Good day, and thank you for standing by. Welcome to the Simmons First National Corporation's third quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Ed Bilek, Director of Investor Relations. Please go ahead.
Good morning, and thank you for joining our third quarter earnings call. My name is Ed Bilek, Director of Investor Relations at Simmons First National Corporation. Joining me today are George Makris, Chairman and Chief Executive Officer, Bob Fehlman, President and Chief Operating Officer, Jay Brogdon, Chief Financial Officer and Treasurer, Steve Massanelli, Chief Administrative Officer, Matt Reddin, Chief Banking Officer, and David Garner, Chief Accounting Officer.
The purpose of our call is to discuss the information and data provided by the company in its quarterly earnings release issued this morning and to discuss the company's outlook for the remainder of 2021. We will begin with prepared comments, followed by a Q&A session. We have invited institutional investors and analysts from the equity firms that provide research on the company to participate in the Q&A session. All other guests on this conference call are in listen-only mode.
A recording of today's call, including our prepared remarks and the Q&A session, will be posted on our website, simmonsbank.com, under the Investor Relations page for at least 60 days. During today's call, we will make forward-looking statements about our future plans, goals, expectations, estimates, projections and outlook. I'd remind you that you should not place undue reliance on any forward-looking statement as actual results could materially differ from those projected or implied by the forward-looking statements due to a variety of factors.
Additional information concerning some of these factors is contained in the company's SEC filings, including, without limitation, the description of certain risk factors contained in the company's Form 10-K for the year ended December 31, 2020, and the Forward-Looking Information section of the company's earnings release issued this morning. The company assumes no obligation to update or revise any forward-looking statements or other information.
Finally, in this presentation, we will discuss certain non-GAAP financial metrics which we believe provide useful information to investors. Additional disclosures regarding non-GAAP metrics, including the reconciliations of these non-GAAP metrics to GAAP, are contained in the company's earnings press release and third quarter investor presentation, which are included as exhibits to the company's current report filed this morning with the SEC on Form 8-K and available on the Investor Relations page of the company's website, simmonsbank.com. I will now turn the call over to George Makris.
Thanks, Ed, and welcome once again to our third quarter 2021 earnings call. Simmons First National Corporation once again delivered solid results during the quarter, reflecting our ability to execute basic blocking and tackling fundamentals. Equally important, they demonstrate our continued focus on strategically navigating the current economic environment without losing focus on our goal of creating long-term value for our shareholders. It goes without saying there are times like now when it's best to just take what the defense gives you rather than taking undue risks and stretching for short-term growth that ultimately creates future headwinds. Before I get to the numbers in the quarter, I'd like to spend a minute on our acquisitions of Landmark Community Bank and Triumph Bank.
Shortly after the end of the quarter, we announced the closing and conversion of these banks, which means in approximately four months since the date we announced the signing of the definitive agreements, we were able to obtain all necessary regulatory approvals, shareholder approvals, close the transactions, and simultaneously complete systems conversion for both banks over Columbus Day weekend. When they opened for business on October 12, it was as Simmons Bank.
Closing and converting a single bank is no small task, let alone two banks at the same time. To effectively complete this task took a Herculean effort and is truly a remarkable accomplishment by the Simmons associates who worked to make this happen. Further proof of the outstanding team we've assembled here at Simmons. I'd also like to take this opportunity to welcome our new customers, associates and shareholders to the Simmons family.
We're very glad to have you as part of our group. Now to the numbers for the quarter. Net income for the quarter was $80.6 million, up $14.7 million or 22% compared to the third quarter a year ago. Diluted earnings per share were $0.74, up 23% from the year ago quarter. Core earnings for the quarter, which excludes certain non-core items, were $79.4 million, or $0.73 on a diluted per share basis. On a year to date basis, net income for the first nine months of 2021 was $223 million, up 10% from the same period a year ago, and on a diluted per share basis totaled $2.05, representing a 12% increase compared to the same period a year ago.
In terms of key performance metrics during the quarter, return on average assets was 1.37%. Return on average common equity was 10.42%, and return on average tangible common equity was 17.43%. Net interest income for the quarter on a fully taxable equivalent basis totaled $150.2 million, compared to $151.1 million for the second quarter of 2021. Net interest margin in the quarter was 2.85%, down 4 basis points on a linked quarter basis. On a positive note, the yield on loans rose 3 basis points on a linked quarter basis, and we continue to have success in managing down our deposit costs, with total cost of deposits dropping 4 basis points during the quarter to 20 basis points.
On a core basis, which excludes accretion, net interest income on a fully taxable equivalent basis totaled $146.1 million for the quarter, up from the $145.5 million reported in the second quarter of 2021. Non-interest income totaled $48.6 million for the third quarter of 2021, up 3% linked-quarter. Core non-interest income was $48.8 million, up 5% on a linked-quarter basis. Non-interest expense totaled $114.3 million for the quarter, flat on a linked-quarter basis and down 2% compared to a year ago. As previously announced, during the quarter, we closed 13 branches across the franchise as part of our ongoing branch rationalization initiative.
With the closing of Landmark and Triumph Bank acquisitions, there will be additional opportunities to rightsize our branch structure in the Memphis and Nashville markets, which includes, in certain cases, the addition of new branches to better position us geographically while expanding our reach and allowing us to better serve our customers in terms of convenience.
We continue to be steadfast in maintaining a strong credit culture, a cornerstone of our bank. Non-performing loans totaled $59.4 million, down $21.5 million on a linked quarter basis. This was the fourth consecutive quarter of marked improvement, with non-performing loans now at their lowest levels since December 2018. Net charge-offs as a percentage of average total loans were 17 basis points in the quarter, heavily influenced by the partial charge-off of a single commercial credit.
These positive trends, combined with improved economic modeling scenarios, resulted in a recapture of provision expense in the quarter totaling $19.9 million. At the same time, all of our coverage ratios remain strong, with our allowance to loan ratio at 1.87% and our non-performing loan coverage ratio at 341%.
With respect to the balance sheet, total assets ended the quarter at $23.2 billion. Total loans were $10.8 billion, and total deposits were $18.1 billion. Loan production during the quarter was $1.5 billion, but was offset entirely by pay downs. On a positive note, our commercial loan pipeline rose for the fourth consecutive quarter to $1.5 billion, up 15% on a linked quarter basis.
We're encouraged by this trend and other anecdotal evidence in the market that will translate into an increase in total loans. For this reason, amongst others, we're continuing to actively recruit loan producers across all business units throughout our franchise. Capital levels remain very strong and significantly above regulatory well-capitalized guidelines. Total risk-based capital was 17.4%, CET1 was 14.3%, and the leverage ratio was 9.1%.
Importantly, these ratios also reflect increased activity under our share repurchase program authorized by our board of directors. During the quarter, we repurchased 1.8 million shares, with remaining capacity under the program totaling approximately $98.5 million. As always, continuing to return excess capital to our shareholders in the form of share repurchases will be dependent upon market conditions and is part of our overall disciplined capital management process.
On our website at simmonsbank.com, we've shared an extensive presentation along with the press release and financial data, which gives much more detail regarding our quarterly results and other important information about our company. In closing, we continue to be encouraged by our performance in 2021 while adapting to an ever-changing landscape and challenging economic environment.
With the closing and conversions of Landmark and Triumph Bank behind us, we are working to ensure our new associates have the tools and resources in place to meet our customer needs, provide exceptional service, and capitalize on the growth opportunities afforded us in these markets. As we enter the final quarter of 2021, our focus remains on building on the positive momentum and finishing the year strong as we enter 2022. This concludes our prepared comments.
I will now turn the line over to our operator and invite questions from our analysts and institutional investors. Dan, thank you.
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. We do ask that you ask one question, one follow-up, and you can queue back up for a question if you'd like. Our first question comes from Stephen Scouten from Piper Sandler. Your line is now open.
Hey, good morning, everyone.
Good morning.
I guess maybe if we can look a little bit on the loan growth front. I know in the comments in the release, it sounded like you feel a little bit more optimistic about returning to growth in 2022. The approved and ready to close pipeline is up, what is that? Like, maybe $26 million quarter-over-quarter. Can you give us some color just what you're seeing in your markets with your customers and kinda how you're thinking about loan demand from here?
Hey, Stephen, this is Matt. Yeah, glad to answer that. I'll give you a little color. You know, we are very hopeful that we're kinda seeing that inflection point on net positive loan growth that could happen as soon as even the fourth quarter. We had a really good shot in October being a month of net positive growth, you know, all based on that pipeline growing and then our production growing. The third quarter, the $1.5 billion that we show in, you know, production compares to the first half of the year at $1.8 billion. Really, that trend is showing we're getting real close to that inflection point of net positive.
What I'll tell you about the production we saw in the third quarter that was really, really good was a lot of repeat borrowers are getting more and more active, you know, across a lot of categories. You know, CRE, industrial, multifamily, mini storage, builder finance, credit tenant, even some select office.
Really good diversified CRE opportunities plus good, you know, what I consider meat and potatoes of auto dealerships, you know, medical facilities, specialty hospitals. We have not seen that type of diverse production since pre-pandemic, meaning our borrowers are back doing business again, and we're seeing new customer acquisition through new talent acquisition, new bankers. We're seeing, you know, moving business over, good core C&I business. We're seeing businesses being purchased. We're getting to finance some of that. You know, the third quarter really showed a good diverse mix that was very encouraging kind of for as we look forward to the fourth quarter into 2022.
Got it. That's very helpful, Matt. Thank you. Maybe just my follow-up would be around new loan yields. I think maybe in previous quarters you've given the yield on that approved and ready to close pipeline. I'm not sure if I missed it this quarter around. Any data there on new loan yields? 'Cause it looked like if I exclude PPP, if I'm getting this right, that core loan yields were probably down seven or eight basis points quarter-over-quarter. Just wanted to get some color there.
That's right on the money there. If you look at our on slide 13 of a commercial pipeline, that's just a commercial pipeline, but it's a low rate environment, very competitive environment. You know, with our asset quality parameters that we, you know, we've always stayed true to, you're gonna see that drift downward in this environment, with that new production coming on.
Like, I think last quarter was maybe like 370 range. Is that kinda there trending or?
On the pip-- co-
Yeah, 377 last quarter and 347 this quarter. Again, that is, as Matt said, that's without the consumer side. That's just commercial. It also does not have the loan fees that you'd see that hit the ledger.
Correct.
Sure.
If you go back a few slides, you can see on slide seven the actual yield and both the gap and the core yield was slightly up for the quarter. Some of that obviously is PPP.
Right. Okay. Yeah, core just excluding accretion, but including the PPP.
That's right.
Correct.
Got it. Okay, perfect. Well, thanks, guys, and congrats on getting those deals closed and converted. That is a very impressive timeline. Glad to see it.
Thanks, Steve.
Thank you. Our next question comes from David Feaster from Raymond James. Your line is now open.
Hey, good morning, everybody.
Good morning, David.
Morning.
I just wanted to start on the commercial finance team and just get an update with those guys. That's a pretty exciting group to bring over and just whether they had begun contributing in the quarter and just what expectations you might have for that team.
Hey, David, it's Matt. Thanks for the question. Yeah, we're excited as well. If you remember when we talked about the commercial finance team, that group came through multiple institutions. You know, they all have some non-solicits that we're absolutely gonna observe and do it right. Really that third quarter of this, what we just went through was process, policy, procedure, platform, getting them all on board and ready to go. We will see some production from them closing in the fourth quarter. That's encouraging. You know, that's gonna be a slow build with those non-solicits, but the team is doing well and really getting engaged, and we're starting to see some pipeline coming through loan committee with them right now.
Okay. That bodes well for production going forward. That's great. Just even outside that team, it seems like you guys have been pretty aggressive recruiting. Just curious how hiring pipelines are looking, where you're seeing opportunities and maybe whether there's any new verticals like that team you picked up that you're looking to expand into.
I really appreciate that question as well. You know, that's something that's really important to remember about us right now. You know, we talked about even coming into the pre-pandemic that we were in an adjustment period, and now as a $25 billion bank. You know, we're really focused on building out a metro market bank and then our community market bank. Within those metro markets, yeah, I think we'll continue to segment. We'll see those opportunities to do that. We're upgrading our talent. We're bringing on true commercial bankers in our metro markets to go alongside what we already have. You know, we're seeing the fruits of that recruitment. We're seeing some pipeline come on.
Also, it's when we talk about investing in talent. I think it's important to remember, we brought on a new head of consumer and business, Joe DiNicolantonio. He was over business banking at Regions Bank, you know, years ago, and now he's building out infrastructure, you know, technology, platform, most importantly, building out bankers.
Also, we've hired a new head of consumer lending, consumer credit card, where we can get much more proactive in the consumer lending space. Also we're focused on where we can do portfolio mortgages. That's a nice complement with Landmark and Triumph. They were big in the medical and professional space, sports and entertainment, and jumbo, really from a mortgage perspective. We're gonna invest in that, more bankers, more talent there to take advantage of the niche that they had.
Hopefully that gives you a feel for where we're taking Simmons overall from, you know, our producers. We are seeing pipeline add from our current bankers that we've added recently, but more to come is what I would tell you.
That's great. Then just last one, just it's great to see the strength in some of the fee income lines. I know improving cross-selling across the bank into the fee income business has been a major priority for you, George. Just curious whether you guys could walk through some of the puts and takes with your top fee business lines and where and what you're seeing on some of those businesses.
Well, I'll start, Matt and Jay and Bob can certainly pipe in. I'm gonna start with our wealth management group because, as you know, about 18 months ago, maybe two years ago, we hired a new head of our wealth group, Jimmy Crocker. Jimmy came on and, Jason Waters, head of our investment strategy, came on at the same time. Those guys have done a great job, but as I've mentioned before, we have $6 billion of assets under management, but they're very concentrated in Central Arkansas, Southern Missouri, and we need that service across our entire footprint. Jimmy and Jason have been very diligent in going out and building teams in those markets. Now, that is one where the revenue comes absolutely after you get the talent in place.
We're gonna expect that revenue will continue to grow. I will say this, that group has already exceeded their budget for the year, so I call them our sandbagging group. They're definitely gonna have a little higher expectation next year. They've done a fantastic job and I think that's the one area where we have a substantial opportunity to improve. Matt also mentioned that credit card is an opportunity for us.
We're building out a portfolio of products. We've been very limited in that in the past. We'll have a new delivery channel through our digital offering sometime in 2022. We believe that credit card fee income is also gonna be a really good opportunity for us going forward. Matt, you may wanna talk about mortgage a little bit. Hard to predict because of the volatility based on rates, but.
No, go ahead.
Michael's doing a great job of building that team out, too. Even though mortgage revenue is down compared to last year, it is certainly up compared to our history. Maybe we'll talk a little about that.
Yeah, George. Thank you. David, yeah, appreciate those comments on wealth. We are seeing, you know, good quarter-over-quarter, you know, revenue pipeline growth on the wealth side. You can see the wealth advisors we brought on. Just as important with that is on the mortgage side. If you have time on our investor deck and look at slide 14, it really paints a picture of what 2020 was from a refinance housing boom on the mortgage market, but now kind of stabilizing in this high inventory. Still, our production is exceeding our 2019 levels, meaning, you know, we're recruiting new MLOs. We're having success both with purchase and refi now. We're excited.
We're bringing on new MLOs every day, and we think we have a platform that attracts really good producers that can come alongside a bank and offer a complete, you know, financial services to their customer base. I think you'll see continued build out of mortgage. Also treasury management, you know, we've continued to hire into that space. We brought on new treasury management associates, and we had a nice little uptick there in service charge income from treasury management this quarter. I think you'll see, you know, more going forward there.
David, I'll mention one other thing, too, with regard to deposit fee income. You know, as we acquire banks, we are very sensitive to the shock that we give to the customers that we acquire, both from a product standpoint, a rate standpoint, a fee standpoint. We're a little slow to bring that new group into the fold, if you will. Now that group is all singing from the same hymnal, if you will.
With our new acquisitions in Memphis, we're true to form. We're a little slow in bringing that customer base on. We want them to get comfortable with Simmons Bank. There'll be some give and take. There'll be some fees that we lower, some that'll raise, but we will be consistent in the marketplace sooner rather than later in acquisitions going forward. That's another opportunity for us to standardize our product offering, our pricing across footprint. We think that ultimately, that'll pay dividends with regard to fee income.
Okay. That's a great color. Thanks, everybody.
Thanks, David.
Thank you. Our next question comes from Gary Tenner from D.A. Davidson. Your line is now open.
Thanks. Good morning.
Good morning, Gary.
I have a question about just kind of balance sheet management. Obviously, the last couple of quarters, you've put, you know, a lot of excess funds to work in the investment portfolio, up over $8 billion now. Still almost $2 billion of cash, and I think you get some more excess liquidity from the two deals that closed in October. Just, you know, kind of curious how you're thinking about, you know, the liquidity deployment, if you're thinking about additional, kind of leaning into some higher interest rates in the bond portfolio, and balancing that against maybe, you know, a pending inflection point on the loan side.
Yep, Gary, this is Jay. I think everything you said is kind of true to form with how we're looking at it. I'd say, you know, first and foremost, we look at the balance sheet overall. You know, we're looking at everything from the liquidity position, which for us, we think of as we sort of break apart the securities portfolio there. We've got about $1.5 billion in floaters. We think of those variable rate securities more like short-term liquidity, just like we have in the cash and cash equivalents bucket. We show that number at $3.3 billion at 9/30. And then we've got a very laddered approach in the, you know, call it the fixed income securities portfolio.
A lot of cash flow coming off from that portfolio over the next several quarters, but laddered, you know, out into some longer-term maturities as well. Again, all of that's overlaid against, you know, where we're at in the loan book, the percentage of that portfolio that's floating, the maturities in that portfolio. We pay a lot of attention to where we're at from an overall balance sheet, liquidity, and interest rate risk point of view.
Okay. Follow-up to that, I just wonder if you could provide a kind of update on the rate sensitivity within the loan portfolio. I know you do provide some detail in terms of overall rate sensitivity. Just, you know, maybe talk about the size of the portfolio that's variable rate, and then update us on floors. Thank you.
Gary, I'll start on that question. You know, our mix, fixed to variable is, it has historically been around 50/50, variable and fixed. But you know, we've seen that the fixed go up slightly. It's in the mid-50s now, but really that's just a result of some construction. You know, many CRE coming off our book, showing a little more fixed but still like that equal weighting there today.
In terms of floors, I don't know if you could update any information in terms of the variable rate portfolio on floors.
Yeah, I would say a good portion. I don't have that number right in front of me today, of what our variable rate portfolio is. The majority of them do have floors.
Thank you.
Thank you. Our next question comes from Matt Olney from Stephens Inc. Your line is now open.
Yeah. Thanks, guys. Good morning. I was gonna circle back on loan growth and definitely appreciate the improving commercial loan pipeline on slide 13. You also mentioned some of your newer verticals are gaining some traction, and hopefully we'll be seeing some normalizing loan demand. On the other side is the runoff and some of the pay downs. They seem to be pretty aggressive still, even more so than some of your peers. Any color on how close we are to seeing an inflection on core loan balances? Thanks.
Hey, Matt. Yeah, great question. You know, I look at that every day, and what we see is our runoff is nothing that gives me concern that business is being taken from us, but it really is a continued right-sizing from a heavy CRE book that the big chunks are continuing to come off, that need to come off, that were planned to come off. Not so much even now planned runoff, but even projects that are at completion that are moving to the secondary market or they're being sold outright. As an inflection point, you know, I'm very hopeful that that could happen even in as soon as the fourth quarter when we had a really good chance in the third quarter, seeing our first month of net positive growth.
With that strong pipeline build, and I think we have a nice fourth quarter of production coming, I think we're getting really, really close, Matt, to that inflection point and then positive loan growth moving forward.
Thanks for that, Matt. I may have misheard you. When did you say the first positive month of net growth was? Did you see it in the third quarter? I missed it, or do you expect that in the fourth quarter?
I was very hopeful in October we had that month, but as any quarter ends, a lot of things moving around at the end, meaning borrowers do pay off things that happened right at the very end. You know, we look at that on a daily basis, and it looks very encouraging in the third quarter, in October.
In September. Yep
September of that month. It's getting really close where you see that net positive on a monthly basis.
Got it. Okay. Thanks for clarifying. I also wanted to ask about operating expenses. A little bit of noise in the third quarter. Where would you point us to for a good starting point for the fourth quarter for the legacy Simmons Bank, and then of course layering on the two acquisitions?
Yeah, Matt, this is Jay. Couple of comments on that. Fair to point out, we had some non-core noise in the quarter. First of all, I would just reiterate kind of the guide we've had historically for what I'll call Simmons legacy for this purpose. Again, we've closed early in the fourth quarter on Landmark and Triumph, so we'll talk about that separately in a moment. When you think about the 112-115 range, we've been pretty consistent in that range this year. We had a couple of one-timers in the third quarter that impact those numbers, you know, a balance of some true ups on accruals in the third quarter. We had a non-core item related to branch right-sizing.
If you go back in time to prior quarters, non-core M&A expense on the mark-to-market of some of those branches when we bring them in as held for sale, as we've worked through those branches, we've been able to reverse out some of that mark-to-market in the third quarter. It actually shows up as kind of a non-core positive, if you will, in the expenses in the quarter. But when you clear out all that noise, we still feel really good, you know, in our guidance range, in that 112-115 range, for what I'll call Simmons legacy. Then I would, you know, fully kind of reiterate the guide that we had at announcement on Landmark and Triumph. You know, we had blended cost save expectations of 40%, on those transactions.
We might not fully hit 40% in the fourth quarter. We're going to get the integration piece right, which will, you know, carry some of that expense burden here in the balance of October, you know, a portion of November. I think by December and certainly all of next year, we'll meet, if not exceed that guide with expectation to some of Matt's earlier comments, Matt Reddin's earlier comments that, you know, we'll invest some of that back into production talent, and we're already having success there.
Okay. That's all for me. Thanks, guys.
Thanks, Matt.
Thank you. Again, if you have a question, star one. Again, if you'd like to ask a question, that is star one. Our next question comes from Brady Gailey from KBW. Your line is now open.
Hey, thanks. Good morning, guys.
Good morning, Brady.
I wanted to start with the buyback. It was great to see y'all, you know, reengage in size there, repurchasing almost 2% of the company. You know, I know the stock is, you know, a little higher today than it was when you were doing these buybacks in the third quarter. How should we think about the buyback from here? I know you have about $100 million left. I mean, would it be safe to assume that, you know, you could do another $50 million in the next couple quarters?
Yeah, Brady, I think you hit it. It's all about management of our capital position, and it's the dividend payout, it's the stock buyback, all of that as a whole, and acquisitions when we do acquisitions, putting cash in the deal. If you look at the share buyback, we did have a pretty active quarter, and we bought it back at about $28.50. As the price goes down, we would probably slow it down a little bit, as the price goes up, I mean. So, you know, I don't know if we have a timeline when we'd hit that $50 million-$98 million, but we'll still be active. Our plan would be to be active in the buyback in the foreseeable future.
All right. Congrats on closing the two pending deals in such a tight turnaround. I know you guys always kind of remain active in M&A, you know, looking at downstream targets. You know, with these two now closed, maybe just an update on, you know, how things are progressing on the M&A front for Simmons?
Well, Brady, we, you know, we have a lot of good friends that we've built relationships with over the years, across our footprint, and we continue to have some very productive conversations, at least in our opinion, they're productive. It's still a very important part of our strategy, to continue to build out our scale in the markets that we serve and maybe even some ancillary markets that we would pick up, through acquisition. We're still very active, still having very productive, discussions. Nothing's come to the point of announcement yet, but we're very hopeful that, one of or more of these conversations might in the near term anyway. We're very much interested in continuing our M&A strategy.
All right, great. Thanks, guys.
Thanks, Brady.
Thank you. We have a follow-up question from Matt Olney from Stephens Inc. Your line is now open.
Yeah, just following up on the last question around M&A. George, how would you characterize the M&A chatter currently in the market? Secondly, as far as Simmons preference, I think the last two deals, Landmark and Triumph, were two smaller banks that were in the current footprint, added density. How should we be thinking about the Simmons M&A strategy from here? Should we anticipate similar deals that would increase density or market expansion? Just any color. Thanks.
Well, Matt, our first priority is to increase our density in the markets that we serve. To the extent that we're successful there, that would be our priority. Now, you know, we've been very fortunate with two deals in Memphis. All of that was in markets where we currently work. Prior to that, Landmark, a bank out of Columbia, was in our footprint, but in no markets that we currently serve. We would consider that to be in footprint as well. We're focused on the states where we're doing business to date, and primarily on markets that we're currently in. If we happen to find a really good partner that had some presence in a market we were in, but had some new markets as well, we would see that as a very positive outcome.
George, just a general comment you can make on just the overall level and activity of M&A chatter in your markets.
Well, you know, it's probably picking up a little bit, but to me, it's sort of normal. We've, you know, been pretty active for the last several years, so I would say that our activity has not increased or decreased. We sort of have a quota, Matt, as we've talked about before, about how many transactions we can manage at one time or within a certain period of time. I think we've been very disciplined in that process and will continue to be disciplined.
I wish I could tell you that we controlled the timeline on acquisitions, but I'll tell you that's just not the case. When we have a potential merger partner, and their timeline is the next six months, then it's going to be up to us to try to meet that expectation. They sort of get slotted, if you will, in timelines that we feel like we can manage successfully. You know, knock on wood, so far, so good.
Okay, great. Makes sense. Just a few housekeeping items here at the end. PPP, I think, you said $8.5 million of remaining fees that you expect. How much of those would you anticipate realizing in the fourth quarter versus into 2022?
You know, Matt, we're working that every day. We've got a group out there. You know, it's gone down pretty quick the last quarter. You know, you're into PPP Two now, so it's a little different. There's not much of PPP One left. You know, it's going to be down by year-end, but we'll still have some going into the first quarter.
Okay. Thanks, Bob. Similar question on the discount accretion. I know that's going to be a de minimis amount at this point, but what should our expectations be the next few quarters on that?
Yeah. I mean, I think you're right. It's kind of trailing off, but of course, you know, you're going to have a pickup in that here in the fourth quarter with the closing of Landmark and Triumph early in the quarter. I would expect, you know, the trail off on, again, I'll use that term legacy to sort of continue, but to maybe be picked up a bit from the new acquisitions over the coming quarters.
Yeah. Do keep in mind on the new accounting rules and CECL is we will have the day one or first day of day two at CECL adjustment that will hit in addition to the loan discount. We'll have a double count. Effectively, all of the accretion will be interest income going forward versus being related to the credit mark.
Yep. Okay. Thanks, guys.
Thanks.
Thank you, Matt.
Thank you. I am showing no further questions. I would now like to turn the call back to George Makris for closing remarks.
Well, thank you very much for joining us today. Just in summary, I want to thank the folks that you've heard on this call today because I think it illustrates our ability to manage in different kinds of economic scenarios. While our loan book is down, we've been able to manage fairly successfully our investment portfolio, and we did make $80 million this quarter, which we're pretty proud of. I think also the marked improvement in our asset quality illustrates two points. First of all, our conservative nature on the way that we recognize risk in our portfolio. When the pandemic started, we were one of the first banks to market with recognizing additional risk based on the uncertainty in the marketplace, and our provision and our allowance reflected that at that point in time.
I think you can see that we are now starting to work with our customers and understand that they're past the point of that particular risk, and our portfolio is improving. We're able to recapture some of that earlier provision, which I think is a very positive reflection of our customer base. I'll leave you with this thought because Matt didn't mention it. While we're really proud of our loan pipeline build at the end of the third quarter, up 15% from the previous quarter, as of Friday, that loan pipeline was $1.8 billion, with approved ready to close at $530 million.
Just in this short three weeks since the end of the quarter, we've seen that pipeline continue to build, and that's without the pipeline from Landmark and Triumph because they just quite honestly haven't had time to get their pipeline into our loan production system. We're very optimistic about our ability to meet the market's needs.
If we had been in this position 18 months ago with a loan deposit ratio of 98% and CRE concentration of 340%, we would not be in the position we are today. I'm really proud of what these folks have done, the navigation that they've done during a very uncertain period of our economy. I hope you'll take that as a positive note. Thanks again for joining us today, and hope you have a great fourth quarter and happy holidays.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.