Home BancShares, Inc. (HOMB) Earnings Call Transcript & Summary

Greetings, ladies and gentlemen. Welcome to the Home BancShares, Inc. Second Quarter 2024 Earnings Call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued after the market closed yesterday. [Operator Instructions] 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 2024. [Operator Instructions] The conference is being recorded. [Operator Instructions] It is now my pleasure to turn the call over to Donna Townsell, Director of Investor Relations.

Thank you. Good afternoon and welcome to our Second Quarter Conference Call. With me for today's discussion is our Chairman, John Allison; Stephen Tipton, Chief Executive Officer of Centennial Bank; Kevin Hester, President and Chief Lending Officer; Brian Davis, our Chief Financial Officer; Tracy French, Chairman of Centennial Bank; Chris Poulton, President of CCFG; and John Marshall, President of Shore Premier Finance. To open our discussion on the quarter today, we will begin with some remarks from our Chairman, John Allison.

Thank you, Donna. Welcome to the 18th year as a public company and the 26th year for us as a financial institution. This conference call is #72, for those of you that have been with us since the beginning years, and I still look forward to presenting our quarterly results. I'm certainly more comfortable today than I was June of '06, when we first reported our quarterly numbers. I could not sleep that night. I was so nervous. I had my notes around, but I just had worn them out. We just returned from a 2-week trip with Stephens, telling our story all over the country. If you remember those times, not many IPOs were getting done. As a matter of fact, the company scheduled in front of us had pulled out and the one behind us had pulled out. I was laughed at, yelled at and even called a one-trick pony by a Dallas firm. We traveled for 2 weeks and raised about $50 million, and I was not sure we're going to get it done. One of the investment banking firms that was in our syndicate sold their retail arm and dropped out of the bank space just prior to the offering day. It was a terrible time to bring an IPO. However, we met many wonderful people. And some are still major shareholders of our company. From $2 billion to $23 billion, what a ride. So let's go to the report. So far, so good for '24; as we said in the first quarter, nice start to '24. And Home's top-tier performance continues through the second quarter. Last quarter, I said, to improve profitability, we simply need to reduce expenses and increase revenue. Easier said than done, so here's what happened. On the expense side, we improved our efficiency ratio from 44.43% last quarter to an adjusted ratio of 42.59% for the second quarter of '24. Add to that: A strong, profitable loan growth in both first and second quarters allowed us to continue on with what is a great start to '24 in spite of the economic environment. Loans grew in the second quarter by nearly $270 million, while margin was strong, was a strong 4.27%, up 14 basis points from the first quarter '24. Noninterest expense for the first quarter of '24 was $111,496,000. And the same quarter last year, expenses were $116,282,000. We made marked improvements of over $5 million after adjusting for -- and you'll hear this repeated several times today. We had not -- I guess we got another letter, invoice from the Fed for $2,260,000 for an additional payment for the FDIC insurance fund. I think we're done with that now. After pulling out the FDIC insurance bond of $2,260,000, actual expenses for the quarter was $110,925,000, a slight improvement from the [ first quarter ] of $571,000 but, from the [ first quarter ], $5.3 million better. That's $20 million a year in savings if we can continue to do that. Diluted earnings per share were reported at $101,530,000 or $0.51 a share at -- sporting an ROA of 1.79%. When adjusted for the additional $2,260,000 for the FDIC insurance fund, the company actually earned $103,916,000 or $0.52 a share; and that sports an ROA of 1.83%. Adjusted earnings for the second quarter actually beat the adjusted earnings for the second quarter of '23, a '24 beat '23 of adjusted earnings. Pleased with that. Having a balance sheet that supports superior profitability during this high interest rate environment that runs almost side by side with 2023 is very pleasing to our management team, with analysts projecting all bank earnings to be down 5% to 10% this year. Being able to run a top-tier ROA allows Home's management to be able to pull lots of handles for our shareholders, including dividends and stock repurchases: quarterly dividends of 36 million or annual dividends of 144 million. Plus, we repurchased 1.4 million for $32.5 million during the second quarter. And we repurchased 1,026,000 for $24 million during the first quarter, for a total of $56.5 million and almost 2.5 million shares. It was actually 2,426,000 shares. That's a 1% reduction in shares outstanding in the first 6 months of the year. As I said, there's an advantage to be able to run a 1.80% ROA because there's lots of panels that can be pulled to benefit our shareholders. That brings the total outstanding average number of shares for future quarters to below 200 million. Over the past several years, we have repurchased many millions of shares and retired the stock and still improved our tangible common equity in the last 12 months by $1.21 a share or 11.1%. We always try to do what's in the best interest to the shareholders. Some Wall Street talk is all regional banks are in trouble and may blow up. I want to assure the investment community that Home is not one of those bad banks they're talking about. Due to the mistakes most banks made, many of the banks' only way out is to sell. They can't earn their way out. They can't earn enough money to earn their way out of trouble, so they sell at some reduced price. Or they bring in additional capital, but the dilution to the shareholders is extremely painful, as we've seen in some deals recently where the dilution was much -- as much as 50%, shocking. They probably would have been better off to sell to a good bank and [ write their bank stock up ]. Your Home has a war chest of capital and continues to build month by month and quarter by quarter, having the ability to earn more than $100 million quarterly while maintaining almost $300 million of loan loss reserve. Couple that with a huge capital account and stable margins, and I now present to you Home BancShares. We truly are a regional bank and many regional banks are in trouble, so it's our goal to separate ourselves from the pack while maintaining a fortress balance sheet and continuing to be a top-tier performer while remaining patient because patient capital is smart capital. I don't think the bank crisis is over. We've just been kicking the can down the road. Not much has changed for a lot of these banks, except more of the same. They have improved their loan-to-deposit ratio, slightly maybe, by either allowing securities to roll off and/or loans to roll off. Or they've chased high-priced CDs to improve their loan-to-deposit ratio, but either way, the odds of a quick fix is not likely. They may be able to improve their earnings slightly but not enough to earn themselves out of the problem quick enough. Another dark cloud, to me, is coming to show up in February and March of '25. That's when the end of -- the bank-saving Fed program called Bank Term Funding Program or BTFP expires. And the problem banks have to pay the money back on the securities that the program allowed the Fed to loan the face value of the securities that was much higher than the amount the market value was. How are banks going to make up the shortfall? Instead of rates going down, there is a chance that CD rates may go higher. That would not be positive politically for the Biden administration. Odds are against it, but in reality it's certainly a possibility. If bank liquidity is in question and a bank has to have liquidity, or fail, they'll pay whatever they have to pay for the money. That's exactly what happened to the savings and loans in the '80s. I don't think there's been sufficient time between the inception of the Fed lending program and March '25 when the program ends. That's why I call it kicking the can down the road. Many banks have negative tangible common equity and many have less than 3%. I hope I'm wrong, but it could be a bloodbath if the Fed does not extend. Stay tuned. We're back carefully looking for an acquisition that makes sense for our shareholders. We're also looking to March of '25 because we think there will be opportunities that arise as the BTFP comes to an end. I'm sure of one thing that banks will not be able to do, and that is to borrow $100 on something that's worth $50, like securities have turned into. Bingo. That's the problem: force the bank to recognize loss on securities if they have to sell the securities. And couple that with not being to earn -- not being able to earn themselves out of the problem. This could get very serious, and many of them may be interested in talking to good banks. At Home, we provide safety, security for our depositors and customers and shareholders. I just have a couple of additional comments here. It's nice to see the bank stocks running and everybody get a little kick. And the bank stocks -- I've just got several random things here. We sold our building that housed GoldStar Trust in Canyon, Texas for a nice profit. And the GoldStar team moved in to our large Amarillo facility. We also leased an additional 60,000 square feet in our headquarters building. You remember that's a 240,000-square-foot facility that kind of was an albatross around our neck, but if -- GoldStar has moved in. And now we've leased 60,000 square feet. And maybe we have an opportunity to lease more, so it looks like we're turning a 240,000-square-foot albatross into maybe a profit center over time. In conclusion. As I said earlier, the first 2 quarters were a very nice start to '24 with over $200 million in income and revenue of over $500 million and improving earnings per share. That brings 40% -- that means we're bringing 40% -- actually take over 40% of the revenue to the after-tax bottom line. Good job, for everyone. I had the privilege of visiting with Arkansas State University Head Football Coach Butch Jones, Tracy and I did; and sharing stories with each other about respective businesses. And he left me with a quote that I've seen come true so often, and let me share it with you. "If you lower your standards, you lose the winners. If you raise your standards, you lose the losers." He had many more quotes and I'll share those over the years, but that one just stuck on with me. Patient strategy, conservative management, unwavering discipline, good efficiency, hard work, smart investments, strong capital, defensive reserve allocation, good asset quality, strong liquidity have led our company to be one of the strongest banks in the nation. And as I have said, we've been thrown in the regional bank basket, but all banks are not created equal. We'll continue to try to separate ourselves from the pack. And in closing, as I said, there is no place like Home. Donna?

Thank you, Johnny. Congratulations on a great quarter. And thank you for sharing all that information with us. Our next report today comes from Stephen Tipton.

Thanks, Donna. As Johnny mentioned, Home BancShares and Centennial Bank had another great quarter, highlighted by continued loan and deposit growth, an expanding net interest margin and solid expense control. I'll start my comments with the net interest margin, as Johnny has already touched on already. The reported NIM expanded by 14 basis points in Q2 to 4.27%, all while continuing to maintain healthy excess balances, cash balances, that we discussed in detail on the First Quarter Earnings Call. Excluding event income noted in the press release, the net interest margin was 4.23% for the quarter, an increase of 12 basis points from Q1; and exited the quarter in June at 4.27%. The yield on loans, excluding event income, improved 15 basis points to 7.49% in Q2 and outpaced the increase in total deposit costs by 10 basis points. During the quarter, total deposit costs increased 5 basis points to 2.27% and exited the quarter at 2.30%. Our bankers have done an extraordinary job managing this interest rate environment and the seemingly endless advertising across our footprint for high-rate CD and money market accounts. The pace of the increase in interest-bearing deposit costs has been cut in half each of the past 2 quarters. We continue to negotiate pricing with core customers as we have been but are encouraged to see the pace of increases on the deposit side continue to moderate. On asset repricing, we have over $550 million in loans maturing in the second half of this year at a weighted average rate of 5.99%; and over the next 18 months, a little over $2 billion maturing, with a weighted average rate of 6.5%. Switching to liquidity and funding. Deposits continue to be a key focus, now with 3 consecutive quarters of deposit growth behind us, despite what is typically a seasonally tough quarter with tax payments and municipal outflows. Our presidents and lending staff are analyzing customer balance sheets and mining for additional opportunities on the deposit side. Total deposits increased $90 million for the quarter. The deposit mix movement was similar to prior quarters as CDs continued to be in focus for the consumer. Noninterest-bearing balances continued to be fairly stable and account for 24% of total deposits. Alternative funding sources remain extremely strong, with broker deposits still only comprising 2.2% of total liabilities. And the loan-to-deposit ratio still stands well below historical levels at 87% as of June 30. On the asset side, end-period loan balances increased $268 million, highlighted by over $200 million in growth from the community bank regions, along with solid growth from CCFG and Shore Premier. On loan originations, we saw volume of $1.19 billion in Q2, with a little less than half of that funded at quarter end. Yields on originations remained strong with an average coupon of 9.20% in Q2. Payoff volume was slightly lower from Q1 at a total of $508 million, although we expect that to increase in the back half of 2024, particularly from CCFG. Closing with the previously mentioned strength of our company. All capital ratios remain extremely strong with a tangible common equity ratio of 11.23%, a leverage ratio of 12.3% and a total risk-based capital ratio of 18%. Couple that with a reserve coverage of 2% on loans and over 340% coverage on nonperforming loans, we are in a strong position to capitalize on future opportunities. I want to thank all of our Centennial and Happy State bankers for their dedication and efforts in the first half of this year to produce such impressive results. And with that, Donna, I'll turn it back over to you.

Thank you, Stephen. And now Kevin Hester will provide some color on the lending portfolio.

Thanks, Donna. And good afternoon, everyone. As Johnny mentioned, our ending loan balances grew by nearly $270 million in the second quarter, making it the fourth consecutive quarter of loan growth for Home. While loan growth is not the first or even the second most important aspect of our strategy, it is impactful when it occurs, especially when we can string several quarters together like we have recently. Our consistent, conservative approach to credit, paired with our forward-looking management during the rising interest rate cycle, have combined to facilitate this growth. We also benefit from a large portion of our banking activities occurring in the great economies of Florida and Texas. This was not by accident and is an often overlooked reason for our success. Asset quality remains a strength for Home as well. 2 occurrences are in play here, 1 continuing and 1 new. The continuing trend is that the majority of any new asset quality issues are tending to be from the acquired Happy portfolio. This is not totally unexpected given that, as we've said before, we knew that their leverage was higher and that they had relatively higher levels of asset quality issues than our legacy portfolio. Notably, though, we also experienced that a significant level of their problem assets identified during early due diligence were resolved before closing. As a current example of this trend, we foreclosed on an incomplete multifamily project North of Dallas in the second quarter, increasing OREO by approximately $11 million. While poorly underwritten and originated at 80% loan-to-cost by the leader of the defectors on his way out the door just before acquisition, we still anticipate a reasonable outcome. We are less than 90 days from completion with the original contractor, who is also a customer, and have 2 serious LOIs that would result in no worse than a small loss upon achieving the [ CO ]. This outcome is due to the excellent work of our special assets group and is underlined by the continued growth and strength in the overall DFW metro geography. The new occurrence I mentioned appears to reflect the shift in regulatory tone, which resulted in different outcomes on a small number of previously reviewed relationships compared to the last review cycle. This includes the memory care facilities which we've discussed in the past, which were placed on nonaccrual this quarter. They continue to pay as agreed, and while they are actually showing recent increases in occupancy, this hasn't yet translated to positive cash flow. As for the numbers, NPLs and NPAs increased 3 basis points and 7 basis points, respectively, due to the memory care nonaccrual and the addition to OREO, but criticized and classified loans dropped by $68 million. Early-stage past-dues are still low at 0.60%. Overall, even with the noise around the occurrences noted above, asset quality is strong and not something that keeps me awake at night. Donna, that's all I have, and I'll turn it back to you.

Thank you, Kevin. Johnny, before we go to Q&A, do you have any additional comments?

I really don't. I was -- it's been a great first 6 months this year and very pleased with it. I think everybody is pleased. Congratulations to everybody. Hard work pays off. And we'll still continue to work to separate ourselves from the pack. So with that, if nobody else has a comment, we'll go to Q&A.

[Operator Instructions] And our first question today is from the line of Stephen Scouten of Piper Sandler.

I guess I'd love to start with loan growth, really nice number there, especially in light of what we're seeing for the industry as a whole, which I think is a bit weaker growth this quarter. So I'm just kind of wondering. What dynamics kind of led to that? I know Stephen said paydowns were a little lighter this quarter, but have you been able to pick off business from other folks stepping away from the market and getting a little more aggressive or just kind of good blocking and tackling?

Stephen, this is Kevin. So I think it's you saw a good production from the community bank footprint. I think that's -- we talked about that last quarter, that we were seeing some really good opportunities in our community bank markets. And that -- I think that translated to some growth. Stephen did mention the lower paydowns. And I think you're going to see that probably pick up a little bit third quarter, maybe even fourth quarter, particularly for CCFG, but the pipeline has been good. It's a little bit lighter right now than it was this time last quarter, I think, but still good. We have a lot of opportunities we're talking in our markets with, so there could still be some good things happen that we don't have particularly on the pipeline today.

Okay, sounds good. And then just kind of thinking around M&A. Like you said, there have been some capital raises that are seemingly a little hard to understand. I'm kind of -- I'm curious why those banks wouldn't sell, maybe, Johnny, to your commentary there; and if -- for you guys, if the math still doesn't work relative to where you've seen some of these trades go off; and kind of how you think about that transpiring for you all.

Well, I guess I can use Ron White's statement. You can't fix stupid. So they're running their banks -- a lot of them were running their banks in the ground, and now they're running them in the ground again. It just -- it makes absolutely no sense to me whatsoever. So one I might -- looked at was interested in and made a call and started to bump that a little bit, but I didn't want to get into the game. I stayed out of it. I don't understand some of these people, the moves they've made. They run it in the ground. They're the ones that ran it in the ground and then they are the ones that run it in the ground again. I've said that twice, but it's pretty amazing to me. I don't -- what they've done and how they go about it, so -- I mean good luck to them. I don't know. If you dilute your shareholders 40% to 50%, that's a major hit. And to overcome that is shocking, so I can't -- I don't know. I really don't have an answer. I don't -- they've actually basically given up control of their companies to somebody else. And if we're going to give up control with this one, it's going to cause somebody to get into trouble with this one, so I don't think it was a very bright move. That's what -- I just don't believe that. And I think you're in agreement with me, that it -- some of these moves we're watching out there are not the best way to go about it. So I mean all the banks to have -- they're going to rise and fall together. So if they merge with somebody like Home, then -- and I think they're missing a 2- or 3-point run, well, Home is going to get the 2-, 3-point run. That's so -- it's as broad as it is long and I don't understand why they don't see that. If they think -- maybe they think they've got a secret sauce and they're going to outperform Home and the rest of the top-performing banks in the country. I don't believe they're going to get that done. So I mean they -- I won't say it again, but they didn't manage it in the first time very well. And they haven't managed it the second time. Stephen, have you got a comment? Tracy, have you got a comment on that?

I guess it just sounds like maybe, for you guys, M&A is more of a potential '25 event if you see if turmoil shakes out first from the BTFP and so forth in February and March and then see where we go from there. And maybe, at that point, we've had some rate cuts in the math a little bit, more palatable. Is that the right way to think about it?

I think that's a way to think about it. I mean we're interested and we're looking a little bit. We're just kicking the tires. What I'm afraid of is being tied up in a deal. You know we've got a war chest of capital. We're making good money, and it looks like income is improving. So we struggled a little bit last year, but we had some wind at our back in the second quarter of last year. We had some of our investments really kick in a lot of money, but core income-wise, this was one of the best quarters in the corporation's history, maybe #2. And it may be #1, so -- and we outearned last year's income this time, so -- and I see good things in the daily reports continuing. So we get that daily report and I look at it every day. I like what I'm seeing. I like what's going on. Kevin has been able -- his lending team has been able to provide lots of good loans to us over a period of time and continues to do that basically. We get lots of looks at lots of stuff. And just to -- we could have done more, but the conservative nature of the company is [indiscernible], so we -- I don't want to have my hands tied up, Stephen, in the middle of a deal when real opportunities come up. And I don't mean this disrespectful, but if they run their bank in the ground, the -- I'm going to buy their problem and it's going to come on our books. And how long does that impact Home BancShares before we come out the other side? I guess you can do the marks and we can come out the other side pretty quick, but I just don't want to do anything to damage Home BancShares where we sit right now making the kind of money we're making and seeing the upside that we see. I think I told you last year that Home was sitting in the catbird seat. And we really sitting in -- we're sitting in a better position now than we were in the first quarter. And I think we're going to be in a better position in the third quarter versus the second quarter, so it just continues. As long as Kevin's team and our retail people control the costs of the funds; and Kevin brings the loans, team brings the loan in, I think you're going to see good numbers coming from Home.

Yes, absolutely. A great quarter. Shareholders should be happy. And I'm sure your wife is still happy too.

We're going -- look. Let me explain something. We're going to look at the dividend at the Board meeting Friday, so maybe she -- maybe I'm getting a hug and a kiss when I walk in.

There you go...

All right.

Our next question today is from the line of Brett Rabatin of Hovde Group.

I wanted to start with, Johnny, I know your goal going into the year was, hey, let's make $100 million a quarter and $400 million on the year. And people were doubting whether you could do that or not. Given this quarter -- I hate to raise the bar for you, but it feels like, with some loan repricing in the back half of the year, slowing increases in your cost of funds, it would seem like maybe you might want to tweak that goal higher. Any thoughts on full year expectations and maybe how you're thinking about that?

Well, the big key here is $111 million in expenses quarterly, and we've been able to hold that. And I think we can continue to hold that. There are some things we won't be able to control, but so far, so good on that side. I'm very proud of our team and how much expenses we've cut out. And Kevin -- you're right. I get it. I'm going to stick my neck out here, but he has -- his team has produced. And our retail team is -- handled our cost of funds. And it's what I -- one of my directors said the other day, he said, "I see that spark back in your eye, Johnny." And I said we're back humming again. The company is back humming again. So I like to see us humming. I like -- I feel good about that. I feel good about the company. I feel good about what's going on. It's just a matter if we can continue to get the good loans to come in over the third and fourth quarter like we've been able to do the first and second quarter. Let me say we're looking at some really good stuff, so I'm optimistic. I think Chris has about $300 million or so in paydowns coming in this quarter, but he's continuing to write business too. And we're continuing to write business, but it's good to see the legacy footprint step up as strong as it has in the last 2 quarters. And now -- and Chris just -- I mean, Chris, he's going to get payoff. He said, "There's nothing wrong with me getting my money." So that's Chris's attitude and I like his attitude. I get what you're saying about the increased profitability. I'm not going to get too crazy out here right now, but let me tell you one thing. When they told me at the first year we were going to not make as much money as we did last year -- I think you heard me. I said I can't get my arms around that. I -- that's not how Johnny Allison thinks, so you know that. I don't think we're going to have less income. Excuse my expression: I'd call that BS, so -- and we have -- as you can see, it was a personal challenge to me. And we've done a great job, so far. Our team has been -- really performed.

Yes, definitely. The other thing was just you went through the asset quality stuff, guys. And I know, the past 6 months, you've kind of been dealing with some cleanup, if you want to call it that, in the Texas markets. Are we essentially kind of through with that and whatever else comes from here would be something you haven't seen yet? Or any color on the Texas cleanup from here and what might be left to do?

This is Kevin. I'm not going to say that we're completely through. I think there could be 1 or 2 things that we're going to continue to deal with. It's just tough. When you've doubled interest expense or interest rates over a period of time, you've got some folks that are just going to struggle through it. I don't see anything that -- I think I went through the scenario that we added this quarter. And to be able to work through that and come out with a very, very small loss on a situation like that is a pretty good deal [indiscernible]. And that's the kind of stuff we're working through. It's not big problems. It's just distractions. It's things you've got to work through and work out.

Yes. And we saw another multifamily project stick its head up, and we're working on that project too. We -- I haven't seen that one. I saw the first one. And I believe you'll be pleased. I believe we're going to have -- be able to work that one out pretty well. It's a new construction. The other one was an older apartment unit that was refurbed. And I'm not sure about that one, but maybe a loss. It may not be a loss in it, but we'll analyze that. But that one just kind of came up on us in the last short period of time, so we were not -- that was not on our radar screen, but it is what it is. And as we do a pretty good job of managing our credits around here and we don't get in a hurry as we didn't get in a hurry on this multifamily unit out of North of Dallas, we just didn't get hurt. When they finish it, they finish it. And if we got to keep it and lease it up, we'll do that. We don't -- however, we've got 3 or 4 people very interested in that project with virtually no loss, so I'm pretty optimistic about that. We take problem credits very seriously around here. And we won't know who made it and why they made the credit and why they made the loan. And did they -- is it a danger to our loan loss reserve, an impact to our loan loss reserve? So it is a serious -- when you get a situation like -- we found a loan that should have never been made. And we found some of those, but we worked through a bunch of them already. And Kevin's team does a great job, so I don't expect -- I sleep -- let me say this. He said nothing keeps you up at night. That $300 million of reserves gives me a good night's sleep, so I promise you that.

Yes, I bet. If I could sneak in one last one just on -- just back on the loan growth topic given this quarter and last quarter, just kind of looking at the trend. You mentioned the payoff. Would it be fair to say that you guys can grow mid-single digit this year? Or any color on the pipeline relative to where it was prior to 2Q?

Are you talking about the rest of the year? Or are you asking for the rest of the year?

Right...

I think mid-single digits is going to be a -- it's going to be a little tough with the paydowns that I see, may be lower single digits.

Okay...

Brett...

It will depend. It will just depend on originations because, I mean, we see the paydowns coming. So it will all depend on what originations come in and they can find. A lot of stuff we're doing is construction. And so the thing that's going to get booked in the third quarter is not going to fund until -- probably first quarter next year is when it will start funding, as they work through their equity. So it will depend on some things that fund on the front end.

We're working on some stuff that funds pretty quick, [ but ] Tracy, you've got something...

I was just going to say, on the Texas asset quality, a lot of that is smaller things. It's a lot of it, but it's small things. And most of those, if I look back, were on banks that Happy State acquired. So it wasn't -- it's a lot of credits that they made, so that part, it just takes a little bit of effort on that. And I go back here on the loan growth: It's still we're seeing good opportunities, just still. And that's South Florida is really seeing some good opportunities, North Florida and Arkansas staying steady. And Central Texas is certainly getting some opportunity. I think Johnny and I are going out to meet a new customer they brought in just last week, on that aspect. My final thing to you, Brett, was thanks for raising them all.

Yes.

Well, I'm happy to do it.

Our next question today is from the line of Jon Arfstrom of RBC.

Can you talk a little bit more about the deposit-gathering strategy? You referenced a couple of times the retail bank and their successes. Just kind of what's the strategy there? And how are you growing deposits?

Well, actually we've never run -- I'll let Stephen talk about it, but let me start out. We've never run a CD ad. We run a strength ad, because we're seeing 6% and [ 5.50s and 5.70s ]. And you can borrow money cheaper than that as a bank, so my point is there are so many of these banks in trouble that they're having to get the money and particularly make it worse. Because when they have to pay back this Fed program in February, March, I don't know where in the world they're going to get the money because the federal home loan bank is not going to loan them $1 on something that's worth $0.50. So I'm not sure where that goes. And we've just taken a path of taking one customer at a time. And the ads that are run by Home BancShares is that we can pay out all uninsured depositors, and I'm very proud of that. We're not going to get ourselves in a position that we can't do that. So that makes that -- I think that's extremely important to know. We're making a lot of money, but it may be one of the safest financial institutions in the country because of the deposit base that we have. So our people and on the retail level know these customers. They're not -- it's not hot money. They know it's [ Mae's and Fred's ] money. And they're talking to them. And they understand and we preach it: We're not going to be the highest rate in town. We're not broke. So many of these banks are in trouble and they're having to pay up for money, and we're not doing it. And it's happening right here in our market and we're not doing it. They know that their money is safe at Home BancShares, so they can -- we can pay every uninsured depositor. And I think Stephen and Tracy took a path to [ fly back to just one ]...

Yes. That's what's I'm going to say. I mean it's working existing relationships that we have both on the deposit and the loan side. We had a municipal relationship up in North Arkansas here recently that took some additional deposits in. We actually were able to reprice rate down somewhat as well. And then we have an association banking division that we've had for some time now -- and visiting with our president there over the last couple of weeks. There's -- I think there's path to some pretty significant growth over the next year, 1.5 years as some of the other bigger banks shy away from some portion of that business, so -- and then like I mentioned on the loan side, it's just we've got an opportunity, as we work through new loan opportunities and see borrowers that have liquidity and other institutions, to capitalize on that at the time that we're making the loan.