Good day, and welcome to the Home Bancshares, Inc. 1st Quarter Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.
I would now like to turn the conference over to Donna Townsville. Please go ahead.
Thank you, Elisa. I'm Donna Townsville, Director of Investor Relations, and our management team would like to thank you for joining our first quarterly conference call of 2021. Reporting today will be our Chairman, John Allison Tracy French, President and CEO of Centennial Bank Brian Davis, our Chief Financial Officer Kevin Hester, Chief Lending Officer Chris Polton, President of CCSG John Marshall, President of Shore Premier Finance and Stephen Tipton, Chief Operating Officer. Hopefully, by now, you have had the opportunity to review our proxy and read about the work that we have done in the last year on our ESG initiatives. While our work is not complete, we have made great strides and this will be an ongoing effort at Home.
Some other exciting news that I'd like to share is on Tuesday, Home was named to the Forbes list of World's Best Banks. We made this list last year and we have also been named to 4th Best Banks in America every year since 2015. One aspect of this is the performance metric and the other aspect is driven by customer service. And because of that, that makes us very proud that we continue to excel in both of these categories. Now for our first report on the quarter, we will hear from our Chairman, John Allison.
Thank you, Donna. That was a nice award. We continue to stack them up over a period of time. Welcome to HomeVancia's Q1 earnings release and conference call. My name is John Allison, and I have the honor to serve as your Executive Chairman, President, Chief Executive Officer and I'm also the co founder of the company.
We're here to discuss the results of our Q1 2021 performance. I'll mention the press release, as you've probably seen it, the Q1 from a pure net profit and revenue perspective was the most powerful quarter in the company's almost 22 year history, resulting in a record net income of 91 point $6,000,000 That's another world record as our company for our company, as one of our former teammates would say. Home Bancshares is known for being one of the top performing banking corporations in America for the last 10,000,000 to 15,000,000, and this quarter was no different. Sales revenue was off the charts with total revenue of $207,927,000 a best ever. That's total revenue.
But what's more important is how much of the total revenue we bring down to the bottom line after tax for our shareholders. I want you to know that of the gross $207,000,000 we brought 44.05 percent to the after tax bottom line or $91,600,000 that is available to our shareholders. In addition to total revenue, our net revenue was also the highest it had ever been at 193 point 4. I think that's a beat on the street, but our company also bought 47.36% of the net revenue after tax to the bottom line. These numbers reflect the earnings power of your company Through the low cost of funds, strong yields and best in class efficiency, it resulted in another high watermark for our shareholders of $0.55 earnings per share for the quarter.
PPRN also hit a new record high of 125, representing a P5 NR of 62.32. That means that we brought 62.32 percent of the net revenue to the pretax pre provision shoebox as our long time Director, Alex Leiborne, has landed. Here's some additional highlights. Pre tax pre provision ROA was 2.92. I think that's a record.
I think that's the best. After tax ROI, 2.22. Return on tangible common equity, 22.90. That's one of the best ever. I think we've had one better than that.
Earnings per share, dollars 0.55 That is the best. And on the NIM, interestingly enough, we increased our NIM by 2 basis points to 4.02 from 4 basis points. Reserve to loans without PPP loans remains at 2.40. Stable asset quality. Overall yields have remained strong at 5.56.
Now that includes accretion of net income and PPP. And without those, the yield was $0.051 Mortgage produced another strong quarter with $8,167,000 dollars versus last year at $2,600,000 efficiency ratio of 36.6%. That's got to be best in class or right at it. Are you happy with that, Donna? You had it with 36%.
You're the efficiency lady.
Considering the size of the bank and the regulatory hurdles we've overcome in the last few years, I'm happy to be below 40%, but I know that we will probably be challenged to continue to push that downward.
I agree with that. That's sure it's fun to talk about when you get it. First quarter loan originations were $671,650,000 at 5.10. We've only funded $250,000 It kind of came late in the quarter. March origination was the highest by the way of the quarter, and it was right at $320,000,000 75% of the originations came from the community footprint.
But 671, we need to learn more on that, but it happened mostly in March. That appears to be continued into April also. Last quarter, I said I thought loan growth would come into the second half of the year, but it may be coming a little sooner than I expected. Negative side rate payoffs of about $800,000,000 in Q1. That's pretty much in line with what we had in Q4.
Hopefully, that will slow down at some point in time, but we'll be able to match on the origination side. We had a $2,000,000 charge off. I just want to be very important on this $2,000,000 charge off was I made the statement to you all when we did our first fireside check that I don't see any losses as a result of COVID. And I'm still saying that. This was a problem credit before the COVID-nineteen.
And I'm optimistic we're going to recover here, but the conservative nature of our group is that we charge it off. That was $2,000,000 of the how much, dollars 2.6 net or something? 2.5 net. 2.5 net. The team has also done a really good job.
I found these numbers, and
I wouldn't I hadn't been
tracking them in the past. I mean, I track them, but I'd not like year over year. This is year over year cost of your liabilities versus your assets. Our total interest income for the year over year was down $9,524,000 That doesn't sound very good. But interest expense was down $17,887,000 which resulted in a positive net interest income of $8,363,000 That is a nice job by Presidents and Stephen Tippen talks that because Tracy talks it in today.
So good job, guys. That's pretty impressive numbers. That added $8,300,000 to the earnings. So good job. Over the year, we have tried to position home to win.
We've made several investments, both long term and short term, and we're continuing to do that again this year with all this excess cash. Last year, we purchased some underpriced, good dividend paying bank stocks
that have
performed very nice for us. We're also in 4 or 5 different ventures that likewise have performed nicely for us. This quarter, we picked up several $1,000,000 in income for the company. And our past performance is no guarantee of future performance, but Home is still in these investments. Our investments produced income of $9,500,000 in 2020.
And so far this year, they've produced $13,800,000 dollars Owners continue to work on M and A and presently have active discussions to our homes, so stay tuned. On repurchase, we spent about $8,800,000 in the Q1, repurchased 330,000 shares at a weighted average price of $26.55 and we'll continue to be active through our 10b5-1 even today and will remain active for the rest of the year. It certainly looks like home is off to a great start. Business is picking up and uptake we're in for a powerful recovery. My concern is still around inflation, which I think may already be out of control.
Company's existing inflation with the new $2,700,000,000,000 fiat money frame coming down low and we could be back in March 'eighteen during the Carter administration. They also thought they could control inflation that had rates close to 20%. I wrote this and then I'm watching TV yesterday, Tracy, and the talking head comes on and he said, we're not careful. We'll be back where we were in the Carter administration. So I
may not be
the only one seeing it that way. And you bought in gasoline laden, it's up $0.80 a gallon. Food is straight up. Lumber went from $300 a 1,000 board feet to $10.50 That's a 3 50% increase in the cost of lumber. I would hope that the Biden administration will shut down their discussions on the huge tax increase as we're just starting to recover from the COVID-nineteen crisis.
I don't say this as a Democrat or Republican. I only say this as an American businessman that has the privilege of leading one of the best companies in America. The tax increase makes absolutely no sense to me before currently trying just to climb out of 1. Instead of trying to suppress American business, the President should be offering ideas to help all businesses. Think about it.
This is not the time for a tax increase. The talking heads on business channels would say 2.25 percent to 2.50 percent on the 10 year by June is going to happen and 3% by the end of the year. If true, if that happens to be the case, and it may be, I personally kind of believe that, those banks are having fixed rates in the 2s and the 3s will pay the price. And those investing all of this excess liquidity that they have in their long yielding long term securities will also pay the price. The risk is absolutely too dangerous for us.
This is most of our largest personal asset and our view myself and our executive team does of putting it in long term fixed rate securities and selling the future of our company. Those that remain disciplined like home will win the race. So when you get to the winner circle, just look for home standing in the middle of the circle. I want to thank our teammates for an amazing start to 'twenty one and the investment community for your trust as you committed many years of that. Donna, I think it's a pretty good quarter, and I'm going to let you have
the floor. Well, thank you very much for that report, and that is the fabulous revenue and EPS results. So congratulations to all. Now we will go to Tracy French for a report on Centennial Bank.
Thank you, Donna, and good afternoon to all. The Q1 for Centennial Bank and Home Bancshares is without question the floor to report. In fact, it might be the safest banking institution in the nation along with being one of the best or top performers in the country. The results of our group we shared today are phenomenal and not only show what hard work delivers, but also managing each detail that turns out to be financially rewarding. Our banking company continues to work hard and remain disciplined in all areas of the bank by putting our customers first.
For the shareholders, the report today is very rewarding. All of our regions had a great quarter. We'll hear from Christopher and John in a moment. For Centennial Bank, our net excuse me, for Centennial Bank, our total net revenue was $192,000,000 for the quarter, making our old fashioned ROI, Johnny, 2.25 percent. Our return on average tangible common equity non GAAP was 21.03%.
Our efficiency ratio was 35.36 with the last 2 quarters in the low excuse me, last 2 months in the low 34s.
Great job, Tracey.
Thank you. And now what we know as the Allison T5NR was at 63.56 for the Q1. These numbers are what they are because of all the effort from every single person that works in our bank. Brian will share with you our capital position, which is very strong with our risk based capital at 18.76%. Stephen will give the details on the loans and deposits as our excess cash has gone from over $1,000,000,000 at the beginning of the year to over $2,000,000,000 today with our liquidity ratio at 27.21%.
Kevin will share the latest on our loan portfolio with a reported 0.66 nonperforming to total loans, while our allowance for loan loss excluding the PPP loans is at 2.4 at the end of the quarter. That makes up to be 383.47 percent allowance on our loans to non performing loans. These reports represent a very profitable and safe company. As always, we are staying in touch with our customers. I'm glad to report all are doing better and some have not missed a beat.
Our markets and customers have navigated through this past year and we believe the economy is doing fine. Although the cost of operating that Johnny mentioned earlier is certainly up. Our regional leaders reported that most of our branches are open to full service with the few that are not, which should be opened by next week. Our customer activity is increasing in both loans and deposits. Loan production is showing good signs of growth along with our pipelines.
Our deposit growth has been great, and our managers are working hard on the cost of these deposits. Loans that have been granted deferrals are showing much improvement, while some are back full speed, even our hotel loans our airport hotel loans are feeling very good. Donna, I've always used the word better as in getting better every day, every week, every month and so on, and our company will continue those efforts for our shareholders. Thank you.
I have no doubt that that's true, Tracy. Thank you for that report. Now we will turn to Brian Davis for a financial report.
Thanks, Donna. I'm pleased to report $148,100,000 of net interest income and a 4.02% net interest margin for Q1 2021. Our 1st quarter net interest margin increased 2 basis points from Q4. Today, I would like to give you some color on the Q1 NIM. 1st, during the Q1, we had 314,000,000 dollars of PPP loans forgiven.
This forgiveness caused the acceleration of deferred fee income for the loans forgiven. The deferred fee income increased $3,500,000 from Q4 to Q1. The acceleration was 9 basis points accretive to the NIM. 2nd, the COVID crisis and the resulting governmental response has created a tremendous amount of excess liquidity in the market. As a result of excess liquidity, we had $581,000,000 of additional interest bearing cash in Q1 compared to Q4.
The excess liquidity was 16 basis points dilutive to the NIM. 3rd, for Q1, we recognized $1,100,000 of event interest primarily from large payoffs. The $1,100,000 of event interest was 3 basis points accretive to the NIM. In conclusion, the non basis points increase were PPP loans plus the 3 basis points for event interest income, that's the 16 basis points decline for excess liquidity results in a net 4 basis points of noise when comparing linked quarters. With that said, our net interest margin is actually up 6 basis points on an apples to apples comparison.
I'll conclude with a few remarks on capital. Our goal at Home Bancshares is to be extremely well capitalized. I'm pleased to report the following strong capital information. For Q1 2021, our Tier 1 capital was $1,700,000,000 total risk based capital was 2,200,000,000 dollars and risk weighted assets were $11,700,000,000 As a result, the leverage ratio was 11.1%, which is 122% above the well capitalized benchmark of 5%. Common Equity Tier 1 was 14.3%, which is 120% above the well capitalized benchmark of 6.5%.
Tier 1 capital was 14.9%, which is 86% above the well capitalized benchmark of 8%. And the total risk based capital was 18.8%, which is 88% above the well capitalized benchmark of 10%. With that said, I'll turn the call back over to Donna. Donna?
Thank you, Brian. Those are amazing capital ratios. We're still doing
all that money, Brian.
Wow. I'm
portfolio.
Thanks, Don. The accomplishments on the lending side this quarter are very impressive. I'll begin with PPP. Round 3 approval and funding continues with the recent extension of the program through May 31. Applications have certainly slowed down, but we have crossed the 4,000 loan approved mark.
Those approved loans totaled about $350,000,000 and we have closed and funded just over $300,000,000 of that amount. Rounds 12 forgiveness continue with over $550,000,000 requested from SBA and over $450,000,000 paid. We have initiated round 3 forgiveness as well and we have a push to focus on these two efforts during the next 2 quarters.
COVID modified loans showed little change
during the Q1. This was not unexpected because a large majority of the $330,000,000 modification balance was placed on an 18 to 24 month interest only modification just 3 months ago to provide the runway to weather the remainder of the pandemic. With the majority of these loans being hotels and just coming through the seasonally slow Q1 of the year, I didn't expect much movement in these balances. 2 positive developments did occur though. 1st, anecdotally, virtually all of our hotel operators have experienced a significant pickup in occupancy in March.
And in the Florida market, especially, we expect this pickup to continue throughout the year. Even our hotels that were dependent upon airport traffic are showing signs of life. Given that this is a March trend, we do not have hard numbers on these, but we do expect the April reports from our hoteliers to look much more favorable. In addition, since month end, the single largest deferred loan of $58,000,000 went back to full payment showing good occupancy and cash flow. This brings our overall modified loan balance to just below $270,000,000 or 2.5 percent of the loan portfolio.
We are very encouraged by the improvements we're seeing around this segment of loans. As Johnny said, mortgage continues their strong showing from last year. 1st quarter closings were up 50% on a quarter over quarter basis with secondary market loans consisting of over 80% of those balances. Dollars 100,000,000 in each of the 3 months of the quarter, indicating a strong second quarter to be expected. Lastly, the accomplishments of the asset quality area are certainly worth discussing.
Nonperforming loans are 59 basis points, up only 6 basis points pre COVID and down 7 basis points on a linked quarter basis. Nonperforming assets are even better 38 basis points, down 6 basis points pre COVID and down 10 basis points on a linked quarter basis. The allowance coverage of nonperforming loans is at 3 84%, up 52% on a linked quarter basis. Early stage past dues remain very low at 46 basis points, which is below where we were pre COVID. Combined with the encouraging reporting around modified loans, I feel very good about the asset quality of this company.
We are seeing new lending opportunities in our markets. And despite the low pricing and high leverage we're seeing, I'm optimistic that the second half of the year will result in some organic loan growth. Donna, what a quarter. I'll turn it back over to you.
I agree, Kevin, and that's good information on the hotel occupancy. Next, we have Chris Paulson with our CCFG division.
Thank you, Donna, and good afternoon. The New Year brought increased activity during the Q1. Overall loan balances were roughly flat and new fundings were offset by increased payoffs and paydowns as loans that would have generally paid off in 2020 were able to finally execute refinancing some sales. During this time, we've been able to maintain margins and returns while ensuring our asset quality remains high. New loan commitments totaled close to $300,000,000 and we ended the quarter with over $300,000,000 of loans that were loans that are approved, awaiting closing or in active underwriting.
By comparison, we generated $700,000,000 in originations during all of 2020. Real estate values in our key New York and California markets appear to have stabilized with sales and leasing activity selves and continue to focus on leverage and structure that reflects a post pandemic environment. While many of our southern and southwestern markets have thrived over the past few months, we expect the recovery in New York in particular to take a bit longer to mature. During this time, we remain focused on our core purpose of building a portfolio that delivers above average returns for below average risk. With that, I'll turn it over to you, Donna.
Thank you, Chris. And now John Marshall will update us on Short Premier.
Thank you, Donna, and good afternoon. I'm pleased to offer an update on continuing to refinance division. First quarter continued to reflect elevated activity as the 2020 consumer COVID yacht buying frenzy spilled over into the new year, tempered only by limited new boat inventories. We've seen our retail application shift from 80% new, 20% pre owned to a 60 five-thirty 5 split just because of the lack of new inventory. The quality of our applicants remains strong with declination rates dropping from 39% in 4Q 'twenty to 32% in 1Q 2021.
Funded retail loans were $50,000,000 in the quarter with average FICO's of 780 compared to 776 for full year 2020. Our commercial floor plan business was essentially flat in the quarter as shipments of new boats from European factories have been pre sold prior to arrival. Utilization rates on inventory lines remains at 30%, down from a customary 62%. It may be mid-twenty 22 before dealer stocks are restored at historical levels. We're witnessing some pressure on marine margins as inventory lenders hungry for assets are unsatisfied.
Dealer financial health is very strong as a result of this conversion of assets. The health of the consumer and commercial portfolios has been favorable as reflected in our asset quality metrics, achieving the lowest levels of delinquency and defaults since Scholl was acquired by Centennial. The profit contribution continues to grow and ROA in the quarter was 2.76%. Cash has emerged as a formidable competitor in the marine lending space. Coffers bulging with stimulus money have continued to accelerate our prepayment speeds, offsetting some organic growth.
The outlook for marine is good. Factories are returning to sustainable production, dealers are placing optimistic orders and retail buyers are placing larger deposits on their next boat. Industry experts believe that the COVID has pushed more consumers onto the water and with a long term profound impact on the pleasure guiding industry. On that positive note, Donna, I will turn the discussion to you.
Thank you, John. And our final report today comes from Stephen Fenton.
Thank you, Donna. I'll give color on deposit activity, repricing efforts and trends and a few additional details on the balance sheet today. On the deposit side, the wave of liquidity continued in the Q1 of 2021 as total deposits increased $787,000,000 from year end to just over $13,500,000,000 That marks a nearly $2,000,000,000 increase or 17% year over year. Most importantly, our non interest bearing account balances increased nearly $600,000,000 on a linked quarter basis and over $1,400,000,000 year over year. And today, non interest bearing balances stand at 29% of total deposits.
We have mentioned over the past several quarters how fortunate we are to operate in states that did not shut down, states that have seen an increase in tourism and steady population growth. $542,000,000 or 69% of the increase came from our 4 Florida regions, all of which had 9 figure increases in total deposits. While the increase is certainly attributable to the government's response to the pandemic, we believe the growth is also a result of the business development efforts, the customer service our bankers provide and the resiliency of our customer base and geographic footprint. Switching to funding costs, interest bearing deposits averaged 33 basis points in Q1, down 11 basis points on a linked quarter basis and exited the quarter in March at 30 basis points. Total deposit costs were 24 basis points in Q1 and were down to 22 basis points in the month of March.
We continue to work rates down as liquidity levels persist. In addition to certain negotiated demand account rates, we have $745,000,000 in time deposits maturing over the remainder of the year at an average rate of just under 1%. Switching to loans, we saw total production of a little over $670,000,000 in the Q1 with $400,000,000 coming from the Community Bank footprint. As Johnny mentioned, only slightly more than 1 third of the origination volume in Q1 was funded at quarter end. Although loan balances declined, this along with robust the robust origination volume in March gives us optimism going forward.
Payout volume was in line with Q4 at $844,000,000 as we saw a number of borrowers monetize large assets or go to the permanent markets. As Brian Davis mentioned in his remarks, when normalizing for the impact from PPP lending, event income and excess liquidity, the NIM would have shown a solid increase linked quarter. We are extremely pleased with how the NIM has held up over the past year. The word discipline has been mentioned a number of times today and over the past year. That discipline has put Home in a great position to capitalize on the continued economic recovery and as Johnny mentioned, the prospects of rising interest rates in the future.
With that, I'll turn it back over to you, Donna.
Thank you, Stephen. A lot of good reports today. Johnny, before we go to Q and A,
do you have any additional comments you'd like to make?
It was a great quarter, as you know.
On your panel a little bit, but we'll get our fair share of that. If Tracy and Kevin, our group would go out and take that $2,500,000,000 and 0.5 percent, that's another $125,000,000 pre tax. So that's what I see in front of us. I see and if we rolled it in full, which we could do, that's $100,000,000 So I think that is pretty exciting as this economy picks up with the company hitting on all 8 in every area except for that not doing too bad there in the middle of it. It's interesting, even though low cost has gone down, the non performing percentage of Kevin had even gone down with it.
So I remember back in 'eight, 'nine and 'ten, when you kind of got a snapshot of our loans, you really got to look at the book of business because it was a solid book and didn't move too much up or down. And that's the same thing that's going on right now to see our nonperforming numbers come down percentage wise on a little bit of a bounce and that's impressive. So, Donna, I think I don't have anything else to say. I think we need to hear from Q and A and I'll let you have it and go to
Okay. That sounds great. Yes, thank you. I guess, Alisa, we are going to turn to you now and
go to Q and A. Thank you. We will now begin the question and answer session. The first question is from Michael Rose with Raymond James. Please go ahead.
Hey, good morning, everyone. How are you?
Good, Michael. How are you? Good afternoon. Where are you?
Yes. Good afternoon. Yes. Sorry. Maybe we could just start on credit quality.
Good to see non accruals come down. It seems like everything's moving in the right direction. Is there any reason to think that you guys would have a provision expense anytime soon? Understanding that you don't expect any losses from COVID and the charge off you had this quarter was the previously identified credit. It just seems like all the pieces are there, your reserve level is really high that you guys wouldn't need to provision kind of anytime soon?
Yes. This is Kevin. I would say no.
Yes. I'd say the same, Tracy. Yes. Stay the same. Back when we had it was really kind of sad, I asked Chris.
I said, Chris, when COVID first hit, he had some snakes over there. He said, how much money do we lose today if we sell that today? He said, we sell it today. I think, Chris, correct me if I'm wrong, Chris, I think you said $15,000,000 And I asked Chris that today before the call. And he said, dollars 1,000,000,000 Am
I saying that correct, Chris?
Yes, sir. I think that's about right.
Okay. And then just curious just on the expenses. It looks like expenses were down sequentially. Expense control has always been a hallmark of the company. Any sort of color there on a run rate perspective?
And any considerations for the year in terms of bonus accruals or incentive compensation that we should be thinking about? Thanks.
I'll take that one, Mr. Allison. Okay. Like on the salary employed benefit, we accrue those salaries on a day by day basis. So we had 92 days in Q4 versus 91 days in Q1.
So I mean, so we had 90 days in Q1. So they're down a little bit there. We did have a little bit of incentive reversal from the end of
the year, but it was primarily offset because we always have an increase in
the FICA taxes that we have in Q1. We did have some PPE expense in Q4, fogging buildings and doing that kind of stuff. And there was several $100,000 So while it is down a little bit, most of it's really due to the number of days on our salary employed benefit accrual, plus we didn't have really a whole lot of the PPE expenses. Our FDIC assessment was down just a little bit. That was mostly due to a true up on the accrual.
So there's really not any noise other than the PPPE from last quarter in the numbers.
Okay. And then maybe finally for me. So there's a big increase in the share repurchase authorization. I guess given where your stock is and how much capital you have, I mean, how active would you expect to be as we move forward? Thanks.
I'm not going to ask Brian that question, but you guys asked me that question. We're active. We're going to continue to remain active. And I think our average price was $26.60 that bought back about 330,000 shares in the Q1. Our team with the earnings has hit the home $2 So that's going to create a few more shares that will be in the flow and which is a good thing, really is a good thing.
But we will probably buy those shares back. So we don't impact them. So we don't believe our shareholders. So we're active and we really, Michael, looked at stepping in and buying. We increased our authorization by 20,000,000 shares and we looked at stepping in there.
We decided that probably it was time for us to look at doing some M and A. So we just we're buying a little bit, and we'll probably buy enough to where we don't deliver to shareholders
on the whole $2 program.
Great. Thanks for taking my questions.
You bet. Thank you.
The next question is from Jon Arfstrom with RBC Capital Markets. Please go ahead.
Good afternoon, everyone.
How are you, John?
I'm good. I'm good.
Good to hear you hear the report. Thank you. You guys touched a little bit more on the pipelines. It seems like it's better. It seems like it's materially better.
But maybe, I don't know, Kevin or Tracy, if you want to touch on it. And then, Chris, can you expand a little bit more on that, the commitment numbers and why you think it's jumped so much? Thanks.
Yes. It's Kevin. So, yes, pipeline looking right now compared to this time last quarter is definitely stronger than it was. We're seeing some good projects across the footprint, some construction projects that are back on the table. So I do think we've been talking for a couple of quarters and we think second half of the year is where it looked like things would get better and I think we still feel that way.
It may be that this quarter is even better than we expected, but it is stronger right now for sure.
Chris? Yes, this is Chris. Yes, with regard to our pipeline, I think what you're seeing, I think we saw in
the Q1 and we're seeing now into the 2nd quarter is the vast majority of probably what we're looking at closing now are deals that we worked on for the better part of last year. We worked through the summer and the fall and such with a number of our borrowers on transactions that I think we talked during the second half of last year, things just taking longer to close, taking longer to get the equity together, etcetera. And part of that is really starting to get to a point where we felt like there was a recovery coming and that you could start to see some post COVID trades, etcetera. So I think we're seeing that. Majority of what's in our pipeline to close for the Q2 are those types of deals that have been long time coming.
We have one closing tomorrow that we worked on all summer with the borrowers. It's just finally gotten to the point where they can get their deal together and close. So I think we're seeing in our pipeline what the economy is seeing, which is things starting to open up and therefore transactions starting to be completed. Most of our Q1 volume was facilities, which was nice to see. We like that part of our business seeing a couple of facilities close where folks have got money together and they're looking to put that money out over the rest of the year.
So I think we feel good about where we're at now. Last year was only $700,000,000 That was probably down 30% from what we normally do. So I think that was the anomaly.
I think
Go ahead, John.
Go ahead, John.
I was just going to say it seems like some of this is catch up and I guess we're lingering projects. Is the new, call it the new pipeline, the new activity, is that increasing as well?
I believe so, yes. I mean, we're seeing now what starts
to come in is new transactions, etcetera. But I think you're still the market overall was down last year and a lot of projects that were on hold are starting to come through. So it's going to take I think it'll take some time to get through that backlog. Maybe one for you, Johnny, on inflation. Are the borrowers telling you the same thing that you're feeling?
Or is that not part of the narrative yet?
Inflation, you say, as we've done?
Yes, yes, exactly.
Oh, yes. I mean, Kevin's son is a homebuilder. We kind of track
a little bit of that.
And I mean, he just had a special order home for a customer. And when he got through adding up all what it cost, the guy said, I can't afford it. I can't do that. So I don't think there's any dynamite inflation being out there. And our bet is to set tight on this $2,400,000 as tight as we can sit on it.
Tracy is about to rub all the hair off the front of his head because he can't stand it, but he knows it's a smart thing to do is to sit tight and remain disciplined and that's what we're doing. And we'll have an opportunity to deploy this money at some point in time. And we have not done low rates. If we need to do
that, we can do it.
We have not done that. We have not entered into those markets. So there really wasn't a lot of business after the pandemic. Chris is right. He said he worked on those projects all summer long.
That's because of the uncertainty that was in the market, and we're seeing that. Now we're seeing it change. We're seeing it turnover where there's optimism, and there's excitement about new projects. And I mean, some of the projects one of our good customers bring us, we can't have brought us. We can't do them all.
We don't have I mean, we could, we just don't go to that level of loan to one customer. But yes, it's a great customer, done well. I just think we're off and running it. I mean, I think inflation has got to hit us at some point in time. But think about it.
We the job this team did over the last year by reducing cost of funds by more than the loan yield and increasing profitability. It should be like a roller coaster on a track and it not a track exactly. It doesn't always do that. I know it's better for banks in raising rates environment and I think we're going to get that. So I think the Fed has done a hell of a job, and I think they're trying to do that.
But I don't know what they're seeing that says inflation is only 1.5 or 1.75 percent because I see it everywhere I look all the time. Our customers are talking about it. It was a piece of was it plywood or OBS or what it was the other day, it went from 7 to 21. It's just those guys in supply don't get appliances is the problem. I think some of that might impact the economy.
But if they keep building houses, these breaks stay low, they're going to keep selling them.
And so the message is you're just you're being patient, you're going to wait it out, and that's the way to kind of take advantage of some of your views on inflation is what other people make the mistakes and see what happens longer term. I think that's exactly.
That's exactly. That's exactly. Now it's coming a little faster. Our comment was it will be the second half of the year.
But
Chris is coming pretty strong and Kevin's feet with report looks much better than I mean normally we look at a report like this for about $200,000,000 or $300,000,000 at this time. We're not now. So I'm not going to forecast loan growth because last time I did it, we went down. But it is much better. I can say that.
It is much better. It's good customers. It's good equity in the deals. It's not a bunch of funny money stuff. It's a real deal like we underwrite.
So there were some deals that went by us because they were 80% to 85%. We're not going to do that. So we don't operate that way.
All right. Thanks for taking my questions.
Thanks, Tom.
The next question is from Brady Gailey with KBW. Please go ahead.
Hey there. Thank you.
So I wanted to just hit on 1 growth from a slightly different angle. And if you listen to a lot of the other Florida banks, Everybody's talking about Florida really being on fire right now. They've seen a lot of population inflow. They've seen a lot of business relocations down there. I know you guys I think Florida is now your biggest market even bigger than Arkansas.
But will Florida specifically play a big piece in the loan growth returning? And just maybe any commentary about what you guys are seeing in that state?
Yes. This is Kevin. I believe it will. I mean, obviously, it is over half of our footprint and it has to play. It always has because it's there's obviously a lot of more economic activity going on
in Florida than there will
be in Arkansas and they really never shut down. So and you are coming into for most of the markets the busy time of the year. So yes, I fully expect that it will play a large role in that.
All right. And then just looking at when loan growth returns to home, what should we expect, excluding any sort of noise with PPP forgiveness, but should we expect loan home to be growing in kind of the low single digit range? Or could it be higher than that as we come out of this? I'd say low. In fact, you would say low, but it that way, it would make me I'll be wrong to say low, but it looks pretty good right now.
All right.
I don't I think it's sustainable. I think this is sustainable. Tracy talks to our customers all the time. We're certainly getting opportunities for better than we've had in the past year. I guess the question comes to my mind when you ask the question, Greg, is really more the payoff type as we are hearing some customers that are getting some good opportunities to catch in on what they've done over the past few years.
So that's always the question for us is the payoff amounts that trickle in on primarily what we've seen on the larger payoffs we've seen lately as they have sold their opportunity. And that's a good thing for them. And they'll be back, and they'll continue to come back. If it's a construction type project, it takes us a little time to put that on the books compared to if it's got a full balance and gets paid off today. But we actually feel pretty I think if we get the sentiment, it's all feels pretty good in all our markets where we're at.
Yes. And then finally, I just wanted to ask about M and A. Johnny, I know you said earlier that you were active having some conversations. But I know you sometimes also give us a little additional color. I think the last time we connected, you were chasing 2 or 3 deals.
But maybe just an update a little more detailed update on M and A and if you feel like you're getting closer on anything. I don't know the answer to that. I've been disappointed in a couple of deals recently where we made an offer that was the highest priced offer, but the bank had sold for it in the U. S. In the past 6 or 8 months.
And the CEO commented that if he made that offer to his board, they'd laugh him out of the room. I didn't quite know what to say. I was somewhat speechless at that point in time. And I said, let's go watch. And we went to lunch in person I left.
But I guess, Tracey had one yesterday that what they're trying to do, the bankers get in the way and screw stuff up most of the time because what they're doing is they know we don't dilute and they know how we operate. So they take they back into a price. They just they take their customer just back into a price and everybody's going to make more money next year and I'd start tracing out, tell them, hell, you need to sell it next year, even if they sell it this year. Anyway, we have a couple of really good opportunities out there, we feel like right now. We actually have a total of 3.
And we're working on 1 as we speak, and we'll see that will resolve itself in the next 2 to 3 weeks. And then we'll move to the next one and the next one, and we've taken a couple off the table because they weren't realistic. And the bankers were
really, I don't know,
if they bumped their head or
what they did. So but anyway, they were somewhat unrealistic. But what you say, Tracy? Yes, sir. Wow.
Tracy said, let me give you what they asked for that bank. And he brought it and he told it to me. I started laughing. I said, that's a joke. He said, no, it's not a joke.
I mean, they seriously made that. And I said, well, I don't know if they bumped their head on the way to get this run doing the run. Anyway, that's you got to be realistic. It's got to be a fair trade on both sides, and you got to you got to allow room for a stock to bloom. And I think we've got 2 or 3 deals out there that could cook off.
So we'll just continue in the market and we'll continue to be smart about the deals. And you know how disciplined we are, Brady, with this going on everything. As I told 1 seller, I said, you'll be proud. You think I'm too disciplined now, once you become a HomeVancier shareholder, you'll be really proud to be with a disciplined company because we protect this stock as much as we can. So anyway, it is interesting as Tracy and I have been out here working on some of these trades, but I think we got one we can get done and maybe another.
Great. Thanks for the color guys.
You bet.
The next question is from Matt Olney with Stephens. Please go ahead.
Hi. Thanks guys. Good afternoon.
Good afternoon.
Sticking with the M and A discussion, we've seen some pretty sizable deals recently that are more MOE like. Would love to hear how Home Bank is thinking about M and A with respect to the size of deals. Are you becoming any more open to larger deals over $10,000,000,000 of assets? Or do you think you're going to stick with the smaller deals that we've discussed in the past?
Well, we're primarily sticking with the smaller $2,000,000,000 or $3,000,000,000 deals to 4 at this point. We're not afraid to do a $10,000,000,000 deal if we understand our asset classes, Matt. One of the larger deals done recently, we just really didn't understand or have the expertise in those some of those asset classes, primarily on gas. We didn't know much about that except its price of oil and gas going up. I don't know that.
But we've just stayed pretty conservative there. Tracy, do you want to comment on that? No, sir. I mean, it's a combination. We've got some good sized banks that really fit well with us and larger banks probably wouldn't fit that niche today.
Kevin talked about some of the asset classes on one of these larger deals a while back. And he was right. We don't we're not a big city islander. We're really a construction lender a lot. We do a lot of construction.
We like it. We've done well in that business. And we'll continue doing that. So if somebody's got a big book, 25% of both oil and gas, that's probably not the place we're going to be. So we'll probably be somewhere else.
Okay. Got it. That's helpful. And then switching gears over to loan growth. I appreciate the commentary that the loan pipeline, you've seen a nice inflection kind of late in the quarter.
What about on the other side? The payoffs still remain elevated during the 1Q. Would love to hear more details around those payoffs. And anyway, I think about the payoffs with respect to customer deleveraging or just egging lower quality credits and was there any change in the pace of payoffs during the quarter? Thanks.
Yes. I think this is Kevin.
I think Tracy both Tracy and Chris mentioned that and for the larger credits, the two biggest things that I saw this quarter were customers taking advantage of selling the project and refis after a project gets completed, multifamily, those sorts of things and customer taking it permanent, taking it non recourse, things like that. Those were the 2 biggest things. They're sprinkled in there a little bit of refi for rates, but those other 2 were the main things this quarter. Just looking at payoffs for the past several quarters, yes, the last two look pretty much the same and over $800,000,000 I would anticipate you're probably still going to see some of that because we've got I think we've got more customers that I know of, a few that are selling that will materialize this quarter or next quarter. So I think you're still going to see some of that.
We're going to have to outpace that to have loan growth. Got it. Okay. Thank you. Matt, there's
a shot at it now because things have turned and even Florida who never shut down is those projects that are coming back on stream in Florida. So I'm optimistic that we're going to see some loan growth, maybe better this quarter than I anticipated. I really wasn't looking forward to the 3rd Q4, but it might sneak up a little bit on us. I don't get too optimistic because every time I do that, it goes the other way.
Understood. Thank you.
Our next question is from Stephen Scouten with Piper Sandler. Please go ahead.
Hey, good afternoon, everyone.
Thanks, Stephen.
Maybe one question just for Brian first. Do you have the number on the remaining PPP deferred PPP fees that could come through over the next few quarters?
I do. As of threethirty 1, we had $20,900,000 And as of today, it's up about $1,000,000 to 21,900,000
Great. Thank you. And then maybe I don't know if this would be Kevin or who, Tracy maybe, but with your lenders, do you feel like they have gotten distracted at all by PPP lending? Or do you feel like you could actually see better core growth as PPP kind of winds down or they've been able to kind of manage both effectively?
I would say this is Kevin. I would say they've absolutely been distracted by both the funding and the forgiveness aspects of PPP without a doubt. Funding has slowed down I'm sorry, funding slowed down a lot as I mentioned. We're not doing that many and we're not really actively looking. We're responding to requests for funding.
But we are still we still have a lot of forgiveness to deal with, particularly Round 3.
Got it. Okay. Very helpful. Okay. And then maybe one for Stephen on the deposit cost side.
How much lower do you think you could get deposit cost? Because you guys have made phenomenal progress, but seems like maybe still some room to go with CD costs. Could we see deposit costs down in the 10 basis points, 15 basis point kind of range in a few quarters?
Thanks, Steven. I think the way we've looked at it here over the last 6 months at least is kind of where we were prior to the last tightening cycle. I think interest bearing costs were down in the low 20s, which that was obviously a number of years into that low rate environment. Interest bearing costs today are down below 30, So that would continue to move down. We have some under contract that will come up over the course of this year.
You mentioned the CD maturities that will continue to help. So we'll find the floor somewhere. But given the liquidity that is
in the system and in the
bank today, I mean, I think we will continue to push on it as we go. And whether we can get down below 20, we'll see, but there's still opportunity over the next couple of quarters for sure.
Got it. Perfect. Okay. And then Johnny, maybe last one kind of for you would be jumping back to M and A. I know you mentioned maybe $2,000,000,000 to $3,000,000,000 kind of deals would be the sweet spot.
But have you broadened the horizon at all in terms of geographies? Or would it still largely be kind of Arkansas, Florida? Or do you start looking at Georgia or Tennessee or any other states kind of in between, so to speak?
Well, I'll just tell you that we've always liked North and South Carolina. We thought that was we've all done a lot like Arkansas over the years and we've always liked Texas. And there's maybe some opportunity pretty pricey in Texas. But I think we're just looking for what comes our way right now. And a couple of them have come our way and some of them are falling by the bayside.
So it's just a misunderstanding. We quoted 1 deal for 1 guy and when our stock was 21, that's 26 or 27. And he'd taken a deal. He left about $50,000,000 on the table. So some people don't understand what can happen to the market.
And bank stocks will start to move up, and it would have been a great opportunity for them. And they're a good bank. It was a good bank. It was a nice bank, nice people. But as usual, the bankers kind of get in the way or appears to me that they may not be correct.
Fair enough. Fair enough. Well, we look forward
to seeing the next one.
We know it will be a good one and congrats on a good quarter.
Thanks, Steve. Thank
you. Don't count out I think Brady counted out all our extra income. I think he took it all off. It didn't mean to take it all off, Brady, because we're still in those investments. I want you to understand that.
I don't know that we'll have that kind of return coming the rest of the year, but we're still in all of those investments.
Every one
of them that we're in, we're still in. So we didn't get in them just to be there. We got in them to make money. And as you can see, we're making money with them. So we're investing a little bit ourselves, Steven.
Our next question is from Will Curtis with Houghton Group. Please go ahead.
Hey, good afternoon, everyone. How
are you?
Good. Good.
I wanted to
kind of piggyback on the Florida discussion
and just in terms of how well
the market is doing. I'm just curious as kind of this recovery moves along, is there anything that's of concern or you're watching
a little closer these days, Johnny? Well, from an asset quality perspective, I always keep an eye on our hotels, but the information coming out of hotels is much improved from where it was. So I've kind of pushed that off the side. I do worry about I do worry about inflation. I think inflation is here, Will, and I worry about a devaluation of the dollar.
I'm scared to death that's going to happen. I listen to a who I've done pretty good with on investing. And he says it's coming, and he says it's going to be quick and severe. So he said, you got cash, get rid of it. That just concerns me, the buying power, the dollar goes down and inflation goes up and we have to fight that battle.
And
I said earlier,
I think the Fed's done a good job, and I think they're trying to how is the guy doing? If anybody do it, I think he can do it. But I just don't believe that
I don't believe they're not
looking where I'm looking. So the thing that bothers me the most is the inflationary side. But that could be good too. A little inflation doesn't hurt us all and a little kick up in rates wouldn't hurt us. I mean, you got to think about it.
You tap, you're ready to tap, we got $2,000,000,000 we tied up at 1.25% today or 1.30% to 1.40% today. And the cumulative goes to 3% by the end of the year and you look so stupid. You think, why did I do that? What happened? So that's my deal is when a trader didn't have any hair left on the front of his head because he is rubbing his head every day I walk in.
He said, I know
we're doing the right thing, but
damn, it's tough, John. He said, it's hard. It is really hard not to invest some of this money. We've talked about everything in the world. I mean, we bought some bank stocks that did.
They've done extremely well for us and paying a good dividend, some good banks that we all know, know the people who run them and know how well they did. They run their companies. And those have done well for us. They're good dividend paying stocks, and we might as well sit with those for a little bit. Other than that, I don't know what I don't have any I think I fear this if they go to 31% or 2% what do you say?
What Brian say want to go, Brian? What would go through the tax break, rate, would you say, Brian?
Well, we were talking before the call and you were asking me what the marginal rate might go to. And the marginal rate that we have right now is 26.135. And if we get the 28% tax bracket, it would go to 32.68% would be our marginal tax rate, which is an increase of 6.545%.
Yes. And think about it, you buy something today based on today's tax bracket and then you turn around and get this get hit with this. So it's a dangerous in some respects, it's a dangerous time to be in M and A business trying to do a deal because they're all going to price it off of what today's tax rate is. And if it goes up 6%, they pull I mean, we make $300,000,000 a year, right? The $310,000,000 something like that.
It goes 7 points, that's what, $21,000,000 $22,000,000 a year comes out of our shareholders' pocket. I think that delays a dividend probably for our shareholders. Instead of doing one every year, it might be 1 every, might be 3 years or 2 years before we do another one. That bothers me a little bit. I know my wife's concerned about that because she like if you remember, she likes her dividend every month.
She last amount in price, she just wants the same amount every month. Since she's going to bid for pricing Brian Davis about that. But I think that would I guess the government would spend it wiser than we spend it. So that concerns me a little bit. Outside of that, I mean the company, if you run a $292,000,000 pretax ROA and a $222,000,000 after that, the 36% efficiency ratio and you make the kind of money we make and you get some good investments kicking in for you.
I could not be happier. I just I'm ready for a little loan growth and I think we'll get it. But you know us, we are not going to push it. And we're not going to change 2% or 3% loans. We're not going to do that.
We're not in that business. We're not going to sell our future. We're looking at 1 bike right now. The problem is that the nice banks, their yield sucks. You got to pay that price, right?
You got go to ride low rates, you pay them out, pay me later, and that's my fear is not my fear. We don't do that. So but in the future, I hope rates come up a little bit. I think it's time for a little kitchen right now. I don't think that hurt things.
My full mortgage down a little bit. I probably told you more than going to here, didn't I?
No, that was great. I appreciate your thoughts and a nice quarter.
Thank you very much.
The next question is from Brian Martin with Janney Montgomery. Please go ahead.
Hey, guys. Good afternoon.
Hi, Brian. How are you?
Good, Brian. I hope all is well there. Just the a couple of things, maybe one for Brian or for Kevin. Just on those PPP fees, Brian, I think you said they were $22,000,000 So the remaining give the breakdown of what remains on 1 and 2 versus 3? And then just maybe for Kevin, just the forgiveness that you talked about, just the how to think about that forgiveness, particularly for round 3.
Just how are you thinking about that? Or just how should we big picture? Any thoughts on that?
I'll go first. Of the approximately $22,000,000 of PPP fees, we have $7,000,000 of it left approximately from round 1 and we started at $30,000,000 at that point in time. And so that would leave about $15,000,000 from round 2.
Okay. Perfect. Thanks, Brian.
So Brian, I think we're going to see the rounds 12 slow down. Those have been pretty consistent the last two quarters or really the 2 quarters that we've been doing it. You're going to see that flow down, but you're going to see 3 pickup. So I would think that the next quarter or 2 should be pretty consistent with the last two quarters. And then past that, I'm not sure.
I don't know how round 3 will finish up. Some of that stuff, we won't be able to start on until later in the year. Some of it will get to start now, but some folks will wait as long as they can. So I do expect a couple of quarters similar to the last 2.
Okay. So not much bleeding over into next year to 2022? I would hope not.
I mean, I don't really hope not. I hope to get it done this year for my people's sake.
Yes. Got you. Okay. And then maybe just one, I guess, I'm not sure for who, but just on the liquidity, I guess, I understand about sitting tight, but just think, I guess, your comments about the loan growth funding late in the quarter, but then you have a full quarter impact of the liquidity from the deposit growth. Just wondering how to think about the size of the balance sheet going forward?
And then maybe just kind of the margin impact, I guess, particularly as you get to Q2 here with the full quarter of both those items?
Ron, this is Steve. To answer the last part first, I mean, we had, I think, on average for the quarter, about 40 basis points impact to the NIM from the liquidity that we had. And I think it was about 50 basis points in the month of March. So we try to we really try to strip all that out and see where would we be on a core basis. I think we're still in that 4% range on a core basis that we've tracked in the past.
Some of the stimulus well, the last round stimulus came early March. Let's still we'll see how some of that gets spent over this period of time and certainly seems like people are saving money of interest. Our debit card spend in March was 50% over what it was a year ago and it's probably up 25% or 30% from what it had been in the last 4 or 5 months in a row. So certainly, some of that money is getting spent and put out in the economy. But maybe some of the liquidity gets spent over the next few months and maybe some of that gets traded into the loan balances for us.
So earning asset size today to me is probably flattish to maybe down a little bit over the next several months. Thank you.
Okay. Perfect. And then Stephen, just the deposit flows, you talked about them as strong as
they were this quarter.
I guess, is your expectation those kind of slow down a bit at this point? Because now that
the deal maybe starts?
Yes, I mean, I do. I mean, Q1 historically, when you had tax refunds and those kind of things, it's good for us. And then you had PPP funding and you had the latest round of stimulus that all helped that. So I would not I wouldn't necessarily expect the deposit increases that we had this past quarter to continue at that level going from here. We'll continue to watch where interest bearing balances are and what we're paying there and try to mitigate some of the inflows there just from an interest rate standpoint.
Got you.
Okay. All right. That's all for me. I had it. Thanks, guys.
Thanks, Brian. Appreciate it.
The next question is from John Hope with B. Riley. Go ahead.
Hey, guys. Nice quarter.
Thank you. I dialed in
a little late. I'm good. Living the dream, working on my bedroom. Any
can you mute I dialed
in a little late. Maybe you discussed the end of construction, like your crystal ball. What subsectors do you see potential growth or demand, like industrial or medical office? Or maybe you don't maybe it's a bad question. Maybe you only focus on 1 or 2 areas, so I apologize.
But if there's a few areas and are you seeing any green shoots or whatever you want to call it in terms of construction demand? Thanks.
Yes. I think you could several areas. I think at least in the footprint, and Chris can talk for his group because it may be different for his group. But in the footprint, certainly, multi family, in part of the footprint, industrial in that Central Florida area, there's a lot of that to be had, although that's generally pretty cheap. There will actually be probably a little bit of hotel that comes around.
And so it's going to be dependent upon which market we're talking about will determine kind of what which asset classes there are. Chris, do you see something different from that? No, I think that's right.
Industrial is hot everywhere, maybe a little too hot. And so we're a little cautious, to be honest with you, on industrial. But anything residential is doing well. A little bit of mixed use is okay depending on the market. But yes, I think it's the stuff you'd expect for the most part.
On industrial, it just depends a little bit of what you're taking a look at. Cold storage is really, really in demand. But it's a subset of that. But again, it's everything from single family homes, condos to rentals, all pretty good in most markets.
Okay. John, yes. Chris mentioned single family and certainly I didn't mention that in my comments, but it definitely the single family construction side is strong and in really all of our markets.
Okay.
And then ex that, it is maybe too theoretical. Like the loan, the cost has got to be coming higher. So that gives you more comfort. And maybe do you underwrite to higher rents as a result or higher loan to value? Or do you I guess, what I'm saying is loan to cost, loan to value are maybe getting separated a little bit.
So that would seem to me like put upward pressure on rent. Are you underwriting that? And it's not a trick question. Maybe it may seem theoretical. I just was curious.
Yes. We're definitely seeing the relationship between cost and value changing in our appraisals. I mean, we are seeing that as costs are going up. I mean, we're it's not normal for us to really try to underwrite to higher rents than the market. I mean, that's not something we typically will do.
Although a lot of our projects do project that, we're sensitive about that and really try while we may give them credit for it on one side, we're also conservative and look at what happens if they don't get that premium. So that's not something that we typically would hang our underwriting on.
That makes sense. Good answer. So it's a little cushion maybe for the underwriting in the future as well. Okay.
Thank you.
All right. Good day. Appreciate it.
Thank you, John. This
concludes our question and answer session. I would like to turn the conference back over to Mr. Allison for any closing remarks.
Thank you all for joining today. Thanks for your support. Hopefully, next quarter, we'll have another good one. We're off to a good year and things are picking up countrywide. And I think rates are going to pick up a little bit.
I think it's good for banks. So I'm pretty optimistic that this could be another really good year for home, and we certainly are out to a great start since we've never made $90,000,000 a month. And I don't know if we've ever run a 36.60 efficiency ratio, have we? Somewhere that we've gotten down closer,
Very close.
Very close. Okay. Anyway, I don't want to say something's wrong. But anyway, thank you very much for your support. And we'll talk to you in about 90 days.