FB Financial (FBK)

Robert Hoehn Director of Corporate Finance
Chris Holmes President and Chief Executive Officer
Michael Mettee Chief Financial Officer
Greg Bowers Chief Credit Officer
Wib Evans President of FB Ventures
Catherine Mealor KBW
Stephen Scouten Piper Sandler
Jennifer Demba Truist Securities
Matt Olney Stephens Inc
Alex Lau JPMorgan
Call transcript
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Good morning, and welcome to FB Financial Corporation's First Quarter 2021 Earnings Conference Call. On this call today from FB Financial is Chris Holmes, President and Chief Executive Officer. He is joined by Michael Mettee, 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. that, Robert like Finance. Hoehn, with call turn And to over Director Instructions] I to would the [Operator of Corporate go ahead. Please

Robert Hoehn

Thank you, Ian.

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

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

Chris Holmes

another annualized. margin $X I'm to successful With morning, of on share, a actually million excluding in interest Robert. adjusted delivered FB quarter for and and our and in our a had per book $XXX EPS to everybody. ROAA X.XX% that's joining adjusted million or passes, your as tangible appreciate $XX $X.XX in Thank of in growth, million, -- markets this annualized. of Financial. but this share sorry, strong morning. of had balances very XX.X% you, return then get day We with were equity We we grew or you Good per little each quarter. value we XX.X%, that Thank we PPP, common $XX us tangible Through February, had normal, $XX.XX few growth. X.X% our numbers closer We loan down reflected a adjusted

customer for single-digit mid- about our down we loan target loans we high As that economic that losses feel million our dictate markets growth demand back, to build, continues allowance from still We our our good for as improving bring we continually forecast for set this reserves. quarter ourselves. and bounce $XX.X to credit annual released

quarter. PPP our loans from last X.XX%, reserve allowance release, this excluding down Following X.XX% to is

waves in COVID hiccups to expect releases term recovery, those the in we or continue outlooks further no economic the Assuming improve. to as continue near would

hotel interest-only loans are to loans. the $XX on and deferrals have interest down principal million $XX $XXX payment schedule, Our million on million million, of $XXX we full and Of of schedules. interest-only are

We our loan continue ultimate resolution deferrals. feel of optimistic the to about

we get each credit this have were COVID as serious we do events, credit cautious, experience concern. still any of points more quarter. grew charge-offs any through knowledge of causes us any optimistic case don't losses. X pain passing without and significant basis net Our anything we we'll in but reserves have still any With specific we quarter, the We're that

projects internal the to returned for focus. the -- that we that have associates our our numbers, This crucial are Beyond current are office. is

than from remote for to a we geared our initiatives for banking we for is goals limited has period, Most our being our competitors. plan of time harp commoditizing. services that we Most the bank have tasks that our face-to-face been ensuring investors run crucial goals individually, interaction operators and towards customers time better do. most better year. competitors the and are are a speak than Each we strategic While and on world for for effective ourselves this

with and across means we pick by regions managers less So environments, that their our banks The customer that's have get credit grow by out with than any size. that to an attain standpoint, processes. value community a individual a From maintain to off First now to a From very able Birmingham, to burned working processes that has I've centralized our our the our to banks. us that banking allow and our a competitors, with our and of smaller maintain operate up our into community review that a and that can and talent -- whether operational fintech even banks. centralized taking of managers a to simpler report and as customer experienced market keep standpoint, competitor, business enough work been have a footprint. relationship strategy our model and well prospects to -- centralized $XX our regions that model advice any a friction conveniently while it's hiring strong proposition responsiveness be From and better customers as is dissatisfied We've formed community online, first means goal the our to with bankers. us line uniformity go our from it regardless very banks banking more. do historically to lack community able telephones announce model. few as of to Relationship been divided of functions, location. very customers is with of Each branch community and business with been million, senior consequences enabling and is with model competitor. that president, do are are larger which those be Very unintended to growth that model. about our have of other of billion time size we're any company. markets. power experience, regional up hard we management challenge second, with our excited the the up in infrastructure their million, with division our banking newly slow explanation providing regional the of assets $XX has or frustrated can competitor and and standpoint, We're stick the chosen Each in the investing be million bank, Since risk Alabama reasons presidents. with union organic the X for presence independent on been support setting to customer other regions region personnel a broken will customers with could $XX have through that to they ensuring their they And a any have faster larger $XX model, With that's Central a Bank, or of a tend and in scalable risk two functions product to market bank associates

mortgage channel strong being our more had long Hills. in presence based leadership in Mabi have Birmingham retail with We

Birmingham foothold Bank be for associates Our a us, logical in mortgage to these and First market couldn't to it made team. in we welcome expansion happier the

later working and and loan the have to financial full-service we're branch in the through office production have of currently, points process Greg application I a turning place We X the make goal in before Michael. to year. over with the having a call other branch

The on mortgage. is first

in XX% $XX.X of million delivered quarter, fourth direct team our this XXXX was contribution. mortgage contribution Our quarter which

that especially it the generally adjusted previous XX% our the So we to we turns but both into don't much we would we the of for quarter quarter confident last mortgage quarter's We mortgage, right. because XXX% out within and our consumer guidance, give solid of channel good were direct the that be did fourth guidance had quarter insight were with in And channel. group, first in retail the contribution.

retail of our in consumer our rates, to decline and with increase interest in As impact remainder channel. But second continues the we look refinance on year, direct the a strong. seen quarter look outsized into we've the channel mortgage an volumes, the delivery has which

in As consumer pipeline quarter. the pipeline a direct. will mark-to-market offset channel margins the the smaller that quarter, declining adjustment should in absorb retail result, have solid the but a The entirely be a or we and on that volumes will second of negative cause will impact second largely by

volume direct the in in seasonality, XX% of half in operations any, With for given decrease, from quarter. normal we on year, quarter, Once would more we course. inspecting significant, expect mortgage the mortgage these expect of the headwinds, the contribution if where digest be consumer total any to contribution are depending the second we the we second of range operations a our

second think discount decided the close portfolio. were that take we were to to we acceptable remains noncore had but that is strong. The we for point being the our were commercial offers with asked on on portfolio We reasonably held-for-sale ultimately us, that comfortable we

hold mark movements As small market portfolio, each we're that the we the as to valuation to likely we some as long continue in see quarter.

million gain. gain. million was a The The third was a $X.X quarter quarter $X.X fourth

an quarter first $XXX,XXX The was loss.

overall the and believe on the We we that to continue the portfolio have mark we feel long on ultimately discount that of portfolio line dispose of ahead term. to appropriately will in the

a So had financial to this summarize. We performance quarter. strong

we're deliver half the no faced we about relationship feel operational added us matter experience our the good feels quarter. of community enhancements of Central in QX about mortgage regional year, customer headwind our a in and and the size. Our that growth on leadership and allow region prospects but to good the the the We and a banking second focused year, style managers for remainder new their key Alabama

credit. Now Greg you on some give going additional color to is

Greg Bowers

$XX was a Thanks, seen of in overall, understatement and this underwriting our that it recall to will we've us for portfolio the our managed that would X% as million P&I, Those Chris. and our And are successfully noted are form remaining an on progressed. appears due shown year world. the sheet, reduced reaction of exactly we payment only what our followed on our perform million and interest you sector, almost to $XXX on update we deferrals by as for to fortunately, Of of of that are approximately reminded have has payment own an customers in through hospitality pointed worst that the gave More we're first to the that schedule. Slide satisfactorily, within to a deferral that of I'm we've as portfolio. to in previously. number that good strength portfolio. And It on XX% in full how interest-only of previously the the strong pandemic, of been balance be deferral the pandemic of a some ago while that continues be today, allowing to X%, say general assisted out the deferral we All storm. say, changes minority around has number, or year the the past that largely our teams, relationships remaining part other glad by see to XX. Those

primary X time what impacted that knew and transportation. deck. industry deferrals, major industry health is the heavily retail, leisure of been it's could as other a or of some concern, the at categories on ago, care, outlined our based the hotel, we to be the out pandemic: more that good tracking by potentially A restaurants, pointed it's we're highlight sectors in time we've we year While portfolio upon

overall optimistic those back, are as look on vaccinations this. Of In held exposure. at are are to can out the overall highlights Slide of They in we industry and in occupancies credit up. The our the the we the will light detail I XX markets these improved especially travel account portfolio, the sectors, beginning of with with this our hotel of we larger Slide of broken up. number segments quarter. operators you segments, As about X and, XX, open. pleased reporting of these, see continue results picks that the out for in the has the to unknown back increase quality future believe, highlight all picture call majority

and very couple could less those loans. We're come smaller, results overall, the so we with not smaller if pleased some talking portfolio further But has through but market, On I'm of the a the again, classified a migration well, fair operators their far. not, how have this seen with hopeful of totals. hotel only improve, we few these. a for see the I'm end about in movement as well-capitalized of account few the

in from detailed saw which this doctor's were for our point I'd reopening census homes, of credits one But impacted. occupancies portfolio project just our in over At classified of initially account a hit or of We the Second and million, this decline year, the few not Slide in At markets. the these have has rest living this increase $XX their with outbreaks of out at health is the indicative the numbers. been specific. of a back excuse which the of closures picks of the just again, XX. counts is our -- me, that portfolio, been is overall, but assisted the on beginning couple been care offices. a has up last year of The exception with

the be able time could breaks done which in good here properties be be Our build displays we occupancy frame vaccinations, the I'll but with confident that back in our teams that report. our past, are the closely. up, XX we will close with are and Slide Slide line have metrics. these restaurant an will to but numbers overall in increase with the this overall credit out extended XX, as group, last monitoring results

feel X loan we relatively ratios points. the comfortable quarter of this health On steady our this were whole, minimal Nonperforming portfolio. the with held quarter. Charge-offs basis at

a I jump, discussed, related is that primarily assisted saw a just increase primarily credits the Our classified the loans to living. of bit but

Lastly, that, we allowance PPP. our end peers With an at by over upper X.XX%, it of comforted having the to Michael. remain turn excluding towards I'll

Michael Mettee

Thank you, Greg.

what XXXX the the QX within decline a earlier, producing Speaking Chris million, quarter expected first was of to to another spoke mortgage of produced you strong in seasonal and team some expanding $XX.X on but QX, range. from

quarter, rise on Slide X, a seasonal rates. we last which the to continued dip margins, saw mentioned As with have in interest as illustrated compress, in

the to As when continued on as we mortgage to historically, needs. the XX% utilize heavily the from volume. to the consumer our positive past, behavior consumer their traditional impact channels. has interest technology effects consumer direct market been do shift and more our the believe gain harder prospects, team This margins direct rates due to We our works between XX% lenders of consumer consumer of especially direct seen traditional in refinance-focused is of share And overall and in additional purchase one quickly, the have leverage the channel in preference outcomes business This the provide pandemic for as business being volume retail relates the than rise direct than it has line space. the retail and to growth been to with mortgage shift will channel.

take season, it business and continue business the as as is to capacity to of shortages. advantage in We a fully headwinds, have will takes any a of April move facing as it industry do expect refinance direction. purchase successful local seen industry implement, strides just to its time mortgage and But national in housing we that model, long in exists. including solid but We excess share and whole as the

around Adjusted on net headline continued to margin as held on in X.XX% the decline in build. details X.XX% of relatively last liquidity margin. Moving saw that flat X levels, to interest line. We has liquidity number normalized and the our impact a quarter, liquidity excess for to Slide the compared

range. X points. to have quarter continue on to contractual still basis $XXX again do deposit came came quarter of We points; down, this PPP is loans, trend loans, deposits of total basis focused on also X this over we're costs poised as in This able as down bringing excluding CDs yield we X.XX% are million while and down cost that repricing the

environment flood We cost also liquidity cash to with to obviously week securities so reducing our on a as like checking money and the lending system, market weigh But we've have picking interest-bearing our to the to we and would deposits per ramped continuing continue Liquidity likely purchases. the to been continue redeploy we progress or see recently. with up into those and competitive margin, is up relationships. rates on the into point basis core that of on

on much risks previously low duration investment We and raised off the in that securities have held evident investing given too our in portfolio were opportunities.

compared However, rates, which cash. the yield, with earning we've on in a to our the about pickup basis XXX nice April uptick in basis added short-term million at that points point recent $XXX XX our portfolio to is we're

our to assets. XX% We total will to portfolio approximately XX% move to of look

a in CECL to quarter We this continued our to forecast saw on improve. of economic million allowance. release as Moving $XX.X

we factors point. to fairly have model-driven had this been mentioned As with previously, we limited qualitative

initial early we was our However, given thought is of still we release order this that prudent stages qualitative the in the to our than that, facing was we're larger increased account some economic uncertainty. quarter factors forecast the based recovery on this With headwinds. [indiscernible] quarter for its in and

the forecast we manage Going forward, to to believe we will improving allowance. skew factors prudent continue weigh that are the for

our some run expenses few annual million expenses other this a seasonal future than feel quarter. was payout onetime estimates quarter FHLB we to currently quarter the banking like higher I'll next higher segment and to we the continue Between and further items, expense section releases expenses. to fourth prepayment rate improve. to would base speaking outlets onetime $X.X $XX.X over related bit million, this in at $X.X close on. run which, the to a to a seasonal quarters, was expect However, not noninterest This excluding the penalties, what about The $XX.X assuming and our related my we're rate by compares million few in is. compensation million incentive

to and rate We back to XXXX; growth for annualized continue about quarter, which fourth things expect mid million. rate have $XXX our percentage single-digit close. from now low to over would Chris I'll turn to the run been

Chris Holmes

Okay. open you, Greg; the line thank interest for Thank everyone, operator, and in to your for you, like we for And this company. our color. Thank you, that questions -- for Michael, again, at point. would


our comes KBW. [Operator Instructions] Catherine from Mealor of first And question

Catherine Mealor

to guide up just your that on just you first expense I wanted follow gave.

Is we from single-digit $X.X run of that saying at grow take this a right? about a you're from rate should then of low million kind this and there? quarter out So pace

Chris Holmes

mid, low right? Yes. to Yes,

Michael Mettee

Low to mid.

Chris Holmes

Yes, low pace. to mid-single digit

Catherine Mealor

to Low mid.

are from how would cost all of through about think in kind Or hiring Okay. I savings cost just the and Great. the by all you of and And in that? franchise investments technology merger? offset your investments basically further savings growth and

Chris Holmes


the come So but in of have will savings, a later anything that of comp-related primarily there come a could in that couple goals we the the form leases. out? terms some else We things and of year, is out expenses hit things. cost still few in Michael, some

Michael Mettee

No, I fair. that's think

I improvement the think in we're seeing lease real It's improved outlook. some estate.

Chris Holmes

good that's point. Yes, a

We and -- have in, probably going dormant real to those. those and prospects to for them the such some we're were are when of that estate better so get rid branches, of market took initially we the our than is markets some be able

Catherine Mealor

see that and you may kind kind your then of the return back then is high loan half of of year. may your follow-up the mid to eat of market accelerated growth. you kind of paydowns that And Can forecasting are that that to in about It's great Great. health digit the on just to pipeline the and of single my looks like kind talk into of just you of Okay. what the growth? the risk just

Chris Holmes


concerned a we significantly answer. and pretty question, into my mean a in probably I in strong February a because that note comments, then to down I had were we were balances, we March. formulate think really your loan I actually, little could good In

look if they at you our would So averages, reflect that.

been paydowns continue the good quite we obviously, to look we're we've look it's because, as and so got demand, pretty also good a actually we to time refinance. are seeing good. forward, And seeing But so pipeline

others to good pay some time, to time good off. it's refinance. profits and a actually, especially for Your been And a not it's -- for

-- both individuals, just their profits so where there altogether. eliminating not and seeing, And just companies we're are for debt some

so would not by we So them, to really that. and solid good mid for you're pipeline we -- when it all the easy. we we I the the high not today, good take try forward roll credit. into still But tell way, on those pretty to if so single for the try you lender -- things -- But account. it's digits a we look at as year to feels when project good

We stronger saw again, at -- lot. really but we seen seeing strong of actually, are little a the it we say, around quarter. are look the would if I bounce weaker latter a And March. a We've pipeline, gets it But April. we seeing part the in

the the -- you that little way, on what with so a at they've means it have when by if earlier folks far, and been you But So been comes nervous always sit versus right Masi, you're year. target later projecting. if in in in our


Our next from Piper question Scouten comes Sandler. of Stephen

Stephen Scouten

market, some additional or any would if I other of of term. size maybe And if and if vision of see if team you think there wanted what focus that standard coming could is kind team kind just that there's you give on or about for bank for it to what out the of specialty bankers. of that then think from, team, kind Birmingham entail sort kind that looked they core maybe how your longer or the growth you color just of they're longer-term commercial just M&A

Chris Holmes

do had Yes. of I'd Thanks, a We've things. the probably institution coming contributors, there. or have from continues different X not X and single case. a variety in Remember -- are have actually but that are able do been folks market that that to in They Stephen. experienced have folks I would folks couple we be -- that banks down are we types able acquire. of it's to experience, of the very some market. of a the some to say

contacts in there. we've got we're Florence, have in We Huntsville and so again, -- already

up. us in of say taking getting normal just and we're so spreading word terms folks opportunity on I'd some And fairly how it's

or I'd targeting -- on was So that. just -- we're question? part what institution not no And certainly us of say It the there. we're second like any anything not the shining fortune

Michael Mettee

Great the plan, what's vision for.

Chris Holmes

sorry. I'm Yes,

just we it. any very long-term we In mean, terms enter we I that, market and would vision there, total of to that approach a yes. -- like down take

flat acquisitions And thinking so all a enter deal be think would acquisitions, can market that we're right about of over in We so kind how or in about about We leading about we we of branch bank bank. straight-up the to the a leading so, of above. -- a we're branch think market. and decade the that deal trying of We acquire if think up. the bankers popped thinking

to each to a And way is be time. utilize approached we've all long-term banks those in we a would those how if how back you we go able into And intent Chattanooga strategy. with one of over of and Knoxville, a approached and that be market, look longer so market, of go the to part things that's our and all achieve we'll of the be period the dominant at

Stephen Scouten

forecast, of risk? what the maybe That you'll the talk maybe to to it liquidity kind you duration versus new incremental on ex incremental seeing guys investing And thought quarter. about know and if guess, but assets, in loan this PPP ex sense, you stable liquidity relatively Chris. a of little of almost of know And impossible yields think, about but XX% it thought securities. you're I about taking think and if kind incremental kind investments kind could and I you we Great. makes I think kind makes that said on you I to then if of pressure you it then bit. were, of, see NIM XX% liquidity the think They how yields. the balance keeping of loan

Michael Mettee

to a that's beginning if deposit growth. annualized I of point. quarter, we'd expected you the Steve, talked don't think the XX% that us at great Yes.

X.XX% It's that So right, is high us higher kind off, production. about loans month on of in the we seeing range, of Coming Yes, at low others and Xs, yields. certainly. in are March. the liquidity X% pay win new

started do XX at has March, you yields we point a the We get saw decrease that look on to or NIM. to lowering in that's and every deposit certainly lower have as so yields, rates bit. basis month, We our XX trying basis settled loan loan arose what early So continued right? to see you offset costs, to up If a and to pick back opportunity securities in moved stabilize late little points our April, the purchases. up were

as said, we'd we liquidity points so And got than talking just to growth that lot loan deploy better more feels excess lot Chris the basis about. and comfortable. portfolio was cash. a basis on Obviously, investment a like But we low XXX points the XX

prudent, in but continue we'll make we to investments So loan prefer as realizing to invest that longer-term growth relationships. and

Chris Holmes

loss liquidity it, is points use metrics, that -- if dollar And one hard funding us. When Yes. folks, unusual of basically, any our we're so time key and is abundant. most of anything that to it judgment of a for a margin success than basis that's -- as tell paying our just more this. when now in, XX isn't add because Steve, I'll on really we right take it's we

and we the million -- so -- $XXX in And we first by way, in took quarter. the

look And in the continue loan the at I about We so portfolio, to is so which which decrease. yield costs, at the One, just on X margin, things. look if well. -- you reasonably will look and deposit just about holding

for And move is got disappointing then we've and other for I net I thing quarter-over-quarter, as look forward. the was just the we me some think optimism And there, disappointing wrong down which us. interest at is so income It number.

just to we'll we much out liquidity one as focused on of be And as that so that that's to try can. get

Stephen Scouten

XX in application range. for Got curious, back it. refi we've the maybe last mid-XXX it. numbers seen years slight then some moved the uptick this just one back Got as me. And down thing I'm

hear If you contribution think you the Did or for might throughout the relatively confirm, to fair there just I XQ could to those that neutral marks said correctly? be close value some make improvement quarter. And X.

Chris Holmes


threw You we And did man, said, a citizen there -- also giving tough on correctly. always hear mortgage before, I yes, is we're really that guidance a thing.

but pipeline the you X our our last obviously the so fantastic we've have, that our direct we will And do quarters, we a X would -- which we about contribution, had consumer capital -- -- look if a business less quarters little like so we XXX our movement the in when second business. robust, had of of But $XXX in in remember, that million have and business means is roll that we large, from mortgage standpoint. is pipeline we have and have a account quarter also pipeline as is

that can you It be to really the Just as you we -- the pipeline when end pipeline the if our substantial. remember, up large mark-to-market margins really grew way related as decrease. shrinking mark-to-market volumes on up were was

that. side other the got You've of

So just pipeline an it's when -- mark-to-market a lead could shrink It that to I short-term it phenomenon. negative we might phenomenon will second I anomaly. a quarter the But second for be yes, I'll call quarter. guess, a right. Michael, you're got a get us. we've

Michael Mettee

right. I Stephen, was refinance a Yes. think question your And move down

industry year opportunity there spent has mind, could think last the keep building some the there, be in capacity. but I

margins on touched has Chris now decreasing. so And

from refinance, weeks. got people last So year over a in industry less perspective the even last you've for if and fighting substantially down an the stance as we're business, still that rate X increase -- over

that. less than So

Chris Holmes

don't in it. count says right. you're the you're let's but it hope right, We We hope realism

Stephen Scouten

No, fair. tangible it grow that's you year-over-year. But Yes. XX% booked what helped

think Congrats. I it. take you'll So

Chris Holmes


right. You're

We'll exactly take it. You're right.


question Demba next of from our Jennifer Truist comes And Securities.

Jennifer Demba

several Can obviously, in? interest about that as you in the other now? lot being you hires the seeing, And right interest acquisitions a markets in last stands announced Can and talk just you the it of be southeast talk about weeks. may targeting other in we're

Chris Holmes

Sure. in Other managers very in relationship seasoned hires, markets. interested other

that's grew will would efforts. so remember, And our we -- say something a of ways. a million be But that in recruiting today, lot year from I also to were X.X XXXX million. XX tough was we

grown of with a were model, lot And focused company. management of we business so things have a risk conversion, lot we our on as a the of lot

to focus to continue is that to as us be And so of haven't we add year able for probably folks. done and that, much this so a

our see commercial about I each you'll focused every we model, well would -- just what customer business all so street. really on the also in sure markets the experience, And And we different shapes we when to we're the bankers including as I and being going front, M&A we're And every beating the as the way the day always been bankers. on put operator, the it. mentioned, a year I'd But we internally us guess, I that's we on we that managers then -- just see in -- have and is put add have on competitors mean. it, making way relationship some mortgage sizes, our that -- really on talk back -- of what throughout is as that interested in -- good you'll

again, so And focus. our that's grown, with much as really as we've

think on get mind, that's And the our get in frankly, got But and we dividend future. the we're where other saying we things some to calls. so of we're immediate biggest most we've going on them,

so a but really where never not never, we And standpoint not our from strategic -- really pursuit that's we is that's what say today.


Instructions] come to Our is next Inc. Stephens question [Operator at Matt Olney going from

Matt Olney

rates December, the the excess in higher night, shock hear suggests ask of what don't and rates, the of the of your the potentially expectations to the wanted one and last new higher disclosures of impact Saw the next asset-sensitive if a drivers analysis in bank I but impact Would there's years interest is missed liquidity. the love the XX-K group. peer company. floors that more are guess banks kind I disclosure I about on I few to from know loan of

Michael Mettee

rate -- pretty on nice that And especially metric rising because you're rise, XX% of about mentioned performed We obviously well asset-sensitive, we about of pickup is end a as yes, that key so We're and optimism. short see being rates a income we obviously referencing feel of that pretty variable scenario, so the environment. some indicative and we're in curve. Matt, will loan for Chris interest so the NIM our disclosure our us. a NIM we in good in portfolio,

the in but than think on And So to pressure offset some more bits by with and we rates can bit if the little it's get puts balance is balance of rise, obviously, some sheet get well way the we're mortgage, we short-term positioned can it sheet. structured. a other inflation, we pieces

Matt Olney

it rate actually follow-up, before about Would that? a of short-term few as just floors And you increases behind those benefit because what loan take a see a loan floors?

Chris Holmes

earlier but Yes. benefit the but get small increases. the from get with a take increasing at the to from stages some we -- each of incremental I increases. exactly we it's some -- we get the We would see benefit benefit have chart, rate would it look increment, increasing with

would And on I you. just would Okay. talk and good thanks question this, say I to -- the to

and we talked this, And seeing the million last X I mortgage. how been quarters. about over would then I from a So $XXX benefit say it's are that so

is rates well it But down, we way that benefit, And rates as we the build to on we're the so our getting our is because up. NIM banking as core forward rates, March go go try squeezed. as positioned get margin we on think business and

You will for rate a we we in that's it's challenge of like for the plan, consumer shareholder especially because makes of market grow -- see, of really just together, value the about see so direct some in mortgage the and you'll think good But sensitive. QX, them when for part talked proposition. it we both that piece kind


Lau Instructions] come coming Alex JPMorgan. of to Next is [Operator question from

Alex Lau

public size? runoffs? terms in you in in these about seasonal fund what impact growth of deposits Can the you of as And also talk expect terms

Chris Holmes


first growth year. of the majority be accounts funds operating of type And would the the just quarter so about deposits, of in sort fund public on accounts, our we centralized every vast we fund up and -- those in have think

seeing those in, And balances. quarter money accustomed a so and we're bigger the in to increase in first come

And so are funds existing that the if by that majority we accounts driven looked -- accounts funding first quarter. at would be that quarter, a in in the increase are up public simply the of

down majority. actually significant and and even that's us. quarter the little That fairly will third, in and be it'd -- maybe bit into the for come routine second a so So a a occurrence probably quarter that throughout the

Michael Mettee

I much communities in that in how bit the a and our we're just money I'll municipalities, Well, on. our governments increase across number to mean that governments money little flown supporting that's of so flown that there's is says in lot creates of these there. system because volatility a layer major municipalities

Chris Holmes

Alex? that Does question, answer your

Alex Lau

your trying So That what to allowance with be have you would sense of get on does. more for Franklin, as ratio ratio ACL loss day normal an a combination CECL? the for I'm with credit just a do And X you release reserves. ratio,

Michael Mettee

balance different Yes, because just Alex, what CECL the We the of a after look a is X bit day you sheet partner not a perspective from mentioned, merger. right?

target to. So basis. that the return necessarily a we have through we're going on monthly, a to We're don't quarterly process looking

loan the Looking at, the loan the adjusting sheet new model and what accordingly with obviously, on growth, balance and then changes like looks economy. outlook for based

think not So of I direct kind know a number, that's but about that's how we it.

Chris Holmes

very in first we And adoption. make it not group, just have Yes. top, new top If way. also decile. we're we we're you probably. prudent at see, both year I seasonal -- this we're top been so a and approached of the add the -- a would but the we can peer at in why maybe obviously, certainly that, our It's of as that, understand that's

prudently. So well. would improve, we so approach us likely a term think conservatively we and approach approached if near least We we on feel releases like say we've in And to at that. to pretty the openly, most see things try bank, heard we're things it we you've conservatively some because of continue that

aiming that -- our how that's we quarter-by-quarter would don't so for calls think CECL, CECL it any much in target for. as to -- take -- And certain because understanding of I don't that's have what opposed is having that's like, or look that what any we that we're

Alex Lau

Appreciate that. any customer other with experience your on be terms this noticeable? require fintechs, technology that compete banks focus of lastly, in does and investments to with And inward would additional

Chris Holmes

-- in we're investment you a Yes. Technology constant in world, investment. thinking I is in making of every it's some our -- way quarter. our technology I mean mean

to for us, so to it, about And it. trying it's be -- trying plan it's routine it's

local of a we feel we investor. guess front a I keeps a on and lot in We what's -- and on was technology shareholder say Fintac back things early were investor, what misstated. said ours the terms in of a of have investments, fintech able because years couple And -- we that personal actually called happening us done investor, sharp emerging experience. that investor thinking is customer of insight that's large managed by front were few fund of were about a We that, in gives are keeps us the a friend local ours. of into us it when And they're an looking I what's line a an their we get very a But at. that I'd to back

And small in is focus. so that made that's since a a fund an -- and fintech a -- investment have fund investment so we in

we're on on And an technology their on so constantly evaluating Jack monitoring Advisory and And again, the core there. with front. Board, where sit processor, Henry, our highest we're we'll Board level again, Advisory

that have that sure into, make and on customer to to to we're the position wrapping so we're project doing that comes what in all competitors -- going when into focus experience, wrapping that that a we so our So leading that are continue it customer is we that experience.


session. this I back to remarks. any to question-and-answer would turn like This Holmes time. it for concludes the At Chris closing

Chris Holmes

this That Thanks. end before. almost not with and this wraps We're have of everybody. the will Everybody, we a forward through you Thanks, at day. way quarter now, quarter if Okay. QX. being at up back point, QX look great next so to further on


This concludes the conference.

Have this to at you. time. a free great now are You Thank day. disconnect