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FB Financial (FBK)

Participants
Chris Holmes President and CEO
James Gordon CFO
Wib Evans President of FB Ventures
Jennifer Demba SunTrust
Catherine Mealor KBW
Peter Ruiz Sandler O'Neill
Tyler Stafford Stephens
Alex Lau JP Morgan
Brock Vandervliet UBS
Daniel Cardenas Raymond James
Call transcript
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Operator

Good morning, and welcome to FB Financial Corporation's Second Quarter 2019 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 Web site at www.firstbankonline.com and on the Securities and Exchange Commission's Web site 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 This open after will presentation.

results forward-looking federal During make this other statements. differ performance such laws. facts the results cause uncertainties Financial to or comments may by subject any All security forward-looking and which constitute that materially risks presentation, forward-looking expressed statements and FB and implied statements are Financial achievements or actual FB to may under from of

beyond Financial's on and other Form not detailed whether ability are Commission, statements. result most or update factors law, otherwise. Financial's and Exchange information, required listeners by or to Financial's these FB control risks contained more such future XX-K. cautioned presentation events predict, as in statements FB Financial put forward-looking as periodic of in Securities Many disclaims and obligation recent FB FB including this revise a contained description of with A such any and to is filed to new are Except current the reliance undue forward-looking of or reports any

in the Exchange and Financial's which on release, earnings website Securities FB these and supplemental presentation company's addition, financial Commission by Commission's financial available the defined measures G. remarks Securities a www.firstbankonline.com and page reconciliation the on Accepted are available and Accounting measures measures certain directly presentation may and at measures as this the information, Accepted website www.sec.gov. non-GAAP is In non-Generally A comparable most to of morning's comparable Principle Principle the Regulation Investor Generally GAAP Exchange financial Relations at of include Accounting the of

Holmes, President turn now to over CEO. go FB like Please would presentation the sir. ahead I Financial's and to Chris

Chris Holmes

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

of theme of team year consistent of included delivered. X.XX%. I'm a This proud is results and execution, first the the the and half of the and has margin accretion interest core The interest non-accrual quarter our performance excluding net

Our all X.X%, on $X.XX, return equity average XX.X% adjusted. of of average assets on common of EPS and those return of

first; the deliverables stellar important summarized. financial results, just the were during The quarter which I

and of operation origination from the channels. sales wholesale repositioning mortgage Second, of the improved two mortgage

of systems Third, our fourth, our the successful integration continuing branch technology. in acquisition, and and upgrades

this First, XX.X% A on the loan another XX%. performance growth above our to banks we explain long-term I'll outlook quarter. delivered XX% of financial organic quarter

I'm managers customers credit continue and demand see worthy for We stronger from results. of to relationship this our proud

case. Our this but the Jackson also didn't way production as On quarter organically led we could a Huntsville. Nashville Memphis our Tennessee, be deposits we and grow market saw basis this we time, the net a and indicated at loan sound growth East a

deposits, for from might in push acquisition we we term, near our our flat as the reduce have With liquidity cost branch not the X.XX%. kept relationship from expected bearing as utilized otherwise. cuts higher We at to our did rate cost much deposits managers which dependence deposit interest

profitable escrow the grew excluding half the in non-interest quarter mortgage would second We quarter. anticipate than be have second the year encourage the deposits growing of funding more that bearing quarter. deposits second during We were it annualized the the from first XX.X% organic will over to the

impact range net of of our middle services X.XX% a a this firmly the management key guidance in The for focused implementation and X.XX% selling the team management recoveries margin following on This technology year, holding accretion of investment X.XX%. quarter excluding platform non-accrual in us. of growth was driven came treasury in by this or the at new our treasury earlier interest

Depending margin could variable immediate will will challenged on loans our the rate reduction the number corresponding of be and the we fourth third our quarters, rate reprice and as cuts magnitude loans. cost have of in an in and

credit, and briefly environment on Speaking the continue to very quality. benign good remains experience we credit

but our see softness don't aware in change. that of that at very We signs will yet, portfolio we point some are

likely our This will long-term any credit be cause will weaker and over quality our the target we vigilant of pruning view anticipated about that the as to made ahead lower coming payoff quarters. growth try towards continue next over loans we the get quarters to prune we the loan that try downturn. We be to some of and of being end to to few

Moving of This portion the a first of margins. improving sale rights to and with servicing level closer by quarter our revenues prepayments quarter offsets our higher this driving profitability, mortgage, a to improved increased profitability our expectation to rates servicing interest of in lower lower mortgage driven volumes and servicing returned portfolio. included

and The August. close June closed in channel we sale Xth, our the origination third-party sale earlier to of channel of intend on origination our correspondent

once few to restructuring the the be divestitures past we we'll months our been back able move that For completion this closed. to and office quarter

business; a have this online. market mortgage penetration into both originations want the acquisition Our for originations simplify mortgage operators efficiency goal the while we We primary retail segment and is maximize bank. customer best-in-class to will channel turning traditional both now and in that in the of

in near will always customer MSR that servicing rights current intend maintaining As of hold levels part hope fourth to to sell how to Mortgage strategy forward. we deliver future. originations we but between second and the ourselves to retail repositioned and others, the and acquisition asset repeatable the and third we're first show results we quarters, happy seasonal going consistent, the most with swing

channels. those entities who for and also time transitioned will complete we the to associates the personally I here origination to doing I at to of who team and working other correspondent diligently customers thank their As serve mortgage thanks have sale been restructuring, contributions our want FirstBank. our the TPO former

the touch we indications April, had well. going now were When the on just of you our where our things preliminary to in branch -- spoke closed acquisition our I'll preliminary the of and integration transaction. I

Having more with the now family. several team with the be the of we've new cannot pleased our people the and quality to FirstBank worked I for months that added customers

competitor's merger seeking our created Additionally, across footprint have turmoil are good relationships. customers good expense people new activity and and banking reduction and out our

in East and and across presence has Georgia an attractive made customers North increased Our the FirstBank lending Tennessee associates.

we a in year. November laid We've of items, in So, final the on To at we're a in of the transaction. the also few estimated assumptions loan out the on announced touch million already acquisition last line when that $X.X aspect financial announcement. strategic executed was that with realized key marked we

book our that the deal estimate branches transaction. on track the Our at the annual to call. tangible consolidated, that which be to expenses I'm estimated on our proud announcement. have we're around million announcement. of announced opposed run million slightly dilution is tax after at X% been on rate efforts date $X.X intangible harder are deposit $XX which but excluding And team below amortization charges we $X run in core estimated to expense the as to We very of non-interest their for line as was the million to value rate compared X%

made further ability transaction on The that's even and the and business meaningful execute me our accretive of branch more to our outcomes confident shareholders. M&A to

solution and looking Fortunately, we primarily for being are for to from on liquidity. and as driving opportunities position [ph] created more searching capitalize comes shareholders ever course our cost acquisitions issues, regulatory success to technology than seeing are before. and Opportunities management

Valuation and wholesale as expectations it. to a and with their an and which absence they good of realize are quality loans are these deposits generally high we have quality High banks deposit recognition able for quality community credit franchises, banks good mixed. of banks value define

are an for they and which more with of the those be we Low they bank actively were. of in quality the they think high speaking agreement to what high think a banks or one aforementioned they like We're few I second quality that of that that valued year. [ph] can't a can hope should community the reach half community sell peers the powerful more quality the finding banks in

attractive for seller need with With we will to book for think be reputation our years we the cash, shareholders. help earned the will choice the geography banks that done, landscape may to in dilution couple back to manner competitive as take price of us transactions some of desire a acquirer our get but and a to our in deal

many we delivered strategic strong have company quarter mortgage where divestitures summarize, move to a feel more and we To that quarter branch our profitability. made the we for that acquisition in Between come. such resulted position fundamentally to sound

call over the more I With our to results to that turn in detail. financial overall, want James review

James Gordon

morning Chris everyone. Thanks, Good and

$X.XX within average were of Our on of the adjusted an share diluted X.XX% average adjusted then assets of for return and XX%. second earnings equity quarter tangible adjusted common on per return XXXX

the Growth, consistent four Slide underlying credit of illustrates benign trends the management our improved quarter. and and EPS mortgage profitability environment our increased last were expense demonstrates company's $X.XX results, over fundamental performance. adjusted of

expense performance Our increase served the growth, margin the in profitability adjusted This loan remains of our quality. the level control fundamentally core to by the credit this balanced years, strength, one of and assets and had demonstrate among well as and driven durability franchise. peers, our been quarter as by over sustain earnings return highest our on average deposit sound that

Next and cost slide well our presents five specifically interest as loan margins the fees yields trends. of as elements net deposit fundamental

our that fees the funds fees the and million this offset of that bolstered in As quarter Chris middle loan landed range branch the our we first we some in acquisition mentioned, to prepayment fees some of in $X quarter received the of deployment XXXX. loan as cost target due approximately excess we lag of mostly our liquidity of control the in of lower of by

basis range we liabilities of XXXX in points each for the absence for of the points to the the they margin XX the to In further take of X.XX% time quarter anticipate in rate XX reprice remainder for downwards. cut X.XX% full near will basis declining anticipate each we as cuts rate term being

our portfolio of and variable XX% billion rate tied Roughly $X tied LIBOR to is approximately loan billion prime. to with $X

this point. variable for cut rate or has so announced We repricing portfolios our points immediate down basis at loan XX week, next at approximately already decreased will rate see LIBOR an

few portfolio rate, made on are securities. nearly we mortgage in accelerated to There yield XXX% the points decline related investment prepayments backed basis fixed

we over assuming yields cost While decrease, also may to have our lower opportunity quarters the an the few decline. next liability asset rate

have priced this possible as much due to at $XXX quarter million due million with to be We approximately in retain lower quarter. around a the coming another as coming X.XX hope fourth $XX of to We CD able rate.

rate cost highly Bank bank. subsided may our also with to balance anticipate and We quarters lead actions obtaining Home a quarter as the decline we the money some other at to borrowings we've Federal an stated $XXX by overall average maturities. taken extended to that coming and CD Loan X.XX% impact in margin allow million Since

Bank of funding our deal over excess the the our Those and we Loan We're upon next customer feel to Federal decline rates year strength margin. long-term but managing next overall deposit branch from the borrowings to To additional in year callable with buffer cost reactions and rates the comparative Home moderate rates continue landscape. liquidity. as expect [ph] the depending summarize, offer funding following relative good providing are to about beginning while

Chris Moving another growth. as and mentioned produced we to previously, loan slide of quarter six solid

hitting growth relationship and the deposit in profitable really not consistent on quarterly target considerations. remains higher growth especially focusing objective cost given Our

flat comfortably have CRE C&D decline construction concentration loan in in to and branch also due percentage within a in portfolio. capital concentration of of transaction the regulatory use the and ratios. our development stayed C&D roughly threshold our outstanding Despite as stayed We our

some to slide basis. the related down branch for deal. deposit and increased organic liquidity so seven, the our cost immediate excess slightly but deposits benefit bank slightly of Next were let funding on customer the lead ratio gain to higher to moving in acquisitions order loan our branch up our We to

environment expected is In do be and event that likelihood half course given able year. we to should of term much the we the the struggled second retain as replace if deposits, cost the rate the have we that the or lower customer non-time lower fund that not CD of of over to a

the pretax slide is $X.X Next adjusted an quarter, retail our looking mortgage at in on operation million X mortgage our set contribution when footprint of total included. second

total adjusted X.X% income down XXXX. the our mortgage with the adjusted the For second was XX.X% approximately pretax from is quarter, which quarter contribution in company's of

of payoffs from portion revenue quarter Our improved increased interest sale was net servicing second of of profitability, and over lower the the rate by loan XXXX. volumes portfolio in $X.X which our down higher due million quarter first some in billion the our to significantly servicing however the Lower offset overall rates volume $X.X higher up in first billion a at was portfolio. servicing quarter from of $X.X that of and driven our

we mortgage pretax in investing wholesale are year contributed banking of of half the income first revenue $X.X [ph] in allocated costs. channels that two The XXX,XXX million approximately before approximately with the

contribution our seasonal above exiting in fourth businesses our being have breakeven XXXX The performance cost wholesale the reduction come we primarily are changed of in of pretax patterns. will quarter in remainder not $X year given exceeding in With full slightly of XXXX's million goal normal third quarter contribution. likely the

technology. in grow additional and banking the single-digit We expenses excluding reflective investments non-interest continue growth and and mid range to related producers expect expenses segment revenue of mortgage to

Excluding increased increases X% in quarter reflecting increase Capital second our estimated related and people non-interest continued and investments approximately footprint infrastructure. compensation normal to Atlantic mortgage the expenses in Bank, and

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

For XX.X% the to and range remainder QX. expect due in of be effective our equity benefit XXXX, tax compensation QX projected in rate we to

for slide XX, portfolio our company. our the whole sound slightly for remains a and shape. in provides the on As shown solid loan our total assets assets, Non-performing quality foundation strong but the quarter on remains asset increased

than year normalize. it expense the increase costs expect of lower on quality, charge-offs are over We slightly this credit that expected back the those sound net quarter remainder provision to the as of would but

by and estimate our we that position this $X.XX branch was per value our quarter XX, Slide share book approximately tangible strong the capital acquisition. diluted shows

Just XX.X% value increased tangible book our $X.XX the to first by quarter following per share or $XX.XX

are dividend future X.X% branch equity, acquisition Our where the XX.X% excess we to organically, execute quarter tangible this we well-positioned on believe capital and and that our We was on capital forecast. continue grow utilized had total above was common M&A. slightly support

comments that to Chris questions. and your open I over for call With want call back we'll overview, closing to to turn the the then

Chris Holmes

Operator, Thank you, remarks interest up and call. that now concludes James. investment And like your once the open Financial. for FB to appreciate call again, questions. we our this morning's in We'd on

Operator

Instructions] SunTrust. you. Thank We'll to Demba first go Jennifer [Operator at

Jennifer Demba

me? hear you Can you. Thank

Chris Holmes

Good Jennifer. morning, can hear We you.

James Gordon

Good morning.

Jennifer Demba

Great.

at be in still will category? excellent, you're quarters. to point? some And You mentioned over few obviously idea next of credits quality calling but credits amount to want you credit weaker Any the Thanks. pruned prune particular this what they any

Chris Holmes

it not No. this anything specific there, I'll way. explain There's but

and credits and team and credit of by and quality we do underway. at where We credits And do some challenge right at others with on we balance are get randomly each annual we undergoing the it we then there look credit about process certain do talk review that we over We now process that the market of we is it with annually. of our and our market. portfolio overall the it’s look do the quality we a a and all and process that

you're -- in impact know as from of downturn the the how the prune. portfolio those it's to let's take those we prune, you is to that because or that than team the do if perhaps that we not we in actions could use bank, negatively the past high I to and of We things once exactly. do move of anything have a more at quality. And look critically word to even weaker those downturn, either the that to credits in at are be One move further all the use have improve would throes it's word especially to don't for look hard challenged

in is as it's proactive our be to and is at more a that anticipation And going than rosy it's the past. In as been process point rigorous some not part, so, economy the that's on today. it

that's that's reference in So to. what

multi-family some the that expect that -- that particularly we smaller would in and monitor you of we're footprint at be going we the would or continue segment so And other segment, some niche specific -- at are to the to concentrations always or would a have. a either at market you as at what hospitality to terms -- -- look

And so other we the all they'll with already but look that specific those, any not than internal targets of at targets have.

Jennifer Demba

Okay, great. you. Thank

Chris Holmes

Jennifer. Thanks,

Operator

KBW. to at next go Catherine We'll Mealor

Catherine Mealor

Good Thanks. morning.

Chris Holmes

Catherine. morning, Good

Catherine Mealor

run expenses a With from is single should guide, in the Or in guess savings quarter higher, that growth you're way. ACBI? your rate. Is there kind think off have core mid of that level I level and a increase follow-up just on When are expense digit full out the Or digit this we so figure grow see I ACBI, any we this bank should saying expenses it quarter? a so me then so at anything at with in that -- mid we today savings quarter there that it that guess this let past there's we in that about little from to so trying rate? that rate single there were before any bank put

James Gordon

and equity because lot we the lot savings not on big it closing whole I our material say, front. normal so of and edge the as we I transaction, grants converted closed bit of nothing the and the may get of but mentioned in annual day all branches a savings anything allowed, this my was on full on same things. closed effect a a probably a Not remember of little that where quarter would comments the and raises contributor other and

same level. the at be should that So

go hiring producers and particular but needs it continued we and the the infrastructure will on revenue in we up in technology. making same, continue So dollars new in shouldn't absolute focus

Catherine Mealor

That's it. Got helpful. Okay.

James Gordon

in is for We and branch the quarter April all. of the practically did most it close transaction the Xth so on

Catherine Mealor

Yes.

Okay.

way impact we the expenses of and And correspondent? Okay. the of is think to third-party side and the the see about then mortgage full on sale mortgage Got there a it. the once

Chris Holmes

on think big million produced units sold there's be little about that I $X.X have in been the obviously on bit $X half with that's the Well, the coming of two million over of office to direct component looking are continuing We the quarter. about talk the Then those size. did million that $X like that's finalize or will we we're the not sell variable $XXX,XXX somewhere I we're we that so that direct say I a year or roughly Then a a to sold back in revenue of that's cuts cut correspondence the this to saw in of would. contribution. for units. expense based contributions have months $XXX,XXX would revenues at the first the as

Catherine Mealor

Got it.

And Okay. on that's basis? a quarterly

Chris Holmes

Annual basis.

Catherine Mealor

$X million annually. to $XXX

Chris Holmes

Yes.

Catherine Mealor

Got it.

Okay.

Chris Holmes

way say, so a Catherine two yes, just there you And And expenses to said I you those think post would of those for is dispositions. lower.

Catherine Mealor

first that. make -- just what sure I then But -- page, and the and I'm that period? assume assume time revenue million on that. is $X.X -- to is same a that this I

Chris Holmes

first The the half year. of

Catherine Mealor

Okay.

in two were line and contribution of those XXXX? direct million $X.X units So, $XXX,XXX for half bottom the revenue first --

Chris Holmes

Yes.

Catherine Mealor

great. Okay,

Chris Holmes

me say Actually, that that. million. let check double I maybe think XX I Yes.

James Gordon

Yes.

You have…

Chris Holmes

dollars That million net $X $X.X is contribution, million a sorry, I'm of -- direct half million quarter. a

Catherine Mealor

Okay.

say Just it again?

Chris Holmes

five it's about X million So [ph]. and hundred

Catherine Mealor

Got and then half first in it. in half. also the million first the Five XXX,XXX

Chris Holmes

Yes.

Catherine Mealor

it. Got

the also so you're one really kind funding cut you've not X on acquisition? to benefit does of Okay, guidance I in limited -- high, that lower liquidity high lower include great. and the it the just that and any excess from really I And guide what feels And any XX mean then because ACBI to gained I other giving is for cut. are but bps per margins, margin appreciate mean costs

Chris Holmes

to that then costs we're the that say the not deployed about. at deposit and talked Loan additional us to would five. well do I've this that the would bringing Bank there to XX. that bit we of advances Federal get added I down Home most closer are We it's quarter able the liquidity little If the

the basis if yield just loan portfolio you which of majority variable cut of the the about is If top roughly get assets. you points that's on a yield think earning of our right point XX half our roughly basis rate, XX off is the

since comes able some along if be we've cut control we're ended. like XX from and of then and that's quarter So where liabilities the five has done the would to the our with repositioning costs wholesale

Catherine Mealor

it. Got Thank That's helpful. very you.

Chris Holmes

Catherine. Thanks

Operator

Peter Next, we'll O'Neill. Sandler at move to Ruiz

Peter Ruiz

Hey, good morning guys.

Chris Holmes

morning, Good Peter.

Peter Ruiz

answered, what they off CD a any running here the give doing what guys But been you if right have be pretty deposit going and questions on could on maybe to side? are potential could just what but you give my whatnot the I of quarters. that little Most been maybe the have running specials maybe transparent you specials are like color. coming on in and look some now competitors color know

James Gordon

Yes.

an some their competitors growth in market to We see kind and that from of organic constantly the fairly sort them. funding see it's and deposit pattern It's the really been consistent, so growing specials the portfolio, are in continue those pattern. loan we that are and are having specials a of

continues aren't kind know marketplace funding. driven to it of in others targeted by Some need little market or -- mostly targeted products. on don't that we things type more they deposits And two don't quiet be because are really time more on money and the growing, they the don't

Chris Holmes

that's likely everyone's over a maybe appreciative rate weeks little Yes. as all think I several that sometime abatement that of when of I would that there's unclear. cut the true. We've last bit seen say coming a

that. competitive abatement nature we're in the So seeing some of

third Our twos specials that their of rolling spread they replace can the over [ph] the maturity really of are the that at in did this that targeted we've last at money year to that quarter X.XX we is product in money XX-month out and that point. current maturity low the map out on

Peter Ruiz

Okay, great. Thanks.

Chris Holmes

Peter. Thanks

Operator

Tyler go Stafford Stephens. We'll next to at

Tyler Stafford

guys. morning good Hey,

Chris Holmes

Hey, good morning, Tyler.

Tyler Stafford

sure just question, to the to on I'm wanted mortgage make back earlier I expectation. clear go Catherine's

the five $X.X $X revenue the million first contributed with the a million -- correspondent TPO So expenses of the and were of guess half I of channels net year, in pre-tax? they for

Chris Holmes

Yes.

Tyler Stafford

Okay.

Okay. Got it.

expected different I frame I guess channels, channels? with way, the So, looking the up the margin just, absence those gain on two two sale the at you exit with a of those can of new, guess

Chris Holmes

in because shouldn't shutdowns given lack it will that it's not both or up but how we two move or so. higher the the over move of announced two from production But will higher, move It of will last of higher those been channels lack where from as the it margins. but quarter it Historically the so. the those dramatically

Tyler Stafford

up where potential rates mortgage at the they're there previously With of rate with on to you've guide million backing I back and a the into guess $X market, strength and move see just Okay. added the and you given a lower to basis the upside upside pre-tax run rates do is cut scenario. XXXX? the under in higher Is year of potential for that the to rate half that

James Gordon

could a be yes, reluctant, there's Tyler, some. there

expect We to it given from you we and good be volumes volume And first think closely I -- being we in said we to mortgage. comes tied to rates which certainly have was quarter. up are it mortgage the talking together. didn't away in we've quarter stay where or forecasters the didn't were on as last I We second expect on quarter when know predictors guide the trying

some for good volumes. been there. it so mortgage And and rates We hope case continues it's and outperformance leads It's continue that's that been as good the for that margins. to

mortgage a reluctant is then don't think I'll a in. to try So we this throw there's so it I there, balanced business. that that – your that's know run answers -- but question -- yes think just what I We

me predictable. also say, repeatable. we you consistent, like We heard like You like

the saw a in some for that the mortgage rights, that of negative And servicing balanced decay mortgage with servicing were production. that quarter balancing the we so rights

little bit forecast so well. hard to that's And that a as

there rate environment down on and go the obviously have say the So, but out and in happened decline biggest canceled opportunity. to we're the all It there's things But not into considered, really you whether always an comes that. reluctant has unknown. that upside sure, that's that of rely but the heading fourth seasonally an out future. and be to would past, quarter the indicator it's the some That

Tyler Stafford

CD comments. I today, I I if portfolio miss or over you the loan dynamics Sure. earning did Understood. first the floating and on guess And a on portfolio? guess for CDs flaws million of just think asset I'd of third I fixed fourth it? you of and have that kind new some on you floating elaborate go gave And prepared that if about loan repricing -- the could may again appreciate the any rate the are kind then right in now asset thinking $XXX of that guys I you maturing of quarter the in just details Can cost

Chris Holmes

Okay.

assets maybe the much nothing On basis investments or the are on them coming XX% all of fixed of so are rates, so our backs. the from a there, on side, repayments mortgage point two accelerated

a loan half $X have prime. the billion about roughly we portfolio that LIBOR pretty On variable to is little over and evenly rate and about that's a billion split between in a billion in

of in ahead at LIBOR rate the the already cuts obviously kind prime is this any of So point.

repricing much side. pretty the that's So asset

that in have product similar we about [ph]. actually Then lower had we it's and that million of hope so the do we one the target not come this that and XXX-ish could the the they running deposit million the what on another could think we're customers that quarter. twos quarter have quarter fourth would to roughly those – rollover the down what in quarter. low same third that based at to we specials be started We we would the That's low into. even On rates this $XXX renewing XXX $XX would side, X.XX% is those is lowering and in bringing

excess the depending deploy that that with with then operating wholesale some that that take manage immediately, but of return margin that liquidity the some today. to said, money cost to us continue can should may things Now short-term money time somewhat other competition and where we and we're route that to over and help of we probably replace on leave, think but would

-- of I will deposit lag that some think it repricing. pricing will asset So the immediate

James Gordon

And Tyler our XXX. at term our X%, shortest term we price intend in longest about price

or fairly XX in it's tight that long term so. So months there,

Tyler Stafford

Got it.

That's that helpful. Okay. lastly… All for color. Thanks right. just And

James Gordon

looking a you're if bark deposit, And for [ph]. your

Tyler Stafford

lastly I tree this think guess the M&A your the me just there. point? just will is buyback fair at you're earlier, up to absent given Hey wrong assume comments I remain that barking it for activity

James Gordon

Yes.

We to bought this certainly if back right do but we could, now. authorization unlikely point. We share looks any haven't in it have place the and

Tyler Stafford

guys. Thanks Okay.

James Gordon

Thanks Tyler.

Operator

[Operator JP Alex Morgan. Lau to Instructions] next We'll at go

Alex Lau

Hi. Good morning.

Chris Holmes

Good Alex. morning,

Alex Lau

Hi. see fund? touch see also acquisition? loan during the do deposit industry the the side, Can did which drive anything balance the sheet growth? organic quarter you you you seasonal loan or the growth excludes And public on with segments on like Which

James Gordon

Yes.

been it loan driven over the been on type. It's hasn't that's and side quarters. segment consistent by or actually pretty last several any So, product the much spread, been pretty particular

And so even some growth portfolio. CRE, have in many in our -- continue to all bit some lending forms. of it's come some slight retail C&Is, specialty some

not where it's keep in try And to -- we do that growth and any where that graph a track the to we So of actually type. include product specific coming. -- there publicize where we is

it's on so And side. been fairly the loan consistent

of public seasonality the the was and terms second first quarter the seasonality the of And the second of the by that than the with so end deposit in to out on funds in probably quarter, side more quarter. most balances

Alex Lau

look deposit growth new for good bearing opportunity Got bringing to non-interest see treasury this does the more pipeline it. mentioned the you bearing or for deposit? platform platform. in management And non-interest on What quarter, like new

James Gordon

Yes.

opportunity. we're actually excited So, about that

growth have which systems of to our conversion. weighed I'll some little through last your quarter six that's say had we probably system. sometimes out small we a us systems, can quarters to during than four not say say, what so go just sometimes of quarters. I tied vendors world four this are – place treasury a we've that pretty And and converted with go most to there process to [Indiscernible] here be of as sunset on and say, systems to mentioned the robust you eight driven its you had been good others management. nearly non-interest in or bearing was the it's treasury six by investments technology experiencing And last if primarily get growing quarters back over your new management in the saw bit took as That part look last the further seven even you the because we If

about Our folks excited it. are

almost forward. organic so this had basis really quarter when acquisition take I I an hopeful growth the you out bearing that's moving XX% strong. that we're said we in And non-interest about think on XX%,

I point merger for is up we're opportunities the right disruption frankly Alex, SunTrust in a glad turmoil excited think I'm some it, between like we cetera, on that, my some And the the word us. don't that's some career. movement we there see something with turmoil once market, fairly accounts of and that's the other often between that market you large maybe et very so picked And emphasis that, And that are add that something that to opportunities in I'll move see for other and in BB&T about.

that in those we're to. some zero so of and trying to we'll on we're And able hopeful be

have a We at a gotten of shot few them.

We have continue we those to to of on and few want a want focus that. won to

Alex Lau

and else system technology platform. want point last anything color. management Thanks just on a you the And you treasury for to upgrades highlight? there's Right. that Is there then that the

Chris Holmes

It's were online that some going on our improvements of or investment Are we and so some a systematically we have enhancements and areas both a of is course upgrades some something rotate we to our we'll facing targeted all continuing did some -- did that term some there retail there Yes. back commercial and view systems conversion customer that and to when technology. taking on XXXX, are our we long and part. on doing see

consistent first this system a next. systems come the three-year upgrade and that it's got So in over you'll And we this. where those consistently plan there a online next. works that Actually will again treasury process then see

Alex Lau

taking Thanks my question. for Great.

Chris Holmes

you, All Alex. Thank right.

James Gordon

you. Thank

Operator

with to Vandervliet next Brock UBS. move We'll

Brock Vandervliet

Hi. Good morning.

Chris Holmes

Brock. Good morning,

Brock Vandervliet

morning. Good

Just shape. the of balance in terms sheet

not with raising of Now to higher would looking closer kind anymore, you like the lower rates here? XXX%? do Or it's you consider running where ratio loan-to-deposit

James Gordon

we we're at We the consider like not we -- there. we're And running now. don't Yes. ourselves predicting great again future

we will that. it where that. It's is But is keep X% less sale portfolios higher in we or it that on XXX. today. we little It that where we like than on held could go And stay high got and loan in XXs want X% the to portfolio so add than a -- for like a another on today. mind Telford investment a And

the add when about -- you're and be. we'd you So to we're XXX% XX% like running running where that's

Brock Vandervliet

looking that loans going for? tight, point. the How you you're what are kind of in you cut and you Got some you things little prune deep to some to looking there opening at just frame it. how remarks anticipating are you And mentioned more keeping slowing could out think a characteristics do

Chris Holmes

Yes.

keep Jack to used analogy every the target some going certain we a to gee current, maybe used this up about We maybe really -- that target. amount to the we're do today. working, I and of -- portfolio in challenge we try year those bring I to It's a to high have have think don't prune everything's want that customers they the would we they are do we know during used And good -- that much don't that's when but GE, always struggling the case just make they Everything's any certain we bad bad Welch performers. certain in review So, folks consequence. that keeping do times guess have had out. as it's times cut to a in

say to-date we're XX% Only look first so will loan XX% over if I that so, longer. like year And also that. half in the nearly XX% of annualized at to grow an to we're the we on and you basis year, growth XX%

in not be particular anything ahead rate. can our I middle range, so in portfolio just we good still talking of annualized get our to in grow growth basis, X% so the any on we of XX% try And and an or opportunity in But grow to think a already downturn. that reduction right to terms drastic we're about XX% at and it's in

And continue any can our sure growth so, is going, try by portfolio make the opportunities amount. face possibly in while there to opportunity to we X strong as reduce have don't of take out this any we just We're let's saying, to dollar we're to we have it be not want -- but strong downturn. as

Brock Vandervliet

Got it.

you. Thank Okay.

Chris Holmes

Brock. Thanks,

James Gordon

Thanks Brock.

Operator

to Daniel Next, we'll at Cardenas James. Raymond go

Daniel Cardenas

Good morning guys.

Chris Holmes

morning, Dan. Good

Daniel Cardenas

like if quickly number for you're there sounds a you markets you specific us perhaps to a just any hold folks. talking it your would of back what in than period that of transaction? M&A, to kind kind as earned on could you of are more comments goes interest others? for then But And remind So be looking

Chris Holmes

Dan. Sure,

first to we'd in give to of operating for leverage. us have markets, where more love number markets operating leverage; a So reasons. some One, on we density more like get we footprint

and because to cultures first. to and lower then risk tend And they you tend customers in the know markets, and and are opportunities that probably the those contiguous we the people Second, people opportunities. be know then and we we where are and -- our I'd like and then, things most enough the so know know And know there's know always beyond market we so. we like --- say more of markets immediate that

to or have We able third some today categories markets, that first be our beyond like two like are go those or wouldn't places in to Birmingham have markets enough ambitions have the probably do current to to that that go but jump today. Atlanta opportunities to we that we

would the geography -- the of And really we opportunities that's are so types and like. the those

need can and quality. We that. with We lot our relationship see like pay and mentioned, of then don't some that banks. banks in with And As banks deposits wholesale and strong on credit portfolios. do good own. that we I premium deposit loans good wholesale customer have a we we banks We that I like contrast it. We solid a for like don't a

depending they're looking could they it's they'll of take we book And be desire markets owned accretion complicated we're attractive already if because specially need and would we to privately think like value of on we metrics, some also if may course be then There don't type and take quite -- the when banks be EPS tangible to are value are we're manage a where the we meaningful any deal willing then have Again we today to quite gets could us not sellers attractive that That some more certain We it. some dilution dilution. get book cash. in carefully. dilution particularly know and some of financial going may company to tangible any. more than And

little that lead so And to more book dilution. value tangible can

that's to under to that transaction transaction to three-year we going years we going whenever we're so we looking on dilution, to particularly particularly even some under try that take to we that want at back but the generally is tangible keep that on important and manage by watch mark us. earn the And closely earn, keep a important we generally and may book closely that three

Daniel Cardenas

for right. guys. All Great. now. That's right Thanks I have all

Chris Holmes

Dan. Thanks,

James Gordon

Dan. Thanks,

Operator

remarks. conclude over does At session. answer the turn that back the this to time, Chris any And I'll question Holmes and conference for closing

Chris Holmes

your We'll Thank forward for very and you time for to and look much financial. Okay. your you thank happy next all quarter. you again interest to talking

Operator

your And you that Again conclude thank today's for participation. does conference.