationships by was the guess best September expand XX. during but ended – part campaign of during basis our buckets new third relationships it, that from based third point. campaign. that of out our kept best to the was XX or since get it of – around of quarter points from We XX down products anywhere somewhere moved and the on

Alex Lau

for from And should a in helpful. the XQ NIM, first December then benefit rate hike? you've given That's you it. X.XX% see just And on to so you also X.XX% for guide on the quarter. even Got the yields the loan

on first on hike pauses here the out assuming progress from do rate where margin you will that think after quarter? Now

James Gordon

Yeah.

going after as basis bring down to have I X you're first the They'll how Atlantic XX of points thing probably impact to the and said think quarter on first take-off. it the we ultimately the depending Capital. deploy we

stabilize constant once is But rate depending range think I loans over on that to in of deploy the some been range. potentially in it as had that begin that and think settle liquidity. later believing out back after And tightened will from we for year. down, in will much tighter excess could liquidity should – now level into going XXXX we the beyond We XXXX count X.XX% that are we range X.XX% it range. the that to I it's did start to within where turn relatively steps level probably somewhat we previously of periods that That it it remainder that had grow range benefits in future then it remain slight hikes than again.

Alex Lau

color. the for thanks Great,

James Gordon

Thank you, Alex.

Chris Holmes

you. Thank

Operator

We'll now from from Please question Christopher take the FIG next Marinac go Partners. ahead.

Christopher Marinac

is on straight see and what takes customers morning. the relates of interest on do checking question Hey wanted versus ask kind to guys, a comparison to of as the how it it it move to evolving? good today DDAs? and that to comparison How I further you you deposits

Chris Holmes

Yes.

is I important relationship that's And most so and so today what when a that’s takes -- would a we when customer moving deploy. test it is and it the say

And folks in account. their check move so to it's get not to easy

customers qualify try to our our of attractive Second -- transactions. put all it an some is of just it product checking today, and for combination. have certain we got it involves the about frankly it do rewards rate We’ve it savings -- and a thing of with card, number debit have most it involves is interest to does requirements on attached

our attractiveness to I be the proposition of the our at mobile all But are quite those you so in of of it's continues And it's good, all are important -- the product, are of be to network, offerings been continues things of of those developed things brand the the there more things. calling good hard. actually Those some which to think hard, those not it brand terms -- always banks move. branch it convenience when in are got been in we’re look that and on decades the We've decades, market a markets, which our some quite it as be liked so to because takes are but with lot and we is relationships. have to generally little and as for a reason folks

Christopher Marinac

good the sounds background. Chris. for Thank That you

poorly catalyst kind up follow of for on this year see it quick How yourself CECL. but of out a a discussion you a merger how that both do topic also more year Just unfolds? this separate playing as internally, for is

James Gordon

I catalyst don't think Chris for M&A. be that going huge is to

and I lot I think the be changing around think will M&A. it. discussion don't numbers. amount a to lead probably will of and credit of credit it'll large But going The be the work a on it

dilution you may or what on move from to late in initial you more CECL discussion the versus I it one impact and as deal you the a that traditional into additional that a do knowing that that As if does consider absolute the timing will than be debate it, be play fair do forward. the impact to head the probably year. day the deal think so we announcing how you How consider value you’re biggest

Christopher Marinac

appreciate it. Sounds you good, James. both, Thank

James Gordon

Chris. Thanks

Operator

go next ahead. Please now Raymond from Cardenas Daniel James. take will question with We the

James Gordon

Good morning, Daniel

Daniel Cardenas

guys. morning, Good

Chris Holmes

Hi, Daniel.

Daniel Cardenas

Just a questions. couple of quick

provided guidance margin that margin core was on you the correct? Just

Chris Holmes

that's right That's right,

James Gordon

Yes.

Daniel Cardenas

should be how XXXX? thinking yield impact we accretion then in And about

James Gordon

million the acquisitions prior two from about Last had accretion $X.X Georgia. think it was year and total Northwest in Clayton we I

relative from I be of mark million will we accretion close mark a environment rate that rate about that until fair will think to years. next close. it's that through. significant the that amount that likely million one going Atlantic $X significant in to for Capital the fairly on we we're But fairly happens those to coming have over influx of And rising we'll couple next so be because deal on kind then of with $X the year will coming

Daniel Cardenas

how on forward? provision Right, at this the the basis? I credit and what be a do see outlook side, a growth credit Or quality renewables? the tipping point number of should or And about in but we provision on we just saw primarily the a then Are ? quarter Is thinking on it million you good. numbers bumped kind we place, mean, $X.X over what's go-forward for I going guys on front? think your the -- all

Chris Holmes

renewables in seeing generally, growth concern. anything that us on quality the The causes the portfolio, credit side, credit not and on we're the the of

in be of forward. in that but It of I So in I would it's we that can I renewables. it be going kind expect it are or range. range pushing as kind little expect plus minus, to growth primarily think a a

Daniel Cardenas

Okay.

James Gordon

over accounting Yes. last over A the of It’s the for as as -- flow the part part renewable got the that loans in the purchase that. one we of been model large into acquisition fairly a model regular of year, provisioning mark the out to July. coming past one-year

factors. other should said, loan certainly impacted as Chris that relative it growth is on in remain the dependent that So level somewhat and

Daniel Cardenas

missed XXXX? on I And your growth your great. Right, James operating expectations expense for in I think comments

James Gordon

a additional of year XXXX for I throughout the second plus kind single-digits They'll be with in plus we've impact on comments full that would of added investments technology a it ones over and new the be Yes. hopefully throughout XX in that coming investments the on the full in our my that new year, and of other board, mid half XXXX. things. plus said producer

Daniel Cardenas

I all have. That's Right. Thanks, guys.

James Gordon

All right. Dan. Thanks,

Operator

to you That I back concludes Holmes, like the turn any Mr. additional remarks. question-and-answer session. for would today's conference

Chris Holmes

we then again this and Thank look All your very We and of your joining Thank throughout the us you for talking to appreciate forward quarter. you. to next much interest. quarter morning. you forward all appreciate many investments We right. joining us

James Gordon

you. Thank

Operator

today's concludes participation. call. your Thank This for you

disconnect. now You may