Bank OZK (OZK) 21 Apr 232023 Q1 Earnings call transcript

Company Profile

Participants

Jay Staley	IR
George Gleason	Chairman & CEO
Brannon Hamblen	President
Tim Hicks	CFO
Cindy Wolfe	COO
Timur Braziler	Wells Fargo
Stephen Scouten	Piper Sandler
Manan Gosalia	Morgan Stanley
Brody Preston	UBS
Matt Olney	Stephens
Brian Martin	Janney Montgomery
Catherine Mealor	KBW

Call transcript

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Operator

Good day, and thank you for standing by. Welcome to Bank OZK's First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Staley, conference and Director like speaker to Corporate now Jay today, of would hand over the your Development. I Investor Relations ahead, go sir. Please

Jay Staley

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

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

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

for We questions. the your will up now open lines

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

Operator

Braziler first Thank Fargo. you. Our Instructions] [Operator from question with Wells Timur comes

line Your is open.

Timur Braziler

morning, Hi. everyone. Good

George Gleason

Good morning.

Timur Braziler

Starting sold XXX, guess, be sale what's appraised OREO of on at the into use OREO, not kind I'm could price loan that that I loan with which that value for today? putting the today loan? it the And value wondering, the in moved the as of why at was land basis

George Gleason

you Brannon, talk about want to do that credit?

Brannon Hamblen

quarter another a specific credit of originally Sure. credit I appraisal We've in in recently Timur, one June question. thanks had -- and more at your to answer 'XX, described the last question, the XXX about the talked you. would we at the had XXX.X. for for obviously

known our day, look it, notices the at out we basis where of to As the the there. book by is end

have We feel of the there, And that. that very as said, to over we good market site we associated we'll feel where affected site. good if next it's -- that's with any that. So two. little year loss by going a our about to that in great terms ability in That's a be come or

Timur Braziler

strength Okay. And your lending the Thanks funding that. side, would XXXX looks talk for then then what thoughts on continued incremental year love in in plan the hear the spread the looking just on loan just the through maybe for at like. on the the of rest and production maybe to

George Gleason

take me growth reiterated continued Let we to pretty our Obviously, originations Timur. The guidance that RESG for that, in prospects gave loan for us. we first look quarter. the good

think results diversification January continues quarter enjoy Our were and we continue to to that and guidance first growth. with very that good. We'll consistent be

to the contributed positive some ended. to degree growth units our loan of in our All quarter just

I'm have not I they'll our here. contributors pandemic process, stress. business to totally expect do in adjustments no the process, underwriting to COVID application the been sure other continue economic economy year, quarter, loan the of because the we're There would usual as every all continuing positive did recession business them and of we great of the as times and and we to be course of and over And origination all with positive but growth. be

structures We do sense to terms just on projects we're and quality quality with there our and that continue business customers. for on sponsors always make

groups. with year, the certainly level off but record expect of throughout year origination originations contributions RESG with good So from origination RESG the good of pace we volume XXXX last that consistent other

Carolina. deposit of ended, X.X% good and was branch growth, our Georgia, organically side, the quarter just deposit growth deposit annualized. from in had Most saw comes you our we in networks. XXX Florida, through Texas, That deposits, not the branches growth On our as in North Arkansas,

the the changes in adjustment. strategies any that going We've gathering our forward fund had branches those of remainder will deposit in expect year. We growth or to not continue

so. wholesale on reliant to do more become not will sources, expect We deposit don't

organic with and the that we feel prospects driving branch good we're very for deposit growth that. about So

those that costs negative you've have saw, growth least lot as up, seen are we because negative has through of numbers. -- growth I've generating a deposit Now, that were at seen our reported most had and branches you deposit banks have

growth deposit positive massively growth had we numbers fund because that. to in made We we've growth we business it, our in got so paying for are deposits that

us and we So by our balanced thing that's margin the a nicely. a of of increased a from our our banks our balance and deposit rate returns. upper course, half that competitors in nice sheet still got but And interest cost letting probably between distance and generate that's have. very rose wide we've industry-leading have nicely margin offset of interest in very the deposits And already variable net quarter, nice an net loans cost to

Timur Braziler

for back. I'll Thanks that color. Great. step

Operator

moment you. our Thank One question. for next

question of with next the Stephen comes Our Sandler. Piper from Scouten line

Your line is now open.

Stephen Scouten

good Hey, morning.

George Gleason

morning, Good Stephen.

Stephen Scouten

look Bloomberg George, you good Well on done. yesterday.

George Gleason

be to Not there. you. Thank

don't probably I I I'm little think Although, old good. anywhere. look a to be good

Stephen Scouten

sounded it either Well, way. good

George Gleason

Thanks.

Stephen Scouten

having spread NIM? how new to cost your But spoke pay for loan growth and enviable loan in that you mean, manage because I the do marginal about new your that of think kind the having growth. on versus of your guys deposits about in think about good you you to of you think spread you how some current marginal as kind deposits curious production, I'm to are you position up Well, just of

George Gleason

was landed of every constant that That's a I a an certainly It's great work on question. what morning early late has that or kind debate morning opportunity that transaction. question, my inbox got looking night in at I've this this a Stephen. last

questions, is just see to is you're those of it spread you love deposits. at of piece One the and what cost would of the quality marginal our want but not business you'd versus and looking a it's to great, do

thousand Brannon and any will come lenders going opportunities deposits that, meeting of to that at do quarter the that value go that. long-term this and making to looking down value the and returns that just you in we're I'm rich the of through with magnitude out, times relationship and do a there got the with a to after there that So parse that deposits, enough sit judgment that transaction those that to on building relationship involved do if generate going and other cost a it relationship is is thing will

that the do time. we So all

a we as think our margin shareholders our do average that growing by because shareholders and deposits us with growing we evidenced generate and our the interest loans on customers as good for are out parse I by lot our return And, business to for are industry-leading efficiency our our net have and customers well shown ratio. well return and and assets really want that a we pretty of that as fact

think it's much very basis. case-by-case decisions But those So well. a we're parsing I

it think have and get you we every situation, our what's go got or with factor are doing in some with of beyond those the record other wonderful below numbers. On the that, principles. what's treasury team in to our every fees, services some credit, customer, and the all a we've the reflected that make there the relationship for historical good other ancillary nuances what's guidelines track prospects bankers deposits, additional We what's And and of but and together won't try decisions. business, I good this as

Stephen Scouten

Yeah.

management are are transparent from Okay. that. I'm where perspective. at if guess, you and composition figure your broker you kind looking commentary XX, the you deposit always, of as here, appreciate Appreciate in a Definitely, that George. I and guys deposit show I which And

put but go, wrong, the that and could what longer I they environment, balance be high pressure a Because the or deposit loans I'm these book internal I this assuming presume some your gathering might would to within or have of a How than in and which that of I'm the would build, maybe bit on guess, and years that capital regulatory your size of stay on ago, extended RESG X.X% your but two have you? little books guidance duration earnings is the sheet. would positive some should

big of could as kind get and might you other So what just ways fund book unfunded that how over? moves that it curious

George Gleason

that I'll to is the good RESG having continue there of just and shortages Good, and longer. say, and on Part that sort comment, of flavors yes, be out certain take is there books loans backwards, of stay building Yes. of -- sort seems some materials, everything environment slower on move it's it did an just seem little delays a where of to components HVAC again, a lot and particularly And than those pre-COVID. electronic have things. to and we

of gives in interest So turbulence on longer the that's because and and earning the positive and markets, they're and assets. staying projects the it is good, are us additional taking rate books longer a it

overstate at quarter. And all. that to had easy already I it's payoff objecting this several mean, we're loans we've that. So not to

So not it's slow, just stopped. slower. It's it's

target beyond the could internal tolerance of much in have. lower have the range that. Number So about regulatory capacity limit where we broken down and we is is We're your into deposits brokered are way tolerance no limitations. deposits. brokered of capacity sort for the question our now. limitation Two, we And limit buffer half on how one,

we if needed increase to. could So we that

I've the our is last but we'll As XX%. we'll XX%. it working of premise that working higher, that if we sort to under needed our that call, keep But keep on is under could, said go that premise

following around So billion and cash that lines we've on investment Fed credit. we've the give and we $XX room of on the to borrowing and FHLB, lot got deposits figure of move you of deck, right the of slide unpledged at got securities a fact funds capacity XX

the survivable in Fed bank we the the term we to tap for funds tapped use is include doesn't program, expectation even expect Fed any and you But capacity calculation, anything discount using, there. have include or don't new funding lines not that. didn't there that but we it's credit because it The do of of don't which given we've that not window borrowing this out

fund growth good will network the in that. our prospects year and said feel our earlier, believe about of traditional I've through our pretty we this As means through doing organic of growth sheet we XXX the balance branch

Stephen Scouten

color, all results congrats Fantastic great. record the George. here And quarter. Appreciate on this it. That's

George Gleason

Stephen. Thanks, All right.

Operator

moment you. Thank One our next for question.

next the Morgan Our of from comes with Gosalia Manan line Stanley. question

now is Your open. line

Manan Gosalia

Hi. Good morning.

George Gleason

morning, Good Manan

Manan Gosalia

the us was special the general you discussed mention credit and the in the you some loan color give more concerns CRE, given I release. on hoping Just around could

why If wait why the surrender guess, for basis, the And sell question what to your buyer? the sponsor you I why did for is can, And is to buyer change? to withdraw? the drove if not for macro above another value than now, you loan appraised rather potential conditions recent look choose

George Gleason

that, let and then Manan, not. that, me why part Well, answer of and

But that talking who land. site. It's of or about piece little a selling people do don't bit of condo visibility process or pieces and out got of a that. a you're for office work apartments design, project, than development the you land go to start buy now So conceive piece ready a buildings or until And great you're and buy They've all people some who that hotels different buy forward. have buildings. build to a are going project, land typically

was So of our properties, the of to marketability research night in tend very types deals comment more than variable in made that a land that was tend observation. in the variable that and other good issued over to was value more reports and the be be one

to of and So it develop sell people to to when is our probably it. to the market are out this value to get forward maximum opportunity incubating and and really the time new to deals looking coming stabilize start back the conditions

holding there's as of land something because a so to as people of the a of uncertainty carry with today that and track lot has much environment acquiring piece cost not do, in turbulence will environment land. forth is there's a cost, interest just and an Buying cost, economic hold

go the incubate economic is of until they of kind dust view Fed's settling raising market have is property of rates stopped of of the we future current the have to and conditions where going on to certainty they're on piece project to this actively land. strategy So and new best this sort people the think enough on wait and a out

will the and great that go again, It level. and interest I in some conditions out it, inquiries in But you the market to intent site is site. at some having until actively is market stabilize economic a unsolicited site, tell not our are and we

Manan Gosalia

December, push this I to What happen? little point that from if to this the concerns a that can what for or all given you to need appraised would at need If you on re-appraise maybe dated mark you see just value the around down? would And credit. Great. bit is

George Gleason

if Well, we appraise it and would value was we a the least change otherwise re-appraise annually at we on of certainly there probably the it. likelihood and it -- we felt material

pretty done, a was you our appraisal the on that was hard the he more conservative guys our is services value. him I on not on value could to those So adamant policy in appraisal get OREO appraiser re-appraise to and annually. pushed will challenging properties the when this tell appraiser

of had OREO, reflection transaction it. is it unraveled, to So the when time, a the the a an backed that. deals think fact an we've buyer the of Silicon sell agreement and the it's Signature got reflection I on that And Valley based the sponsor out of Bank

So I asset if already we turbulence, hadn't economic would think we the this have had began.

Manan Gosalia

Great. I can -- then color. And some comments for I just credit. if up I the was on appreciate general all hoping follow some with

As concerns bank the you since have know, investor ramped up failures.

managing how And the CRE concerns maybe it? you So if you of vantage given how much talk your do is unique market? ahead the these question you. share point you Thank about can you're for in

George Gleason

position. credit feel Well, Yeah. our about we very good

that to for anybody is and commercial -- a I've real average XX% talking in seen. on portfolios estate far gives value, about to RESG think Our values us beyond contract to cost, anything, XX% cushion loan tremendous I weighted that loan

about feel So we very good that.

points guidance was the in reiterated January XX the points, X XX our points that Tim net our year gave QX basis full to for basis We call that or range range. year we from in and to charge-offs basis this that expect

pretty I out we real There solid reiterated guidance still is lot chatter think estate. there commercial have feel is of about that it guidance. We good. that about a wouldn't or

properties regard management renters features, newest wanting. is building are one new that purchasers brand are construction we I two have new to the portfolio and that are referenced in the this that. And buildings would what the our newest attributes that points These of state-of-the-art those because and make amenities And it's is comments. sponsors in point or units or

tend result, be market. properties best, to a marketable property as most in And the our highly the

leasing the buy to around and we it's makes done there's competition giant there there and because but we've on noise parts is those. office transactions the we're So there office activity of and are office sense space, a properties is a it's know markets buildings. not that still demand of space and doing our the But best running I world lot good for still And got rent office we've buildings, seeing is out and office sub-markets to or the portfolio. because

three it buildings they Now years leasing there. we paid We'll the ago on, are give four it ago loans slower was it is you leasing ago years and are before COVID? years Yes, off But decent slower, than velocity or five are office office because is. but or leasing that. getting moving on seeing buildings up and is

those about I thing of now CMBS and properties. wave lot at about to or projects are CMBS. there a our X% estate That's And there's gets not from and maturing even tell rate second property X% market type talked lot and commercial conversation types The maturities of interest from all rate of that put going are the that's to you or is to understand a our not maybe office loans be coming ditch. would going and are a challenges I higher. is interest lot have or real in CMBS going X% a those into that X% that a some of refinance

has attributes But enjoy. properties. sort in are developers not that and lot five projects XX to those of originated quality from and not years into benefit been the A new spill or rents. new on flat increases that properties CMBS, that of there to They're substantial or large state-of-the-art amortization since a ensuing years put though seven and there buy those properties. because work loan was are loan going They are will over older substantial of

to environment to to than be already them lease be harder trying people amenities leased And come are work, back to to a all the desperately not that state-of-the-art they come going if to new they're up, employees employment want properties they're get back employers the desirable in. has work. So that want where to to current

they For regard. most office come is to to The work. back quality critically part, the get that to important are them the of in trying environment

the have like experience amenities recruiting you tool you that office that pleasant people. they If offices people where to valuable you the is and because the and really and work, want a going is -- that's in people nice that got a attributes like

Our state-of-the-art these sponsors buildings who that. new are office building understand

B building, if got grade old get of you're an customer. And out our you've not that's looking probably to that,

can per nicer though You're be foot even a probably lot looking your of to recruit get and out better to that place where going into you cost building. in go to a building square is talent, that get up

market. So very this positioned we in think we're well

Manan Gosalia

you. Thank I appreciate the detailed answer. Great.

George Gleason

Thank you.

Operator

Thank please. moment question, next you. One for our

Our of UBS. with Preston Brody the next line question comes from

line is now Your open.

Brody Preston

any Hey. everyone. with back handful a color want developed taking I queue secondarily, Thanks into I’ll of ask repurposing has as have land I questions. project? might that’s few potential to hop if and then maybe or done give suit the the buyer it you repossessed. loan wanted to ask on at maybe them, to for where it new think any the located. anything us a their ask straight to Brannon to to end. Good geographically, And could it’s that’s a needs a loan but then them for and where been been about just extent morning, up been follow is got just I’ve a the did

George Gleason

Brannon?

Brannon Hamblen

This the the it's phenomenal sort of loan George Glad answer the in has West Brody. mean, it heart entertainment I Sure. as of site. said, in is And it's a Coast, to there. is that, culture LA. in right

on development that So be all day, piece phenomenal is one of there expect fully think that we dirt. vertical a I to going

undo XXXX the prior site your purchased in mean, much. around As the in that in think repurposing, decade just look, of and equity of entitlements they've it's a been and I sort heart sponsor it. to not game, late put question, so question to pre-development. a of I on work your ton But the

I cost was think basis their million. around $XXX

time So and decided rising go vertical. forward they've lot about it, cost, a rising that on step talked about interest and we but rates to point to that of then things we've to spent nature not take where they a got talked of

be being on So great, that's work not vertical There's specifically a site. that for question. great your -- of a a lot there development there'll answer to is done plan

as marketing certain, just, little more bit about fee. said, we more George new things picking when stable owner's thing. It's a a As the time good little under are feel we that right bit said, the

Brody Preston

the Got do buyer? -- has Does and stay all potential the the it. done, does previous for in the the more does that all help I guess, that all place does and -- it attractive a owner make stuff permits that

Brannon Hamblen

unsolicited I for think can't about George so. There we've whether and And have of interest some there things. had make ultimately promises some our mind in course, But its in question a forward. they put going what the development to as great they about you do is no site. said, viability

Brody Preston

Got this on for you could -- Could think yield slight just to help the just earnings what as is loan, that. like this loan. a just you it to but relates about ring-fence I'm is? Thanks to me this loss just it. Okay. here ticky-tack trying the loan

Brannon Hamblen

was -- that loans so it one. there, but rate a it's know I floating had with rate, loan that and It all today. so we're replacing the exact been an on up it's older don't the that we

George Gleason

norm. the Brody, I it, kind assume X% that's right on of

million $X.X would million interest in year, be So income. $X.X quarter that

Brody Preston

the okay. Got the for properties just And on want so. did to appraisals ask XX it. or that had -- did then much. Thank very I you you updated I

understand on appraisals us could re-appraisals, we one are what more think then of drove of us I focused lot forward? on any the thing maybe you should expect And couple was that. of if that? there And a two, going help if office. One, Just the questions maybe a kind kind of

tougher reappraisal environment? expect given office one should office we of just just that was it So more the But there.

Brannon Hamblen

Good question. Sure.

George Gleason

ahead, Go Brannon.

Brannon Hamblen

George. this, Absolutely. take me let Yes,

sort before, really than driving a of drives we portfolio of migration natural the what Nothing as and these appraisals in terms risk lifecycle. on our natural the the -- talked In appraisals, of it's more top really about evolution. these was stay in we've place we've

virtually we some as deal of that to have would to the extend typically loan three-year economic have, appraisal have allow the renewal We over typically requirement. that always standard every said, has a loan get sort borrower and options then be an to I we'll and hurdle think

So the But don't at other I maturity may generally of been sure these normal you course point see, here. will were what extension. know this have typically there and was some for in and appraisals. reasons that's

those a we that that I second course to a their question the roughly initial that, this extension, do what background reason answering here origination appraisals at if is get as maturity for historic any be and understand going was see have they loan, reason, future. would in ago. about the then around sometimes But appraisals, But were to hear to a to In follow another we then velocity, more the if or see see you'll future LTV that's in look the appraisals that probably upsize normal and of loans then for point appraisal you'll in generally you course, of figure time. we'd, will assume hit three your years and and there velocity going similar

Brody Preston

just And that's phase, extension in that's still they're because correct? just an -- the construction

Brannon Hamblen

completed in lease-up have entering situation. they phase, it on be may and may construction, construction the varies depending the They just

Brody Preston

Got it.

last just the I years, queue. I'll community. the one before few then has investment obviously, RESG And in debate Okay. George, been, more of a I the for point amongst back ask think guess, I hop

come can think RESG loans, folks being given maybe loss be going go do you of would have wind a some perversely, environment? I'm prove as want just see of a the like we potentially look kind the this well this opportunity credit an you that of think and out on take to story you been that, pretty but beneficial bad, small so do up with in could kind at loan Do or on asking, is that that in this loan like forward? And really never to you the the loan, some strategy to -- relatively other size to negative more a stressed RESG land it no it underwrite of

George Gleason

Brody, ratio find been over and industry credit amazing the quality people XX know We've I know averaged -- had debate the of of years. the basis that People model risk an merits thing that annualized it have this in of tens don't loss I you the industry. We've XX doing years that of portfolio. and projects tens now. adjusted perhaps, an the guys dollars and point that in RESG off. We've best estate tens paid of billions whole that we've probably got real X

senior always secured lender. are We a

loan-to-value, XX the that we're losses things. always over We're have all of economic X to of environments through portfolio and the the are low only these that points favorable on life incidental occasional undisputably years. going loan-to-cost just sorts record just prove basis at in low challenges track And portfolio

hardheaded quality continue and want be some who demonstrated of negative want quality argue to that not good that and argumentative risk be good has be our sort a sheet. balance want to systemic and people is to to So and to is something

and an which prove we've got But industry-leading I that And industry-leading don't great ROA. think over again. takes, business going just net well to it I if people yields, interest want our us consistently, plan an about give model. it's margin quality execute it. time drives long however and and And It naysayers business it, great they to the them that great to It assets. you We're will argue not. drives time it. get know a can argue about can

Brody Preston

Great. Thank you.

George Gleason

Thank you.

Operator

next for Thank you. moment One question. our

from with of question Olney next comes Matt Our Stephens. line the

open. now is line Your

Matt Olney

follow OREO Hi. taking my Thanks I to property. for the on want question. up

if December improve, 'XX, to hold into appraisal that that conditions you you not or earlier. take another curious, property stabilize if and Is of and till get wait fair? would by Just assume XXXX I need

George Gleason

Yes.

earlier, least -- said As it's will we reappraise since appraise an it OREO. I annually at

Matt Olney

banks a see note, is did I action wasn't why typically from the that the appraisal And it the guess, come a is property wasn't on an Any into as there once bank? guess what Okay. OREO, more when for I taken as typically far for clarity but other us updated we I assets at time, requires think that into here. that appraisal case new foreclosed that

George Gleason

days. It was essentially within XX

or appraisal So standards a that's old. by is year regulatory less anything new a

new So it was time. that a appraisal at

Matt Olney

few peak guess, thinking at I think, more that in the near unfunded then quarter. And helpful. seen ratios, over of Do about the was the capital you RESG least term? flat, balance you relatively unfunded That's commentary we've Okay. the I first a could balance, that where of kind think for go at looking any in kind on for Just quarters. next think

George Gleason

you take? want to do Tim,

Tim Hicks

year. originations near that year. had have much -- Matt. Sure. It's peak not Hey, at I or $XX we're peak last throughout to its billion certainly you likely year. going down Yes. we and would agree the is with Obviously, this of it its is to trend that as go we

George Gleason

billion. $XX.X

Tim Hicks

expecting point. Not year much this to this at have that

year. we down So think will that as yes, point, to your go the trend do I throughout

Matt Olney

bank commentary deploying where unfunded you Tim, pretty to of just some mean, expect kind good then, ratios of that And on the excess sizable ratios. capital, the on done of as capital but a slug the job I as balance. capital far sitting go? has Any follow now on to of up you're a

go. see you this of Just to curious kind expect where

Tim Hicks

We, top banks -- equity course, the It's securities. XXX if a top. remains of don't ratios, a quarter. common the tangible that talk among certainly, is came in the for value and last opportunity top have into they in And over and obviously fair good to US, Yes. you of things are probably our adjust our any HTM the HTM other light considerably pretty or of ratio about capital

high So that tangible over we a looking the equity, years. have maintained at level common very of

we our asset that. this year, Last would continue certainly are grow Obviously, don't that possibly grew I at risk-weighted relatively expect expect flat. assets to do to risk-weighted to considerably. level year and

a risk-weighted common somewhat we throughout as our ratio year basis maintaining earnings capital tangible could flat on and in the flat the risk-weighted leverage really with asset ratios Tier X strong certainly be throughout go year. and up So our a to

Matt Olney

everybody. Thanks Okay.

Tim Hicks

Thanks.

George Gleason

you. Thank

Operator

Thank moment question. our Instructions] you. next [Operator One for

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

Your line is open. now

Brian Martin

guys. morning, Good Hey.

George Gleason

Good morning, Brian.

Brian Martin

it -- on answered has the just stuff, of of but lot Maybe a couple been just things. real a estate

where for you are payoffs quarter sounds the to it's had in see the here? how given acceleration of see on gauge kind mean, there -- as Is they to Just from up, that it still the beginning the market? still you're I starting is low this caution RESG, some like of that this are commentary, that but beginning been sponsors pick a but to the already, see of couple, you lot payoffs George, quarter kind a you I know -- or you trending, those are

George Gleason

know that we a would I level payoffs. not continued seeing don't but slowing it's of It's or are stopping. say I Brian, accelerating,

that where see we'll So goes.

reiterated in 'XX, we minus $X.X think be to billion. year back was for and I $X kind or same as which that plus our million, guidance in 'XX range we this had payoffs to $X.X of million

the repeat last has see going of course couple good have for of So to us that origination back growth implications years and nice some over given year think year, substantial into that to balance somewhat plays this of next loans in of question. we're of last the response to volume the a and I to year Tim's our continue payoffs funded the capital

ratios, year next growth to to this that those but sort total have year. equity ratios are and industry CET We of leading expect and expect we tangible capital expected support common X, to the continue going

Brian Martin

Got you.

the momentum given of the could you touch lot think here, you you But of Okay. And little kind just there's think a lending outside kind it give just little RESG. then where of how some those there the two, of bit, just recessionary George, helpful. can of a kind a on momentum just momentum of would just much and good do on a areas, continue be from last level, high groups outlook just perspective,

George Gleason

that banks going stable other would see so units that already capital have back. robust some fact, to about we more read the maintain or that that I sheet new cautiously say and pulling do. we're some business shut commenting don't in to originations loan And to momentum. Brian, you've are limit and is we curtail -- and those forth restrict we're of originated they've shrink Well, and banks their are that that or going result down guys a banks don't There organically optimistic we expect think ability the other in of that level have the originations part the deposit balance we're that banks their base do growth And diverse, forward. new

at business and customers, It's as looking business. relationships, good good OZK, for we're usual Bank good

there macroeconomic before will some gotten respects, year. think that though how offset tend we're some to and constrain even as be at pieces some will So that But I wouldn't volume we bigger pie that positive see will look I headwinds to may we of out. think the be tend plays of that We'll pretty the cautiously may to have that. the opportunities have in just get that remainder we about

Brian Martin

gave XX the benefits really about the costs end for looks of directionally up you just Tim just you the in quickly Tim, offer how to last how just in and come just just here of where that positioning one think was kind just comments know whether can you But it quickly there. expect on good can whatever maybe you prepared that just -- percentage last agree, down some color maybe be give up, months, or with dollars, margin any about up it's we And the kind maybe funding -- the to or gone front. over margin. as margin on remarks Yes. I how I given just catch

Tim Hicks

more, But loan are other deposit yields costs will the Yes. that opportunities assuming our to answer. up increase. go Thanks, holds my We've and growth based on once and going more business impact increases than up year, the that. is our May RESG throughout our good go Brian. more in going lines. got may for then But the does certainly, Fed of Fed year what rest Certainly, the the slightly to in

branch We CDs. network previously, that's to our George going through will fund that, primarily, as primarily and retail said be

we've will are that up And enhanced and obviously, deposits, that with supporting continue do deposit on efforts advertising all marketing the we're and and those we'll help We, working those ramp that efforts got. always raising of core grabbing efforts. to

help retail that core the We That likely are adding well. in will margin last quarter about talked and But quarters. will additional few as deposits our staff our gathering each network, for with we've it's opening deposits which time decrease to continue year. this

at see record great But net assets had margin. in average the will we help as of decline interest income the income look year, in of QX. we for earning obviously, net said we a we in quarter think interest offset And as our comments, we quarter, balance any

net I quarters interest this well. on income as we interest you strong great look year throughout there think really year-over-year, at our we'll And certainly net income. growth as if other have go

provides that questions you and willing some Hopefully, may to commentary, you answer have. Brian, any certainly more So

Brian Martin

like plays that's the the so, And Yes. No, it sounds will sequentially quarters out. just as in three I think directionally or down good. -- just that be next NII just

Tim Hicks

don't NII down. I will to opportunity our be this has balance. on quarters Not average increase based more that down, in be but know the necessarily. NIM year the one NII will or

Brian Martin

you. Got

Okay. the and right. quarter, All Understood. questions, guys. for Thanks great

George Gleason

Thanks, Brian.

Operator

Thank question. moment our for you. next One

from comes line Catherine question of the KBW. with Mealor Next

now is line Your open.

Catherine Mealor

Good Thanks. morning.

George Gleason

Cath. morning, Good

Catherine Mealor

conversation. idea back Can the are I spot of maybe new out on you an deposit where give where step coming coming wanted quarter? of where on costs were -- the rates deposit to average on you deposit your rate and us

George Gleason

to? want you do Cindy,

Cindy Wolfe

Sure.

Okay.

give you this will think Catherine. idea, I an

indication XXX. you're the an So deposits was what of looking of was cost for? XXX. that interest-bearing give March Does you quarter

Catherine Mealor

feel on? offerings of you've at of that at coming That's great. And special seven-month like online. some CD CDs got I looked new a your of then, mean, X.XX%, Yes, was XX-month where kind at range average that's like you're on does X%, seeing It I looking helpful.

George Gleason

rates Those March Yeah. went into effect and on continuing. XX

have fact, about. yes, I'll today. exception there general In not that's which out for competitive one talk the reasons, we But rate that, to

Catherine Mealor

have CDs, loan funding core were your your seems if you billion, continues network through saying branch Okay. that to like per kind from pace, fair grow yet, like growth brokered it is earlier? tap in the you Great. your capacity this you still quarter feel market $X.X conclusion a at And $X what not of billion having even really to

Cindy Wolfe

lot there. is if -- metro markets. We well of you branches aggregate, the look in we're small It our at as in markets a as now

the So a lower branch network our slightly our have we nature total of deposits than per peers. branch

we our is is have get competing proof deposits as in want that capacity. that deposits. that for we that do But want. grow given work to we can. gives market, In we many better competition, there and our any that don't core the as So We that room a against on something you branch to do time and all

we know continue So capacity there to to grow. there's

Catherine Mealor

these found Were there you growing core success where CDs? specific more any markets in

Cindy Wolfe

to best I in culture a me, sure. is primarily, and winning mean, culture every talent function Well, and being of a market. it's of the

So as our we another focus way care quality. do a quality to huge on service win. focus is talent lot business. service retail any a really Consumers And about in

I we're and of that. time most my but service. spend know story the talent focused pricing, about on extremely on I So is mostly

Catherine Mealor

traction all was like And was study you March that had just it X there in market? of the you there like you dislocation felt a X -- was or that given drama better felt market more

Cindy Wolfe

we are the a answers on leader those very that which each markets all know Sure. talk Maybe in of well, individual we to to level and granular doing markets.

general we same in nice buildings, our diversity which a have a I consider strength. competitor have products, same We I have the same competitors. mean, and we have set, good we the the

don't against big or XXX% just market in to up want just banks community You every banks. line

be as another, one So and market it's the just are it not in driven. factors that pretty complex why versus go into might you winning to price

one So just equation too necessarily work price. another. meeting to I doing time than of And market time, better I'll say, we would in all might not this all much the just be take it's not a aspects why way on the go pricing. through

Catherine Mealor

Okay. credit the conversation. And back to then Great. kind of

about your just it for your the to you your on And construction you're and now borrowers X% yield, rate? on up you're borrowers higher to continue loans As loans with afford about seeing interest has any rates that at any an talk impact in they're can stress today? reprice the to construction ability seeing that continue and your reserves

George Gleason

our projects. Obviously, impacted are equity over profit transactions you desirability into And last ramp originations, which hence, Catherine, a being I'll the rates rates. are in those rates these interest in Yes, did year those sponsors, frankly seeing why pursuing, that they're you're impacted the has the continued XX, the lot year profitability guys months take margins is on by than increases new fewer projects their and the higher cutting XX last are that. new that most in created significant up the of of interest this projects

collateral the sponsors RESG for Our of protecting and sponsors sponsors Almost those additional us and are our buy sponsorship situations. those to hedge, in our our very the protective and structure beneficial those our is assigned rate are quality to cap, of require rate all of as us and an to interest interest loans transactions would of our an loan.

the equity. the In have reserves of every adequacy in structure to require the a that the as stack and if completion addition, the adequacy guarantees department stack of and of management loan, sponsors we’re very in any reserves the evaluating asset or monitoring cap in putting rectify that of that cap our diligent part continuously develops, our deficiency by more guarantee

common without sometimes without So up. have, discussion obligation would a not but these have additional fairly the in occurrence have they goes rather And and put a honor managing as hitch that and exception. rates our course that are that required and credits of that’s a they to almost reserves risen, do sponsors that’s interest that normal that

of a if It’s we to it’s for a an it issue manage equity issue. for yes, legitimate issue sponsor and the the as us right. opposed So administer

Catherine Mealor

slowed, for we've credit projects last obviously, just I But about question pay past really the pay for talked have obviously Okay. seen you helpful. your is reasons down. of my on And have some hour. then That's downs think the

of process what looks the moving So market like type buyer kind are active is, what the seeing can to the for you as seeing that to in you how for those permanent in today? give you're flavor to what give a of just a project like, pricing financing like, looks that market, looks what just success sense us the market us that

George Gleason

can the for an that. Brannon harmonize to that That's you answer all see we over if going to place. I'm throw on and

Brannon Hamblen

mean, I Yeah. George, right. it's

biggest that's was of the that's say loans I Of actual refis, actually loans as had across loans off, is on. board. I pay counting and are the as in fully there actually, I not even are and course, Catherine, would past occurring in paying condo terms terms all number got -- fairly well think you of this off what's paid downs you've quarter, sales condo of of the number that that mean,

southern But where condo In are, you with wouldn't market. course, that. they the are environment, of might of you see rates think a are little tend typically slower follow those a big by those this our Miami guys collateral other on presold in And versus to deposit deposits and a lot loans those high there. such transactions with might buyer have markets through very and not buyer secured that

say, I'd still that, to tends multifamily behind most But the be liquid.

heard course, sizing I've are pretty And Of some on but up, refis cap agency historical lenders some was pretty type some they're compelling. around seen basis, a and reasonable. that still rates their

still pay overall, seeing it's but they're -- slower, we're some off. stuff still So again,

some had science a it's a We loan as not -- was well. we refi, a in had it hotel refi -- was big life industrial, that that

sensitivity consideration. that the buyer it's our So thing our that of a borrowers if or our improve that, us at can one assets rate -- our paying on is they're all,

So ideal off. but come transactions market, not seeing an still

Catherine Mealor

That's helpful. Thank you.

George Gleason

Thank you.

Operator

moment. you. Thank One

Our from next Brody with Preston UBS. question comes

Your line is open.

Brody Preston

of for least if when give occurs? office. they're at had Hey, follow-up us Class buildings that know projects a And I I've pre-leasing office And sense occurs. that the the A a pre-leasing in of could under office your those ask construction that have often they under construction are much They're any or wanted I are to in that obviously, how place. if one on that you RESG some I how can for or just buildings have that read nature.

Brannon Hamblen

in it'd that in are in have question, before has Good we requirement of other We some in the to And we're well, thing at, sequential it is be out, office some you've or to late, I that are a answer Brody. Absolutely, got right? asked pre-leasing projects typically do on pre-leasing yes. material place do and mean, And spec that, place we think short point our of the a addition and means that average, you're I loan-to-cost, fund. funding, more funding. starting XX% which start to at

commissions And then and that as that at leasing in on tenant top leasing does funded got occur, the time. of that, dollars it you've has fact improvement only point are

probably, I a actually would call -- it, that you tell funded third on office. our there's So of commitments are

certain combination deliveries with with, and it. actually money So pre-leasing feel LC that, we leasing in that news requirement, we cases, and happens in way call that the good cases, in other a taking TI good and the and loan-to-cost future place loan-to-value about ultimate and

about good feel we portfolio, detail office in So alluded as earlier. our George to

Brody Preston

over that those months? remind three should just be us come sticky interest like at a on Fed to And get at rate right, so point quick rate I that were And any good referenced kind X% for was think George, funding Great. the what next nine funded it, what then the that currently, for assume but you loan, for just -- the a last rate Catherine and to of one floors, my quarter? is that relatively this we cut for that. Thank if to

George Gleason

that Brannon, shot do to you at take one? a want

Brannon Hamblen

was that was, talked floors, want Yes. the to and what about but non-purchased we've change. I the say yield proxy. know rate as And said, X% a And don't it's exactly, we're are closing. did, floors of And obviously, our good I and a -- at of and year, today fact SOFR those day loans that typically closing loans on we as last we lot are the we as in going closed I

Now SOFR as we has all quickly moved lot a know.

floors those up well. have So moved as quickly

but the loan of XX, think good vintage more you I where a -- originations. chart, our that have sort that so you more we basis, figure forget -- what of granular and really nine the even loans, maybe quarterly figure gives was vintage I You see

sort the I'll not busy that set. George but on allocations extending being side, reserves of the originations They're asset being as are floors where of that also movement sort nature. only we're But busy through of group things mentioned quarters you so loans. and the those you and SOFR of management interest And follow tell the with

and that increase were, to floor of the time looking the -- sort up any do portfolio a that sort looking extension and same before, in be we be average to at you point we'll modification three any that well. in that as we'll of alluded time around can mentioned that maturity rate in sort possible we other and three stickiness point like years, borrowers feel rate, to to I move or of attempting be safe ask for the that legacy on be natural that a place there will in the we at at

work it over every and changes of the last, it's We speed at So part has hard but an with the lot important six, of SOFR day. especially to we what magnitude it a do. And nine do -- the of again, months.

Brody Preston

my it. everyone. it. questions, taking Got much you very Thank I for appreciate

Operator

line with comes One Timur you. from Wells And of the Fargo. Braziler question our Thank next moment.

now Your is line open.

Timur Braziler

Hey, follow-up. Thanks the guys. for

Just of quick ones. a couple

from could looks uncertainty, we and charge-off see year? over the as overall it feeling like how quarters, wondering, about has the of into of to the incremental the like this allowance all just in you're what allowance I'm the trend RESG. unfunded incremental incremental end ratio We commitments. enter happening ratio, on last outside First, started of period that back the X.XX% the to been build two the ratio activity some allowance

Tim Hicks

Yes, lot depends overall Clearly, It current the -- we own on the you've scenarios weightings. last view. and our scenario uncertainties there to a There's on continues balance. impacted be scenario view Timur, couple good those our viewpoint the our all in in been reflected the the how environment, of growth and Tim. our compared been Obviously, in macro by build ratio Moody's to that's quarters. the couple selections, us really about feel our last in has overall we funded of ratio. And is and this that ratio seen provision our quarters of

that we've low we've a net charge-off the range really Timur, historically, still given got on ratio, a low is end. But

you norm. If look loans, our low the our of end at nonperforming historical on they're

Our is low. past ratio due

our quality is good. So asset really

the loans, transfer outside If those bit at mention this substandard to our OREO, looked of you actually are our special quarter. last over a down to and little relatively one stable loans quarter

very our about to expect So ACL growth economic and feel that and be is our is the on variables scenarios. where on really our good, our funded asset good and quality we the forward-looking view

George Gleason

really And loan on our good Timur, or I of we've growth attributable that year. ACL just either has would we charge-off this growth couple last been guidance did majority for and the to and Tim the of growth unfunded, in quarters, reiterate the funded prior what net portfolio, ratios our said that reiterate the and had

Timur Braziler

Valley? just Silicon just quarter. of then should Great. the post that guys we then And about pretty much year? how of buyback the the million was Thanks. back And just the were buyback, on the you bought lastly, aggressive rest in how first be I'm wondering $XX thinking for

George Gleason

we March. Timur, in very were active

$XXX leave we this certainly, I'll that. So million quarters, it left current in our got authorization. future in quarter And we've and at be to active expect

lot And that opportunity the we're and to be like and remain an potentially quarter this of into go buy, our of much and continue active that gives we how to we active future things current So us we but it's active, compelling certainly as in seeing we'll certainly a buy remain when market. feel to consideration like now, the in quarters. feel obviously, valuation

Timur Braziler

just remind that million when authorization then $XXX through? And Great. us is

George Gleason

it's I November think Xth.

Timur Braziler

for I it. color. Thanks all Great. it. Got the appreciate

George Gleason

you. Thank

Operator

time, remarks. to to Chairman for Thank conference you for like your the Mr. this George closing Chief Gleason, and Executive At Officer turn back questions. I'd over

George Gleason

Thank appreciate you, see Thank the our today. three a all it. about That call concludes for you. call. Appreciate We day. We'll Have you great joining guys, the in months. questions.

Operator

conference This for concludes you call. your today's participation. Thank

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

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