FB Financial (FBK) 19 Apr 222022 Q1 Earnings call transcript

Good morning, and welcome to the FB Financial Corporation First Quarter 2022 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, Wade Peery, Chief Administrative Officer, and Wib Evans, President of FB Ventures will also 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. recorded website, be the approximately the being on for conclusion is call. Financial's FB two call and available will replay of Today's hours after Instructions]. [Operator Robert turn that, call With like of to would over Finance. I to Hoehn, Director Corporate the Please go ahead.

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

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

everyone. as thanks this in And morning. morning, Robert. you, for We us appreciate interest your Financial. always, Good Thank joining FB

the EPS and tangible fundamental sheet $X.XX our strong. while growth and and on with annual rate XX.X%. the lower our IPO. delivered quarter the the as per X.X% We've of mortgage of for balance return and return low volumes a -- growth assets a on we -- AOCI few quarter strong value At book compound key high There of challenging want bank margins. got annualized, manage over items was profitability excluding average growth For quarter. share, tangible It quarter, to I had was key impact recycle delivered a growth common they few some re-positioned XX.X% loan equity grown qualifications highlight very a as of to are XX.X% since of the a good

growth quarter teammates PPP, loan Excluding year-over-year This in XX% our strong over in And markets. past of three growth had linked growth XX%. a we result of quarters. is fiber the annualized economically positioned four is

quarter deposits, annualized. deposits, non-interest see growth had in of non-interest bearing quarters, grown we escrow-related Year-over-year, grew linked by And our mortgage we've we activity our XX.X%. deposits to continue escrow We deposits, mortgage five our bearing XX%. three X.X% past excluding good the in over excluding annualized

three us. continued quarter. recoveries growth growth loan quality So that's very of Asset non-interest be XX.X% net year-over-year basis to We core of this experienced points in bearing for deposit of XX% strong

parts banking growth of loans our compared segment moving NPLs segment improve in of to through XXXX our but fourth to one quarter, and is the and in we that pre XX.X XX. higher. PTPP basis reduced to at piece the run NPAs also XXXX feel view level held Michael give rate year-over-year being that's A are X in that from we XX.X our in producing. parts impacted his $XX.X XX.X%. also that basis performance to profitability declined million the comments. of points. our to to We fourth to million X.XX%. adjusted There -- as quarter constantly rate by of of number quarter. around million decline be million XX run will We of $XX.X -tax, investment credit for move quarter first don't currently million And pre points that and for which a would this XX basis our moving points discuss I'd six EPS, ourselves to the the you we walk some for that that assets like our ways full banking look -provision

mortgage in we quarter. been a remaining mainly equity view that to significant were million quarter by A was interest in account net disappointing of in to accounting current our interest a loans events impact itself. impacted environment accelerated $X.X our points, million net due on the over $XXX this value basis mortgage appropriately-sized average premiums our sale mortgage largest first X short-term. net portfolio entirely of result impacted in in our $XXX book from in of purchase the basis is the calculate average impacting in on portfolio, loss remaining interest securities online sale related. than past income loans, confluence quarter, being was challenging liquidity. our X.XX% the per loss couple to impact premium We million net early any will -- a intangible book remaining held from our net X.X pieces Based The with on income of operating longer-duration our tangible The is And purchase excess loss income prior finally, to of had add quarter. A held of a sorry. book has and six as I'm in refinance repeat particularly forecast in off that is quarter deteriorated two channel impacted. $XXX,XXX share loans are hit $XX.X X.XX% the We our also unacceptable. balance the do that the accumulated for accounting the created the -- quarter. as unrealized on ahead we of to unlikely share. per has paying sheet in roughly rate the feel accelerated lower net with balance purchase were equity due million margin share segment Our the our credit interest We per tangible an reflected sheet industry. a interest Based account which amortization shift quarter combined balance on nearly for for loans value two interest sheet margin in of our fourth driven Those by in the mortgage unrealized And our losses balance lower other drop seven the this value is point that We to portfolio, remain near-term. in -- losses primarily million common point $X.XX basis the or didn't securities and for to interest years our due to margin. two mix maintained for entire the direct-to-consumer margin

lock maturity do both turn common part and equity. loss to unrealized and mature equity result. -- that In we While we don't look impact per over intend over long-term of no our majority but to we experience intend turn tangible Securities haven't growth solution view the loss. be as help to of the little it tangible loss resolution moved securities position with book to as permanent no stated to should the We assets our constraints the to value likely portfolio book in time the portfolio our immediate tangible we and view and a our tangible lower, a term to we'll share the

look second So points, quarter and remainder the the year, of we loan in the key to continued as XXXX. growth expect we

loan very a have pipeline. strong We existing

temper and lessening. and Corporate that a strong Our markets queue fundamental to have little look a optimism that ever-expanding are of continue growth driving strong expansions will relocations

a We have payoffs the And economy. larger continue known broader also some third eye the to in close second, quarters. keep coming we on

current to material corresponding exceeding the our size our through industry. for and environment growth of for tough We and cash in value XX that down loan dollar for We're bullish not impacts in guidance. and us profitability remain efficiencies balances down highly do We're now. continued excites Between year. on very large of bullish to and to remainder on about mortgage sledding our origination annually right that our our reducing in create and rate division. the over expected capacity we're sensitive mortgage benefit forecasted and that However, production the the expect to bank's mortgage. us XX% loan the our would delivery, put are hikes operate mix, we're expect the keeps functions comfortable But asset a operational ready from we of technology long-term the mortgage that mortgage exploring portfolio

rate point income -tax. $XX an shock in shows it million announced basis or XXX increase latest interest Our XX% pre net

that can basis Our by point update XX% for remainder good mostly we're a XXXX. the increase mostly that or latest million. Hopefully, $XX things -- XXX expect shock we the tell you rate analysis of showed

bearing about excited restating XX.X XX% year-over-year. loan continued to deposit growth our deliver, are non-interest teammates organic We and growth growth

culture, that most change would balance of to hire and successful also our current a a additional circumstances. there's the model authority of and customers corporate their attract for organic positioned strong on to built like perfectly opportunity local addition destination banking from sheet In banking team talent a our larger current and as community to disruptions ever-growing growth, recent those an our competitors markets. With in in than in new we're

become while back well runway And to disruption. in economic market have believe across customers which business by development model We We with a also to meaningful the are and our the real do the that fostering to we to of the a way bank think resonates so. banking every our compete in get have that impacted footprint. and message in community local desire choice talent we experienced communities we

M&A. evaluate bank great strong our in will traditional basis management are good banks strong There in deposit core and banks FirstBank. with to have be few fits These continue teams, attractive also markets footprint. community We a

organic on could eminent, focused and us. nothing possible to it's our we're a opportunities that transaction While come is growth

tangible tech-enabled direction technology in taken are as to process space, profitable value improvement, EPS consistent. attention, book traditional the more banking, invest can national explore for dilution our customer limited the goals, through been banking pay build us efforts unit, dilution Past our we dilution, haven't into technologies our for expertise book and to brands. you formalize advance to we Our close in And As Fintech seriously continue form. our help take we accretion, has areas while blockchain to back traditional improve to would for addition our we as and our emerging our and value the message tangible know, historically we remove and the turn how innovations customers, in costs experience right of

new is to both. leveraging process Henry like to Our asset expertise Consortium -- ventures investors to ourselves flexible customers, to those achieve an of network being to to and by and sorry, those new broad ideas. business or developers USDF order figure teams and the goals and with to existing network, develop technologies, responsive can founders perform relationships grief those We've quality benefit partnerships we that I'm to from bring technologists that cases business help as a partner and development and profitable in within Jack minority made

on Our more progress continue to and to provide able as to needs undertakings initial as on payments our that updates have be specifics. else. everything laid be on efforts focus move to We'll we groundwork blockchain to

turn invited For fall. look in. Michael that excited Michael. in to we're a to the little I'm we forward the opportunities it to how now, these going financial we're to now detail. results about And discuss seeing more being to over participate things

I'll Thank good you, And in our everyone. Chris. segment. first to results speak morning, banking the quarter's

the to ratio our income segment for Prepayment baseline larger that $XX.X $XX.X credit run of million paid which tax net $X.X segment core $X.X in Chris each rate individually combination, reconciliations, income -provision in banking million from loans the was pre first in had quarter. they mentioned, million amortization including off. remaining quarter, prepayment. the was million segment the $XX.X Pointing efficiency interest purchase had we premiums pretax, the of equivalent the As to than million accelerated deteriorate to when related this Franklin

portfolio, a Non-interest of earnings [Indiscernible], $XX.X held in As income. back [Indiscernible] banking income result, $XXX,XXX back The also net with loss a million a million to interest also million million of adds $XX.X during of the core from non-interest for on which segment. $XX.X in which we'd million segment adjusted we core $XX self-securities are loans loss our our had to our commercial of interest back $XXX,XXX more income, be income, income, and quarter. performance $XX.X and in adjusted sale reflective added net has quarterly $XX.X that added non-interest stated mark-to-market figures car Along back ask $XXX,XXX figures. from earnings not million

have million we $XX.X banking our delivered million XXXX. first in growing expense. the we $XX.X that Finally, And non-interest in in run comparable of which XX% rate million that segment comes PTPP, $XX.X over segment, together, the is quarter

of four million the steady premium, margin. X.XX% decline range net $X.X margin from which to basis a amortization point our we The that on purchase seven experienced X.X% largest each the margin, prior driver created had of of to X.XX% accelerated the interest the our that Moving significantly of down quarters. was drag was for accounting reported

of with of for margin at XXX the other interest-bearing fourth quarter. held and down of this points mortgage a primary The to of a XX yield which cause XXX had for million had about institutions basis X.XX% quarter up the a sheet stated the financial makeshift was to And yield loans were fourth we're from million deposits which balance our decline quarter. sale, for

accounting of investment. Looking loans forward margin, for our had our remaining net for X.X on we million purchase held discount

million dollars thousand premiums and lines have credit of new However, premium individual have which approximately thousand X.X in of net XXX closed loans, loans Bank close FSB premium, and interest the on and X.X ever purchase older remaining experiencing three net still further million are Franklin and remaining in $XX.X $XXX XXX chunkier due with our for of payoffs weak. discounts We to a that portfolios. contain commercial remaining are quarter. expect acquired origination XX our the million the Scottsville $X.X in at remaining products premiums saw mortgage would to impact accounting average expected to immaterial lines, which of premium million we premiums that thousand discount net larger treatment we with any be we the to foreseeable data, rate in Within an we Farmers loans given no National for expect deteriorated the volumes future recently has the approximately continue ever that million acquired purchase environment and portfolios accounting more given over held-for-sale mortgage decline for remain tend is and consumer large, premium to portfolio and

the XX% sheet portfolio While in anticipate portion the anticipate assets. liquidity duration ever expect more security and we do to that of shorter provides while a that in yields the securities decline have excess total not we portfolio the excess we not the attractive our increasing become much balance highly rate-sensitive. do deploying entirety Overall, liquidity of volatile of our in deploy remains

in $XX in indicated income XXX a of $X.X point rate and the the of shock million XXX We basis point the another billion $X.X point decreases next And XX have points those million after hike. loans, loans increases, rate million basis remaining $XXX $XXX variable of after number XX we'll rate a of around rate and latest additional our ended mentioned, with shot. billion cash, quarter shocks interest-bearing to XX we approximately that Chris million interest basis basis As floors. have net

environment. poised strong to are expected be beneficiaries the from right We

primary we non-interest be to being banking that can on anticipate we to $XX line million to income, move to $X.X income quarter we next us segment continue way begin swap For payment, will about out one fee that the range loss Durban to the with that item $XX per be anticipate the million in we would other. range income the X, $X that fill quarter. Beginning July or million amendment, of the

our in We growth expect continued non-interest segment expenses. banking

we back-office As tremendous but and mentioned, customer-facing talent, Chris at have opportunities roles.

us that execute a that have will We team opportunities. runway help building and we're ahead of very promising on that us,

in and rates, seasonality operating difficult rise mortgage quarter industry. to a in the illustrated upward typical interest experienced excess X, environment due rapid capacity to Slide first and mortgage Moving mortgage on

rapid division those quarter, and saw immune the decrease in material not was with refinances to industry the margin During mortgage our in declines a challenges.

our was quarter-over-quarter. typically as refinance up of lock it XX% Our was XX% rate fared quarter-after-quarter. The increase mixed particularly channels rate direct-to-consumer the volumes the in down business, total as felt channel volume interest X.X% impacted decline originations, which of better by volume saw an retail lock comparatively in

decline margins we X.XX%. by X.X% profitability to a margins. our from X.XX% margin decline in anticipated retail The had is affected by last when a basis. go-forward around demonstrated However, compared to to was the also value quarter That on expectations mark-to-market in stabilize decreasing

As all segment, segment working and we're not mentioned, in in our optimize we're this to our pleased results quarter profitable [Indiscernible] Chris cycles. with market the as for operations mortgage

give worked remainder the our that at plans contribution we final optimization, As this in we or of guidance year time. for not the will second mortgage quarter the for

point remain a near-term, While rights rate bright environment rising our is mortgage expected cycle. the as the difficult as the I during to servicing would portfolio operating spot

able improvement over feel local another as investment from section loans our a to our held that will away be And this losses. servicing and the Economic qualitative there We basis to we utilized I my in quarter as are releases positive fourth a rave first with there quarter. being from made. allowance enjoy be for further XX drop. forecast ACO move point that showed credit contribution economies continued the to quarter. for impacted, I'll we close our to for in reduction We our experienced MSR continues

the to that If we're conditions inflation change, related maintaining about the near-term. ACO with However, in similar I'll experiencing, due level of not being as economies over local to anticipate for turn our would do is loans the a our it by fallout. held and we investment over as well Ukraine that, And to Chris. conflict uncertainty optimism economic tempered back

you, And remarks. All the this Michael in the our for quarter. growth We're I'd prepared And to Thank particularly for interest line for point, proud loan and the of with questions. quarter. we're FB color. that again, Operator, pleased for right. Financial the your once our Thank like open at concludes team the that for in you results everybody

will And We our ahead. will of At [Operator Instructions]. momentarily now to time, go first Sandler. our the question answer and Piper we roster. will from session. begin Please pause Stephens question this assemble Scouten come

everyone. morning, good Hey,

Good morning, Stephen.

been, second-quarter said ratio if the you am guys or think that expense, given we at wondering but can about no similar how longer-term, on efficiency and the basis, you all appreciably guidance as what migrations that know longer-term it for than maybe of profitability Is I question recent have of to could kind that business said it of ratio or all efficiency about in Or the think a if business from refinancing holistically otherwise? whatnot. like perspective, or as has you year, rightsizing mortgage looks maybe maybe an around guidance quarters from be just that's these does rest I about possible? ask that to need think you lower I efforts what

Typically, so so probably efficiency Stephen we've group business. of in answer our low in XX% that ratio will that terms or one. targeted

particularly because said environment still long want get to, for some makes not hard we a we're ongoing. guidance, rightsizing got So in giving And this, it's just Anytime those term right we when current don't that now Michael markets because unpredictable. it's like it's target. that's the that you not it

relate have we more as so And will we it. information,

basis. do mortgage the factor will coming from to least an servicing fair say don't we But also the think at in much I the that quarter we have in there. think it's be rights on previous operating different materially quarter

the directions. to moving going continue of than it's So in I of that do in segment, segment even. hit in mentioned, see -- we some some value other technology quicker to potential got things probably that And because hit it long-term, that and of banking you've as both innovation segments the we particularly

in So, it to lot And of then those a we're hit conversations. participating and that has continue hit. will

and showing you think the in of significant tangible you Great. think I some higher have do that noted how growth the you the excess that Okay. value about aggressively amount. excess benefit that have guys you taken book. haven't still short-term guys showed deploying per actually extended any more all into counted investments? liquidity appreciate you share, liquidity duration Chris, about adjusted And a book maybe how know really you then, true a some securities tangible but I different And camp today? really for additional the higher, I moved There's to rates earnings. that for guys And But now do liked

on important it's closely -- We us. about a that's metric the Yeah, whether about -- your talked appreciate tangible all for results. comment one, it's obviously track and we time I it constant conversation, book. it in We an talked it our and

We we're if balance our constant about us. ever for anything a also it It's topic on sheet. talked thinking about doing

tangible it as to think we we like about losses, about think dilution And about as take and that want value. owners book term. get -- we're as this think the long so to we just investments, the we I on about think it and think characterize don't we and -- we about AOCI, And loads

move want to didn't so we to help maturity. a And

to of But deploy get also, remember, right for the surgical additions we've in portfolio some deposit. period our about thinking think the are We opportunities when we extended an been we camp on that. to

currently. liquidity it think could think We is of faster, a up hear liquidity the there's most While I -- marketplace. dry what lot I of in the than

Just think prevailing I opinion. what others from are

today but we'll because And comments notice, and can faster think. generally liquidity fund because some about than We when more just were to about Also little do probably sure everything as we today, then careful that than on we're grow a want can no typically and we make talking certainly we so cautious do. we more that different that think could than we're become deposits. probably liquidity. think also so much of we're long-term for and our deposits, we more low side us. bad non-interest a bearing assets valuable we of And don't We on that's think up to growing don't -- all non-interest liquidity for most those the forms want deposits, tied bad we and because talking yielding focused get shareholders. one, on it's those other in we're bearing It's fast as liquidity us

So some as we was say, the as wouldn't could that in a Michael to of make long we answer increases assets. XX% go surgical since with said, portfolio, probably

So Michael?

loan first maintain [Indiscernible] all. liquidity, not deploy off with will our growth Driven there. on better that we'd deployment but rather of XX%,

answer that Did questions, your Steven?

can on lay those any Yeah, impact about did economy? it's how in could this for just Sorry, guys? else you well. there -- inverted of how you any waited Sorry if I the assumptions going to in Moody's the yield on wondering migrations very me, throughout guys some quarter Were there. just clarifying the could, to CSL, hear you and or changes that. think in modeling provisioning curve that movement see CSL we the it last if negative year reserves projections. I'm current seasonal given about model everything and changes the that One out the how fears me, modeling you are question

is discussion. think And have net did factors. And be a consistent, concern. very we've at will out lot XX the considering of quarter, layer thought this route stagflation in is you stagflation really that in quarters, our We been that's of a scenario to XX%. there. which we SX, into where different been diminish, part which of We Stephen, as but think is a the good tell inflation that a went to last couple kind about estimated I lot just qualitative a it question. Back is question of We of, from a scenario qualitative continues risk perspective. weighted --

-- through of this of basis qualitative we that there. a And every we're scenarios different risk on into we quarter. kind the going downside the some So took and there's evaluating process consideration quarter definitely

quarter, a congrats growth prospects And future. Michael. strong great strong helpful, Super it. the and guys Encouraging. on in Got

Thanks, David.

Thanks David.

Our comes go of question Hovde from Please next Group. Brett Rabatin ahead.

morning. Hi, guys. Good

Brett. Morning,

XX start And how to variable and first mentioned portfolio in days billion for repricing rate a and talk move color in following and much hike, a that how the the the linked-quarter, to little about what locked reprices as changed portfolio. XXX. asset-sensitivity first just higher? might bit you margin, really right Wanted loan off tied, your and of XX% cash $X.X and didn't give loan for loan XX% the billion on expectations, are a be $X the of Can on the of you XXX Fed going terms little is rates kind the or reprice the more in portfolio us more

morning, Good pieces bit little with of the more kind a outlook. the NIM first start I'll We Brett. through XXX down around to the walked on and margin that.

even shift upper XXX cash. back for If net sale you to normalize be sheet balance meaning, to mortgage -- would to margin the and XXX even with just we interest isolate March, at maybe

that portfolio. of what hike come seen on two we've weeks that's back shift the quarter the So rate already and

in finish see yet in day happen a as reported at move when driven, don't see couple the weeks they XX asset rights, took our material The to sensitivity to contractual. yields numbers. the prime on to rights is time didn't last anticipated same pricing up are the days all [Indiscernible] increase. has guess, there or our, had we the XX-XX their I next our in and further we So mix improvement LIBOR all up of you account there shift just XX Does into basis really point XX as increase that to

portfolio. after XX delay rate seeing that's of are entire So a rates there. you first overall in hike the the basis in that We increase our points, did variable see kind

that that And answers so your we would right for expect to continue Brett, see as that. question? to

Yeah. That's helpful.

go an the what and thesis trying the Just it. that of into to might with tenor idea happen of margin get the

-- platform. around helpful. there's have to as banking. And question business guess seem on is going compress banking that's circle the for guidance I mortgage giving margins is to any mortgage try those that this the time the you're it of side potential So that I optimistic influence will on that I from it quarter, then improving taking doing business, it two away and to I could figure equation of might on back enough about or the happens, would guess out, fix year the about to I to obviously that. your like guidance expense the if that how understand able the over guys on which that thinking but [Indiscernible], like profitability for near-term. the expense thinking on mortgage equation, the potential guess to on you the it make would things, it year and just wanted you're continue it make are around gain there's to the improve you're be just you or seem profitable? perspective, what side focused not but I offset the you're for not I'm the possible the sale of work know money for trying for

experienced Brett, to so our decrease. remember, on It's already mark-to-market $X.XX Starting the with sale we question, went $X.XX. a if in I value, gain we've from

in reflective on that applies would naturally of so key that to And first gain where and will were on the bring the quarter. down. That XX margins be sale more income down, segment,

than would say applies So a always mark-to-market look term, say business be or your goal I on would But the gain on to will again higher mark-to-market. through bit impact sale I point. longer And in generally, typically next the number throughout the that value will I profitable That's down. the little and revenue us, quarter, execution. would the come cycles. yes,

to and the we'll shareholders. necessary capital positive profitable So make to on adjustments our be return

rights of think couple mortgage So experienced an that we 'XX haven't benefit you of the haven't first for yes, quarter, experienced, also, over first see the or time the in that our say or a years. and seen, should improvement haven't servicing there the couple that a And in of servicing positive quarter longer-term. with I of last was

the And anything down that to was books flow add I'd longer Chris, so to expected loans you'd well. that? cash as

faster I broader Volumes making we we're the change something of that, That our be reason capital than one on innovation think of one traditional segments, didn't -- That's put to It's businesses. you and application, we also is something missing that that I time to. There are business. a expect couple return delicate of in I technology the see time ongoing we're year what a Today, segment in looking I for refer not achieve you the hits think is to not be those. through the a week. look that. a alluded going those it and cost over We're process said as to that for as not and some in we're you That's the of what an numbers But to we in do down never businesses. -- out -- that us. we're look as banking talked mortgage The only on look would non-banking for thing it, add what process. to some begin it's we on we business that volumes. about I terms spike now. that hit XX% out some and areas. on projections. you more at you don't participant at -- of structure adjustments We're we the banking this our separate we It's remainder in the are refer any to look may that's we expect we is a next to year, -- -- segments. -- in as to not it's been got it, we but exactly of period that don't process real is are it non-banking our of but That's working and fun that we're banking -- things profitable unless start does and for

then pressures with we're provide. lastly structure might And done willing just that the realize that, the Okay. has guys in a expense have expenses. inflationary to your be seeing good maybe I you and that outlet on mortgage was part growth curious thoughts you cost any a job for on speaking, but

Yes.

-- all all on seeing expenses cost you we're across So of our headquartered but where increase markets. the of happen growth the markets. Brett, seeing outlook to Nashville, we're we're And the here our and in be across

do environment. digits So mid-to-high-single tough We I year. will it's expense a expect, really say said we the for

looks little increase to cost fronts. be digits little with probably and in like are a to a our with detailed, banking on guidance figure what be going going So that segment out mortgage we because more certainly you as we're announcing we all to in seeing better begin decrease our expense That segment. gives

color. the appreciate Great, Okay. I

All right. Thanks, Brett.

Demba comes go question next Securities. from Truist ahead. of Please Our Jennifer

doing? Jenny. King Hey, for Brandon this on you is How

Hey Brandon. Good talk to. to

-- I'm Yeah. sorry

you. We to missed have you. But glad

Yeah.

wanted around wanted markets. for of of you opportunities your on merger appropriately transaction. know of choices your the some if quantify with the course, in the commentary to I Bank touch on disruption prepared job hiring, the I to to TD potential And course. on could bank being remarks Of now being positioned back

you I'd because is some say would the the difficult form and take really what say customer we the on said quantify is to I organic and focused you, a It's really never as going need it's Yeah. organic of I growth those come and And it to to proposition. growth. think all of recruiting it going we of down is, can't this. people. company. time the to or but what we're We of We've and long-term be quantify doubling know both focus always is answer some for the it's exactly short because

there I of up think that year to disruption frankly, a customers because that have I people But now. subject that couple think cases, and us years or of that going even and we're some show focus on are in I from shown to going very years a lot the show cases them over immediately to I think of will already next are a the from specific two have up. up a now think lot be

larger of continue occurred, disruption think we'll but those on banks result of some already occur. to our particularly some has a among in of I market that the As

a So be more mean type that on trying of what make will that. those. in that's terms project we effort we focused us effort to capitalize by and And for almost sure that's more

Okay. Thanks the color. for

Great.

is loan the very expecting And was mentioned that it regarding was the downs, pay next quarter first you're strong growth some And second quarter. then in in question quarter. and third my

slower, up confirm that XQ, to to timing want in current XQ, loan be expecting XQ and just just pick being you're I growth environment. So based the off

Yeah.

that you about a -- of we think in at lot. XX% And in a growth we is right. where all when heard a I quarter rate think

so go, some wouldn't we we're I capacity? far you your point what's are that coming at probably, from wow, And at we're say And but so, it, not it.

rest going loan still And quarter strong. XX% strong not every we continue think will But to I think -- year. I we're each rest the to for so, of quarter the it's of the expecting have rethink the the would say growth year. it

XX%, And the strength quarter the and so annually, we say said, we quarter, the of given and the XX% quarter. that first first is the fact first to

rest rest get that We XX%. the XX% you So that the our do that's for that expect get expect We good, same of but or come -- of be for targets that's your year, above good. out typical gate the of year. the strong, to bodes at of we as to means you don't you level, when well

this we a And growth to Okay. trend throughout I showing credit still year? reducing of fairly add regarding balance how deposit lastly, are we on know how as expectations debate Got deposits their is would that the lot quarter. growth deposit What grew, sheet. asked in do the your to it. there's

to your assumptions know in and what where Just things your are. markets there's wanted

not put to while on because that want want focus on that that because be at there Is for balances the And interest continue bucket. costs the costs the want manage we manage then be continues Michael, bearing. liquidity to frankly more to grow us, to the you while bearing, we anything? -- non-interest to We on interest-bearing -- actually, go that area growth of a some bucket. may fair, that to So down continue a avenues we to similar than cost may got

a COVID that have your still actually set. what that and segment and Those third public inflated quarter, associated. do growth are flow deposits as comments that cost right balances. look We and on That from we'll in well, typically managing out funds to managing the go be forward balance get the your back then balances the second, in question like could which and impact would back

growth in non-interest look and bearing for interest-bearing. reasonably the on flattish would I consistent more growth

much. very Thanks helpful. That's right. All

All right. Brandon. Thanks,

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

Hey, good morning, everyone.

Kevin. Good morning,

morning. Good

that. commentary outlook would mortgage it's change, fitness? going say being does be or you the the -- how and time you was a ability I variable there related -- this Do ratchet to point, when to commitment understand discussion given this just on previously your within and right-size of I the down this at unable being say to expenses. profitable really Chris, to Hey, every that longer-term and reasonable Because to real just to recall period

just point longer-term earlier top about that that interrogating your you're affect view a So able the given or it's hitting could are the I'm business? that was what the business, just fact quickly headwinds more and this just looking to I'm changes permanent more line side, at generating So of on the XX% return there not for. multiple where pivot expense the of suddenness the on

We've committed. how to industry enough the the side so got originators a and does a years going to segment. Kevin. remember we're made it I a in our not we're think And we've investment trade we're retail making it's a move attract time. we for the that's business business. Remember, also, think And across it. in just comments think on definitely of in Southeast the significant And position coal the technology to strong I our really continue that. it's business. to question, be two It's big fair got in commitment over And we've -- strong I and from on be million impact got and what a impacted. to all from And for the -- $XXX relevant homegrown committed

is our to So management is commitment job to I sure that But profitable doing keeping our want to end clear that And the earning make are capital we of At got to get allocate we're also -- appropriate be we on an great committed it on capital. the that. return has and shareholders' return. and day, one. a and

expense -- segment particular it business. made probably the in thing one our in on direct-to-consumer shift side, this there mind to we is keep is As thing one challenging more that's

remember, got which probably is call typical two origination. bank of channels you your I branch-type If two retail our would business, really that is One retail, mortgage we channels, channel.

of The dried in online. heavy other in those this leads. terms which heavy is comes current us. is time. a environment, up also same of all That both for refinance online buying It's direct-to-consumer, component the And at

but We wait same just at l to haven't the before that want time. experienced

I profitability. And handle a go for what us $XXX segment one this so biggest before. in they -- of just to million same And been drove would environment could experience of that if has little to we part again, challenging -- the and more back XXXX, that that that if

best capital. investments sure again, that return we're to thoughtful on long-term thoughtful like So to making long-term that just the that continue were on again, -- and owners making we're here get impacts on the sure

used apply fair to Okay. that I that contribution the I guys you talk longer-term think correctly, still mentioned PPR if net a would and a you think recall target I there or that That's just XX% say? as of target, long-term about like -- am is being you was very right at the I is have looked percent earlier efficiency guys on

That's good yes. Yes. a

right are Rile. You

your can on for and there have use. me a to benefits Okay. the imminent I on some on multiple one But potential M&A, that stock referred are that to you opportunities, maybe And still M&A commentary you've disruption hand, one nothing the last healthy come. heard other guys

you're relatively growth economy. There's given strong, the uncertainty now. right sensitive loan Your credit, on is just asset very very more

more or makes little someone So to challenging review to sheet balance maybe it. else's take seemingly it

two is or M&A you or say said next year all would that, you might the a what likely a little versus quarter ago? less over Given so have

analysis. analysis. Good Good

all the of answered some have -- may question. You

my that footprint. banks One markets of I strong a making and remarks, our community when in say that the comment in attractive are things I is there few was prepared did

few that intentionally chose. was that I so And word a

out right the And are all there opportunities, mentioned, are the with strong. again, for there. reason, said, a some not you we're really now the And reasons you the opportunities but really organic so, reasons active pursuit

the If we're organic -- you at really, what really organically, doing good. look

to over of getting good, we years company until -- and last we better which size want the focus to better, already Remember, the with doubled we two the on and and to and is better, continue and better continue better. on operationally making We great. have experience, get customer be

And going really those opportunity, out identified to good have when don't there of some so that control we there When though. We're a those to those going are are big advantage focuses really been for come for us is us. pass. take to and long these opportunities of And term.

do. haven't when could we that's could and so say while the that are ready we we but few but in eminent. -- the There we'd they say book we but we interested we slight, And be interested in attention it earn-back, to haven't take a nothing dilution, careful a like taken had try with have we take And say be in that's taken in do, we're ones that's we happen, would they some to typically And is couch few, the could very good we it tangible that it why tangible reason that why where where position why past. dilution a we a be that's we [Indiscernible].

much. very Chris, you, thank Great Okay.

Kevin. thanks Alright

KBW. from Please comes question go ahead. next Our Catherine of Mealor

Thanks. Good morning.

Good morning.

I want follow-up the to on margin.

know on thinking impact lot you this we've from the of the generally? and saw repricing quarter, a the but, that yields. and yields are floors opportunity loan production new I where coming about loan all Just about talked

production on the four of three, at There's ish still in late some like the in them - low Cath. right the new high Hi on coming fours quarter.

in seeing yet. move Still But yields environment. a we and to the we're the environment. increase on So come starting loans rates competitive still back But haven't we're at material there roll-off lower higher. rate seen see higher some out arising

to Just one add thing.

up and did -- have bigger now April think up moved been we terms size very And that of described. some the down low quarter, much mind We but has didn't up. is the move it's That we some. in seen are actually, stuff rates. our ones it's moved our the some coming that in still to this at community, are banks did see of late quarter quarter, low better rates. We of your the -- in case, banks problem the banks, have late actually probably smaller because we've unreasonably our it in on. in some seen banks what been we It's some of see And to banks up the in their bigger encouraging we've are in unreasonably in have frankly. even pricing in We closer that down it are some that moving

to And difference That's gain retail platform how on sale sale gain margin, between the and on sense then the direct as great. platform? mortgage margin do that consumer on the mortgage you

Yeah.

all direct-to-consumer first along retail XXX have the specifically its typically, So did has XXX in that been below X margins quarter to direct consumer and the that and XXX number. decline run to X. went the We see

higher. So detriment some the XXX of at of which moved way, volume But it's spoke about call of the it Chris earlier. more was that, back to Those it been XXX have in range. a

as stabilized well. So bit have margins also a retail

increase over a materially an but first material -- seen we've number. quarter, So the not really higher

I you so guys. is helpful. quarter, Great really That's got. Great. thank Chris, much Okay. all

Catherine. Thanks,

go Inc. ahead. come Instruction]. of Please And will from question [Operator next Stephens Jordan Ghent our

question I kind are Hi, morning. of follow-up on you quick disruption the good just talking guys about. a had market

about briefly you're lending that verticals then Thanks. in. the maybe seeing opportunity markets you're If and most potential you guys also, seeing in, any talk what could

Yes.

our in where across We've we're it seen conversations. not hear I one and one that here, it's conversation we of markets. them So then can't any Actually, [Indiscernible] can It market. and [Indiscernible] not see across have of Jordan, think markets. don't where it's -- the

much markets. the pretty [Indiscernible]. it's market Every So across

-- The the lending so And let's see verticals. [Indiscernible].

we're verticals would are, be do there. some going we're and mortgage on talking we focusing the us, mortgage two redemption's to really how having we manufactured I For were be guess Probably, where is now. to see about that housing. Those -- how is opportunity

say I verticals [Indiscernible] more more. area lending manufactured opportunity. then, I origination thinking technologY the really back-office say where we side side and about And I is on leveraging and for I the when plan funny sounds haven't When probably that enhancements But expertise to really and you're the an again, say forward. think -- of is So seeing that's as more about that, there. our and be housing -- that of potential in good strategic that an us continue where in interested we one got where of our we as the it. move leverageable part has Part we've marketplace plan in so that

Perfect. Thank you.

Thanks, Jordan.

right. Thanks, All Jordan.

our concludes to over the for I Question-and-Answer to back remarks. Chris would Holmes turn conference like session. closing any This

XXXX. all for appreciate of look we questions. pushing Thanks joining today. you. a Okay. support forward to We your you to Thanks your to rest us good forward for of Thank and

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