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FB Financial (FBK)

Participants
Robert Hoehn Director of Corporate Finance
Chris Holmes President and Chief Executive Officer
Michael Mettee Chief Financial Officer
Greg Bowers Chief Credit Officer
Brett Rabatin Hovde Group
Stephen Scouten Piper Sandler
Matt Olney Stephens
Jennifer Demba Truist Securities
Kevin Fitzsimmons D.A. Davidson
Catherine Mealor KBW
Alex Lau JPMorgan
William Wallace Raymond James
Call transcript
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Operator

00:04 Good morning and welcome to FB Financial Corporation's Third Quarter twenty twenty one Earnings Conference Call. Hosting the 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, will also be available during the question-and-answer session. 00:31 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. being FB will hour Financial's conclusion the is replay available after call of the on website call. Today's recorded be and for the XX:XX approximately an listen-only have placed participants all time, this in At a mode. been The call after for the presentation. be will open questions that, to turn I Robert over the like Corporate of Director Finance. would With call to XX:XX Hoehn, go ahead. Please

Robert Hoehn

Thank you. XX:XX

predict, risks other www.sec.gov. financial All During Investor implied in put which more to I morning's XX:XX risks not filed Many under www.firstbankonline.com would the are measures In are and like over most statements. the statements update that this constitute XX:XX XX:XX beyond Except CEO. of any of SEC, non-GAAP forward-looking periodic of GAAP are and and financial defined addition, available actual a company's as Relations performance which statements this turn of FB Financial are by FB and on forward-looking website website results presentation, measures and expressed listeners Form supplemental differ to forward-looking presentation, these Financial's FB directly FB including now undue result or available GAAP comments comparable XX-K. of FB comparable forward-looking Financial Financial's from FB this Financial's statements. may current disclaims whether at President and subject as A cause presentation to factors may the the on SEC's or otherwise. and is achievements by or A presentation, such statements presentation to the Financial's remarks securities to FB such detailed obligation Holmes, earnings any forward-looking law, and such the the description results certain contained Chris XX:XX in facts Financial required other a at these may as reports events measures laws. or uncertainties SEC materially future cautioned is ability recent make the of any reliance and control revise contained measures with Financial's by federal page to FB of financial non-GAAP or most in on in to Regulation new information G. release, include reconciliation to information,

Chris Holmes

for annualized deposits we hub XX:XX growth Thank deliver delivered that state traditional estimates Nashville, in midway jobs by be XX:XX strong our good continues in in one this morning. dollars, part adjusted and point you of recognized percent, that leadership becoming Tennessee you, strong return commercial a of team activity in we're our In appreciate entertainment, as quarter and you we number percent, thank Financial. Good center EPS positioned continues strengths on your by market nine hospitality. to solid from We healthcare, XX:XX become joining loans, Robert. equity in common elected We of loan had non-interest when eight an bearing is point grew what's and morning results. one FB managers from we development. share of economic exciting average to the zero including on a our relationship interest of adjusted to percent state, market and eight Jackson. We we with this just adjusted fifteen that us assets the PPP of the got two is exclude our return share be quarter guidance. as support for tangible percent economic four Memphis activity the hub increased created decades business We've is five XX:XX twenty will in be twenty loan markets. estimation, well to to West XX:XX magnet on billion will that six believe across on our technology that in manufacturing environment. this and of a percent growth Tennessee. and vehicle point We evident create to unicorn. have Growth site. is investment economic place and a Jackson at received that the news roll thousand a friendly dollars benefits very And of come Ford will of economic investing Tennessee in-line continues Eight an annualized. direct the jobs Tennessee FirstBank’s electric capitalize in third to between to Memphis second our infrastructure site in total capitalize West in officials thousand six in addition quarter West a seven and the This Tennessee to

to so believe are a the the continue to me for annual single digit the out that for XX:XX percent trends Of growth regional for continue Presidents expect number we telling target two. good growth a to We our to is question ten annual twenty twenty of digit loan difficult they our twenty double not quarter, us percent high twelve is year. as expect return strong for one. for fourth activity that would have, If to twenty

that of result range bringing the pleased placed during well the our this so continued total be in and better as call. fairly quarter relationships. account September on compared guidance liquidity, will quarter deposit a an in world’s August anticipated cost to bearing delivered our contribution. bit been of as point of volumes XX:XX focus pre-tax balance percent of the last for even we five our our on quarter’s with wider eight bearing dollars On growth deposits, strong cost points results decreased million outperformance we the bringing deposits guidance shift our XX:XX the as As the mortgage, our of deposits twenty down value interest of team in than with Moving nine additional composition a side a and have XX:XX during by we're margins third refinance high liability was quarter, the quarter. our very in That performed a Early with an when operating this a basis watch sheet, strong October volatile, non-interest quarter. to

in metrics we at quality summer. is XX:XX moment ahead guess and we the fourth a to million basis quarter. improve ACL behavior sixteen with improve held with improving economic materially releases anywhere continues relief down at reserve Asset down to credits non-core positive by and momentum on quarter The in over as of in [ph]. quarter four nonperforming result intentionally shutdowns support continue mature We normally we've this the disposition our saw COVID driven what points The back to and non-performing million forecast, the We've this conditions total loans was but improvement a there slight one hundred basis and to a and as non-accrual could was contribution to the cautiously from of best the declining of favorable the the point this XX:XX material by basis next million to back moved million credit four continue twenty we well activity in of assets loans dollars bank. Our more the leaving statistics markets winter income non-forming of survive our resulted points, just we’d our note, our related seasons any the non-performer markets, footprint that sizable to changes and just follow net in fourteen a and by the as changing as XX:XX dollar quarters. the XX:XX assets expect one without a as is that are speed run to which despite credit bank million our few exposure quarter, environment dollar experienced case that charge-offs in institutional five across non-interest operating decline that indoors. and slightly reversal of effectively swap On higher thirteen portfolio. Assuming with as the right we saw [unwound] during now folks in bumps or refinance expect one overall month remaining forecast of would out points.

accept right rebounding valuation a that get on than this shares. growth the own. strong this as just buyback percent for worth we million would bank priority Speaking management to capital equity moving some ratios in with a of is plan, XX:XX the window we retired after our nine deploy our materially portfolio ultimately its to bid. reopened, common we're quarter, impact tangible point dollars five capital before the outside prefer second percent [indiscernible] tangible our trading sheet, but total left that marketing behind And nine talent remaining at organic is shortly XX:XX time we still so is and assets Our would closed pleased with customer deployment strong excess acquisition it a point. been with to relationships the have a to on and still activity and five Merger the We’re loan has capital growth just We we and But Franklin bit and remain performed converted to we range, Network organically, point and favorable, the organic since going quality the over remains of how but target year the our now merger. balance Financial bid of of liquidity takes down capital combinations accretive. as eight our well. yield that retention less

transactions and on Capital we're that synergy on provide risk nothing summarize, merger, that twenty believe a and strong open of across primarily targeting operating we and a loan XX:XX is within markets footprint two. A as we well to Franklin strong activity could fairly further current continues managers Tennessee undertaking the leverage growth for consolidation similar fit we that as as footprint. around We us. returns characteristics our of of we financial There's So, support As in We're cultural to our support provide but provide twenty our partners footprint combinations. us possible the conversion team that future capitalize will focused Clayton process. good net for ultimately that Atlantic look a banks look have activity our the our imminent, that and additional density M XX:XX relationship provide to of quarter economic had towards

down we as A but growth and the mortgage. the the to two. in valuations did use XX:XX back we're some Mortgage not turn M and rebuilding much very of twenty building use twenty more quarter in to but the them possible in fourth quickly, the into previous capital results to over call we're our bank likely is term. now buyback near discuss activity and detail. XX:XX I'll to Michael, CFO much capital the order – expectations, to one financial and that We're to twenty continue seasonal well our likely twenty our outperformed expect come of behavior capital We to over expect remainder

Michael Mettee

you, XX:XX to Thank Chris, good everyone. and morning

mortgage million. expected first Slide illustrated mortgage a Speaking on better six, contribution of performed approximately point to and than with QX in nine eight

slow outperformance. were in and move It environment. XX:XX also mentioned this payoff’s certain does saw recent in will revenue, quarter in is early As quarter. late in higher appear up to not the rate refinance book margin would servicing a headwinds leading division rates we our would and some we quarter, lower seasonality, the impact run it and how all second one call, the servicing usual lower mortgage with ultimately but rates the quarter pay QX, the on reactive, stabilize industry over expect business We some QX’s

thirty four [indiscernible] higher though bearing would of deposits quarter. non-interest second have In focus quarter our decline points the for basis measured relationship were results. XX:XX down four mentioned, points, down coming in cost the expect mortgage million third we point best point five percent in remixing quarter. accounts we goal a headline they've expect basis on this our essentially five flat September of for going interest of with of four more basis one will to to a Moving bringing thirty As saw the deposit our of four deposits one the total have interest quarter at plateau point forward next there to quarter remain As was We versus fourth but nine on continued three two, gotten total eight is a and bearing deposits. net our in portfolio to bit to improvement the point in percent able points. percent in cost remain or twenty Chris total our and the quarter. of we're interest second two I in thirty to our mentioned, would managers for and margin, accounts deposits by make the contribution success additional past estimate number our percent plus direct in I month XX:XX increasing number bring three compared Our three contribution is forward. on at some million to to Chris focus and cost seeing twenty did quarter, XX:XX percent that going XX:XX for bearing

near third outflows quarter. point on the term, continue quarter back of million percent the the approximately five about number in XX:XX public to Our loans second dropped funds twenty two after seasonal in contractual on fluctuate in from point during basis points However, this as will percent quarter four yield to four that come thirteen four the three quarter. seven two

in three experienced the point However, we the the in to to are being would quarter. third percent two yield quarter that XX:XX same originations below point held that to eight second the rates range three We see encouraged new contractual point we percent legacy nine yield still that to in continue portfolio, expect compression four begin rise. four on percent with until to rate on

our continue increasing to two portfolio. in billion a variable when reminder, rate excess immediately. the liquidity by rates we're We asset As and share doe securities that manage have sensitivity reprice in we XX:XX raise, approximately loans part allocation to maintaining

policy much band providing volatility benchmark Treasury hundred Our in with during average rate eight that third expect In adjusted six of U.S. increase the to three the thirty in monetary quarter. the one past as income. expect Interest the interest would margin not rates significant we in and the year swinging yield increased increases, few pandemic. was the The on and by volatile securities absence sixty are purchase that rate overall basis stay invest securities to we securities continue as that approximately we've still percent. from three that portfolio during an the excess while interest or been to points point responses relative XX:XX quarter the do quarter continue Given quarters. duration with in tenure million exhibit to volatility, the of we risk, same for fiscal

held decline rates improvement to investment as quarter, the growing funds five volatile bank slightly order as interest to and yields excess bearing in prior continues exit release in at our at in to securities the reprice in deposits. dictate volume expect quarters. forecast We relationship loans the XX:XX funds cost and on deploy expect portion assets will as than the we'll liquidity as yielding quarter our to continued of continue than incremental CECL current the grow net mentioned, our income. portfolio Moving model. continue lower to and Chris quantitative to the was relative two We for to strategically XX:XX of better managers public portfolio. to enter focus on smaller Economic million, point Liquidity of two lower CDs continue reserves this and be non-interest quarter to comes CECL

our head factors On allowance, as from portion winter. our into the we of of now we many COVID qualitative maintaining are the

of economic twenty twenty that more releases we'll to in everyone as trends have they Based these what comfortable factors factors. expect these the quarter come first qualitative rate one key know the between twenty some the moves after we fourth of half indoor the continue footprint Assuming season, XX:XX relaxing sometime for on and feel we today, of of would two. our

Included XX:XX vesting segment the primarily point is number. run resulting of to eight from there the tangent two in fifty know, eight nonrecurring thirteen point for in loss real that point two non-interest unexpected sale pointed of one thousand. dollars portfolio hundred elevated eight million was the speaking line the as we As million this approximately one where fifty eight of four close stock On million point million. that gain quarter XX:XX net to of for compared quarter. those dollars gain to on slightly five to This additional items was dollars, I’ll while we banking was seven many related is out, rate thousand, items to five a IPO sale number the banking section has well. Speaking expected a point had been billion. last thirteen in my had estate we twelve a COVID would to change. of owned stated benefits non-interest the [money] [ph] from income of grants few on the income, commercial loans at eight to point have benefit forty unwind can taxes our and Franklin operating loss and quarter. seven are million point a type million segment, The banking merger. the on expenses, you in held two taxes quarter's as We to that coming had turns, subject of this of that segment a a swap there Netting a amount payroll taken XX:XX segment one-time compared related point fourth hundred three

had benefit point related also one vesting two the million awards. of to the a We IPO

For to XX:XX five to twenty things I'll three would to tax turn return close. the to back three Chris over quarter, And point with fourth we to rate. twenty that, percent expect percent

Chris Holmes

results our team Thank remarks. prepared Michael bearing open to mortgage questions. right. like non-interest the growth, the that growth, loan This proud our outperformance. line All appreciate we'd XX:XX Andrea, quarter our the particularly you, for point, deposit And color. and at we're the for and concludes for pleased We're and the with this of

Operator

[Operator Group. comes go Rabatin question from And first our Brett Hovde ahead. Instructions] Please XX:XX of

Brett Rabatin

everyone. morning, good Hey XX:XX

Chris Holmes

Brett. morning, Good XX:XX

Michael Mettee

Brett. morning, Good XX:XX

Brett Rabatin

to obviously the in about color in us give is you movement C&I a what return to growth from? the comments that market is talked possible percent growth coming you growth is that's growth seeing ask more wanted bulk share percent, expect come XQ, new it and in maybe and around if that customers, the the client little is to or new where here nice where quarter of was and to the additions, could ten you prepared twelve first I you're activity XX:XX loan from from that

Chris Holmes

all Brad, product has XX:XX types. growth the of across much pretty Yes. come – so our

in than been or during If our you C type. the it's type. of We and two more over I particular of product orders, growth have did product three all quarter look last kind any other this

are we grow. I return continue expect be so, the quarters twenty closer last fifty that to than seen know in last in to to and that continue don’t to past will twenty product our average utilization quarter of to quarter, that. terms to a land down you And two leading nineteen glad it expect quarters into were was still this two see but if see nineteen. see the to have the the that XX’s low third to it not of utilization, were we call XX:XX We it utilization. where continue of we you in We percent the looked type,

but hot. than was, still higher it's it's it So, not

when expect can't well little residential growing be the we we several strong, that's see to single as we're always our – one say, loan or And to we've I either new where at combination are low good it's growing I be to our seen and as good growing. that going have and faster markets any continue for CRE we've rate growth think and so, are And So, digits in the digits a balances growth And than customer we most have would still over point our which double pin acquisition. about a markets part, thing. we XX:XX seen C&I think construction. been the next quarters, seen

So, as with there share is coming that's well. that some

product and And So, as negative. I one also it's customers combination the that give it's across all there's a a picking we’re would you well. of customers combination types up that I can't – new is say existing

Brett Rabatin

mortgage normal, the question, fourth tough do the there. for a guys you because you see on or be the platform back give then it normalizing, some would Appreciate a can at as get nineteen bit of us mortgage you've where color some investments level Okay. think, that higher longer of And see you guidance than point? mortgage, things made in quarter, happens a to twenty but the maybe term, assuming trending maybe XX:XX how you thoughts as

Michael Mettee

Brett. Yeah, XX:XX

ten this it I twenty will where out a to what down percent the the low of attend been you kind and fairly look been be percent expect MBA, in think play where significantly. to the traditionally Fannie of the number, at fifteen volumes would rate at point, to percent contribution environment twenty targeted. is predicting at of mortgage craft normalize typically would they're look But is in we've Freddie We outperformance. would fifteen a kind hard which sheet by you certainly we expect if is we've

Chris Holmes

Yeah, to difficult you bit look think that twenty for all then, is how and two. because for twenty not, else, view don't for about even if a quite and of they forecast different a twenty particularly slightly even the talked out take Brett I we two most are really they're year out there, And probably at the line-up a there. than everybody a volumes. us to forecast forecast. We It's year forecast XX:XX twenty about difficult forecast particularly to and

average between So, us. to it's, as we – target as but percent. year. percent can, as make we won’t that's as much it ten [Indiscernible] fifteen where somewhere do on well typically we won't an in can, we We for mortgage comes

Brett Rabatin

flavor how an expect from two any Are talks perspective give up then in if think little twenty to you acquisition color You the than for I could you Appreciate shape you? you M last and about more one? if pickup I you Okay. potential seeing A XX:XX in optimistically have one targets, a maybe recent and sneak M there quick us with could and quarters. Chris, for in talked A

Chris Holmes

XX:XX Yes.

twenty and twenty you we FirstBank tried in we early much we twenty Franklin twenty of that and threshold with one, all you So, digest one, Franklin asset think twenty lot last over went combination dollar announced years, combination, to as the in so, a it took know and about into well twenty the we two, that the billion and twenty of ten had twenty know, Pretty twenty. transaction. couple

And So on much we've operators as XX:XX so focus some think been taken We been top it's in company. that has company. execution our of ourselves level that also pretty focused. the of

And so, as of opposed going our to as of to thinking having [indiscernible]. the out ourselves through grow

we've so, that, numbers, to we particularly focused And XX:XX been about through that. talk so, think about on good the we that. are we're and pretty in We shows And open feel it with where in our organic numbers. more

And give so perspective, that's you. one I would

perspective just keep much us reliant – just quite that doors that. XX:XX that interested are on saying, targeted those those second open targeted outcoming much, actually, relied rather The and we're We're than as more on it's M hey, is as in the we're the strategic that list and market we of we pretty is, in, in for much us on we’re A. a it's upon keep it a interested interested things

easy could might as be feeling of is we during us others. going not there that our that rate list good twenty think one It's difficult go, and hey, gotten we think look would it a so, It's with think be at that, we perhaps a better or to interest twenty better we that's – the an twenty a for environment. And say it's and operating come we a that that for environment and have timing will that we from time standpoint an reason the how two. that more very so get to those be I in think to conversation us again that's two, small and

play that that. that I into so, could And could think

Brett Rabatin

Okay. the XX:XX Great. color. Appreciate

Chris Holmes

on being for you call. Thank Sure. XX:XX the

Operator

Scouten question Stephen next Please comes ahead. of from Piper Sandler. The XX:XX go

Stephen Scouten

Hey, morning everyone. XX:XX good

Chris Holmes

Stephen. morning, Good XX:XX

Michael Mettee

XX:XX Stephen. Good morning,

Stephen Scouten

these quarter back think quickly, markets last going just just forty Maybe been the they XX:XX team to how some additional team that to I’m Birmingham ads ancillary it is and think maybe I contributed that be in that in loan up, there has the million performing? to of months if you was shaping could you how in continuing growth curious question referenced ahead?

Chris Holmes

XX:XX Yeah.

we've So, that I'll humbling in been with they us. It's been have fantastic terms of first us. has in reception the were able almost been our really, folks that have there been down just quarter in we nineteen with been have match. and a It's market on Birmingham again. really gotten culture – gotten fitting and a They the and really really, they’ve that really folks about pleased we great last have when say the market good have we and actually where to the our XX:XX as get they for doubled been talked Birmingham

of they're want in so, get other I to of well. And quality ahead that we're but they're to this with in joining seeing. ourselves, the to folks volume continuing mid-seventies folks team. be we're what some We we're been, and like to point. it's at thrilled And other the couldn't more terms And as of we about talk said, continuing talk to

maybe gave In than is So, even just happier – what up pulling. we way be with going I the it actually couldn't it's the you. more pipeline, encouraging

very very, been we've pleased. So,

Stephen Scouten

That's great. That's great. XX:XX

around to, focus list, that front, had A give on to would or or look uncertainty would A? is a the that given into can expansion any currently M ideology to extensions referenced there Western areas, maybe list banks that and any extensions even you to prefer that and – M move and some quarter, spoke deeper specific that look targeted there feel you us geographic you Carolina you product or would there were are mortgage last North existing especially the your guys I that when slight on you potential you And Okay. think around footprint. you of Is maybe at

Michael Mettee

Yes. XX:XX Sure.

leverage we operating so at the of top list. the – list, at as is because top the geography of the think of geography list and So, really is about top is at the the M&A, and

even so, number have, XX:XX from at decade thirty. Chattanooga we we're a six. And from Maybe didn't top the a you And in think have we five fifty didn't a a before. we the in at, number where are now we and make standpoint standpoint, ago, we're Nashville the look we're about Knoxville and even same basically share top I today where if in Nashville market market share in right presence

markets And so, we location, I so have said years million before, say each of a had we we I as in did hundred had but actually presence, when – and less those than ago, one ten again.

were enough return we creating we're – that a so, presence, present getting have get the operating we're when irrelevant like density capital we And and on market great you like standpoint. from to So, sure a we leverage. to XX:XX have to make

much we've footprint be, so, leverage markets leverage, in we'd that And don't as would much as like. operating we're not creating operating have we still got

part market extension tend really East has it would a a but bank that's is has M&A. Western draws geography, our say extension a we improve so, we and that's back say or to with and be a profitability so that times reason, something Carolina North partnering a we strategy in so lot of presence that get of lot in institution Northern into we as that presence geography. and continue it an being going way footprint And question think about interested And to your contiguous XX:XX of our A us market be through instance, Georgia, to for so, of times our a Western for in Tennessee around let's institution we'll that the and could an that. to look of that would Carolina, our XX:XX and and And our M think

deposit – of heavily there, in is sheet. of then housing interest about of what We mortgage some And in the manufactured our group to legacy same verticals, also we on think sort obviously, refer and maybe vertical. group bearing We're very, very, call we I'll culture institutions, had very deposit performing we in the also think the way I'll group, about lending or the and really those. more non-bank non-bank, That we have is XX:XX like think way. that's side of We specialty of very type balance our a more as interested think interested non-interest really well.

being, – had or we're we XX:XX – assets to which or either you're and to able those good we we both in sure those in sell particularly we like in, competitor both we for competitive do those we against into product we're came either make interested something have verticals in lines vertical we with and win any love those. like competitive, that, if in And the make a selling the [ph]. of those that that that sure a to yield, so, or was mortgage portfolio we're of create can market spaces, option want [manufacturing housing] any want We than can portfolio us even that more national, across

look that's So [Technical to significant really is another a Difficulty]. intend be factor that we at that we something

Stephen Scouten

guys all fantastic Chris And you That's me, for in have answer. update an from on do just for Thanks, last the quarter? Awesome. a XX:XX impact the Durban detail. then the expected third

Chris Holmes

at twenty you about and for XX:XX that quarter two, million could range, million be eight Stephen look same year it's twenty half still a going Yes, third annualized. four dollar

Stephen Scouten

XX:XX Got it.

color guys. the Appreciate Michael. Thanks, Okay.

Michael Mettee

XX:XX Thanks Stephen.

Operator

XX:XX Matt Please The of ahead. go comes from question Olney next Stephens.

Matt Olney

XX:XX Thanks. guys. Good morning

Michael Mettee

you? Matt, Hey, how XX:XX are

Matt Olney

down the I to XX:XX drill Hi, bank. I'm the for good. expenses on I'm wanted good.

think you and mentioned I prepared in was be elevated there will items. remarks, unusual some

I in from of was third but on as original the color expectations, the more the explained that from into with outlook the in there well quarter so this, else versus next it portion as IPO like stock an quarter then and year well? and any something think fourth here seems there your a Thanks. grants

Michael Mettee

XX:XX Yes.

the was IPO on hundred divesting [indiscernible] quarter, five around was the flat related third or and and that vesting. flattish dollars main reality to the really over quarter expecting thousand peculiarity. the the were second So, We

would in eight same fifty of billion, million going that to in management. going are Chris ten investments mentioned our risk to bid of the range. there And million strengthen areas, and of as we're fifty to continue I [indiscernible] we're strengthen that kind and to that there some Knowing take it expect bench so, kind nine these comes over making operating forward, hire we look to as opportunities talent

in And capitalize some us of so, allow do our to lot markets, that. which to we seeing XX:XX continue disruption a on We're talent.

down in become growing balance continue see the push wise, revenue you'll to to efficiency sheet, the to So, side some our but more look efficiency there, of ratio. we continue efficient expense

Matt Olney

bit the dynamics I'm down term then on and front, the the want the on little the appreciate more both mortgage Okay. XX:XX circle a that. you And there for and Thank to That's trying great. outlook. margins near I drill to back between volume.

I more the think incremental concern volume some rates Thanks. on the it’s sale in side that recent the in seeing two gain on is on that recent weeks, margin higher fifty given in you five the quarter, or third weeks? pressure are

Michael Mettee

is Expectation seasonality in to saw XX:XX kind capacities, of a the in even of with pressure We inventory on quarter Yes. couple QX, to been start over mortgage XX:XX also normal still the hung the for pleasantly lot really kind us the as return months. September, there space. Margins of [indiscernible] seeing purchase to type. of that third slow we're We've there kind surprised leading which volumes of side. past

side, would hope there having and there, I that typically increase seeing in that hadn't not In lot eight. the on of gave well, minimum markets. of the whole we're spoke the been little at lower think the some a third refi to purchase of was growth that of quarter which boost a inventory a get bit volume lenders this XX:XX to our some that FHFA we about back point, refunds was as

percent you saw percent And so, fifty percentage that. to from pickup six our refinance eight from in sixty

into priced the that's And market. fully all so,

to XX:XX parts that expect through there, down moving supply in inventory a You'd as and lot constrained, too. supply, tail quarter. of due the but So, is of chains housing get fourth we still kind

Matt Olney

guys. me. all that's Okay, XX:XX from Thanks

Chris Holmes

XX:XX Thanks Matt.

Michael Mettee

Matt. Thanks XX:XX

Operator

of Jennifer next go question Securities. Truist Demba from ahead. The comes XX:XX Please

Jennifer Demba

morning. you. Thank XX:XX Good

Chris Holmes

XX:XX Good morning, Jennifer.

Jennifer Demba

about your and or could where right of I’m years, the their or talk wondering or one over ahead? priorities line technology two you peers phones in in with like now terms next investment you're XX:XX expand if you maybe feel

Michael Mettee

Yes. XX:XX

in we some of there we're about it on innovation of create a But couple when in of making even really investments we really spent done been area. think And think very we focused are also, of that. we've about some of with as things actually about small that we – handful intense through we a And changes lot XX:XX So, with that more on time internally look a at dialogue And focus investments that. have couple experience. thinking first around to customer a thing. it, our and folks

have with think Southeast, companies. Our that good, the be measures ways can in we improve in experience active mostly customer then of first, almost but we secondly, to in we leading few the – And research, I which experience efficiency several have customer an the the third and applying customer quite party we we using innovate And so, the like company? think says and is in after a all many fintech with investors but – about, XX:XX we in are measures, efficiency leading dialogues the several research fintech technology we technology we what of said can in several there. how investor a Also, and active process.

over few the is, that years. believe it the much very next So, transforming really is we industry

and latter. you our not we're just are business or that we to going time are – transforming lose so, we're do options that at value the do same And and to I the think – because

Jennifer Demba

XX:XX Okay. you. Thank

Michael Mettee

XX:XX Okay.

Operator

Davidson. next Kevin XX:XX Fitzsimmons ahead. D.A. go of question from The comes Please

Kevin Fitzsimmons

everyone. morning, good Hey, XX:XX

Chris Holmes

Kevin. Hey, XX:XX

Kevin Fitzsimmons

transaction important there’s to was a complicated feel in a to more, One large I been deal just more with be deals a more type you is it's go thing. while. be A. to the coming a to it ask wanted your experience, going of was out or for took confident handful view? do a bank think and on Chris, XX:XX like fit more appetite your traditional deal, that, questions going of like of M larger you Do digestible Franklin more and synergy

Chris Holmes

a because, to say, And lot. we've a were I that about hard. talked Kevin, great XX:XX question want deals that's actually, again, off, first Yes,

Okay. pay first with would for little folks selective where be those people and option able to are? us And What they be those higher premium and for smaller investments. with go more a grade size – a be

regarded do it FirstBank, combination in Middle to doing was Tennessee, so, And we some of Franklin it and they than some was equal totally now in legacy if Franklin merger opportunity the market really a the We ones. employees we those that make big as at bigger are Middle in love particularly in and get employees more, market, between ways, XX:XX and synergy you markets legacy FirstBank looked the employees. national total the merged more because we those has Tennessee, that.

them on going We’ve it's retained And XX:XX so, budget. customers; – had retained but a both we now, they by the we’ve the And all and the said, sides retained way. that well. have being folks

time. as have and of targets, So potential we look what hard them we it's frankly, that for us the back – going at been to when at than would but most at smaller – what look we

would You know, would say been and have FirstBank sixty been one synergy of percent. those, forty percent Franklin

smaller that look at of percentage that really ones I they're the that those those targets company. as interested As in, we a mentioned than in we're

that's just don't say, that gets so bigger only [indiscernible] [adjust] for, size, the think I your really I it we once because opt a much And list, what to [ph]. than that’s gets third know would for. be but target specific XX:XX that’s it would not what opt we hard

Kevin Fitzsimmons

the down very but as camp know of this And very of reports stories a love the temporary falls things of I kind and it's a today, as XX:XX into mentioned you're not aggressively – those but watching you hear that of much don't taking if or few could reserve and about and chain while. supply worker your quarter lots persist Great. you're and of the of growth more healthy been about solely something you just is, probably you Thanks. can I why disruption shortages markets, headwind the or appreciate times you in that. mind big a operating just as well? know, could loan this you a know, think is picture headwind just, credit whether is and it's fortune it in concern a that's have potential good it speak you how

Chris Holmes

not XX:XX Yes, credit shutdown. from much headwind a a from mind for my it’s quite of a as potential – comes

effects we kick do part versus labor being live take over the part thousand we shortages, shutdown the settle of shortages, has but and up would jobs very Nashville speak real, spot versus be just don't up chain, of again the back very something as the in COVID that been either going personally I will I have country. has have see also the side they in the the in from as something whatever there forward into We which spot cost any are we I shortages normalize migration the the or gone because And The about. of but created we shutdown reason, would don’t see for in And we got later. labor but labor. residential nationally, it's capitalism slowest a commercial I’m that that's opposed worry chain living two middle in about of Costs think so sooner so, being – disruptions of or and go commercial. the just rents that XX:XX growth, the in absolutely later. all status in so, the mean of sooner housing our the the twenty much largest supply, a those, up, in you significantly. mentioned, whether things – things attractive growth state, portfolio to both our attracting to chain, is seven the as growth if supply see residential month, the and highest Those state, supply those, a Western forces certainly going high area. coming to particularly don't in market talked XX:XX being I if we XX:XX and space, gone our I East where locally next think the and we I labor a normalize regionally both tend and down in of up and and know, have So, real estate our to cost you gone really space, I and of think it think begins think of tend

level. think to are pressure lot every There's persist. at where a wage I going are shortage we the of labor

at You know, I too. offers mean, get of even we some paid they folks. our highest

those standpoint, so, XX:XX we to we that And so, the problems, And still but as probably see – be look – being do deal see with. but going class that, it's first biggest the that difficult things from labor have that's you it, to are shortages a from at there's that of add it issue said later, right Michael, the will anything I markets. [indiscernible] issue, like I we're Supply itself would our but growth general, chain now in it sooner because think in. the versus of an is a resolve markets, being and in you also the to the it? area but attractiveness we

Michael Mettee

relative moratorium coming know other consideration things XX:XX reserve you part also the to all you I know had off, are loans forgiven. Kevin, of eviction the think you PPP being

and economy with we a how but of wage and businesses, aggressive the impact has point. is too there, of get their have And labor, with especially at variant that turnaround increases bit certainly kind drove a to expect a with, was the that been abate home impact [indiscernible] so, a the earlier would on quarter wait bit, this that Chris seeing with a all of in little And inflation. bit little and do across are on mentioned dealt see there Delta little things the and to, board. prices price what

Kevin Fitzsimmons

term on bearing long proactiveness Okay. you've XX:XX at you Chris, the if deposits, non-interest institutions. last one from And mentioned me, looking focus you're – one mentioned and

to and and so not much that. markets get right into could excess now and say, hire why attractive fund one loan Now, the out go you've liquidity growth well got

years? trying can't a of right proceed over you'd at to it have count you funding upfront what is way today having more just you period get and long-term some rather point? in to that a it get the approach and that on taking So, And deposits may necessarily go traditional of the that versus and cloth

Chris Holmes

and correctly. two are view will attractive non-interest you the be It long that is Yes, XX:XX term that always things. attractive. read very bearing deposits It's

the in we're deposits, less we they about think And relationship, than the that's given valuable term want. targeting traditionally valuable value, what the operating we pure we a relationship we're are and with today XX:XX primary to monetary rates as but mean what us ones are, just very and so, from so mind, that's our account And is that that. targeting long are, what where comes those by interest

some balance get doing of loan are officers hiring to loans okay. on sheet, the We

relationships do term got it'd will taking be closed, would the those not you in community bank over we bring us example. bring non-interest now. even those deposits be bearing certainly it for so, are in we If and the organically much we're of one opportunity, we – And they I'll legacy approach example we as as deposits they in markets opportunity good we the I'm if long them very in just loan being but growing where deposits. have XX:XX have call those, on with that's banks sooner for that's come than those that a Birmingham with know that but in Kevin and right, with fine time, we them. in envious loans, interested around percent operating that very in Again, fund account their and we, got portfolio those because don't forty

And there. want to get so, we

Kevin Fitzsimmons

Got it. XX:XX

Chris. Thanks, Okay.

Chris Holmes

Kevin. Thanks, right. All XX:XX

Operator

question next go from KBW. Mealor The comes of XX:XX Catherine Please ahead.

Catherine Mealor

Thanks. morning. XX:XX Good

Chris Holmes

XX:XX Catherine. Good morning,

Catherine Mealor

to could And and XX:XX thinking there how versus much your you're securities? earning deployment model get growth? think a Just Thanks. both about put liquidity we how in loan to of wanted the big and the of percentage you potentially strong balance portfolio how as securities how loans average plan assets to excess and the margin about follow-up the into just as sheet,

Michael Mettee

that XX:XX Hey. Catherine, it’s take part. Michael. I'll

thirteen total earning point Our of that has thirteen range in assets versus been percent, target five percent assets.

little deployed that because came has bit there. here clearly, some We quicker. stay, been looking were so we're to right we a in liquidity actually of So, kind but at year-end, range

transactions some it's and in also, repo, in day repo reverse liquidity paper. as We thirty well, their nature short-term there some that are deployed

And We you'll a of That's we material growth likely we'll our opportunity opportunity I there. what have growth lot deploy. as XX:XX So point don't percent, in markets. thirteen that that think range. helped prefer there's a strong little above percent think loan thirteen see bit. mentioned. we this five We

Chris Holmes

add just Catherine, side. I the would And XX:XX on loan

kind having Our to we're regional the – I when optimistic, – two. mean, optimistic. we pipeline look out at at look thinking not very the about we're targets presidents are today, When two, twenty twenty twenty very two, we up we and look of twenty coax we're them at for

for the side we're the reason, feel sheet. loan for So, balance the outlook better so that and about growth – we of

Catherine Mealor

seasonality fund. then And public of the the on Understood. XX:XX

can think you that in just remind quarter I mentioned you Michael. will seasonal remarks, that? remind are this in prepared your higher fluctuations saying with us, Can you you're [indiscernible] the public this us come trends and

Michael Mettee

We five we'd them that in to I million increase. quarter. still XX:XX those back quarter government two saw we funding that deployed There's not fourth balances of twenty during come higher some rollout lot will a expect from out the has the been version expect Yeah. and the be to and

Catherine Mealor

it. Got XX:XX

next see that about more deploying we quarter loan think the before a with could year So, liquidity little excess increase a you bit fair growth? that way think it? actually next to Is

Michael Mettee

Yes. XX:XX

Catherine Mealor

Great. Perfect. Thank got. XX:XX That's Okay, all I perfect. Alright. you.

Michael Mettee

XX:XX Thanks, Catherine.

Operator

question from go JPMorgan. ahead. XX:XX The of comes next Please Alex Lau

Alex Lau

morning. Hi, good XX:XX

Michael Mettee

XX:XX Good morning, Alex.

Alex Lau

at on your talk about Appreciate that and XX:XX competition loan Thank front? markets structure Can low looked rate you range loan you double growth the you. as competition guidance. credit both in digit the

Michael Mettee

four know Alex, sure. there think we and too many. The banks out thousand is competition XX:XX are I think all that's you king. there Yeah. It’s,

market – And market, they every the time. most the one are we them, so, it and We've got all that market it's only competitive two to this two tell me in – I joke talk the there has about banks got. time I is

fact it everybody So, it's matter thinks the and is. competitive of

I much of that have than will I at rate haven't Sometimes seen like we a credit Greg, see just concerning our what credit off-late, specifically, don't but of particularly find is found And cycles. now times pressure this, check credit so, we you'll see we concerning. have might this. it occasionally would XX:XX that you in is times this, relaxing pretty credit. structure. say, with standards more past relaxing relax right terms on We you in competitive standards And me one, see, like

can there, don’t And I so, we've we me you think correct seen… haven't,

Greg Bowers

you're being we've anything is XX:XX think as but encourage growth, when lose. you’re as I previous want got like it flexible. crazy right. I very it's We flexible, we're to far always in but called where I'm seeing I about the think competitive, cycles talking mean, or it not

Michael Mettee

XX:XX Right.

before We on statement things seeing have we're things. these made that lose calls crazy current seeing we're

seen that time. this haven't We frankly

thing. think So, I that's good now very a

are seeing brutal We rate pressure.

brutal Okay. pressure. We're seeing rate

pricing We two at a all, lowest that lowest price, priced the everyone a rate single we've one. the deal we terms frankly, ever have or done priced lowest we've on and terms, haven’t competitive that won

boulder is just so, And than we are somebody there.

So…

Alex Lau

XX:XX color. Thanks for the

Michael Mettee

Did XX:XX that question? your answer

Alex Lau

XX:XX Yes, have of you as ninety towards? Thanks. conditions you reserve Thank does. potential the that one hundred on that it economic see a so And ratio the allowance releases, improve, you. do normalizing on range one,

Michael Mettee

got and ten to XX:XX percent was go we back the I'll companies terms and one couple standalone references. in of a you loans. twenty give together, standalone one two to of the If in standalone, reserve a FirstBank before as of a Franklin FirstBank

was be Keep that I than was a twenty higher And and have I little a I they it that think they think would XX:XX seasonal. to is a have real concentration higher estate mind one reserve pretty estate – Franklin, think little loans. higher. a allowance so in real naturally because around concentration a

they remember can I those, CECL, begin added so, if of it we've had, had combination probably in we've one and somewhere institutions fifty, post we would and two to between so, I And CECL be a were significant think that, in would say so there. somewhere

call one one, there sixty probably. it probably thirty something the in I'll So, it's somewhere we to one think to

Alex Lau

you XX:XX about for on efficiency last end? going of do that that. eighty a how lot Thanks think a your through one, just percent, ratio ratio mortgage year And

Michael Mettee

eighty million target mortgage mean, you as about the efficiency really, in space, was four before I to terms third nine ratio. our XX, in I year, contribution right think in Yes. million obviously, eighty, at the that Alex, that up you low million, percent push dollars in the target said from know that eight eighty wind in XX:XX point I quarter, of percent one think but we've five range think that we'll in

Alex Lau

for Thanks questions. my XX:XX taking

Michael Mettee

you. XX:XX Thank

Chris Holmes

XX:XX right. Alex. All We appreciate

Operator

William from comes next Wallace XX:XX The ahead. Please go James. Raymond question of

William Wallace

my had XX:XX Hi. I two quick questions. Thanks for ups. follow taking just

quick in bounce to rebound you you to that loans, reserves and you might and hundred whenever just loosening to settle how have that won't commentary up you anticipate comfortable or a we the start you Q pressures the that you On on that would sixty to gave at? guys decide get one anticipate COVID hundred we could factors, back point get the out we where to those range thirty one feel and

Chris Holmes

tough XX:XX Michael. Yes, a that's one,

Michael it. that So, answer. I'll let you process, talk let him I'll runs so about

Michael Mettee

three would overnight. you'll of part see. it's relative take quantitative quarters. to two a Difficulty]. Yes, This [Technical think a kind expect lot of I don't of range. Certainly, going model there's over moving to That's I happen couple is to it the XX:XX next did parts that and quarters, the qualitative, versus but

William Wallace

just trying the on maybe And Appreciate a margin helpful. That's XX:XX bow then that. commentary. put to

you promising hear the next budgeting is the I you year growth. think what for as that about when So, is growth are promising, pipeline you're saying loan conversations

you margin net and yields, loan the to taking So, the at loan see offset margin is the asset that and margins, you the will mix on contraction? drive anticipating could a expansion maybe basis, if core do account think yield pressures and growth interest the we the on portion to in we look enough that do are or that of portfolio earning that you loan improving pressures fact think

Michael Mettee

XX:XX Yes.

up some portfolio continuing factors is, twenty growth the addition in taking So, work there's I there. One two in and two. think loan liquidity of

bigger come rate see but things there, because the So, of margin margin rate I would I a think we some expansion rate get that comes when loans billion think we increase. – you a got of adjustable with two from could expansion about increase adjust

And comes that so, I the think bigger when expansion happens.

little loan, of we as And doesn’t that going be very what think bit we where bounce those, incrementally it cost add side, on to of bit or a are generally actually, will are the a margin couple without until down what over either much. little growth, we probably a the see probably same than get anyway, the in in the but so, we'll you quarters the quarters. reduction the little XX:XX can around we loan get we band bit expansion, of but next We of still move on less on think got up we'll of we've previous a and two

that are, our we on but so, around the as keeps we'll you think those with as long as margin bounce positioned And up keeps rates – move drive loans kind side. up move rates that rates of to them adjustable know us as where relatively it, move up flat, they

William Wallace

Okay. XX:XX

help we minus from So, basically plus some kind or the Fed? of until flattish get

Michael Mettee

Yes. XX:XX

William Wallace

Thank That's it. all I had. XX:XX Appreciate you.

Michael Mettee

XX:XX Thank William. you,

Operator

XX:XX This to our conference any concludes to the remarks. like closing turn and question I back session. for answer would over Chris Holmes

Chris Holmes

Thanks us. joining everybody Okay. XX:XX for

FB your hopefully results. quarter, you. and appreciate next forward As Financial, to great interest quarter, always, look we in Thank another we

Operator

is Thank and you presentation, The attending you now concluded. now may for today's disconnect. conference XX:XX