Hancock Whitney (HWC) 20 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Trisha Carlson	Executive Vice President, Investor Relations Manager
John Hairston	President, Chief Executive Officer
Mike Achary	Chief Financial Officer
Chris Ziluca	Chief Credit Officer
Michael Rose	Raymond James
Brett Rabatin	Hovde Group
Kevin Fitzsimmons	D.A. Davidson
Catherine Mealor	KBW
Brad Milsaps	Piper Sandler
Ebrahim Poonawala	Bank of America Securities
Matt Olney	Stephens
Jennifer Demba	Truist Securities

Call transcript

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Operator

Good day, ladies and gentlemen and welcome to Hancock Whitney Corporation's third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Trisha Carlson, Investor Relations Manager.

begin. may You

Trisha Carlson

good and Thank afternoon. you

with During today's risk company's would Harbor most forward-looking and and published We recent XX-K including identified may to we language and remind the the was Safe uncertainties make like the everyone statements. review therein. release XX-Q, call, to in earnings the and that presentation carefully

made. the You Whitney speak Hancock statements made date which should on by keep in mind that they were as any of forward-looking only

of is rapidly predict Hancock As and are the on future forward-looking set statements. everyone obligation inherently from economic environment believe undertakes materially the accurately place market performance or understands, results Whitney's limited. Hancock results but plans could and not predict such that any cautioned statements. and to those to statements is expectations undue results the and or evolving are assumptions, any ability not reliance economic or to forward-looking forward-looking our Whitney current changing. of development performance on our reflected or based or forward-looking We actual by reasonable or or project statements revise you differ are update strategies effects no forth in guarantees implied

afternoon In measures. some contain the addition, remarks of this financial non-GAAP

link comparable You are X-K also release most find the The can reconciliations our Relations included to conference Investor in our posted webcast GAAP earnings presentation call in measures on the website. and the slides financial tables. with

now over Hairston. Chief Credit John We and Ziluca, Achary, President I Mike will Participating will and CFO today's call. in today's reference of Hairston, turn call to are in some these call slides Chris John the Officer. CEO,

John Hairston

everyone. and good afternoon Thank you Trisha

have this the the returned those to we implemented today additional and year, that we to strategy execution Earlier absorbed half first are future very building reserve, we quarter. divesting report credits. in energy With pandemic-related risk a of impact the this results $XXX actions million XXXX. downsized We of by debt strong of pleased in subordinated taken, the issued derisking approximately reflect profitability

almost loan at or for is X.X%. our a excluding could we home expenses and into return losses balances improved our have including on lines We in shareholders. expect million, in with refinancing portfolio, X.XX% operating per approximately Loans net X% income for Fees quarter-to-quarter. across our or a and quarter performance profitability with credit line revenue strategy expectations of Pre-provision business today's reserved are for $XXX derisking our energy kept equity flat pandemic loans quarter under our reserve million of was for COVID-XX $X.XX Today, from more all in reductions drawdown environment. and for lead continued up mortgage $XX returned level. to a We clients. solid the potential in linked control. markets loan we was Net first to PPP secondary share the to should impact losses lines reflects the believe, our losses NIM half this provision the and declined portfolio. point, returns adequately normalized to improved

will widely a near-term and established and accepted distributed Our vaccine clients has available election is worldwide. the expectation continue the been on for until stay sidelines until that is the to

levels helps growth in hand loans. to wholesale of of a the lower of drawdown allowed the number quarter. net and We our expectations level over the to of our risk level in a a remains in peak turn continued nonperforming charge-offs through ongoing decrease showed the a Despite than short-term, resilient and while expense, reliability billion core time operating reported of deposit on narrowing temporary signs million other funding deposits challenges remained mixes provisioning So of X% compared support core NIM. less pandemic for deposits at fallen at and loan $XXX $X.X for a despite in May. environment, several in of active this have growth which manageable deferrals significantly credit the improvement lower and continued businesses Deferrals continued

of As expected, XX% A $XX million XX% the sector criticized than is or loans to quarter. of by less COVID-XX. the hospitality exhibited little pressure this increase impacted related directly

to year. can our sheet criticized reflects We report over will expect less posturing that confidently thanks half adequately our strong to capital with in resilient and solid credits but the core feel deposits more the move mix. COVID reserve, resolved, Today, to we time have we first balance risk a due of

the a X.XX% with points or excluding half We expect I the by capital rebuilding have approximate year-end loans. in first tangible ratio common of equity to X.XX% will PPP year spend XXXX. began basis TCE of X% the XX

consult on will We examiners dividends paying current continue at our Board to quarterly continue confirms. dividend and to intent with the with remains levels

impact in who the and storm fellow Florida. these many while in been season. our homes operate Before year's virtually and Louisiana beach specifically towns of markets year the to the their volunteered secured most hundreds want and hurricane storms Orange two the I after locations I Southwest a the over day our Mike, under members MSA bankers thank Gulf hitting hit to storms We same from team I Pensacola with locations storms Alabama summer turn know taking of in of call one Three and the to clients this generator difficult over this Beach mention power markets. our hit. and the reopened path to has it for want Shores colleagues

businesses meals XX,XXX subside. beginning Our XX winds again areas storm and after citizens impacted volunteers over hours typically cooked in once for the

colleagues continue will comments. areas. over six now our and the expense to Mike hurricane thee will in weeks, in storms. three to for clients, Despite call support provision these to I We our expect material we turn no additional these communities related

Mike Achary

Thanks Good everyone. John. afternoon

profitability a vast as improvement over for obviously third to share, in million the So a John and company. earnings quarter per totaled or the the $XX.X noted, second nice return quarter $X.XX

energy quarter's a additional second of million, the million $XXX $XXX included was and an reminder, mainly the to was loan million sale a loss of loss million related. of large related provision nearly COVID-XX As that which $XXX $XXX

came million, X% million provision Our guidance, our at PPNR returned a or the net $XXX.X normalized prior level of covered healthy a million last $X.X reserves provision our more from $XX Consistent building The to so in $XX remainder with quarter. million. slightly. at charge-offs with the up

net we fourth charge-offs. provision the cover quarter, For to expect again our the

we or So reserves. point, significantly not to expect at release this do build

reflected as with mortgage, well in that stable $XXX loans PPP under loans forgiven loans energy. indirect to There down as all Our was at balance were deposits expect PPP $XX million. Loans across and sheet markets, quarter. also We in currently were decrease just in million was down $XXX billion. driver will to the no ramps a drop of XXXX primary remain our up. year The the reduce was forgiveness begin then in the EOP and in to end $XXX stable through excess as the to some million our of process significantly balance the relatively sheet quarter of strategy first of decline liquidity. related deposits The

related down a So in $XXX while our brokered deposits reduction costly EOP more million, to $XXX million CDs. were was

costly CDs. retail with deposit deposits expensive brokered of DDA other Our decreases and more categories well then in quarter as increases was less mix this and in favorable and

last As points to of quarter. we were able result, reduce cost our deposits a from nine basis

to basis about also million up at the of stable balance XXX picking of of to portfolio, about the approach led yield. Fed cash held points for the This sheet to securities $XXX quarter moved management a We proactive NIM X.XX%.

fee quarter. the we continue the remain fourth the Slide XX improved in income relatively stable to NIM areas quarter. Looking greenest within slide in All linked to expect is the forward, deck.

not fees do We and contributor increases pre-pandemic with fourth fee the At fee levels with were pay and expect down. income, service maintained a specifically on were significant this reported quarter charges While to payroll level BOLI. activity quarter's our we this lower mortgage point, specialty led of in income. and or taxes fees overall similar expense the control incentive again levels, in not both quarter. banking expense growth income card Mortgage focus a at of up fees in income increased as and specialty to

During the New on offices in led and quarter, Jersey and vacancy during of staffing attrition headcount our closure saw higher third implemented in the quarter, the overall as focus we to an New levels. York Initiatives and trust we also a of XXX. decline such

Louisiana We also announced late October. branch and locations in the consolidation Mississippi in of XX

As reduction down well. we to expense be expenses these continue, quarter efforts fourth expect in as the

we noted, began capital John As quarter. rebuilding this

in back over Our CETX points turn quarter-end. to up XX.XX%, based total I under June basis came just John. capital at XX% With and will call was the ratio that, risk from XX

John Hairston

Thank you Mike.

Now, operator, call questions. the open for let's

Operator

Instructions]. [Operator

with comes Our James. Raymond Rose from first question Michael

Your line open. is now

Michael Rose

Hi. Good afternoon guys.

John Hairston

Hi Michael.

Michael Rose

it of the increase loans the you? some assume at-risk are commercial How some from is I wanted I Hi. this in just start exposures. with of quarter. criticized migration to

there? some the color could we quarter, Thanks. then some color if So that that off charged healthcare credits And this were if can great? you would on be of get some give

John Hairston

talk do Okay. want Sure. Chris, that? to you to

Chris Ziluca

Yes. Sure.

indicated first our the was issues. quarters got some I of the kind in arms that level starting couple migration knew of we We migration prior really didn't QX. going to some in lot As of during discussions, be there anticipate a some specific show of we because to around account

broadly. under of to the the of was right. the focus of and So some the ability assess you quarter are A well in facts better as this as our portion sectors more reasonable migration circumstances credits

did some due migration COVID. we see to so And

John Hairston

Yes. offices. of was healthcare egregiously it now on large healthcare all all while credit, the while And from credit Michael, affected. And percentage not is they almost one that question. The healthcare a very also were specifically was shutdown, charge this John income was healthcare somewhat its of it

charge was while opted we it down. So to credit that operation still

Michael Rose

a of more real credit estate then? So

John Hairston

credit. Services No.

Michael Rose

Service.

for then Mike. a maybe Okay. just it. Got follow-up And

If come run items you the just elevated appreciated, out and quarter, the expect of would the some that would rate would amounts can expenses rate dollar from Thanks. fees perspective? a for be us that run this for give of you

Mike Achary

last am I heard Mike, of the sure the question. not part I

Michael Rose

what the this out severance Thanks. cost and of Just what offices? comes the the will like run for quarter? expenses out for rate come for the closing Or the that stuff elevated of

Mike Achary

Yes. Sure.

one-time for in terms of any did third they offset cost, really So another. the one quarter,

items So as that had the acquisition. MSL few comp kind out left the as was offset other of of the some incentive facilities reduction that the to of called a we cost well the and over the from really we were some closure severance of by in really related

such rate for of reported. going forward we did offset all run actually the that number those was the quarter really third one So items another the that

quarter. same in initiatives in Now, on the that did expect of kinds initiatives, we the we the third execute cost fourth to continue do to cost- quarter, saving

things or for least at So probably equal, quarter, third we million the down expenses $X in do all expect, to be so.

Michael Rose

You mean quarter? fourth Correct? the in

Mike Achary

I Fourth sorry. XQ. am quarter, over XQ

Michael Rose

Yes.

quarter? this And amount Okay. was what then the BOLI

Mike Achary

$X of about at right And million. expect was repeat lot in to the again gains don't mortality was that It we quarter. a that fourth

Michael Rose

Perfect. questions. taking my and call Thanks for

John Hairston

You Good from you. bet, Michael. to hear

Operator

Thank you.

comes question Group. with next from Hovde Our Brett Rabatin

Your is open. now line

Brett Rabatin

Good everyone. Hi. afternoon

John Hairston

Brett. Hi

Brett Rabatin

is from might the be this outlook. out you that of making credit what I loan year sure a I good. energy just you point? the path wanted categories to what am figure And growth in have at a to trying on the growth looks and I what about to kind and loan has guess here? the grow the ask through of obviously book been and And want terms I pipeline been for uncertain things more bit challenging know are focus maybe

John Hairston

about color. that refinancing it start applications unusually continued credit. it's John. split first purpose credit But when may Chris but we went quarter add it somewhat record decline to pace or activity even consumer is from XQ. mortgage didn't actually thought, quarter. evenly had the we and This record quite the It Usually, not third I first would is second And Okay. subside or bit will let's outperform second between in business talk and we from and In Mike see to in growth surely, up. and But a to fact, the decline. the quarter after want

that as side. well activity, to our consumer some took that impact equity in refinance were over lines balances so already the on were mortgage that portfolio And out some the as degree, of

down for the really across half see indirect you wind of board credits, at continued reduction overall the it about mortgage looking deck of and actually saw business So was that the quarter. And very through few categories the in the And amortization, production fell that XX% third has somewhat portfolio. the of deferrals outpacing have investor refinance with the roughly, the third and would it The right, been is been precipitously quarter. left. essentially pretty quarter, that previous which third year's what

uncertainty. about production. XX% appetite of little still about a I or that of to significantly about and level at there risk tie-in demand bit would credit lower causes So a say, while is XX%

So went the better step expected perhaps resurgent at enough a rated hospitality is sector. the don't the is that I than fact that. through are be that there be which ball that there. think that just now. somewhat a is on the better while not It's too when excited than crystal that the somewhat The that, about future, under little would our growth And things quarter performing may as before right in been hospitality and book, at you have perform actually those through demand categories not think more most the focused something in sectors of will are footprint, far quarter look has we obvious. to But we ago a the was quarter we this point, gas despite third growing, clear

So certain markets. secured those related estate to to C&I commercial life valuations under in sectors credit think in market. that And life in outside as consumer sectors there's particular to to then book in various in tightness focus. real of the real categories begin There's the I of is estate respond

idea So production. in are give interested that not to want I don't the we

larger We are faster risk that, little credit interested or markets add time, to production. to going in we point and at a we a the where bit perspective that have to are Chris But ones Mike? are resurge in sturdy Anything of on some today. may it's this sure we making keenly like than in feel from concentration a focused

Chris Ziluca

only The certainly to not the add, we interested past. I in the that are growing of called we that be John, thing that in is areas the continue would ones kind out

certainly mentioned you mortgages indirect, energy. just then So and

Brett Rabatin

Would assume from it payoffs that here? expecting to be you than originations are more offset fair to

John Hairston

again. what daunting appears And This XQ, know don't fourth little offsets. to John terms can of be next with this consternation more created of uncertainty, be year. in It's A to one hard particular is the election people that a how quarter, taxes is would expected. have to tell. than production seasonally, has lot because model

people it's are it only while market the for into The point from estate in time paydowns. think just may seeing of in money I are enough So and expansions. But is, so not this be because those we big considering fair of to is a uncertainty exception investor still increase degree related a an at offset real cheap priced amount retooling point view, they that expanding. of to

over is being XQ. call we into I might Now want the I until really don't pace way happens. and we And election. in after versus point paydowns inflection consensus. that too of said, But much of early certainly been have think because the the occurs. think perhaps when is the the slowing that offset production get there But peak to really it's a a fairly significant trough will it too to internally don't reached where debate I actually haven't out

Brett Rabatin

the for Thanks Great, Okay. color.

John Hairston

you. Thank course. Of

Operator

Thank you.

next from comes [indiscernible] question Our Davidson.

open. line is now Your

Kevin Fitzsimmons

everybody. Hi. Good evening

John Hairston

Kevin. Hi

Kevin Fitzsimmons

we think fall margin rate lower next little the to beyond just There's time, envision and further to an parts. in you Thanks. continues on stable a quarter, are off. over order keep if margin liquidity is let's now, excess here, can think, several tall some start year quarters? into if the but next the too as growing for portfolio PPP environment? being But of do. would loan know look tough able we longer Or to the the a don't you Do you that the I look I if I we guess, fourth that's and many so out for if side, put to moving over

Mike Achary

Mike. is this Kevin, Yes.

So go feel the where that right maintain certainly kind we around for forward goes the given to the really certain ability of fourth quarter. just X.XX%. And so have now, our we it guidance pretty somewhere is around NIM

well as well economies. it our And fourth margin bunch there, just where environment if this certainly environment that's think, it Going reasons like available we might is dependent loan the whole as rate growth rate there is all full clarity you to visibility in the the going us when of challenge. at out of very step quarter. effective that environment. a is stays other But certainly, guidance to regional the right now out Certainly now, really and opening the be pretty mentioned, growing including and a beyond assume is too upon into of XX, point, as for I soon, meaningful things the a vaccine for resume, that's things murky right the a as with

guidance a after bit release. about will fourth more talk our XXXX So we quarter

Kevin Fitzsimmons

Mike. And ramping relatively loans should process forgiveness Okay. quickly Thanks we and falling mentioned first off in then how about staying look PPP up roughly in stable but before fourth had you quarter. the quarter at

it fair the flow through margin, to to of in fee, bulk XXXX? origination is expect So to of assume remaining mostly the quarter first the we should

Mike Achary

Yes. how we outlined have the it certainly play on fee the will of then the out, a it first have forgiveness bit to way, related does process and certainly, recognition year. plays little some that the scenario basis next in outside They will under if we quarter out

the have wouldn't any of the that first right to amount. be quarter, pulled Now, a will next then forward some now, be quarter of be extent the to that that fees But there forgiveness we fourth will in fourth assume the we year. do quarter to as from material

John Hairston

submitted XQ. have fourth of no from about waiting we and down thus helpful, there that SBA. there's repaid million it's only in as for this been were But $X $XXX if PPP paid And Kevin, have in been quarter resolution. far, And loans already morning, are million

all SBA is appear it is of to that expedite kind repaid picking process. How and quickly beginning does definitely resolved those that it's to tough up. forecast, So but get

us don't what at clarity I think that So that any spike beginning. is of as the have

Mike Achary

throughout. And could that spike

who So knows?

Kevin Fitzsimmons

the me be What one just you the Because on really intend signal? it want said kind ask clear. to it. just does statement I thought Are pay on dividend. question of Let clearly, I one on guys including that just hand, there? in quick you to you pretty

then last and intend it I came risk. is pretty at it you you this might think be it across guys call, now. Capital back And definitively to increasing, to profitability. pay out came said, on quarter that are you

out just that? on you consultation So of conversation is at we look how with of that caution, an abundance always in more that having regulators are

Mike Achary

Kevin. Absolutely, Yes.

So our capital it this we said our on if goes Reserve process are common we That the case now, be saying and that at a earnings year, earlier a least current of that the the But quarter dividend that continue without go in will time, that we with dividend. in the will couple basis. confident we another at right Because Federal one the the the and had half of number priority the in very support, really point common was levels. go forward ability of the to case, and reiterated continue first last we through to comments at for the quarters. as consultation in losses

Kevin Fitzsimmons

Great. Thanks appreciate it. Mike. I

Operator

you. Thank

Mealor Our Catherine next with from comes question KBW.

Your now line open. is

Catherine Mealor

evening. Good Thanks.

John Hairston

Good evening Catherine.

Catherine Mealor

margin. follow-up about I am thinking just loan on yield. One the

yield around and am $XXX back I out million. if I So accretable PPP, of a getting yield loan

to are more So think of about we but loan much just million? that do the the where on how you renewed yields? new to And have you portfolio $XXX yields close thinking where is are revert flow, are of we kind as we bottom should going and from this downside new kind how loan think churning,

John Hairston

or but to math new sure down kind that third correct put yield the also million so. the we we your loans happens $XXX much be have, Not about in to to And in books. that backing certainly is of the how yield on quarter downside

million our so levels production so. and on came $XXX So or or were million at loans those about $XXX about

So to yield, or forward. that maintain there less support should be more loan good going

at core the the account if we but up accretion, NIM our was was for course, a quarter basis back our actually X.XX%, of out NIM flat point. Now, purchase

variable. obviously, So that's something that's

Catherine Mealor

your effective if corporate went your you is the Got How helpful. And then, up it. do to tax like rate about XX%. look what rate could rate tax XX%? That's think

John Hairston

Well, still are that's we something through, working Catherine.

And So rate are evaluating ready the the at them, that effective mean right different the quarter fourth in We quarter at with end up do in next now as to about terms but bit be. XX%. you tax of tax does a to that out strategies quarter focused in are go it do to million. third what again. tax effective implementing are the into rate move as we a deferred we fourth came the on XX%, come have of if liability kind year, not third we I lower quarter and rate we stands be at $XX correct might of expect

So to that guidance that no yet. just under evaluated. certainly scenario, on that But be have will

Catherine Mealor

you. Okay. Great. Thank

John Hairston

Okay.

Operator

Thank you.

Our Brad next question from with Piper Milsaps comes Sandler.

open. Your line now is

Brad Milsaps

guys. Good Hi. evening

John Hairston

Hi Brad.

Brad Milsaps

appreciate Mike, reduction. the some details all I headcount around consolidation the of and branch your

sort Just could it's picture, terms bigger the you in a you next something a of kind of not thinking works the guys this just for guys of larger? the the at standpoint? you guidance kind of working end while? know of of you are for consolidation? on what iceberg have but is on of branch maybe in Or give yet, this that in is the I from additional your the sort a looking year have bigger me structure curious, are Is been potentially beginning by about plan sort picture this expense kind tip of of of how

Mike Achary

the No, absolutely end. not

the right certainly quarter. announce. kind in the to again, to some be continue And not ready a obviously, other forward position those then fourth to we are we evaluate we these the there's know saw that right are announce And of are now do options. nothing, basis, you quarter, things third things go could will of form on And kind of So similar But and continue exercise. think now. kinds efficiency that you of in I But of we to evaluating Brad. things, do focus in larger a see us what kind in us you on

Brad Milsaps

to you Okay. a comments And It kind putting of bonds looks a some that am sense relative are the maybe wanted the of looking occurred of if the on like bond on the you that lot your quarter, then yields purchase. yield late I Can correct. kind up in at follow give around of me you the averages of the of where to of average current were the book?

Mike Achary

I will to. Sure, be glad

finished bond about the right billion. $X.X quarter at So portfolio the

it like between just XX% So of to a keep up little bond earning somewhere to was bit under XX% average We assets. the $XXX million quarter-over-quarter. portfolio

of it's seven So related other in was smack you of middle was basically points, amortization the course. basis down was will. that The of kind the premium reinvestment Nine and that to right of quarter the lower range, in if then yields. XX higher yield

significantly, just prepayments amount money reinvested called removed that third bond to flows of We earlier money earlier. I earning was north compared And XX $XXX into picked the bond I second. up to out then cash really can that up points, those of was we you the imagine, million XXX quarter other So that about basis from $X million of reinvested the points $XXX basis that portfolio. really About the the from Fed billion. we the total the mentioned and pretty back portfolio as just about in was were really

The there of back there we The money really yield so portfolio about basis itself. And securities. about there reinvested So the or kinds XXX mortgage-backed. of about was that another portfolio quarter XXX was yield in characteristic two-thirds commercial then reinvested points. in basis mortgage in points. backed Probably was got the we invested is of bond things that the into that back

Brad Milsaps

Great. Thank appreciate you guys. it. I

Mike Achary

Sure.

Operator

you. Thank

Ebrahim Securities. from comes question next of Bank with Our America Poonawala

now open. in line Your

Ebrahim Poonawala

afternoon expenses. I expect fourth had expect, about in the expense questions, you terms just the that? Good hear on couple $X the that sequentially one million on Mike, you in decline quarter of of you that follow-up guys. is a I Did correctly,

Mike Achary

That's Yes. correct, Ebrahim.

Ebrahim Poonawala

of was the into from have branch numbers, why not the you taken? all some headcount quarter expense it should more savings given greater the the a that, Or actions don't impact baked on and reductions? that we be already And which than see third is

Mike Achary

it really lot There And branches be XX the Yes. But announced, fourth quarter. of won't the until we those a that. is timing. that is middle the of consolidation, certainly of for the closed some example,

the the So attrition impact impact, see quarter's really really of quarter same of to vacancy as you that some well the a first you levels goes the achieve And were to for we won't full get that as XXXX. until of full a able rates.

will So I year's of full see and XXXX. in most that kind quarter a of full a impact think you

the well other the close we more we once again, granular call, around expect quarter fourth bit So guidance would on items. a quarter as little fourth give I that will expenses as

Ebrahim Poonawala

fourth there expense Got XQ. is quarter would assume pick on the it. I mortgage up guess some I in the savings if banking and slower is

well. should you benefit some there get as So

Mike Achary

correct. That's Right.

Ebrahim Poonawala

response guess around the just loan your margin, moving yield. I core to Catherine's to guess I And question

balance interest book, a yields the say we it bit at that when and it's all securities book? But fair of little funding sort from securities to has look the given pressure to rate room backdrop, lower. lower sheet is incremental tied So the essentially beyond essentially probably a the more loan close to are bottom pressure this, of is cost and investment the that point

Mike Achary

Yes.

I things lower quarter that, deposit at kind on keep for a We the reduce quarter-over-quarter, points, offset quarter XX. the basis will able like the our The bond the our if tailwinds to down the NIM able cost. got things Deposit one. about think, previous costs, to we think and over we being to in to execute flat we it third so, continue proactively our but year was I portfolio. pretty had, be mean yield I second down that will quarter. nine this quarter of good fourth we ability again think run look that

quarter. in now, are I are you deposits. at the to certainly we runway But of little hanging level there's believe additional kind that XX that December do at beginning that will some run out room of We or number basis So fourth cost of the the XX our basis think out ability reduce to bit. we forecast see kind points and outperform at head are number that our on. a the that's But to of by capability we there's a of And called we points. certainly

continues you the X.XX%. our to how will, of basically linchpins, keep that be we able So NIM one at if are to stable of

any run In going terms then the still off of from some liquidity, I certainly be I support extent. fourth out loans. really that has will NIM we And to loans And there's to liquidity, pull some of I first of be majority think, vast that because from quarter helpful think great opportunity earlier, there's as of the to to the some in XXXX. is helpful NIM. played quarter, that, certainly forward fees will the have forgiveness that shedding But happens PPP which if kind mentioned some our for PPP

So those in fourth of are thinking ability think are quarter. how the NIM stable the kind about we in things we our about keep to

Ebrahim Poonawala

are of That expect would deposit another XX% talked run sitting loans morning should be number that in a good for this And What it. amount bank about And PPP Got when yet PPP helpful. loans we forgiven? of was off deposits. you?

Mike Achary

portfolio loans base, is maybe the the really Well, average to plays out, hard loan some earning that that as will it of a certainly deposit in material of areas until out the certainly, would, to see would are move money you much flows it tell. But certainly PPP How from I forgiven, other we amount. think to think assets. terms

John Hairston

PPP tend We up look Ebrahim, at spending happens. forgiveness as when to it this is as to picks opposed when more John. actually

of been and those have our has to lot average actually didn't which and book charges they been right. recurring an because higher. balance the monthly the far, impediment a service somewhat Because so has less deposit stickier fees we charge, anticipated, than been has been And fees set

been So there turn actually to time, the pay more at flow begins are to Mike to it's point of and some us helped funding earlier. when resilient, But occur. mentioned expensive puts takes quite that that has in which down in this

Ebrahim Poonawala

questions. for Thanks taking it. Got my

John Hairston

Yes. you Thank much. so

Operator

you. Thank

Our from Olney next question comes Stephens. with Matt

open. Your line is now

Matt Olney

the mentioned am you on circle XX% that you near expect increased criticized additional want this what quarter. am that in the loans then expectations to back figure just you of far I the to I be guys. out like John, could And XX%? from talking Are off, downgraded? migration Thanks And sounds potentially evaluation it I along Hi. we term. level here? in credits curious trying And to are are around another credit. how

Chris Ziluca

Yes.

this Chris Ziluca. So is

analysis in I of or kind any that they always many addressing of can in how respects that of are weighted back whether But businesses closures cautious it because unknown surface thus full depending not think risk have is are we that. sort there things done on and being roll we gone have pretty all the the how about and portfolio. like in a through pretty of feel loans our good things we thorough our We portfolio we far. credits

plenty really imagine, some So given don't see, although and to as you is sort credits. can opportunities so some there of customers it be upgrade be will there be of to somewhat days we will also and and the will and some any downward. cycle this migration in both the at there stage COVID We be then are impact economic uneven. significant the in, will There that quarter,

our structured done But process normal we in that place, credits opportunity we about that our during addition to of really pretty certain solutions we portfolio have as the put work cycle. well the have to risk process rating. management used and Some our be through deferral in the actually

I bigger juncture. this the see this I we at going surface, all point, roundabout and at it's don't reality to of level the quite can bit things of we a But think think So in little answer. that are migration, migration saw QX the a is those

Matt Olney

That's helpful. Okay.

John Hairston

and middle or hotel of we better this understandable the next this reason for know XXXX. for than Part levels the we Matt, hospitality what tend year, that John. migration what the out parts are specific in obviously of And based on better today, occupancy projected it's Chris of saw shared tremendously you And situation about if is which is which lot to that obviously XX%, XX% look the is a given footprint, that to migration and is that in. be Yes. we is of XX% over was

attractions, tradeshows as convention like by get will and be happened into migration hotels year, event this next and and that by year be organizations, probably to led things people more So it's we narrowly. are likely festivals really driven that management that

several is. over way quality And is it deal would candor depth last years, agree that I so five is our and credits and bumps sector with Chris. depending there given think asset with and will be the in image what who I very and expectation on the a company experience we high. has the But Obviously, the energy improve been as looking its to review

very There deeper push think street. no anything what I XX% we the quarter. this so accurately have down kicking And or for that actually a reflects will can fact the the migration is reaching

it think is stated. exactly I what we So

Matt Olney

Okay. fair points. healthcare quarter. this going was And back All the credit very charged-off to then that

And I out segment Which think office? this Nashville was healthcare of into different you in divided the have past was this Thanks. the segments. from?

John Hairston

don't It too tell can that inappropriate. But multitude healthcare income much regional the business, from be group. a it an the national And their a in was not. while derived credit. was was you a a I of I it's get organization That want healthcare offices business. And are to obviously into It in will not credit. not one that little as

four much months. dental a part footprint, as better so And had for as five or and we with physicians basically our were of closed across the of lot closure offices

we were taking was of felt revenue treatment and we the off that position going P&L with so curtailment, in for account better the ahead And a where now. the

Matt Olney

That's Okay. helpful.

structured graph of that coming Just like and solutions. relatively us gave slide the are year-end? for stable one Do obviously now still to towards anticipate that those think million deferrals me. about be and of grow nice will down as there a you the we you On $XXX $XXX between year-end? get and XX, amount have you million more Or

Mike Achary

respond Yes. to specifically. I that will

a addressed necessary our I customers. have part, For for of solutions lot the think most the we structured

and right look really solutions don't and that the structured now It put anticipate might of the deferrals it. in with for being the as of customer the to we thing vast in right But if will go in the then and at ourselves. our box substantially to able to place I think we a year. are really QX deal as XXXX. the reality, of at time is majority trying end there do up increasing that for spent put that customers building million place try $XXX certainly to really continue them, for we in will number the I things I still answer between But and for entertain right the think in deferrals, going we

John Hairston

was solutions part that of evaluate the which And did a when and not. credit criticized of we which structured you to as the have process try

doing. So that's we are what

Matt Olney

Great. Okay.

John Hairston

Did that Matt? help you,

Matt Olney

Thanks great a That's guys. appreciate Yes. it. I lot.

John Hairston

sir. for the Yes, questions. Thanks

Operator

you. Thank

with question next Jennifer comes from Our Demba Securities. Truist

Your line is now open.

Jennifer Demba

evening. Thank you. Good

John Hairston

Jennifer. Hi

Jennifer Demba

the going think continue Just the trend a in more is of fees? core hurt see and curious mortgage you in you service quarter to mortgage line? do going what to and kind seasonality you to charges income you banking Are those income card as think will in fees? fourth improvement see to And

John Hairston

out quarter. other number the this categories, them, lumpy. second And income, once as tends third we And is because quarter income in in even secondary about were the question. be John. talked look mortgage than terrific it fee we a that's outperformance at When again was of a we much and more take obviously BOLI, better there Well, to

you they service Card investments last fees that one same were up of were up quarter rate all Annuities down at up and run I charges when up. compare you out. when Mike to XX%. wanted so get were But service call X%. first XX%. And mean other categories, charges But year, the to that XX%.

categories of the as still upside indicate production in mortgage fair begins exception of amount would that wind. that income secondary so And that to a there's with those fee

look would a various traffic improvement that the categories come of have meeting because I over for accounts annuities bit investment time generate locations and accounts. upside and foot mentioned members average there investment think down in more there that we still team those I as both is little I and So into with balances as

that So we number up. traffic to get just need particular more

or income. So as out will think stronger gets I charge we deposits service migrate spent, see

see will go for season see into when get seasonal the up. up go been people more shopping, card can we that's will one the then toughest fees investment traffic. And predict. to we As annuities more And

up time you was question said, In we every quarter say terms then we think will down, of a asked great that it and and it go again. goes last I question secondary, it I think

the to mortgage down the that seasonally the almost will So income I as holiday it we secondary into drops season. typically basis off get hesitant am than say go other

that mediate than time. little more a alone, we last it down So no your I same see Did for reason other year think did reason, if answer should bit down question? moderate I or it

Jennifer Demba

Yes. Thank it. you John. I appreciate

John Hairston

Okay.

the for bet. You Thank you questions.

Operator

would Thank for back showing further remarks. over am I questions Hairston not you. like the any at I call turn this to John time. now to closing

John Hairston

care. call. your to we future. Okay. interest. the in forward Joelle Take thanks the look Be And to seeing everyone and for sometime live Thank for safe you running you

Operator

concludes today's participating. this gentlemen, and call. Ladies conference Thank you for

You may now disconnect.

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