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spk06: Good morning, everyone, and welcome to FB Financial Corporation's fourth quarter 2021 earnings conference call. Hosting the call today from FB Financial is Chris Holmes, President and Chief Executive Officer. He is joined by Michael Mati, Chief Financial Officer. Wade Perry, Chief Administration Officer, and Wib Evans, President of FB Ventures, will also be available during the question and answer session. Please note FB Financial's earnings release, supplemental financial information, and this morning's presentation are available on the investor relations page of the company's website at www.firstbankonline.com and on the Securities and Exchange Commission's website at www.sec.gov. Today's call is being recorded and will be available for replay on FB Financial's website approximately one hour after the conclusion of today's call. At this time, all participants have been placed in a listen-only mode. The call will be open for questions after the presentation. With that, I would like to turn the conference call over to Robert Hohen, Director of Corporate Finance. Please go ahead.
spk07: Thank you, Jamie. During this presentation, FB Financial may make comments which constitute forward-looking statements under the federal securities laws. All forward-looking statements are subject to risks and uncertainties. and other facts that may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned not to put under your lines on such forward-looking statements. A more detailed description of these and other risks is contained in FB Financial's periodic and current reports filed with the SEC, including FB Financial's most recent Form 10-K. Except as required by law, FB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures to comparable GAAP measures is available in FB Financial's earnings release, supplemental financial information, and this morning's presentation. which are available on the investor relations page of the company's website at www.firstbankonline.com and on the SEC's website at www.sec.gov. I would now like to turn the presentation over to Chris Holmes, our president and CEO.
spk10: Thank you, Robert, and good morning. Thank you all for joining us this morning. We always appreciate your interest in FB Financial. We had an excellent quarter as we delivered strong organic growth, reported EPS of $1.02, and continued growth in our tangible book value per share. Our tangible book value per share at year-end was $24.67. That represents a compound annual growth rate of 15.5% since the company became public in September of 2016. While our returns are slightly less than we've come to expect from ourselves, our return on average assets of 1.6% reported and 1.4% adjusted, and our return on tangible common equity of 16.8% reported and 14.7% adjusted are sound, given the extended ultra-low rate environment. Earnings for the quarter were strong and relatively straightforward. During last quarter's call, I mentioned that our regional presidents thought the fourth quarter would show activity that could get us to double-digit loan growth for the year. As usual, they were right, and we had 315 million of net loan growth, excluding PPP, or 17% annualized for the quarter. This puts us at nearly 11% for the full year. We also had very strong non-interest bearing deposit growth with 20% annualized for the quarter and 23% for the year. Our net interest margin was stable for the fourth quarter at 3.19% in a zero rate environment. Expenses were stable and as expected. Our asset quality continues to be very strong with NPA's assets holding flat with the third quarter at 50 basis points and classified loans as a percentage of total loans dropping by 14 basis points to 1.66%. Charge-offs for the year were very manageable, 8 basis points, and we had a provision release of $10.8 million in the quarter. which leaves our allowance for credit losses at a very healthy 1.65% loans HFI at year end. We did have a significant gain on our commercial loans held for sale during the quarter, primarily related to two relationships that exited the bank. One of those had been written down materially prior to the Franklin merger, and one paid off and had a mark against it. We've been consistently describing this portfolio from the date of announcement in January of 2020 until today. We marked it conservatively at the merger date. We have very capable people managing it, and we have continued to manage it to maximize returns as we've worked it out of the bank. We had $11.2 million of net gains on the portfolio in 2021. and we have $79 million in loans left. All those same factors that yielded positive results so far still hold and we look forward to maximizing the value of the remaining portfolio in 2022. As for the core portfolio of the Legacy Franklin Financial, its performance has been stellar. As we enter 2022 and we think about our outlook, our long-term Organic target for loans has been 10% to 12% annually. With the current environment and the momentum that we're carrying into the year, we believe that we'll be on the upper end of that range for 2022. We're targeting similar growth in non-interest-bearing deposits. Our net interest margin should remain stable until rates rise, and we're positioned for rising rates, and we expect margin expansion throughout the year as rates move upwards. Expenses will increase, as you would expect, with healthy revenue growth. We expect an expense growth in mid to high single digits in 2022. Moving to mortgage, as expected, the fourth quarter was a challenging environment as refinance volumes came down significantly. We expect these conditions to persist in the first quarter. I don't believe our mortgage contribution in the first quarter will look much different than it did in the fourth. In short, we believe that 2022 will present strong opportunities for organic growth. One other area of opportunity became public last week as we announced we were one of five founding bank members of the USDF Consortium, which will focus on doing foundational work to allow banks to leverage the breakthrough blockchain technology for responsible innovation and growth. We feel the use cases of USDF are nearly limitless And in every case, it provides efficiency and enhanced experience both for us and our customers. Our Chief Administrative Officer, Wade Perry, is on the call. Wade has led our digital strategy and our innovations area, plus he's a board member of the USDF Consortium. We will also continue to evaluate acquisition opportunities. Nearly 18 months after our combination with Franklin, we have a high degree of confidence in our ability to identify, negotiate, and execute on mergers in a manner that delivers value for customers, associates, and shareholders. With Franklin Merger, we combine with the dominant community bank in attractive markets and added new associates that play vital roles in managing the resulting company and significantly raise the overall talent level of the resulting institution. The wish list of partners that we've identified would have similar mass in markets that we want to be active in, both in footprint and contiguous to our footprint, and all those banks are known in their local markets as the cream of the community banking crop. I want to emphasize we don't need to pursue acquisitions for the sake of growth. We're very excited about our organic growth probabilities. If a bank hasn't made our list, then we're too focused on organic opportunities in front of us right now to distract our team with the care and effort that we put into the integration process. So with that, I'm going to turn it over to Michael to discuss our financial results in a little more detail.
spk09: Thank you, Chris, and good morning, everyone. Speaking first to mortgage and illustrated on slide six, mortgage faced the usual seasonality of the fourth quarter in a difficult operating environment due to excess capacity in the system and lower refinance volumes, ultimately resulting in downward pressure on margins. The mortgage segment provided a $700,000 contribution for the fourth quarter. With the recent rise in rates, continued decline in refinance volume, and continued seasonality, we would anticipate similar results in the first quarter. Before moving on from mortgage, I want to address our gain on sale margin and market-to-market value chart in the bottom right of slide six. We have pointed to the market-to-market valuation as a leading indicator of gain on sale margin. This quarter, we had a timing difference related to settlement of hedges versus loan sales, so our market-to-market valuation was slightly lower and our gain on sale margin a little higher than otherwise would have been. We expect those numbers to be more in the 220 to 230 range next quarter, with March market closer to 2.2% and the gain on sale margin closer to 2.3%. Moving on to the net interest margin, for the fourth consecutive quarter, we saw the margin remain essentially flat at 3.19%. Deposit costs declined by a further four basis points in the quarter, which served to mostly offset the six basis point decline that we experienced in our contractual yield on loans. Yields on the new loan originations have held steady in the 3.8% range compared to the existing portfolio at 4.17%, and we continue to make incremental progress on lowering our cost of deposits, which offsets some of the decline of asset yields. We expect our margin to remain in the same relative band until rates increase, which seems imminent, and our balance sheet is well positioned for that increase when it happens. Our latest interest rate shock scenario showed 10% upside to our net interest income in a plus 100 scenario. We have $3 billion of variable rate loans that either don't have floors or are not currently receiving support from a floor. Those will reprice with any increase in rates, with the majority of those repricing within three months of a move. We then have an additional $500 million in loans that are within 25 basis points of their floors. We also still have $1.6 billion in interest-bearing cash that will reprice with an increase in rates. Our interest income will increase materially in a rising rate environment. What I think the industry is unsure of at this point is how quickly deposit costs will follow the increase in asset yields. The confluence of liquidity in the system and new non-bank competitors that weren't nearly as prevalent during the last round of rate increases make it a difficult data to predict. Speaking to deposit growth in the quarter, we once again showed solid growth in non-interest bearing deposits. Excluding mortgage escrow related deposits, our non-interest bearings grew by 31.8% annualized in the fourth quarter. However, interest bearing deposits grew even more at 33.7%. This growth was driven by an approximate $500 million increase in public funds as those accounts began to seasonally fund up. We would expect those balances to remain elevated through April or May before beginning to decline. Moving to the allowance at $10.8 million, our release was a bit larger than we expected. The economic forecast that we used in our CECL model stayed relatively flat from third to fourth quarter and had minimal impact on the change in our levels of reserve this quarter. The primary driver of the change this quarter was the release of a portion of our COVID-related qualitative reserves. We determined that release was appropriate as economic activity had remained vibrant across our markets through the beginning of winter. However, with the sheer case counts of Omicron, we maintained some of our COVID-related reserves. We will continue to monitor the qualitative factor, and we may have further releases over the coming quarters in the absence of any renewed shutdowns or changes in consumer behavior that impacts our customers' outlook. With our allowance currently at 1.65%, reserve releases in 2022 are likely to be smaller than they were in 2021. Speaking to expenses, core banking segment expenses of $50.87 million were down slightly from last quarter's $58.8 million. Excluded from our core expenses this quarter were $1.4 million of charitable donations that are not run rate expenses going forward. In addition to normal growth, we would expect the first quarter to be elevated compared to the fourth quarter due to FICA and 401 contributions. For 2022, we expect expense growth to be higher as we invest in innovations in technology and intend to aggressively recruit relationship managers, both of which we feel should lead to top line growth. Excluding gains related to our non-core commercial loans held for sale portfolio of $9.9 million, our banking segment non-interest income was $11.9 million. Quarter to quarter, we've been in the $12 to $12.5 million range, and we would expect that to continue with some growth until the second half of the year, at which point the Durbin Amendment's impact on our interchange revenue will begin. We anticipate losing $2 to $2.25 million per quarter as a result. Touching last on capital management, we were able to redeploy the gains on the commercial loans held for sale portfolio and our share repurchase plan as we retired $7.2 million of our stock during the quarter. We have a little over $92 million remaining on our current authorization and will continue to repurchase shares when the financial impact of such transactions makes sense. I'll now turn things back over to Chris to close.
spk10: All right, thank you, Michael, for the color. We're pleased with our results for the quarter, and we're particularly proud of the team for the loan growth and the noninterest-bearing deposit growth. That concludes our prepared remarks. Thank you again, everybody, for your interest and operator at this point. We'd like to open up the line for questions.
spk06: Ladies and gentlemen, at this time, we'll begin the question-and-answer session. To ask a question, you may press star and then 1 on your touch-tone phones. If you are using a speaker phone, we do ask you please pick up your handset before pressing the keys to ensure the best sound quality. To withdraw your questions, you may press star and two. Once again, that is star and then one to ask a question. At this time, we will pause momentarily to assemble the roster. And our first question today comes from Brett Rabaton from Hobb Group. Please go ahead with your question.
spk08: hey guys good morning um congrats on the strong loan growth um wanted just i guess first start on that you mentioned that you think that'll be on the higher side of the 10 to 12 percent um that you usually are giving guidance to and just just wanted to see you know what what um segments you think that'll come from and then maybe just thinking about the pipeline and the into hires that you're looking to make? Maybe just talk about geographies and, you know, generally speaking, what the pipeline bodes for this year.
spk10: Sure. Okay, Brad, thanks. First of all, on the loans, we continue to be bullish and positive on loan growth, and that's because of the Because it's not combined to any single product. We see it across product lines. This particular core, our construction and development had the largest growth, but in different, depending on which core you look at, it's kind of been spread across the board. We have strong C&I growth as well. We continue to have strong residential growth. And so all of those are in a growth mode. you go back a quarter or two, multifamily led the way. And so it's both spread across product types, but it's also spread across geographies. And so because of that, we continue to feel pretty good about heading into next year. It's hard to predict for the whole year, but we've consistently been able to deliver 10% to 12%. And obviously this quarter was significantly above that. And in a year that was a When we went into the year, the outlook for loan growth was very questionable. We ended up with 11% for the year right in the middle of that range. We're looking at the higher end of that range for next year, what our expectation is. Then on the hires, we're generating a lot of capital. We have a lot of capital. We're always trying to think of the best way to deploy that. Acquisitions tend to grab most of the headlines, but, frankly, being able to recruit folks both in our existing geographies as well as in, well, pretty much in our existing geographies, and there's a chance we could do something on a de novo basis. We're not out there searching for that, but sometimes it comes to us. And so those would be the areas where we would be active with that strategy. And there's not one particular geography that we've got a bull's eye on a geography or a or any particular competitors or anything like that. It's more a matter of being aggressive every day, having people talk about it every day, and taking advantage of the opportunities when they present themselves.
spk08: That's very helpful, Chris. Appreciate it. And then maybe more a question for Michael on the margin. And you mentioned the 10% upside to NII with 100 basis points. If we get three rate hikes this year, I know people are talking about four, but assuming we get three rate hikes this year starting in March, it would seem like your margin could be up 20 to 25 basis points, but I know there's a lot of variables that go into that with the cash and liquidity and everything else. I'm curious just from a margin perspective, assuming we do get three rate hikes this year, how do you think the margin might progress?
spk09: Yeah, Brett, good morning. I think you're thinking about that, right? And that 20, 25 basis point range you did, you mentioned that a key point, right? Excess liquidity is still weighing on us about 22 basis points on the margin. So if we see some of that exit or redeploy, um, in the, in some things, uh, either loan growth or securities, you could see a little bit of a benefit there as well. But I think in general, that 25 basis point ranges, it's pretty in line.
spk08: Okay. I just want to make sure I understood the mortgage guidance for the year. It sounds like you're expecting the relative efficiency ratio and the contribution to remain similar to 4Q levels basically for the full year of 22. Is that a fair way to think about it?
spk09: No. I was pointing to first quarter. It will look a lot like the fourth quarter, not the full year. We're kind of the wait-and-see approach on the full year at this point. We've tried to go quarter to quarter and get some decent guidance, and so that's kind of what we're looking at for the first quarter.
spk08: Okay. Thanks for that.
spk10: And can I just add this? Michael knows a lot about the mortgage business in addition to being the CFO. He's got a background in the mortgage. He knows tons more than I do. We've set a pattern of really not going out much more than a quarter. If we do think about the year, the seasonality pattern we do think should hold for the year where the second quarter and the third quarter tend to be the quarters where we certainly have the most contribution, and the first and the fourth tend to be the quarters where we don't have as much contribution.
spk08: Okay, great. Appreciate all the color.
spk11: All right, thanks, Brett.
spk06: Our next question comes from Jennifer Demba from Truist Securities. Please go ahead with your question. Thank you.
spk03: Good morning.
spk10: Good morning, Jennifer.
spk03: I'm just curious about your expense growth guidance, mid to high single digit for 22. What kind of hiring plan is baked into that assumption?
spk10: Yeah, so... When we've looked out and we've done budgets for the year, projected for the year, and we've baked in hirings in a lot of, frankly, in quite a few places. Mostly a lot of revenue producers, but not all revenue producers. Some of them are significant hirings in the operational side of our business and the technology side of the business and in our innovations unit. There are some significant hires there on revenue producers within the bank. I think of the major categories, my point is revenue producers within the bank. Like I said, a few in what I'll call our operations support area and some in our innovations unit. We've mentioned the USDF consortium and some things we're doing there on the innovation side. There's going to be some talent there. Then the other thing that's baked in there is we are seeing our employee cost increase. We're headquartered in Nashville. The biggest concentration of our folks are in Nashville, and we're seeing cost increases not only there but across the board. And so one of the keys to us continuing to grow revenue is to continue to be a great place to work and continue to make sure our associates are taken care of, and so we intend to do that both defensively and offensively. an important part of our 22 strategy.
spk03: Okay. Thank you. Just a follow-up question on asset quality. It looks like 22 is going to be another great year in asset quality for you in the industry. How low do you think this reserve could go, given the fact that you should be producing pretty strong double-digit loan growth?
spk10: Good question, Jennifer, and I'm knocking on wood as we say that this looks like it's going to be another great year for asset quality for the record. It seems like every time that we think that. something negative happens to the industry. After knocking on wood, I'll tell you, we feel actually quite good and have been able to do some pruning portfolio-wise. As we look out on the asset quality front, we feel actually quite good. When we think about where that settles, let's say just a normalized allowance for credit loss settles out, Keep in mind, you know, our combination with Franklin, the First Bank Franklin combination took place in January. We announced it in January of 22. We closed it in August. I'm sorry, January of 20. We closed it in August of 20. And so, see, that was also right in the middle of the CECL adoption. We think probably a 130 or 150 range is probably where we'll settle at. kind of what we think. Thanks so much. Keep in mind, all those factors change. All those factors that we use to set that, you know, are evaluated by a committee, you know, are audited, and we are, and those factors change every quarter. But that's why the range. So we think it will probably settle out in the $131.50 range. Thank you.
spk06: Our next question comes from Matt Olney from Stevens. Please go ahead with your question.
spk01: Thanks. Good morning, guys. I wanted to go back and ask about the loan floors. And, Michael, you gave us some great details there. I wrote down $3 billion of variable rate loans without floors that were priced immediately and another $500 million that were priced another 25-bip higher move. What about anything beyond 25 bips, or is that pretty much it, the $500 million? And then on the variable rate side, are these prime or LIBOR, SOFR, any color on that?
spk10: Yeah. I'll just say the biggest portion of the move comes in the first couple of rate bumps for us. And it's a combination of prime and LIBOR, but mostly Go ahead, Michael.
spk09: No, that's right, prime and live war, and then actually transitioning most of the live war to prime at this point, although we are doing some SOFR. But, yeah, Matt, as Chris mentioned, it's minimal beyond the 25 basis points, about $50 million to $100 million beyond that per rate hike.
spk01: Okay, got it. And then on the mortgage front, you gave us some great commentary for near term. Definitely appreciate, tough to predict that. But I guess taking a step back, trying to appreciate where the profitability of mortgage could be longer term, whatever metric you think is the best way to look at that. Where do you think that will eventually land?
spk10: Yeah, so we've said if you look at the bottom line of the company, we think it should be somewhere more than 5%, but probably less than 10% of the total company bottom line. And so we still think that. I will say that As you said, Matt, thank you for saying it. It's notoriously hard to predict and project. We certainly do it and we project it, but it's hard to project. We don't get too far out other than what we said. We do expect certainly a meaningful contribution. during the year, but if you look at MBA predictions on volumes, I think they're down what percent, Michael? 35-ish. 35-ish percent year over year. In addition to normal running of the business where we're making sure that we're trying to maximize our origination, trying to maximize our margin, trying to maximize our customer experience, We're thinking about how we continue to evolve that business with things like blockchain technology and other technologies. We're also thinking about some investment in that business as we continue to move forward. We want to continue to have a meaningful contribution, but also we're trying to think in an entrepreneurial way about that business.
spk01: Thank you. All right.
spk06: Our next question comes from Alex Lau from JP Morgan. Please go ahead with your question.
spk04: Hi, good morning. Can you speak more on the USDF involvement and what are some potential use cases for the blockchain technology in the near term? could be applied to your businesses, whether it's the core banking or the mortgage business. Thank you.
spk10: Yeah, Alex, and Wade Perry is with us, and like I said, he's a board member of USDF, so I'm going to let him talk just a little about a couple things. But I'll say this about the Consortium One. We're very excited to be a founding member and do think it's As the industry continues to evolve, that's going to be very important moving forward. And I'll let you talk about it, maybe give an example of a use case or two and even some that could be specific to us. Sure. Good morning, Alex. So when we think about the blockchain technology, what we know and recognize is it's revolutionary technology. It will have the potential to change almost every aspect of the financial services industry. We see that. We're watching closely what's going on in the decentralized finance ecosystem. That's proving out to be true as you see that non-bank ecosystem growing. We want to come together with technologists and regulators and find a way to utilize that inside the banking space. That's the intent of the consortium is to do the foundational work there. Part of that has to be the creation of a stable coin, which is what we're working toward here with USDF, and that is actually the coin itself. Once you are able to allow banks to be an on-ramp to use blockchain technology, then you basically have a set of opportunities that can be quite expansive. So specifically for us, I mean, we're looking at things that we have deep knowledge in as we get started in this space, particularly around mortgage. We know that the manufacture and delivery and sale of mortgages can be done in a significantly less costly manner using blockchain technology because truth replaces trust, if that resonates with you. So that's one of the spaces, and of course we do a lot of, obviously our manufactured housing business is quite large, so we're thinking about those two areas today. And then what can happen on the payments and settlement front has the potential to really help us with some of the things we're facing, particularly around revenue loss and Durban and those things. And as you look at the payment systems today that we actually run our economy in, they're 40-plus years old. And we will be able to cut substantial costs out of those systems and get 24-7, 365 real-time settlement out of blockchain. So particularly those two areas are starting places for us, but we have quite a long list of opportunities that I think help us on both the revenue and expense side. Very good. Thanks, Wade. Alex?
spk04: Thank you for that. And a separate question, just digging into the very strong loan growth, are you seeing any borrowers tap into the kind of excess liquidity on their balance sheets to pay down loan at all? Or is the preference still to hold on to actual cash? And just, can you just speak on the recent pay down activity, if any? Thanks.
spk10: Yeah, we haven't seen a big move towards tapping the liquidity on our balance sheet to pay down loans. That's not something that has been a notable move for us. We do still see customers at high points with their liquidity and then we continue to see room in our utilization of lines where it has not returned to normal levels for us. If we go back to 19, the high point was in the low 50% in terms of our utilization, and we'd be in the low 40% today. We think part of our continued bullishness on loans is that we're seeing great originations or additional draws on some of our commitments. And so that color helps, Alex.
spk04: Yep, that's very helpful. Thank you for taking my questions.
spk10: Sure.
spk06: And once again, ladies and gentlemen, if you would like to ask a question, please press star and one. To withdraw your questions, you may press star and two. Our next question comes from Catherine Miller from KBW. Please go ahead with your question.
spk02: Thanks. Good morning.
spk10: Good morning, Katherine.
spk02: Just one follow-up on the margin discussion. The contractual loan yield is now 417. Where are you seeing new loan yields coming on as we try to think about where that bottom before we start to get the lift from higher rates?
spk09: Hey, Katherine. It's Michael. Good morning. For the past couple quarters, we've consistently seen it in the 3.8% range, and that's been pretty steady. for the back half of the year and what we're seeing early on this year.
spk02: And would you say more of your current wind production is in the variable rate or fixed rate categories?
spk09: Yeah, it's still pretty split. You know, obviously all of our customers want fixed rates and all of our, you know, we prefer the variable, so there's a balancing act there. So it kind of ebbs and flows. You know, it's over time, but it's been pretty consistent, 50-50 split, maybe slightly more on the fixed rate here lately, but expected to go back to our historical norms.
spk02: Okay. And then on your ALCO modeling, you mentioned that there's 10% upside with 100 basis point rate move. What kind of deposit beta assumptions do do you make within that? Also, is that a static balance sheet or are you assuming some deployment of your cash within that 10% assumption too?
spk09: Thanks. That's a great question. It's a static balance sheet. Deposit made is, as we mentioned, really kind of difficult to truly look at in this kind of new economy that Wade was just mentioning. 3%, so 30 basis points, so every 100 basis point maybe we'd expect a third on deposits. I would think that lag a little bit, but time will tell as to how much we see competitive pressures on rates going up and what customers demand.
spk02: Okay, awesome. Thank you. So it feels like your commentary on that even 10% feels conservative if that cash is deployed more aggressively and deposit costs lag.
spk09: Yeah, I mean, we're certainly sitting on a lot of excess liquidity. Yeah, we don't, as you know, generally over-deploy into the investment portfolio. We've stuck at kind of 13, 13.5% of assets, and that's where we kind of wound up, which we really appreciate now that the tenure's above 180 this morning and have some opportunities there. We are conscious of public funds and how... long that sticks around in deposits, but yeah, I would say there's definite upside.
spk02: Okay, great. Thank you for the caller.
spk04: Thanks, Kevin.
spk06: And our next question comes from Kevin Fitzsimmons from DA Davidson. Please go ahead with your question.
spk05: Hey, good morning, everyone. Chris, I just wanted to follow up on your commentary on the M&A outlook, and I recognize your point that you don't need it. You feel very confident in the organic growth. But I'm just curious what your assessment of the environment is like out there. On one hand, it seems like you guys are pretty selective in terms of your wish lists, and you know who those names are. On the other hand, when you look at the environment and now we're moving toward higher rates, do you think that has an effect on would-be sellers that maybe they're not going to be in quite as of a hurry to sell as they might otherwise have been? I guess, you know, and then just what your expectation, would you expect in 22 to be announcing a deal? Would you be disappointed if you didn't? Just trying to drill down to that. Thanks.
spk10: Yeah, good questions, Kevin. I'll try to cover all that and don't hesitate to tell me if I miss a piece you're interested in. As we look out, we are comfortable with our organic growth picture. Again, that's where we get the highest return on capital. We like going out in organic growth. I've said before that We kind of keep a targeted list and we've talked some about that, but we also will entertain other opportunities that come our way that folks bring to us like investment bankers or primarily investment bankers and they may not be on our list. I guess more and more as we think about the environment going and moving forward. It's probably more focus on the list and less focus on less hopefulness that somebody that's not on the list would become a reality because with the things that Wade talked about, the things that are changing in the industry, we've got really strong opportunities there. Now, that being said, when we have the opportunity to get really, geographies that we're interested in with a meaningful share. Geographies that really bring us a strong brand and strong people, that's something that we're interested in. If you looked our list, every one of them would be a very strong community bank, either in or near our markets. But again, there aren't many of those. And we're always interested in the liability side of the balance sheet. We're very interested in non-intra-variable deposits. And so those are things that we really think about and look at out there. And it's not that others don't have value. They certainly do. But when you look at our strategy, that's where the most value is. And so we're pretty focused on the things that we're looking for. which leads to a relatively small list and so which leads to a relatively small list and when it comes to the higher rates I think actually more than the sellers I think what happens with higher rates is at least the higher stock prices stock price stock is usually going to be your currency and so And that usually leads to folks, at least under the impression that they're getting more while on a relative basis. They actually may not be, but I think it leads people to feel better. And so I think what the really rate driver is the higher stock prices is what it's driven by rates. And, hey, the one other thing I want to mention is, I want a big shout out here to both the Legacy Franklin folks and the Legacy First Bank folks. Integration on these things, Kevin, is really hard. To actually put them together, get everybody in the same company and thinking the same way when they didn't used to do that is not easy. And it takes a lot of care and a lot of work, and it's really hard. And so we've been able to do that. And I think what you saw on what we announced on the gain on the health for sale portfolio, what we announced in loan growth, we've been able to integrate those in a way that has made it work. But, man, I tell you, it takes a lot out of you, and it takes your focus off of everything else. And so it's got to be something that we, just like Franklin, that makes a big difference to the combined company for us to undertake that at this point. And so when we do it, it's going to be something that we really, really want.
spk05: All right. That was perfect. Thanks, Chris. Just one quick follow-up. Michael, I believe you mentioned in your commentary buybacks, and apologies if you already covered this, but with the stock price where it is and the preference for organic growth and funding that, is it fair to assume buybacks are really not going to be the focus in the near term?
spk09: Yeah, that's fair. We've got better... more optimal uses of capital right now. We'll obviously continue to monitor that and deploy it appropriately.
spk05: Okay. Thanks very much.
spk10: Thanks, Kevin. Appreciate it, Kevin.
spk06: Ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Chris Holmes for any closing remarks.
spk10: All right. Thank you very much, everybody, for being on the call. We really appreciate your interest, and we look forward to a fantastic 2022. Thanks, everybody.
spk06: And, ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.
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