HOMB Q3 2026 earnings call transcript, October 15, 2026

Greetings, ladies and gentlemen. Welcome to the Home Bank Share Incorporated third quarter 2026 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued after the market closed yesterday. The company presenters will begin with prepared remarks, then entertain questions. Please note that if you would like to

ask a question during the question and answer session, please press star, then one on a touch tone phone. If you decide you want to withdraw your question, press star. Then one again to remove yourself from the list. The company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You will find this note on page three of their Form 10-K filed with the SEC in February 2026. At this time, all participants are in listen-only mode and this conference is being recorded. It is now my pleasure to turn the call over to Donna Townsall, Director of Investor Relations. Donna, please go ahead.

Thank you. Good afternoon and welcome to our third quarter conference call. With me for today's discussion is our Chairman John Allison, Stephen Tipton, Chief Executive Officer of Centennial Bank, Kevin Hester, President and Chief Lending Officer, Brian Davis, our Chief Financial Officer, Chris Poulton, President of CCFG, and Scott Walter of Shore Premier Finance. The story of the quarter was stability, strength, and shareholder value creation. All banks are not created equal in management, profitability, margin, and among many other categories, and we certainly work hard at home to set ourselves apart. We are proud to announce another record-setting quarter here at home, and our team is prepared to provide more details about our performance. Our first speaker today will be our chairman, John Allison. Welcome, everyone. It's another strong quarter for home bank shares, led by record earnings of $129.1 million, or 65 cents a share. For the first nine months, of 26, we remain on the strong path towards my goal, our goal, of $500 million. Or does it sound better to say a half a billion? I never thought I'd be saying that. But we're on the path for that. For the first nine months of 26, we produced 380 million adjusted earnings, keeping us on a strong path towards our goal of 500 million. Really, the real difference between the earnings and the adjusted earnings is primarily amount of commerce, the merger expense of 12 to $13 million. During the quarter, we paid our new dividend of 23 cents a share. I know y'all are all happy with that. I would think that's a nine and a half percent increase. And my wife is extremely happy. As y'all remember, she's a dividend hawk for everyone. Increase in the last quarter, we repurchased 1,300,000 shares for approximately 39.3 million, creating a shareholder buyback yield of 0.6

nine in the third quarter. Second quarter, we created a shareholder buyback yield of 0.77 and the first quarter of 0.25. So total through three quarters, additional shareholder return of 1.71%. For the three quarters, we've repurchased 3.3 million shares, approximately 94.4 million, with plans to continue stock repurchases during the fourth quarter. Couple that with the new dividend yield are approximately 3%. It is our goal to return as much capital to our shareholders as prudent to do so. I understand the importance of shareholders because they are the ones who we work for. Being a founder, chairman, owner, operator, and largest individual shareholder, I understand the alignment firsthand management is invested in alongside our shareholders, and we remain committed to sharing the rewards of the company. performance with them. That more than confirms the passion and drive to share the rewards with all our shareholders. HOMB's earnings power and balance sheet flexibility was shining brightly in the third quarter, with record profitability, strong stock repurchases, margin expansion, increased dividend, consistent ROA, strong PPNR, tangible book for share growth, low efficiency. ratio. It'll be interesting to see once we, as time goes on in this quarter, how we compare to the rest of the industry. We're proud of the fact that we've been named by many companies for outstanding peer leading performance awards, year in and year out, and as we forge forward on our goal of a half a billion dollars in profit. As I said in the second quarter, Mountain Commerce transaction is performing very well and making a continued contribution to the total company. Based on what

I've seen, I do that transaction again. We expect additional benefits as we complete the back office integration during the fourth quarter. Congratulations on a good job to our new Tennessee partners. I'm proud of the work you're doing. Again, the big surprise like the second quarter was the third quarter average loan growth balance is outstanding. What appeared to be a large down quarter like the last quarter turned out to be only down $28 million. On average balances from last quarter. That's a result of keeping many of the loans and payoffs coming late in the quarter. Our funding strategy also continued to benefit earnings. Barn expenses during the quarter declined by $2.3 million. Decrease in interest expense on deposits was $1.2 million of that and decrease in $1.1 million in interest expense on federal home loan borrowings and other borrowings as we reduced total borrowings by $200 million.

Many banks may think their AOCI pain is over because they restructured the balance sheet. It took hundreds of millions of dollars and in some cases billions of dollars of losses attempting to repair the damage inflicted by their decisions. The story appears to be repeating itself again as rates continue to climb. Home avoided taking excessive duration risk, maintained balance sheet flexibility, and protected shareholder capital. The excellent decision not to build a large, long duration securities portfolio has proven to be the right one. High rates still affected our AOCI during the quarter, but impact remained manageable relative to our size. If you remember, we've not bought securities in years to speak of. A key point that differentiates home from most banks as evidenced by the increase in margin for the quarter is the balance sheet is structured to increase the margin as rates increase. Donna said all banks are not created equally and they're not created equally. But when rates go up, bank stocks usually go down when it's actually positive for home bank shares as you can see for the quarter. We built this balance sheet to perform through different economic and interest rate environments and that discipline continues to benefit our shareholders through today. Those pushing public banks to buy low-rate long-term securities several years ago are now the ones pushing for growth. Grow, grow, grow. Growth at any expense. They say, Johnny, open up that loan machine. I really bet that few, if any of them, have ever run a bank. Being one of the most profitable and safest banks in the country, year in and year out, has worked for our shareholders. We will stay the course as we have in the past. I'd rather be known as one of the safest and most profitable banks.

in the United States than ones with problems losing millions of hard-earned money of the shareholders. We will grow when opportunities meet our standards for credit quality, pricing, and shareholder returns. We will stay the course and you can bank on that. Regarding our large non-performing loan we've been discussing for several quarters, or our long-standing guidance has been, we have no additional loss in the large Texas CNI relationship. And in fact, we expect recoveries over time. There's been a lot of positive movement in this credit over the last 90 days. 80% of the assets of the company are under a signed asset purchase agreement that we expect to close tomorrow, next week, three weeks from now, but soon. And the remaining 20% have a preliminary agreement with only one contingency that will be resolved of once the first part is sold and completed. So when the 80% sold, we understand the other 20% will come right after that. We expect these transactions to close this quarter. The scheduled proceeds from these two sale transactions would result in a recovery over the current carrying balance. Remaining balance is owed and the proceeds would be between the personal guarantors and home bank shares. Profitability, as I said earlier, of our top. Certainly we had a 166 PPNR and I think Steven's going to cover most of those. We came out with a pretty good efficiency ratio of 40.84 for the quarter and a 2.11 RLA and that's without the mountain commerce conversion.

And I'm performing ticked up a little bit, but that's not concerning to us at that. I think Chris had a little one that popped up, 11 or 12 million and he's around to discuss it if anybody wants to ask a question. I'd like to say a special thanks to our team for continuing to. Produced better numbers almost every quarter in our 26 year life. We're honored to be a continuing top performer year in and year out. Donna, I think that's all the news I have because all the news I have was good and I have no bad news. Okay. Well, no bad news is good news. So thank you, Johnny. Our next report comes from Stephen Sipton. Thanks, Donna. As Johnny mentioned, the third quarter of 2026 was another strong performance for home and Centennial Bank. Adjusted earnings were $129.1 million, an increase of $1 million from last quarter. Performance metrics are, again, top tier with a 2.11% return on assets and a 16.54% return on tangible common equity, which is on a TCE ratio of 13.48%. The reported net interest margin was 4.53%, an increase of two basis points from Q2. The poor margin. Excluding event income was 4.50%, up three basis points from the prior quarter, up four basis points year over year. The overall loan yield, excluding event income, averaged 6.91% and exited the quarter at 6.90%, while interest-bearing deposit costs averaged 2.37%. Total deposit costs were 1.83% in Q3 and exited the quarter at 1.81%.

Now, switching to... To the balance sheet, legacy deposit balances declined in Q3 by $358 million, as a result of a decline in municipal deposit balances, quarterly tax payments in September, and the reduction of wholesale deposits from the MCB acquisition. We continue to focus on core deposit relationships in this extremely competitive rate environment. Non-interest-bearing balances now stand at $4.21 billion and account for over 22% of total deposits. Loan production softened slightly in the third quarter to $850 million, reflective of our conservative approach to underwriting and discipline and pricing. Tennessee contributed nicely this quarter with almost $70 million in production. Payoff volume that we've discussed in the past materialized in Q3 with payoffs at $1.01 billion. Our pipeline for unfunded commitments remains strong at over $3.8 billion. As Johnny Mitchell said, as you mentioned, tangible book value per share grew three cents to $15.35 despite a $65 million increase in AOCI and the share repurchases. A testament to the earnings power and stability of our company. Capital levels remain extremely strong with common equity tier one capital ending at 16.7% and total risk based capital at 19.4% and reserve to total loans of 1.93%. We believe our balance sheet is well positioned to benefit from the recent moving rates. And for what looks to be additional rate hikes in the future. We have approximately $1.2 billion in fixed rate loans maturing over the next 12 months at a weighted average rate of 5.72% along with $7 billion in variable rate loans. Asset liability modeling shows a nearly 6% increase in net interest income in an up 100 basis point scenario.

We're proud of the third quarter results here at home and look forward to another record year as we round out in 2026. With that said I'll turn it back to you Donna. Thank you Stephen. Kevin Hester will wrap up our prepared remarks with an update on lending. Thanks Donna. Loan balances ended the quarter much better than we anticipated when we visited 90 days ago. We had some payoffs late in the quarter but also held on to a few that we expected to pay off. Johnny says I'm not very good at forecasting loan balances.

So I've got that going for me. I'm not sure if it's correct or not, but for what it's worth, this quarter looks better than the last. We continue to see sizable loan opportunities throughout our footprint and we're encouraged by the effort that's given by our lenders. Johnny commented on the large nonaccrual and while we'd hoped it would be a third quarter resolution, we're very encouraged by the progress made recently and we believe that the proposed asset sales validate our underwriting and management of the credit. Overall asset quality remains solid and while non-performing loans increased 11 basis points quarter over quarter, that increase is due to one CCFG loan that we expect to be resolved in this quarter and Chris is on the call to provide more color on that. We remain focused on asset quality, profitability, and growth in that order. One thing I can confidently tell you from my 65 quarters leading the lending function of this company is that this is the only... formula for long-term success in this industry. Donna, I'll give it back to you. Thank you, Kevin. Well, Johnny, before we go to Q&A, do you have any additional comments? Well, I think Stephen kind of hit that. Think about the quarter. We got an ALCI mark of $65 million. We paid our new dividend, increased dividend, and we bought back 1.3 million shares, and we still grew tangible bookbacks slightly. We didn't lose. The tangible book didn't go down. Banks sell on tangible book, and we still increase tangible book value per share. I'm very proud of that, and what that says is that home has amazing earnings power. That's what 211-ROA will do for you. I really just want to thank the entire team for continuing to deliver outstanding results nearly every year for our 26-year history.

Come back to you. HomeBank Shares has built a consistent record of top-performing banks, and the performance reflects the discipline and dedication of our employees across the company. This was another strong quarter for HomeBank Shares. We produced record earnings, meaningful capital to shareholders, maintained our balance sheet discipline, made encouraging progress on the large credit we've discussed. We remain focused on finishing the year out strong and delivering long-term value for our shareholders. Past that, I think that's enough for me. Okay, that sounds good. We will turn it over to Q&A.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimal sound quality. If you are muted locally, please remember…

to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Steve Skowkin from Piper Sandler. Your line is now open. Please go ahead.

Reminder, please unmute your device. He was going to be in kind of a rural area today. He may not be making connections. Let's move on. If he comes back, we'll handle it. How about that? Let's move on. Your next question is from the line of Woody Lay.

Hey, Woody, this is Steven. Yeah, I guess the first part of your question, you know, the core NIM, excluding event income, averaged four and a half for the quarter. It was $4.55 in September. Obviously, the rate height came halfway through the month there, so I think there may be, you know, a little bit of incremental benefit for us. And then just... You know, based on our alcohol modeling, like I said in the comments, I mean, we show, I think it's 5.6% increase to NII and up 100 basis points scenario. So that's kind of what, you know, the way we think about it today. I mean, we're certainly in a competitive environment on loans and deposits, but, you know, if we're able to control that on the deposit side and get some lift out of these maturing loans over the next 12 months, you know, I think there's a chance that it could potentially move a little higher from here.

Got it. That's helpful. And then, you know, I was curious on the growth front, you know, based on your opening comments, it seems like you're a little bit more optimistic on growth in the fourth quarter. And was curious, you know, is that a reflection of, you know, competition slowing down? Is pricing becoming... I mean... more rational, I guess. Just curious on your thoughts on maybe what's driving that clear path to growth. This is Johnny. I'll take a little and give it to Kevin after that. We had some... We lost about $500 and half a billion dollars in loans due to some unusual circumstances that we have that hit the company over the past 18 months. They're gone now. Those unusual circumstances are gone, but we're back on the long... We're back on the long wagon today. We've got lots of good stuff working, and I think you'll see, you'll be pleased to see the long growth out of home bank shares. I'll let Kevin speak to that. He was referring to it, and then we'll let Chris comment on it also. Yeah, Woody, I don't know that it... It may be saying that people are coming back to their senses with the 25 basis points that already occurred going up and the thought that there's probably 75 more coming. Yeah! That may be playing into where we're at. We're not 100% sure of that at this point, but there's certainly some good opportunities that we're looking at for this quarter, good sizable opportunities, and it's across the footprint. It's not all in one place. So we may look back at 90 days and say that, yeah, that is part of it.

All right. Well, that's all. All from me. Thanks for taking my questions. One more comment from me. We're seeing a lot of opportunities out there right now that really look good. I think you'll see. Chris, you want to comment on CCFG about what you're seeing? Sure. Thanks. Well, it's a little slow new origination wise for us in the third quarter. I mean, I think we closed towards the end of the quarter, other than two loans hadn't closed, and we probably had zero in the pipeline, you know, no soft quotes, no term sheets. But I view that as a good thing. Ultimately, the market was in transition and the market's got to catch up with us sometimes a little bit on feeling sour about things. But really, since the start of this quarter, I think people are starting to accept the way things are going to look going forward rate wise and such. And so we've seen a lot of pickup in the last couple of weeks, a lot of our existing clients, a lot of deals coming back our way that maybe went away for a little while, et cetera. But I think what we're hearing in general is it's pretty uncertain out there and in uncertain times, you know, our certainty is a virtue. So I like what we're seeing. Pipeline's filling back up and hopefully it'll continue that way. But I feel good about things. It was a little bleak in the in the third quarter.

And then I guess actually just one quick follow up. I mean, it sounds like. Pricing and spreads are a little bit incrementally positive. Just any any sense on structurally? You know, I think last quarter you called out. You're seeing some irrational structure in the in the marketplace, which was causing you to pull back. Are you still seeing any of that over the past quarter? Yeah, I don't I don't think that that's necessarily changed. I could I could believe that maybe pricing disciplines coming back a little bit more than I do. Structure discipline at this point. Got it. All right. Well, thanks for taking my question. You got it. Thanks.

Your next question is from the line of John Armstrong from RBC Capital Markets. Your line is now open. Please go ahead.

Good afternoon, Mr. Armstrong. Nice to have you with me.

Hey, hey. Thank you. Thank you. Kevin, just one quick one on loan growth. You talked a little bit about late pay. Can you help us kind of understand the sum? It was I would say the latter part of the quarter was three or four hundred million. And it's other than one that Johnny was talking about. The majority of that was just projects. You know, we do a lot of construction and projects reach the time where it's where they either sell or they move to permanent financing. And that's that's what we were seeing in the third quarter. There was a lot of projects that needed to, you know, need to move on because it was time. One of those was unusual circumstances. Great credit. 170 million dollar credit that we lost. Unusual circumstances. Hopefully that's not repeatable. Yeah. Okay. I know we tease you guys on the loan growth projections, but it sounds pretty good. From my point of view. It's better. It's much better. It's much better. I'm telling you, we're looking at some good opportunities. Yep. Okay. Just two quick ones on credit. Chris, anything to note on the CFG non-performance? Sounds like that's going to be resolved, but anything on that? And then can you guys remind us of the size of the Texas? Resolutions and what kind of a step time we could see in the Texas non-accruals? Thanks. Chris, go ahead and take the first part and I'll take the second. Okay. Yeah, the one loan that popped up is a little less than $15 million. It's a pre-development loan to a previous customer and they had developed and done fine on that. So we did a pre-development loan for them a couple years ago. It's an L.A. loan.

It's entitled for... which L.A. needs. It was adjacent to the Eaton Fire area, so kind of northeast L.A. So they had asked for some accommodation on that right after the fires. We gave them that, gave them a little extension for that. But we've kind of gotten to the end of that and we really needed to exercise our rights under the loan agreement to try to get resolution there. So we started a foreclosure action at that maturity. Since that time, we've signed an LOI for the loan sale. We put that a little bit on hold right now. We are continuing to work that, but our borrower's been in contact with us throughout. They've approached us in the last, again, in the last week or so with what they would need to do to reinstate that loan. And so we're going to give them kind of another five days or so here to come to us. We gave them a plan for reinstatement in the first stage of that over the next few days. And then there's about a 45-day period after that for them to fully do that. You know, that's our preference. Our preferences work with our borrowers when they can come to the table. So we're going to give them an opportunity. We're going to try to give them an opportunity to do that. Hopefully that's the way that works. If it doesn't, we'll go forward with the LOI or we'll go forward with foreclosure and sell the property. But our hope right now is the borrower will be able to do what they've said they can do. Good. Thank you. And on the large CNI credit, you got any more questions on that?

John, are you? Nope, nope. Just the Texas. Okay, on the large CNI credit, it's a two-piece sale. Sale number one is the marine equipment and floating stock. That brought 92% of appraisal. That's the bid. It's been purchased by New York Stock Exchange Company. The purchase agreement is signed. The purchase agreement is signed. We're waiting on approval from the Coast Guard that the employees have transferred over and the equipment will transfer over and waiting on approval from the Coast Guard. That should bring in in the $85 million range for us. The second part of that is the basically the fuel tanks. And there is a 17.5. million dollar bid on those. We should net about 16.5 out of that. So that brings us in 101-102 million dollars once that closes. The book balance, not the actual balance, but the book balance we have is 91 million. So you'll see about a 10 million dollar recovery or the low-loss reserve or whatever when that closes. And the balance is what has been default interest that we have not recognized. a penny of. So it will be between the personal guarantors and home bank shares is how we resolve whatever balance is out. But you should see recoveries there. Once we got a hold of the credit, we re-underwrote the credit and I have to congratulate our people on an outstanding job to get 92% of their prices. So,

I would have told you it would be gone by now, but sometime in the next couple of weeks, I would expect it to happen. We ll issue an 8K when that happens. And we re buying a bottle, Stephen s buying a bottle of 25-year-old Whistle Pig and Donna s having a tent party in our parking lot. So we re going to be drinking Whistle Pig and having a tent party out front here when we get final resolution. I think it s clear. Close. Close enough. I can smell the whiskey, John. Man, I wish I could get an invitation, but.

John, expenses might be up a little bit in Q4 for me. All right. Well, I think congratulations on that. That's a long time coming, but that'll be a nice step down. So thank you very much for the answers on that.

Your next question.

This question comes from the line of Brent Grabiton from Stonex Group. Your line is now open. Please go ahead.

Well, we hadn't broken yet, right? One of these deals was just about two months diluted, you know, 30 minutes or a cup of coffee diluted, you know. They've gone radio silent on me. I don't know what happened. I don't know what happened with that deal. I don't know. It was something that had a high level of interest to us, and it's just gone quiet. So I don't know where the bank is. I assume the bank will be back to us at some point in time, but that one just went quiet. One of them we pulled out on was two deals. One of them we pulled out on, and the bankers gone quiet on this other one. So it's something that I think would be good for them and good for us. I think it would be a nice transaction for HOMB to do, and we spent a lot of time modeling it and playing with it, and we're willing to bid up for it. So as it turned out, I called a banker yesterday, or told him to call me, and I hadn't heard anything from him, so it's kind of disappointing. I don't know if they used me as a stocking horse or what they did, but anyway, we'd like to have, we'd like to put a transact together, and we're ready to do that. So we'll be working on, we're always working on, there's a lot of them out there right now, opportunities to do those transactions, and our currency still is holding up fairly well. We got knocked down a little bit here. All the banks got knocked down recently, but I think we're going to have a lot of them out there.

We'll be back and we'll be able to do trades here before long. A little disappointing. That's a little disappointing that we hadn't brought that one closer to fruition, but if it doesn't work, it doesn't work. There's more out there, so we'll move on. Okay. That's helpful. I wish I'd told you we're doing due diligence. One of them we did due diligence on, and we got inside the loan book. We decided that wasn't for us. So, it was a tough deal to do anyway, and once we got in the loan book, we came out of it. Okay. And second question is, what I'm gathering from the call is it sounds like there's some budding optimism for loan growth and production, but I didn't quite get it. It sounds like you also think that maybe the payoff challenge that you've had the past two quarters, is that dwindling down? And then I always like for that if it's short premiere, we're still seeing demand or how that business would go in with higher diesel prices.

Hey, Brett, this is Kevin. I'll take the payoff. There's still, it could be close to last quarter as far as the payoff number goes. We'll see how that plays out. I mean, you had some rollover into this quarter that we thought we're going to have last quarter. So that always happens when you're looking at folks that are selling. The properties are going and getting permanent financing. You know, it's hard to pinpoint exactly when that's going to happen. So there's still a little bit of. However, from my aspect, I'm seeing better opportunities than I've seen in a while. So I think we can overcome those those payoffs. And I'm not sure they have to. They have to come down substantially because we've taken so many so far this year. So hope. We won't. We won't continue to see the big bats in the payoffs. Chris, you got anything big payoffs coming? I wouldn't say we have elevated. I mean, we we always have. We always have payoffs. I don't get payoffs. I get nervous. OK, great. I'm sorry, Johnny. I'm ready for possible loan growth is what I'm ready for. That's good to me. Thanks, guys.

Your next question comes from the line of Matt Olney from Stevens. Your line is now open. Please go ahead.

You know, some of the outflows that we had on the municipal side, most of those are tied to T-bills and, and index. So that's some of our higher cost funding that, that drew down some in the quarter.

Okay. Appreciate that, Tipton. And then I guess another follow up, Steven, you mentioned the, the variable rate loans around $7 billion. Just want to make sure that's a all in. Is that CCFG and the community bank? And just remind me within that $7 billion, kind of the repricing timing, as far as how quickly and how often those repriced. Sure. Yeah. So that does include CCFG. That's, that's what is set to, or can adjust in Q3 or Q4. So, you know, the longer term stuff I'll call adjustable, right, that we have out there. But, but what we consider variable, you know, inside of, you know, call it six months or less. And some of that's daily. Some of it's monthly. Some of it's quarterly. Three and a half, about half of the seven, three and a half billion is tied to Wall Street Journal Prime. And then 3.3 billion or so is tied to SOFR. And then we've got some other indices for the, for the balance of it. Got it. Okay, guys. Thanks for your help. It's all from me. Thanks, Matt. Thanks, Matt. Your next question is from the line of Michael.

All right that's helpful and then yeah. Do you think the shareholder yield is important Michael? Do I? Yeah I mean I think you guys have a lot of capital and deploying that capital through different buybacks and opportunistic M&A I think is what we all want to hear and see. You guys do what you've done historically so keep it up. Thank you.

Maybe maybe one last just one for me on just on the environment. Any areas in credit that you know are kind of peaking your interest at this point you know we've heard some some scuttle around you know some of the restaurant groups and maybe some leisure and hospitality. Just anything you're watching a little bit more closely here. Thanks. I don't know. We don't. Not really. We don't. See any if you're looking for a segment or problem somewhere out there. I don't know if there's any widespread problems. Some of the Texas credits created that we've we've been spent the last they will fuss at us about growth. We've been busy cleaning up that Texas stuff for three years and it all we got left maybe is a few hotels that give us a little problem. But overall asset quality other than we don't have any problems. We have these asset quality meetings in Texas takes two hours and Florida takes 10 minutes and Arkansas takes 10 minutes and you just don't have any problems in those markets. So anyway, we're continuing to work on those. But I don't see any segments anywhere. I don't, you know, we resolve this, our big credit in Texas, which we think will resolve soon and our non-performance. I mean, reserve non-performer jump over 300%. So I think you can expect that coming pretty quick. So asset quality overall is pretty good. All right. That's great to hear. I'll step back and thank you to Tracy today. Sorry for you guys lost. I think we're all missing today. So thanks again, guys. Appreciate it. Your next question is from the line of Dave Rochester from Cantor.

Your line is now open. Please go ahead. Hey, good afternoon, guys. Back on the deposit discussion, given that, you know, the incremental aggressiveness you guys had mentioned on the depositor front, how are you guys thinking about a return to deposit growth in 4Q? Are you confident in that? And do you think you can fund the loan growth you're expecting with deposit growth next quarter?

Hey, Dave. This is Steven Edsler. Certainly be the goal. We've talked about the competitive environment. Some seasonality in the last quarter, we would expect to see some of the municipal balances return there. We're talking at loan committees constantly about opportunities to get deposits with loan opportunities that come across in order to help fund that. Separate and apart from that, we've got 4.9 billion in capacity with the Federal Home Loan Bank. We've got a good cash position today. We've got securities portfolio that comes off about 30 million a month. So not concerned from a liquidity standpoint. I think historically the approach has been to use some of those avenues and take our time and pick our spots as opposed to being out here and having to run CD ads to raise funding. So, yeah. Appreciate that. And then can you just give an update on where the spot price for deposits is the quarter end and where you guys are seeing new money post the hike?

Yeah. So total deposit cost ended it. They're average 183 for the quarter, 181 for September. You know, I see our CD and money market negotiations every day. You know, our folks are doing a good job. You know, we may have to. Pay 4% here or there with the customer just because, you know, the bank down the street's running an ad at 420 for seven or eight months. But, you know, our folks do a good job in negotiating, you know, down into the low and mid threes. So I guess, I guess, you know, mid threes is kind of where we're thinking about, you know, opportunities today. Okay. And then just switching gears to the, the fee side. Okay. Things. There was a little bit of volatility in trust fees this quarter. I was just wondering what the driver that was and how should we think about that line, you know, rebounding going into 4Q next year? Yeah, some of it, some of it's seasonality in terms of when our annual trust fees are, are, are charged. You know, Q3 is generally a little bit of a, a light quarter there for trust. And then, you know, mortgage and, and CCFG fee income were a little bit light. Um, yeah, this quarter as well. Do you feel pretty good about that bouncing back next quarter? Yeah, I mean, I think if you look over the last six quarters, you know, we've, we've averaged about $50 million to shy, uh, in, in non-interest income and, and they would expect to see, uh, let's migrate back closer to that number.

Yeah, I think you heard me say that the good news is, the good news is we got customers that do real business. It's not just. Transaction. The bad news is that they make a lot of money and they pay a lot of tax. So we get hammered on the quarters. So, but they, it comes back.

Good. All right. Uh, maybe one last one on expenses, you know, some good expense control. Uh, this quarter you guys showed is just a good run rate to kind of finish out the year. And what are your thoughts on expense growth next year?

We've done a budget for next year. Yeah, I guess that's coming pretty quick isn't it, Brian? You may be working on it now, right? Uh, we're kind of waiting for Mountain Commerce to get converted. Okay. Okay. Uh, so we don't have next year's. If you've got, if I'm running, it'll be less than it is this year, but anyway. Steven's smiling. Yeah, I mean, you've got some inflationary pressure, but you know, we've also, um, we've had some things set up throughout the year. Whether it's physical space leases that we've been able to kind of work space down, we'll begin to see some of that benefit in Q4. You know, some of the lower performing segments that we have, we're taking a look at what opportunities may be there for cost savings. You've got the Mountain Commerce cost savings that we'll get some of in Q4. So some of that, you know, should offset just inflationary. pressures this quarter and next year. Okay, so maybe a flattish kind of number that making this, this is the run rate this quarter good for next quarter. For Q4 that's that's probably fair. Yeah. Alright. Thanks. Yeah. Yep. Sounds good. Thanks for all the color.

Your next question comes from the line of Ed Najarian from Havdi Group. Your line is now open. Please go ahead.

raise rates and, you know, things will kind of settle in from there until the until the next rate hike.

Okay. All right. That's, that's helpful. Thanks. Good quarter, guys. Appreciate it.

Yeah, thank you.

Your next question comes from the line of Brian Martin from Breen Capital. Your line is now open. Please go ahead.

We've already got a decent recovery the first week of this month from a charge off that we had in the first quarter of this year. So we're sitting in a recovery position nicely right now. Assuming we get some of the recoveries we would expect, I think you'd see reserve coverage grow nicely and not need that provision. Gotcha. Okay. And that could bleed into early next year. based on kind of the trends we're seeing, it sounds like, I mean, at least lower zero, whatever, you know, whatever the level is that big picture, I think about the next couple quarters. That's fair. Yeah. Okay. And just the last couple, Stephen, I think your comments on the margin, just, it sounds, you know, given the deposit cost outlook, and I don't know what the new loan yields are coming on today, but the margins more relatively stable. than, you know, rising given, given a couple rate hikes. Is that how to think about it at this point? Yeah, I think so. I mean, you know, like I said, we, we actually the quarter at 455 on a, you know, non event income basis. And, you know, I think if we can run in that range, the four and a half range, maybe a little higher, we'd be, we'd be certainly pleased. Gotcha. Okay. And the, and the new loan yields today are comparable to where they have been. Yeah, we, the 850 in production this quarter was, I think it's 695. So, you know, at the time, you know, for most of the quarter, you know, a little above prime, so. Gotcha. Okay. And the last couple, on the M&A side, Johnny, it sounds like certainly looking, but it doesn't feel like anything's imminent near term in terms of M&A, just, you know, kind of plot along here and look at the opportunity.

Please. I think that's fair. Okay. And then I'm looking for one. I'm ready to do one. We're ready to do one. We're ready to, you know, if it makes sense, we're ready to do one. So, you know, we've got some opportunities out there. The ones I was kind of hanging on this one because I really wanted to do that trade. And I guess it just went away. The banker never called me back to tell me where it was. So I don't know if he lost his phone or what. So there's another one out there. We'll go. We'll go to work on. So see if we can put it together. Yeah. Okay. And then I think you mentioned, Johnny, the buybacks. I mean, I obviously getting back the mountain commerce, but it sounded like your commentary was more that, you know, it continues in the fourth quarter, suggesting it may not be as interesting, I guess, or likely to continue into next year. I guess. Did I hear that wrong or just, you know, kind of wait and see? You heard it wrong. You heard it wrong. We've been buying stock for years and we'll continue. I know. Yep. I think you want to clarify that. Well, you know, either Stephen or I, we'll get out of the market and somehow take our stock down a dollar. And I say, Stephen, he said, I'm already buying. I'm already in there. I'm already in there this morning. I said, okay, just keep buying it. They don't want to take it down, just buy it. All right. I'm just making sure you weren't leaning towards your wife and raising the dividend more. So I.

I appreciate all the color. She texted me while ago. She's just thanking me for mentioning her on the call and letting everybody know that she's supporting. She wants another one tomorrow, but we're going to have to wait a little bit. All right. Well, thank you. Thanks for all the color, guys. I appreciate the update. All right. Appreciate it.

There are no further questions at this time. We have reached the end of the Q&A session. I will now turn the call back. Back to Mr. Allison for closing remarks. Thank you. Hopefully we keep rolling the way we're rolling. We'll hit the 500 million or y'all call me sometime. It doesn't sound better to say half a billion. What does it take, buddy? Half a billion. We started, but we couldn't spell billions. So now we're halfway there. Anyway, thank you all for your support. I think things have been We've really had a good strong year this year, and I think we're going to wrap the year up fairly strong, too. So thanks, everyone. Talk to you in 90 days.

This concludes today's call. Thank you for attending. You may now disconnect.