Origin Bancorp (OBK) 27 Jan 222021 Q4 Earnings call transcript

Company Profile

Participants

Chris Reigelman	Head of Investor Relations
Drake Mills	Chairman, President and Chief Executive Officer
Lance Hall	President and Chief Executive Officer of Origin Bank
Jim Crotwell	Chief Risk Officer
Stephen Brolly	Chief Financial Officer
Matt Olney	Stephens
Bradley Milsaps	Piper Sandler
Brady Gailey	KBW
Kevin Fitzsimmons	DA Davidson
William Wallace	Raymond James

Call transcript

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Operator

00:02 Good morning, everyone, and welcome to the Origin Bancorp, Inc's Fourth Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Please also note, today's event is being recorded. I'd Reigelman, turn Head time, over conference this Chris to of At like the to call XX:XX Investor Relations. ahead. go please Sir,

Chris Reigelman

to filed made Harbor are SEC release I'm press the and yesterday. by with joined earnings Origin our this have. Crotwell; XX:XX CEO in Chief Statements the to XX:XX Now, forward-looking comments All earnings regarding I'll subject you Chairman, presentation, presentation statements the release and Mills; includes Officer, please presentation X morning Financial may Please X our www.origin.bank. Statement slide Bank, that you Drake. issued which thank on note, release. our President the Safe XX:XX our available this of our Officer, Harbor of will non-GAAP Good Please CEO, Hall; President of Bancorp's presentation. us with those and available you will morning, note, is Steve our be XX:XX We the page of measures. refer call today's the along over Jim of we presentation, today. during at slide Harbor joining of which we Brolly; Origin for Officer, Preston Risk is any during and Drake financial our presentation Slide Safe use phone, address and our website we afternoon, you our Statements Safe questions Chief Credit on also refer yesterday joining press on to website Chief After slide the a our that Lance Banking Moore. happy are copy For call earnings to and turn slide by to available

Drake Mills

XX:XX Chris, and good Thank you, morning.

and have year, quarter company. our and with results as full am back accomplished what the past we I pleased the a on Looking

on our purposeful is planning Moving how value. through execute and we focused process creating into XXXX, sustainable we that in are long-term deliberate

deposits. places XXXX, XX:XX XX% success we bankers that's X.X% X.X% we saw more felt Again, the full us We what pleased his for save year-over-year. our detail confident our I'm and regarding an to with of diluted $X.X $XXX finished in loans December excluding delivered. how the $X.X with quarter had of single-digit to strength ability high I'm growth in operating in million XX:XX organic year. relationships. per PPP take steal loans will but mortgage deposit year position little mention of can leverage. Lance annualized. as that I You billion fourth we in As growth, $X.X a that we warehouse loan and in XX:XX we begin assets, positive provide a showed billion total we a our ended impressive Our see PPP which thunder and is and XXXX. advantage of billion quarter-over-quarter, and want record and exactly mortgage growth, out growth the Looking Lance, million the I'll of deposit We in backing at but or warehouse, and deliver for bankers increase results quarter $X.XX with statement, share. continue our to $XX.X income earnings of core our deliver proud the income growth, or net our quarter an loan strong

net or million the our had on ratio record efficiency income net and $XXX.X of $X.XX full Our diluted per earnings tax basis, we was XX.XX%. interest X.XX% year, margin equivalent For was share. a XX:XX

pre-provision up XX% was year-over-year. $XXX for Our pre-tax million XXXX, earnings

for that team company. of front slight non-interest efficiency in even improved our presentation. this and continues be Our is XXXX will management XX:XX expense, which the with ratio center Our increases through later efficiency strategy go Steve in in primary to the

infrastructure that revenue on mindful Slide be As evident see market, we people streams. and can has management, in you our X. expense This of in Texas investments on produce which investment we always the stronger will focused in are been the

million rate respectively. This of Our annual and the at Texas we've incredible to DFW over our our way $XXX bankers bankers lift-out with five legacy XX%, teams. loans growth XXXX. as grown XX:XX our deposits We've you XX% last compound well When Houston had deposits teams and and success grew in years, the produce. in applies a as grew $XXX loans in look at million

talented We infrastructure Now, bankers to to pursue turn I'll it XX:XX continue in will market. our aggressively and our Lance. most leverage the over

Lance Hall

have XX:XX organic the dynamic meaningful us years. have On had portfolio, can Drake. all has from the throughout and Origin people. quarter that with for We compound Thanks, you the being warehouse high-quality We've had Slide our having PPP off XX, has attracted high-quality and last strategic selection. client XX% success markets. mortgage I'm bankers produced. will XX.X%, always have of focus This who our of directly right been the see and the we growth our been proud of loan over to and as We a results philosophy purposeful XX:XX another loan experience bankers and our pay continue relationships excluding client strong and annual continue advisors. of certainly on five trusted growth rate of and to growth comes over

quarter, C&D, growth as XX% loans the outstanding of time deferred our the for production appropriately C&I, with which loan X.X%. PPP of specifically In of compared PPP owner in we XX:XX million on annual warehouse end we $X impact at an X.X% excluding net you the initial remaining. the year. quarters, of of held for as pandemic. deliver loans delivered million owner loan $XXX.X bankers growth CRE investment clients business Drake the our have the program quarter to fourth in and compound of on annualized to $XXX.X basis. the five is prior pleased the of spoken PPP with I'm X.X% grew we bragged show PPP detail linked XX:XX or were rate XX% during dissect, million we've a occupied of XXXX, excluding and use our in to a year and also we As look occupied that able core for need fees At growth to how

to an of can We balance Slide XX, of the you our deposit those overview see On of recognize in XX:XX fees the first-half XXXX. expect trends.

total will of clearly In deposits by $X.XX billion continue the deposits. now We remain relationship. XX:XX emphasize center to the how with at Core will significance focus value our an growth a our deposit cost quarter, of bankers. on relationship of to core bearing of compared non-interest non-interest of of deposits deposits XX% points decreased million Origin have truly to we XX:XX value high-level leveraging our place over and or continue technology linked environment, Regardless $XXX and increased the loyal of a we non-interest that average In XXXX, took total basis $XXX XX.X%. for while average our XX.X%. quarter, deposits place focus year-over-year. company. growing bankers responded fourth drive This on bearing high-level to the Origin, deposits increase Year-over-year philosophy understands At saw deposits. million or average by bearing core and represent of a we XX the average the of growing place

focus and robotics new other a initiatives, our partnerships vision along is metrics. long-term what turn quality in our processes. During the sustainability. many over to of This credit critical believe technology experience our XX:XX client our the I'll statement to and enhancing we major increased through Jim on of a we and year, the to with component launched past is with integrated Now, website, creating it FinTechs, go

Jim Crotwell

XX:XX Thanks, Lance.

investments our XX, Past year due the held held from total loans reported ended reduction our credit loans investment of held with for loans total the the X.XX%, see investment our Classified be loans losses QX. to a can our be review consistent allowance at at in points investment to on to quality of from X.XX%, throughout as continued also remained XXXX. in evidenced held resiliency to $XX.X came of to to QX, the you Slide for held improve for which at portfolio, percentage on held throughout continues from basis level relationship as decreased continues as average driven loans continue been year. on loans net classified and is held loans Based investment to reduction overall net million Lastly, as and is banking. a to reflecting these loans investment XX% As loans of million, X.XX% levels focus investment the XX:XX for for for for Non-performing a charge-offs well net PPP year-end, X XX:XX stability of extremely as PPP for X.XX%. net our XX:XX pleased a quarter reduced quarter reduction down we loans. annualized ago. credit by stable stable of metrics, by ongoing portfolio, $X.X quarter-end PPP for with our also the which of our We

of investment, All-in-all, As their represented Steve. and the economic forecast. of shortages the very was improving as and chain variant said, on to investment reserve continued and PPP mortgage over supply of stability well X.XX% our continue with decrease loans pressures, of X.XX% keep and in continue overall as loans our Omicron we loans. for driven turn With performance are a XX:XX XXXX, its on warehouse net and I'll impact close XX:XX well and held improving the it as that economic eye reserve year-end disruptions, held inflationary as for of potential by conditions, labor credit now the pleased impact. we to portfolio. The potential quality

Stephen Brolly

Slide start XX:XX on I'll Thanks, XX. Jim.

Our loan QX, investment total for the which PPP forgiveness. yields X impact on points includes loans basis held in increased of

basis Excluding shows points yield investment PPP see XX as loans quarter, basis total loan the cost continued right the graph the for bottom right points a decrease our the our XX:XX held in the of XXXX. for On our quarter. on was from fourth you'll the deposits variable of and our cost decrease decreased loans, composition. impact graph, quarter XX% in of XX:XX fixed representing Top funds, X

loans an interest XX% Origin. rates As asset for be of will bank approximately sensitive our increased with beneficial floating,

XX December generate our month approximate an basis expect of rate incremental their loans Prime index interest our X.X% interest will and of XX:XX increase Prime With no basis have floor We income XX% and one At rate. month million from rate points floor shift below no interest XXX an LIBOR interest net $XX XXXX, XX, index one or in of parallel loans have rate. interest LIBOR XX% only in rates. interest to point below their

increase XX our quarter X With basis trends The shows decreased percentage our total X.X%. graph NIM. NIM XXX net left income and point of interest recent to shows that trends. of income XX:XX the the Slide on and

income million increase. $X.X a net Our increased interest X% representing quarter-over-quarter

income to increased increase to third our $XX compared a the quarter, securities quarter producer, banking quarter revenue million quarter. our which balance the top fourth largest securities a the income, on increasing made added from quarter table $XX.X loans Mortgage believe on yielding interest non-interest net impact million. net The income, of million the XXXX. revenues shows the mortgage Excluding having XQ graph improved from the that $XXX,XXX. third XXXX. X.X% net the income and the to The in Slide interest impact other the with the shows PPP to our our the is our from million negative fourth to income, the top contributing and The PPP real loan our component details the increased income changes investment million investment due graph the this net contributing fourth components and net IPO Insurance sheet a is compared and quarter-over-quarter. to distribution. commission of full prior the XX latter increased We our improve and income shows right that mortgage revenue new will $X.X clarity graph warehouse, We was interest XX:XX to of which revenue or fourth of NIM C&I quarterly $X.X lower fee Every XX:XX left right. with bottom over since quarter 'XX growth XX:XX purchase estate part securities quarter. 'XX warehouse lines. X% on interest $X.X quarter to change XX:XX X% in in in to is left to continue third and top excluding bottom quarter. seasonal XQ The of non-interest give

non-interest the XX:XX our value acquisition completed total gain. million of The the growth require an During of main due our quarter, primarily the reported of driver increase $XX.X quarter. insurance accrual we XX% produced fourth this $X.X in $XXX,XXX additional to expense analysis, to the rules third us XX, expense compared Slide agency. to original of million, investment remaining accounting fair and production. fair million incentive of was non-interest we an XX% The that increase loan the Lincoln $X.X value the

focus We I'll efficiencies, and turn continue Drake. operating on graph growth ratio bottom and efficiency support represents leverage quarterly XX:XX the to to Now, it our over our trend.

Drake Mills

Thanks, Steve. XX:XX

strong us December, continue our I that having close capital position successfully to our capital. were on building growth, Those Our would fourth mentioned on has while supported slight impact last in the acquisitions a quarter. in finalized valuable insurance partnerships. we end-market two allowing organic call partnerships

the our drive significantly culture, remain what will is we a advantage. They will and Banker America. of and organic being The delivered to growth, Best unwavering attracted beneficial plan the the employees the consistently XX:XX innovative their the dreams. market, grow we dislocation We value. strong approach Texas loyalty expense to Origin produced with structure, for Magazine in managed power was I and of in in as do. of is reinforced are be a to recognized XX:XX XXXX. Third our Bank I year vision was a committed on our us in franchise. market long-term continue ways and this people our bankers, maintain our We accomplished on year our credit we be they Origin take executed effectively in and believe competitive We and what This which technology For proud disciplined combine our American took quality market, stated, from and told would company. am Work deploying advisors strategic trusted great connecting in in to strong have advantage our highly-talented capital to XXXX we others to continues to opportunistic strong separates of unique by shareholders by an position, XX:XX build as and, to that by

Our vision is in focus. clearly

drive you highly-talented continue intentional call We be a story. for us for to to best-in-class questions. bankers and strategic of are about culture award-winning XX:XX part an vision the it a and being and today, to up to Thank growth the following who build we'll want open attract on

Operator

today your session. Please go from [Operator Ladies the Instruction] Matt XX:XX gentlemen, at from and this Our first begin question Olney time we'll Stephens. question-and-answer with question. comes ahead

Matt Olney

morning, XX:XX Thanks. everybody. Good

Drake Mills

XX:XX Matt. Good morning,

Matt Olney

could PPP on think the you or rates loan growth, XX:XX it's far more the else as and XXXX, mortgage I of growth then with as as do driver more you utilization warehouse. loan growth what to you warehouse? type that when want paydowns speak and colors in see fourth to And loan And great or start of robust look and notable I you quarter? driver? to the growth is expect mortgage if ex-PPP anything into the take Any out the the

Lance Hall

pay Lance. of be and great. on conversations continues the loan to is at was is with in allows going company, us we if So so come the confident continue an (ph) quarter XX that we about Presidents, deck, are at going X just and were loan teams. time pipelines came growing model going $XXX confident out we're for our very built to Texas, management the growth, started to have you that off. year. the We we and next Dallas XX:XX QX about single-digit built and the that pleased Texas XX% and Slides culture we felt very is was continue to our morning, XXX% geographic get all think traditionally Matt. million came organization driver the way last walked Worth from Good forward year which a to grow in the XX:XX double-digit On a Hey, [incent] like the quarter the in and really almost fourth growth as see into to growth third markets this to lift-out pipeline and kind high we feel that Houston that of that for to Texas to Yeah. We in to and us, the slide basis, fruition. I I Fort those XX:XX that that's equating our investments with of year, huge we look loan we

Matt Olney

on XX:XX So back at combined get way layer in to the along growth look if markets, level do other high with I Is that single-digit plus the it? a that we Lance, XX% in basis? Texas a to fair

Lance Hall

we double-digit XX% $XXX utilization which that from this really, would that was XX% is growth. great QX of Matt, see that year. perspective, in levels. good say fact also get next we mean, us our think It quarter to in I historic in just XX:XX loan a to to was C&I drive was growth. a from we in We this million XX% we budgeting growth majority budget equated back drive I really C&I, overall we're utilization, business. about where went can see loan into area. Yeah. The It for to like which the continuing and vast line

Matt Olney

Just some for would that into roll growth hear on great, love And on expectations That's your in how shape same side, in deposit you thoughts the anything the then seasonal fourth fourth quarter, growth and numbers be to Okay. XX:XX XXXX. deposit trying also really then could the to deposit strong growth Lance. quarter as pit is? sticky thing,

Lance Hall

markets to the get and funds NIBs growth, million our year here we in then that you've work to also goal, through that chart incent business. we get to now. our seen perspective, some we've million we I will got year-over-year over few to the to of in see on itself North the a portfolio tax those had stated XX% core end continued the gotten the bankers seasonal of Louisiana public ramp have a NIB dollars But up up always you in do as growth have XX:XX We think that portfolio, we've of was XX% quarter book distributed. $XXX see that we've From XX:XX though through at and there and out deposit core NIB $XXX and on back dollars years our specifically continue last slight

to and do continuing put got loan this deposit So opportunity in liquidity strive we've to feel like we something loan that ratio a at now great we are and portfolio. we're point to XX% work to to that down to our

Matt Olney

XX:XX Thanks, then the just And Lance. the moving few on fee in fourth lastly Okay. pieces there side, were quarter.

out first two more fair you Can those as but as integrate quarter insurance think benefit to some Thanks. from called for a guessing of value income closing first we these a think for spot about into the us should we the in us the I or get you I'm gain, you quarter December. look point deals landing different items? all to range from

Drake Mills

talking about about talking you're just fees, total XX:XX insurance. not And you're

Matt Olney

Correct. XX:XX

Drake Mills

XX:XX Go ahead, Steve.

Stephen Brolly

a X% going could that's million expect be you to so $XX mortgage other be numbers. to we that, see, we else. XX:XX XX:XX in than about $XX expect increase everything increase fees year, XXXX. low single-digit Insurance to about about this because start million Other going that larger to subset all the and I'm is just for insurance with little and bit to

swap really piece really And of think, partnership increase volatile. don't but normally a $X fees, won't budget we is limited thinking year, very rates last we probably a that million income, that then swap kind the if fees flat, but maybe Now increase.

Matt Olney

it. Got XX:XX

Okay. Thank you, guys.

Drake Mills

XX:XX Matt. you, Thank

Operator

me? ladies conference hear is XX:XX and this Are gentlemen, the to able operator. And you

Drake Mills

XX:XX clear now. us? hear We loud you can and How

Operator

Q&A. having do you for were the technical hear loud apologize control clear. I can issue. a that. I have We I and XX:XX of

So Piper today comes from please our Brad next Sandler. from Milsaps Sir, question ahead. go

Bradley Milsaps

morning, guys. good Hey, XX:XX

Drake Mills

Good XX:XX morning, Brad.

Bradley Milsaps

years for a expenses couple inflation. nice taking with, of my expense really lid keeping discussion be Thanks questions. last cost. tight a the May done, pretty to XX:XX job about guys Lot of of one start you

companies guys You consolidation of well. got coming know a as growth the are expenses those you've company, insurance from I in

kind Steve, maybe XXXX? in of And of jumping-off plans how curious point to just well? that expenses you a hiring if give your for So good relates us kind as

Drake Mills

growth coming to inflation we a very million and We're about through about our that with the production. the got production million team, the the look things dealing X.X%, a are we've XX:XX To the Yeah, rate, that's increase in -- this and but at point a another tremendous fourth budget $X.XX I’m pressure the increase of the a fact on of quarter. about majority number of starting And insurance simple, and of the with, expense in pleased bank. XX:XX with after what make going X.X% in pleased core million fact bank. just let's the at spent as And quarter you a amount came a and use wage wage that were core out agency, There the paying and opportunities let's time. of back looking we're we $XXX.X that $XX.X is Brad. as for run a company see for X.X% add is quarter. If increase that's a for say

highly on at come say fourth X.X% though So, increase into even you the I and would pretty the that X.XX% put core a that's quarter, in banks to just And we as productive going good bit non-producers into of a a feel third year. might expense look X.X% the that effect. was with at starting that that good

some we're production, very being seeing hold pleased we're going expenses things. that in. and good to getting come we're on to We're able where operating So with

Brad Milsaps

Drake. Thanks, XX:XX

close. annualize add insurance So if quarter, get the me kind of I I another fourth that plus maybe that understand, X% to should companies pretty the if

Drake Mills

a it’s -- help I'm math run a $XX In say I'll my everything going baked million And probably add little in. with to Yeah. bit. XX:XX rate

Brad Milsaps

in at thought alter have assumed you And Very it. all? rate have sensitivity better. quarter helpful. you beta, last guys you a XX% your XX% still but that you that assumption table? interest that Got Or you table Do Steve, could think said I that XX:XX about deposit do

Stephen Brolly

is after the the XX:XX system have a the We XX% bit. little really points by we basis all point alter increase. we in did Hey, did Brad. XX it XX XXX increment. That and a liquidity first With that zero, really right basis now,

average, our is normal XX%, that's on So under it about points and averaging XXX XXX XX%. over and basis basis to points it’s an

going bit be of increase. little basis a first lag there's to the a in So XXX point

Brad Milsaps

XX:XX you. And Okay. question Thank That's then very final -- helpful.

Drake Mills

to XX% is add way their modeling little really I'll with different about model beta. model XX XX:XX that, the zero is I'm my from it, a basis points, I'm sorry.

Brad Milsaps

Great. question XX:XX maybe picture then, And of a Okay, okay. Drake, final one. just bigger kind

was, your where talked ago, I to your think it to kind was your other this Texas, X. of a Bank being goal and and profitability Mississippi get call closer over of are, Texas to the that ROA. time sub-X on year about regions up you regions kind closer about double of Louisiana

a kind made to Texas could of update And terms of be in of be line kind organization? able the rest now on profitability us up of Just from bringing curious, where the you might you in in progress year of the there the you XXXX? with

Drake Mills

today ago XX:XX for Worth Houston. we're and years we're Dallas, was in Texas Mississippi. this later in on ago Texas, Yeah. when We've actually year XX XXXX the Louisiana for we call. this in minute preparing and went thinking we significantly Nova, XX large Texas XXXX, and in into I years were into been Fort a mid-point about

would to operating we little back IPO, that I'm focused are We're additional And talked on the $X to top going but over positive this top and of nicely. very about I starting many infrastructure, billion as here, time able if So institution, XX:XX leverage. I've infrastructure billion of we'd be to basically on of ramping assets extremely up -- the to the it sell overlay sorry is spend investment. see, very where be times a $X that we little ROA laid

what in do see strong if And a XX:XX probably this, and the is pretty And you but and the Houston, shouldn't I to at you a in by I at them bit -- little look ramp to if the you DFW this Dallas, XXX so, starting of that So to ROAs we're Houston end give if expect approaching year, there. market. the at XXX look if X% not year. be I we're looking of at range then up end

Brad Milsaps

you Okay, much. XX:XX great. Thank very

Operator

and question. ladies Gailey next from gentlemen, And XX:XX our KBW. ahead Please your go comes question Brady from with

Brady Gailey

Hey, Good XX:XX morning, guys. thanks.

Drake Mills

XX:XXGood morning, Brady.

Brady Gailey

linked end in look quarter, bond the at long you of kind billion. gets up balances the I about When kind flat curve know as end was $X.X higher? of a any But potential XX:XX I thinking of book at the growth how balances book the average period 'XX caught are in bond quarter. little

Stephen Brolly

rates modeled XX:XX end excess have just with do may XX% timing. little growth So, deposits. the in to the come should little If able has We Brady, end we we be than were did but have XX:XX had the a we end a to XXX XX% less quarter looking bit than first the a the about public loan the out. grow model the that fourth less at about comes bit the mentioned cash know the XXX. they And at the Now XXX, now is and bit little XXX, funds that X%, XX%, higher, December, with investments really be at of it we a are right of of Lance but yield. at -- seeing as we're with

more. a to So we bit will little start add

is million off XX $XX month. run a normal between -- Our about and $XX

where project at loan flow growth. need may add and month on cash the more we we to depends that add the then So on just of and we each least

Brady Gailey

right. And looking XX:XX All then --

Drake Mills

Brady, this want Drake, add to Yeah. to is XX:XX I that.

relationships be truly us I grow manage expense a core I side liquidity our think what cliff think standpoint on slower we are in as look any and as able far at to a position very to increases. the from a continue at to rate good deposit deposits is and

loan portfolio, are we to run might have deposits luxury. deposit to We down don't the model So also costs we what to lower have higher that slightly we changed going we long-term this we are relationships, the that in mindful have our run XX:XX look to we as at past. overall compared done somewhat as be a ratio while that see

that factors and all able think as be right we are are that. way these the going to very some maybe sure we do in So to on to put work liquidity deploy make I to margin we are focused that

Brady Gailey

we And XX:XX that now lower 'XX? to but $XXX warehouse, know shrinkage? are do warehouse from? moving normalize seasonally a kind continued into is to to about continue million in you think next about a weak XQ Okay. grow How possibly right. some do the you the Or, I the how $XXX about mortgage thinking of at quarter, out good washed All year? think fourth Is base you million. to it see that then quarter,

Drake Mills

want it's Well, I outstandings. that, XX% strategy ago of call mortgage to years to and warehouse investors to XX:XX the to was XX% X to run our grow our and on it remind everyone

So if you looked year-over-year and XXXX that between was growth, XXXX. at XX% average balance

we so, slight million in that XX%, is have And to think and $XXX that at and able increases we close will to going number that. are that be that run XX%, to

the pleased we’ve even to and are, still we we looking on and are that hit will boarding on -- but with we manage We plan in are to range. going overall, pleased I where exactly to XX% have ended we am up at that, continue clients where XX% do target. this

flat to are we increase slight going So that potentially, that. but I $XXX at million would probably say see

Brady Gailey

of that's XX% Very loans And assets? or XX:XX a XX%, percent to then the as Drake, clear.

Drake Mills

XX:XX Loans

Brady Gailey

Loans. XX:XX

side? insurance feels then like think to All less any Okay. the couple putting insurance great right. likely. to Are in? fee like the where growth acquisitions. could other would be Are income-based of insurance you businesses with add it's you're M&A want the with bank you you you there see or It that you on would be to interested be finally, And

income-based So the I'm just still in wondering all? if you fee cards is M&A for

Drake Mills

XX:XX Absolutely. It’s -- I there is some this business. insurance like opportunity,

fee aspect, and We a that's are Texas that as fill an lay growing the income, there, And the fee going we like I think our drive of think XX%-XX% speak We're important and think going prime we're creating where us that continue spread some split between this and is some as footprint. our opportunity need. to relationships it income that to feel we income. valuation because I in look at we for relationships thing that's it's to create I to

Brady Gailey

right. Great, guys. All XX:XX Thanks,

Operator

question. question Kevin next go with And ahead our your Fitzsimmons XX:XX from DA Please from comes Davidson.

Kevin Fitzsimmons

good morning, XX:XX Hey, everyone.

Drake Mills

morning, Kevin. Good XX:XX

Kevin Fitzsimmons

on Drake, Brady's question. just to follow XX:XX last

something the I in might market look something you traditional going possibly in of the prospect new for you've that I new why sitting be believe you interested of ask So, is that similar into mentioned with deals. the in. But even past being getting have to a terms was in front you Texas organic of in bank growth

So out I M&A? you fast how that bank want rule give about feel out you to or so to to and jump chance traditional didn't rule the it

Drake Mills

our XX:XX could find to position very what but wouldn't for. after fill that production that growth that's looking continue for to culture doing, wouldn't XX all a I be we're we're creating us out, to trigger but disciplined of to partnerships off, rule good in truly, I in hopefully let's the we benefit luxury, to and me. pull to say. footprint disciplined in allow that's allowing it's to bring truly something and if out, everything rule us of It and markets, years what on on first that Well, and do the XX:XX And staying is we us institution, our stay gaps think organic be is and in. in So, be This a markets shareholders something. it's allows our partnerships I approach, that building within but same else, going focused going going we're that

Kevin Fitzsimmons

Thank of one and the follow-on bottom look effective first that a the fair the to start between running the asset and and be margin just balance position. more PPP trajectory? to at as it for if the the moving shift the then quarter percentage going all rates parts quarter, over second sensitivity that fees great. rising to have than Is But heavier and in margin. fees PPP then that's quarter the appreciate say in mix offset running year? all a and think shift way the And I of maybe then then is off, off, margin then might then Okay, to from we on rates, tailwinds you. XX:XX positive mix

Drake Mills

new is own here as fact that standpoint our our with asset important point that, The love out bringing are feel I in. we're Board there position upside. aren't relationships and is there you XX:XX I are that we've and think think fresh the own from I a production that's people price-sensitive, if territory. just [indiscernible] that And fair. sensitive our we margin bottomed

of bullish will [indiscernible] environment we we've see without flat a So somewhat and that bottomed I'm pretty

Kevin Fitzsimmons

the find is big a used deposits, an don't Yeah. for earlier about and one interesting that from we I industry could mentioned about XX:XX Thanks, think thing Drake. we a priority, increases staying declining. and from have standpoint with excess on cash, your but -- up actually this deposits do hear few lot industry in because that, as industry flushed focus just so these And you the because, so and keeping now a deposits having we're to cash, wake you quarters because

asset an then that pivot it earning liquid base. is been we're but some so driven to margin, loan opposite in where the have maybe be maybe killed, NII has the that the might by percentage don't getting margin getting banks asset we the lift pivots earning percentage And average where growth pressured you assets, growth have on from and but

So I'm about your the industry? just curious about thoughts

Drake Mills

long-term deposits, long-term opening core never Yeah. building years something twice that we incent -- here XX:XX and off I I've and I and is of And a that mentioned here. for value, my relationships something deposit up again me, preach, XX lid comments been have and in that

loan that is we loan going organizations a to core will it's flush because through care creates engine -- and of all deposits. going. we'll value same deposit This much have think build we I then value the will engine time, us. how like have sudden liquidity to liquidity long-term that growth, get growth going I have and for are and don't really We what the will all

Kevin Fitzsimmons

Drake. hear. great That's to Thanks, XX:XX

Operator

Wallace with question your William Our comes from next question. XX:XX [Operator Instructions] from ahead Raymond James. Please go

William Wallace

Thanks. Guys. morning, XX:XX Good

Drake Mills

XX:XX morning, Good Wallace.

William Wallace

following NII saying deposit think you're growth. I and X% Kevin's Steve matched XXX then by was, Just heard believe I what up questions. And be environment. growth when it loan modeling increase expected up was to I XX:XX

you to of deployment of off. with the that liquidity is there it running liquidity funds are assume is still So have assumption that that like even looks some no excess --

have So NII correctly? cash I if I be would to saying assuming it, hearing X% up environment. upside that that you that Am and excess and then you deploy decided to Am correctly? XXX the I'm

Drake Mills

little deposits, we part, to -- of the focus loan because matching than on deposit maximize ago, margin we we and year, a Because can most going that For you yield, growth. several think see solely you if XX:XX a bit brokered this take are had we're don't stance growth other different deposit years things. We growth position of number a and we that back go had own. remember we in

we have like tremendous I position franchise themselves a in off XX:XX down we're truly on creating We to can before. said focused our we Houston Kevin like before earlier, did for of deposit So we a hats team that's pin focus on basically. deposits in DFW haven't amount that team don't to position broker value. we our are been and where own has, DFW. with now and funding with a And So,

pair can deposits down versus growth. this you that loan and see a X% growth in we double-digit year So to X% might

William Wallace

XX:XX All That's right. Okay. very helpful.

into and having So the portfolio. growth the deposit deploying all less liquidity X% assumes you're loan

Drake Mills

absolutely. Yes, XX:XX

William Wallace

increase XX%. where do go Lance, mentioned quarter And we you were to fourth line need so, from in in XXXX, if budgeted increase in line To you target utilization need your in Okay. pre-COVID? continued to the XX:XX you hit pretty XX% a XX% significant do and where utilization?

Lance Hall

that No, XX:XX we I don't think do.

XX%. at we're So

were is Our XX% pre-COVID. We historic XX%. like number

continued up do year-over-year, If feel year-over-year, benefit, management we be producers production kind would So loan treasury mean, a I’m on that just XX% new going XX% income and XX%. of in based this quarter we had got levels. up a looking we and could production back like back we fee lift line but up got to historic levels. I we XX%,

growth a benefit. can without feel that line would we like So but nice additional utilization, do be the that engine

William Wallace

to actively the and word? always like side? And are guys the now as feel going it is you Okay, you XX:XX to point new at to Or, are where production build the continuing to you lending then know I you Are great. lines the opportunistic opportunistic along maybe just truly try aggressively a be on relates side. hires. best

Lance Hall

always good you're to think I looking that see us XX:XX for going talent.

get from strategy X we're have we're so And closely as in a into capacity stop. close now is the group the same Now through of these as are expectations we done the so the communities. years at existing built going the we've that fees. the in closely like the lift-outs, and much lot we we bank at From loans last $XXX and $XXX Now time, previous versus to monitor normalize, year year. people, we're produced watching that million be dislocation, we I our we the done into higher begins benefit we've turned lift-outs to that producers to those it producers in XX:XX of the able in we've not same talented teams. last going growth time, in had to we which have to we have in mean, feel about $XXX,XXX producers million

Drake Mills

C&I throw want in our line mix XX:XX in Wally, we something that attract to I The is our talent And portfolio desire institution. and grow here. with to

opportunities passed and on a or relationship say, lift-outs teams real that don't So number focused are, estate additional let's fit. just of we've have for that

lifting out mix who on, producers So a we we're and the forward. think desire bringing we're portfolio that we that who long-term produce moving

William Wallace

there's color. headwinds X% in Steve said guys lot a you for a of And I that heard that you believe increase you expected. Thank that then, can mortgage, think you I XX:XX do

quarters expected on talked gain I hires production we've know in think in XX%, I declines sale Speakers] I couple -- a in Can side. you and that believe, we're the us team talking of on ramped pressures up remind volumes XX% give a X% Can how would probably you you [Multiple little mortgage past you growth on mortgage talk about the confidence about that in margins. bit

Drake Mills

in past we is volume impact. are we gain the continuing manage based our think expect And in impact But markets the up flows more the more that to to what much use hedge to And MSR that it that X%. we're on to competition normalization increase hiring but Yeah. traditional than MLOs that mortgage to know this going the effectively pipelines in at and our in in has on that in we by the past. time work will margin, XX:XX that allow going sale intend MSR hedge to I markets -- efficiently the the and understand especially Texas we ramp than

see we upside big a So this in mortgage. year

William Wallace

FinTech you can when you're looking help companies guys you talking it in all how technology of with important the guys systems you the Okay. utilize organization also a are Lance, also over type technology for partnerships kind invested Are you And some side. you about of companies is better talked FinTech important and a how to help efficiency are, how XX:XX philosophical. just about that efficiently And -- lending have operate Or now. and know year I bank we've just to more Great. more kind in right and is relationship? last efficiently? question, offerings technology on partner to more side from banking-as-a-service the and

Lance Hall

thanks. Hi, Yeah. XX:XX

to a I of mean the -- C&O little you the at We've continuing client for more automation, kind which a consumer the if of year both. groups, budget think piece in investments that invest view our this and in commercial while, make, for inside look more bank in of to we I more the it's C&O. bit on of streamlined continue efficiency we're experience. creates the year operations adding for been a it's

departments process into a an the processes FTEs. from have process we've that on where robotics around working manual that interesting other annual and been through the that's to X.XX our reduced automation, and X,XXX far day put continue of man-hours invest We through some group, savings saw so over the in going basis automation data

to through fraud company our going our to through group, year that that. service based some real-time be and able continue surveys. software, mortgage we delivery management, client we our that through work some If text-based with on XX:XX we're drive Doing to data things measure want some detection to this operations. So some

to trying and both equity into And and to company, provide we table as perspective. so also automation most we've this and feedback from can benefit the client then partnered understand with invested a now have continue group FinTech called going that's to push scores. to net us at funds, a what seat a the promoter We've experience instantaneous we're Podium

production. as So we about driving automation, improve company. we're taking that ways can talked on holistic can look driving a in the our therefore we've past, at And that we it's so about focus efficiency,

William Wallace

XX:XX Lance. you, step Thank I That's appreciate. I all out. had, I'll

Drake Mills

XX:XX us appreciate time Hey, your Wally, it. thank this We some you allowing of quarter. for

Operator

your And XX:XX Milsaps from with go question Please Sandler. next Piper follow-up. our a is follow-up from Brad

Brad Milsaps

going of your and recoveries, there, just else kind to just going about in good at points, pretty run XX:XX you clean-up Thank think reserves quickly is charge-offs a want you cycle, Or forward? you've on a that the a to over some some of that's mid-high through have anything last be maybe charge-offs are just think NPAs when level. you. low at which out to of kind done Drake, your or XX may zero guess But credit, I a wanted to having time even curious, touch net I treat wanted excess of on banks levels, [indiscernible] the bank? years I are obviously think couple years but the couple as basis the push related remainder of how areas might last of

Drake Mills

clean-up. a XX:XX necessary bit to No, am reluctant and I say little

before, want moving institution stresses. some us and I've look portfolio and like allowed the a of on we understood forward to what this COVID of really focus lot things do As said to

be legacy did there assets So see our we especially credits of look of But of XX%. are to things But areas, you am Crotwell a deals I going Jim that and up. that rate credit, have to if Jim be do because these lower. to but push about are had are continue some X fit going we assisted proud just take XX%, to and that that's at X.X% the charge-off living sec, think prouder because some Preston pushed be so look and that are were just and I because I teams and past -- the those type And trends, and down mind not some to the profile. if talk some put position they some I some million we almost opportunity growth you're down arena, you their watch about couldn't -- have, don't of why out. what institution, we are deals, XX:XX at our clean-ups you levels $XX And did cleaned we out great credit they've there in and classified credits this the want for when

changes. had we've some So significant

Jim? So

Jim Crotwell

is XX:XX overall The that coming the at the Yes. I’m had Thank year. Drake, classified at X.XX% we pleased you. assets end Dan just of in in metric movement the one been that extremely

You metric. look X.XX%, back a where dramatic year ago at so to we were in a that's decline improvement and that

have year While ongoing have and been all at dues the bankers our of stable, do stable proud X.XX%. basis very, an and the throughout other our past been credit very they what on very metrics very

brought in the to standpoint reserve a reserve continue have non-performings peers we've from that stability the you as I a we XX:XX stable for done been it compared well as positive our and very, see So, the see us. very if to and down, heavy metric very that's we as lifting, resiliency as will, Our portfolio.

be more the in from can't a last earlier, the our years. performed about I to levels economic go toward charge-off pleased how bit little of on the the that I some it have do continued I think we And this year, comments back end XXXX at -- perspective. think there. think direct decline over upon am we will banking. our rate get historical again, of I throughout And a see year, relationship depending say of has enough will I portfolio I this with last we room being see seen forecast, mentioned result but XX:XX decline I have but we how over as all-in-all, as not So the to it's focused a the same two

Drake Mills

deeper about that in process even charging are selection am if client a add this selection that process, have we today client a relates past, And matter that. it credits another Brad, into the we little This something to within surrounded that this at you years relationship back with it's also always organization. poor we will been ago. XX:XX clean-up changed And and selection and it note that I we process. in at issues where has very very you process manager core our talked just And the to serious four look off that been if management look goes are. by selection, pleased back client relationship I

Brad Milsaps

at to that X.X% north need dragging seem, there of XX:XX one to years. and kind look X% of pushing et would It looking up, That's your that's end ROA company about follow-up you thinking expectations, year. comments Dallas of that come three the you if the whether are of do would the X.X% Houston And by this helpful. but aspects Drake. towards both I other organization around got If all may down. just in cetera holding on who pushing Thanks, states consensus for folks have ROA that a to be

two kind entire regions on ROA Just returns the for company. consolidated square to of want levels those those vis-a-vis comments those achieving the of

Drake Mills

look a you EPS, Yeah. if all if to incredible we are XX:XX growth that's there and you you one we look -- at from on and focus the metrics, have perspective, doing. area our incredible us things And continue at our matter ROA to revenue our about that is if metrics to where at is growth for in pre-pre understand this that look what we have be. We and that's

year. for done was a us, the was things. Mortgage certainly it have a we to degree this So drag

We so is have ourselves a very be drag in good less -- let's to there, not say position down.

have done (ph) incredible job we team. just ready an do three the I is things. XX recently what last Derek have standpoint. unbelievable we for an job holding McGee as of think the executive what is overhead side, reducing get to on management I we efficient But he efficient hired XX:XX legal company, over going some have years cross think from Now, an and executive [bps] an other us to We

markets And go higher so those numbers we going those are pushing through -- equate ROAs to 'XX, those numbers as 'XX.

Brad Milsaps

questions. for taking XX:XX the Thanks Okay, great.

Drake Mills

you. Thank Brad. Okay, XX:XX

Operator

to we'll for And over XX:XX conclude question-and-answer remarks. turn and with ladies back I'd today's like that the gentlemen, Drake to floor Mills closing session. any

Drake Mills

I up teams, with, incredible put stakeholders, way a high-level, an our we're had But tremendous thank XX:XX a of tremendous that that we doing things for strong but think a our culture what long-term to an think obstacles the position. do laser-focused in in a we is support our finished creating that going the that's for and hand, you I are the intact, the tremendous this on amount side, of does Well, we're position, in the recognize at people, our you I is company, the appreciate our all we investors, that very value, and us. I that. company same of deal a a amount and investors things think year, XX:XX and it producing company value. are involvement I a to creating I amount undervalued in hope on appreciate other

you to for and support, pretty see quickly. thank hope So, in the you we future your

Operator

conclude do gentlemen, thank today's We conference for XX:XX presentation. you Ladies that, attending and call. with today's we'll

your disconnect You now may lines.

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