With the preamble. We have Dave Zalman from Prosperity, John Allison from Home BancShares, and Ed Wehmer from Wintrust. This is the Unplugged panel. Just want to say, guys, this is webcast. I want to remind you of that.
For how long?
Yeah, how long?
You know, last time that guy took us off, we weren't on very long. They said, "Behave," I think.
I remember.
John actually thinks he's running this deal.
Yeah, exactly.
He actually believe he's in charge.
Yeah, exactly. This goes back to 2007, believe it or not.
Wow.
Ed is retiring. He announced his retirement. We'll get into that in a second. This is kind of our finale of the Unplugged panel. It goes back to 2007 when we held our conference on Martha's Vineyard. Ed and Johnny met, they got along. Dave was not there at that one. The next year, we took it.
They needed some class, and then they asked me to come.
That's right. The next year, we took it to Boston and put Johnny and Ed on a panel with a couple other bankers, and they pulled me aside after the panel and said, "I don't wanna be on that panel anymore." Then 2009 we added Dave.
I was the only one that wouldn't go away.
Yeah. And we tried to add a 4th, but it just hasn't been successful. These guys have been on this panel together and so the way I count it, this is year 15. I thank you guys for doing that.
You're welcome.
When we started this, I went back, and I looked at some of your market caps and some of your assets, and the first panel.
I was wondering about that.
Yeah, the first panel in 2009, Johnny, you were $500 million.
Huh?
$5 billion today. Dave, you're about $1.5 billion, 6.6.
We were $1.5 billion?
Yep.
Oh, wow.
Ed, you're about $800 million, a little over 5.5 today. Huge growth from these guys over the past 15 years. It's pretty impressive.
You almost gonna catch us.
No, y'all keep stepping up. I try to catch you, and they just keep moving up.
They keep moving up?
Yeah.
Doing pretty well, though. I guess with the way we usually start this, we have each of you introduce your banks. That used to be important because nobody really knew who you guys were. Let's just, let's just do it again for old times' sake. Ed, we'll start with you. Introduce Wintrust.
Thank you, John. John, I'm gonna start by saying I appreciate being on the panel and all the support you've given to Wintrust over the years. Retirement is gonna be fun. You have to get a farm animal to indoctrinate Tim Crane, though.
No.
Okay.
No, we're not going there.
Stop it.
Good old joke from. We got tossed out the airport for saying that once. Wintrust is 32 years old, started a card table out in Chicago Midwest. $53 billion in assets now. been waiting for that beach ball underwater to come up, and rates finally moving. They're coming up. Beach ball is going so high, it might be considered one of those Chinese balloons I think. Hopefully I gotta try to shoot it down or anything but, been a heck of a run at Wintrust. miles to go before we sleep. we are very diversified on the asset side, great deposit base, and really the biggest bank, 3rd biggest bank headquartered in Chicago behind first in Chicago in terms of deposits.
We're ahead of Northern deposits Chicago now, so moved up and Chase and Harris better look out because we're coming after them.
Yep. $0-$50 billion. The beach ball analogy is the margin. Low rates that I always talked about the beach ball coming up from underwater, and that was the margin rising. You guys, you finally got it, but we've been waiting for a while.
Yeah
for that, but we finally got it.
Yeah. I say my beach ball go home.
Yeah. Take your beach ball and go home.
Yeah.
Johnny, how about you? Give us a little bit on Home.
It's number one, it's nice to be back. Thanks for the invitation to be back. We always enjoy RBC. We've become great friends, the three of us, over the years. We pick at each other and trust each other, and it's been a lot of fun. Home is, we're about $24 billion now. You said I was $500 million.
Yep.
when we did the first one. We've grown the company over the years. I can't catch up with these guys because they both outgrown me, but it's been a. Home's turned out to be a really profitable operation. We run 2% ROAs. We run a really efficient company, sub-40% to 42% to sub-40% efficiency ratios. We work really hard at it. It's been a, it's been a lot of fun building this company over the years. We didn't deploy our money into securities, and we didn't deploy our money into low rate loans. We sat on the money and built a $ billions in cash and sat on that cash, and now we're deploying it into the market as we choose to deploy it in the market.
The bad news is, I was around when Volcker pivoted in the late 1970s. The good news is that I was around when Volcker pivoted in the late 1970s, then he had to come back in the 1980s to fix it and take rates to 21%. I think it was February of 1982, where the U.S. government issued a 14.87% 30-year Treasury. I'm sitting on enough cash, I'd probably take $1 billion of that if it comes around again. I think that's not a bad place. We've been pretty patient, been premeditated with our moves, and it's paid off for our company. We're hitting the record earnings streak. We've been running with record earnings and that.
I don't know that the first quarter of this year will be the record, but it, if something doesn't blow up, it'll be a great quarter for us. We had, we did the last deal we did in Texas, acquisition in Texas, bought about a $6 billion bank. It's been a rough, kind of a rough ride with that deal a little bit, but we've turned it around. I've never done a dilutive deal. Every deal I've ever done has been accretive, accretive. Accretive to book value, accretive to EPS and tangible book. Tell you how quick this world's changed. December 31 of last year, the book on Happy Bank that we bought was a +$27 million, and we closed it April one, and it was down $101 million.
A $128 million swing in their securities book over that period of time. I announced to the street, I apologized and said, "I think we've just done a dilutive transaction beyond our control." As it turned out, the rest of our market stepped up, and we turned it around, and it has turned into an accreted transactions with a lot of hard work and a lot of hard effort and a lot of premeditated moves. That's kind of the story at home.
Okay.
What are you selling Jumbo Prime? You didn't mention Jumbo Prime at all.
We're bringing it back.
You're bringing it back.
Dave, how about you? I've covered you a long time.
We're $40 million.
...tiny bank, a man with a dream, and it's a big company now.
$40 million in size, not capital, in total assets and about 10 to 12 associates, and that was it. Since then, today we're again a $37 billion company, primarily in Texas and Oklahoma. Again, we have locations in Dallas, Houston, Austin, West Texas, South Texas, East Texas, and Tulsa, Oklahoma City. We're not located along the border or El Paso, but pretty much cover the Texas, cover Texas and Oklahoma pretty good. Again, we kind of grew from a real small bank and today, you know, do what other banks do, gather deposits, make loans, have middle market lending, warehouse finance lending, mortgage lending, wealth management. It's a number of other things. We've been very profitable and, you know, it's been very good.
You know, I think when we started, when we went public, we didn't even have a $50 million market cap. Today, probably $6.5 billion or $7 billion, something like that. We've just announced, we've announced it some time ago. We were trying to close in this first quarter. We made two small acquisitions in West Texas. Somebody asked, "Well, why would you do a $2 billion to $1 billion or $3 billion?" I said, "Well, you know, that'll give us about $6 billion. I'll be bigger than John in West Texas." I just have to do it over there.
I don't know about that. I'll go buy something tomorrow.
Okay. All right. All right.
Unhappy Bank.
It's been a good ride. It's been a lot of fun being part of this, no question about it.
Yeah, absolutely. Absolutely. Also, we're open for questions. If anybody has questions, just raise your hand and we can get them answered. Just the economy is another topic. We have a lot of debate internally in our research department about the economy and whether things are strong or not strong. Ed, maybe you start out. How are things in Illinois and Wisconsin?
Um-
What do you see in the economy?
Economy is not bad. I mean, if we have a recession, we'll call it the immaculate recession. You're never gonna have one of those with full employment. It's gonna be weird if you do.
Yeah
... our economy is pretty good. labor is still the biggest issue for most of our clients and people out there. that and hopefully we get We're gonna get a new mayor in Chicago. It'll be good.
Yeah.
Hopefully it's the right guy.
You didn't like the other one?
Huh?
You didn't like the Lori at all? You didn't like that?
Lori was kind of tough.
Why? She...
She.
Careful.
She could dance. I watched her dance. I like when she dances.
Oh, man. Yeah, yeah. Right.
Anyway, back to the economy.
Somebody said she could make a Beetlejuice movie or something like that.
Yeah. Anyway.
Yoda. She could be Yoda too.
Yoda.
No, the economy's not bad. People are getting their prices pushed through. It's all accepted. People are most worried about labor. They sell labor shortages in Chicago.
Okay. Generally feels good.
No bubbles.
Okay.
60% of our loan portfolio is out of Illinois.
Yeah.
You know, we set this up 30 some years ago. We said 2/3 of our capacity could be handled by, stuff you should, you know, just normal banking.
Yeah.
The other third, we do our niche businesses.
Yeah.
If you think about that, we're kind of subject to the U.S. economy too, and Canadian. Got our Canadian premium finance operation up there. The other third is our premium finance, our niche businesses and, what, $14 billion in premium finance business, $2 billion in franchise, leasing $2 billion.
Okay
all over the country. Very well diversified. We don't see any bubbles yet, but feel pretty good about where we are.
Okay. Johnny, how about you? You've, you get, I'd say three different geographies in a way, but maybe there's a bunch of subgeographies in there, but what are you seeing?
Well, Texas has always been a great state. Yeah. Okay, well. Only in Texas. Only in Texas until you went to Oklahoma.
There you go.
Only in Texas. Okay. Texas is a great state. Florida's a great state. When failed banks hit, we were the biggest buyer in the country of failed banks, as you remember, and we bought all those failed banks in Texas.
How many did you buy?
last week. we didn't-
How many did you buy?
10.
We did 10, didn't we?
We tied for the largest buyer in the country.
We probably did 20. We probably did 20.
Probably.
That's bullshit.
Anyway, they the failed bank deal. Overall, you got Texas, you got Texas and Florida, which are the two most dynamic economies in the country. Where are people moving? Where are they going? They're going to Texas. They're not going to Illinois. They're going to Texas and they're going to Florida. Those states are booming, as you know. The good news is we didn't during the pandemic. We didn't get shut down in those states like other states shut down. We stayed open. Business stayed open. Their business positive in those states.
They're Americans.
They're Americans. Okay. I mean, it's a great place to operate, and when you operate in two of the best states in the country. The corporate office is in Arkansas, which is the lowest priced place to operate. Part of the secret sauce of this corporation is the fact that we operate in Arkansas, and that the corporate overhead is low in that market. I mean, our corporate office is a $5 million corporate office. If it was somewhere else, it'd be $25 million, $30 million, $50 million corporate office. We operate in that state, so the back office is all there. It's really worked out really well for us. Then we expanded through the failed bank transaction. We ended up in New York.
Yeah.
-through a failed bank, Doral Bank purchase, and that's been a really nice trade for us. We've been with them eight years, and they make about $70 million-$100 million a year, and they've never had a loss. It's all non-recourse financing, different than I've ever done in our community footprint. I like the way they underwrite, I like what they do, and they've been very successful. Actually, I have learned a lot from the guys that operate in our New York office. I just had two jets fly in about three months ago, one from Palm Beach and one from San Francisco, with the same company.
Why do these guys fly over, banking the country to come to Arkansas to sit down and try to make a loan? I said to him, I said, "What the F are you doing here?" He said, "Well, our bank's not lending to us, and we need to borrow some money." He said, "They said you got money." I said, "I got money," but I said, "You're really..." It was a complicated loan. It's about a $220 million loan.
I said, "You're in the wrong place." He said, "Why is that?" I said, "You need to go to New York and see my New York guy and let my New York guy deal with you." As it turned out, we have not done the loan yet, but I sent him where I need to send him because the expertise of our New York team is absolutely amazing. They've been great for us, a plus for us. We only allow 15% of our total assets in New York to have because the multiples they took straight pays you on that kind of business is much less than it pays you on a community bank footprint. Overall, things are really pretty good. I'm glad to be where I am.
I'm glad to have the expertise of our New York guys along associated with New York. I mean, with Texas and the Florida, because both of those, that's where people are moving. It's just really pretty incredible seeing what's going on in those states.
How'd they land their plane on a grass runway?
Well, they still have that wind sock you gave them.
Oh, yeah. The wind sock.
You know, I told Don a while ago, I said, "I wish I had thought about..." I sold that cabin a couple of years ago. He'd gone back and got that wind sock that you sent me.
I asked him if Arkansas had more than 1 airport. He said, "We got two." I said, "How many wind socks?" He go, "one." I said, "A wind sock.
Yeah.
Dave, how about your markets?
Well, I don't have-
It may be self-explanatory.
No, I mean, after Johnny gave that kind of introduction to Texas, I don't know that I need to say a lot. It is good. Texas, as you know, we grew jobs, 650,000 jobs last year. People continue to move in from California throughout the United States. They like the no state income tax and a very friendly, you know, governor. It's all been really good. We continue to grow, we continue to get more people. I think Texas is probably now has more Fortune 500 companies than New York or California today.
We passed up California, and Texas just show you that we have so many people moving at the same time, and it's fast becoming the center of Western civilization and cultural enlightenment.
Oh, God. God help us. Very good. God help us.
Yeah, God help us.
Johnny, you mentioned the Fed. How would you grade the Fed out of the Dom? I mean, today, you know, maybe it's another 50. I know you were pretty vocal five or six quarters ago about how the Fed was behind.
Well, it...
How do you grade the Fed?
I mean, it had to blow up, right? It had to. I mean, they pumped so much money into the economy, it had to blow. I mean, the inflation had to be generated. Examiners were asking me two years ago, "What worries you?" I said, "You guys, inflation." I said, "You're creating all this money and you're doing all this stuff. It's fiat currency. You got lots of ink, you got lots of paper, and obviously you're using it." You know, they said, "What do you?" I said, "You're diluting the American public." They said, "What do you mean by dilution?" I said, "Well, get you a shot of whiskey in a shot glass, taste it, and then pour that in a bucket of water and taste it." He said, "We can't taste it." I said, "That's exactly what's happening.
You guys are diluting us into infinity in the world." Something's gotta blow, right? Something has to break somewhere, sometime. You can't continue to dilute, dilute and think that we're gonna end up being the world currency, remain the world currency. I said, "We're gonna have inflation," and here it is. That's why it was a lonely decision not to put money in securities or in low rate loans. If it didn't have a five handle, I didn't put it in there of a loan, and I didn't put anything in securities. I just stopped putting anything in securities and just built $4 billion or $5 billion worth of cash and sit on it, and then looking for opportunities at this point in time where to deploy that.
Now much of my liquidity has run off and my loan growth has grown, but I still have lots of liquidity, I'm just sitting, picking my spots in the marketplace is where I think is the place to do. I've never been in a position like this in my banking career to have this much money and have the ability to sit and the patience to sit and deploy it as I want to deploy it through the market. I think long term, that's gonna pay lots of dividends. We've had two record quarters in a row coming off this acquisition. We're going into I mean, this quarter, and I think unless something blows somewhere, I think we'll have another really good quarter.
I think this could be the best, should be the best year that Home BancShares has ever had, so.
Ed, what do you say on this? What do you think? The job.
When they kept saying it was transitory, I said, "What are you smoking?
Yeah.
What Ronald Reagan say? Inflation's the price you pay for the government. All the free stuff the government gives you.
Yeah.
It ain't free.
Yeah.
We knew it was coming. I hope they keep raising it, honestly, and just get it over with. It's good for us. We're still very well situated for rising rates.
Yeah.
Everybody's worried about deposit beta, say, that was the buzzword today.
Yeah.
I think the asset beta. Our portfolio has got, what, $13 billion-$14 billion of loans that still have to reprice. It should handle any additional costs we have.
Yeah.
We had a lock in our margin right around 4%. Maybe it keeps going up, probably would be a little higher.
Yeah.
We started putting derivatives on the books that covered the downside there. We were at 253 for a little while, our margin. Fortunately, our mortgage business helped and PPP helped a lot too. We started coming back up. We're gonna double our earnings and our stock price the exact same as it was before. Kinda goofy.
Yeah
we're gonna have a record quarter and should keep going. As the Fed goes, I don't know. We'll see.
What are you, David?
I'll probably have to be careful and say that I do sit on the Federal Advisory Council, so I might have a little bit to do with that. I don't know, it was wrong. I think that the... You know, I think that the Fed waited too long. There's no question about it for raising rates. Sometimes on my recommendation, you know, to the committees and the FOMC, I think a couple times ago, I recommended maybe we shouldn't maybe just wait for a lag, you know. Of course, they didn't, they didn't listen to me. Instead of 50 basis, maybe cut it back to 25. I felt bad after I recommended that, because then you had like 514,000 new jobs that came up, which I still think is hard to reconcile to.
I think that the Fed is. This is just my feeling, this is just my opinion. They would rather overshoot than undershoot. I think where rates probably might have stopped here in the next time or so is probably not with the unemployment where it is and where everything is. You're probably looking at a higher interest rate, maybe instead of a five handle, it's six handle. I hate to say that much, but I think they'd rather continue to raise rates. You know, again, if something happens, you know, in the world-
Yeah
... and something changes and, you know, you had a war or so, whatever. You know, something or some catastrophe, or you had a bunch of banks went out of crypto or something like that went crazy, I think you'd see a change. Right now, I think that probably they'll raise rates higher. I mean, They wanna bring inflation under control. Where we thought it was gonna be is probably gonna be higher. That's just my gut feeling, that's my opinion.
I think during my career, this was normal for most of it.
Yeah. I was gonna say that, yeah.
These rates are basically getting back to kinda normal. The average Fed funds rate for the last 50 years has been 5.44. We got one scoop of ice cream rather than two scoops, and we bought a G4 rather than a G500, and we bought a 2,500 sq ft house rather than a 3,500 sq ft house. We all lived and we all existed during that environment. We'll live and exist through this. It's just an adjustment period. The rates are not going back to this sugar high that everybody ran on forever. A lot of these young people have never. They think the world's coming to end, and they've never seen rates at this level.
When it hit, I said, "I think Fed funds are going to 6%." They called Don and they said, "Johnny bumped his head?" I mean, did Johnny call?
What happened to John? Someone said he said 6%. I said, "Yeah, I think it's conceivable it could go to 6%." I hope it doesn't go past that.
Yeah.
You know, they have to stop it. They have to stop it. There's no need in backing up today. We've already taken the pain. Let's keep going till we stop it and kill it. You know, Volcker thought he'd killed it in the 1970s, but the snake was still alive. He had to come back in the 1980s and take it to 21% to cut the head off the snake. We need to do that. We need to cut the head off of it. It may take... I don't know what it's gonna take. Maybe 7%, maybe 7.5%.
I don't know where it's what it's gonna take. The key is to get it stopped at this point in time, because it, particularly our seniors are really being punished as a result of this. They're the ones. Those people on fixed income are really struggling. My in-laws, I watch them struggle a little bit because of the. Of course, rates are up a little bit, so they can get a little money.
You can help them.
I can help them. I damn sure can do that.
Are you still driving the G500?
I tried to.
What are you driving now?
A bus.
Are you still living in that 2,500 sq ft house?
I sold it.
See, look at you.
I got a 2,500 sq ft boat now.
Now how big is the house? Which house, I should ask.
Yeah. I think it's gonna boil down to the government's gotta stop spending. They're still spending too much.
Yeah.
They gotta cut back. Not just us, they gotta cut back.
Yeah. Open for questions as always. If you have questions, put your hand up. You kind of alluded to it, Johnny, but risks in the banking system from higher interest rates. We talked about some of your competitors taking on a lot of low rate, fixed rate loans during the pandemic. How pervasive was that, and where do you think that risk lies? Is it a risk?
Well, I think it was extremely pervasive. I. You know.
Securities as well, I guess, is another thing.
They're gonna come out of it. Those people will unwind this, but it'll take them three to five years to unwind that. I mean, it'll take a while. If they were doing fixed rate loans, it's gonna take them a while to turn that around. I think most banks in the system did that. I don't wanna pat us on the back. It was scary as hell for me and my executive team. There's about seven of us. We meet every day and to not deploy that. I wouldn't even reinvest the money that came in off the securities. I just put it in Fed funds. Well, now Fed funds is, what, 4.60%? Not too bad, all right. Go on a Fed fund, right.
When you're sitting on that cash, then once in a while, you see a perpetual preferred comes out that somebody runs and has some really good friends that had to raise some capital because AOCI or whatever they had, they're 7.5%, 7% perpetual preferred. I said, "Well, give me $25 million of that, give me $25 million of this." Just kinda pick your spots. I like my position. I just really like my position where we sit today with the ability to do that. Not... I'm not patting myself on the back 'cause it was one scary ride to make that call turn out to be right. It was... I got into it with my CFO. He said, I don't...
I said, "I don't want him..." I said, "Don't even invest, don't reinvest the money coming off securities." He said, "I don't guess we'll ever invest again then." I said, "Don't start that damn stuff with me.
Talking back.
I was under pressure already, right? As you can imagine, y'all know me. I meant that. Don't start that with me. I'm not gonna listen to that. Anyway, it that was the only controversy, I think, right, Donald, we had on the executive team, everybody else stayed pretty hitched. It was lonely. It really was lonely. It turned out we were right.
Yes.
Could bring the acquisition market back.
Yeah, I was gonna ask about that. Let me ask Dave first. Then I wanna go to this acquisition thing because, I think that's probably real. You, you get a little different approach, but somewhat similar to Johnny.
We, you know, been in banking since 1978, and I think Johnny called it completely right. We continually bought in all markets, and created this ladder in the securities portfolio. Johnny's right. Today, we have $14 billion at 2%. It'll take us three years or so to get, you know, you can do the math. If I'm reinvesting at 5%, you're talking about another $420 million a year in income. Where a lot of banks have really hit their peak, we're just starting. You know, we do have some. We invested in every market. We have that ladder, and we weighed out, if we didn't do it, how much we were leaving on the table.
We did it, and that was a risk. I think like these guys said, I've been in banking where I saw 20%. I paid 19% on a CD in 1981, and I saw 0% interest rates that I didn't think I'd ever see. You know, we've been in all markets, and I think if you're, if you're running a good bank and you have make great earnings and you have strong capital, you're gonna survive. You just have to, you have to know where you're at, what you're gonna do. I'm excited for what I see for the future anyway, but it's gonna take us a little time where Johnny's benefiting quite a bit right now, so.
Ed, you guys have the liquidity buckets.
Yeah.
basically, that you weighted.
Yeah, we did the same thing. I mean, is that a lot of liquidity, and waited for the rates to move. I mean, we as a company, our earnings, our earnings have grown, what? 12% in the last 10 years. We've been through everything. We've been through oh-seven, oh-eight, 9/11, then oh-seven, oh-eight, then pandemic, and now this. We've increased earnings every year. You can't be smart. You gotta take what the market gives you. When it allows you rates, don't take it. We're, you know, we're well situated right now. Forever, I've been sitting, waiting for the beach ball to come up, for God's sakes. It finally came up. You know, we didn't do a lot of fixed rate lending.
We did a lot of derivatives for our clients, and they're happy, we're happy. We're in great shape from that perspective.
You have some asset repricing coming up.
Oh, yeah. Well, a term for the premium finance business, the $8 billion-$9 billion of life insurance business where we haven't had a we had one little loss, I guess. Can't say we never had a loss. We had little tiny less than a basis point loss this year.
Yeah.
That's one year, it used to be LIBOR, now it's for U.S. Treasury constant maturity index. That every year. If you go back a year, and we put it in our press release, we'll pick up 4% or 5% of that money as it reprices. The other premium finance business is $8 billion of $45,000 average ticket size, nine month full payout loans. Those will reprice also.
Right.
up basically our prime. That should offset any deposit betas that we have to deal with. We get the normal lift we've got anyhow. It's great shape.
Good. I know we're gonna get to deposits in a second, but I think there's a question in the back.
Fresh with the small banks of Kansas, this has been the most entertainingly insightful session I've attended. I figured I'd light a little bit more sparks so you can get more entertainment out of this. Johnny, I agree with the reserve currency. Can you guys talk about your views on crypto, blockchain and all the other Silicon Valley things that you guys don't get? While they don't make money on those things, you guys keep making money. Maybe you can talk about what do you think about tech?
Crypto, blockchain
That's three different things. crypto, blockchain, and the FIS, Fiserv kind of guys that help you make money. So.
If you're asking me, I'm going straight into fintech and crypto. That's my two big moves. That's my two big moves. Because last year when I was at all these deals, they said, "Are you in fintech? Are you in fintech? You gotta get in fintech. Johnny, are you not in fintech? You gotta get in fintech." I said, "Well, we got $10 million." "That's not enough. You really need to get in big. You need to get in crypto." Well, we just kinda do what we need to do. We stay down that path. We're bankers, and we're gonna continue to be bankers, and we're not gonna get too far off of base if good or bad or indifferent. I've kinda stayed out of that field.
When it was $9,000 a coin, I left town. I told Don, I said, "Read about that damn stuff. When I get back, tell me about it and see if I need to buy." Well, it was $16,000 when I got back. Anyway, I didn't move into crypto. I've stayed pretty much out of fintech. The problem with fintech, a lot of these people getting their money from the banks to do fintech is that they don't know how to collect the money. They've never been in a downturn, right? They don't know if there's. Who's their collector? They don't have a collector. They're depending on somebody else to collect. All of a sudden-
They get their funding from you.
Yeah, they're trying to get their funding from us. I had a former analyst call me, he said, "Call Don," and he said, "Don, this one fintech company just lowered their credit standards on used cars to 300." I called him, I said, "I've never seen a 300. You have to work to be the sorest SOB in the world." There's no way to get to 300 unless you spend your life to be at 300. Guess what? They blew up. There you go. That's what happens with all those.
Tulips in Holland than crypto. Buy the tulips in Holland rather than crypto. I mean, same stuff.
Yeah.
Nothing behind this.
Tulips.
Yeah.
Yeah, tulips.
Crazy.
Yeah, I use probably the example here three or four years ago, I talked about this emu bird. It's a big ostrich. My father-in-law is a dentist. He's invested in everything, and he was paying $30,000 a bird and $3,000 for an egg. I said, "What are you gonna do with that ostrich?" You can use the oil and the feathers and all this stuff. You know, about 12 months later, they turned all these birds loose, and they started going from field to field because nobody wanted to pay them. That's kinda the way I feel about the crypto, the emu birds. They're about the same. It's just the same thing. I just don't think it's. To me, it's not a real deal.
Okay.
On the aside, can you talk about actual investment in technology in your banks?
you know, I'm sorry.
Go ahead.
I wanted to comment on your blockchain, though. I didn't mean to throw crypto and blockchain into the same category...
Right.
because blockchain is more of a software, and it's probably gonna have a lot of value and add a lot to it. Probably banks, the amount of money that we're spending, I wouldn't say the majority of all our money, but we spend it in two places I think they're some of the biggest expenses, and that's technology. We probably spend more money there. I really feel in the future that technology, the more digital products that you have, the more technology you have, and the easier it is for your customer to get access to you and how easy and user-friendly it is gonna make a difference if you're successful or not successful. That doesn't mean that you're gonna do away with people, but ...
I think everybody, you know, we have a mission statement. The mission statement's kinda cornball, but I came up with it. It's, you know, it says, when a customer comes in, you smile, try to call the customer by name number two, and you try to say yes. Everybody wants to be known. If you're a customer, everybody wants to be known. Also, costs are going up so much, expenses are going up so much. The minimum wage, and you're paying people, even tellers, $20 + an hour. I think you're gonna move more toward AI, probably. The delivery system is gonna be really based on technology. The better you have and the more... Not just have the fanciest technology.
How easy is it for a guy 60 years old or 65 years old to use that technology? I think it takes two things. I think it takes service, knowing the customer, don't forget that fundamental, but also make it easy for the customer too. It's like right now, you see everybody, guys my age are texting. Everybody else was doing it 10, 15 years ago, but now everybody's texting, you know. You wanna make it easy. I just think you wanna make it easy, really.
You guys aren't doing it in Arkansas, are you?
No.
We hadn't gotten to Arkansas yet. We hear it's coming, right? Now it's just around the corner, be here before long.
Here's a statement, true or not. Many believe that long-term funding the loan growth is going to be the largest challenge to bank margins over the next several years. True? False?
I think it depends on your, I think it really depends on who you are. Like, you know, we have a $14 billion bond portfolio that $2.2 billion rolls off every year. We got tons of liquidity coming off of our. We, you know, we have tons of liquidity. I do think, though, if you're a bank that's got a 100% loan-to-deposit ratio, it's definitely gonna be an issue. There's no question about it. I think it depends on your bank. For us, we have a 66% loan-to-deposit ratio. We have plenty. In fact, this is a time for us. Usually, a lot of other people lend up and loan up as much as they can. When times come like this right now, it really becomes an opportunity for us. We've actually made...
I can't believe that even the borrowers do it, but some of these multifamily projects, you know, where we used to make a loan of 65% loan the cost, we're doing loans now at 50% loan of cost.
Yeah.
We have to do it just so that it shows that a cash flow of 300 basis points is stressed.
Exactly right.
things have just cost so much.
Exactly right.
... that you have to do 50%. First they get mad and leave, then they come back and say, "You know, by the way, let's talk some more," you know? Then you get it, you know?
Yeah. The truth is that those who have money today are driving the bus, and they're setting the terms and the rights, and they have the ability to set the terms and the rights on loans better than... I mean, a lot of banks are out of money. Donald and I were just in Dallas, and we were visiting with a guy. I told this story today four or five times.
I don't know why she still runs with you, bud.
I don't either. The guy's 108... He's trying to sell me his bank. Dallas bank. He's trying to sell me his bank. It's 108% loan-to-deposit, and his margins are going straight down. I said, "Well, you want me to buy your bank?" He said, "Well, I'd like to have your stock." I said, "I bet you would. I bet you would like to have my stock." I said, "You want me to buy your bank, and your problem that you got will be my problem?" "Well," he said, "I hadn't looked at it that way. You can fix it." I said, "Yeah, I can fix it, but what does it cost to fix it?
'Cause you screwed it up, and then I take it and fix it." We had another bank, the guy was showing similar situation. I said, "Tell you what, if you'll pay me $100 million, I'll take it." You know? That's what from guys that have been acquisitive in the marketplace like us, we're looking at these trades out there today. What is a book? Let's say the book, the loan yield on this book is 2.70% or 3%.
Yeah.
What the hell? What's it worth?
Right.
What's that worth in the market? How much are you gonna mark that loan book? Then you go to AOCI, and you mark that. I think M&A, I think it's gonna really be tough to do M&A in this environment. You can play a game with the marks. You can play whatever game you wanna play with the marks and make the deal look halfway good. I don't know how you make a deal today. I don't know how you make one work.
You can make it look good from an earnings standpoint, but really the dilution that you get from that AOCI.
Oh, yeah.
...is pretty tough.
That's it. That's I don't know how you do that. I mean, I'm bottom fishing, right? I'm bottom fishing out there. The Fed called us and said, "Look, everybody's not gonna make it through this. Keep your powder dry. We need y'all. We trust y'all. We need y'all to come in and..." You know, we're kind of sitting there looking for... Why would I do a deal now that was dilutive or even a breakeven when there's opportunities, I think, coming down the stream here with some banks? You've seen it. We've all seen it. We've all seen the ones that are 108% loan-to-deposit, that their margin's going down, they're out of money, and they're telling their loan officers, "We don't have any money other than the cash flow we get in off our securities and our loans.
That's all we got." Texas, we're running into that in Texas. Puts us in a pretty good position. Why would anybody wanna buy? It's for sale. This one bank, why would anybody wanna buy that? I think it's gonna be an interesting two or three years here. Maybe some real opportunities to stick their head up.
I agree.
Funding matters, so funding matters.
Hmm?
Funding matters.
Oh, yeah. Oh, yeah.
... free and declining for 15 years.
Yeah
... feels like it's going the other way hard.
Well, deposit is what your bank is really worth.
That's right.
You know, deposit base is what you're all about. We're fortunate that 15 charters, multiple brands, we can go into a market that's maybe $100 million, or a new branch, $100 million dollars in assets and offer big rates to get people over. We don't cannibalize whole systems for a marginal cost of funds isn't that bad. Follow what I'm saying?
Yeah.
So-
That's it. That makes some sense.
Yeah.
You're advertising a bank, Johnny's bank, not Ed's bank, right?
Right. Right. I could do that 100 x.
Mm-hmm.
In Milwaukee. Milwaukee's kinda tough 'cause the credit unions are kinda goofy, but in Northwest Indiana and Chicago, we've got a great reputation. We won the J.D. Power Award two years, three or four of the last five years. We won eight national grants awards this year, seven last year. Means our products are just as good as anybody else's. Or better. Spent a lot of money on fintech, put it all in place so that we can always have better products here and delivery systems. Kill them with service. That's what we do.
Yeah.
Loan demand is kinda gonna slow down a little bit, I think. You still would raise deposits, but I agree with you. You gotta keep your powder dry because you're gonna have opportunities to buy. Right now, pricing is so stupid. I mean, there was a bank in Miami that we know, and the guy was talking to us and told me what I thought he was worth, and making 20 basis points, same issue you're talking about, and somebody bought it for 2 x book. Go figure.
I saw it.
You look at it too?
Huh?
Did you look at it?
I looked at it, but the guy was a billionaire that owned it, and he was gonna end up being my largest shareholder.
Did he want a boss?
He want a boss. He wouldn't be as big as I was. The only way to fix it was strip it.
Yeah.
Was just strip it. That was the only way to fix it.
Yeah.
Was strip it. I didn't want my largest shareholder outside of myself being pissed off at me because I stripped his bank that he'd owned for 35 years.
Yeah.
That was the only way to fix it, so I just walked on it. I didn't participate.
Mm-hmm.
Do you think there's more stuff like that that's coming?
Has to. I think it has to. I mean, it. I called one guy. I called. I was bouncing right off the bottom. I called him, and I said, "Looks like you got yourself a little pickle here." I said. He said, "Well, I do." He said, "I want them to quit raising rates." I said, "They're not gonna quit raising rates." He said, "It's killing me." I said, "I understand that it's killing, but you got more to come." I'm not sure we could have put a deal together anyway, but I think it made him mad. He hadn't called me back. It's been a month since he hadn't called me. I'm just bouncing off. I thought there might be a trade there somewhere, but there wasn't, so.
There will be.
Hmm?
There will be. There will be. It'll happen. It happened before. We first got the acquisitions at Wintrust. I had done a lot of deals before in my previous life, but always after one of these events, guys kind of throw in the towel. Great opportunities to expand that way and make accretive deals and not have to live on the accretion. That kills you.
Dave, what are you seeing?
As far as M&A?
M&A, yeah.
M&A is different right now. You know, the two deals we were lucky that we did, they were about 100% loan to deposit, so they are pretty high. We didn't have any security like you did at Happy. We didn't have to book. You know, that's a bad deal when you have to take that. I think the AOCI is changing the dynamics of the M&A right now. I think that a lot of people thought, well, if you have this loss, it's an unrealized loss, and it doesn't really matter, and the regulators really don't care that much because it doesn't count against your capital. I think all of that has changed. I think it does matter.
I think that regulators have finally said, "Okay, you know, this is an issue." I mean, this is an issue. I mean, I don't know this is the exact. I don't know if I should quote or not because I don't know exactly. I was talking to a guy, he said there's 365 banks, you know, out of the 4,000 something that really, if you took their AOCI out of it, they'd have a negative tangible net worth. I think that becomes an issue. I think with M&A going forward, you're probably, especially if you're gonna do a bigger deal, where in the past we did a deal, you would just take the bonds and you just market to market, like you said, you got your money back. The dilution to the and you do.
The dilution to the capital is so much now because it's so big in some of these banks, they're gonna have to split that with you. They're gonna say, well, their comment would be, "You're gonna get that money back." I always tell them, "Well, you'll get it back, too, if you're a shareholder, so you'll just have to participate it. So you gotta split it with me, you know." I think that there is gonna be more M&A. I think that this liquidity, I think it's gonna be a big issue. I think there's even a possibility I don't wanna throw stuff out of the air, but what I see with some of the banks that have crypto in that, I think that's a real issue with their borrowings, that they're borrowing from the Federal Home Loan Bank.
I think some of that stuff that can happen could cause even more stress on the system. Sometimes you think, well, this is one or two banks, but I think that could cause even more stress on the system. When that happens, it's gonna even be bigger liquidity issues. I think banks that have liquidity and good credit are really it's gonna be an opportunity maybe six months from now, maybe not today, it may be six months, but I think there's gonna be a real opportunity going forward. Yeah, I do.
Maybe next year. Hopefully, you get a change of government so you can get deals done quickly.
Well, that's the other issue. Can you get things done too? You know, I mean...
You know, AOCI is not real until it is, and then it's real. I asked the regulators at the last exit exam, I said. They talk five minutes about all the ratios they have. Of course, ours, I can't tell you what it is, but it's as good as it gets. They talk five minutes about that, and then they just open up now. They're just conversation of what's going on here, what's happening here, what are you seeing there. You know, they there is AOCI. I said, "What are you gonna do on AOCI? What's, what's your look there?" He said, "People may not be able to borrow from the Federal Home Loan Bank. They may pull them back.
If their rate % is down to a certain point, they may not be able to borrow from the Federal Home Loan Bank. I found that interesting.
I had lunch or a meeting with the lady that's head of the agency. What is it? F, that controls Fannie Mae and Freddie Mac and also Federal Home Loan Bank and FSA. I said, "Well, is that true?" Because I've heard that. She said, well, again, this is just what she said. She said, "That's not necessarily true if they had called their own regulator and the regulator calls them, then they will lend them." I was really surprised because the meeting before that I was with the FDIC director, Gruenberg, and his position is completely different than the old FDIC director.
That's, that is a clear evidence that it's up in air.
Sure.
Yeah, I mean, really.
Yeah.
Typical government.
Yeah. Yes. Go ahead. Hang on, Jeff.
Have fun. I'm not gonna talk about today. I'm talking about running your banks. I think y'all are all seem like you're just really enjoying that. My question is, do you have an end game? I'm thinking long, long term, not just through this cycle, but, you know, have the three of you, because y'all are doing amazing jobs right now. Is this gonna ever end? Do you have some 20-year plan, or is there something out there that you're thinking about, if I get to this point and then maybe do something else or find a bigger fish, or is this gonna go on forever? I mean, obviously, we don't live forever.
I'm the oldest one on the table, and just so you understand, I only buy green bananas. Someone says it's a three-year earn back to tangible book, and I say, "Bullshit." You know, I probably won't be around three years or a five-year earn back to tangible book. I said, "I need something that earns back tomorrow, today, this afternoon to tangible book." My attitude is that I'll find a partner at some point in time. There's only a few banks in the country that I'd mix my money with, that I believe in, that I think are solid companies that I could do something with at some point in time. An MOA doesn't exist. There is no such thing as an MOA.
My thought is, at some point in time, I'll find a partner that makes sense for my shareholders, because I'm not an employee, I'm an owner. I have a lot of stock. This will go on for years and years and years into my kids and grandkids. My thought is that I find the right partner that I hook up with, that I trust my money with. There's not but five or six in the country, and they may not be interested in Home BancShares. My thought is, that's where I'll go at some point in time for my deal. I don't wanna just sell it. I think I want it to continue on. It's a great company, high performance, and I think if we find the right partner, and we hook up with that partner. That's my thought.
Maybe the best one's right next to you right here, so.
Yeah. We can do it, gentlemen.
Oh, Jimmy, what the hell?
You want me?
Yeah. How about you, Dave?
You know, to me, I think that's one of the biggest questions in my point in where I'm at right now. You know, probably the majority of my net worth lies in this company. You know, I ask myself the question, what is the end game? I think that you really have to really look and say, okay, is there something? You know, if something comes around, I think you always should look at the shareholder. If it's a shareholder value, we should consider it. I think that if you're not doing that, Let me back that up. I said, you should always look at that stuff, you should always have a succession plan. I think that's the most important thing. If that happens, it's good.
I mean, there's several 500 billion dollar banks that would love to have one of the bigger banks in Texas-
Sure
... you know, in Oklahoma. I think that there's always a market for us, probably. There's several that are not there, and they would love to be there. I think that you always should have a succession plan, and that's one of my biggest deals. If that doesn't happen ever, then that you have people into place. That's what I've probably focused on more on that right now than I'm doing anything else, is building that next generation of an area chairman or president for Houston, Dallas, San Antonio, West Texas, Austin, all these places. Your executive committee members. You know, it's that group that's probably 40-ish, 45, 40 on. That's what I'm focusing on right now. I'm picking all those people in the event something like that doesn't happen, really.
I don't know if that answers the question or not, but...
Ed, you're in the middle of it, right now.
I've done it, yeah.
He's done it.
I will say, I won't speak for Tim, who's gonna be running it. Don't screw it up, Tim. You know, I usually use the F word. Don't F it up. We're on the internet, I can't do that. I was told by. We just got this going. My first non-executive chairman told me, "Ed, anybody can sell, not everybody can build." I took that to heart. He's right. Our model will work any place in the country, and it works very well. I would imagine that, if I was still there, I'd say we're gonna keep going and growing. I think the opportunities are great. Midwest, Michigan, Indiana, Iowa. Maybe it's, Dave, you like Iowa, right? Maybe it's, walking around, they say. IOWA.
It's going to be Tim's run, but we came to the realization on the succession plan about eight years ago when I started thinking about what we're going to do. We're all about the same age. We all leave at the same time. We elevated people, threw them in the water, see if they can swim. They're all swimming great. Our culture is so different than a big bank culture. 15 charter, we're pushing everything really close to the customer, let the guys make their decision, put guardrails up. They get to make the decision. They actually get to run something and feel good about it. I think that model will continue to work. Get real close to the customer.
Pay $300, $400 to get a customer, and you're gonna let him go for a $10 fee he gets pissed at? No.
Mm-hmm.
Big banks can't hold a candle to us. I think our model is very good. It can continue to grow, but it won't be me doing it'll be Tim. Good luck, Tim.
Mm-hmm.
Yep.
One of the biggest challenges we had is, you know, we started off as a 40 million dollar bank, and we really didn't have any money to pay these guys, and so we ended up giving them stock.
Yep.
I was giving them stock, and a lot of those top people who helped us build it, you know, they ended up with $15 million and $20 million. They don't wanna work anymore. I've had to go out and get younger people and bring them in there because we gave them stock in lieu of money. Of course, that all worked out for them. They're really.
That's what's up.
Yeah. and they're happy now, you know? they're real happy.
We've done the same thing with our entire executive committee. All of them are multimillionaires, they should be because they've helped build this corporation. They're all vested in the stock. They take the bonuses in stock, we create programs for them over the years that they with a bogey, they hit the bogey, it's over and above their salaries and bonuses. It's been fun sitting back watching those people get wealthy. But they don't. Most of us who get wealthy don't realize we're wealthy, don't pay any attention to that. We just have our own way of operating that we do, we go.
Yeah.
We don't feel that way. We don't have that feel of, "Hey, I'm rich." You know, you don't feel that way. You feel like you gotta get up in the morning, get to work, you got things to do, and get it done. As they say, things happen while you're planning other things, right? That's kind of how I look at it. I'm proud. We have created... I think I told this before, we've created more millionaires in Arkansas than J.B. Hunt, Tyson Foods, or Walmart for individuals and my people in Arkansas. When they have a list of the top wealthiest people in Arkansas that own public stocks, there's more Home BancShares people on that list than there are anybody else's company, and I'm very, very proud of that.
It's very rewarding to see those people do that well.
Those Confederate dollars or American dollars? Just wondering.
He thinks the war is over. He thinks the damn war is over. We're just stopped to take a smoke break. We're going back.
They call it.
Okay.
The least unpleasant view.
Okay. Credit comes up. It's the one that we've got, you know, 10 or 12 minutes left. Credit comes up. You know, I guess we were talking about these marks in AOCI, and I guess none of that matters until credit becomes a problem, right? I guess I've been surprised by the resilience in credit and the resilience of the economy. You know, where are the problems in credit? Are you seeing anything at your bank? Doesn't feel that way, David, but where do you think the problems are gonna show up?
You know, I'm probably not the right one to ask because we have $27 million in non-performing assets and $311 million in reserve. You know. I haven't seen the credit issue. I think the banks are more capitalized right now more than they've ever been. The underwriting has been better. I think that some of the banks that were running a little bit hotter, I think the bigger issue. The credit will be an issue with the higher interest rates, but I think the real issue for banks is gonna be the liquidity issue, I think, and trying to build something going forward. I see credit. I think credit is still pretty good, really. Right now, I think there's. Again, you don't wanna invest in office space. Well, let me think. Let me take that. That's regional, too.
I mean, if you're in San Francisco, you certainly don't want office space downtown.
Right.
If you're in, you know, Dallas or Houston or something, the markets are still pretty good. A property is better than B property. You know, I think you just gotta be careful. You don't wanna be financing big-box stores, single-box stores. You don't wanna be financing B and C office buildings. You know, I think credits are still pretty good right now.
Mm-hmm. Ed, you talk about a little bit of a slowdown. What do you think on credit? I mean, if you go back, you really pulled back.
Mm-hmm.
You had the epitome of a bank growth stock, and you pulled back before the financial crisis. It cost you a lot of market cap, and you came out of it, you know, without any issues.
Yeah.
Are you seeing anything now that bothers you?
Not really. Our non-performance is like $70 million.
Yeah.
About 30 of that is premium finance. You're just waiting to get the money back. $40 million, that's what we put in the reserve last quarter based on what our sausage maker, CECL pulled out. You throw it all in, you get a number, you gotta use it, you know. There was no bubbles.
You gotta create some overlays for that kind of stuff.
Yeah. Somebody I know has zero, how do you get zero out of that, damn? Anyhow, right now we don't see any issues. We've got a $1.3 billion office portfolio.
Yeah.
Non-big it's mostly out in the burbs. What, 40% of it is medical and not big bank, not big stuff at all. I think the average size is about $1 million a loan.
Okay.
It's mostly in the neighborhoods we're in and that sort of thing. I don't see any bubbles right now. We're underwriting. Commercial real estate's actually pretty good right now.
Yeah.
As you were saying, we're getting 50% down.
Yeah.
Great rates. It used to be SOFR plus, you know, 2x, 3 x SOFR plus 300, 350. Right now on points and-
I'm like you, I just don't think the credit's gonna be the issue right now that I could see.
What about you, Johnny? What do you think?
Well, I've always run, I heard about this CECL deal. I wasn't real sure who he was.
Yeah.
And-
Benny's friend.
one of the...
His brother is Ben.
Huh?
His brother is Ben.
Ben CECL?
Ben CECL.
I know one thing, a 2% reserve has always worked.
Sure.
I always run a 2% reserve. I have about $270 million in reserve for my company. You know, think about it. If I got $9 million in capital and $2 million in reserve, that's $11 million. Or I got $10 million in capital and $1 million in reserve, that's $11 million. Because it's my largest asset, I sleep pretty good at night knowing that I carry this kind of reserve, and I'll just err with too much reserve. I think that's good to do because I don't know if the guy, CECL, has ever been to Conway, Arkansas. I don't know if he's ever been there. You know, I'm gonna continue.
When y'all see me take a $150 million or $200 million out of reserve and put into income, you'll know that somebody's stuff is done to my hand. That's the only way I'm gonna do that because what difference does it make? It's our money. You can count it as capital. It belongs to us. I've already allocated when the crap hit the fan with the pandemic, I took $100 million out and put in reserve, and I just left it there. I'm gonna continue to leave it there. Why not? It doesn't matter. It just makes me sleep better at night. It makes my shareholders sleep better at night. I just think That's the reserve portion. Asset quality has remained very strong.
The only weakness I've seen that I have is in memory care. I'm seeing memory care not work. I'm seeing it not work because the people that have dementia don't live as long, and the churn is much, much faster, and it's hard to fill it back. I've seen that struggle. I have about $60 million of memory care with this one customer. We did it right. I mean, non-recourse, 50%, we're not losing money. That deal is not cash flowing. The mass money in that deal has been supporting the hole it hit in it. Interestingly, they did them as separate loans and they wanna keep Palm Beach and Naples. They wanna keep those two.
Those are for you.
Yeah. The others, they wanna throw back at me. Anyway, I'm $0.50 on the dollar, I'm not worried about it. You asked if I've seen a break in credit. That was really interesting to me that these. It's a great plan when we look back. The baby boomers are coming through, right? They're coming through. There's gonna be more people with dementia. We need to build more memory care centers and we'll really do well. That sounded wonderful. The cost of taking care of the memory care centers is higher than they anticipate. In addition, the churn. A lot of people during the pandemic went and got their family members and brought them back out, brought them home and took care of them. That from an asset class, that is, that's interesting, it to watch for.
I mean, we got $60 million. We actually got $100 million of it, but this one customer got the mass money in six of the same deals. Interesting this.
That is interesting.
Outside of that, I don't, I don't see anything to speak of at all. I just maintain big reserves, excess capital, excess reserves, just err on the side of being very, very, very conservative and still do a almost a 2% ROA every quarter.
Any last questions? Started a little bit early, we're off on the clock. Just to summarize, decent economy, things to watch, loan growth is there, slowing a little bit, funding more critical than ever, and really not seeing anything on credit. Stay tuned on M&A.
I probably need to watch, you know, I think we put out, so they asked what our loan growth would be, and I think we said mid-single digit. We'll probably do a little bit better than that the first quarter. I was concerned that the last two loan committees, we saw a lot less. I said, "Well, you know, these higher interest rates, we've got half of what we normally saw." Kevin mentioned to me today that loan committee this week's back up to, you know, where we were. I kinda thought that maybe it was going back a little bit, but you think it's still doing pretty good.
Okay. Fair.
I think it's gonna slow down. I think we're gonna see it slow down. I mean, some of these deals don't work. I'm running about a 4.20% margin to do that. If you go out and get money today, it's a 5% handle, right?
I wouldn't even know what 420 looks like.
Well, I'll show you. I'll send you a picture of 420.
Let me get my needles.
A lot of my loan officers didn't know what that looked like either. You know, you gotta ride, you gotta ride in with a nine handle, but some of these deals don't work at a nine handle. I mean, if I wanna maintain, this is what I tell my loan officers. I said, "You know, we're running about 4.20%. If I go out and buy money today," which I'm not doing, I don't have to, I say, "It's 5%.
Yeah.
These banks that are out of money, they gotta. If they wanna maintain a 3% margin, they gotta, you know, they're gonna pay 5%-8% that the loan's gonna have an eight handle. We're writing eights and nines is where we're writing. If we hadn't brought back Jumbo Prime, that'd be 10. I'll bring him back.
I was wondering where Jumbo Prime was today?
Ed, anything else to add?
No. I think it is gonna be an issue for a lot of banks, and I do believe that it's gonna end up in a lot more acquisitions, opportunities taking place. As a company, we always take what the market gives us. We try to be smarter than the market, take what it gives. It's given us great organic growth for the last three and a half. We haven't done a bank deal in three and a half years. Now we bought a portfolio of Allstate Insurance loans. We just did a wealth management deal.
Right.
I think it's, you open up, it'll open up again, and we'll be the guys.
Well, Ed, thank you. Best of luck with your back healing-
Thank you.
as well, and best of luck in retirement.
Thank you.
Yeah.
I'll be totally retired.
Well, you'll be around.
I have one question. Are you the new heir apparent?
Yes.
I don't know if he's gonna be here, but he'll have to be initiated, won't he?
Well, okay. That'll kill the webcast.
We'll have to interview him.
You'll have to interview him, and he'll certainly need the initiation.
Absolutely.
Yeah, that happens behind the curtain, but, we'll need to get on to that later.
To get some various sundry animals.
Yeah. He likes farm animals. I don't know if he likes farm animals or not.
He does. He does.
He likes farm animals?
Yeah.