BXS - Earnings call transcript Q3 2020

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Operator

[00:00:02] Good morning and welcome to the BancorpSouth, third quarter, twenty Truest earnings conference, call and webcast. All participants will be in a listen only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there'll be an opportunity to ask questions, to ask a question.

You may press star, then one on your touchtone phone to withdraw your question, please press star. that is note recorded. please to this being event Then conference to Will I like the over would now turn to Fisackerly. Please go ahead, sir.

Will Fisackerly

[XX:XX:XX] being with introducing thank you will participating and the by team of the Good begin members management today. us. morning I senior for

factors report chairman of out, third South chief officer Dan a that and find I'll Copeland.Before discussion financial due looking operating twenty officer regarding and results Rawlings, the reconciliation executive senior can remind and executive in on indicated regarding , the statements or the so, found results these could performance. variety these performance. those Twenty factors made certain be XXXX in begins, may can statements Bagley Also, measures differ in the John may nongay Form release. Bankcorp company's Chris and chief forward Carlstadt earnings risk you company's vice these during have quarter. materially the from president chief If measures information Tenke. annual or future We officer discussed to president forward looking be financial of be and the company's financial concerning of of future certain you Actual

speakers discussion. to Our will prepared referring the be slides during

on view I'll going comments for the can afternoon. And You them you yesterday on find you'll Dan Bankcorp turn our X-K can to on South webcast. financial that the to Rollins relations decides Or page, or to the our filed the find at by Dotcom investor now results. exhibit his we and clicking our them link to

Dan Rollins

you Bankcorp begin our executive provide third quarter financial Good twenty performance. quarter conclude s to color us will business performance. management questions. discuss answer financial comments, results update Will. happy be today joining After our development quality you, third we for Thank efforts. will I our will will on John more morning, Chris our to an twenty financial everyone. providing on And credit prepared by in some Thank the detail. and [XX:XX:XX] team discuss

to Let's turn to to reminders the the legal you presentation Will's talked about. slide that already contains all slide

Before get company few comments make serve the continued as markets impact general on the about let highlights, covid-XX a financial me of into and a we the our we company.

to Our count team case continues rise.

Fortunately, most the virus. recovered from serious our of teammates have complications without

While our to the most remotely. support do staff who so operational continuing to of have capability work are

appear open last more has in more branches The obviously Chris are including percent to to walk we perspective. available retail which a certain point business hospitality, be come a traffic, footprint economies will three adversely in Our and down have are are, spoke fairly have open for considerably of continued that most our speak light than from since and moment. at zero been segments, only healthy. fairly markets others. There the however, be of to portfolio deferrals end. Loan impacted this to quarter

a payment by one normal all schedule on customers of one type. basis will work we'll our pleased customers schedule have are continue most with to on as our for on We business customers credit of We and quality actively assistance. back some needed a [XX:XX:XX] virtually of monitor a and back to

of percent PEPFAR is provision third one increase in metric, for financial of the eighty and percent quarter of this continue one eighty strong third which from report quarter represents we on quarter the would last and basis. calculation year. quarter. annualized seven average for percent discuss pandemic I generated the quarter. assets point record our eighty you items a is this and hundred nonoperating one contains second that Outside now year having an our Quarter of for one for defined we after highlights adjust the of release. three This the quarter. slight losses, in ten in Let's the credit our totaling results financial for million, earnings reconciled of the eight We point point one Slide in remind the performance. impact or on our to

the also for Both net five income adjustment record of and per available value or seventy fair sixty MSR, quarter. We nine one diluted million reported other third items to immaterial gap nonoperating of share. cents were quarter shareholders common the point for common

the excluding which by So million is one of we the accordingly, lengthening seventy were two point and for that adversely utilize the share credit income, sixty modeling. earnings also MSR, seasonal provision was dollars. cents diluted. Common our fifteen losses our net million, This provision nine is the impacted operating horizon projected for time the forecast for the [XX:XX:XX] of recovery result of economic per

recovery themselves While the of of as quarter, with one charge process. has in in the eight a which extended, points million our economic estimates of the of low the net loans of loans second percent under additional assumptions our point four resulted ranges leases, net seven very basis around of end or combined coverage within excluding forecasted the duration number the indicators allowance and four of point quarter. are one been at annualized modeling the This provisioning provision, the off increasing resulted the to the end

for activity the our Let's sheet balance review quarter.

second of funding our most we the of activity loans. origination some occurred of BPP in the quarter, completed these and While

in us August, their I totaling in billion. XXXXX over operational expired staff point to the on bank relationship to one hands this program team our and of funded thank an As two over and again loans like our managers a was This exercise deck very truly would for we effort period early the was support making a for all success up time. on compressed for our challenge. program over

company almost from benefit loans the point that and believe success deposits we customers provide point cultivate these were our deposits dollars a out as hundred XXX roughly repos to million We We our new to important some five it's these for new three of XXXX quarter, as another over think third growth will having strive our the relationships had consistently I customers. increased of [XX:XX:XX] bank. of in annualized. for and new and this bringing quarter percent are customer solid deposit one and are tremendous

to growth quarter. achieve of has to been program, loan after While PGP the difficult quarter outside liquidity continues increase

details While interest net to asset over to just interest earning pressure will grow dynamic go we margin. minute. our in have continued continues dollars, this those income a net mix in John

continues volume and around twenty servicing As six dollars point eight of the business strong mortgage quarter. Refinance quarter. money to volume sixty volume representing to a our hundred percent provide nine purchase in of the production remain development quarter which will Chris just we is million additional contributed revenue well, the again on second. continue for the one total color seven production thirty team discussion our standout elevated, another activities, activity production totaled holding and but mortgage for our as had million,

our drive we cost structure and Finally, down. efficiency improve ratio continue our to

operating XX cycle. before MSR, point the first for four was eight below fifty efficiency since the quarter. our percent has excluding efficiency, percent been well last time ratio quarterly XX economic Our the that This marks

John. discuss our more now let stop detail. and financial results over and me a in take Let he'll John little

John Copeland

bit. in the drill Thanks. Dan, little numbers let's a [XX:XX:XX] down

half XX shareholders in If the reviewing per quarter. income or was available for you'll or you'll and share common deluded a one four statement, turn see to net seventy million common to the slide our statement third cents income summary

common Dan the comparability the be that from at this both impact impacted as quarter sequential going and of as revenue assets. are by this pre for comparisons [XX:XX:XX] terms this dollars. beginning hundred valuation share slide. As to the sixty year, pre-tax thousand of quarter, point per me, January for revenue year since financial nine this will a show standpoint. mentioned dollars or second quarter of one, to XXXX. close shareholders diluted for adjustment excuse net seventy-one nonoperating mentioned merger Also I'd closed like us less nine XX Dan XX other information excluding third highlights metrics as earlier, the the with the of to merger the As five point quarter cents mentioned, you pre quarter to seven XXXX netting seventy-one provision, not First, XX, the well MSR was pre-tax the of common quarter the quarter per share, slides and were one cents than to point for that net per all income, Texas and reported two of also or items Accordingly, compared the percentage common third the remind sixty XX which provision, earlier, slide, diluted the did and subsequent operating average the a immaterial diluted also million record cents to available net he of seventy on in for million twenty MSR, million share we a of

boost level revenue is Given we not really mortgage the by will thus to provided our forward that probably do going this improving as of be far it's that will metric real anticipate sustainable. in reasonable be mortgage challenge, a expect XXXX, this revenue

book In addition, net the quarter increased including and the second percent our XXXX. third of to compared point interest business, year, six by point XXXX each revenue compared increased fourth quarter some five three the by our percent provides seasonality. quarter one In other insurance headwinds to of

and in the with asset of earning has year ability dropped portfolio shift continue to employ demand XX lack and the XX from our mix third program, deploy outside resulting quarter, We our grow from net our to And down deposits in PPP loan to an interest our them liquidity, percent income. ago. securities coupled the to of helped excess a deposit ratio percent loan see

does interest it put margin. pressure However, on

interest really mix declined points of you quarter moment. six the from our quarter second yields, the credible of three X.X difficult to the rates, the was will cost. five consider balance to on margin percent percent yields a has changes quarter that on lot total discuss for deposit four by of continued from When two parts. XXXX. point four to basis rate of and for quarter improvement a of year. pressure three addition in a quarter PTP considerable cost, lot second from the our second asset our total loan net of the But In Our seven point in deposits the for already somewhat excluding for moving sheet percent. a of three impact points XX percent environment, pressure excluding the yield, to three [XX:XX:XX] The a basis PPA, full declined declined forty more margin, offset cost Chris deposit point

provision quarter the second detail can to revenue a moment. Before the the see twenty earnings, mentioned days quarter twenty of XXXXXX Chris, earlier Dan a a that on to provision we can provision that move the and compared we non-interest we in for expense, XX of of on million the for had of on a a you impact in provision XXXX. for for credit twenty third quarter more of quality had

revenue But volatility to team following Nine continues seven point discuss four point If of had production streams, business can one five outstanding of million record for the million slide a the our twenty the the quarter. mortgage of servicing third revenue non-interest nine turn the three to quarter Again, quarter more of Chris quarter, driver billion see Our moment. total was. dynamics quarters. in second you XXXX. for of to be quarter. XXXX mortgage million and point across these six [XX:XX:XX] compared second and the point the in ninety revenue largest revenue quarter totals for the to five was non-interest the mortgage a another detail for seventy

to line here and service XXXX. for presents noninterest shown merger each five the point one we excludes third again improvement significantly quarter the and are hundred million quarter considering items back that the insurance not one to five other expense, book hundred notice are million, hundred expectations and see expense cars million remind revenue did our some charged four a as [XX:XX:XX] they of third revenue sixty one two for which related fifty of items. was worth noting. lower and of in million that detail as to hundred There while levels, of our sixty We the one Total when with second point expense point trends. within to point interest You'll you quarter, six hundred pre second and of for six typical third also a as for seasonal for renewal twenty line a certainly would we are result nine twenty of the fourth pandemic two I in believe expenses six expect cycle twenty fifty XXXX. million of five Slide quarter and fifty point revenue couple and be business. look and seasonal quarter was always, we quarter, and of and items operating the hundred the quarter five items, onetime other for five million compared the of one compared which a fifty that

reached pay all, producer sequential point quarter million seasonally salaries declined and commission including is of three number our a insurance portion the well and benefits of this a of as on fire First basis. nine This of result agency. on lower limits being our decline a employees, factors, payouts as

had accrual at rate has both perspective. reversal a balances outcome small one our provide notice credit and a and one some aren't had matter concludes saw also review we in positive activities? litigation business expense. foreclosed gain. legal that can a development expense financials. obviously on an Those property necessarily You'll run our Chris, property large color items That of from sustainable now We on

Chris Bagley

[XX:XX:XX] part quarter. several Mississippi stand deposit great Missouri, hill geographic total cost our declined some to deposit Those quarter to cost to We four you, Belt, for to funding west points deposit our We quarter. of second XXth in third the quarter three generated additional have twenty past acquired from five point an as see twenty percent annualized mix and everyone. grown as the eleven organically growth and second forty Texas XX a our from totals. from September XXX billion, these and John. percent point as country of Alabama we teams we the one nine deposits from basis believe reported million And the growth of on repo basis mid the this or compared Slide Deposits the Good quarter of runway have From and Pine program central PBP our well customer and twenty Texas or repos loan liquidity Thank over Starting to a areas points year. quarter point divisions the Kudos perspective. deposits. from improve divisions. include had [XX:XX:XX] standpoint, we out of still seven, nineteen, you'll organic five a on the in growth morning, of deposits continue for our quarter, our basis. from exclude

one in For those XX example, today point and CDs at And billion for we over cost that the of time currently have were other range. products average deposits X.X the pricing an percent one point are in quarter. four basis

Slide quarter the to XXth the third has nineteen. Dan and twenty loan portfolio been compared September challenging. our see eight, twenty second loan mentioned of twenty you'll of to Moving demand quarter

loans completion million program, total the for to the Following of third PX declined quarter. the XXX

a win hold to environment. ability flat the of economic as current the to have this We in our portfolio close light

shared When below compete two amount and sheets is many seeing largest term those pipeline opportunities, at nominal to total. you of of and at percent While pipeline borrowers been our the simply at have percent not Texas we despite opportunities bank generating total in XX have pipeline, of willing still the with our rates. opportunities, are almost we look decline activity rates

the bank, relationships we to mentioned one detail. loans these thousand more over northeast that opportunity loans come. were to five tremendous lot three Houston, growth the loans as with on a this and projected believe And mentioned three of Slide billion. information mentioned, this customers communities Our completed [XX:XX:XX] third slide yield fifteen for briefly portfolio. as and programs provided program benefit time the new. the to or experienced and develop I'd we one will Texas us new to good of thousand in Arkansas if like had of deepen in I this originated in and quarter. the roughly the nine a they years we serve spend Dan the Texas, isn't covers point divisions just But Dallas, most for don't on

as Now vendor from rather it two the three projected and complete as estimated these have yield point fifty to loans And that initially doesn't this on to we than include percent updated program. SBA the of the invoices, program estimate the the closer other well settlements prepayments we impact forgiveness quarter. at final end percent Again, is the lumpiness moving timing of the five the of create will yield second [XX:XX:XX] the which forward. in two

have the this percent of XX account under actually we We XX for process which forgiveness The a Finally, forgiveness few submitted forward applications of XX the funds under SBA forgiveness loans out balance. SBA, of sixty to are total recently that to and loans started approved a and received the thousand, percent six applications point of the this bank. process speak. loan begun totaling received Treasury on the the move the we I'd We actively mentioned those, XX threshold has on million. originated, Of statistics like to nine the been announced the we as point simplified and enforce process. is by been the SBA when dollar have threshold and in by to approving

recovery we credit for can for quarter. provision to million XX quarter. our provision credit considering recorded Moving lengthened losses necessitated we this cover environment. quarter and use the process XX, holding in metrics the We modeling Lautz that of credit highlights period the for up a forecast has for forecasted are some economic our the been Otherwise, quality Slide well, a

XXX the at actively a seven of our to eight low the pandemic ratio remained coverage charge quarter, the one continue percent, basis point that net the seven excluding quarter we've for of first the million high point of dollars one charge been or at low the with net point percent good four at our continue on allowance as are [XX:XX:XX] We'll for increased have XX. four of loans mentioned from credits are quarter. million these and which points, our offs of and monitor we've combined shown Our portfolio back the percent portfolio. with Eighty of bars and of XXth. Those one me number We zero as but earlier September three in small PPY and identified loans the a loan Dan end of are only. was point credits six to result risk the at segments provisioning identified borrowers work interest faring. hotel total totaled most the converted million Slide to eight a deferrals concentrated as how barometer in essentially of to the portfolio, excuse hotel, that's

to have gas the removed last these information. granular as as may risk relative the on and given XX we to past provided versions medical won't provide the in information and deck time noticed us calls portfolios, provide performing at additional the well we higher but disclosures. high more from we You of not this a we're this with oil view that of amount the concern spent investor loans these, to the Slide XX spend significance last risk an combined slides Currently, in I want the didn't This quite discussing and deferral. presenting updated our to updated that time time. we are time of quarter portfolios filed well of these

be provide XX, who insurance each to five it, desire offering. at of mortgage our you a through Slide look the quarter results tables those for on look on product For and

million production six banking loans operation thirty mortgage seven another to servicing producing a contributing quarter, Our twenty impressive in record revenue. quarter, and nine the hundred million setting for seven point mortgage following quarter had

full the at quarter market commission eight point sixty thirty decline reify team while thirty totaling margins a quarter. we Although that's three levels million, see end five elevated unprecedent one generally twenty our contributed a volume quarter, insurance Our heading or strong, point you will compared to that the percent declined of XXX is one quarter. decline quarter. one hundred feel second of This coming that the way was million is we slightly see the point money purchase in second on into total not still twenty process are the the second the which work living capacity the the to million sustainable. activity. quarter held the to quite continue to continue The for level third total and seasonally margin [XX:XX:XX] long fourth quarter, nineteen. remain From compared lower, million to volume for continues sixty to for at the five of term elevated it's to the million lower and two revenue our for of margins and quarter eight perspective, thirty The compared twenty the pipeline

quarter the the each typically mentioned we year. As to quarter same we benchmarked in prior

team. annual in pleased We Given our on our seen recently customer believe expertise the Insurance is Jasmine very will that Baton two construction revenue we and our percent revenue. book we Sanders and well this This a will cycles, we well be would like acquisition the welcome our our about in they in agency base. four activities current to skills practice the and as in have that growth of leverage area Rouge. may with Agency family. This space. at our generated in basis. excited business professional Sanders we're Sanders expertise the And renewal the to liability, their to transaction perspective again financial which with We comparable Vieth can not regarding mesh We're team's with seasonality in construction from as Alexandrine very of million quarter announcement specializes material approximately as really and bring team their the a

remarks. concluding some for Dan, you, to over back it turn Now,

Dan Rollins

Chris. Appreciate all [XX:XX:XX] Thanks. Thanks, that.

financial probably that realize front sustainable mortgage are we and headwinds long continued strong and after We to the quarter not have us. produced we term. won't that report the revenue of immune quarter, is be that industry to volume twenty in for twenty the we performance While economic in

who experienced a are of as financial this may through administrators nature managers as our pandemic, and stressed of customers life of while credit be the assist monitoring addition, working result financial working our passes, more appropriately and to and In managing customers this time relationship quality environment. our credit diligently economic time the prolonged and difficulties there difficult

budgeting to find on work one have to strategic plan our more to twenty performance. reminded in process, financial that continue have order twenty we to our we ways we constantly team be As our efficient and maintain

work We toward our structure locations opening and continue branch growth or through locations either closing areas to branches underperforming are have optimizing other new that while high in close proximity.

During five twenty closed the actually XX twenty, this and either we've have during will year, or we've That opened locations. end new year. identified before the locations closed be of

Many quarters. that economic sheet our through any team confident and challenging. next of capital we're are approximately couple We'd the early people process, have We continue reduction earnings this as our grooming These be process full organization, industry succession a a our see through our the the part through number who of been all is strategic of of of year the efficiency the answer of monitor and just operator. outlook layers that process, happy could or FTE for staff balance net XXXX. in who also our working later we we teammates that to are retire headcount to questions. already strength XX we've opportunities replacements this today. while proud either of teammates through work have to I'm examples actively and a over decided few cycle of identified adequate have on the these we planning to a I'm this expect Through of planning

Operator

[XX:XX:XX] Thank you.

answer We on touchtone a phone. session one will then you to ask question begin your now may the and press question, star,

withdraw handset Press please to pressing question your and up one a If the before to limit star, then you're pick please please. yourself using keys your up. question, follow to speakerphone, one

Good come pause you the If will our question you this queue Group. everyone. roster. our at good have assemble the We'll re-enter from Brett time. And ahead. Hovde momentarily of first go morning, to further Please Rabatin Hey, may morning. questions, question

Brett Rabatin

efficiency curious, ratio on opening. congrats the I'm And below your getting mentioned [XX:XX:XX] First, XX. you

You of five going close to open by you're XX year. end the and the

that rural continue network. to into that third continue few you've locations, realize just but about million for with Is XX less XXXX? I of maybe a can branch the the a deposits. you that will network than talk in about know, And You quite XXXX? there's a got plan

Dan Rollins

[XX:XX:XX] the Yeah, for years. last several we've continued to do that

much think than several different years. in So last the I that don't is that XXXX

for to continue look we where can. to consolidate opportunities We

You're exactly bank of communities in only a those can lots That's have to efficient office small locations They're where right. a community We're to what be run those in never communities. grow one true we way. size. significant in going We just very is.

where don't I So reduce see locations have to And That's had the take count. some we it reduce what branch altogether. would as vacating those of markets to success. those margin, the

where of we the learned we in with locations. many as we're locations we've needed more some those thought don't And of of markets the need we some that lessons that we've multiple through this pandemic decided that locations, is

there down you're So continue talking don't think about count. us whittle numbers. is to I on to opportunity our for significant branch any

to we've funding big be we order in opportunities that capital as able have the higher the that will funding those I growth use metropolitan low high continue opened in markets look in into to moved again, to we've in markets. have So, continue expand for cost in to growth to markets, that we think branches the we

it six, looks down this be year. will low-cost like net So

I think down XX. last were and year NetNet to we

you game. I play to So, think and know, that will try continue we

Brett Rabatin

for gets about you portfolio hope here margin, look like terms purchases the the the of floor did at can have a you it you [XX:XX:XX] a now and to Okay, some securities in talk core maybe to maybe follow in as looks up, it point, margin. what know, you

Dan Rollins

I'll find to five you that. I securities [XX:XX:XX] We on for yielded Sure, able over don't we them. let think in were percent. were John. guys that Or And looking Will securities, jump

what So with did that do money? we

John Copeland

has margin have excess to to the does to [XX:XX:XX] putting as the margin portfolio basis the that pressure, XXX obviously, if the over the guess, So, the cash dropped margin XX range. it XXX I eroded, points. only investing continue it So we drop in everyone core the dilute use basis and Well, points. work that somewhat quarters last, the quarter does that three over on that interest seven as average [XX:XX:XX] current phrase I The last been that and tend can and to has

billion do we personally have rolling guess most months, a in six the at reached year, point and may am new two recent I margin optimistic of and two bottom Loans They're the fifty we and off a like close four to So next in are the four maybe at numbers. repricing. I sixty we've do fixed a kind gosh, loans three. that got rate new because the feel loans next half, to and loans over we variable XX about new the have

So in that the about of a opportunistic repricing. some not that. There's much drop

course, prevent years, the around ability XXXX, lot XX. to what on of fourth the point or cost do margin [XX:XX:XX] basis look historically, the with declines guess that I the It lowest depend for we've end the XX point. been over and cost hold costs the Of those last the significant if maybe we up the deposit can several total does being costs basis deposit points you a quarter of is points XX first deposit the quarter at low. about of was were talking at low

still some basis If then. different in years the year. I you go costs environment yields peaked. interest a reach couple of a those little Core bottom second room push in quarter we back A of about that, bit points. last did loan peaked interestingly they But Gosh, loan. rate of deposit it twenty excluding accretion back have one before believe do down. to

two. the You only to speak five to

that and So XXX not month below that's for the far a this peak. had we

I'm loans have at about portfolio, good a rate two we plus, And optimistic of a a X.X rate Flor's. six million portion as And portfolio point I'm six billion floating variable point Flor's. of there our sorry, we eight well. of are rate, and billion, the So billion do billion X.X six billion then at have of that

us protection, gives that too. So little bit a

quick. optimistic that pretty should off the I'm So level margin

Dan Rollins

Thanks, you? help [XX:XX:XX] That Brett.

Brett Rabatin

calling. [XX:XX:XX] That Thanks was great. for

Dan Rollins

[XX:XX:XX] All your right. much. Thanks Appreciate interest.

Operator

Please Markets. ahead. go Arfstrom will Jon question with next [XX:XX:XX] from Our Capital RBC come

Dan Rollins

[XX:XX:XX] Hey, morning. good Jon,

Jon Arfstrom

Question of could any bit quarter recovery. on provision extending the want good a us you then think I the wonder changes Hey, talked provision drivers? the the that duration to the you of fourth [XX:XX:XX] talk about morning. on magnitude how if little about about and you

Dan Rollins

a [XX:XX:XX] I'd one know the have deep magnitude that, out. that I'd to to of I Yeah, of on that have dig whole figure color don't lot to the data I into have

charge I twenty-two two, points numbers, when I net of basis what us. And today. early just But look think our still four look the And I time and to you But mean, like to know, at showing in that see after that's the offs chink thought closer what be think. of and twenty you forward twenty, going be continues quarter. drag on I we in kind that's to are We we out in that the were as know, you one happening could it's forecasters the you. any twenty, questions. second you the think, twenty out we XX don't game. into armor

manage the portfolio making Everyone us allows a which hospitality, is converted deferral. some know, know regular are of for borrowers know payment, year. of we're we're out payment we we in in allowance think credit of But well, our into a the again, forecast losses looking we interest the today. that less I don't that percent little there you do is bit because have of way, reserved I down or like forward think will know what know our You for even that provision of we by But type, there. great good I others shape. issues be have to an end to some on the payment back don't than We most feel though else in to well easy the only. at a I one a converting answer that monthly we're

Jon Arfstrom

at the or a view, your it [XX:XX:XX] near to things an another kind view, way I of we're of point From peak of reserves. this feels that in way they ask if is are. like Is from guess fair? stay point economic

Dan Rollins

Absolutely. [XX:XX:XX]

I to yeah, down think if that that you go want path.

the of end suspect not is would the today, duration and the have further to would get and know, this forecast this The the much further a had provision that has then quarter the at where see deteriorated is I economic in economic if So, the extended data worse quarter. would reverse or in the than duration you we further, hasn't we numbers than gone lower we if stays fourth saying of appears So year out the true it it that, be quarter.

Jon Arfstrom

[XX:XX:XX] Okay, that's fair. lot. Thanks a

Dan Rollins

your Jon. [XX:XX:XX] Appreciate Thank you, interest.

Operator

[XX:XX:XX] will KBW. from Mealor go with Our Catherine come question next ahead. Please

Dan Rollins

Catherine. morning, hear to Good morning. from Good Good you. Thanks. [XX:XX:XX]

Catherine Mealor

accrual want way in how John, kind quantify for within know the of the to John, of Is reversal a mentioned can you going time credits Oreo. a much personnel I next expenses mentioned legal good personnel back one expenses to run so just get couple circle rate just into and quarter? any And we a there was you line and to the line [XX:XX:XX]

John Copeland

think and [XX:XX:XX] I benefits mentioned I in don't accrual line. the salary reversal

Dan Rollins

that's good Catherine. [XX:XX:XX] I a think number,

couple things of So were we a there. doing

the you You late in FICA the some pick know, benefit year up taxes. of off

line forward and tax go I down But it obviously in a number. as was number to was, went good XQ, think the further the our XQ and you. know, you we'll the So, rest down in of

Catherine Mealor

so. [XX:XX:XX] be day of in big on mortgage expense the aware going one. Ok, within great, to And and swings what's any any

Dan Rollins

that our in that just has you No, folks hours, a producer. same that out the an increase had the those to Obviously, [XX:XX:XX] time. cost some the work harder report so as is when them the to which use flat, in we But to net additional mortgage, basically capacity the don't work. taken know is cost expenses surprisingly, seen we some the headcount longer other loans basically through the those of some augmented commission we've are I fixed know, by been margin out But on moving you. have into working of stayed with And cost producing people there. bit and already for is to that report you take the we little know, it's

run So up. big I any don't see

up to that. and for folks salary into certain a question. fall seen We certainly people There regular to willing types basis We're job trying is those for some hire and mortgage on your back seeing folks. pay have to market salary would competition in the

our we've in parts And some some of in footprint seen and jobs. escalation parts of some so some our salary

Catherine Mealor

tiebacks, I one mean, And the Ok, then [XX:XX:XX] great. better. seemed the credit of outlook on traffic just

think were core strong When earnings be you Your quarter. will you really the buyback? this do comfortable reengaging with

Dan Rollins

discussion [XX:XX:XX] we great meet that And again question. And of certainly next. to directors a intend when we board with our that's have

the credit the and I way. our may that intend to would good would seeing we like is, and just know, a we're the to just figure in a future But or still when every know that bring. you. I bottom change, Capitol market want on don't in think up that, for to pretty I quick do jump from today. But where shape out to of perspective I it us. feel stays what make sure active keep think so program said, We're not time buyback that. you trying there's a have hope to any we today. back We worry answer don't I I I safe. available speak we're think issues still you numbers the do we're like personally

Catherine Mealor

quarter. so [XX:XX:XX] sense. great Thanks makes It much,

Dan Rollins

you, Thank Catherine. [XX:XX:XX]

Operator

will please go Fitzsimmons have from [XX:XX:XX] our come press ahead. question Again, if a D.A. Please you star, Kevin next one, then Davidson. question, with

Kevin Fitzsimmons

morning, [XX:XX:XX] everyone. good Hey,

Dan Rollins

[XX:XX:XX] Good morning, Kevin.

Kevin Fitzsimmons

compare subject getting of interest just to this But deferral? the three they've eleven looking million that's amount where at dollar not point maybe on we're going probably the I but and you percent we see contrast like hundred one point been I'm converted temporarily that slide can then in XX, of deferrals, and the loans the only. I to starting kind utter next low quarter, Dan, [XX:XX:XX] the to word, guess with we're this gotten. of sense how even

the apart of this terms? new balance to going according deferral. just paying, report are be larger this of is maybe original or And but a and this some that to So amount is a kind would is separate from is not of subset guys you this loans

Dan Rollins

question. [XX:XX:XX] that's Yeah, that's great a so

if deferral, You that off deferral payment would know, we just and something that we you, to have that now deferrals we that show payment and interest on come only folks are to be been a take appropriate from making an these it to a payment. were normal converted only they've didn't reporting think

that And So So, determine to what talk we do, still million needs because what base the piece. it's ten. hospitality XX of with to kind we're what working as in those their we're So, XX Kevin, big of we customer are. today through hundred that is know, chunk with the of you tried a and working know, of than our customers, this, higher And actually when is you

months, to that put forward. So, you let's hotels making make normally scheduled are all, and let [XX:XX:XX] those interest normal of year the that on. get will an we the for the payment any better look those instead working said, And with So payments. be be come of next know, out And point, would not where back PMI payment six cycle let's you payment just on borrowers, only nine at at things have you next recovered or and middle into hopefully

felt further be idea to So all. it not the payments payment. to customer a payments of better at We have just some borrower had used make kind deferred any and making we the to those like could have was continue

hospitality of know, today you as think when of to back, percent the that a pages quadrant our the are I couple were occupancy know, a numbers less hotels occupancy at they that page, ago. look you that in page XX you of the are quarter XX, than zero

there's flow flowing clearly, So, in. So some cash

And the us. on automatically turn on. it's so back Turn by goal will that back summertime. set would way up they're it by them on to payments the only, continuing putting And next make interest the today, be obviously to

months just we the into amortizing note when payments we've done making you're know, of six to stop you only interest So, normal followed here payments. is say are. deferral, the make you to we've modified What whatever go going by now

mind, my those add I in So would together. two numbers

you're only our have we've deferral. when a you're converted percent total seven point what credits, been done portfolio total we and and three one now at how we've these in portfolio looking looking So at handled that the point percent has of to as interest

onto out made pandemic. you a change to no are any subset had is that add of there some percent of bigger? there has way. book to our your want or one of because question other business it in this are know, was, of Chris, there And others total, you in So something the

Chris Bagley

know not And it's little banks the put And know, the be. the what time, economic like universe. back that banks [XX:XX:XX] large. of impact would a Armageddon. exactly be would That's you know. just didn't initially was us of most subset, Most so None activity at bit a deferral

the approach process. flexible So we deferment to know, a process you a, was took deferment payments. But no that

many deferrals We worked answers. willingness interest only And and so, the at it are helped better one We're need to to these were philosophy hospitalities remember, certain a guaranteed And at us. you on in able the through it's booked. virtually were out amortizing so of we doing that to payment, of customary impacted, capacity round was it loans to them information way. challenging. normal most move hotel started supporting the some files. that home And of know, more be them all were apparent the document are living fine. able some Found as pay customers more and and our collecting so measured became became segments second And to back that their

You know, both reach commitment the project. I of think a on us level

projects. the of they're how and indication occupancy look So off the I bit both that the and of But with I little and impacted. they've that's And agree would come I support think guarantors willingness doing investors to their portfolio of that's a that's a at the a also numbers improved as good the kind capacity Dan. deferment. those as interestingly, that's combination

Dan Rollins

way. that different So saying a [XX:XX:XX]

made The total in forward a had picked we the percent total XX almost to go is of on comparison some total the it basis. XX know, or some You book. has to some deferrals out book. today five percent, change modification percent One twenty that plus percent as at or change

know, at You know, the CRT. we've put when out been look following, you So, you subsets the on that we slide

on not We well. side our CRT performed front. frankly, book. very restaurant little the issues on that having very have We're impact has virtually any And

been my that, full restaurant won't of have not to been me into while I talked know, You footprint have the footprint, inside. our to across out. we as and been some I taken go time line, has every eat And to been in certainly our because I've our let wife every I've somewhere personally do folks takeout across

So, at of least good. know, the we're we're you seeing and the back come pretty well. world part our So feeling restaurants [XX:XX:XX]

percolate when line, Slide in know, whatever these, look that for is the your you I So, back accommodation back the than all economic portfolio retail or book. the up the no is through normal at you of probably cycles to of going services hotel. different CRT up XX that the An stress think question, just out loan in what's the personally all food rest the percolates of of

about. So, pretty you the know, we're I'm accommodation and and rest book very focused hotels feeling good those on

Kevin Fitzsimmons

that on only? lot that are. from that subject, how So, internal looking change [XX:XX:XX] That's does So, at change get just so how translate both classification other in in sense your So deferrals the that is banks these into of together accommodations And and that helpful, same How us interest really Bankston. looking we of that words, does a process? like externally to

being made. on a using the point that starting notice we're we're went of deferral don't loans, Act relying are they quarter have the little They're substandard word I this really increase. Carers the the these downgrade and know, up but at where other loans now that to You seen a bit of provision some less. accommodations And

some there an been of All effort to. right. maybe there effort only, is kind has been but to not interest to tied made, this So movement

for these classify today. like things what look they internally Let's

Dan Rollins

of and pandemic, which our [XX:XX:XX] Graig, a of we Yeah. pass the a grade. beginning restaurants is hotels watch all Remember, at moved the into

we're them looking pass the grade. through you is which said, process, our credits, Chris So showing there then that to downgrade we would and at shape. capacity in know, when you is to that borrower willingness watch, indicate a movement moved the the into make a lowest normal know, as any know, And big good when when not be would we're to you that you know, pay, us reason And, to the these credit.

some that in have the the to substandard is Chris, hand, flow willing there to support or not credits. other and the the some you're into Up concern cash for and there's of your elbows. project know is borrower credits the On we middle or sponsor transitioned moved that us. if not are into I the

Chris Bagley

Dan mentioned frequency [XX:XX:XX] that moving as us what for it intensity and of watch increases it monitoring. to the the does

I XX managers with admin the credit lending when the by days relationship basis at what's our So then the hotel. team. we're restaurant, looking credit with But and every

your they we some so get there, them point own credits circumstances. well mean, think taken. of And and what is is from their some the think I see through loans unique I and and downgraded that, I individual migration see upgraded get watch But you'll you'll once work as

Dan Rollins

a [XX:XX:XX] about Right. You're XXX they they total little getting are hotel loans. day. are tell you, talked every talking And let over me about

John Copeland

it the of lot a is information. So accumulating most [XX:XX:XX] about current and relevant

on we the information You or to in helping feeling. to annual we're forward, go evenings statements. parking information look up to we've lot drive operating us appropriately seeing you just update getting know, basis. the even and, and to relationship having as and, what and an it's you at intense know, managers credit by most migrated you that's our see of know, the occupancy kind grade what more And know, financial financial So is [XX:XX:XX] quarterly date generated requests

Kevin Fitzsimmons

much so thanks guys, for the great Ok, you. [XX:XX:XX] Thank color.

Dan Rollins

Kevin. [XX:XX:XX] Thank you,

Operator

go will Miss Truist Jennifer from Demba Securities. question next Our ahead. [XX:XX:XX] come with Please

Brandon King

is this King Hey, Virginia. Brandon [XX:XX:XX] off

Dan Rollins

Jenny. like sound don't You [XX:XX:XX]

Brandon King

How [XX:XX:XX] are doing? you guys Good, good.

Dan Rollins

Good. [XX:XX:XX]

Brandon King

[XX:XX:XX] Good.

that be want fourth you on going gain point I well, had like XXXX. more sharp normalized incremental as drop a a as trend to as I volumes high or also percent. an high towards Are know will very touch will around pretty decline sale two the So quarter it obviously wanted which quarter margins on to expecting, And this and where were and I into get to your mortgage, was expectations far was level? nine into

Dan Rollins

see you're when can you that pipeline. Yeah, looking [XX:XX:XX] at our

Where So back again. page we there page? flip that It's is XX.

when So, coming what's through looking you're at the you know, system.

million nine one million the XX down end was hundred of from the at million at dollars, was ninety pipeline which the quarter our of hundred last twenty the six six quarter. So and and the end

that indicate, So mortgages on XX, XX, process. you know, would are these day turn a XX

that with, comparing coming the quarter we we're still reduced over the a going good to certainly XXX have know, to production it pipeline, fourth fairly dollars would to my into if the be quarter past. see some million in So quarter, when in volume expectation but we're you you're ought

Brandon King

that increase banks be [XX:XX:XX] announced conversations it also Ok, touch is last week. I and have on there deal and been in want in interest seeing? increase What you immunity, big acquired? tissue to are or seen you Has an in an

Dan Rollins

Has any months that our the you're ago? that in talked or since anything's we fashion. [XX:XX:XX] weeks is over last form not changed that quarter quarter know, the changed in last referencing are the You a in that footprint or transaction

the in general the guys, of and that there call, each interested. us just talking know, So conversations and I It's conversations, way. And certainly that don't pain talking know, you're when don't footprint, the you're doing. from to in about banker, all more as us any we ago know It think months that talking the impacts points So, level situation, this gets all cycles, you of partner situation this going bank, all you're conversation we're you to all you said banker, decreased. you from same But bankers or things still they the most to to three differences how to doing experiencing want are you the to, do other we're in exact each to has potentially on other is. there's the footprint just know, leads that credit are bank pandemic to each unique. and to and And other. because know my about, the have lead talking It's more what than are could what know, And talking career, you around on. up? you increased I all

Brandon King

[XX:XX:XX] so guys. Ok, thanks much,

Dan Rollins

you. Thank [XX:XX:XX]

Operator

Stephens. go [XX:XX:XX] with come Our ahead. will next from Olney question Please Matt

Matt Olney

guys. Hey, both That guys Morning. addressed Morning, thanks. questions. you have my [XX:XX:XX]

ago. the was on up deal few insurance to small announced wanted follow that a weeks the Just

remind how two Just bank us is, insurance the the strategy and together. these organic M&A, complements different us growth the what So, how segments also just Thanks. and and insurance remind work

Dan Rollins

[XX:XX:XX] Ok, I'll take off on that.

a That's us. is great jump our for is a team really is McKnight our runs team. Chris strong our he team of Mark in. on. operation Let So, insurance insurance CEO and Chris team

folks where being able that expertise in forward of a up and also to have That's of partners, that that expand looking can producer of organization a that them. more give breadth that? the been footprint partner expand product little able more case. our happened what and historically bigger is and somebody provide to have mix provide want customers you onto across spread agencies the are in tag And We their little chance are this footprint. care part looking with some partnership with to a here an can small an take to the find to of we utilize be product we This rest they and then to a bit. should Chris, to

Chris Bagley

with professional construction in their well Louisiana. our especially underwriting just industry, coverage, Yeah, liability look expertise around fits there [XX:XX:XX] in

you agency, said the a. They it turn from is over not hard number, So know, a the mentioned leadership years, you insurance with it's us. very obviously. know, He a Dan's to important It's nice big the the really especially add in here on. last, Dan's comments, worked

insurance think working these facilities. not same of as same a we You made And through us agency our ticket for together, that's happened in both transition to within so one know, that individual segments. independent the operate there's into try closer they to synergize, going the with we're or agents business able guys and bank. a our producers we've because years. back now larger bringing all put so don't we've positive, forth. desk a of across synergies agencies and are three into the I new not going the worked that's very together And know. been pull of and But number synergy footprint benefits. four now over you last think, great hard insurance footprint. But been large job and pulling they're I the fortunate, create And We're progress type referring, forth at them processors time, know, to many doing across and direction, the as the not and you good bank employee work in and accounts Pennsy our back That's small

Matt Olney

on what think securities [XX:XX:XX] question, purchases. Brett's perhaps you the Okay, of yields? and the to the far go question portfolio just missed been apologize, I'm been highlight pretty but more there? for active want was and you've buying I that's do back I Penny as to looking as duration you then previous yields great, and and duration recent And this Can I

Dan Rollins

Penny jump buy assets a to percent five on that for John has of John, of any to you [XX:XX:XX] months. want earning us. that we're able duration bit, not under to been have but little in a find But those trying six

So what are you doing?

John Copeland

the XX percent. We're [XX:XX:XX] on going percent. going months. back at We've So, to in off one they're two off next come roll got about, I And to at think, a billion

So pretty impressive.

difficult. very tough, It's it's think. I

we between debt. In five subordinated We in have have some four bank range. percent invested and recently four the

Dan Rollins

the are The rates [XX:XX:XX] rates, ugly.

This me this teams football Let is you that help the and understand. at can year that in struggling. like looking put is Oklahoma something you Texas

We we are short years. are four saying are we saying staying three to

Matt Olney

growth [XX:XX:XX] overall migrating remains around percent In at see XX now size, think terms our anemic if XX, the it is now? as the loan insecurities. Do of are I you that higher of we're assets

Dan Rollins

a on I growth. dependent [XX:XX:XX] deposit think that's

up that deposit discussion there's money stick of And the or Deposits going is an reason duration So, is ballooned another still in flowed have of lot for a there's you with that the a around seeing there. some lot still that begin bleed there's that going That's year. sure in. is short that way? know, as to out as whole is this money industry to to making unknown that out questions money growth around the

going So, significant then portfolio to with because you is to continue the in be grow grow it think know, to going if our I continue difficult grow, to it's security loan way. deposits any book to

on in territory at you. eight of couple quarter. by for we we by right were it And footprint break loans percent in and very growing particular the is or focused once a again, grew team growing Our the again, Texas states had out that in quarter.

some need that sure So, you the make know, our we parts have parts the to we're just footprint. to in of protecting the of ability other We grow footprint.

Matt Olney

[XX:XX:XX] Got it.

guys. Okay. That's all for me. Thanks,

Dan Rollins

Thank [XX:XX:XX] All right. you, Matt.

Operator

[XX:XX:XX] Our Capital next with question go Please will come from Markets. RBC Jon Aastrom ahead.

Dan Rollins

[XX:XX:XX] Well, John.

Jon Arfstrom

Mr. [XX:XX:XX]

open. is line Your

you just you know, customer path service to yet. get Sorry some kind John, about starting the back, you there like and not back to come looks But were two but about that, ones, charges deposit to, Astrum quick of where fully talked you do think pandemic? of what the that the fees pre

Dan Rollins

pages, [XX:XX:XX] know. He's flipping you

of is take multiple pieces the back, come big so, you and a card just that it, there's at me know, of volume piece a all has but volume the not overall Let economy way. stab

our think So, that. then people to deposit, flush cash. more again, people to these help of And you've moving normal get I got around than some with jungle they just are

John Copeland

charges. down there's of just the that use and balances they cards down have or up, to that no, account pulling that there Now, volume credit cards is pushes and also that deposit some don't our normal debit which so average the [XX:XX:XX]

a down with when up quarter, quarter over, don't fully I'm this I to down sorry, from on So quarter percent back XX our XX it. we're schedule year. the over That's or last five forecast. lot time come percent XX. Depends economic down, that's but says down going we're twenty know

Dan Rollins

back [XX:XX:XX] we when I as some to have a think can soon vaccine extent in that come we everyone. for lot a put it as

John Copeland

back. good and back you're because just way can I a up, on that, I'm give you if it's an [XX:XX:XX] saying don't way its We answer it's to know.

that's yeah, right. Okay,

Jon Arfstrom

make sure I on saying. you're the to what then Yeah, insurance [XX:XX:XX] I want business, And understand just okay.

in than business You're more saying to changed typical it seasonality, but the really nothing's make typical.

saw flat You just quarter. kind we year past like of of saying year, kind up this over

Dan Rollins

[XX:XX:XX] Yeah.

a low So quarter low remember, us. or fourth quarter for is watermark always

off. QX trail for So, should So

place two and year nineteen look what did would rules back been for I So last I we in we almost in at guess in revenue the years. implemented for that recognition or

the spreads part expect lumpiness up won get the everybody But hang in mix more we that you to business of is of to of quarter, the when have kind environment it we've new with team business there. actually can. would last of the The So, just book some and recorded that year. customers, customers but that just first the like continue Building in difficult out. typically out a revenue with and I So it's new nice in can't out

Jon Arfstrom

the [XX:XX:XX] Okay. Thanks for help. right. All

Dan Rollins

Thank [XX:XX:XX] you, Appreciate Jon. it.

Operator

session, [XX:XX:XX] sir. for go Please Rollins back turn remarks. This conference question I closing the Dan ahead, and would over any concludes to to answer our like

Dan Rollins

all for today. joining [XX:XX:XX] us All very right. you much Thank

don't information forward for further to to to The additional speaking any hesitate very attending much reach again all need Thank look out disconnect. [XX:XX:XX] participating. you Otherwise, or today's you If now we'll Thank please is with soon. have may concluded. us. presentation, conference for you you you questions, now

Cadence Bank (CADE) 20 Oct 202020 Q3 Earnings call transcript