Bank OZK (OZK) 20 Jan 232022 Q4 Earnings call transcript

Company Profile

Participants

Jay Staley	Investor Relations
George Gleason	Chairman and Chief Executive Officer
Brandon Hamlin	President
Tim Hicks	Chief Financial Officer
Cindy Wolfe	Chief Operating Officer
Steph Scouten	Piper Sandler
Manan Gosalia	Morgan Stanley
Timur Braziler	Wells Fargo
Catherine Mealor	KBW
Matt Olney	Stephens
Jennifer Demba	Truist
Michael Rose	Raymond James
Brian Martin	Janney Montgomery

Call transcript

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Operator

Good day and thank you for standing by. Welcome to the Bank OZK Fourth Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to today, Jay Staley. Please go ahead.

Jay Staley

morning. Good Staley, Relations Jay for Corporate of OZK. Bank Director am and Investor Development I joining this our in for you Thank call session. our morning question-and-answer participating and

those In filings refer risks actual to statements in earnings by release, factors make projected and we and and that for information our today’s results other on such comments to expectations, various public outlook Please cause our vary more implied or estimates forward-looking statements. future. the management Q&A session, for may from about or outcomes forward-looking may the

the are Officer. Officer; Operating on Hamlin, and and me President; call Gleason, Brandon Chief Wolfe, Joining to take questions CEO; Financial Cindy George your Tim Chief Hicks, Chairman

now up We for will your open line the questions.

remind for queue how Let me our now listeners questions. ask in to to our Victor, operator,

Operator

question Scouten [Operator line from comes Sandler. Piper Instructions] the Your from of first Steph

Your is line open.

Steph Scouten

on Congratulations quarter. guys. morning good a great Hey,

still maybe get slower? today seeing more mean, you are of thinking Are in space? what it than originations, customers just First that it ‘XX. be was of thinking you or we little the ‘XX reason are projects all, or What’s it’s kind you a those overall slowdown? construction how ago trends about will that Is economic XX high were can about days all early I the tabled when think maybe think I saw seeing from you in extremely for relative it I guess X.XX%, we to

George Gleason

will, Good Brandon take morning, Hamlin that question Steve. I Brandon. if you going am let to

Brandon Hamlin

had the morning. quarter, hear great we and this the answer actually question we to Steve same Absolutely, and Yes, is similar. you last from

those we impacting say increases the costs is in. of couple increase, continued hearing evidence velocity seeing flow, coming a deal anecdotal that and although of the have I that on items that cost to hit are would are You

slower it’s rates obviously, not at up but interest But So, slowed still pace. a have down.

new deals. but new the seeing are still pressing we of still piece that against puzzle deals, So,

still the take are competition but bit that signing given that in will We And little a really is probably XXXX. of mean, opportunities. piece a less a – is we pie answer. bit up not new smaller, I

We where or are is. able I light success is quality the are competition good of past, into in And fair given quoting have and and spreads winning. more better the really have of and we in what share competition the said our today deals as getting to had in pushing that less lower leverage the on originate we

Steph Scouten

great. rollover to but Okay, rates a floors become back do starts that? begin your into may the half year, If And I early, this question how think little play interesting. it to be in the of

George Gleason

stays floor we from our Yes, loans rate. near years Stephen, way is, they obviously near originated X that. let before because last we whatever maybe their very origination longer out ago that the rate would rate away are their active. those on loans become those or floor quarter The at the loans, floors, floors at you better Obviously, originated the me works tell for Fed we that of the terminal

the is, we new with the replace stays that Fed far older more peak at roll loans So, origination. the longer are the and those the from time rate whatever or at floor off at that are loans near the of the floor

X, is better year our has our is stay then a for it slows at that increases quarter the for there, Fed scenario stays the their defensive longer. increases The point X more or where and and the for more X floors the rate longer it So and maybe or margin. they rate

Steph Scouten

floors? almost quarter, – the of percentage into kind just previously think about kind loans about from I you charts saying, would you we is improving that showing these fair it? those a roughly could the understand rates to fall that very at of higher is protection just the went – every level, it inverse the how this Is as were George, of and what how like mean I helpful. that’s think but are numbers and of are Yes, high

George Gleason

that those from XXX and or before got The Fed we basis in a had Yes, activated. way big a exactly. And big or points quickly what XXX by we floor year or chunks rate big the loans loans formula raising lot XX issue floors the chunks. rates the lot if time rise at being of two, a rate you above XXX or and think a and back in at was those had above was rates to kept

So we quickly got over those floors.

benefit You of been core in record have spread can achieving. that interest that of and we our net levels the see margin

It’s catch-up that possible quarter have it it seems X? of Is X.XX a spread yes, a core it year. catch the it it up, of Is the past that was another deposit that point we margin So will the when we have true. peak are we see over Fed some core we number Fed significant in we costs. the likewise the quarter is core could Stephen, and this where have that net had is why of that to Is costs rates we And X? X? that’s those and spread. comment But on the It’s the in and we raising those improvement flipside based But spread. the our interest made of a X? net that in the increases, in and QX possible improvement stops interest our like question, going margin will legitimate and is some have as NIM point increases deposit reversal fact see going,

we at will in at deposit of in see QX, we gains even QX beginning but gain of will hit up, peak those QX least. But have lagged erosion NIM core with slower some a I would catch out would a can’t that’s some we questionable. if spread are recent which gain probably eke increases rate we Fed hope in probably in costs, didn’t and So I to incremental QX, small

Steph Scouten

doing Yes. anyway. range, at than Well, to of peaks going better XX% be are the banks NIM X.XX you

we So one back think we that the the that. when about frame at of pressure is because you in how try that, follow-up the with think hardest of anticipate. costs? try that about are the to We thing but rising, you when about kind all, the can just me, are to half do not, deposit to up I when of year half deposit year, guess lag is that to how think are the lagged rates back they on in betas do fine

George Gleason

way is do can it floors to that we doing everything make we the long sure are Well, duration. that up our on thinking not about – a we too put roll the and are deposits

to strong rates we to in much ‘XX coming some the That some was growth were intentional front half to the and book year, that in deposit and least knowing base down going XXXX with added put we and maybe the in saw because that going last at you an increase Now have of to duration XXXX. not duration all in CDs. loan see that probably of volume in weren’t at

and the So still – might are of new duration on those adding beginning are in probably repricing we Fed but deposits are in pulling we think ‘XX and we to shorten early cutting categories likely but ‘XX late the deposits as just to out some the to and that’s doing are. that they get some longer, if ready we a a bid CDs the be timing have mode

Steph Scouten

record appreciate results. Yes, congrats again on all I perfect. Great the and it color, George.

George Gleason

have team nice is. in interest the Thank that expansion lot risk And a really for to way for Cindy managed Officer guys good asset Drew want interest how there, and I Well, and give income all that. have our a out have worked didn’t the done guys side our Chief they a profile our the Stephen. as that interest of liability just Drew manages have net very and happen. we team you, been wholesale Deposit have funding spread, and have net who Harper, to and Stephen. Cindy credit our that Wolfe they our thought strategic we deserves on deposit in and core to Thank a making They what our Ottie that you, adjustments managed margin, well really job Kerley, shout of and Ottie the had rate

Operator

Thank Stanley. Morgan you. Gosalia [Operator Instructions] Our next Manan question comes of from line the of

open. is line Your

Manan Gosalia

Hey, good taking for Thanks questions. morning. my

George Gleason

morning, Manan. Good

Manan Gosalia

Good morning.

So I follow-up wanted of quickly to just on last questioning. the line

the those cities, hear towards with guess that I large the the are Did chunk a the due CDs on XXXX. of of should So mid repricing come cities of new you the to you there? term you end I are putting right for reducing that and fact

George Gleason

out throughout early say would into I they that Manan, ‘XX. ‘XX more laddered and are

ladder. So it’s pretty a well-managed

just so of maturing having we and a distributed everyday on instead manage that maturing We of effectively focus it even and have got can that pieces fairly chunky CDs kept considerable have there. keeping we here big

So well on it’s and throughout diversified day-to-day a ‘XX into basis ‘XX. very

Manan Gosalia

just just given larger are Perfect. your a How think it. portion takes I terms this then of refi to based given peak Got capital maybe And what’s picture high your to how of and big play that best this – how rates. a can on repayments quickly do on go more can And and estimate repayments and Fed market out we markets the before guess, question you move on just conversations based what maybe that push to the seen sponsors year? loans, how in just guess add have open the up financing? you permanent out can I close you

George Gleason

think our XXXX during that achieved Well, said range again, repayments we in that have will and the be we we XXXX. RESG

X% on we getting were a to they this, getting than could excited And markets billion Transactions are $X.XX would billion they rates next are about would longer now to tell a exit think the to comment phenomenon a the that less that as But in loan road number to are on they not XX a could months for have stay will more Brandon are Manan, that. that. there. have if and a that’s get to think wait It to than So seen you your thinking X%, exit. our but are than the in they more little they closed. going capital today they One little months, sponsors that are been today. tend just they a in year or they the to construction more get the if times, I range rates A little they think be done. will at we a longer long-term we rate repayments months want down year. the that, X our be stay if It is and that as is, I loan to response have better they lot ago. tend exit can better are not $X.XX is much likely phenomenon of that expensive past, that going question seen a it one Sponsors get in little

Sometimes on want to road. just do the year sometimes on permanent But this do down Brandon, they you activity in go and that, ‘XX? ready to year are put they bed or the comment refinance next

Brandon Hamlin

Sure. No, you characterized it George. correctly,

I are XX the X, X, a as going will – longer have And go. where extensions, said. of think likely we exactly know term one number much about there rates we you months is of don’t so just to really, those short-term

is said, accelerate. normal place, As repayments still move the as would expect the market a back more rates open. we to to But those George

lot perhaps view than in is year we the average income, But certainly the a little extensions and we those of to there our likely point times, half interest higher make more, they is front more little benefit of half loan will to and and back not year. as earning when long-term get but of an fee be obviously more from assets think we are know the minimum nature. of I

And the will back, capital move markets on. so they come when

Our rates. rates attractive, obviously, long-term as not as are the

George Gleason

equity X is longer. Yes. on longer, longer those books we on a sit It Brandon’s would the positive loans staying return And we our them to XX months – that have greatly very improves emphasize on are months I book on thing. point the view loans

Manan Gosalia

Right.

think be to that I So was my follow-up. going

So NII and assumptions, different I as couple from for there the mean, and NII next you NIM books this scenarios declining. if macro should or in any if But have which on on your continue ramp of to higher and in run up down we to peaks there peak just longer, is quarters decline your it that NIMs there? you helps see is situations to starts – then NII earning even the get move are stays assets the

George Gleason

tell growth driven be would originations that core portfolio be net in will a in in NIM but than loan income by great little I alluded coming it We XXXX XXXX XXXX Manan. comments and compression spread will question, specifically a going to actually that is that good drive becomes increasing NIM and ceases help some interest have in that occurred the in that us loan growth in you where to our growth I continued we diversification that’s is, and the assets. a that handoff average by to management baton offset that got internally our of to have and have drive is XXXX and we that’s in Well, also our XXXX. should headwind, growth quarters, but as prevailing referred in thought earning more see this

income story. So optimistic interest about we are net positive a cautiously

Manan Gosalia

so it. Appreciate much. Thanks

George Gleason

you. Thank

Operator

from you. Thank Wells Braziler Timur line from next the comes Instructions] of question [Operator Fargo. Our

is line open. Your

Timur Braziler

morning. Hi, good

George Gleason

Good morning.

Timur Braziler

on last that of growth could should XXXX slowing are loan expectation Just be what slow? line you funding Is know from scheduled expecting too commentary, standpoint about or how thinking originations? pretty balance that you up much and given a following for sheet the in we that

George Gleason

to Tim, address that? you do want

Tim Hicks

Hi, Tim morning. here. good

for origination the that were that and level in later last kind we’ve loans of fact of loans the funding over given construction to great the of of do these a four extent quarters, six our schedule Given loans. had the volume construction the many in We know phase. funding to those the –

meet on we we that said Page us we gives billion would exceed growth that XXXX achieved And X saw so loan thought XXXX for and the you XXXX. or confidence, in $X.XX – that

we the we lending XXXX business We’ve some asset-based RESG loans other Bank. in our Community got in – visibility of and sequence into So like is good from have and that year. that lot have the profile funding a and for those with the just combination delayed pretty lines of our growth that

Timur Braziler

maybe Brendan. are classes just you slowdown Where classes there Okay. valuation. asset markets Great. the at then either amount asset resiliency looking for national the And seeing conversely, then of any right any that And marked In RESG. are of in geographies now? you, or activity a kind and or kind are seeing follow-up within most of

George Gleason

question. Great you know that. take don’t I if

Tim Hicks

Yes, yes.

us type property diverse see both to what’s interesting, So the to from fairly book geographically be continues we and that coming book, a a perspective.

out, which and past includes talked I Midwest, before, to been a think slower continues has case. be upper it about one that it stands several Chicago, little we’ve the the the quarters and then

that at seeing we’ve basis pretty to looking office look deals than is just where similar we southeast, the would great that. Southeast the as I those leverage so sort south, we’ve coasts origination continues but low But remain coast, good I to our available in but slower a I And historically, a still history, signed those we’ve both on We’re much historically as it up at southwest, frequently really achieve the pre-leasing improving on what the But less opportunities close, on got there. little with doing still the has well. position are say, deals probably when our there, pipeline standard in states seen, you’re of feature, slower to we’re opportunities. but relative be still really mix to on before, seen bit as said a office and

Timur Braziler

charge-offs? provisioning us at in charge-offs And about the coming through for the comments just Okay. maybe proven thinking How uncertainty? for we’re recognizing that made ‘XX we just Great. ‘XX, here as start a looking on year, me, the can talk levels, broader thoughts year. your then record net And last given trajectory was then at looking normalized around

George Gleason

want take you that? do to Tim,

Tim Hicks

look and I X had Sure. we record last over basis charge-off on low. Yes, our had basis Obviously, an XXXX, to which year ‘XX to and ratio, points Figure XXXX. what based uncertainty we obviously, in you to the mean, net in XX XX in would a number X or great XXXX. net that we’ve charge-off basis can that is a is for the on range history, net a charge-off going It’s hard range, and points know all-time know points. be what year in that somewhere X It’s to likely XXXX point on able is lot The with years basis our to there what for XX be of be today. us X be best pandemic the going in guess

into go provisioning, macroeconomic They we became as were did bit lot compared little those scenarios for of to a factors they used X/XX. – that that. obviously, goes get The that. a Moody’s more Moody’s those relates from what adverse into it and factors, to As

you we we’ve SX still and influenced are has SX shift the our saw balance. combined through The Moody’s provision our unfunded weighted last in that so weighting by scenarios. in had quarters us balance And our funded on weightings the and been to growth the slightly, downside although two greatly

the of Moody’s obviously, we through So X-year as those a forward will in funded get level during quarter-to-quarter. unfunded we growth XXXX, projection. scenarios, have the then economic impact of our and provision impact And look we’d obviously, from at

of towards And so get end are at. we’re years looking the are, XXXX, as X the you where ahead that scenarios you of the

there XXXX And uncertainty lot so brings. of of is obviously, a what

may those as so And influence related when well. get that weightings we Moody’s and forecast our more clarity, to to

that from the really move the helps. up both of selection Hopefully, that two of last go ACL you unfunded last to total the into seeing points in and our So in that related of a Obviously, and And had overall commitments our growth the last economic Reflective funded total factors two our we quarters a forecast lot that. of balance. – and basis Moody’s the those. couple both you’re to see did growth quarters.

Timur Braziler

Thank you.

George Gleason

add something comment to And ACL question going comment I’m lower here the been has than a ACL made funded our for has that loans previously. unfunded our a is loans. Tim, there. up for on percentage come

risk moved to ACL not our As that funded percentages – funding or to put does That and lower that move to so you RESG lower of – follow. one up higher we’re of more mix. than XX%ish roughly on those connect, loans percentage exposure as is and the because unfunded have reason is have mean at with they It’s lower funded default low XX lower XX% RESG on unfunded the loss category, loans leverage, a if much the doesn’t a the the of That’s fund funded loans a going our unfunded are associated loans. it. our

the So consumer loans, higher other all stuff the is loans, those loans, has typical marine is ACL mostly loans, allocations the bank for funded part. RV loans community other the and lower that ACL

of So to allocation change way. the really meaningful loan the funded any from movement a unfunded loan that doesn’t in allowance for

think I So I is clarify because I there confusion might some about thought there that. that out

Timur Braziler

Great. Thanks, George.

George Gleason

Thank you.

Operator

you. Thank

of Our Mealor next from line the comes KBW. Catherine from question

Your is line open.

Catherine Mealor

Thanks. Good morning.

George Gleason

Good morning, Catherine.

Catherine Mealor

about talk much you in through of what comments, on projects. these little unfunded, to the of that disclosure like us a walk I how can office gave of think looks wanted your the maybe funded of and versus that some for bit kind portfolio, you I billion newer which leasing management is $X.X

George Gleason

The originate on leasing, Catherine. said, that projects funded And we respect pre-leasing projects to exactly Yes. into versus at when – spec. that I yes, but I’ll we don’t dollars some some that, or know complete. as originate are top that of the we’ve the But of look off with head. the my we when unfunded jump – have

improved book the still Obviously, those we’re are results moving range green as newer in portfolio, said, to positive predominantly leasing. the have continued a we involved momentum putting it. that seeing leasing are the seeing is screen of that on going We is across projects. stuff pre-leasing there And with I forward with on but

the of seeing we portfolio on in slower as we’ve terms lease times, loans others, the have it activity both play numerous thesis, we’re our pleased the than there noted So in the the and we a there. whole, But to portfolio, on that in knocking we are some continue there. we the generally whole, success that park. is some flight-to-quality what across Again, the with out, the see markets in that of out see of out range

Catherine Mealor

just about And the Fed? Great. conversation, your sense the where to as as costs back the near then a to margin reach – where might get towards deposit you talk be us we to can peak to end on work rates funding to coming of quarter the

George Gleason

Cindy?

Cindy Wolfe

cost Yes. of Catherine, this interest-bearing is Cindy. December was on deposits. X.XX%

Catherine Mealor

kind But a – on know on? average in coming is range CD we’re rates CD I new And on markets. different average, your of

Cindy Wolfe

that have don’t market. an information. I I it right, average, don’t depending and have varies on you’re the

Catherine Mealor

Okay.

growing from annualized your that should so that comment, And increase from over George, about then previous basis? fourth Should the of big NII we about you’ve think course NII here. about basis in a back a such Or a – year-over-year because seen your we to on think year. quarter growth the

say But to a quarter’s just see fair ramp So think NII year-over-year just fall, for of to falls is year. and this margin to the increase? annualized just think seen then we’ve as bit could about just rate, margin as the given going a I trying funding compression that at the growth throughout little sure, it obviously, cost happen run peaks from we is,

George Gleason

that take you don’t why Tim, one?

Tim Hicks

obviously, find Catherine. we a really, have the strong year-over-year you’re comparison. Yes, really correct. up Year-over-year, to Yes, potential have

to higher we If or to compared be did just you’re we there quarter income in fourth fourth than in one quarter, net more I it interest comparing quarters will have quarter. the think each which

Catherine Mealor

Great.

very that’s helpful. Okay, you. Alright, thank

Operator

Thank you.

Olney from next question Our Matt comes from Stephens.

open. is line Your

Matt Olney

I’m growth. Good ask ratio. ratio? consider floor from capital CETX curious specifically morning. I few for think further and wanted thanks. you a more CETX down the loan come It’s about you little over what the bit capital quarters the just deployment what the Thanks. to strong about last Hey, the and

George Gleason

Tim?

Tim Hicks

we’ve got asset the a of have capital little we growth power, unfunded, multiple contributed to saw two, a our ability good our we funded where growth as in the growth over and in both risk-weighted over obviously, and and deployments, repurchases. several the Obviously, or quarter, lot quarters. fourth Matt. bit earnings demonstrated which share to quarter had Yes, of We’ve has you last do the last

comfortable where unfunded we’re we as funded the risk-weighted approach are end the thoughts have. of So that decline there see the relief growth is you’ll will side. asset know our we’ve on asset outlined some we I year, that the CETX. likely Obviously, don’t the unfunded which the give us we much that on balance risk-weighted to some on growth,

internal we’ve So some targets CETX. on got

of and we We’re expect ahead of well as ahead those to continue to be the those throughout year. well go

Matt Olney

in going particularly Thank can Tim. us far for that, XQ? as yields core I were And Thanks. Perfect. do then loan Okay. to that the than some any the seeing in potential impressive quarter. I higher I XQ extension discussion, spread think as you appreciate Any in Brandon impressive betas you higher in betas up moved XQ. future, And The of it. the fourth versus loan know see those back quarter? the obviously color in give XQ. mentioned we XXXX. the we’re fees In fourth

George Gleason

to would expectation of Matt, have high. a range a don’t considered minimum was range. that say, low. I It the a It and interest, we the in so QX. for huge fees XXXX. fairly what be wasn’t factor rate wasn’t in normal in we to And have that’s going would of I be particularly think run extension typical was kind It particularly forth

it a dollars in and down to rate I not from on million up typical vary run will going a year we particular the on will a quarter. more any few than quarter-to-quarter, a see that. few margin course have think I but of points big our basis over impact fairly the mean or probably that’s

Matt Olney

the quarter, XQ fees fourth color the other saw if betas stronger George, any in the we it loan on XQ? wasn’t And in versus

George Gleason

floor Everything variable was Fed quickly. was that and was moving essentially off the its

with translates So points loan of up moving rapidly go Obviously, Fed XX XX. to basis XX those into we loan the instead yields will our yields. and less –

definitely loan tied can large the a what yields increasing to there on to is Fed of there extent So is rate – do increases. magnitude we

Matt Olney

in so, Okay. portfolio, be And funding growth flows securities of Will a if ‘XX. curious thinking you this growth? Just year work deposit factor that to down is the the for But size you source about year. be funding that. could kind just and that how of then you this liquidity this disclosed much? growth lastly, expect loan big year? around the cash a if terms going on think of portfolio what from you Clearly, in And

George Gleason

that’s on as Matt, the going assuming with Fed’s opportunities to be likely attractive buy to us what going yield to think out it much as for a purely inverted Fed reinvestment and see is to the what is, would faster priced and yield pivot the there. inverted seems pivot depend into steeply curve, we curve than not there we

of in very the higher be yields now that inversion point, – if a reversal thought sentiment and we So right we’re some buy in the market steep and portfolio seems of pretty much bond is yield But bonds a little to a better entry ahead it buy a itself curve. lot and on the sidelines we the and letting with attractive was get bonds what entry we that were run might off. seems point. would there market If that a

So, we going are sidelined it. not to and we are chase

So, if with gets we portfolio miss smaller in are okay that that we and just that.

Matt Olney

all for congrats me. That’s quarter. on Alright. Thanks the and Okay.

George Gleason

much. so you Thank

Operator

next question. our for moment One

Our Jennifer will the from come Demba Truist. from next question line of

is open. line Your

Jennifer Demba

Thank you. morning. Good

business anytime starting Just in if new quarters? the any have curious several And operation how going? other lending lines interest mortgage in you next the is any new

George Gleason

Yes.

are technology. We on the working

their members and governance We got build-out senior process doing three and risk and have of are our the mortgage build team they around that. all onboard,

that’s product testing begin fully teams we is when actually technology product probably, technology we start business. going Jennifer, quarter will start business. the before and we That adding get on business in drive and the are some origination We to that tested, vetted doing third that

we – start will So a small and it up and it in ramp slowly. scale way

but nothing possibly really bit that to begin trickle that’s move matter you until of in ‘XX, going that of see a the is probably XXXX into XXXX. needle to results So, sometime late a little will there,

Jennifer Demba

you. Great. Thank

Operator

Thank question. our One moment next you. for

come Our next Michael the from line Rose will from question of James. Raymond

Your is open. line

Michael Rose

expense for Good the Hey. on Thanks the my start guys. wanted of to side morning questions. taking I house.

You different the guys kind have done years. a bunch over initiatives projects of of and

to on we it then for components, annual think up. going you costs kind how should costs, increases different anything Just inflation, be would see if of healthcare tap whether And merit wondered XXXX? about FDIC wage had

can If it. I of appreciate kind expense would the just contextualize you Thanks. outlook,

George Gleason

Tim, go ahead.

Tim Hicks

more could But rattled we got off which you we Page Figure a a increase which list, the headcount Hey throughout can – chart And the increase add Michael. year, see XXth, you added the Yes, have to people probably we on that back that laundry XXX had was XX, we which that and shows have half XX, in we X.X% June on our through year. a the is low added last we that headcount. you point from of list. really

raises also the We year and of a good raises gave throughout additional go lot effect some into XX/XX. that

go continue to will we as year. headcount this add We through

gotten additional January in headcount. have with started already We

at pandemic continue. we mean that will as level, diminished were our at So, headcount. we headcount I really said there

initiatives. add to to back needed we growth our So, support staff

year. wage mentioned continue those Those pressures, will throughout are You this real.

a Really, assets if deposit we in the the quarter, And get this go have change, take from increase mentioned to will that are also delayed throughout well. you QX X-year the similar our assessments average increased pressures up. into the as as insurance support didn’t going in we for think would a growth You of million some growth have that $X.X year, advertising renewal marketing it and line go levels of will other inflationary assessment up balances we account probably contracts of you but that’s initiatives. similar got and which vendor items, contracts. to then really QX to And when X-year about you our little up and come bit probably all or or X-year kind to deposit the have for

at adds year full range to total at increase out, that which point up expect ratio full least still about year, that, in point double-digit best. for of low out would So, kind were XXXX industry’s this be in compared increase to would you all sure expectation still that mid-XX% wanted am kind efficiency for expense. that non-interest the I our year-over-year, I year of ‘XX. would the low-double to Well, digit put a but among the to of We us

Michael Rose

exactly. Yes,

chart. XX XX, question. Figure the on follow-up, one RESG Page Just separate

I XX%, LTV from for noticed the to of sort of term kind I particular the and opportunities looking up on resolution of there any Tahoe sort but So, longer on about XX% a that was credit, credit that just some know credit it’s point? updates. at Any any XX%. updates

George Gleason

Brandon?

Brandon Hamlin

Michael. I happy to Yes. that, would take be

floating, in to relates the to it any do time. has given that more mix point asset at with the As bubble

We few there have a then under and construct the to well, XX and that. homes and club, at beyond and sell are got town remaining – roughly project single-family we have XX lots a construction

others when have quarter got those a So had very you sell – price. a and those town we the attractive It on have a originate have that they had them. at town price nice in slight homes appreciation have because when are the then over But sale loans, you home And close they of did time, LTV has your and on not as them, start, we one impact LTV. high. pretty

where to better under you were have a nice six got, prices transactions well. construction still of you and contract. community have the are good I of really mark rates things. and in place of a and saw as and I out But would hunker as COVID they affected as bit was were sort XX We in It’s created about a have benefit that good under of pace has of the price and feel said, market that on of getting going a being we definitely That town have frothy pull-back resale still will increased, very, the people focused that. if if project. We tell sale those doing work in point. from to a very down we sort at home, had one that

that a sort resolution, but progress of made pace. somewhat and albeit long-term it’s the last said, of certainly at reduced perhaps years So, in to good of a as you expect continue, lot couple

Michael Rose

the Okay. credit. then And just mention rated special finally,

I of think kind new addition. a that’s

concerns Thanks. your get there to any on if any sort wanted there end. Just is details of

Brandon Hamlin

costs to a date million the appraisal light million. is on decided ultimately, a escalated that not to That results planned in XXXX plan, that have the was development in development $XXX.X appraisal And No, borrower his construction the of sure. XX, site last materially which obtained concluded LTV vertical credit appraisal of a or and and very the original new proceed $XXX.X current Yes, for high-end with abandoning years. we December December XXnd, development a the of XX%. And actually this new over there. couple of as-is compares of an value

liquidate mention the the loans sponsors appropriate liquidate to that property, actively working rating So, and a marketing to decision special for the order their we was credit. But property. that current development the plan concluded given

Michael Rose

for Thanks questions. taking my Great.

Brandon Hamlin

bet. You

Operator

[Operator moment One next question. Instructions] our for

question from next Janney from comes of Our the Montgomery. Brian Martin line

Your line is open.

Brian Martin

guys. morning Good Hey.

Brandon Hamlin

Hey Brian.

George Gleason

Brian. morning Good

Brian Martin

a just Maybe second. on loans the one for side

I about year. Just outlook growth the this the commentary appreciate

just buckets provide Just that any the kind and banking of where community the are think called perspective the kind I growth community of the standpoint? from that wondering the you front. out if RESG both thinking opportunities where about on on can you different ABL of you also from comes how growth,

coming year? Just from understand of growth trying the might where kind be to this

George Gleason

you, again. in level of will up level Brian, I XXXX it’s to in funding loans high finish think start would XXXX. and going tell XXXX, those with the diversified in lot up of originations, Obviously, a originations be RESG I funding record the of

last well of at are commitments Business are group as same This little growth in a actually growth Group since balances getting year slight in decent the community in Corporate in will couple and in nice had funded last a Specialties chose RV. RESG’s and shown year, But because a undoubtedly manner various and their time, of in in last group banking and grow we as at waterfalls funded that the So, reduction our quarters good as we elements traction our traction some has good big balances positive getting grow of indirect marine ABL the should there momentum The outstanding funding. year. for on portfolio. the originations

total So, even growing in commitments. that group is

are see saw and probably units good some in going than better from we that was the of community year, bank in diversification to those think the we we next and last positive. So, contributions year

on the continued trend toward the are So, we portfolio. in diversification constructive

Brian Martin

And the the pipeline Got at this ABL in it. portfolio is pretty point. healthy

George Gleason

comment you do on that? to Brandon, want Yes.

Brandon Hamlin

is. looking year, great in at on George of that things here one early the some have would they Yes. the And book, No, said, some year. had the it good year pulls and got portfolio, as they a structure, and a as others accordion But credits also you defensively And as I that about note last very with formulaic to those characteristic ahead of credit weigh if businesses health of nice sales have and experience great credits in, expansion will. but sort our volume to it, these opportunities. particular the

don’t You as credit have there. expansion book realize QX different during another new it that a We necessarily three good actually had to well. customer credit a with was night last to a expand credits contemplating pipeline and is more

portfolio. the growth encouraged that opportunities really for about really, So,

Brian Martin

it. Got

which what up on rate, a have increases and kind or on year, No, peak but missed ramp the think said get year-over-year maybe of the growth it, just talked as guys XXXX growth helpful. we in of even Tim, given just about kind we did you hiring kind about from and missed this or fourth that’s Okay. this I said expenses, would ramp-up starting what the anything and And quarterly, or earlier there? just obviously I should the how expense be you you that you is maybe, that, might it quarter what that level, provide of into

Tim Hicks

increase. No, we expecting are Yes. year-over-year, low double-digit

If quarter, tough. you is are always seasonally QX starting with fourth

a got You full load of FICA.

insurance health got You have increases.

a raises in. got have amount that of come good You

in. the have insurance then kicking that doing now. and then and FDIC XX/XX. right – lot there kicking is The marketing, a are that’s we in So got And increase you of advertising

So, of year-over-year, QX in increase as low-double throughout healthy as level get but increase year, I we would expect much and another the digits. not overall, maybe

Brian Martin

Got it.

a one on your there? broker deposits on And the were and Okay up a, kind bit. front, And was one just repurchases, that’s outlook the then the helpful. the deposit of other just just just then

the Just that see kind there, wondering or of next trend kind over what the go you as appetite of the of year couple of want throughout years? to is kind just just you where

George Gleason

do you the repurchase? want Tim, take to

Tim Hicks

Yes.

quarters. We take a lot Obviously, our me in purchased QX. we as as had previous balance in grew much some, funded the we repurchases. Let not and unfunded in

good profile. good levels and a really got capital have earnings We

I do time. at the think same we can multiple things

and on quarters below that to number. and repurchase that fourth look there quarters number opportunistic will are that may be the we where be above find where we So, opportunities quarter have are may share we

and that opportunistic to opportunities be find try use see will where we we So, authorization. to

Cindy Wolfe

And this is Cindy.

am focused on as opportunistic worked into know. surgical the finding and and And I space, brokered, very being that We to and we are completely borrow going are way we as we going brokered. the the we it get the for that finding and you opportunities can. possible had where back look On down, Tim’s opportunities are be best to words Audi the teams and for and continue say and pair disciplined that Drew to

our our So, we managing we are are pleased way brokered with increase in the book.

George Gleason

percentage going any that are is see not to going And in going material the probably brokered increase – percentage to of not you forward.

– to We acceptable zone in going not our are are materially internal it. on and what’s for in increase a and that target in our standards, we

not you our to see So, at XX% are of deposits XX% going be XX% or that would or expectation.

there. going not are We

sort So, probably sub-XX% about max probably see you range percent XX% will or around that. is the the on

Brian Martin

Got it. Thank you.

great taking questions for guys. Thanks quarter Okay. the and

Operator

for Thank would further closing remarks. call back any turn in I the you. any like to Mr. queue. questions showing over to And the not I Gleason am

George Gleason

today. very joining much guys Alright. you, Thank the call for

much. are XX day. you days. about year concludes to celebrate Have we We great you. a a so and will see our great We quarter in appreciate a glad call. interest you great your really with company Thank That and in our

Operator

conference concludes for you This participating. Thank call. today’s

disconnect. a now Everyone, day. may great You have

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