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| Statement |
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| George has talked about good prospects for adding new teams throughout the coming quarters |
| So that's very favorable for credit quality |
| So I think our guys are doing a great job of funding our balance sheet, and doing it in what is a very cost-effective way, particularly considering how much we are growing our balance sheet |
| So we're very pleased about that |
| And Cindy, [indiscernible], Drew Harper, the other guys on the deposit team, the guys in the retail branches, there are 1200, 1500 people in those retail branches, they are doing wonderful workforce and we're very pleased with it |
| So we feel super good about that |
| As we've said a number of times through the year, the Southeast region has remained strong, certainly relative to other regions |
| So we continue to see very good activity in that region and over into Texas and the Southwest |
| And so it's playing out really as we expected it to and we're very happy, as we said, to be making the return while they're on our balance sheet |
| But with -- in many cases, fewer competitors out there were able to still close a number of deals, great deals with improved leverage and pricing metrics |
| That's why we've said that we will give back some of this very nice expansion that has occurred over four or five of the last six quarters, and our net interest margin and core spreads expanded broadly as loans reprice faster than deposits last quarter and we gave some of that back, as we said would happen |
| The -- obviously, the record origination volume that was exceptional performance by our RESG team in 2022 is leading to significant fundings in 2023, and that fund up of that big chunk of the portfolio will continue in 2024 |
| We're building the quality of our team, and we've got some really good things that we're very positive about in the works on that, that I think will help us continue to grow our balance sheet and grow our loan balances even when we get some pretty chunky waves of payoffs in the future |
| We continue to think that those are fundamental ingredients, great sponsorship, great state-of-the-art new assets, low loan-to-value, low loan to cost, that will continue to help our portfolio perform very well on a relative basis to the industry going forward |
| But the reality is that the quality of our sponsorship, the quality of our new construction projects, combined with the low leverage loan-to-value, loan-to-cost metrics on these projects has contributed to the excellent performance of our portfolio so far during this cycle |
| But we've got good prospects for growth |
| So we benefit in all of the rate increases |
| And would anticipate that our growth in earnings would help capitalize whatever growth we have on the balance sheet |
| And I would just echo what Brannon said, we're thrilled to death to have loans stay on the books longer, and a lot of times sponsors are quick to exit our loan to go to a cheaper permanent loan solution |
| And we put up record net interest income |
| So I think we've managed the capital levels, the share repurchase, just how we wanted to, and we've got good prospects for meaningful growth going forward and want to be focused on that as opposed to focus on share repurchases |
| I mean as you noticed during the quarter, we had significant loan growth, an ROA in excess of 2% and that allowed us to capitalize the vast majority of that growth |
| Brannon and his teams at RESG continue to do an excellent job of getting paydowns on a lot of these loans where we would have had an upward migration in the loan-to-value based on a reappraisal as part of an extension process |
| So if you go back to 2021, 2022, 2023, I think we've done a really good job of managing our capital |
| So we're very happy to have those loans on the books for an extended period of time |
| We did have a small decline in CET1 ratio, but still feel like we have very strong levels of capital |
| So we're not surprised, and I would say on the whole, pleased to see the payoffs continue to come in, in the numbers that they do |
| We always do look into the future and plan and that's why our portfolio and our performance metrics right now are doing so well |
| Our tangible book value per share has increased year-over-year at 14.5% |
| And then now this year, we've had a lot of great organic loan growth, and so we pulled back on the share repurchases |
| Statement |
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| But yes, despite the slowdown in the number of deals that are out there, there's also been a pullback from some of our competitors out there |
| And a point that Brannon made is that our leverage points are coming down probably over the last two years, our loan-to-value, loan-to-cost ratios, quarter-to-quarter-to-quarter have had a generally down trend not every quarter, but we're probably down 5 to somewhere between 5 and 10 percentage points on leverage now versus what was originated two years ago |
| So the growth horse outran the net interest margin shrinking horse |
| It's been an interesting year as we've seen generally a slowdown in the number of projects that we've seen that would differ from region to region |
| Our leverage points are low |
| I would agree with that being an anomaly |
| That was probably at the lower end of a normal range but still within a normal range that may have contributed to it a little bit |
| George Gleason And I would comment that the fact that third quarter noninterest expense was a few hundred thousand dollars below second quarter |
| So, look, with rates doing what they've done, we've known we were going to have a slower repayment volume, but it has been, a repayment volume continues to be |
| I just wanted to better understand the loan yields, the beta slowed quite a bit on a quarterly basis this quarter |
| I think we got a question last quarter, and we're all incredibly curious here |
| And that's one of the reasons we have so much equity in our projects and our leverage is so low as we are stressing these projects for a significant market risk |
| And if we can continue to improve it |
| So you've not seen us go below 10% in CET1 |
| So we underwrite for a lot of interest rate stress, and that certainly is what we have seen with the Fed moving the Fed funds target rate 525 basis points from the 0 lower bound |
| Obviously, in our management comments, we talked about the one loan at RESG, the hotel loan that did have a small charge-off of $3.7 million |
| We're experiencing that |
| George Gleason I think the biggest factor is just the slowing rate of Federal Reserve rate increases |
| If it goes up a little bit or it goes down a little bit or it stays the same |
| But that's -- there's nothing unusual |
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