Simmons First National Corp (SFNC) 2018 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Simmons First National Corporation Third Quarter Earnings Call and Webcast.

(Operator Instructions) I would now like to introduce your host for today's conference, Mr. Steve Massanelli.

Sir, you may begin.

Good morning, and thank you for joining our third quarter earnings call.

My name is Steve Massanelli, and I serve as Chief Administrative Officer and Investor Relations Officer at Simmons First National Corporation.

Joining me today are George Makris, Chairman and Chief Executive Officer; Bob Fehlman, Chief Financial Officer; David Garner, Controller and Chief Accounting Officer; Marty Casteel, Chairman and CEO of Simmons Bank, our wholly-owned bank subsidiary; Barry Ledbetter, President of our Southeast Division; and Matt Reddin, President of Banking Enterprise.

The purpose of this call is to discuss the information and data provided by the company in our quarterly earnings release issued yesterday and to discuss the company's outlook for the future.

We will begin with prepared statements, followed by a Q&A session.

We have invited institutional investors and analysts from the equity firms that provide research on our company to participate in the Q&A session.

(Operator Instructions) A transcript of today's call, including our prepared remarks and the Q&A session, will be posted on our website, simmonsbank.com, under the Investor Relations tab.

During today's call and in other disclosures and presentations made by the company, we may make certain forward-looking statements about our plans, goals, expectations, estimates and outlook.

I'll remind you of the special cautionary notice regarding forward-looking statements and that certain matters discussed during this call may constitute forward-looking statements and may involve certain known and unknown risk, uncertainties and other factors, which may cause actual results to be materially different than our current expectations, performance or estimates.

For a list of certain risk associated with our business, please refer to the forward-looking information section of our earnings press release and the description of certain risk factors contained in our most recent annual report on Form 10-K, all as filed with the U.S. Securities and Exchange Commission.

Forward-looking statements made by the company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance.

The company undertakes no obligation to update or revise any forward-looking statements based on the occurrence of future events, the receipt of new information or otherwise.

Lastly, in this presentation, we will discuss certain GAAP and non-GAAP financial metrics.

Please note that the reconciliations of those metrics are contained in our current report filed yesterday with the SEC on Form 8-K.

Any reference to non-GAAP core financial measures are intended to provide meaningful insight.

These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

I'll now turn the call over to George Makris.

Thanks, Steve, and welcome to our third quarter earnings conference call.

In our press release issued yesterday, we reported net income of $55.2 million for the third quarter of 2018, an increase of $26.3 million or 91.3% compared to the same quarter last year.

Diluted earnings per share were $0.59, an increase of $0.15 or 34.1% from that same period in 2017.

Included in the third quarter earnings were $1.3 million in net after-tax, merger-related and branch rightsizing costs.

Excluding the impact of these items, the company's core earnings were $56.5 million for the third quarter, an increase of $28.8 million or 103.7% compared to the same period in 2017.

Diluted core earnings per share were $0.61, an increase of $0.18 or 41.9% from that same period in 2017.

Our loan balance at the end of the quarter was $11.9 billion, an increase of $492 million from last quarter, and an increase of $1.1 billion or 10% since year-end.

Our markets in North Texas, Northwest Arkansas, Southwest Tennessee, Middle Tennessee, St.

Louis, Kansas City and Oklahoma City have all outpaced the company's average growth rate.

Our loan pipeline, which we define as loans approved and ready to close, was $464 million at the end of the quarter.

On a consolidated basis, our concentration of construction and development loans was 97.4% and our concentration of CRE loans was 296.8% at the end of the quarter.

Total deposits since September 30 were $12.1 billion, an increase of $135.1 million from last quarter, and an increase of $1 billion or 9% from year-end 2017.

The company's net interest income for the third quarter was $143 million, an 81.4% increase from the same period last year.

Accretion income from acquired loans during the quarter was $10 million.

The accretion income in the third quarter was approximately $5.2 million, more than in our original estimates due to accelerated cash flows of acquired loans.

Based on our cash flow projections, we expect accretion for the fourth quarter of approximately $4.2 million.

Our net interest margin for the quarter was 3.98% compared to 3.99% the previous quarter.

The company's core net interest margin, which excludes the accretion, was 3.71% for the third quarter compared to 3.70% the previous quarter.

Since December 31, 2017, core loan yield has increased 44 basis points, while cost of interest-bearing deposits has risen 42 basis points, and cost of borrowed funds has risen 70 basis points.

The subordinated debt issuance at the end of the first quarter had a 5 basis point impact on our third quarter net interest margin.

The timing of the existing subordinated debt prepayment had an additional 1 basis point impact.

Our noninterest income for the quarter was $33.7 million, a decrease of $4.3 million compared to last quarter, primarily due to decreases in debit card fees and mortgage lending income.

As of July 1, we became subject to the interchange rate cap as established by the Durbin Amendment, resulting in a $3.3 million reduction in debit card fees in third quarter compared to the second quarter.

As a reminder, we estimate that we will receive approximately $7 million less in debit card fees in 2018 and $14 million less in 2019 on a pretax basis.

Mortgage lending income was $1.4 million less than the second quarter, mainly due to fewer transactions driven by the rising rate environment.

SBA income remained flat when compared to the second quarter as we remain selective in our loan sales as premium rates have lowered in recent months to the 6% to 7% range compared to 10% during the first quarter of the year.

Noninterest expense for the quarter was $100.3 million, core noninterest expense for the quarter was $98.5 million, which represented an increase of $1.5 million when compared to the second quarter of 2018.

$1.2 million in computer and software items were expensed during the quarter as part of our next-generation banking platform initiative.

In addition, we spent an incremental $1.1 million in the third quarter for marketing campaigns directed toward deposit growth and $1.1 million of 401k profit-sharing expense.

Our efficiency ratio for the quarter was 53.74%.

Income tax expense was lower in the third quarter due largely to discrete tax benefits related to tax accounting or a cost segregation study and a state-deferred tax asset adjustment.

At September 30, 2018, the allowance for loan losses for legacy loans was $55.4 million with an additional $1.3 million allowance for acquired loans.

The loan discount credit mark was $54 million for a total of $110.7 million of coverage.

This equates to total coverage ratio of 93 basis points to total of gross loans.

After the end of the third quarter, nonperforming assets were $71.9 million, a $4.1 million decrease from the second quarter.

This balance is primarily made up of $40.8 million in nonperforming loans and $31.1 million in other real estate owned, which includes $9.6 million in closed bank branches held for sale.

$2.8 million in closed bank branches was added in September as we closed 10 branches.

During the third quarter, our annualized net charge-offs to total loans were 36 basis points.

The provision for loan loss during the quarter was $10.3 million, which includes an increase due to strong legacy loan growth and the increase loan migration during the quarter from the 2017 acquisitions, which is consistent with our previous guidance.

During September, the company sold approximately $32 million of substandard rated loans that consisted of both legacy and acquired loans.

The loans had adequate reserve, thus no additional provision expense was required.

However, the sale increase net charge-offs by approximately $4.6 million.

Excluding these charge-offs, our annualized net charge-offs to total loans were 12 basis points.

Our capital position remains very strong.

At quarter end, common stockholders' equity was $2.2 billion.

Our book value per share was $23.66, an increase of 21.3% from the same period last year, while our tangible book value per share was $13.48, an increase of 5.2% from the same period last year.

The ratio of tangible common equity was 8.1%.

We're very pleased with the organic balance sheet growth we've experienced this year.

Our bankers have done an excellent job.

While we have substantial funding sources available to sustain the current level of loan growth, during this time of rising rates and tight liquidity, we intend to grow loans at a balanced pace with the growth of our core deposit funding.

We have a commitment to provide capital for our relationship clients, which we will consider a priority as we manage our loan opportunities.

This concludes our prepared comments.

We'll now take questions from our research analysts and institutional investors.

I'll ask the operator to please come back on the line and give instructions and open the call for questions.

(Operator Instructions) Our first question comes from the line of Brady Gailey of KBW.

I know last quarter we talked about kind of a forward quarterly expense rate of around $95 million, you all came at $98.5 million, and I understand the couple of things that pushed that up in 3Q.

But going forward, how do you exceed -- how do you see your, kind of, quarterly expense rate trending?

Well, Brady, we still think that $95 million is a good run rate on a consistent basis.

However, I will say that we're much more focused on what our efficiency ratio is.

So we still intend to invest in our business.

And you probably noted that, during the quarter, we had a little over $1 million on our technology project, most of that was related to the change to Workday, which completely replaced our accounting and HR systems.

That went live in August.

Also, you probably note that our loan growth has far exceeded our expectations for the year.

And while we've experienced good deposit growth throughout the year, loans have outpaced deposits, and therefore, we chose to spend a little extra marketing dollars to promote deposits, to keep that loan growth going at current pace.

So we will manage our expenses appropriately within that efficiency ratio range.

But as we see opportunities based on growth and other market conditions, we'll take advantage of that.

So when we take a look at budget, that's what we know.

We've got to be flexible and deal with what we don't know.

You also may recall that, at the beginning of the year when we talked about how we were going to allocate some of the benefit from the tax-rate adjustment, we were very clear that we were going to share some of that with our associates, and obviously, we've been very successful financially this year.

And I think our accrual for our profit-sharing plan demonstrates that we're sharing that profitability with those who made it possible.

So we'll continue to do those things that we think are good business decisions.

But based on what we know today, $95 million a quarter is still a good run rate.

Okay.

And then loan growth, in the past you've talked about the 10% to 12% range.

You look at the last couple quarters and you've been higher than that, kind of in the mid-teens, if not a little better in 3Q.

But is that 10% to 12% still the right way to think about forward loan growth?

Or could it be better?

Well, I'm going to let Matt predict what our loan growth is going to be, but I'll make a couple of comments.

One is, obviously, the intent of rising rates has slowed the economy down a little bit, and I think we all have seen that demonstrated and prove out in the marketplace.

Our mortgage loans were down this month, and I think that's probably a national trend.

Commercial loans are in that same bucket.

And when you expect 2 more rate increases in the next 6 months, you have borrowers really questioning whether or not the cash flows based on today's rates are realistic.

So we're seeing a little bit more hesitancy on the part of borrowers to take the risk they may have been willing to take a year ago.

But Matt, you may talk about our loan pipeline and what you see going forward.

Yes, thanks, George.

And Brady, I'd tell you, if you look at kind of our approved, ready to close, where that went from the second quarter to $613 million, now it's at $464 million.

I think George is right that, while we're seeing really good opportunities, we remain disciplined to conservative underwriting as we always have as well as our pricing standards and relationship standards.

And so as George commented earlier, we're going to make sure we can take care of our existing customers, and we have plenty of capabilities to do so.

But as long as we can grow deposits and it fits our standards, we'll continue to look at those opportunities.

But you do see, that pipeline did shrink, I think it's relative of rising rates.

All right.

And then finally for me, just an update on the M&A.

George, I know you said, you'd kind of be back in the game next year, but your stock price is off, but I guess everybody's is off, at least the publicly traded guys.

So just an update on kind of how you're thinking about M&A as we enter 2019?

We continue to believe that there are excellent opportunities for us in the M&A arena.

We're having some really good conversations currently.

The stock price and the devaluation of the banking sector has somewhat of a negative impact on the optics around an acquisition, especially when you consider privately held banks don't see that same fluctuation on a daily basis that publicly traded banks see.

However, we believe that the whole industry is affected by that evaluation.

So to the extent that we can all see eye to eye on relative valuation, we believe there is still really good opportunity because the value of our company relative to some of those we compete with in the M&A business is still very healthy.

So it really just depends on the reasons for the merger, the timing of the merger.

I have to believe that, over the course of time, the pricing will take care of itself.

Our next question comes from the line of David Feaster of Raymond James.

So we're sitting here at the low end of the core NIM range.

There's a lot of moving parts today with the sub debt, the seasonal strength in ag.

I just wanted to get your thoughts on the core NIM going forward.

Is that 3.70% to 3.80% range still reasonable?

Or could we see the core NIM kind inflect going forward as you start growing loans like you talked about it at that more balanced pace?

We -- first of all, we probably should've been clearer last quarter about what that range should be.

We took on additional sub debt.

So we refinanced some debt that we had, but we also took on a little over $100 million of additional sub debt.

That additional debt by itself is going to cost us 5 basis points with regard to our NIM.

So really, that top end of the range should move from 3.80% to 3.75%.

We believe that 3.70%, 3.75% is still a good range.

And we intend to balance the -- our ability to raise our core loan yields with our deposit cost increase.

And I think we've demonstrated since first of the year when we combined Bank SNB and Southwest bank into Simmons Bank that we've been able to manage that process since the end of 2017.

And we've had little variance quarter-to-quarter, but some of that's been driven by the timing of paying off some of the refinanced debt.

So we still believe that 3.70%, 3.75% is a good operating range for us.

We also believe that we're still in a lag position for loan yields catching up to deposit costs.

So we're a little more optimistic about the ability maybe to expand that NIM in the future, but currently, we are very satisfied with the ability to balance cost to deposits with loan yields.

Okay.

That's great color.

On -- your commercial loan growth was notably strong in the quarter, which is kind in stark contrast to what we've seen from several other banks this quarter, where pay downs and competitions has really weighed on growth.

What do you think is driving your ability to grow C&I loans in at an outsized pace?

And are there any specific segments where -- that were notably strong or where you're gaining share?

Well, I'll ask Matt to sort of address that for us.

Yes, it's -- that's a good question.

The C&I growth that we've seen quarter-to-quarter has been in our energy group.

If you look at our group that came on board from Bank SNB, very, very experienced team.

We have a very disciplined conservative underwriting, and we've taken advantage of that over the last 2 quarters.

Now I will tell you now that, with the robust energy sector right now, we're seeing bigger banks come down to compete.

While credit standards are staying good, credit spreads are getting smaller.

So we're seeing that slow down now because we remain disciplined on our credit spreads.

Got it.

Last one for me.

I just wanted to kind of get your thoughts on fee income more broadly.

It's been tough in some of these sectors, with mortgage and SBA, like you talked about margins coming down.

Just kind of wanted to talk -- hear your thoughts on fee income going forward.

Where do you see the most opportunity to grow fees?

And start getting that ratio of fees to revenues back up?

Are there any other lines you'd like to add or supplement either organically or through M&A?

Yes.

So first of all, I'll answer your last comment first.

And that is through M&A, yes.

Noninterest income lines of business with acquired banks is very important to us, so that's going to be a priority.

We have lagged behind in our ability to roll out some of our fee businesses throughout our new footprint, particularly our wealth management group.

That's going to be a real focus for us over the next 2 years.

We need to make sure we get our wealth management group prominently entrenched in all of our markets.

We've not made that a priority in the past, but it will be going forward.

We're going to lose the Durbin income, that's a big chunk to overcome.

So $14 million pretax revenue out the window for 2019 just because we exceeded a certain size.

Doesn't make sense, but that's the way it is and those are the rules of the game.

I will say this, our mortgage group does a fantastic job.

We view mortgage as a very necessary product if we're going to call ourselves a community bank.

We do not intend to create a mortgage company.

It is going to be one line of business that we offer in all of our communities.

So we're going to be subject to, in our mortgage business, what effect rates have on normal course of home purchasing.

And I think you see that reflected.

Now SBA, we obviously have 2 choices there.

We can leave SBA loans on our books and collect that interest over the life of a loan, or we can sell those loans, or the guaranteed portion early on in the process and book fee income.

It's sort of a breakeven analysis for us.

If the premium in the marketplace indicates it's a better option to go ahead and sell those loans and book fee income, we'll do that, and you've seen us do that in the past.

Currently, that's not the case.

With the rising rates, SBA loan yields are very, very good.

And when the premium only is 6% to 7%, it doesn't justify selling those in the marketplace.

We're better off keeping them on the books.

So that will fluctuate based on what's most advantageous to the company long term.

So yes, our fee income is extremely important to us, diversity and everything we do, including our revenue stream, is sort of the table stake for us.

So we are going to focus on driving that noninterest income going forward in all of our lines business.

Our next question is from the line of Matt Olney of Stephens.

I want to go back to the discussion on operating expenses.

And I'm still confused why the expense run rate should be close to that $95 million after seeing these 3Q results.

Are there any more cost savings coming from previous acquisitions?

Is the deposit campaign now complete?

Just any more color will be helpful on that.

Well, we have the expense savings from the branch closures that we'll have in the fourth quarter and going forward.

They didn't close until the end of September.

So we got no benefit in the third quarter at all from the branch closings.

So there's going to be a little benefit from that.

The other 2 expenses were sort of onetime occurrences.

Now our profit sharing plan, we'll just have to take a look at what we plan to do in 2019.

But I think we have exceeded our expectations this year, and therefore, that profit sharing number was up proportionately.

We still feel pretty good about what our budget looks like.

Our compensation expense was down, and we would expect that to continue to go down as severance payments roll off, we have some retirements at the end of the year.

So we're fairly comfortable with that number.

And, Matt, on the profit sharing, as George said, that was part of what we gave back to the associates as part of the tax savings for the year.

As we got to the -- into the third quarter, the numbers became a little truer of what the year-end results would be.

And so that was more of a true-up of the number, not indicative of 1 quarter.

So it's really a onetime adjustment on some of that.

Now it will be higher in the fourth quarter, as we accrue that 1 quarter, but it was a year-to-date catch-up.

Okay.

And I think earlier you mentioned that you are trying to manage to an efficiency ratio.

I think you mentioned that when you talked about expenses.

Can you give us some more color about what efficiency ratio you're trying to manage to over the next few quarters?

Yes.

So here are the financial metrics we use internally as we make decisions.

One is our target ROA of 1.50%.

And a lot of that's going to be dependent on whether or not we're successful in driving this noninterest income up to a 30% level from where it is today at about 21%.

Of course, a lot of that revenue has no assets tied to it, so we expect that we should get to 1.50%.

And we're going to manage between 50% and 55% efficiency ratio.

So from time to time, we're going to have investments that we need to make.

For instance is, we roll out our coverage of our wealth management group, we're going to have to hire people with no revenue associated and invest in those markets, put those people in place, so we can offer those products and services.

So those are really the 2 financial drivers that we use internally, that we think -- we base our decisions on.

ROA at 1.50%, efficiency ratio between 50% and 55%.

Okay, that's helpful, George.

And then on deposit growth and deposit cost, you mentioned you ran some new campaigns in the third quarter.

Can you talk about the success of those campaigns and interest-bearing deposit costs, I think, ticked up around 21 bps this quarter, which is a pretty good-sized jump from where we were previously.

Are you saying that you expect that cost -- the relative increase to slow down somewhat the next few quarters as the campaign ends?

Or -- any color there would be helpful.

Yes, I do expect that growth to slow down, and I expect our loan yields to pick up the pace.

And once again, we expect to manage those on a balance basis for the fourth quarter.

We'll take a look at what it looks like in 2019, but we feel pretty good about the fourth quarter.

I will say this, Matt, you've probably heard it from most every bank that you cover, and that is deposit gathering is a real challenge today and it's -- there are really a couple of factors that I'd like to mention that we see happening in the marketplace.

One is, there are billions of dollars that used to be in the banking system that now reside in fintech companies or other payment systems that could really help if they were back in the banking business.

Those groups are not driving the economy, but they're siphoning off funding that we use to drive the economy.

The second thing is I'm a little disappointed in the way our public funds are managed.

Public funds ought to be given to those institutions that help drive the local economy.

And I think we have seen, at least recently, more of a bid process to maximize return instead of understanding that maybe there is a responsibility of public entities to help drive economic growth in their geographies.

So those 2 factors control billions of deposit dollars.

And I think that's why you see so much emphasis on digital banking, and we obviously are very interested in our digital offerings as well.

But we're much more focused on growing deposits in markets we currently serve than going nation-wide with a digital deposit gathering.

That doesn't do those local economies any good when the group that holds those deposits is not investing in the growth in that economy.

So something's got to give at some point in time.

I don't know what that answer is, but I do know it's having an effect on the banking business, and it's causing us to really take a good hard look at whether or not we're interested in funding transactional loans.

We value our relationship, particularly with our commercial customers.

Those customers that think of us as their primary bank, we're going to make sure we have the capital to support their growth.

So the other shift we're seeing is in our commercial customers.

They're having to make a choice, "Who's going to be my primary bank?

And are they going to have the ability to fund my growth going forward?" Because some of these transactional loans are going to dry up in the marketplace, not only at Simmons but in other banks as well.

And as a follow-up, George, you mentioned capital, and I was confused about the prepared remarks.

Did you say that you guys paid down some sub debt capital earlier this year, but you also issued new sub debt capital?

I was confused in that point.

No, Matt, as you know, back in March, we had the $330 million in the sub debt we raised.

But it -- there was the timing of paying off either sub debt or trust preferred, we had about $20 million at 6% that we're not able to pay off until September 30, it's actually called on September -- we called it on September 30.

So that was the sub debt, the rest of it was the TruPS.

Yes, but Matt, we raised $330 million in the second quarter, $220 million was to refinance current debt, $110 million of that was new debt on our books.

And our next question comes from the line of Bryce Rowe of Baird.

Just a couple of questions here.

I just wanted to ask about the sale of substandard loans, and if there are any more planned within that bucket?

And what brought on or initiated that process?

Well, I don't know that we have any more currently that we're marketing.

Our experience is this: We would rather eliminate substandard loans than foreclose and take assets into, say, other real estate.

That's not a good prospect for us.

The longer we hold that other real estate, the more we get to write it down.

So our philosophy is to move those loans while we can.

It's a large distraction to our business going forward, and I would say that these, while they were performing for the most part, had become a large distraction.

They also take up quite a bit of allowance associated with them and we wanted to free that up.

So I think it was a onetime situation.

As we manage our portfolio, we saw an opportunity to go ahead and get rid of those troubled loans, increase our asset quality and move forward.

So Marty, you or Matt may have some comments about that.

Well, that's exactly right.

But I think we'll always be looking at many opportunities.

There -- we get calls every day, as do all other financial institutions, loan buyers.

And if our loans match up and it's in our best interest, we think, to move those, we will do so.

We do not have an actively -- plan right now to market.

A pool of loans, but that could change tomorrow.

All right, that's helpful.

And then maybe wanted to ask a little bit more about the deposit campaign.

Sounds like it may have wrapped up in the third quarter.

So I was curious if that is in fact correct.

And then wanted to get an understanding of, kind of, the nature of the deposit campaign.

Was it directed at certain markets?

Or a certain medium?

Just any color around that would be helpful.

Hey, this is Matt.

I'll give you some color.

Yes, it was the market at -- well, 2 ways, but specifically it was marketed to markets where we have low market share, and we direct campaign new customers to the banks, CDs and money markets.

But also, as you can imagine, we solicit the existing customers of our bank that we can have additional share of new money that we could bring in to the bank and those markets, we did that as well.

But it was low market share markets for us where we knew we had opportunities.

And so is it -- it's wrapped up in the third quarter, Matt?

And have you been able to kind of quantify the results of the campaign?

Sure.

So it is still ongoing, but the direct marketing is wrapping up, but those opportunities are still coming into our branches and calling in.

So we're still seeing new growth.

But we're not direct mailing anymore.

And if you look at our overall campaign so far in new money, it's $400 million of new deposits to the bank through that specific campaign.

Now that's specific products.

Now that's not indicative of other existing products that we've sold on our existing deposits -- on our existing deposit rates.

Great, that's helpful.

And then maybe one housekeeping item.

From a tax rate perspective, you called it out as being lower here in the third quarter.

Curious what you're seeing for the fourth quarter.

Well, I will tell you, first off, it was a bit of an anomaly for all of 2018 as we've had several adjustments.

A lot of it related to the acquisitions and the conversions from one state to another on our charters.

During this quarter, we did complete a cost segregation study, and some of it related to the new acquisitions we had and the buildings they had there and others, we're able to take advantage of that.

That cost savings -- the segregation study was pretty substantial.

We also had some new market tax credits that hit in this quarter that were then as benefit and a proportionate for our state taxes on the deferred taxes.

A lot of that hit this quarter and in prior quarters.

I would say, we'll have this year, even into the fourth quarter, we'll probably be in that same range of tax rate.

But I would estimate that in 2020, we'll be back to the normal rate, of say...

2019.

I'm sorry, 2019, normal tax rate in the 23% range is rough estimate right now.

(Operator Instructions) And I'm showing no further questions at this time.

I'd like to turn the conference back over to Mr. George Makris for closing remarks.

Okay.

Thank you very much, and I want to thank all of you for joining us today.

We said at the beginning of the year that we had several integration projects going on during 2018 that should be able to demonstrate our -- future growth of our company.

And I'm awfully pleased with the organic growth that we've been able to accomplish this year while doing those integration activities.

We've grown organically by over $1 billion this year.

We think that we have established our reputation in the marketplace as a bank that is very flexible and easy to do business with, and we hope to capitalize on that in the years to come.

So thanks again for joining us, and we'll look forward to visiting again next quarter.

Have a great day.

Ladies and gentlemen, thank you for your participation in today's conference.

This does conclude the program.

You may now disconnect.

Everyone, have a great day.