FB Financial (FBK) 27 Oct 202020 Q3 Earnings call transcript

Good morning and welcome to FB Financial Corporation's third quarter 2020 earnings conference call. Hosting the call today from FB Financial is Chris Holmes, President and Chief Executive Officer. He is joined by Michael Mettee, Interim Chief Financial Officer, Greg Bowers, Chief Credit 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 on the Securities and Exchange Commission'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. of With turn that, Finance. Director the to Corporate call over I to Robert would like Hoehn,

you. Thank

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

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

We I one today. quarters Financial and in with Financial. thank appreciate and to what impactful morning strongest And has FB us the you excited Thank I for since think joining and everybody of good company. FB had the on am been have your you that Robert most interest you update

quarter, the feedback experience banking conversion in and The over out from really new mobile customers improved platform online which July consumer app our customer smoothly mobile converted online our that our first, have and capabilities we our how and systems During excellent gotten we banking the new experience. and went. improved

anticipate managers the to Memphis added the over July market. that we We quarters team production their steam of over as really very the couple next and in continue in XXXX. of course the to in some and commercial well-known we expect clients some that gain bring momentum Second, long-standing significant relationship over lifted strong And some they FirstBank. of

the X.X% we Third, and this months on merger closed get Nashville's me we premier From hustled FBK. the to bank had how at our that see together conversion culture us team, people on Thank X.XX%. nights very adjusted pre-provision be Franklin very of of months feel of return October through then have XX on earnings come bank the that one than community systems of a average to To two premier accretive and embody entrenches organic Fourth, past our we of And breaking That protects of we future the assets you August. strong as posted powder to M&A. teams the provides community and dry and finally, accomplishing further further growth put one million associates sheet $XXX so few notes our subordinated per record milestones. pretax and EPS bank. made million later towards philosophy August perspective, a our record-breaking adjusted the to we adjusted those strategic over share, many Tennessee's has us a us $XX.X at well positions that proud XX. $X.XX sleepless for raised here in less end balance

pursue growth. we place number of M&A from our profitability back priorities As three, one, our and in past This and is fifth, right. and the us you associates, liquidity, March safety capital, to four, These ensure the of to health accretive reordered sheet. calls, in the positions our when customers two, remain priorities strength to time balance number growth number may aggressively remember organic number and

of On minimal protocols returned office. continue had our emphasize cases safety the we employee as have of and across our most and of the have those, we first to associates base safety, COVID health our to

We our operations have our moving team normal. to while and protect our a back for provide customers environment continued near to safe

number liquidity of built two, in XX.X% to assets have tangible $X.X access our us. and an priority position For to contingent available we to billion liquidity additional

We of excess comfortable are very the position liquidity liquidity. company's and

some down unwind So we funding came over number the next in quarters we expect as come our On few over the to merger. liquidity sheet balance that non-core own priority position three.

to tangible million even growth and that's organic equity books. Our in to balance has with X% deposit assets loans PPP on the over course has the a million and tangible this sheet over common year $XXX increased of that's still $XXX seeing

as is have high risk-based which ratio we Our total capital ever had. about is as XX.X%,

take arise well committed. that guidance opportunity future. had that strongly balance We a and that C&D economic themselves we sheet combined and on our larger to get managed originally portfolio quarter, with originally had than is of XXX% that present this in we a to a any on thresholds the is both took that which may Franklin to the year merger feel positioned of also earlier well, issues and anticipated under any advantage We basis the very may regulatory weather

bit in credit increased I $XXX net I am for we as million $X So allowance will our Over a period, speak by well. while same talking have Year-to-date, we experienced charge-offs. credit only have that about our losses capital, million. to

loans PPP investment to ACL up X.XX%. excluding to held Our for is loans

number very nonperforming loans bring feel to in We have our On margins. four, working our profitability. That's little remain We to good, protection good we Our too leading maybe given loan a XXX%. need priority is will the for on about that portfolio. and down, earning place we that the decline a focus regain have seen until focus been our keep deposits peer a assets. to we cost ACL

However to $XX put went contribution. expecting million we about in up the pretax year-to-date, $XX $XX pretax mortgage has year, contribution, when in million into million

adjusted PTPP that's quarters. As the mouthful, has X% been each a two a our result, past of over ROAA,

in on rates. So I would say, margin we times our declining a pretty effective hedge of have gotten

number For priority five, growth.

we in pumping the that felt terms brakes back We that XXXX. We continued and the place in measured started on approach rates we nonsensical. put were

with this some opportunities best have are quarter across some used and to customers. deepening in footprint momentum on significant head this expect We into year our focusing as pickups local picking while economies seeing our some we new credits our real prune up, regional are weaker With presidents relationships XXXX.

in company billion the assets grew of overnight $X.X about mid-August. topic On the in growth,

We our to and these lays shifted two of just that slide included MSA in deck some for how Williamson this are County to County the share quarter's XX in Davidson in thrilled banks have market announcement assumptions in us top has have Nashville to the from we while Rutherford our today. in creates in the what market and being share County. Strategically, the second bringing top

That working that to at this a mass in opportunities. people a bit with we became critical achieving a announcement leads market some that market. some we closing. think creates to additional together continue like in thought were were our seven From of months merger the with we the We clear that after top synergies more that combining towards perspective, players

let whether winning. now a every talent than for FirstBank couple a they The we individuals are is same used the banks each even better the they knew say working So or organic expected. elite work company that one every months, as team the to the that been in we a can are country. new community of on I definitively With joining and associate that that group of have that team through high-performing performing the hire, that day for merger,

the get things how but points attention with from and all to But cylinders, things have takes stacks resonated on work accounting all a I tell our later. new a the with and of will perspective. and to have do integrated to excited go should believe are our story against that and We teammates our is We of of our far. to in the including gives really some fully teammates, on, been well focus message your be walk that always up your financial well want and humming couple through out I we Our company. we that all performance has message you pleased still so let Michael purchase proud of gone you have competition this market.

value accretive per to the share. up ended transaction book First, being tangible

we back the and rate impact pandemic terms environment But loan on the thought three move mark value rate share neutral portfolio. going tangible continue transactions done interest streak our Each or the its in the zero accounting the dilution. that With as way book to and purchase on to that and loan whole-bank swung March, see will ultimately we have evaluating and since we back our public some might per April accretive May, we other the of the been due to best mark, forward. do we were we have

balances of there some for is equity critical quite portfolio. to of classify sale. The institutional and of portfolio well some portfolio credit legacy the loans since Franklin examining done that doing had tremendous that some team loans the sponsors from assets strong are is decided are million $XXX in as Second moving options. principal that a The working portfolio and and book private the sale item bank job announcement behind actually as backed at held That we we portfolio has about non-core the quality that portfolio in of ultimately out X/XX.

any help are and see accomplished been while All look sheet incredible team better I is we than our have ultimately year be type our mark able we that has don't demographics of I I created look that our franchise shut said, on of the this hopeful that portfolio. what that we an can't we has sit and we now So that execution feel positioned look footprint world and will take may balance think but of bid and at closed I value realize merger shareholder pressure down. to bottom-feeder any how and amount we our to and the at here that

we We our laser-focused loan and talk integrated going enter portfolio. Greg to fully With am take I to advantage about over Bowers to opportunities. getting that, on all call XXXX are turn firing the on Franklin will and of cylinders

Thanks Chris. Good morning.

our message will seen classifieds continued our asset previous our and good in continues it in have how metrics non-performers. even to trends including this about release, That quality be From past associated for watch for on We categories. these few well, on calls themselves, times. as continue speak spoken the and have perform specific But list, I has you touch we perspective, report quarter. to unusual credit numbers dues, that a a important to with

On down X% the seen roughly a deferral combined of front, to on we company at move XX% high a from have quarter-end. over that basis

what we onset our well we a and help in proactive have deferrals. customers for got a next. these this, few out of, requested uncertainty, things Behind it As of all of management. as seek a of lies the need deferral was our Initially, hit, are truly but numbers to desire have review. combination hardest going those But a customers conservatism to doing reaching relief with many fine, the might we as that the in in in remember providing category consideration I out noted deferral this risk of before, the am hey, which at that come against were to our protecting relief, were

second quarter. the and that was the came were that those deferrals in around, quarter began the to pre-COVID latter drop. report category first their our So in back Then plan went to as

segment a that optimistic cautiously say, uncertainty of for stimulus, hotel but and the in quarter concentration or the without vaccine accounts to we In deferral reduce will is single to which the Now we remain this true regard. here the remain are the third am within report the portfolio. make largest watchword. pragmatic glad regarding ultimate continued the This I we progress outcome about summary, continue especially to within size portfolio continuing that are with

quarter-end, with moving slide to the with billion provides up XX. This the by roughly of combined overview Synergy of an new Franklin merger loans Bank. Moving as portfolio $X.X total

worthy previous the presentations, We portfolios makes the to are this on it highlight company. changes together. has that excited and about we but in think impact hit some today as is these I on Chris our this two put of

will portfolio, page. the so presented am sale. loan not the portfolio. First, My institutional how same for for all book, loans talking the market on investment, the I local about we old clarify held held non-core and comments deposit we are not relationship-based the let's the about plain loans be

has With the balanced Franklin of An the portfolio, builders statistics right concentrations people, homebuilding historically. estate building a to are estate if extremely going to process. reflects broken portfolio That But be real Synergy's successful that standard real commercial who strong the growth market. No right are counties question dealing area. the it this subdivisions, any out and are portfolio you and market real expertise into and Davidson a lending residential remain real upon merger, of piece. will The Synergy legacy is the portfolio a homes inventory a levels. held estate relationships residential The Rutherford took better is estate continue was well-diversified The advantage that construction for there focus based. built market, is segment in your and we don't than And has about area and trended the MSA. single-family and see be in primarily FirstBank Williamson, on concentration homebuilding and assessing piece than we Franklin percentage that to within with sale. demonstrate is tight it. the The up to which inventories our higher company. you is and believe in business, monitoring in area

see threshold. the also alluded ratio below percent already our a You construction development has XXX% will that risk-based as capital is of and Chris of already regulatory to,

at is which frankly stands than it Now we bit quicker expected. XX%, had

know, estate Again, with portfolios with owners instances. underwriting On the see skin as their bent side, people a borrowers commercial size willing dealing a within stand well. to little focus higher we and we similarities similar game, a Generally, deals. focus the the on real a market in behind certain two with that parameters dollar local in toward

begun have two organizations. merging the already company's processes the We and steps credit of

a continuing two to We melding and forward the lot going of will the cultures assimilate time spend portfolios.

next slide the XX. to Moving number

which up with first next done past, breaking provides we the have of all XX an results. continue slide watching. to has the lines out Slide granularity. more providing little began This would concern. say be I slides references something portfolio the that, are As in the along we that of overview our cash that owes retail general we This the industry a But the portfolio Occupancy continued and meeting in do slide we significant XX, good to a see the has to the in On while borrowers and regional $XX point segments previous picked of their low of CRE retail would that a $XX our strip a That mall. side. under its has its with has step-ups larger C&I say moved but are typically to by that component however largest portfolios and remain a that million. smaller support of mid-XX% high could bag performance, have single willingness optimistic atypically as the the sought deferrals. hotel the I continues across we in property centers, up loan the similar, fared has range a secured the is over We to the It's thousand underwriting dollars of positive results. we This owner-occupied one properties. about a with And general, hundred that is well not about exposure merger. actually and just fees to generating loan-to-value This it mixed we obligations cautiously XXX performance range. We this slide, one my the flow. portfolio. portfolio original in deferral. leverage occupancy our is board notes hotels wish at consists ranging and of the positive remain represent this few from of the highlights comments report largest million

to an all them of for the an calls account this, too into roughly that, both for one and without deferred have year our principal reserve current, extend customers wherewithal bring did detail, behind the a which establish upcoming the lines. we to requiring corroborates with than interest-only conjunction for we of properties example interest largest As interest, in year. with agreement On an stand entered agreed a much who the agree going Rather structure. maturity we of an to we with and we that overall the believe into have these investors this and position to are dealing basis, and willingness our good

XX, which practices I field not slide, nursing the and having slide to support luxury compared with properties next lower to are primarily of would which, after Healthcare as the model accounts results. Overall, is say, much occupancies. is deal an from steady portfolio that is number X.X% to which to living service hearing report at can here. physician that rate on that service this assisted good we you and occupancy are overall are Anecdotally, while is note full models reopening know, that COVID a Lastly impacting continue for of, our limited the location or operators the skilled Generally property. our protocols portfolio.

in total. is reflected XX, Our accounting for under on restaurant exposure number slide just X%

we before, merger up moved portfolio the single a talked As largest with about our did have pretty slightly we as Concentrations diverse here. exposure.

capacity. million easier operators footing. markets, finding service full local a But with and to as going to service actually operator the seating good Now continue the be financial with the strong constraints approximately are than all $XX and it's on limited challenged

one will monitor so closely. on well, this we that continue but to good far So as portfolio

a food segment's quarter's business within with moved performance was larger have not QX. declining a diversified included rating operator As been this criticized presentations, noted numbers, we that have whose our did to in prior in

we decline. XX the will $XX roughly under for highlights that and pickup mix accounts this likely X% You exposure our that of leisure a accounting assets Slide to of for substandard our without million has would just This recall for improvement, it the represents quarter. majority continue just industries of portfolio, in that the total. indicated an done other which

have a an It I continue include turn do be business the uncertainties perspective pandemic. Deferrals teammates with over good. remains assured airlines. will Overall, any quality the few we before, But activities but list segment. this it here the it from activities and you debt continued our satisfactory this us would out direct tempered within asset some related also as total. the down. continued to results customers. benefit within some travel not With to discussed Mike. to Slide to warehousing. under and remind all the such if that over at working the to within air past enthusiasm see review we continue to to segment, didn't has keep as credit as quarters and seen indoor support merger struggle. warehousing, Overall environment, we past outdoor We under we such expect. over wouldn't however, and outdoor does the must some update trucking And As which be point commercial have that, breaks new continuing XX In any have excited about industries a venues X% are improve transportation good current we economic that with rest segments quarters will as performance few we are summary, of come actually while this and

prepared be the CECL My impact the Q&A mortgage. and as And margin well. today good available for and Thank I you everyone. then and the will will of merger, Greg on section financial focus Franklin remarks morning

will for out economic CECL, on. to to ACLs lays million forecast reporting have forecast a baseline the are feel our With that of on the July. our walk First, like forward our our than slide touch captured pretty well of ACL slides put expectations current in September's two Slide well focus and we positive resulting Moody's We XX And assumptions. market. forecast first we $XXX shows June's blend as $XXX by used from million. each more there I XX forecast on category. blend, out as

As did not in continues additional September economic in noticeable scenarios. see July we time rest August positive out that forecast country activity were our reopen, Moody's But of changes that put markets. more the to the our than in in between incrementally did the and forecast,

So July for we blend ultimately our with the stuck quarter.

slight relief Looking at on quarter. there in were two that portfolio, our primary we saw ACL the legacy drivers the for

balances Together, economic tells million of declining the adjustments. second adequately we at QX a to this reserves to bit heartburn opposed was in for little approximately with feel us produce these few $X improving very used combined continue the as first forecast The We still and but go a this those QX. was our we ACL reversal to qualitative about quarter. and letting had stick reserved what point with model that

Franklin the ACLs, that related On touch there few on. were I components a will

first speak non-purchased is to deteriorated The credit I allowance. our will that

model As bucket That our in told X.XX% a needed ACL. in for of were quarter. CECL loans they September $XX.X the expense and provision of billion resulted XX, million there us in in $X.X that

portfolio adjusted the Given the provision, that entire one back nature reserve of the providing our earnings. in out that on unique we quarter, for of

purchase deteriorated credit Franklin to piece The related was second ACL. the ACL this

towards were of was close million on X one. at ACL $XXX and X.XX% main at $XXX day provision and held our of wound to and about factors million loans Tier Segueing or investment, XX, four with ACLs PPP. us excluding up for of to led our quarter. expense this from million CELC expense. that being than we capital loans an ACL That our there to does There pieces impacting rather in goodwill portfolio. told, established As expensed model our ACL not All was qualitative on X.XX%, that count of $XX.X September in the bucket piece

release about and talked have which related are portfolio We reserve expense. day legacy two FSB one

unfunded for commitments. related The provision other two to

of had to the unfunded the commitments million. outlook for With we on $X.X from improve quarter-to-quarter, relief continuing a economy

led portfolio provision million. unfunded the for earnings. assumptions quarter, reserve $XX.X one On a of of the backed the this provision, in unique non-PCD environment one this due on commitments of building on day our Similar our on nature the have economic adjusted we also to our side, out to to entire FSB

the four these our You slide of on could see details expense provision components on XX.

quarter update like this. would compared million the Moving $XX to which our that up that to impact. as the to it's purchase of our point first on think I as into bought to am of talk you million accounting, loan ACL and the related from talking I CECL estimated an initial FBK's eight at bottom $XX To $XXX mark. standalone the adoption of through into put At was legacy terms, mark million from to $XX I announcement. $XX relevant total CECL to of million million million. to wound basis double The or up pretax slide one standalone helpful ACL standalone mark, would we $XXX what we loan been economic assumed of impact roughly this forecast announcement, close, PCD had ACL have have value tangible a from be would or that expected common $XXX point provisioning, from to on January. been equity back day what related bought At million our initial million in with that on fair to $XX

move low $XX million million had [indiscernible]. that So to $XX from pretty

few we non-strategic the or we at cards on large had will level a the to right refinanced had on In liquidity par on par. mark $XXX portfolio mark million get portfolio. of no on The loans. portfolio, remaining second the at million of the is $XXX feel remaining sold past At to if other credit while X% captures X.X%. close quality assumed be months, a pressure mark that the September we portfolio. there $XX that an to either the we million XX, that million that and We portion banks the of At have the a seen announcement, mark given X% we piece feel or opportunistic get we comfortable sell $XXX

liquidity million with [indiscernible]. we value was announcement. ACL the $XX The on are assumed fair pretty at non-portfolio, That $XXX million million of the as up So the have came between where fair loan premium the $XXX marks. the piece our mark credit had the that in into and million mark value last We and a million marks versus mark credit good still announcement. $XX we rate, assumed number would $XX at

the versus banks, Checking on the So announcement rate a Obviously, what $XX driver in million Between environment assumptions we purchase we two from around realized. expensed a huge have was accounting $XX million third the swing. quarter. or merger that the announcement. related at $XX being the in expenses charges had event, to-date it expected of Despite quarter million most fourth we realized a we conversion versus there.

become branches their headquarters location, our million We expect to that to We have all terminations up net $X for operations left cost. contract and acquisition. related former $XX Franklin the which adding has fourth hub. lingering nine million quarter except we would see from ended the in conversion leased has locations their

to plan current is sub-tenants closed these find Our for locations.

very the but potential fed early XXXX. a That may in is XX% path modeled to we save loss second in today. clearly which originally $XX low over we at is realize are savings. our bit of Durbin, estimate cost will it anticipated feel current $XX to said, are full our the a we little hit rate take cost run strongly that with billion environment, than a at So under There over more billion this we rate of realize On longer assets would on strategy. likely executing getting $XX revenue be how billion announcement. point, XXXX in we weighing to created on of XX/XX than at not half that XX/XX, transaction interchange cost-benefit and are At the we

of announcement. as value versus creation tangible bips tangible neutral XX book of about calculate we Finally, our today

deals whole-bank of it shareholders. to neutral value and pass-through to that have protect our value tangible each or noted, either pretty book Chris for our As been good feels accretive

on stated PPP on the Moving to number. continues and margin. to weigh liquidity

contractual liquidity third despite from X.XX% messy, having quarter the to this yield Contractual basis PPP X.X% QX. The half about and color, XX the on rate bips at in given is of X.XX% loans Franklin for XX books PPP, only contractual portfolio impact on had was recent points quarter. And for the decreased fairly on around X/XX. yields quarter. the loan

loans, the held portfolio Excluding the was PPP around for contractual X.X%. rate investment on

points side, On cost XX those deposit of in quarter of basis a of with $XXX decreased There maturing the X.XX% X.XX% cost The million weighted deposits points. average are total repriced XX. deposits from to as have approximately basis time sheet QX. September been X.XX% Despite in rate the the for nine fourth liability would deposits X.XX%. cost in of

third CDs had a the with during about comparison, cost XX a under we basis of rate of an under bips mature those points. at quarter of X.XX% For of sheet million average had just we average under and just renewed $XXX cost. a XX% little XX Those

We we relationships million legacy this quite a $XXX deposit have identified contractual that relationship quarter. rate also the of consider core would sheet at customer not that will think we we Franklin balance X.XX% in leaving

to The quarter. produced record another team Moving mortgage.

gain So we this to NIM regard. congratulate in that their loans continues to facing mortgage would in environment. low industry, pressure seen And margins slide in constraints atypical the as strong group bank counterbalance benefit origination strong on XX. on producing quarter, ultimately our last from margin pipeline with that rate is work our in and like the the Similarly on to to our continues the on production us capacity volumes provide sale to and

expected. on As pickup plus execution we to mark-to-market the call, gain demonstrated in QX slowed QX earnings second in highlighted value is during sale some quarter our

QX peak is mark-to-market Our over will to the current elevated gain turn to likely be production. we that, but on will will value, With to due for back our sale expectation a in levels at new I Chris. margins on seeing call continue

are up To we you color. ahead of this still that, have close, operator. accomplished we Michael main like I you excited quarter. for proud the us The to on Greg open execute to meet right. those for questions, challenges very what lay the we would line those, the All capitalize With for and opportunities. thank Thank and are but against

Catherine comes [Operator from first Instructions]. the with Mealor And question KBW.

Hi. Good morning.

morning Good Catherine.

expenses for outlook is I mortgage, looks a color. expenses. first on are like maybe and had just the of core bank a first my all $XX strip out for But of core of bit these your bank just million. questions we little under question If it kind Thanks were more the picture. just needy couple

And savings number can give and so in. Is then visibility your what kind move fourth quarter of and you as year? there looks next then Franklin of know partial have the we like to cost of for rate a have we into that coming growth I you quarter kind any

morning. are a comments. dollars, you couple Glad make with I me good Catherine, don't know of but the And us. And let exactly Yes.

quarter-over-quarter. Our expenses core expenses flat, close to to pretty legacy were close core pretty our flat bank were bank

in ways, saves slightly cost terms perhaps better slightly it expected, coming as so moves look earlier. expected, sometime originally some are that are a There could getting as of, I there. of both things think in we our we earlier moved Our them XXXX. saves as maybe coming cost in number And couple are of because out, in have beat in actually we that

markets these was That's plan announcement. We is at some have less, closures. attractive made when less some got some subleasing. it from branch of do we the than to We

So likely allowing all confident even a meet that, think exceed that with We drag that. cost could and those. meet But we more we saves we on than little will the expected. very we or we that that are exceed

so standpoint. And the a to quarter continue related to Mortgage volume. from will an variable two expense remain elevated in those fourth That's elements. expense purely

revenue on notice, much. and get continues you again business efficiency that our so variable If better gone to will a has it's expense and because up better our

quarter. at we pieces look kind clarification? that's Okay. as other so moving And of Any the fourth

expected That's bit kind good there is than that Is they fees, Or line? one-time helpful. anything run rate? other quarter. that in more a of little were up And well, this then a

fees. in other Nothing

particularly. were loan not Our consistent, fees

fees were -- Our swap

million. $X About

Yes.

there were we So can And fairly and review detail if the something no, they put we can is that in our deck. consistent. there, certainly

Okay. And may. I if last one, then one

Just the mostly closing? due classified classified Or was perspective? the this any Was a migration legacy deal assets. to there of just increase in Franklin into kind from

is Bowers. this Catherine, Hi morning. Greg Good

morning. Good Hi.

legacy of the some merger, have about as quarter. in million moved see I larger account that think but into the substandard $XX will one FirstBank did we I from you from that referenced, that's

referenced That's referenced one comments the we and your you today in actually. have

Right.

as in actually referenced deck well. referenced the comments. was in It the was It

Yes.

it. Got

is that. what of apologize. And I type I that? Okay. credit missed

it's Yes, diversified I referenced. It's is foodservice, it. call a what

Got deck your that it. put before. in You

Okay.

right. That's

so the it. Got All Thank queue. out hop Great. right. you much. of will I

Catherine. All thank you right,

comes the with And you. question Securities. next from Jennifer Demba Thank Truist

morning. Good you. Thank

morning Good Jennifer.

Can hit kind year you per should interest in assets quarter, next billion $XX fee of remind you expect us fourth what would you stay over in the quarter?

$X price that would That's what $X would it what about us. what cost between It' -- that that's will refrain. $X I control million million, is and -- Yes. million

you search? us CFO can update on And Okay. also the

that's well of in the that is, it how The we expect candidates. before pleased we been and update and end And to Yes. with would year. going the is conclude going interest

One Okay. more question.

be environment about acquisitions. long opportunities us a point? be at before give what And you of mentioned you interested of kind would timing How what this in comfortable doing some times, deal? might at? another couple this in looking we Tell of are you You terms would

did like in seen remain thrilled does, we get that do go We sitting now what branch is the to thing talk strategically transaction everybody also highlighted. engine folks been at, leverage. I would financially the Every sure hitting really, has merger are of and strategic right we have and successful. that that as same our same acquisition focused go we in And this with things that as prior it's we that that Clayton. don't all as really cylinders. terms see We with successful, our from Yes. the that have Atlantic I clear the I internally table a about the thing that done And critical All operating those expected as of we banks about say on really would Capital. to acquisition back mass. and the around then I back and with And really price you to the much about we we position. am sitting But prior been in making

sitting engine our growth to organic our sure and in here are make now want and really among we peers. our we so markets And think, is still we best,

one I is hit we opportunity disappointed we absolutely ready get get job take so sure them. before suspect And a We six make we going strategic opportunity. to to I because It's would we suspect really we us. things if just strategic making could will But for time. strategic to to will will are right. us that's do we same the months. We got frankly, opportunities, have somebody more an to three to do more some one and again. for us wouldn't is wouldn't for didn't be and miss have decisions we an that little that's be we be get And always than one,

into as happy to operating lot And so to right metrics see come say really where happy and kind what And of of wind that's continue to move we we will balance way is really our sit. of our are opportunities say balance a we all would improve are we we of sheet. though strength now with organically. our XXXX, the sheet I our

I And in great so think financially, a position. we sit

much. so Thanks

Okay. Thanks Jen.

Piper Sandler. the you. question comes And next Stephen with Scouten Thank from

everyone. Hi. morning Good

Stephen. morning Good

to that annualized That back the on half number? $X that number? is an million. Or just the One quick solves Durbin clarifier impact. Was XXXX

That's annual number. an

we a it of shot, out it's get real we question, funding the billion, off would So and we say, some but completely but $XX long shot. are assuming to wholesale under go I long of doing not because things don't be that some would in base, pay it's

our other question about much if And looks you credit there, percentage basis then It categories. I can't the loans? the the last points I noted quarter. of Any XX could reserves. on touch that million on the if then And exposure, around you reserve foodservices that C&I remember in Great. specific guess one there? higher $XX like for reserve the versus

guys segment? what you that And you So I portfolio? am lower confidence wondering, on that gives that what's different percentage around at for

Greg. Good morning. measure have in just That's here This that the we reserves direct as to we general us specific as in would the how I CECL those. far got ACL Yes. is just the numbers that. on on

for look And second Yes. half.

percentage, there C&I improvement some Mike. see It's Stephen. quarter-over-quarter. Hi we did

how into in I forward. kind think that segment looks the loss performance that we see of the will that. certainly going stimulus And played expectations, has [indiscernible] the been But

Okay.

with this? with loans business, affiliated maybe So PPP small most

first They part. will that yes. try, On

a So nothing that. specific of because that kind little bit nothing CECL other calculation specific an and other what cause of us thing. increase But than our would of the rating than to

Okay. funding some the cost liquidity have Great. And have the noted non-core from possibility and you guys items to of FSB. use the to then some higher

a have liquidity. lot that, excess Beyond it of looks you like still

food a there be you would anything book little that wondering, the Whether securities more additional might the it else am think side? I So about reducing there? needle bit how move on initiatives or

a helps Yes. balance ourselves pride little of side a There dilemma of our profitability. really is having funding our a do really sheet we on there strong because that

helps I available deposit and of our and there lot helps real several stability relief gotten. think things. it today, PPP bankers liquidity have numbers in everybody really our helps that to of because and a the not the because folks the elevation is margin some But of that's

same funding. time where on And that's we we wholesale together, going are at looking the all at so some two as put these balances

then possibly that portfolio yields course grow your are pay are down. investment to great. but we we the aren't trying could So it thinking And rapidly about pretty of

was credit on wasn't we bit you this up markets, little tone. from But our begun a may the pricing some perspective it. both pre-pandemic. And to to have a both loan perspective, and perspective picked things have had, And see we in it so a tracking side, the credit a from

we for to have more absolutely we probably Again, aggressive. the be than slower see business, Franklin And us are pace at behind business, expect even I we so the got XXX% have. growing transaction but a us. open would

to more see and there into A-players XXXX. of expect team would us I a aggressive out those be have move as we folks We

And so that's another strategy.

helpful. one last maybe very thing, Maybe Super level. Perfect. high

in reopening you was you seeing and the almost population August the I think that, I still weren't pretty said improvement flipside But some think numbers. would are that seeing Moody's economic inflows. guys necessarily as one by the indicated strong maybe of

forth. zero of tax think percent growing are state, tax hearing us population Northeast all states the and from rates about with zero and I migration in so

are phenomenon? you and anecdotally, if what seeing if seeing significant in can markets that are your any influence So just I you on tell am you us wondering,

Yes. the job just has are And other from the New be question. seeing are. York in get that our asked that good in really Northeast, leader we particularly the would in often, and Nashville really particularly to our growth continued But Stephen, very We be there. we places. markets, especially investors strong

are make here. companies significant folks of big Amazon a and numbers move We presence. seeing technology investments has

a which really we is states so to assembly in facility really assembly assembling seeing numbers just plants in vehicles. GM suburb. big, again. And Spring now $X pick begin Hill, announced are of Nashville billion three those investment the are up electric All their

making are big folks investments here. So

then it's logic. And New couple will buying of York, quite somebody folks, you just homes New And here, continues defy to number and give that remarkable. from has I from who side from they It the hear, from the they almost residential migrating to just so either the good. up a York actually if are lives here. so then buying are homes pure are anecdotally Jersey, or moving And you Coast just Chicago the when they area, from New West big Connecticut, been

party dinner that. I just are seeing a mean topic. so it's And we constant

it. seeing of are lot a we So

super so really good I appreciate Chris. and congrats Thanks Got helpful on it. a it much quarter. That's guys.

We you. Steve. appreciate Thank it,

And Thank next you. question from comes with Kevin the Fitzsimmons D.A. Davidson.

guys. morning Good Hi.

Good morning Kevin.

no in the not be the to is next bulk preserve build guys to reserve behind quarter, the some the this necessarily at metrics detail could given barring you ratio and potentially that you given led adding organically? calculations say releases it this of to and quarters? and Chris, fair over the strength changes all that big on or time economic lot you few given in the is of point And the I spend growing that of a the and reserve appreciate the expectations mean

Yes.

greatly straight numbers said and too We and we fair. it's have good pretty characterization it's think consistently that our pretty I fairly think not said from varied a from consistent, calculations. I own secret we we

highest, to certainly so that's of led among highest our doing approach. And That's banks the the And peers, it's And been I allowance had undue it number influence haven't not differently. among highest. us factors. qualitative our that's think. different If we understand I the

that go, yes, cycle. we need think surely that wow, to at it's at I say so, even we fair as as the it, we can't And we in all look look

could in with, follow a something it conservative the was think that it unless there we really expect. turmoil, it cause to worse you know, election be get that of we all could quickly that kinds take I you something from it But characterized approach. could Now, we be us But hey, really up wouldn't changed than see wouldn't, changed. outlook, economic unless it, up we here, going things

book the step time. decided it and -- And to into Okay. That's to was on some helpful. that that from know and then I FSB, sell order very was look the held was institutional to for sale, the take loan Great. decision put back that that in plan to originally portfolio short

for the for decision So sell a of portfolio? was whether to on imply held the those? a held to opportunity that that in more to able you be saw to term keep short to decision sale go process Or investment did there

sale. conversation been you, start that's afternoon Good for Yes. telling question. I late And and when would held it's went it yesterday by as a as

thinking, boy, characterized here characterized lately, as moved at looked in be at as that. Initially, back right. we it like were again, as are you sell March, to know, we then exactly into you to through, we it we And And Then so it April, sell you able just went then some looked we taken going find. before, we to that. I in have in we those today's that's world But strong X%. And of, it's it. it's they come because folks on to a it nice yield going to aren't said as are it. north need a approach letting to got the are at look And we have of therefore that's with performing portfolio we options easy will

But if let And we we to it. it are comes so, going somebody strong, sale go. may then fire

a constant topic. so And it's

terms the on. of off, number moving of all one. in Okay. Great. doing And there what sheet is and you last balance a things are parts one on moving Understandably things moving

net top let's back, reported bigger to be step level margin looking What So net two margin can on expectations from ex-PPP could next over say, you a Thanks. you the core the see cold see what doing? picture, a some give on basis the three interest interest quarters? doing? And taking forgiveness may a

yes, just But do Yes. been moving we really, right lot now pieces. question. and the you we has mentioned. that of what Kevin, because to parts prepared are not There exactly appreciate of a

and that of to at want put parts the but try point. go this we we so And beyond to some pieces wouldn't out

additional out we later. we the and expect a As on at some investor margin put any out we quarter further meetings the and want may we deck put into But we and we do what deck, update some this information next quarter. don't to move the on point,

right. All guys. Thanks understand. Okay. Totally

All right.

Instructions]. next from Thank comes Alex JPMorgan. [Operator you. with question Lau our And

Good morning. Hi.

Alex. morning Good

So think main following two year? contribution, mortgage headwinds? are what XXXX, positive about drive driving can you quarters thinking you consecutive And offsetting in when pre-provision mortgage net levers of in growth potential the upcoming record growth revenue you are of the some

Yes.

are the about our where we from had look And to fact falling ROA are by think peers a of well revenue get X%. most have hoping pretax of of pre-provision a north you at if pretax and So pre-provision of the you way, that and X% north short. we number

going anybody, something of than But shocked in would better. even the wouldn't as to like in the be not I that it has events of have though it of we performance more next think said quarter, was fact, fact, same storm quarter. we perfect mortgage matter expect we last had created are a we are And And looking results be so, we at sort that repeated.

nobody more And about shocked are. so is than we that

the are core look we we that of as bank. at earnings XXXX, So on focused really

quarter And refinance core we the so, year. mortgage, help our huge this got earnings in of a have

it that strong projected, say quite year. Let's go another expect we rates would

I we million contribution did basis on was $XX this annual Wib, quarter, our $XX and record previous, million previous of Our think for an mortgage okay.

That's right.

that Matter And I year of say set we high duplicate never would we we year. this that hate them. good been we pretty at I set fact, and won't to next set But never. no. so, expectation. And have mortgage achieving would goals the expectation we

to focused the how margin. on We grow be we are going

know, we still how on focused be and will less, the the continue in be are be to mortgage, understanding we have going margins peer-leading you the see is volumes But are to expect to We we momentum way the going industry-leading it. and of measures two numbers in our in terms terms of growth well, on of capital, in capital growth. and of profitability EPS return those our growth, terms terms our terms really of terms in our in in less and of our

you Thanks about to you target Franklin for building long has you. comfortable that. term changed Or How the towards Thank And that regional target from prior presidents? loan returning then XX%? with your just could growth into are XX% of speak the XXXX merger? that momentum

strongest term again, target hasn't with long changed, Franklin they the the strongest they because have, merger are That markets the especially in strong, bankers. with

do And to on job. so certainly put a because great want reins we wouldn't guys those they

to continuing goal term good But be would of first uncertainty merger And heading that I say that XXXX. Franklin momentum actually so now we the the half. strong XXXX, would economic some see we us. long half also impacting some is first it. right see into say, wouldn't would real into there for we And headed see I the

into are year. momentum it, our on are, actually, taking our thinking as our see challenging it, markets among bears thinking that heading and off where But a people so heading little been a excitement coming And what's we works we bit about see I we again, XXXX. into we

the Not will see yet a that's what do of target. think growth we be so long-term we And goal lot a good sure loan But exactly it in for XXXX. momentum.

taking questions. for my Thanks

one there Memphis. we team mention thing do I Alex, new Yes. have in the would a is,

some there growing on off a are And that great are market. of in job lower But so things really doing they a they base. bringing

some So we at overall that the events we growth got the too have help whenever like for that should look company.

you. Got it. Thank

right. All

the does session. that And you. Thank conclude question-and-answer

like the So Chris floor to comments. any I to closing Holmes turn for would

up we Thank the a Thanks joining and great appreciate quarter you we fourth. everybody And forward wrapping to call. looking questions. much are for Again, the are you the for us. very we on being

a day. Thanks. everybody great have So

Thank for conference has you. today's concluded. you Thank presentation. The now attending

disconnect now lines. may your You