Home BancShares Inc (HOMB) 2017 Q3 法說會逐字稿

Greetings, ladies and gentlemen. Welcome to the Home BancShares, Inc. Third Quarter 2017 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 presenters will begin with prepared remarks, then entertain questions. (Operator Instructions) The company participants in this call are John Allison, Chairman; Randy Sims, President and CEO, Home BancShares; Tracy French, President and CEO, Centennial Bank; Brian Davis, Chief Financial Officer; Jennifer Floyd, Chief Accounting Officer; Kevin Hester, Chief Lending officer; Stephen Tipton, Chief Operating Officer. 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 3 of their Form 10-K filed with the SEC in February 2017. (Operator Instructions) and this conference is being recorded. (Operator Instructions) It is now my pleasure to turn the call over to our first presenter, Mr. Allison.

Thank you, Anita, and welcome, everyone, to the third quarter 2017 earnings release and conference call for Home BancShares. In the first quarter, we had 2 of the largest events ever in our company's history. Number one was Irma, reported to be the most powerful hurricane since Donna in 1960; and the acquisition closing of Stonegate, a $3.2 billion deal. However, of these, only one I'd describe as a pleasant experience, and that was certainly Stonegate. I want to a say special thanks to our Florida team, especially Teresa Condas and Stephanie Scuderi of the Keys. They did a great job keeping us informed. As sketchy as it was, as I said, as bad as it was, Teresa did a great job.

Sometimes, information was a little sketchy, but it was always solid. I have -- a little humorous here. Have to have a little humor in here. So talking to Stephanie Scuderi, and I said, "I'm coming. As soon as they open the airport, I'm coming in. And I'm going to get my boat, and I'm going to ride down and look at the Atlantic side and see the damage." And she said, "Be careful because there's lots of stuff, debris in the water." She said, like yesterday, as sad as this is, said, "In my dad's boat basin floated up a king-sized bed headboard and footboard all intact in his boat basin." So to give you an idea of the damage that went on, and that was the area where it wasn't supposed to be quite as bad.

After my personal trip, I realized the Keys were hit and hit hard. There was virtually no electricity or communications. Lesson learned. We all learn from experience. We probably need to look at generators in the locations, and I think we'll probably do that. Now the good news is all our people are safe and accounted for, and all of the branches are up and operating. The people in the Keys are very resilient. They've been here before and dealt with this kind of situation.

FEMA, along with the state of Florida and the military, deserves a special thanks. They were flying C-130s in there almost immediately in an out of the Florida Keys airports, bringing food and water and even a complete tent hospital. As bad as it was, I don't think anyone went without food or water. Congrats to them. As of now, all branches are up and running in the state of Florida, except for one in Naples. And Teresa said yesterday this may be the first. With the approval and the support of the regulators, our branch in Naples got hit pretty hard. So it's not open. And Tracy went to the regulators and asked them for help that we needed to move into the Stonegate branch. And they said, "Well, you're not part of Stonegate yet, and you haven't converted." Anyway, I don't know if this has ever been done before, but what you have going on in Naples is Centennial and Stonegate working side-by-side in one branch. I don't know if it's Centennial on one side and Stonegate on the other. I told someone to get me a picture of that. That may be the first. We may never see that again.

And interestingly, I know this probably won't shock you, but Comcast was supposed to be there on a certain day, and they didn't get there for 4 days to connect the lines. So our people actually operated with cellphones for 4 days, taking care of our customers. That's an outstanding effort that we all should be proud of.

So you can kind of put this in perspective, the storm. It was like 100-mile wide, EF4 tornado, with winds to 160 to 200 miles an hour that's rated devastating. And that's what it was. As I drove further down the Keys towards Key West, I saw extensive damage. We offered our customers a 90-day deferment -- all customers in the Keys a 90-day deferment, and about $120 million worth of those customers had accepted that offer. It doesn't necessarily mean they got a problem. It just means that they kind of take it if they get a chance to do that. A lot of landscaping wasn't covered by flood. It had to actually go through a building, so their pools and landscaping had to be picked up. Advanced checks for cleanups are coming in and rebuilding has started. I've probably said enough about that.

I'd like to welcome all the Stonegate team to the Home family. We're blessed with this addition of Dave Seleski and his professional team. The team of professionals, along with Home's team, has, thus far, made this deal the cleanest, smoothest transaction ever. And I say that, the cleanest, smoothest transaction ever. And it is our largest, at pretty much [charts its]. But it's really because the fact that Dave and his team have been experienced acquirers in the past, and they know what to do and how to do it. And working with our group who are experienced, it has been an absolute pleasure. Tracy French coming to me, it is the best one we've ever done. So congratulations, everyone, there.

Not expecting to close this transaction in 6 months from the time we announced. I mean, they were running 9, 10, 11 months. We didn't anticipate that. So we didn't set conversion until February. Darn it, or we would already be closing this month. That has cost us some money and will cost us some money, but we'll get through that. Hopefully, by the end of Q1, we should ring out nearly all expenses other than the cost, the carry of the branches and that's closing and some of the rental expenses. There is no substitute for experience, and it's well done by all, and congrats. Randy, I think you can claim number 26. You already claimed 25, 26. I think we were shooting for 26, weren't we, Randy?

We were shooting for 26.

Well, it wasn't record all-time earnings, but it was a good solid quarter. And when you pull out the 2 biggest expenses, which was $18 million for merger expenses and $33 million for a hurricane reserve, it may not have had to go to $33 million. Maybe should have gone to $40 million. I don't know. We don't know. We just took a guess. Kevin, are you going to talk about how you calculate that reserve?

We will, yes.

So Kevin will tell you how we came up with the $32.8 million, and it was based on percentage and different areas. Do you know Kevin? He'll lead the...

I do.

You're the one that came up with the numbers.

I've got it.

You got it? Okay. Anyway, income, had we not had those 2 -- and we had 3 other deals. We had a lease that we got out of the Panhandle. We worked out, finally worked out, and we wrote that off. We had a Las Olas branch that we took the hit on. What else do we have?

Central Florida.

Central Florida. Okay. We had a deal in Central Florida. We took all of that. So anyway, had we not done that, we would've made $46 million, a little over $46 million versus $43 million last year. So if you're not claiming number 26, I can assure you that I'm claiming 26.

Just wait until my comments.

All right. I'm just going to touch on a little bit here, and then go back to you. Had good solid revenue, asset quality continued to be strong. About $75 million worth of loan growth. We didn't -- kind of fell off a little bit at the end due to the hurricane. Hopefully, we'll get that this quarter. Margin hung in there. Efficiency was good, good core ROI, great expense control. I think expense control was -- expense was right at the same as last quarter. Total assets exceeded $14 billion, market capital of $4.5 billion and stockholders' equity grew to about $2.2 billion.

We made a major personnel announcement during the quarter. Kelly Buchanan was named Director of Corporate Branch Strategies. It's a position responsible for deposit growth and incentive programs for all our branches throughout the Centennial footprint, along with evaluating and exploring and designing new virtual branches. Kind of playing with that, we think it's got a future. Kelly's been with the bank 17 years, has been in retail banking and business development for 10, and was also branch manager for Tracy French before we acquired him -- or after we acquired him, I guess, Tracy, right?

That's correct.

And Tracy quoted -- quote was that she's the best branch manager you ever had. So congratulations to Kelly. I know she'll do a fine job.

Finally, we'll be setting the new corporate EPS goal for the company as soon as our brilliant leaders in Washington D.C. settle something on taxes. Well, that is if I live that long. So hopefully, we'll get that done. If we don't, we may, by the end of January, set the new goals. I want to watch the combined companies and watch the earnings power of Stonegate, coupled with the cost reductions and the efficiencies I think we can get there and anticipate what that's going to be for a couple of months, Randy. I'm going to let you have it, Randy, and see what you have to say about 26.

Well, thank you, Johnny. As our Chairman stated, there was a lot of noise in our third quarter between Hurricane Irma and the acquisition of Stonegate Bank, which was, and I don't mind saying this over and over and over, the largest in the history of our company. It's been said that hurricane season brings a humbling reminder that despite technologies, most of nature remains unpredictable. But it's also been said that the one thing Florida knows is how to deal with the aftermath of a hurricane. And we are proud of our bankers in Florida, as Johnny said, especially in the Keys, and their response to their community. The rebuilding has already started, and we will see an infusion of construction and restoration that will present a lot of opportunities for our banks and communities.

So let's get to the main subject that you introduced, Johnny. Last quarter, we announced 25 quarters of record earnings, and we were on pace for 26. However, during the quarter, the corporation established and accrued $33.4 million of pretax hurricane expenses, including $32.9 million to establish a storm-related provision for loan losses. Plus, we had $18.2 million of merger expenses associated with the Stonegate acquisition that closed on September 26.

So with all the noise of the third quarter, did we make 26? With so many adjustments to earnings, plus just a few days of Stonegate income, it is kind of confusing. But here is what I do know. For the third quarter of 2017, the company recorded a net quarterly profit of $14.8 million compared to $43.6 million for the same period in 2016. Now that's not going to get you record earnings. But when you do take out merger expenses and the special expense for the hurricane, or to say in a more professional way, after-tax nonfundamental earnings for the third quarter were $46.4 million, an increase of 1.1% from third quarter 2016 after-tax nonfundamental earnings. And that does get record third quarter earnings. And number 26 in a row. As Johnny said, $46 million beats $43 million all day long. So yes, Johnny, I think we can say with confidence that I'm planning that, once again, and for the 26th quarter in a row, Home BancShares had record earnings on a quarter-over-quarter basis. But with all the expenses and everything, I'm okay for those who would like to tag the quarter with an asterisk due to all the special events and provisions. You know they did that in 1961 to Roger Maris when he bit Babe Ruth's home-run record. So we would still be in good company even if you put an asterisk on it.

Now how do you know that?

Roger Maris was my favorite player growing up.

Okay. So you followed that?

And most people like Mickey Mantle, but I was a Roger Maris fan. But we need not -- one thing to remember, and this is real important, we need not let the events of Irma take away from the fact that Home BancShares is, once again, moving forward towards a very successful year. And we're excited about the positive effects on income that the Stonegate merger will have in the months to come as we gain new efficiencies in savings. And with saying all that, what a better way to tell you how the transition with Stonegate is going then to have a surprise addition to our call. Our newest regional President, Mr. Dave Seleski, is with us today. Dave, can you give us an update on how things are going?

Yes. Thanks, Randy. We're thrilled to be a part of Home BancShares. This merger really gives us a chance to be a major player in many of the best markets in Florida. We're already seeing some results on the commercial side as a result of the combination. Over the next 2 quarters, we'll continue to integrate both organizations, while evaluating revenue and growth opportunities. Specifically, we'll look to expand our treasury management services and association services throughout the state. The larger balance sheet of Home will also allow us to expand certain key Stonegate Bank lending relationships. And finally, we feel there's some room for some targeted acquisitions to complete the Florida franchise. We're looking forward to adding to the continued success of Home BancShares and continuing to have fun in growing the franchise and adding to shareholders. Thanks.

Thank you, Dave, and welcome to the Home BancShares shares family. We are certainly excited about $3.2 billion coming into our numbers. Okay. So let's get to some of the numbers.

Diluted earnings per share for the third quarter of 2017 was $0.10 per share compared to $0.31 per share for 2016 when compared to the same quarter in the prior year. Excluding merger and hurricane expenses, diluted earnings per share for the third quarter of 2017 were at $0.32 per share. Our return on average assets for the third quarter was at 0.54% as compared to 1.81% for the third quarter of 2016. Take out the merger expenses, special hurricane provision and other nonfundamental expenses, and our return on assets was at 1.70%. Our return on average assets, excluding intangible amortization, was at 0.59%. Our core return on average assets, excluding intangible and amortization, provision for loan losses, merger expenses and income taxes, was 2.94%. And our return on average TCE, excluding intangible amortization, for the quarter was 5.8%. So as of September 30, the corporation, and I'm proud to say that, this is sitting at almost $14.3 billion. Now that is a world record. Deposits ended at $10.4 billion as compared to $6.94 billion at 12/31/16, which is reflective of the addition of Stonegate. We've got a great management team on hand to talk more about the results of the third quarter, and I will now turn it over to Centennial's CEO, Tracy French, to give us additional color and his comments on our performance.

Thank you, Randy. I've said for 5,067 days that working for Home BancShares and Centennial Bank is an adventure every day.

That's 5,000 and how many days?

5,067.

Wonderful days.

Absolutely wonderful days. This past quarter was yet another chapter for the book. Our teams of bankers met a hurricane head on named Irma while joining forces with a great company in Stonegate. We certainly prefer one over the other. I officially would like to welcome Dave Seleski and the Stonegate group of bankers. We hope we never meet a hurricane like Irma ever again.

While the Florida Keys were blasted, it's fair to say the southern part of Florida was affected, along in some ways all parts of Florida with the hurricane. We're pleased to share, as others have said before, that everyone associated with our company is safe today. Teresa Condas and her retail banking staff did and are doing a great job in managing our banks that were affected back to being in service. Only one is still closed today, that's our Naples office that was mentioned, and we have one in the Florida Keys that's open part of the day every day. In fact, the teamwork with Centennial Bank and Stonegate, as Johnny mentioned earlier, is already paying dividends. While conversion is still a few months away, the Stonegate branch and the Centennial Bank's branches are working out of the same building. This may be a first, and we may be on to something here for cost savings in the future.

How'd you get to -- do you just go to the state and the Fed?

It's a lot of hard work, Johnny. It's a lot of hard work. Our company went over the $10 billion mark in assets in the first quarter, and it's now over $14 billion in assets with the addition of our latest acquisition. I'd like to take our hat off to all the Centennial Bank, Stonegate Bank and Home BancShares staff for making this happen in less than 6 months. They are talented. And it shows when you can announce, get regulatory approval, shareholder approval and close the deal within the time line, while also jumping over the $10 billion mark.

With all the friction factors in this quarter, our region and market leaders continue to focus on revenue and expenses to maximize the results for our shareholders. Revenue was up in the first 3 quarters compared to last year, even while the month of September was really at standstill in some of the areas that the hurricane was affected. Our noninterest expenses were steady when you take out all the friction factors mentioned, and our nonperforming assets continued to make improvement with currently strong numbers. We're proud to report a very strong and solid first 9 months. And being the simple math person that I am at the table, I see the bank's revenue as the most ever, core ROA at 3.36% for the bank and our efficiency ratio for the bank at 34.61%. The entire corporation staff is what makes this happen. So Randy, now I guess it's off to the next chapter.

Thank you, Tracy, and well said, especially the friction factors. I've never heard that. But all these merger expenses and exceptions, that may be a term that is coined. Who knows? Friction factors. I like it. I like it.

It cost $18,000 for that term.

Okay. Friction factors. Okay. So let's get back to total number of active Centennial branches is 172 versus 147 in the second quarter. Of course, that's with Stonegate. So let's look at it. 76 in Arkansas, 89 in Florida. Florida's now larger than Arkansas; 6 along the Alabama coastline; and of course, one in New York. I would now like to turn it over to Stephen Tipton, our Chief Operating Officer, who's going to fill us in on some of our income efforts, efficiencies and other operational matters.

Thanks, Randy. As everyone has mentioned, the third quarter 2017 was a bit busy and a bit noisy, but we're proud to have closed on the largest acquisition in the history of our company in such a short period of time. We want to welcome the 24 branches, hundreds of employees and thousands of Stonegate Bank customers to the Home BancShares Centennial Bank family. Our project and implementation teams are now fully focused on the Stonegate conversion and working daily with their peers in South Florida towards that February date mentioned.

As you'll hear, we posted a core net interest margin of 4.07% for the third quarter of 2017. Our team is constantly monitoring loan yields and funding costs. And I'm pleased to say that the legacy bank footprint had over $370 million in loan production for the quarter at an average rate of 5.29%, our highest yield to date.

Switching to funding, we continue to see our plan of asking for deposits materialize. In Q3, we saw over $150 million in organic deposit growth, with much of that coming in the back half of the quarter. You'll continue to see us focus on the core deposit relationships. As Johnny mentioned, I want to welcome Kelly Buchanan to her new role with the company as Director of Branch Strategy.

On to efficiency. I'm pleased to report a solid core efficiency ratio of 39.12% for Q3. Although a bit noisy, as we've mentioned, we're proud of the solid expense control during the quarter from the legacy bank. Integration efforts are already underway with Dave Seleski and his team of bankers, and we're excited to begin seeing those results soon. With that said, I'll turn it back over to you, Randy.

Thanks, Stephen. Here to break down more of the quarter and report on our net interest income, margin, noninterest expense and other highlights is our CFO, Brian Davis. After that, Brian will pass it to Jennifer Floyd, our Chief Accounting Officer, to give us more information on capital and book value numbers. Brian?

Thanks, Randy. There was a lot of noise this quarter for our company as a result of the completion of the Stonegate merger and Hurricane Irma. For the third quarter of 2017, we had a quarterly profit of $14.8 million or $0.10 diluted earnings per share. The impact of Hurricane Irma and the merger expenses associated with the Stonegate acquisition, third quarter earnings were $46.4 million or $0.32 diluted earnings per share. The impact of Hurricane Irma was $0.14 for Q3, while the impact of the Stonegate merger were $0.08 for Q3. Accretion income for the fair value adjustments recorded in purchase accounting was $7.2 million during Q3 compared to $8.5 million during Q2 for a decrease of $1.2 million. The decrease of recognized accretion income when compared to the second quarter of 2017 is primarily due to pay off accretion decreasing from $2.6 million to $1.7 million, plus the normal expected decline in accretion. Excluding the accretion income and the associated loan discounts, the company's net interest margin for Q3 2017 was 4.07% on a non-GAAP basis compared to 4.11% in Q2.

Excluding accretion, during Q3, Stonegate produced about $1 million of net interest income. However, net interest income decreased $583,000 to $106.8 million in Q3 versus $107.4 million in Q2. This decrease is primarily the result of the $1.3 million decline in accretion income. Noninterest income was down $3 million in Q3 compared to Q2 2017.

There are several items worth noting. First, we had $2.3 million in total lower gains and losses in Q3 versus Q2 for SBA, OREO, branches and investment securities. During the third quarter, we disposed of 3 of our vacant properties for a total loss of $1.3 million. Secondly, other income was down in Q3 because in Q2, we had $1 million of additional other income for items which have been previously charged off. Excluding merger expenses and Hurricane Irma damage expense, noninterest expense was up $1.8 million in Q3 2017 compared to Q2 2017. The increase was related to the increase in costs associated with 1 additional day of salary expense, 4 days of Stonegate and $160,000 write-down of an OREO property. With that said, I will turn the call over to Jennifer.

Thank you, Brian. And now for our third quarter capital results. As of September 30, 2017, we ended the quarter with $2.2 billion of capital and $51 million of cash at the parent company. During the third quarter of 2017, we paid out shareholder dividends of $15.7 million. And additionally, during the third quarter, we utilized a portion of our approved stock repurchase program and repurchased 380,000 shares of common stock at a weighted average price of $24.36 per share.

For the third quarter of 2017, our common equity Tier 1 capital was $1.23 billion. Total Tier 1 capital was $1.3 billion, total risk-based capital was $1.71 billion and risk-weighted assets were approximately $11.4 billion. As a result, our common equity Tier 1 capital was 10.9% compared to 11.8% at June 30. Our leverage ratio was 13.2% compared to 10.5% at June 30. Tier 1 capital was 11.5% compared to 12.5% at June 30, and our total risk-based capital was 15.1% compared to 16.8% at June 30. Additional third quarter capital ratios include book value per common share, which was $12.71 compared to $10.32 at June 30. Tangible book value per common share was $7.06 compared to $7.23 at June 30. Excluding the hurricane reserve, common stock repurchases and dividends paid in excess of net income, tangible book value for common share would've remained flat.

And finally, our tangible common equity ratio was 9.2% compared to 9.9% at June 30. Excluding the hurricane reserve and common stock repurchases, tangible common equity for the third quarter would've been 21 basis points higher. Randy?

Thank you, Jennifer. Now normally, we switch to our Chief Lender, Kevin Hester, at this point. But there's another surprise addition to our group today. We have the President of our New York group, Mr. Chris Poulton, who will give us an update. How's it going in New York, Chris?

Thanks, Randy. Good afternoon. While it's not quite been the 5,000 days that Tracy mentioned, it has been 2.5 years or by my count about 1,000 days since I and the team in New York joined Home BancShares.

Wonderful days, right?

Yes, exactly, wonderful days. And we brought along with us our portfolio of $300 million of commercial real estate loans. Since that time, we've expanded the platform, converted to a branch, opened our West Coast loan production office in L.A. and have originated over $2 billion in new loans. What's been constant over that period is that we have maintained our discipline, both on leverage and pricing. Just as when we joined, our portfolio today has a weighted average LTV of 43% and yields just under 7%. Now for the third quarter, we grew the portfolio by $74 million to just over $1.2 billion. This represents a 6% quarter-over-quarter growth or a 20% annualized growth rate. And a pipeline for the fourth quarter is shaping up nicely, and we expect that we'll continue to see solid growth as we look to close out the year. With the support of Tracy and Johnny and the whole Home BancShares team, we continue to build the CCFG portfolio one loan at a time, and we couldn't be more pleased with the results.

Thank you, Chris. Okay. So now let's switch to our Chief Lender, Kevin Hester, who will give us more details and color on loans.

Thanks, Randy. As was noted in the earnings release, we experienced organic loan growth about $73 million in the third quarter, all of which was provided by CCFG. Payoffs, while still substantial, were down about $90 million in Q3 compared to the last 2 quarters. Legacy production was solid in Q3, particularly in North and Central Florida. Our asset quality ratios remain very strong, with the nonperforming loan and nonperforming asset ratios at 62 basis points and 60 basis points, respectively, which is virtually the same as last quarter. The ALLL coverage of nonperforming loans improved slightly from 171% to 174.5%. Past dues increased 20 basis point to 0.89%, and this number has been very consistent at 1% or below for the last few quarters.

Lastly, the allowance for loan losses as a percentage of non-covered loans increased 7 basis points to 1.09%. We've been working on the resolution of 2 nonperforming credits in excess of $6 million each that we had hoped would be completed by quarter-end, but both bled into the fourth quarter. In fact, one of those was resolved just after quarter end at a gain, and the other will pay off in full later this week. The 2 subsequent events will give us a great start to the fourth quarter as it relates to asset quality.

Even with the negative effect of Hurricane Irma on September activity as it relates to our mortgage group, we're still ahead of 2016 in both closings and locks. And we have onboarded all of the Stonegate MLOs, which should provide a significant boost to production, given their access to our expanded product offering.

Speaking of Stonegate, I want to also take the opportunity to welcome their employees to our team. We are implementing changes to our process in those Florida regions that should be good for both our customers and our lenders, and we look forward to working with them going forward.

Johnny mentioned the allocation related to Hurricane Irma, and that computation is as follows on the $2.5 billion in loans that we have in the disaster area. It was 5% on the loans in the Florida Key balances, 5% on the 2 large Orange Grove loans that we had that were on the mainland and in the path of the hurricane and then 0.75% on balances in the remaining counties within the FEMA-designated disaster areas. And that totaled to $32.9 million that had been previously discussed. And with that, Randy, I'll turn it back over to you.

Thank you, Kevin. Okay. Just to recap real quick. Another good quarter despite the friction factors of Hurricane Irma and our merger expenses. We featured the closing of the largest acquisition in Home BancShares' history. And actually, I would like to quote something out of the press release that I think sums up this quarter the best, that the actions of the company has demonstrated so far this year, especially surrounding the recent hurricane, reflects the critical elements of our mission statement and community banking philosophy, a strong sense of community, exceptional customer service, shareholder focus and high-performing growth. I like that.

And with that, I would like to say to you, stay tuned 90 days from now as we get a full quarter of earnings with our new partners at Stonegate Bank, and as we go for number 27. I will now turn it back over to our Chairman, Mr. Allison.

Thanks, Randy. It looks like we're getting geared up for closing out '17 and a great '18. I don't -- anybody else have any comments? Any other comments you need to say? Anita, are you still with us? I think we're ready for Q&A.

(Operator Instructions) The first question comes from Brady Gailey with KBW.

So when you strip out Stonegate and the loans that were acquired, I think core loan growth was around 3% to 4%, linked-quarter annualized, which is a little -- I think that's a little under you all's target. I think I heard you guys say that payoffs lightened up a little bit this quarter, but can you just give us some commentary on your loan growth and kind of how you're looking at loan growth on a core basis in 2018?

Yes. This is Kevin. From a legacy perspective, I think this quarter is looking similar to last quarter. I think Dave, on line, can talk about Stonegate, and then Chris can talk about New York as well.

Yes. So as far -- yes. With Stonegate, I think we're going to see $15 million to $20 million of loan growth. I think the thing that's most significant with us is now with Home's bigger balance sheet that we can go back to existing customers and increase the relationship. We prescreened 3 or 4 deals over the last couple of weeks for existing customers. If they get approved, and we think they will get approved and if the customers take them, that could be additional $70 million in production that, as a Stonegate, we would not have had. So we're pretty optimistic that with the bigger balance sheet of Home BancShares and the ability to do larger deals that we're going to be able to go back to our existing customers and also solicit some bigger clients that we wouldn't normally do.

Chris?

Yes. This is Chris in New York. Yes. With regard to our pipeline, right now, it looks pretty similar to last quarter, maybe a little bit better. The challenge for us is always we might get a surprise pay down or payoff during the quarter. But what we're seeing right now with regard to just pure originations, and then funding of our existing commitments, those seem right on track for us. And I think we continue to see good opportunities in the market. And as we've always said, we don't really have a growth target, but we'll take a look at what the market's giving us. And right now, the market's giving us good loans.

And Chris, when I look at CFG's kind of year-to-date loan growth, I think you guys -- at least on an end-of-period basis, have grown loans about $140 million. So maybe at that kind of $50 million a quarter pace, does that feel like the right level going forward just as the portfolio matures a little bit here?

Yes, I think that's right. We always sort of think about it somewhere between $50 million to $75 million. Our year-to-date number's a little bit skewed. We had -- the first quarter, we had a little bit of decline off of one particular loan that we wrote that paid us off earlier than anticipated. But if you strip that out, then we've been pretty consistent in that sort of $50 million to $75 million number each quarter really for the last year or so. As the portfolio gets larger, we generally assume about 1/3 of our loans will pay off in any given year, which would make sense since they're just under 36-month average duration. So we say about 1/3 we'll pay off the each year, and then we will replace those.

All right. And then finally for me, probably for either Johnny or Tracy, you guys have Stonegate in the books. Are you out chasing the next deal?

Well, it wouldn't keep Dave settled down. He's got 5 deals. Stephen Tipton has a deal. Tracy's got a deal, and I got a deal. And Dave's got 3 or 4 teed up. So we're still -- we're all active and busy looking for the next trade for Home BancShares when it makes sense. We're going to be -- we've got the crown jewel. There's not anybody in Florida near as good as Dave and his organization was. So we won't be paying those high prices we paid for that one, but we would've been disappointed had that one not come forward to our family. From the legacy, on the loan side, on the legacy footprint, we already have as many loans in the pipeline as we had last quarter that we generated. However, we still got high levels of payout. Stephen Tipton, you've got any comment on that?

Yes. I think, Brady, you mentioned that payoffs were down a little bit into Q3. I think you'd maybe start to see New York's volume kind of normalize a little bit. His payoffs in the first quarter of this year were a little elevated. But at $70 million, $80 million, $90 million a quarter for him is normal going forward. I think what you saw here was the legacy portfolio, the Community Bank footprint slowed down a little bit. So whether that's something we can see running forward will -- remains to be seen, but I think so.

The good news is that the addition of Stonegate with New York being about 15% of our book, it opens -- gives a great opportunity for Chris to double his size over the next 1, 2, 3 years, whenever we get to that point. So I think that's a big plus. As he continues to grow that, you see his profitability -- that could be. I think for '18, as we're positioned right now with -- the bad news is Florida had a hurricane. The good news is there's going to be lots of rebuilding in the state of Florida and lots of economic activity. So I think that's powerful. And the addition of Stonegate, and then you bring in Chris' ability to double, and you can see that I think that we're teeing up for '18 for a great year.

The only thing I could add there is like over the last quarter, Brady, that I think I've identified that 5 of our regions had an increase in what their loan balances was compared to North Florida and Jim Haynes' group down there possibly making some loans in those areas.

The next question comes from Jon Arfstrom with RBC Capital Markets.

I had a whole bunch of questions, but I have follow-ups on Brady's now, so I'm going to follow up. In terms of some of the payoffs, how would you characterize where those loans are going? Are they going to other banks, meaning it's getting a bit more competitive? Or is it other things like business sales or private equity takeouts, things like that?

It's maybe 2% or 3%, maybe 2% or 3% going to other banks. That's not where it's going. It's real business. It's real activity. Those guys -- a lot of those Florida guys, if you heard -- I don't know if you've heard me say that, it creates so much equity in the property. So we will continue to lend in 8, 9, 10 and 11, and the values of those properties have really accelerated. And the question is, do we want to loan into that. Do we want to loan into that at high price acceleration. Some people are doing that. I learned a lesson. You may not remember this. The Florida Keys years ago, when I loaned into that. I know you do, but we're just not going to do that again, that -- one of my favorite stories is the hotel in Key West we're in at $200,000 a key or $250,000 a key. And a REIT buys it, and redoes the hotel. And asked us at the end how much we wanted at $1 million a key. And we passed on the $1 million a key. So you're seeing that happen, and you have to remain extremely disciplined to not loan back into that at those levels. We were, about 60 days ago prior -- about 30 days prior to hurricane, one of my guesthouse people said, "Johnny, I can get x number of dollars because my -- I'm 100% full, and my room rate's the highest room rate in town. And I can make all this money, and I need you to loan this guy -- I've got it sold. I need you to loan him 70% of the money on this deal." Well, we're sitting at that guesthouse today at probably $0.25 on $1.20. We like our position. And for us to go back in at that higher price is just not something that we're doing right now. So maybe we're just too conservative because -- but there is no substitute for experience in that. I told someone, maybe we're getting -- maybe I'm getting too conservative, but I think it's a good place to be right now when some of these pricings get too high. I think it's time for us, we're not going to play. We don't mind playing. We'll play $0.50 or $0.60 down on the deal. We'll play the deal. We're just not playing it at $0.75 or $0.80 on the $1 at these prices. And what I told that hotelier, and I wish I hadn't said it, but it is so true, he said, "I'm 100% full." And I said, "Yes. You're one hurricane away from being 0, too." And as it's turned out, that's what's happened. So he'll recover, don't get me wrong. He'll recover if the sale did not go through, but -- or has not gone through. That's what I'm looking at, Jon. It's just being real careful. 8 years or 6 years in, 7 years in this cycle, it just gets your attention when -- like another example, Liberty, we had a carwash guy accumulating carwashes. Most of you all have heard that story, too, and he sells it to another company, a U.K. company. We get involved with the U.K. company, loaned him a lot of company on that trade. We thought that was okay. They just sold it again. That was a $60 million payoff this quarter. We chose not to go back in the third time because the price was just -- it just wasn't -- we didn't think it was reasonable, so we chose not to go. That's more than what you wanted to know, but you kind of get a feel on what we're thinking.

No, that helps, and that cleans up other questions just in terms of your overall attitude on lending. I guess, one of the other follow-up was for Chris. Johnny, you talked about his ability to double his size. And I guess, Chris, the question for you is, do you feel like you could do that now with a bigger balance sheet? The question really is, is the quality demand there right now? It's just a matter of picking and choosing?

I think there's a lot of opportunities there. I'm not in a hurry to do it. So if you said now, meaning in the next quarter or so, I'd say it's probably a bad idea. But over the next x period of time, which we'd say over the next year or 2, yes, I think so. We continue to see good opportunities there. But just because we have more room to lend doesn't necessarily mean we're going to sit down and do transactions that we wouldn't have otherwise done. We never really felt like we didn't have the opportunity to do so already. And so I think we like the loans we like. And as such, we looked at 5 or 6 deals yesterday. And we certainly -- in our pipeline. And we certainly didn't sit there saying, "Well, I've got to do one of these. So which one of these 5 do we like?" Instead, we sit there and take a look at them and see if they fit. We like knowing that if we like them all, we probably have room to do them all. As it turned out yesterday, I didn't like probably any of them. And so I think we probably will end up passing on either all or all but one. But -- so I don't know that the fact that we could double makes us do it any faster. I think it's nice to know that we have that capacity, and I certainly think we can fill that over time.

The next question comes from Michael Rose with Raymond James.

Just 1 or 2 quick questions for you, guys. So you guys have a fair amount of authorization on the buyback. Your capital levels are pretty high here after the Stonegate closed. Any thoughts on accelerating the buyback, given where the stock is and what it's done year-to-date?

Well, we've been in there for most of the year. We couldn't be in when we were then in the [Arb] the last 45 days, which I didn't think was fair. We couldn't buy. We couldn't do anything. The rest of the world could mess with -- manipulate our stock price and we couldn't do anything. But we'll be back in. I mean, we'll continue to buy the stock when Home BancShares is on sale. When we see an opportunity to buy it, we'll buy it. I mean, we bought -- was it an average $24 and change, Jennifer, during the...

Correct.

During the third quarter until we got shut out. Or we would have continued to buy, particularly when it got down in the $22s. I told somebody, I said we would've bought, we would've accelerated that buyback in the $22s, I can promise you that, and the $23s. But we paid an average price of $24, and that was [summoned] when it got down there. But there was also some $25 or $26. So...

Yes. Just with the total risk base a little over 15% here and you're going to build, why wouldn't you try to utilize more of it is just my thought process. But...

That's a good point. We got lots of levers to pull there. You've got to be looking at what your capital is for the next deal. You've got to be looking at where you are and what -- where they want you to be. So you have to keep all of that in mind. Or if you didn't have to keep that in mind, you could take those levels way down. We'd probably buy back an 18-wheeler load today, so...

Plus, we have to keep the capital for our CRE ratios, too.

Yes, that's correct, capital from CRE ratios.

Fair enough. Just switching back to the hurricane provisions quarter. I appreciate the color on how you guys came up with the estimates. But as we've seen storms like this play out over time, it seems like after the immediate impact, there's a lot of aid dollars that flow in, insurance payouts, things like that. So I mean, would you characterize just the magnitude of the provision as being conservative? And maybe from here you have some cushion to maybe book a lower provision as we move forward should things play out, as they have historically, in past storms?

I'm the guy that kicked that up after going to the Florida Keys. I felt like we needed more -- I saw more devastation than I anticipated. If you think about our history, we're a company that fixes it. We go fix it one time, and we don't milk the cow every quarter. And we don't go back to the well. We're known as the company that fixes it and fixes it one time. So I think, could I have been -- could it have been a little high? I don't -- I'll tell you in a year. The real truth is a year from now. What I did see in Key West, which concerned me during my trip, was nobody was there. I mean, all of those -- that market is dependent on tourists. And I went to Hogs Breath Saloon and Sloppy Joe's. It just happens they're up in there, by the way. Just looking at the traffic, and there wasn't 10 people in Hogs Breath, and 5 were with me, and the same at Sloppy Joe's. Now we've got Fantasy Fest coming up. And hopefully, they'll be back, start rolling back in. I've been asked the question at the country club last night, "Johnny, I'm going to Key West in November." I'm okay. You're fine. Key West is fine. So it wasn't the damage that Key West got, it's just the fact a lot of cancellations happened as a result of that. So it'll be back. It has in the past. It'll be back. So my concern really is the cash flow, not the damage there in Key West. On up from mile markers, say, 15 to my marker 37, 38, it's pretty bad. However, where there's something bad there's something good. Boondocks is one of our great customers down there in the Keys. It's just -- he had a generator, and he got water turned back on. And it's amazing, his business. We stopped and couldn't -- I had to park on the highway. That's how much customer base he had going there, and I'm really proud for him. He was very excited. His revenue's up. How much Kevin, just strong isn't it?

Yes. He's, right now, probably 200% of what he normally does in this quarter. So there's a lot of people who aren't doing anything. So...

A lot of people aren't doing anything, and our operator in Marathon, Florida in [Overseas] -- name of the restaurant's Overseas . Same thing there. He is just -- he's up. He's running. And all those people in there, primarily, they were locals at Boondocks, and they're coming in to have a beer. And I guess, we think about, alcohol doesn't go down in a recession. It kind of goes up. So some of those places are really doing good.

Maybe one more for me for Brian. With Stonegate coming on, do you have a sense for -- maybe you can provide us what the scheduled accretion expectations are for the next couple of quarters?

I do. We booked -- I'll try and give you a little color on what we booked on the loans. We booked $96.6 million in total mark on the loans, and of that is $73.3 million that will ultimately be accretable discount. Probably for the quarter of 2004 (sic) [fourth quarter], we're looking at about an addition at a minimum of about $3.6 million, $3.7 million. That's really excluding any payoff accretion. We normally kick up a lot of this payoff accretion because we immediately load the loans on the loan level, but we're not going to convert until February. So we won't be loading the accretion on the loan level until February. But based on that, it would be a little over $10 million for next quarter. And I'll kind of reserve back that accretion will continue on through 2018 on a quarterly basis.

The next question comes from Stephen Scouten with Sandler O'Neill.

So I wanted to follow up on kind of what you guys are thinking about Florida and the hurricane impact there as it goes into 2018. Johnny, you mentioned you feel like you're teed up pretty well for growth in '18. So I mean, from your experience, and maybe Dave's commentary of his years of being in Florida, what's the -- what does that turn time look like to where you really start seeing development increase again, that rebuild activity, and when you'd expect loan growth to pick back up in those areas?

Well, I'll take this, and I'll flip it to Dave. But I told our people, they need to buy a Home Depot stock because when I was in Marathon -- when I was stopped in Marathon and went to with Home Depot, I've never seen activity in Home Depot like I saw the activity in Home Depot. So it was -- I mean, that event has started. What you're seeing right now is basically cleanup money coming in. And insurance claims are filed, and we haven't seen them. Central Florida, we started seeing a little money coming in, more money coming in. But I talked to Teresa Condas yesterday, asked her questions about what she's seeing on the deposit side. And she said the small checks are coming in now. But you're going to see -- you're seeing economic activity starting as of right now. No doubt, because a lot of those people lost their homes or their homes were damaged. So that economic activity has started. And it'll probably continue, particularly on the modular side, I would suspect, in Florida for the next period of time 12, 24. Might depend on that -- there may be a capacity problem on getting modulars in there. By the way, those modulars that were on stilts survived. The mobile homes that weren't on stilts did not survive. So that was pretty interesting. You'll see -- I think you'll see those coming back. Dave, you got any -- you got anything to add?

Yes. Well, I mean, I think it depends on which markets were impacted. I mean, some markets weren't really impacted at all. And so the pipelines remain very strong, and there really wasn't much of an interruption, maybe a week or 2. So we're not seeing any real decline in pipelines. And like I said earlier, I honestly believe with the larger balance sheet of Home and with the -- we had very little attrition in terms of employees throughout this whole process. So most of our business development and lending staff is in place. And plus, with the additional people from Centennial, I think we've really got an opportunity to grow. I'm pretty bullish on where we are today. And I think the hurricane, obviously, was a big impact to the Keys and some areas of Southwest Florida. But I think overall, we've got a great opportunity here. We just got to get out there and execute at this point.

Okay, that's really helpful. And on the deposit side, I mean, Johnny, you mentioned some of that's starting to come in now on the small end. I mean, do you think that will be meaningful enough to where that can help abate some of this pressure you guys are seeing on interest-bearing deposit costs? I mean, I know they were up, I think, 5 basis points this quarter, give or take. And so, I mean, is that something where -- or maybe 8, if I'm looking at [the credit]. Is that something where you think that will drive deposit growth high enough to keep deposit costs more in line moving forward?

Well, that's a possibility because there'll be lots of money coming in at that point in time. And that's...

It'll go back out, though.

Yes, it's going back out, but it'll be a temporary -- you're talking temporarily, I'm sure, Stephen. But I think we'll see that as it comes in. And what is that? 6 months, 8 months that we see that. Meantime, as we've employed a new czar of deposits, Kelly Buchanan, you'll see us taking some -- creating some creative programs on the deposit side over the next period of time. We think deposits are important. We've been able to fund, as you've seen, by just asking for deposits and without doing anything really silly. We're not letting money leave like we did let money leave. So that's raised the cost of deposits are up a little bit. We were letting all that money roll out, and we decided to hold on to it a little bit. Or Steve, we're up $100 million and how much?

About $150 million.

About $150 million. So...

You made a comment on it. We've got a customer in Central Florida that's in the insurance business. And just over the last 3, 4, 5 weeks or so, we've seen $70 million, $80 million, $90 million roll into that one customer that, as we said, will roll back out at some point. But it can provide some short-term relief, I think, short-term benefit.

Short-term benefit.

Okay. And then just kind of thinking about how that can affect your core NIM, I mean, the core NIM, I think, was down a few basis points again this quarter, which I know last quarter's call, you were thinking it might be able to directionally move higher. So I mean, how do you think that will continue to shake out with where you're seeing new loan yields and some of these deposit inflows and what it might cost to drive some of this deposit growth moving forward?

I think that might have been a little anomaly last quarter, and I'll let Stephen speak to that. He -- I asked him what happened because I thought we were going to beat it. So he's got a pretty good idea.

Yes. Stephen, it's Stephen. Cost deposits were up about 6 basis points from prior quarter. I think I mentioned when we were here 90 days ago or so, we've got accounts that are tied to T-bills. And you saw some of that kind of buildup and reset in July, absent a rate increase over the next few months. I mean, I think it's reasonable to see that kind of flatten back out. I mean, as Johnny said, we've been proactive in retaining the core business that we have, but we haven't had to modify any of our existing rates yet. On the loan side, yes, I think I mentioned in our remarks, we did -- legacy bank did $370 million in production at 5.29%. That's probably 12 or 15 basis points higher than what we've seen previously. Every month, we watch renewals and modifications that we do. We're seeing those increase anywhere from 7 to 15 basis points every month. You're talking $100 million a month or so there. So -- and I think, obviously, with Stonegate, we'll reset a little lower. But their core NIM was lower, but I think we'll -- I think we kind of see that reset down, and then take back off from there.

Okay, that's great. And then maybe just one last follow-up on the M&A discussion. I know you mentioned deals coming from all angles out there to look at. And I know the Florida stuff is largely fill-in. But on the non-Florida deals you might be looking at, can you give us an idea of maybe kind of size that you'd be targeting at this point in your lifecycle? And also if you're kind of leaning more towards the dent-and-scratch deals that you've historically liked or something cleaner?

All of the above. I love a dent-and-scratch, you know that. I'm looking for a dent-and-scratch. There's one out there. I don't know if we'll ever get it or not. We've been on it for some time, but it's got to come at some point in time. It's a pretty good size dent-and-scratch for us. So we're looking at that. We looked at one that's pretty deposit-rich recently, thought it made some sense maybe for the deposit side. Outside of our footprint, we probably would do -- I don't know we'd do anything in the $3 billion to $5 billion. I think I'd rather be in the $1 billion range. However, there's one out there that I really like. It's in the $8 billion or $9 billion range that I really, really like. But you're kind of betting the farm with the company, not betting the farm with $1 billion. So dent-and-scratch would be my favorite. A nice deposit franchise would be a plus, but it all depends on where it is geographically. If it were North Carolina or South Carolina or Texas or Missouri, we don't have a base there, so we're not going to get the kind of cost-saves that we're going to get out of Stonegate, and we understand that. But you can build on that. It'll take a little, but you can build on it. So I mean, we still like Texas. And at some point in time, we'll probably end up in Texas. I think the strong Texas with Florida, good Alabama, our CCFG operation and the back-office operating in Arkansas makes a pretty powerful franchise.

The next question comes from Matt Olney with Stephens.

Most of my questions have been addressed, but I just have one clarification on the credit. It looks like the loans past due 90 days ticked up this quarter. Was that from the hurricane that you mentioned previously as you offer some deferrals on some of the -- for some of the borrowers? Or was this from the 2 loans that Kevin mentioned that you were trying to get resolution on before the quarter but it slipped into 4Q?

Kevin?

No, it didn't have anything to do with hurricane deferrals. I think, most likely, it was the Stonegate acquisition from the -- just the percentage that they had to our percentage.

Yes. The Stonegate loans, if they had loans that were on nonaccrual, they don't come over as nonaccrual. They go into pools, and all those pools have accretion. And so they're technically accreting some income. So by definition, they're not accruals. So they would land in the 90 days-plus bucket.

Okay, that's helpful. And Kevin, the loans that you mentioned that you were trying to get resolution on before the end of the quarter, remind me of the dollar amount of those loans that you mentioned.

They were both between $6 million and $7 million each.

The next question comes from Brian Martin with FIG Partners.

Just a couple of things. Just going back to those 2 loans you just mentioned, Kevin. Is there, I guess, an impact on the provision on the reserve? Or is it just a -- I mean, I guess, I don't know how they were marked. Or it is just an impact to non-performings being reduced in the fourth quarter?

It should just be an impact to non-performings. It should improve those.

Okay, fair enough. Okay. And then just one for Steve. On the core margin, I guess, just in thinking about it going forward, with the potential rate increase in December, I guess, is it fair to say that kind of based on your commentary, maybe the core margin is down a bit in the fourth quarter with the addition of Stonegate? And then it trends higher in first quarter and looking out, even, I guess, potentially with the rate increase in there as well?

Yes, that's fair. Obviously, Stonegate, I think, ran in the $3.7 million, $3.8 million range on a corn end. So we'll reset with the full quarter with them somewhere in the $3.9 million range, give or take. Their mix of variable rate loans was greater than ours. I think Dave was around 60-40 or so adjustable and variable. So, yes, I think you see a rate increase potentially in December. I think we'll see the benefit of that maybe more so than what we did pre-Stonegate.

I'll add a little color to that. If you just pro forma-ed the 2 companies together and left everything equal, it was going to be about 15 basis points decline in the margin. But when we pick up this $3.6 million, $3.7 million of accretion income, that will kind of neutralize the playing field and would bring their GAAP margin more in line with our margin just on a pro forma basis.

Okay. I got you. Okay, Brian. And then maybe just one for you, Brian. That step-up you talked about, the $3.6 million or $3.7 million, you said it increases a bit more as you look into next year once the conversion is done. Any sense as far as how much, how we should think about that additional pickup maybe in the back half or the remaining quarters of '18?

Without a crystal ball, it's hard to tell. We're going to -- from an accounting standpoint, we're going to have to kind of put a Band-Aid on it until we can get those -- until we can get that conversion because there's just kind of a manual process on calculating accretion until we get it on our system, which won't happen till February. But it'll just be a function of payoffs. And I mean, we don't have a crystal ball on who walks in and pays us off here. So that should be on the low end going forward, at least for '18.

Okay. The $3.7 million is being on the low end?

Right.

Yes, okay. All right. And then just from a -- just with regard to the M&A potential, I mean, I guess, is there -- given some of the activity in Florida that sounds like it's going to pick up as a result of the hurricane. I guess, is it -- did it seem like there's more of a focus on organic in the short term, a, with maybe pricing being up and the activity that you're going to see in Florida, plus what you're getting out of Chris, which seems pretty positive? Or is M&A still that much of a -- I guess, a priority? Or I guess, has the priority of M&A changed at all with the opportunities that could present themselves in Florida now?

We take M&A as it comes, Brian. We don't chase M&A. We take it as it comes. So we're certainly looking for organic loan growth. And we're probably more aggressive on the organic, but want -- not don't doing silly stuff, but wanting more organic loan growth. We'll probably look into that, and I think that's positive for us. But the M&A deal, it just when they come up. You fill out those plays, those footprints, where we need to fill out, where we're not. And I mean, these deals kind of came today. And then Stephen's deal kind of came to him. Tracy's came to him, and mine kind of came to me. So that's kind of how, you just -- people know we're all acquisitive entrepreneurial kind of company, and they just come at us with these opportunities. And some work, some don't. They either work or they don't work. I don't know. Dave, you've got any color on that?

No. I mean, I think there's still going to be a lot of consolidation. There aren't as many banks in Florida, but there's going to be opportunities to pick up banks that could fill in the rest of the franchise. I mean, we have a nice franchise now, but a few -- there's a few areas where we'd like to expand. And M&A, if it makes sense, we'll do it. If it doesn't, we'll just take the long haul and do organically.

Okay, that's helpful. And just -- and last thing, Johnny. I guess, it sounds as though -- I mean, are the other markets outside of Florida. I guess, it sounds like if you go there, look at opportunities there, it's got to have enough scale. But is $1 billion enough scale to enter a new market, in your mind? Or do you need something more like, for instance, if you went to a Texas or pick a different market, does it need to be bigger than $1 billion? Or was $1 billion enough to get going? And I know you mentioned a couple of larger ones, but just in general how to think about if you left -- if you go to a new market.

Well, there's also, what is it, fair and greed? So the greed is you could go and do an $8 billion deal. The fair is you might get yourself in trouble. So you do a smaller transaction. You get your feet wet. And we're a pretty conservative company. And maybe it doesn't give us enough scale. Maybe we'd go up from there, and then do an $8 billion deal after that if we get comfortable in the market. So it's just caution. I mean, I like the $8 billion deal a lot. I like the people in the $8 billion deal. And I think I like this $1 billion deal that Stephen's found. So it -- would we do both? No. Probably, wouldn't do both. It's just kind -- we'll just kind of progress forward here and see how it evolves. Kind of just, you remember when you met your wife? You just started dating. That's what we're doing. We're dating. And we haven't danced but twice so far. I haven't kissed her yet. So...

This concludes our question-and-answer session. I would now like to turn the conference back over to Mr. Allison for any closing remarks.

Anita, thank you. It's been a pleasure working with you today, and look forward to working with you in the future. I think the company's well positioned. I think '17 is -- we're about to put it to bed now, and I'm looking forward to '18. I wish we'd gotten our conversion done quicker, so we could really see the impacts of the Stonegate transaction in the first quarter. But with -- I think I said it earlier, with the ability of our New York operation to grow, they've got a lot of runway out in front of them. With Dave joining our team and our other great Florida team now. I think we can continue to grow Florida. I think we'll do some smaller target acquisitions or we'll certainly be working on those. I think Florida, particularly South Florida, is in an economic -- going to be in an economic boom for the next period of time, 3-, 6-, 9-, 10-year, and I'm pretty excited about that. So overall, I think if our loan loss reserve is more than it needed to be, then that will pay dividends. It's just our money. It's just in a different pot. I think it's prudent to do that. I think people that didn't make the reserve properly, I don't think that's prudent to them or their shareholders. As I said, we're known as a group that takes it one time and gets it behind you. So that's what we've done here, we think, hope we're right. And a year from now, we'll know the answer to that. Thanks, everybody, for the support, and we hopefully will be back together 90 days talking about another maybe 27, Randy.

27.

Okay 27. Thank you.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.