Home BancShares Inc (HOMB) 2009 Q1 法說會逐字稿

Greetings, ladies and gentlemen. Welcome to the Home BancShares, Inc. first quarter 2009 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning. The Company participants will begin with prepared remarks, then entertain questions. (Operator Instructions)

The Company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You'll find this note on page three of their Form 10-K filed with the SEC in March 2009. At this time, all participants are in a listen-only mode. And this conference is being recorded. (Operator Instructions)

It is now my pleasure to turn the call over to our first participant, Mr. Allison.

Thank you, Leah. And thank you and welcome to the Home BancShares Q1 '09 earnings release and conference call. With me today are the usual suspects, Ron Strother, Brian Davis, and Randy Mayor, and I was able to round them up.

We continue to maintain our aggressive no-BS style when it comes to asset quality. If a problem exists, we deal with it. The fourth quarter charge and provision for loan loss was an attempt to recognize and deal with the problems in our Florida market. I don't think you will see the sky clear there until the first or second quarter of '10. However, we're making good progress and feel like we have our arms securely around the problem.

There's some bright spots. With Obama's overtures to Cuba, it has great potential effect for the Keys, and from a selfish point of view, I hope that works out. During the quarter, non-performing loans went down slightly, while non-performing assets went up slightly as we worked those through the pipeline.

I am pleased to announce that our first quarter 2009 showed a solid performance. We'll cover some of the highlights. Basically revenue and expenses. As I indicated, management was focused on improving our net interest margin and Q1 '09 showed great progress, with a year-over-year increase of 15 basis points to 3.93. We've been working pretty diligently within the Company on our interest margin and it appears to be successful. Also, that was the 15 basis points was the same on a link quarter basis. That resulted in net interest income of $21.811 million, one of the best quarters ever, almost a record. The record was $21.855 million, only $40,000 off.

In addition to that, we were able to improve recurring non-interest income from last year, up 3.8% to $7.6 million. So the revenue side was fairly strong. On the expense side, we were able to lower non-interest expense for adjustment of $750,000. As we told you a while back, we would have about $750,000 in M&A and consolidation expenses this quarter, and we had an increase in assessments and FDIC insurance of $593,000. Had we not had those, it would have resulted in a 3.9% reduction year-over-year. These two items also impacted earnings by $0.0367 per share. And without these, we saw continuing improvement in our efficiency ratio, down on a core basis to 59.71. That's an 11-basis point reduction from the fourth quarter, which if you remember, was the first time we had broken 60. So the major initiatives to improve the ratio is beginning to reflect progress.

While loan volume is growing slightly, we applaud the conservative nature of our customers in managing risk in these uncertain times. We charged off about $1.015 million for the quarter, recovered $450,000, which resulted in net charge-offs of $550,000. We made a loan loss provision of $1 million. That improved the reserve from a healthy 2.06% to 2.08%, an increase of two basis points on a link quarter basis and nine basis points year-over-year.

While revenue remains strong and expenses are coming down, mixed with a good Arkansas economy, we were able to produce a good solid quarter. Even though the activity in the Fayetteville shale has slowed somewhat, we're beginning to see the start of the activity of Hewlett-Packard and Caterpillar, as people are starting to move to town. We produced record mortgage income for the quarter, over $880,000.

Let's go to the numbers. Net income core -- we're going to deal on a core basis with everything here -- net income core, 3-31-09 was $6.7 million versus last year at $3.5 million, an increase of $3.2 million. This year's earnings on a diluted EPS core was $0.30 versus $0.17 last year. And cash earnings core was $7 million versus $3.8 million last year. That resulted in $0.32 for this quarter on a cash basis versus $0.19 last year. On a link quarter basis, we were short about $120,000, $6.8 million in the fourth quarter and $6.7 million in the first quarter this year.

Diluted EPS core was $0.34 at 12-31, and $0.30 this year. The difference is primarily the TARP money, which hits us for about $0.03 a quarter, and that's a rounding. They caught us $0.04 this quarter. Cash earnings core, $7 million versus $7.1 million, short by $121,000, and cash diluted EPS core, $0.32 versus $0.35. Net interest income, as I said earlier, was not a record, but almost a record -- $21.8 million, up $1 million over 3-31-08. Net interest income on a core basis, $7.6 million versus 3-31-08 is $7.3 million. And non-interest expense, $18.6 million versus $18.7 million, a reduction on the quarter at 3-31-09. So we're pleased with being able to raise the revenue and maintain the expenses. And that's part of the efficiency ratio taking hold.

Net interest margin grew from last year at 3.78% to 3.93%, up 15 basis points. On a link quarter basis, net interest income was also up about $186,000 as a result of the margin improvements, and non-interest income was up about $49,000. While non-interest expense shows to be up $266,000, less the FDIC assessments you would have had a reduction quarter over quarter by $220,000. Return on assets core, last year 0.55%, this year, 1.05%. Cash ROA on a core basis, last year 0.61%, this year, 1.11%. And cash return on tangible common equity was 6.79 last year versus 11.30 this year. Big change in efficiency ratio, from 63.10% last year to 59.71%, as I said in my opening remarks, down 339 basis points. On a link quarter basis, 12-31-08 was 1.04%, first quarter, 1.05%. Cash ROA on core, first quarter, 1.11% versus last year at 1.10%.

Cash return on average tangible common equity, 11.30%, down a little bit from the 12-31 quarter at 12.04%. And efficiency ratio, again, was down 11 basis points at the 3-31 quarter as we continue to work on that. Loans grew by about $100 million, up 5.3% on a year-over-year basis. Total assets, up $15 million to $2.59 billion, while deposits decreased to about $19 billion as we paid off some broker deposits and allowed some hot money to run out of the bank. Total common equity increased about $3.3 million to $289 million. On a link quarter basis, we had some loan growth, be it slight, but it was about $10 million in loan growth. Total assets grew $6 million. While deposits decreased by about $12 million, and that primarily was broker deposits. And total common equity grew by $6.6 million and loan to deposit ratio stays a strong, 1.07%.

On the allowance side, allowance and loan losses, 1.99% last year. We grew it to up nine basis points to 2.08% this year. Last, non-performing last year was 308% versus 168% this year. And non-performing loans to loans, as we discussed, would go up, went from 0.64% to 1.24%, and non-performing assets to assets were 0.67% last year, up to 1.54% as we work through the problems primarily in Florida. On a link quarter basis, the last loan loss grew by two basis points to 2.08% from 2.06%. And allowance of non-performing grew from 135% to 168%, so that was a plus there on that side, while non-performing loans to loans decreased from 1.53% to 1.24% for this year. And non-performing assets to assets increased slightly 12 basis points.

For the quarter, we only opened one branch. That was in Hebrew Springs, Arkansas. We probably may open another branch or two in that market at some point in time, but we don't have anything out there to announce now.

That pretty much concludes my opening remarks. We'll go to Ron Strother and let Ron tell you about loans. Ron?

Thank you, Johnny. Let me touch on loan volume to start with. As Johnny previously indicated, we saw an increase in loans outstanding of $100 million quarter over quarter, or 5.3% annualized. Q1 '09 compared to Q4 '08 slowed somewhat with a $10 million increase for the quarter, or 2.1% annualized. This slowdown was not unexpected. Our customers have grown more cautious in this weakening economy. Fundings were largely due to committed projects being built out.

Touching on mix for a second, it remains basically unchanged, with real estate composing 82.7% of the portfolio, a slight decrease in consumer and C&I loans during the quarter. John has already touched on asset quality, but let me amplify a little bit. Non-performing assets increased about 12 basis points at Q1 '09 compared to Q4 '08. However, the positive news is that we were able to move about $8.6 million of MPLs to foreclosed assets held for sale. We call that OREO. This project in Florida is now being marketed aggressively. Additionally, about one half of the increase in MPAs is an SBA loan in Little Rock, with no loss expected.

As John indicated, we added about $1 million to the provision for the quarter, with only $563,000 in net charge-offs. That allowed the allowance to grow by two BP to a very healthy 2.08%.

As John said, the problems are clearly in Florida. 58% of the MPAs are in Florida. 70% of the OREO is in Florida. Arkansas' NPLs represents only 73 basis points of their portfolio, while Florida's NPLs represent 3.74% of their portfolio.

John, that concludes my remarks on loans.

Thank you, Ron. We'll go to the margin guru, we'll go to Mr. Mayor. And he'll predict that margins are going to shrink because he has for the last two years. We'll see what he has to say. Randy?

I'm going to stay away from any predictions. As Johnny mentioned, the net interest margin did improve 15 basis points on link quarter basis from 3.78% to 3.93%. TARP proceeds that we obtained during the quarter contributed about 5.3 basis points to the margin for the quarter. Once again, the liability side of the balance sheet was responsible for most of the improvement with the cost of liabilities dropping 22 basis points, from 2.51% to 2.29%. The yield on assets only declined by nine basis points from 5.98% to 5.89%.

Currently, our repricing gap is 8.5% positive within the 12-month window, which should prove beneficial if and/or when rates decide to increase. Time deposit balances, as Johnny mentioned, declined $67 million for the quarter, with $52 million of that coming in the broker deposit area. We've basically taken the TARP proceeds and utilized them as a funding source and elected not to renew our broker deposits at this time.

That's all on the margin side.

Randy, thanks. I'll summarize here before we go to Q&A. Even though, as I said earlier, the Fayetteville shale has slowed down some due to natural gas prices below $4, that still is healthy in this market. With HP, Southwest Energy, and Caterpillar picking up the slack, we have barely seen any difference. The Company continues to maintain a strong insider ownership, and most of the assets, 85% of the assets, are in the stable Arkansas economy. We're continuing to have modest loan growth and a bright spot for the quarter certainly was record mortgage income at $880,000. With an improving core efficiency ratio, and as I told you, we hope that our run rate, you can look at our run rate, the fourth quarter of this year, and get the feel for what we believe is going to be a strong run rate.

We continue to build strong loan loss reserves, and a stable to improving net interest margin. We're continuing to try to push that margin up. I'm optimistic we can push it up. I would like to see a four and I would like to see something above that. I don't know that we can get there, but we're going to continue to push. And as you well know, over $350 million in capital, the Company's in strong position with leverage capital of -- I won't call it excess. Let's call it over regulatory limits, regulatory numbers, of $212 million on leverage, $200 million on tier, and $140 million on risk-based capital. I think that bodes well for the Company, and thank you.

At this time, we will go to questions and answer. (Operator Instructions) Pardon me. Mr. Arfstrom from RBC Capital Markets.

Hi, it's John Arfstrom. Can you guys hear me?

Yes, John, how are you?

Ron, can you clarify what you said on the non-performing loan that was the SBA loan? You said it was an increase and I'm assuming you meant the annual increase, is that right?

Well, let me speak to the SBA loan. What I was saying was, of the increase in MPAs, about half of that is an SBA loan in Little Rock on an establishment where we have a first lien position and the SBA has a second lien position behind us and there's more than ample collateral to get us out. So, John, we don't perceive a loss in that credit.

Okay, and that's in MPL, is that right?

Yes, yes. It has not gone to other real estate owned at this point. That is right. It's MPL, not MPA.

Okay, and then in terms of your OREO, can you just run down the components of that for us?

I think predominantly Florida. We still have that issue in the Upper Keys that you're familiar with, that strip center. We have a house that is coming out, was supposed to close last Friday at about $1.1 million, so we have that coming out. And the biggest addition to OREO was a project in the Middle Keys where we got title to that and it's a series of lots and a couple model homes, and that's what I indicated, those are now on the market being aggressively marketed by us. We have control of that property now and we can now liquidate it.

Okay. And I know you guys are agressive in valuing these projects when you take them to OREO, but how do you feel about the valuations on that?

We wrote that project -- this is Johnny. We wrote the project down by almost, a little less than $6.7 million.

At year end, Johnny.

At year end. We wrote it down at year end. That was one of the -- that was the largest chargedown at the end of the year, was that project. And we wrote it 50%.

We've had offers on the homes, John. As you know, you've seen them I think, two model homes. We've had offers on those homes. They haven't met their expectation. Allegedly, there's people circling on the lots. We feel good about the bank-owned balance.

Okay, good. Early results from the name change? I know Florida was a little sooner, but in some of your core markets as well. Can you talk a little bit about that?

Well, if you remember, the Company branded the logo with the names in the middle of the logos, and so far, so good. It's been actually very successful. Our marketing department's done a good job. Four of the banks are in now. We would like two more, which will come in, guys, what, June 20? June 20, when we convert both the Centennial Bank in Little Rock, as well as Twin City Bank in Little Rock to Centennial Bank. But so far, so good. People pretty much look at the logo anyway and are familiar with -- people do business with people, not necessarily with names.

But the Marine Bank name hasn't been an issue?

It has not been an issue, absolutely has not been an issue. When I feared it would be an issue.

Yes, okay. And then just any overarching thoughts on TARP capital and your thoughts on how long you would like to keep that?

You know, I've been asked that question by some bankers recently, and we took about $50 million, could have taken $66 million, if you remember. I'm just going to kind of sit back. I think our Company's going to -- we kind of look at it as insurance. You know, you insure your car in case you have a wreck. You don't think you're going to, but it's just good to have the insurance. We think we're going to sit with that. And I'm anxious to see, as our friends at Iberia and some of these other people pay the money back, what happens to the warrants. I think it's a little early to be anticipating, be deciding what to do with it. I'm going to watch these other guys and let them guinea pig it a little bit and then see how that works out for us. I think it's just healthy to sit with it right now.

As one of my directors said, it's kind of like going to the ball game and you're not sure how cold it's going to get, so you take a coat just in case you need it. So we just look at it as insurance. It is fairly expensive. We're paying 5% after-tax for it. And that relates to about 8.9 something pretax yield that we have to get out of that. Had a customer the other day thought we were charging too much, John. I said I tell you what we're going to do, we're going to let you have it at cost at 8.94%. So we're going to sit on it for a while. We're talking to the bankers and visiting with the bankers about what we should do and what they see out there, but it's too early for us right now.

All right. Thanks for the help.

Thank you.

Thank you. Our next question comes from Andy Stapp of B Riley and Co. Please go ahead.

Hi, guys, nice quarter.

Thank you, Andy.

Can you give us update on the Florida Keys economy, especially I would think tourism would be weighing down on it?

Well, interestingly enough, they have cut some of the prices on the hotels, I guess they are wrestling a little bit. But the times I've been down, it's been quite a beehive of activity. We're beginning to see a few sales in that marketplace. We're beginning to see, as Ron said, we have a house we think will close in the next two or three weeks, that's a sale. We have two or three other pieces of property pending. We have, Ron had told me just prior to the call, looks like we have a big payoff coming in on a piece of property that we were concerned about. It's okay. The volume of non-performing assets coming in has slowed. We have one project in Key West I'm a little concerned about, but it has slowed and I'm going to have to say that it is maybe declining a little bit, but not at the rate that it was, Andy.

Okay. And the increase in MPAs you got for the quarter, is that the run rate you see for the balance of the year?

Well, that's an ebb and flow, as you know. You got stuff coming in and you got stuff going out and we've got some offers on some properties that we think will close. There's some more. It's not over. Let me say it's not over in the Florida Keys, but we've dealt with a lot of it. And some of those that we charged substantially at the end of the year and put on non-performing, ironically are paying as agreed, if you can believe that. So we think we're in a good position there, Andy. If we continue to -- if we get new stuff, as we sell some of these and some of them heal up, and some of them are healing up, then we may have additional reserve money there. And hopefully we'll see some recoveries.

Okay. As you mentioned, loan growth was muted. Are there any prospects for improvement there, or do you think it's going to stay muted until customers are willing to borrow?

I'll answer that, and then I'll let Ron comment on it. I think this crisis has scared borrowers, good borrowers, and I think they are ultra, ultra conservative in the marketplace now. We're not seeing the volume of new credits that we would like to see. We're seeing some credits come to us that are having problems at other banks and we're not involving ourselves in that. I think it's primarily the fear that's out there and I think it's out there nationwide. It has subsided recently. We have begun to see a little bit of activity and that may be a plus that the world thinks it's stabilizing somewhat. Ron?

Yes, Andy, I've chosen my words very carefully at the first there on our customers growing more cautious. We have a substantial project where the customer had asked for about $17 million and we did the land takedown and the customer felt it wasn't right so they canceled their commitment on the vertical part and we are left with a conforming real estate loan. So we stand ready, willing and able to make any loan that's out there or move a credit from another bank, but we're going to react to the demand that's before us.

Okay. Are you seeing much in the way of opportunities to gain mortgage here from some of your larger distracted competitors?

Well, a big competitor, a big regional is one of the competitors here, and one thing we've seen there is that when they ran the price of deposits up on the liability side, they have quit that. They have backed off of that high, high cost of funds and it's enabled us to, we think, to pick up some of that. We let it run. We let some of that money run when we were competing against 3%, and 3.5% and 4% and 4.25% CDs. We just let it go and we think that money will come back to us. I think they would rather be with us. But really overall on the pricing side, on both the loan and the deposit side, it's gotten really pretty rational in this state. I think the bankers have decided it's time to make some money. So there are some opportunities to take some market share from some other people and we'll do that when appropriate.

Yes, but are there opportunities to take some talent away that's frustrated with their employers and bring the good part of their books over, leave the bad stuff behind?

Ron?

We're concentrating on private banking right now in a pretty big way, and we got a real All-Star that was with us at the old bank, Andy. You remember the First Commercial story. And he has a big book. And we are very selective. And when those opportunities avail, we do move them over, yes.

Okay. And what about opportunities for deposit growth?

There's no doubt that there's going to be opportunities for deposit growth. I think our non-interest deposits went up pretty substantial for the quarter. We have not been aggressive. We have kept our customers competitive, but there has been tremendous opportunity, Andy, on the Federal Home Loan borrowing side. We were able to pick up money from five-year fixed money from -- we started buying it a little early, if you remember the story. I started buying it a little over 3, and then bought it at 2.72, 2.50, 2.30, 2.20, down to a low of 2.01 and change. So there's been some great opportunities there.

And we absolutely look every day. If we need money, we decide if we need to go Federal Home Loan or we want to go to the deposit world and get it or whether we want to do broker deposits. We have our broker deposit -- we had about $70 million in brokered and we're down to $20 million in broker deposits. And that money looks awfully cheap right now. So wherever the best options are, this corporation is committed to improving this margin. We need to see 4-plus. We ran a 3.99 in February. We were less than that at, of course, in January. And ended up with a 3.93. So we need to see a 4 handle here pretty quick. That's the driving force for us.

Okay. Thank you very much.

Thank you.

Thank you. Our next question comes from Kevin Reynolds of Wunderlich Securities. Please go ahead.

Good afternoon, gentlemen. Good quarter. And wanted to ask a little bit of a conceptual question, I suppose. With you capital levels as strong as they are, particularly your common, with your two state footprint, and then the difficulties that are either already existing in Florida or likely to continue in certain markets in Arkansas, are you interested in pursuing acquisitions, and I guess mostly of the assisted variety, and are you getting calls on that? And then beyond that, are you getting calls for things outside your existing markets since your capital levels are so strong?

We like our capital levels. We like them. Proud that we have the capital levels that we have. We will continue to pursue acquisitions and we're looking for the right transaction. We looked at some transactions earlier and really kind of wasted our time with those transactions because when we finished the due diligence, there wasn't anything left. So we're looking for a good transaction or two. We would like to have a larger transaction in the $1 billion to $1.5 billion area. Ron, do you want to comment on that?

We're on all the lists and we get the calls, and as John said, it's, it's awfully ugly. When you get a call from a regulator, it's pretty tough. We would like to see something that is worth our time in an assisted type transaction. As far as clean banks, we've always stood ready to look at those also.

We're getting the information. We just haven't seen anything that tweaked us yet.

There's some here in the state that you know about, one big one. We went through that one, and we're on the list.

Okay, and then with respect to potential for transactions that are not assisted, has there been any improvement in the expectations on the other side, or is that the primary constraint right now in terms of actually finding something that you can do?

There just hadn't been any activity on a transaction that's non-assisted. There just really hasn't been any activity to speak of. I think you can look nationwide. You know as well as I do, Kevin, we haven't seen much M&A activity out there. I expect if these prices remain at the levels that they are today, I expect we'll probably see some of that activity coming in the future. Probably in '10 more than '09, but we have not -- we would, as Ron said, if it was a healthy institution, we would look at it. We have had some opportunities thrown at us in some telephone calls, but it's not some places that we want to be. We're really primarily focused on central Arkansas right now, as well as primarily Little Rock. We've had a few light discussions in the Florida market, but the meat of our management team is in Arkansas. It would make it a lot easier to do an Arkansas transaction.

Okay, thank you.

Thank you. Our next question is from Matt Olney of Stephens, Inc. Please go ahead.

Hey, good afternoon, guys.

Hi, Matt.

Can you remind us how much you have left in the consolidation expenses from Metavante and the charter stuff and when should we expect to see that?

You will see it in the second quarter. Randy, will any of it drift into the third? Do you want to cover that?

Yes, there could be a little bit that drifts into third, since the conversion is so close to the end of the second quarter there, Matt. I would say somewhere around the $1 million dollar range would probably be the max on that.

And the FDIC assessment, or just the regular insurance is about $965,000 first quarter, so $1 million. Is that a pretty good run rate going forward, excluding the one-time assessment?

Well, yes, there's not a one-time assessment on this quarter and we haven't heard the final resolution for what the second quarter one-time assessment would be, but I believe that the $1 million per quarter excluding the special assessment is correct.

So you're going to treat the one-time assessment as a one-time hit to 2Q, I assume?

I sure would like to think so. I mean you're going to help us out by doing that, aren't you?

Of course. And, Johnny, could you remind us of the efficiency ratio targets you have going forward and when you think you can get there?

You're talking about my targets or the rest of the team's targets?

Easy, Matt!

I had originally had a 55 target. I told them to break 60 first and they have done that. And then I told them 55. But I've got my eye on a better run rate than that. I would like to see a 50. But I always push a little harder for these guys than what they think they can get to. But hopefully we'll see something in that range, the 55, somewhere in the 55 range in the start -- for the fourth quarter run rate. That will make it significant. We're getting there. As you remember, I'm not a big guy on consultants, but I'm seeing it happen. I'm really beginning to see it happen. We're not there with it, but we are maybe 20% or 25% implemented at this point in time. Everybody knows what their charge is, everybody's aware of what needs to be done, and I'm pretty optimistic that the number's going to be pretty good for us. I'm beginning to believe in it, Matt!

Well, that's good.

Randy and I meet with these teams regularly. We're broken up into units or teams, whether it's retail or lending or whatever, and they are making good progress, as Johnny said. They are penetrating. Some have penetrated 50%. Randy and I met with them this week. We gave them a charge to try to get to the 90% range well before we get to the end of Q3. But all these initiatives, if you will, as John said, are falling into place. So hopefully we can get everything done by the end of Q3.

It's become a focus of everyone corporate-wide, is looking at what we can do to save a buck here and a buck there. And the study was pretty good and it laid it out pretty well for us, so hopefully -- I still am optimist that fourth quarter will be -- I would like to see it in the 55, mid-50s.

Okay. And lastly, the 10-K mentioned the renegotiated credits, somewhere around $16 million, $17 million as of 4Q. Can you give us an idea of some more details on these credits that are renegotiated, where are they and what types of credit and how have you changed the terms on these?

'm a little aggravated about that category. That category gets a little over the top. The world knows, particularly in Florida, that they can come in and squeeze you on a little bit on the interest rate. So if we adjust the interest rate, then some of these credits ultimately appear on renegotiate. I looked at one a while ago that was the largest one in that category and he had been two times 10 in the last three years. Two times 10 days. We did adjust his interest rate. He has never been late. Some of them in there, and I'll let Ron talk more about this, some of them in this we dealt with in the fourth quarter. And Ron can elaborate more. He thinks some of them were being double counted. Ron, do you want--

Yes, Matt, we face this, we talked to the regulators the other day. Randy and I were invited to a meeting, and as John said, we voiced our frustration about having yet another club to beat us with. But these credits have obviously shown some sign of weakness, but, Matt, they have gone through the grading system. They are either criticized, classified. If appropriate, we've gone through the FAS 5 and 114. In a couple of cases, there are specific reserves against the credits, but the challenge Johnny's given us, and I think it's correct, our desire is to keep the people in the property as long as they can or will pay. And as you know, Matt, if they make their payment successfully under this plan for 12 months, they get to come off this list. So we could be hard about it and say, you know what, either pay us or we're going to foreclose. And if they say no, I need a little bit of relief, if we work with them, they have got 12 months to clean it up and they come off the list.

And Matt, some of these people are playing a game. Some of these people that say they can't pay suddenly do pay and have the money. They want some kind of concession. So one particular example, we had a partnership in Florida. They said we can't pay. Well, they did pay. They got a reduction in interest rate, and they did pay, and in conversation with the other partner, he said, "Well, I wired him $300,000 last week." That's enough for the next 10 payments. So I mean some of this is a game and some of these -- I think it's a new club to beat us with that probably doesn't need to be there. When I think back about renegotiated credits, I've had renegotiated credits since the world started in the banking business and they either work out or they don't work out. But probably the majority of these credits that I'm looking at that are under renegotiation are going to work out.

So you would say most of these are in Florida and most of these are renegotiated on the interest rate rather than extending maturities out?

That's correct. Well, some of them got maturity change. One guy said, "Hey, it's tough on me right now, can you put me on interest-only for a year?" We said sure. He's been a good customer and paid good. But every one -- let me say this. The largest, of this $17 million, they are all current and paying as agreed and there's none of them over 30 days past due.

Okay. That's very helpful. And so you think the balance is about $17 million in first quarter as well?

It's going to be $19.1 million.

$19.1 million, is that what it's going to be? Okay. I argue with some of those credits, but the law says what the law says, and I just shake my head and say put down what you want to.

We're following the same rules that are required for in the call report, Matt. The $16 million was in the consolidated call report. And when you get right down to it, I mean I'm not the loan guy, but some of it can be defined a little bit of a gray area, but we've tried to take what we believe is the appropriate approach to put those in there, and we do the best that we can.

We call a spade a spade, and our team, when they see something that's just a little bit shaky to them, they put it on that list. I argue with it, but I have quit arguing.

All right. Thanks, guys. Great quarter.

Okay, thank you very much. We appreciate it. I thank you for your interest in Home BancShares, and I guess we're done. Are you with us, Andrea?

I'm here, sir. We have no further questions at this time.

Thank you very much, and we'll talk to you in 90 days.

Thank you. This does conclude today's conference. At this time, you may disconnect. Thank you.