The First Bancshares - Q1 2023

Transcript

Speaker 0

Good day and thank you for standing by. Welcome to the review of First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would like now to hand the conference over to your speaker today, Hoppy Kohl, CEO.

Please go ahead.

Speaker 1

Good morning, everyone, and welcome. I've got several of our

Speaker 2

team members with us this

Speaker 1

morning: Dede Lowery, our CFO George Noonan, our Chief Credit Officer And J. J. Fletcher, our Chief Lending Officer. And I'll start by covering some highlights for the quarter and then turn it over to the rest of the team. So guys, we are so pleased with the outcome of the quarter.

It was a great quarter and strong start for the year. As noted in the release, we closed our largest acquisition ever There is a Southeast Bank as of January 1, and we integrated our systems out of 331. So we closed and integrated all in the same quarter. We accumulated about $1,600,000,000 in assets in 24 new locations in Atlanta, Coastal Georgia and Jacksonville. So over the last 9 months, our team has done a phenomenal job closing 2 of the largest actually our 2 largest acquisitions ever.

You remember back in July, we closed Beach Bank, which was a little over $600,000,000 acquisition, closed July 1. We integrated their system December 3. And then again, what I just noted about closing Heritage Southeast Bank. So all in all, We've grown $2,200,000,000 in assets over the last 9 months, not to mention organic growth that we've experienced in the loan portfolio And opened up new markets in Tampa, Jacksonville, Atlanta, Savannah and built significant density in the Florida Panhandle. So we're absolutely just thrilled And I appreciate the phenomenal job that our team members have done to make all that come together.

In terms of balance sheet management for the quarter, I thought we did a really nice job of managing our Overall, but if you adjust for $77,000,000 of broker deposits that we let go, deposits were down only 2.1%. Our deposit mix stayed pretty constant. In fact, it improved just a bit. In the net non interest bearing deposits were 31% of total deposits at the end of the as compared to about 30% at the end of the Q4. So we're pleased with the ability to manage our deposit flows, maintain our relationship management, they've done a really good job It's not only dependent on what we have, but when we're doing matching around with margin, I think people are asking people to bring new money to us.

And so like most people in the industry, we're feeling deposit pricing pressures as well. However, I thought we're again, we probably did a really good job On the total cost of our deposits were only up 20 basis points to 72 basis points, but still well below 1%. Loan growth was a bit muted for the quarter. It was up 1% quarter over quarter with 4% annualized, about $37,000,000 With our guidance from last quarter where we had seen pipelines off about 20%, J. J.

Is going to offer some additional color About where pipelines are now and what we expect for the second quarter and the back half of the year.

Speaker 2

Net interest margin, again, I thought

Speaker 1

we did another good job of managing our margin. Certainly, the seasonal we guided to some margin improvement in the Q1. Last quarter, we certainly experienced that because of the seasonal deposit flows, but also because of the addition of a Heritage Southeast and Beach both added asset sensitivity to our balance sheet. So our net interest margin was up 32 basis points to 3.63%. So all of this combined with a great quarter in terms of improvement in our core earnings, adding the scale of HSBI, the effect of getting all Cost savings, majority of the cost saves in from Beach, plus our better than expected margins contributed to a core earnings growth of 9 $900,000 quarter over quarter, 58 percent.

Earnings per share was up 27% quarter over quarter to $0.86 So Given where we sit today, the construct of our balance sheet, strong liquidity, well diversified low cost funding sources, Strong capital position, earnings ramp, which is even creating more capital, we can reward our shareholders with and deploy. We feel like we're in a really good spot to compete the balance of the year. Even though we have significant economic headwinds, We feel like we're in a really good competitive spot. So with that, I'll turn it over to Didi to give us some more detail around the financials.

Speaker 3

Great. Thanks, Hoppy. And as he mentioned, obviously, about the heritage closing, I was going to start by saying we have noise again this quarter and that seems to be our theme Every quarter is the noise in trying to get to what our operating results actually are minus the noise. But we did close Heritage on Oneone and issued 6,900,000 shares of our common stock. For the quarter ended March, we reported $16,300,000 or $0.52 per diluted share, but on an operating basis, which excludes acquisition charges, which were net of tax of $2,800,000 and then the day 1 initial provision for credit losses For the heritage loan portfolio, net of tax was $8,000,000 So when you take those into account, our actual operating earnings were $27,100,000 or $0.86 And as Hoppy did mention, that was an increase from previous quarter end of 9,900,000 And are 58%.

The drivers to this quarter obviously included a full quarter of Heritage Bank as well as cost savings from the Beach Bank. If you remember, we closed 6 locations in relationship to the Beach acquisition. And those were all done in the month of December following the systems conversion of Beach. Our net interest margin, as Hopi mentioned, did expand to 3.63% that was an increase of 32 basis points. 21 basis points of that was related to the purchase accounting adjustment.

And if you recall from our call last quarter, we did net interest margin expansion for the Q1, mainly due to the closing of Heritage. Heritage had A higher net interest margin as a company as a whole compared to ours and they also have We had more floating rate loans as a percentage of their portfolio than we did. So as well as the Beach loan portfolio that Hopi mentioned. So our core NIM did increase 18 basis points to 3.47. We are expecting some contraction in the margin going forward.

We had indicated that Expansion in the Q1 mainly due to the increase of the addition of the heritage portfolio. So, we think we could have 10 to 15 basis points of contraction throughout the year on the core margin to probably about a 330. One point as well, I have to bring your heritage on. We do remain asset sensitive, about 1.5%. So we had mentioned that as well before that they would increase our asset sensitivity.

Our yield on earning assets Net increased 49 basis points, while our cost increased 20 basis points during the quarter. And the top you did mention, our deposits did decline 3.2 percent, a part of that was from the payoff of Booker CDs of 77,000,000 And then the remaining part of that was kind of split $50,000,000 in interest bearing, dollars 88,000,000 between our savings and money market and $76,000,000 in our non interest bearing. And then the heritage portfolio at the total was down $54,000,000 and that was mainly in the interest bearing categories, non Seating related. So, feel really good about that. As As I mentioned, we kept our mix with 31% of non interest bearing, at the end of the quarter.

Our cumulative interest bearing deposit beta was 18% and that was from a period of quarter end 2021 To current, so we feel really good about that 18% beta. We also, as Hapi mentioned, our liquidity, we feel really good about liquidity. We have a strong liquidity position. Our ratios are well above our limits. Our loan deposit ratio was below 75%.

Our borrowing capacity is $1,800,000,000 and then we have about 41% of our securities portfolio is unpledged. So that's roughly about $850,000,000 Over the next four quarters, about $220,000,000 is expected in cash Well, that of our securities portfolio. So we feel really good about our liquidity position. At the end of the year, if you recall, we had $130,000,000 in advances On the Home Loan Bank, those were paid off in January as well as the $77,000,000 in brokered CDs throughout the quarter. At the end of March, we still have $27,000,000 in brokered CDs.

Those were paid off at the beginning of April. So Those are gone off our balance sheet. We did participate in the bank term funding program with the Federal Reserve Near the end of March, we felt like that was a good way to go ahead and kind of look at our liquidity, Look at where we were with some of the deposit runoff and take advantage of that. And we did $250,000,000 at a rate of $469,000,000 So We were able to use our unpledged securities book and pledged those at the Fed. So we really kind of remained our same Our liquidity position remained the same.

We're being able to borrow the $250,000,000 and felt like that was a good prudent decision as far as looking forward to where for our liquidity needs. I just want to highlight a couple of our operating results, our operating net income ratios. Our ROA for the quarter was 1.36. Our return on average tangible common equity was 20.13%. Our efficiency operating efficiency ratio was 53%.

And as Kathy mentioned, our capital ratios, our capital is good, our TCE was 7.2, our common equity was 11.2, our leverage 8.8 and our total risk base was 14.7. So all great capital ratios. So I think that is all for me. I'm also clear to Mark, Oppy.

Speaker 2

Good to

Speaker 1

know. Great report. Thanks, Phoebe. JJ, would you like to dig into the loan portfolio a little bit?

Speaker 4

Yes, sir. Thank you, Hopi. As Hopi already reported, the bank achieved modest growth of about $37,000,000 for the quarter. Would note with HSBCI close on Oneone, a lot of time and effort was spent on both sides, HSBCI and 1st legacy trying to get those people up and trained and going into our system. So

Speaker 5

it did take a lot of

Speaker 4

effort and we appreciate that on everybody's part. Bright spots within the company continue to be our Private Banking division and also the Tampa market. After somewhat the slow start to the quarter, overall originations were about $245,000,000 including HSBCI and positive momentum of about $90,000,000 in originations just in March from the First legacy portfolio. As Hafi also mentioned, in January, we reported pipelines had compressed about 20% from the previous quarter. However, at the end of Q1 2023, those numbers were back up to previous levels pretty much online with the Q3 2022 numbers.

And then heritage, of course, excluded there, but they had about $90,000,000 in pipelines at the end of Q1 'twenty three. On pricing, we remain diligent in repricing opportunities and all renewals and modifying loans that continue to maximize spreads on new production. I think you'll see in the release overall weighted average yield for the new loans in the Q1 was 7.36. Also unfunded commitments and lines continue to augment In the Q1, trailing 12 month unfunded commitments were about $345,000,000 and on 18 month unfunded, about $600,000,000 So Summary from the loan side is cautiously optimistic as to production and funding going forward based on our current pipelines, unfunded commitments. We have several new lending teams being onboarded currently at this time in different markets and then look forward to full integration of the HSBCI team members into our system.

Speaker 1

All right. Thank you all. Thanks,

Speaker 2

J. J.

Speaker 1

George? Thanks, Todd. All right.

Speaker 6

Thank you. Generally, through the Q1, Credit performance metrics remained very stable with some categories showing some moderate improvement, some benefiting from the acquisition of HSP, Adding the results to our numbers, delinquencies for the quarter continued to remain very manageable averaging about 39 basis Points through the quarter. Our criticized and classified loans as a percentage of capital plus ACL showed improvement with a decline of 9 basis points in total C and C. And NPAs As a percentage of capital plus ACL improved slightly, we saw a decline of just under 2 basis points. So generally all good metrics from the credit side.

If you're looking at your deck, the next So comments, if you will, track with the pie chart starting on Page 15. So you can see these comments depicted there. Our loan portfolio composition continues to remain very balanced. CRE overall Represents 44% of the loan portfolio, but when you divide that between owner occupied at 24% and non owner occupied at 20%. Fee balanced among the subcategories, Wonderful Family run at about 19%, C and I, 15% and C and D, 14% of our overall loan portfolio.

All of the other categories Don't really see 5% of loan total. So good balance across the whole portfolio. Drilling down to CRE and C and D, You can see the predominant categories there post HSB acquisition are retail standalone at 27% Hotel about 21%, professional office space 20% and retail center 12 are the predominant drivers in CRE. In the C and D category, residential 1 to 4 It's the largest subcategory with subdivision lots at 16 and commercial subdivisions at 12. So again, No other category exceeds 5% in the undeveloped land and multifamily categories.

Moving on to Page 16, just for reference, with a little more heightened focus on Office space, particularly non owner occupied office space on a lot of folks' mind. Thought we'd show kind of where we As far as non owner occupied office, as a percentage of our total portfolio, we're about 4.1 percent of total loans, so about $204,000,000 give or take in the non owner occupied office space That comprises about 43% of our total office loans. So the larger majority is in owner occupied office that has been a That office said, has been a traditional category for us in owner occupied. And by state, as you might imagine with the recent acquisitions in both Florida and Georgia, we see that Florida Holds about 49% of our non owner assets, Georgia, really about 29%. And our average loan size is probably For a community bank, more so than a larger national bank, our average One size on the non owner occupied office side, it's $727,000 So we've got a lot of midsize Non

Speaker 1

owner portfolio.

Speaker 6

Maturities, our total loans in non owner occupied maturing Through the end of 'twenty five comprise just under 20%, and that's a pretty even balance, about 5% to 8 Percent of the subcategory each year over that 3 year run. So pretty orderly maturity schedule coming up in non owner occupied And 51% of the portfolio matures in 2028 and beyond. So we feel like The takeaway there is that gets us through what we hope will be kind of the downward trend in rates as those loans During 2028, moving forward. Thus far, credit quality has remained very stable Over the last several years, occupancy have continued to remain in our portfolio in acceptable ranges. And as with most of our newer loans in this space, newer credits, we are those are typified by More owner injected equity in the credits to put them in the performance ratios we want to see.

Classified non owner occupied office is running just under 1.6%. So Again, continuing to see good credit quality through that portfolio. Just referring you to Pages 17, 18, 19. If you have any questions on those, we could Certainly answer those, Tom, but that generally is a pretty good overview of credit as we sit through the end of the Q1.

Speaker 1

Thank you, George. Appreciate those comments. That concludes our prepared remarks. And so now we've open it up for questions.

Speaker 0

Thank you. At this time, we will conduct the question and answer session. Our first question will be with Catherine Mealor from KBW. Your line is open.

Speaker 7

Thanks. Good morning.

Speaker 1

Hey, Catherine. Good morning.

Speaker 7

Didi, what are you thinking in your NIM guidance? How are you thinking about deposit betas over the course of the rest of the

Speaker 3

Well, I think we have yes, I think that was going

Speaker 2

to go up a little bit because

Speaker 3

I feel like we've had we're continuing with the pressure With some of our competitors, with some products, we've just been matching, as Hapi kind of mentioned in the same thing last quarter, we're just You're kind of fighting it every day and trying to maintain what we have. And so I just can see that continuing. We tried to put a little slide in there that showed The cost and you can see the increase from February to March to kind of show a little bit of guidance going forward. It's not like it's deluge every day, but I mean we have some continuing kind of daily. So I did see that going up, Tom.

Speaker 2

Catherine, we may have

Speaker 1

to be a little more aggressive From here on out because JJ, I know the pipelines are building. So we've got the ability to be a little more aggressive on the deposit side, but put out in the loan book. So No, Bobby, we have to be a little more, Greg.

Speaker 7

Yes. I mean, but it's amazing. I mean, if you look at your cumulative total beta so far, it's just still so low at only 12%. So Is it your what do you think is the driving factor so far? Do you just been able to keep as low of a deposit beta as you have been so far?

I understand it will increase from here for sure, but still I think we'll be below industry averages.

Speaker 1

We've got a well diversified Relatively rural deposit base across the Southeast. And I think if you look at the slide in the deck, it shows that like 80% of our accounts are consumer accounts. So we don't have a lot of concentration in large commercial accounts, which tend to be a little more a little less sticky, I guess. So I think that's it. That's just it's highly granular.

The average size account is $43,000 So it's a highly granular Older season retail deposit base across the Southeast.

Speaker 7

Great. And then on how about on remix too? We're seeing across the industry a big remix from non interest bearing into interest bearing. It's hard to kind of see just because you've got the merger kind of messing with the numbers a little bit, but how are where are you seeing in that mix shift and what do you expect for the rest of the year?

Speaker 3

For the last several quarters, Catherine, we've been in that same like our non interest bearing, We were 31%. I think at the end of the year, we were a hair over 30%, 30.5%, somewhere in there. And I think September, we were 31.5%. We've continued to kind of maintain that non interest bearing percentage.

Speaker 2

So, do you want

Speaker 3

to hop in that?

Speaker 1

No, I think you're right. We hope to be able to maintain it pretty confident.

Speaker 7

Okay. Great. And then how about on the expense side, Deedee, any outlook on just The expense run rate for the next couple of quarters and the pace at which we'll see cost savings flow through.

Speaker 3

Yes, I do, Catherine. I think We should see some more cost savings this next quarter. I'm showing a little under 1%, probably 7.5% to 8% in this next quarter. And then I think Going down for the Q3, probably another 1.5%, so and then kind of constant for the Q4. So I think we'll have With the Beach acquisition, those folks that were remaining that were that left at the end of January and then with the heritage That will be end of May for some of those folks.

So I think we'll be able to see even more of that by the Q3.

Speaker 7

And the percentage, just to be clear that you're giving, can you specify what exactly you mean?

Speaker 3

Yes. So like on our actual expenses for the Q1 without acquisition charges is like 41,800,000 So I'm showing that down to about 41.5 and then it's like 40.8 the next quarter.

Speaker 7

That makes sense. Okay. Great. Thank you. You're welcome.

All right. Great quarter. Thank you so much.

Speaker 3

Thanks, Catherine.

Speaker 0

Thank you very much. Our next question It comes from Matt Olney with Needham. Your line is open.

Speaker 2

Thanks. Good morning. I want to go back to the discussion around the core margin. And Didi, I'm curious what that assumes For liquidity deployment, you still have a very low loan deposit ratio and you mentioned some of the security cash flow expectations. Just curious kind of what the plan is for deploying liquidity this year?

Thanks.

Speaker 3

I think it's kind of like we have been saying Remix and as we talked about the securities portfolio coming in at 250, We'll be able to deploy that into the loan book, obviously considering what the deposit run off Mike, continue to be. Obviously, we've talked about that and being aggressive in keeping those deposits. But I mean, 78% to 80% loan deposit ratio It'd be really good for us. And so that's kind of what we've been talking about for this year as a big roommates opportunity.

Speaker 2

Okay. That's helpful, Didi. And then on the loan growth side, I think JJ mentioned A few new lending teams that are hopefully being on board pretty quickly. Pipeline sound like they're better now than they were maybe a few So, go curious to know what this means for loan growth expectations for the balance of the year?

Speaker 1

You want to take well, I think we're feeling like Between mid single digit, high single digits given that we've got the new markets in Tampa, Jacksonville and Atlanta and then Panhandle are really Building our pipelines pretty quickly. So somewhere between 5% to 7.5% is kind of what we internally feel like our loan growth will come out for the year, Matt.

Speaker 8

Okay. That's helpful. And then just

Speaker 2

one last one on the going back, I guess, to the margin, the accretion levels, $3,500,000 this quarter. What's the expectations for the scheduled accretion from here?

Speaker 3

Part of that, Matt, is difficult to predict because the Q1 until Heritage was on our books, we took A straight line approach to the accretion for Heritage. During this quarter, those loans will be Added on as accretion will be added on and it will be accruing off on a loan by loan basis based on the average life of each individual loan. So It can fluctuate, so it's very hard to just kind of predict. I would say, I think we have about $8,000,000 I I think I'll pop my head kind of internally budgeting for that for this year, but it's really kind of on basis. Obviously, if one pays off or pays out, you get more of that quarter.

Speaker 2

And just to clarify, do you have $8,000,000 for the remainder of the year or The full year of which we've already recognized 3.5?

Speaker 3

Well, part of that was not all of that Heritage, so I was only kind of talking about the additional accretion for this year over last, but was about $8,000,000 for the Heritage book. So that I think there is a little over $2,000,000 for Heritage this quarter.

Speaker 8

Got it.

Speaker 3

We still have some of those other acquisitions still due to rent and some accretion in there.

Speaker 2

Okay, guys. Thank you. Great quarter.

Speaker 1

Thanks, Matt. Appreciate it.

Speaker 0

Thank you. Our next question will be from Christopher Marinick of Janney Montgomery Scott LLC. Your line is open.

Speaker 9

Thanks. Good morning. I wanted to talk about credit. And Hafi, if we look out the next maybe 18 months, I think now that the company has completed the acquisition and integration continues as kind of a steady state, should we expect to see some Just modest normalization of kind of special mention and substandard loans. And I'm just curious kind of how those get resolved now compared to the past?

Do you think The credit resolution is the same as it would have been in past cycles or will this environment be any different?

Speaker 2

That's I don't know,

Speaker 1

I haven't thought much about it would be any different. I think that My initial thought, Chris, is, first of all, we're not seeing credit cracks and we keep looking. You got to believe The blocks in interest rates have gone up, there's going to be some cracks somewhere. Now in terms of resolution, I don't see us taking our changing our approach to Quick resolution. In my career, it's always been identification and quick resolution of problem of credit limits your loss.

Your first loss is Likely your smallest loss. So I think we've been very conservative about grading credits. I think our loan reviews and our exams have proven that out and that we I can't remember last time we had any material downgrades from an outside external auditors. And so we're pretty diligent. We've got a pretty Through the credit culture here, so I would say quick resolution or our continued quick resolution would George, do you have any thoughts for that?

Speaker 6

I agree, Hoppy. And we have beefed up our Regional senior credit officer capacity too in each of our regions has an end market regional credit officer That also works with the regional special assets officers. So they're able to identify problems early on and work Together, to our resolution, I don't think our strategy will change any, but certainly the addition of Some additional resources from more folks working on that very thing will benefit us over the next 18 months cycle.

Speaker 1

Well, you made a great point. And when you said that, I thought that, and Chris, I think this goes along with your answer. As we grow, we never had a special Assets division up until about 8 months ago, Troy. So we formed a we took a very seasoned credit officer And she started our special assets division. So now we have a more formal collection process with the SaaS department that manages those problem credits In preparation for, 1, being a larger bank and 2, the economic headwinds and the fact that it's just a lot larger A lot larger footprint to manage, so that's good point, George.

Speaker 9

All right, great. That's helpful. And I guess just more I kind of state in the obvious, with the modest growth that you have in the future, it still feels that the pretax provision base is stable and growing, but that also feeds into Your credit protection as well. Great. Thanks for taking my questions.

Speaker 1

Thanks, Chris.

Speaker 0

Thank you very much. Our next question comes from Brett Rabatin from The Hovde Group.

Speaker 5

Hey, good morning, everyone.

Speaker 1

Thanks. Good morning, Brett.

Speaker 5

I wanted to just talk about the rebuilding of the loan pipeline. And I guess I'm curious just to hear Your experience in this market, if others pulling back, it's providing opportunities on credit or if you're just still seeing existing Maybe looking to do things and if there's pullbacks, are you being able to Originate new stuff or put stuff in the pipeline that might be enhanced from a credit perspective with equity, etcetera.

Speaker 2

So this is JJ.

Speaker 4

So I think a couple of things. When the interest rate run up happened late last year, I think we saw a pullback and contraction just from demands from our customers who are not sure. And so we knew at the end of the year That was going to be down and it was. And so I think we just got a little more aggressive in rebuilding those pipelines, but I think it's just a combination of Our clients getting ready. We are getting some new looks, but George will tell you, we're seeing some things now that I think We weren't looking at in the past that are coming to us that we're not excited about because it feels like everybody's trying to find place to deal.

So I do think there's Some limitations in the market, but I think our core business remains the same and we're still looking for quality opportunities. And just in our Recent committee meetings, you can feel the pickup of credit and good credit from what we saw at the end of last year.

Speaker 2

That's one of the things that My answer

Speaker 1

to this is, we have required substantially more equity in most of our projects that we've done Since the end of last year, the first issue, I looked at that pipeline, I look at the equity going in on the front end and people are putting it in. So our core customers still have A lot of equity, a lot of liquidity, and

Speaker 8

we're just requiring more equity because

Speaker 1

of the rate environment, and they're still doing it. Okay.

Speaker 5

That's helpful. And then wanted to make sure I got the you're having to pay more in deposits, Everybody is and your betas have been really low. Would you guys have just the spot deposit rates that maybe you paid for CDs, money market type accounts at the end of the quarter?

Speaker 3

I believe we one of our CD specials, I'll clear if I'm wrong, but I think we came out toward the end of the quarter at 4% for 9 months and 3.75% for 13 months, that was kind of 2 of our specials. Now at the end of the quarter, when we Put that in place, we were seeing some 5% numbers from some of our competitors on money markets And some short term 3, 6 month CDs at 5%. We've been kind of just around that whether it was on a CD or a money market, mostly in the 3% range on our money markets up until probably February, March, really more March, we went into that 4% range on some of the requests for money markets.

Speaker 5

Okay. That's helpful. Yes.

Speaker 3

And then as you know, I kind of mentioned a while ago, but in the deck we put out, you can see that increase From February to March, which was really where we obviously with the last rate hike, we had to increase our CD specials and then some of our money markets.

Speaker 1

So our all in cost of deposits is 83 basis points extended? For March. For March, yes.

Speaker 5

Okay. And then just lastly, tax rate from here, is 22% a good number or does that move any higher or lower?

Speaker 3

It's generally it's I would say around that That's kind of where we are. We were right on top of our accrual for this quarter. So I think we'll be in that range.

Speaker 5

Okay, great. Appreciate all the color and congrats on the quarter.

Speaker 3

Thanks. Appreciate it. Thank you for your question.

Speaker 0

Our next question comes from Kevin Fitzsimons from D. A. Davidson. Your line is open.

Speaker 8

Hey, good morning, everyone.

Speaker 1

Good morning, Hapi.

Speaker 8

Okay, Hapi, I just wanted to given that the deal is now In the rear view and you guys have healthy capital levels, but granted it's a bit uncertain in the environment, how are you feeling about buybacks today, Today, happy.

Speaker 1

I think it's still part of our capital tool and reward for our shareholders. And these price is certainly a tracker. I think we'll use it. I think to your point, Kevin, we've got plenty of capital and it's another tool we can use to reward our shareholders.

Speaker 8

And what's the can you remind me what the current authorization in place is?

Speaker 2

It's $50,000,000,000 Got it.

Speaker 6

Okay.

Speaker 8

And then, happy, now with you guys over deals are done, you're over $8,000,000,000 in assets, Can you remind us or maybe update us how you're thinking about this

Speaker 1

approach,

Speaker 8

However long it takes toward $10,000,000,000 in terms of whether that with the amount left, whether that changes your Strategy or attitude on M and A and whether the things that are generally Expected of acquired of being $10,000,000,000 How much of that is already in your expense base? Or is there more To go on that regulatory checklist for being read. Because I think you've said in the past that they start well in advance of Jay, you're

Speaker 1

ready. They have and that continues. And both our state examiners and our federal the Federal Reserve I have been very proactive for us to say, okay, here are our expectations levels in terms of audit, compliance management systems, BSA, Management Information Systems and we actually are having monthly calls with the Federal Reserve just to make sure that we keep pace of our expectation levels. And they're kind of, to be honest with you, that's gone out of their way to do it. They've done it.

Like they said, hey, look, we want you to be ready because If you're ready, that's what's working with us. So I appreciate that attitude because I want to be ready. In terms of M and A, Right now for a bit, we're going to digest it. We just completed 2 big acquisitions. So we always remain nimble for opportunities, Kevin, But we are very much focused on integrating these acquisitions.

We've added some markets which we think give us above average organic growth opportunities. So we're very much Focused on the organic growth piece of it, but we'll remain opportunistic. We've started our 10b committee. We formed an internal management committee that meets quarterly. We started our GAAP analysis where we have a third party look at the gaps between $1,000,000,000 to $10,000,000,000 of what we have now in terms of our support systems versus what we need at $10,000,000,000 So we've got a good start to go.

There's going to be some more expense as we get closer to that 10,000,000,000 And we think we've got good platforms built in terms of software platforms, process and procedure Across the company, but there's going to be more people required as we approach that $10,000,000,000 threshold. So I think the closer we get to that, you'll see maybe Increased expenses associated with that.

Speaker 8

And I assume that's really compliance folks for the most part?

Speaker 1

Compliance, BSA, audit, those are all areas that really changed materially From being in the community bank space to a regional banking organization. Got it.

Speaker 8

Okay. Thank you very much.

Speaker 2

Thank you, Kevin. Thanks, Kevin.

Speaker 0

At this time, I would like to turn it back to Hoppy Cole for closing remarks.

Speaker 1

Well, thanks everyone for joining us today. Again, we were really thrilled with our quarterly results and we feel like we're in a really good position Go forward from a competitive set even given the economic headwinds. So appreciate everybody attending and we look forward to visiting with you next quarter.

Speaker 0

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect and have a good day.