Home BancShares Inc
NYSE:HOMB
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Home BancShares Inc
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Greetings, ladies and gentlemen. Welcome to the Home BancShares, Inc. Second Quarter 2023 Earnings Call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning. The company presenters will begin with prepared remarks, then entertain questions. [Operator Instructions]
The company 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 2023. [Operator Instructions] And this 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; Tracy French, President and CEO of Centennial Bank; Stephen Tipton, Chief Operating Officer; Kevin Hester, Chief Lending Officer; Brian Davis, our Chief Financial Officer; Chris Poulton, President of CCFG; and John Marshall, President of Shore Premier Finance.
While Home BancShares actually continues to stand tall in this shaky banking environment with a strong second quarter results, and our first speaker, Chairman, John Allison, will illustrate those details for us with some prepared remarks.
Thank you, Donna, and welcome, everyone, for attending the second quarter of 2023 earnings release and conference call. I hope you found it interesting and informative and maybe a little comparable. Some people set themselves up for an easy target and sometimes [ almost ] can't pass it. Well, here we are in July '23 and just wrapped up a very interesting and unusual quarter, to say the least.
We have seen that the worst financial crisis since great [indiscernible] in 2005 to 2010 and 1917 pandemic like we have never seen, while inflation, not seen since the late '70s and the early '80s as a result of both the past and present administration spending money without any restraint. [indiscernible] was trying to do his best to control inflation with this out of control spending.
I call that swimming upstream with handcuffs. So we got [indiscernible] that's a new term I just heard. So how is it working? Suicide rate has jumped, homelessness has exploded, the highest number of bankruptcies in 12 years, we're starting to replace the U.S. dollar with a digital one, not sure what that means; bank failures, we've had several bank failures this year and that we'll have many more we could; the interest rates were at the highest level; crimes running rapid in cities; the war in Ukraine continues on and Putin's own hired army [indiscernible]; the economy is slower; the deficit is exploding; the administration is trying to get us to believe that the economy is strong while 31% of the Americans have tapped a loan from their retirement fund for [indiscernible] record level of credit card debt [indiscernible] continue to kill families of Americans; thousands crossing the border, almost [indiscernible]; inflation continues to march forward. However, it is improving.
The last time I checked [indiscernible] was still busy buying nonstop to our Chinese counterpart. China appears to be a threat to the U.S. because U.S. looks weak. China is trying to bully us a little bit around the world. China [indiscernible] weather balloons over the U.S. really. Russian aircraft playing cat and mouse with U.S. aircraft and ships; and Hunter Biden has finally agreed to take his place from the U.S. attorney.
I think they have stopped him from having [indiscernible] on Tuesdays and Thursdays. So that's his punishment. And they did prohibit him from paying any more income taxes by the way, no state, federal, city or county. I think that's just because they want us to pay our fair share. We can't figure out who left the cocaine in the White House, but other than that, things are really, really good. So what can possibly go wrong.
The second quarter was stressful [indiscernible] days with several bank barriers in the prior quarter and maybe more to come. This was scaring [indiscernible] days of my banking career. As I said last quarter, liquidity was not important until it ends. And this was my first experience up close. What a liquidity crisis can do and how quick it can end the life of the bank. I was very nervous, but also proud to be one of the very few banks that have the balance sheet with the liquidity to pay out all uninsured deposits keeping Home's balance sheet strong with the ability to pay out all insured deposits has cost us some income, but the peace of mind that we position Home into one of America's strongest and focused financial institution more overrides of short-term earning issues.
Not only can we pay out but we can pay out if we borrowed all the money and left the balance outstanding for the full quarter. At today's interest rates, we would still be in the top 25% to 30% of profitability for the top 200 best publicly-traded company banks in the U.S., and that includes all the money centers. However, in spite inflation, second quarter was a pretty good one anyway. Really, the only weakness in the second quarter [indiscernible] with interest expense to outrun interest income by about $6.9 million from last quarter.
Interest income was a company of record, but so was interest expense. That was very disappointing to me, but we're addressing that issue. We have about $760 million to reprice between now and the end of the year at a little over 5%. And we possibly could see a 300 basis point increase in those yields. If so, that adds about $5.7 million to the quarterly interest income. Not all we need, but close. We also have about the same dollar number of scheduled payoffs and we'll evaluate the rate and customer and hopefully retain some of those customers at a higher rate.
We'll continue to originate new business as long as we feel safe and secure, we're not aggressive on the loan side, and that philosophy will continue forward. It is certainly not time to be taking any risk. Our goal was to make about $400 million for the year, and we're on target to do that with a $208 million first half of the year. I thank our investors and shareholders would be happy with those numbers, having the best year in our corporate history in the middle of a banking crisis, coupled with a very unprofessional treatment and possible [ illegal ] behavior we experienced in West Texas.
I think all our people should be proud. Our performance speaks for itself. My wife said, protect the chuckwagon, and that's exactly what we're doing. This is the time to move slow and careful, don't take any risk and for sure, do not buy someone else's problems by refinancing their bad loans and trying to get them off the books. This is the time when problem loans flow to the top and many bankers are trying desperately to get them off the balance sheet.
We're seeing some of them but New York -- our New York office they're seeing a lot more of them, but interestingly, nobody has really taken the [indiscernible]. If these 5.5% and 6% newspaper ads continue to be run by these bankers that have already ruined their balance sheet -- excuse me, have already ruined their balance sheet in the ground because of mistakes they've already made. I suspect the cost of deposits will continue to move up. For them, that means for the margin, they cannot borrower any more money from the [indiscernible] they borrowed all they can borrow and they spent all their liquidity that are forced to have cash to satisfy the regulators.
Regardless of cost of margin, if they're forced to sell the securities, the laws could hit them so hard, they could get a run on the bank, AKI, Silicon Valley Bank, that's exactly what happened, and it happened quickly. A few days later, the bank has closed over forever. They thought they were totally bulletproof. I spent 23 years building this company and the thought that it could be gone in the blink of an eye is absolutely [indiscernible].
Those bankers have allowed their balance sheets to go over 105% loan deposit and weak capital of 8% or less have a good chance for the [indiscernible]. If the big bad wolf shows up at the door, it starts hopping and popping get that forever. That's not one to happen at Home. Strength and safety has been our priority for the last 23 years and that will never change as long as I'm here and this management team is in charge.
Let's go with the results. Pretty good results, $105.3 million in earnings for the quarter, it's $0.52. I think in line got a little extra penny somewhere. I think the analyst [ were at $0.51 ]. Revenue, $257.5 million, that was right on target. Efficiency at 44%. Net interest margin remained strong. However, it dropped 9 basis points during the quarter. We tried hard to keep that up, and we're working on that now.
On the asset quality side, reserves remained strong at 2.01%. Nonperforming loans and nonperforming assets both improved for the quarter. Loans from 0.51% to 0.43% and nonperforming assets from 0.33% to 0.28%, good numbers. Announcement on $30 million [indiscernible] loans that we've talked about for a couple of years have been sold, refinanced with multiple buyers bidding on the properties. This is a perfect example of conservative underwriting practices that your company follows. These loans were underwritten properly on the front end and provide an avenue for banks to get out if and when problems come up. Great job by all.
Asset quality has remained good. The only thing worth mentioning is I found that today or yesterday afternoon, we have 1 office building at [indiscernible] in the $25 million to $30 million range. We'll keep you informed on that. It's early, but we do not anticipate loss. The tenant moved up, spent over $10 million on tenant improvements, and we have looked at the office if Kevin has understand on that front. Other than that I don't see anything [indiscernible]. I must say it's a good feeling to have almost $300 million in loan loss reserve in these uncertain times.
[indiscernible] sleep better with those kind reserves, and our employees, investors, shareholders, customers and posters should too. Return on tangible common equity was 19.39%, nice number, and here's the capital ratio top-tier capital ratio, CET1 at 13.63%, leverage at 11.92%, total risk-based capital at 17.28%.
Tangible common equity of tangible assets at 10.65% and tangible book value is $10.87 and book value is $18.04. During the quarter, we repurchased 560,849 shares for approximately $11.8 million, and year-to-date, we bought back 1.15 million shares for $25.3 million. Average loan yield was up 20 basis points to 6.84% from the first quarter of 6.64%, from the -- yes, the first quarter, 6.64%, excuse me.
Interest-bearing deposits increased from 1.90% to 2.27%. That's a pretty good jump, jumped more than 20 basis points. I'm expecting the second half of the year to be much tougher than the first year. The good news is Home can handle whatever comes our way. We didn't get into this great position by luck. We've controlled and directed the entire operation of the company on the most conservative path we could follow. [indiscernible] along the way, some are controversial and tough to see, but they had to be made, but they have certainly paid off for Home.
Home continues to be recognized in the top tier of all banks in the U.S. and even 15th in the world. That's a great place to see it. It will be interesting to see the rankings after all bank reports during the quarter. I would imagine that Home will remain in the top H1 group of all banks and it has been for most of this entire business [indiscernible] being ranked by Forbes, Best Bank in America 3 over the last 6 years was not luck. Running a business in normal time, if we had -- no more normal is anymore, it's fairly easy because we all pull from our past experiences we've had.
But in the last 18 years, it's been a new surprise after new surprise experience. We had witnessed many Home BancShares employees working from daylight to dark, getting very little rest in their offices, sometimes some of them even slept in their offices. And I described that [indiscernible] in 1 word that is remarkable. I'll never forget how blessed we are to have such a remarkable team that does whatever it takes to win. The entire group participated in this process, thank you so much for what you did, not only Conway, but throughout the entire footprint.
The efforts you may change the course of lots of things. I want to thank the investment community for their amazing support. Being in the bank space has not been the most popular asset class over the last 15 or 20 years. So many of us have committed our lives to the space and so have many of you, but you could always sell and change your asset class as much easier than those of us that are huge owner operators of our bank assets. Home is my largest asset and the largest asset of the members of my Executive Committee and the largest asset of many of our regional presidents.
So there is a powerful commitment to the success of this company. I don't think there is a management team in the country that is more aligned with their shareholders in the entire bank space of Home. We will protect this company with whatever it takes. We've taken attack on Home in any way as an attack on all of our individual families' futures because all of us an attack on Home can change the value they have -- that we have committed our lives to for nearly 1/4 of the century. This is not a job, this is the future.
I hope all of you are proud of performance over here. There is only a handful of banks that sell 2x tangible book or more. Most of them sell in the 1x or lower. As we've seen the multiples decreased over the years, we do not apologize for our multiple. As a matter of fact, we're very proud. If I've heard it once, I've heard it a thousand times, I'd love to own your stock, but you are a little [indiscernible], really, why do you think that is? We're blessed with the best and smartest institutional investors in the entire bank space, and we've met nearly all of them over the years, plus strong insider ownership with about 7% of the bank and the Allison family stake is around $200 million.
Well, we're here in the space, committed to our shareholders, and we'll continue to try to make you proud by remaining in a small group of elite top performing banks in the country year-after-year. You have my personal commitment. Thank you for listening, Donna. I'll come back to you.
Okay. Well, thank you for a very insightful report as always. Next, we have Stephen Tipton here to provide us with some more operating details.
Thanks, Donna. I'll start with the topics of liquidity and funding. We mentioned last quarter the shift of deposit balances to investment firms, money market mutual funds and a highly competitive interest rate environment in the bank space. That theme continued in the second quarter of 2023. Total deposits declined $449 million in the quarter, with the vast majority of that occurring in the back half of April as tax payments cleared.
Across our footprint, the Arkansas regions were fairly stable over the quarter, with Texas and Florida attributing the majority of the decline. Although noninterest-bearing balances declined slightly less than $350 million, they still account for a strong 27% of total deposit balances. Johnny mentioned the uninsured balances relative to our borrowing capacity.
Adjusting for collateralized deposits, which are generally the municipalities, local school districts and higher ed relationships, the calculated uninsured balances improved slightly from Q1 to 29% of total deposits. Alternative funding sources remain extremely strong with broker deposits only comprising 2.2% of overall liabilities and our internal limits would allow us to grow that by over $1.4 billion if the opportunities on the asset side represented.
As we mentioned last quarter, our top 10 list of depositors accounts for less than 6% of total deposits, with only one of those customers being uninsured and uncollateralized. As a reminder, our deposit base shows nearly 500,000 deposit accounts with over 70% of those having been open and active for at least 3 years and over 25% of those over a decade. The mix and balances today stands at approximately 2/3 commercial and 1/3 retail, while the number of deposit accounts is approximately 80% retail.
The focus on loan committees and discussions amongst all of our regional presidents today is certainly on deposit gathering, core customer growth and retention. On the asset side, loan origination volume picked up slightly from Q2 with $1.34 billion in commitments. Notably, over 80% of the volume coming from the community bank regions with over $400 million each coming from Texas and Florida.
The yields on originations continue to improve with an average coupon of 8.64% in Q2. Finally, as Johnny mentioned, the net interest margin compressed 9 basis points in Q2 to 4.28%. Lower event income in the quarter contributed approximately 3 basis points to the decline, with the remainder attributable to deposit rate increases outpacing the rise in earning asset yields.
Interest-bearing deposits averaged 2.27% in Q2, up 37 basis points from Q1 and exited the quarter at 2.39%. The core loan yield, excluding accretion and event income, averaged 6.72%, which was up 23 basis points from Q1 and exited the quarter at 6.79%. With that, Johnny, I'll turn it back over to you.
Well, Johnny, before we go to Q&A., do you have any additional questions or comments?
Yes, we've all been watching this bank crisis live from the front lines and watching the impacts on interest rate the effect they've had on our banks. I remember the late '70s or '80s when the same thing happened and when the same loan process was happening. You can say what you want to create a cycle of excuses, but the financial position of any company is good or bad -- be it good or bad is based on the past decisions your management team has made.
And as they have total responsibility, them and the Board, that is where the buck starts. We can say we're blindsided but we're watching it happen and always should have been preparing for something. I don't know that we knew what to prepare for. One of the big differences between the present bank prices and the SNL days was the speed of the collect. SNL was a slow death. With today's technology, it is no longer slow death, it is light speed. There are several differences, but lots of similarities. CD rates then were higher than loan rates, we're seeing that now. You got a 3.5% loan rate and you're paying [ $5.40 ] per money, what's the efficiency ratio on that. SNLs like today, we're forced to buy money at higher and higher rates, driving the [indiscernible] deeper to the heart of the bank. Exactly like today, they just need a bigger truck. That didn't work. The speed of the clench was amazing. They moved billions of dollars out of SVB by ways of today's just normal technology. With the computer or with their iPhones, they move very [indiscernible]. I think it was shocking for SVB as we understand.
Early on, I was not aware if we could pay out all insured deposits or not. When I say that, I mean, early on in the first quarter. And that's when I thought, can we pay out? And I thought if any bank can pay out, Home should be able to. Immediately, I asked Brian Davis and Stephen Tipton to give us a report and the very comforting information arrived and the stress levels of all of us dropped immediately. The decision not to invest excess funds into securities was one of the toughest and long list of my banking career because the impact was huge.
The impact was on thousands of people, employers, shareholders, customers, employees. The call turned out to be the red -- the correct and looking in hindsight, the [indiscernible] deploying short-term money into long-term securities in a raising rate environment. Well, you have to be stupid to do that. Well, that's what 99% of the banks did. And we could have been in the same shape as all the other reasonable banks that did that, and most of them did with that one simple decision.
That's why I say the regional banks are not all made of [indiscernible]. We have tried to separate ourselves from the pack. The call turned out to be absolutely correct by taking the $3 billion in excess funds and just putting it in Fed loans. Even we made a mistake though, we invested our cash flow from our securities back into the securities book. Millions of dollars were reinvested back into because we felt the pressure.
In hindsight, that was not a very smart move. It probably cost us to $200 million to $500 million of additional liquidity today and some additional earnings today. However, if it was $500 million, we put $300 million in Fed funds. So I guess that was 6x better off. So I'd rather be part right or mostly right, Donna?
That's right.
Or not right at all? I should have never fold into that pressure. We all make mistakes, but driving mistake into the heart of the bank, that was not good. Management is totally responsible for the [indiscernible]. There are many different silos and responsibilities on the bank and everyone that they know what is best and they may know in their own individual [indiscernible], but management takes all inputs and has to make a balanced decision that is the best and safest for the entire corporation.
In other words, the buck stops here. No one to blind, there is no substitute for experience, and I'm the only one old enough around here and [indiscernible] proud of that to widely remember the [indiscernible] day of late '70s and '80s. Don't tell me history, don't repeat itself. As it turned out, I guess it's better to be mostly right than not right at all. We together have built one of the best and safest financial institutions in America. It may not be totally bulletproof, but it's darn close.
Donna, how about Q&A? Tracy, you got anything you want to say?
Well, it's kind of hard to follow that comment. But just a little -- I can give a little heads up on the community bank aspect because you identified the first 6 months and last quarter certainly not been dull. But it's never been that way for this company and working for a leader like Johnny Allison. While playing with the cards that we have been dealt, Centennial Bank continues to perform extremely well. Each month, as we manages our company, I simply see our regional leaders, our support office directors continue to perform skills taking care of our shareholders.
To give a few examples of what I mean, our ROA for the first half of the year was 2.04%. Our return on equity was 12.73%. Non-GAAP equity was 21.74%. Our efficiency ratio was 41.37%. Our Famous Johnny [indiscernible] finished the first half of the year at 57.43%. Our net revenue was over $522 million, and our net interest margin was 4.41%, which is up 81 basis points from this time a year ago.
As you heard from Johnny Allison earlier, our asset quality remained strong. Our 13 regions, all continued to perform well, managing our cost of funds, managing our loan yields and managing our noninterest income and noninterest expense year-to-date. Today, we had 8 regions over 2% ROA, and that stood out with 2 of them over 3%, that be in our Cabot region and our Northwest Arkansas region.
Our lowest Johnny was 1.93%, which is not too bad whenever you look at the rest of the country and how banks perform. Johnny, we will continue to focus daily on our strength and given it our all for the best return for our shareholders.
Thank you, Tracy.
[indiscernible] you got any comments?
No, I'm good. You said it all. You won't go to Q&A?
Thank you very much for those comments. And I think now we are ready to go to Q&A.
[Operator Instructions] The first question comes from the line of Jon Arfstrom with RBC.
Do you hear me all right? Okay, good. Question for you, maybe Tracy or Kevin, what are the loan pipelines look like? I'm curious if you're seeing quality opportunities and you had some decent community bank growth? Just talk a little bit about the drivers there.
Jon, this is Kevin. So I'll let Chris talk about CCFG when that comes time. But in the community bank footprint, we're still seeing good opportunities. It's hard to make some of the deals work. I mean, you got to get -- you got to be looking at 45%, 50%, 55% equity in a lot of these deals to make them work. And there's people willing, in some cases, to do that. So we're still seeing good opportunities.
We actually had growth at the community bank level last quarter. So good pipelines, good opportunities. It's like Johnny always says, we'll take what the market gives us. And if you see growth, it's because the market is there for us, and we're going to continue to do what we always do. Chris?
For CCFG, I think it's -- we're seeing opportunities there, but you work in the market you're in, like Kevin said. And if you look at the CMBS market, for instance, I think it's down 70% this year for the first half of the year. There just haven't been a lot of transactions getting done. I think we're seeing them, those that are getting done. I think we're seeing a lot of ideas. I just don't know that all of them work.
And I think it takes the pace right now to be a little bit patient. The -- there are some transactions that we think will probably come our way here, but we got to be a little patient with the sponsors and they got to be a little patient with us while we work through some things. And so the first half was a little bit slow, which is fine. I think second half will pick up a little bit more. I'm not too worried about it. We haven't forgotten how to grow.
And I think the good news through all that was we continue to get pay downs. I think I've said this before on calls. I only get worried when we're not getting paid off on things that should get paid off. When transactions have slowed down, if your payoffs slow down too, that starts to get me a little bit nervous. So we were down a little bit this quarter or a lot this quarter, but that was really due to mostly we were getting paid off on things that I think it was time to get paid off on.
Okay. And Chris, what are the pain points in your business? And I'm just curious how your competitors are behaving? Is it just -- is the volume just dried up? And I'm just curious, we all worry about central business district office and big geographies, and I'm sure you get to see that in your deal flow. But where are the pain points and what -- how are your competitors behaving?
I think it's -- the pain points for our borrowers, right, out to be honest with you, there's a lot of -- not a lot of transactions are built for 11% coupon, right? And so I think it's just tough to make the equity [indiscernible] senior loan numbers were can get a decent return for the sponsors in a lot of cases. So in some cases, they've sort of slowed down or pulled back on a transaction to wait and see if things get better. I think you're looking at a higher or longer now.
And so at some point, you've bought the property or you need to develop, and those things will get developed because they'll just put -- they'll put more equity or accept the lower return. Competitive-wise, we have not seen -- I mean, for the folks that are pretty active in there, I haven't seen anybody do anything that they shouldn't be doing. We're not seeing people get aggressive on rates. We're not seeing people get aggressive on leverage. I think we continue to see nonbank players as a deal the other day we were looking at, I kind of liked the transaction, but we were going to be at sub-50%, and they were going to bring in [ mezz ] and the nonbank lender came in and took the whole thing.
I think we see that happen a little bit more, but I think that's okay. I think that's healthy in the market and such. So I think some of the nonbank actors are probably being still pretty aggressive, but not overly so. Just not a lot of transactions actually happening in the market. I think we're getting our fair share. I just think it's been, as I said, not a lot happening. That will break. You can only hold on to things so long and builders build and sponsors sponsor. So...
Okay. Fair enough. Stephen, a question for you. Johnny kind of alluded to -- I don't want to call it a mismatch just on interest expense and interest income because being down 6 basis points on a core is a victory and your core margin is a victory right now, but how do you guys feel about the relatively near-term outlook on the margin? Do you feel like this is really maybe the trough on it?
John, this is Stephen. I think we're going to continue to see deposit costs rise. We've continued to take a measured approach and have our bankers work going off with customers as opposed to advertisements and mailers and things like that, that we're seeing out in the place today. Johnny mentioned the opportunity on the loan side in terms of repricing renewals. And I think that's really the goal that we set out is to try to even that up and match that up in terms of where deposit costs go and where loan yields go.
Yes, I think its -- you may have some slight decline to it as we continue to go. But to your point, I think we're talking basis points as opposed to 10s, 20s and 30s like we've seen from some other banks that are...
The next question comes from the line of Matt Olney with Stephens Inc.
On the credit front, great to hear the update on the memory care centers. I know that's something that you've been focused on for a while. So good to see that move off. On the office loan that you highlighted that you're carefully monitoring, looking for a few more details if you have them, looking for what market that office loan is in, when does that loan mature and any kind of color on the LTV?
I'll let Kevin take that. It's in the West location with the LTV as -- Kevin, do you want to...
Yes. I mean I think we're having it reappraised now, but I think it's going to be in the 55% to 60% LTV range, and it -- we're still monitoring that one. If Johnny wanted to get ahead of it, and he's always wanted to tell you ahead of time what's happening and how things are. And I think we're just kind of getting in front of that when it's something we're watching and may or may not be a problem. But if it is, then we wanted to know about it ahead of time.
We do attack these things, as you know. And I apologize for not having any more information on it than I have at this point in time. We'll have a full [indiscernible] able to give pretty quick. As we did on the memory care centers, we all know where we are and what we're doing, but we don't. Early on, where we're looking at it, we don't -- unless we get a really disappointing price, we think we're in good shape, we've got some additional cash put back for that thing also. So as soon as we hear something of that, we'll let you know.
Okay. And just to clarify, you mentioned you're gaining the reappraisal right now. Is that reappraisal because there was a tenant loss or maturing soon? Or what's the reason for the new appraisal on that loan?
Yes, there was a tenant loss, and I think that was part of it. I think, as you're working through some of these things, sometimes it's just prudent to find out where you're at. And so I think it was -- there were multiple reasons for it. But yes, there was a tenant loss in that particular property.
Okay. All right. And I guess just switching gears, I want to ask about capital levels. Capital continues to build. It looks like the pace of the buyback remains still a little bit slower than it did this time last year. I'm guessing that CET1 ratio could be close to 14% by year-end. Any more thoughts on capital deployment? And I guess, Johnny, kind of how do you weigh your various options at this point of the cycle?
You've got M&A out there, which you've done successfully in the past, but it sounds like the timing of that is maybe kind of unknown right now, but I'm also guessing on the security side, if you wanted to, you could look to maybe restructure something on that front. So I'm curious just kind of how you weigh these various options?
Matt, I'll kind of play with that a little bit. It's not the time to do that when everybody thought [indiscernible] the world is going to pivot came down, we're probably in a good time maybe to look at selling a few securities and redeploying the money. We just kind of tinkered with that a little bit. That might be something we want to do someday. We have a pretty good yield on our investment book by the way.
So I don't think that -- the losses were up. AOCI increased a little bit, Brian, $20 million, $25 million this quarter?
That's correct.
So it's an interesting thought. You got to balance. The key is don't keep too many deposits. Balance -- it's a balance between loans and deposit enough to be able to pay out is the key to me. So a lot of carry -- I mean I want to [indiscernible] into deposits. I don't want to -- if they're paying $5.40 for money, I don't need to carry it being around in my pocket. Paying $5.40 is something I don't need.
So when you see the balance of this coming in deposits run off, they have -- some of that has not run off. Somewhat's been asked to leave. So plus we had 2 tax times here in -- we had an April tax time. And if you were in the Tornado area, you have a June tax time. So I didn't have to pay my taxes till June. So you haven't seen the results of that yet, but it's not that bad. It's not that bad. Anyway, I hope I answered your question. I kind of run off [indiscernible].
No, that's helpful. I appreciate that. Okay, guys. Great color. I'll step back in the queue.
The next question comes from the line of Brett Rabatin with Hovde Group.
I wanted to start with the comment that you made about the second half of the year being a little harder than the first half of the year. And just wanted to get some additional clarity around that. Is that due to the margin, a little bit of nonrecurring fee income in the second quarter? What are the -- what's the biggest challenge second half versus first half?
Well, to me, it's the right environment. It just continues. These people -- I mean, these competitive banks running 5.30%, 5.45%, 5,60%, 5.70% and some 6% ads. I mean, they're continuing to run those. I guess people have put enough money in there that they feel safe under the limit, $240,000 or whatever. But that may -- I mean, that just flashes back to the SNL days of the late '70s and early '80s, where you're paying more for money than your loan balance is.
Remember looking at SNL and Conway, Arkansas, and they set our average yield is 7.90% something. I said, that's good. That's a good yield. Well, the cost of funds were more than that. So that's -- I just remember that happening and seeing that happen in SNL here and happened all over the country. It just makes me -- it just keeps me alert and makes me nervous as to where that's going to go.
Can it go much higher? If somebody has spent all their money, Brett, you know that. They spend all their money, they've borrowed all their money, and they're still stretching for liquidity, they got to have liquidity, then they can go into the market and pay whatever for it just exist. Now at that point, it grew the margin and hell everything else. But I think because of the inefficiencies of the rest of them is going to put pressure on us. Does that make sense?
Yes. No, that's helpful.
Yes, they spent their money putting securities and they like chores. I mean they borrow like they borrow, we got 2% broker deposits, we've got room to put deposits, we got room to put $1 billion -- almost sort of $2 billion of broker deposits on the books we want. We just got to -- we try to balance that's what we try to do. I think it's the fact that everybody spends their money before and remember in the SNL day, let me tell you something. If the big shows up in a bunch of these banks, they're gone, they're gone, they're history.
I'm not going out on bankers getting that position. I'm not meet my entire executive, the Board and everybody else. We're proud of the position we sit in. It caused us a little income, but that's okay. Does make sense to you?
Yes. No, that's helpful. And then I just wanted to follow on the loan pipeline commentary. And one of the things that I thought would happen, you've been so conservative and kept your powder dry. I kind of thought when rates went up, it would be -- you'd see stronger growth on the balance sheet, but I'm curious to hear if loans just aren't penciling enough or well enough for you to get interested, maybe you need more too much cash up front for the deals to work for you? Or just what you're seeing that's keeping you from being more aggressive than you have been with bringing customers out were from banks that may not be able to service them?
So Brett, this is Kevin. So I mean the community bank footprint on some of the smaller stuff, you still got some local banks that are doing things in the 7s that just don't make a lot of sense. We're not going to play in that game. On the larger stuff, to some degree, I think you're right. I think that's why you've seen some growth in the community bank footprint is because there are some folks that are out of the game.
It is still difficult to make some of these things work, like Chris said, we're in the 9s now to make things work, right? And it's difficult to make some of these things pencil out. So when you start talking to people about 50% equity and sometimes more, sometimes they just don't -- either the deal doesn't get done or they go somewhere that they can get it done a little less than that.
It's just not the time to be stretched -- it's not the time to stretch. It is the time to be careful because, as I said in my remarks, lots of banks got some bad assets on their books, and they're doing everything they can to get rid of those assets. So it is a time -- it's a dangerous time to me. You got to be real careful, real smart, stay with your customers, know your customer, don't be taking any risk, don't be taking any chances, just sit tight. I think Mike said something, while back you said, it doesn't hurt to shrink a little bit. And it doesn't hurt to shrink a little bit and be lean and mean. Tracy, you got to jump on that?
No, I think the pencil part is, the biggest part that we see there we could -- this bank could grow if we wanted to open that door, but the numbers just don't add up when you're doing 8%, 9% credits.
Anecdotally, on multifamily, for example, we're in some really, really strong markets, but we're not writing to trended rents. We're looking at historical rents. We're seeing rents slow down, and in some cases, turn south a little bit. Hotel, we're seeing some things. Even in our really good markets, we're seeing some things trend back towards 2019 levels in some of our hospitality.
So -- and we've underwritten that way all the way through the pandemic. We went back to 2019 levels rather than 2021 levels. So yes, you would think this would be the time you would see growth. But as Johnny said, it's not the time to stretch. So that's where you are. You end up -- you take what the market gives you and you continue to write conservatively. And if you grow, you grow.
You'll need to come in with policy exception, correct? You'll need to come in with a policy exception on loan to us at this point in time. We're just not able to do that. We're not going to -- we don't have to. We're in a good enough position, we don't have to -- we've got a good margin. We'll grow. We'll do some new loans, and we'll renew that $760 million, and we'll save some of that other $700 million coming off. So we don't have to do that right now. So there's nothing wrong with keeping your head down.
Kind of reminds me a low 5%, 6% and 7% right now. Except when I saw that liquidity crisis, kills 3 banks basically overnight, that really got my attention. I don't run scared you know that, but I get -- that one made me nervous. That has my attention. Plus the fact I will not -- we will not get ourselves a position we can't pay to uninsured deposits. That's the most important.
To me, that is the most important thing right now because if they're having to be bank run start rolling, it wouldn't be good in the country and Home would survive. So I think that's the most important. I wasn't sure where this was going early on. But I think it is extremely dangerous time. And I see people that are 108%, 109%, 110% loan deposits. I wouldn't be able to sleep in that. I just would not be able to sleep in that. We've got 8% capital, 109% loan deposit and the big bad wolf shows up, turn off the light because it's over.
Brett, just on the positive side, we're seeing opportunities that we're making approvals on and working today. So -- and that's with good businesses that other banks may have tightened down a little bit in some areas. But we're -- I don't ever -- too positive in front of Johnny, but I think there is some opportunities out there that's going to make our loan...
We're working on some really good opportunities right now. We don't have them yet, but I think they're coming, and they're priced right, and they work. They appear to work at this point in time. The committee hadn't approved them yet, but we're working on some pretty good signs of loans. It makes some pretty good sense with some customers that our people know. So...
So that's in Florida, Arkansas and Texas.
Yes, that's true. In Florida.
Yes. I'm guessing you guys sleep a lot better at night than -- go ahead, I'm sorry.
No, go ahead.
I was just going to say I bet you guys sleep better than most bankers at night.
We do. Thank you. Yes, we do. We are sleeping. It's a good time to sleep good. Thank you for that.
The next question comes from the line of Stephen Scouten with Piper Sandler.
Johnny, you always have a really good pulse for the environment. You were saying rates were going where they are today long before anyone thought that was possible. But I guess I'm kind of surprised to hear you be what a lot more negative than what I heard kind of so far through the quarter. It feels like the sentiment has improved a bit since early May. But maybe what are you seeing?
I mean, I know you've talked about competitive pressures. But where are you seeing stress? Is it smaller banks that you're looking at? Is it -- I guess I'm just kind of curious what gives you this level of concern when things seem to be kind of normalized a little bit?
That's about -- I mean, Tracy pulled list, those banks that were 105% loan to deposit or greater with an 8% or less capital ratio, and it was a pretty good list. And that's where the big bad wolf. If he goes there, they're going to be the serious problems. So I think the -- I'm not negative about banking right now. I'm just concerned about liquidity of these people that are 110% loan to deposit. And if they stop their toe and once the dominoes start falling and maybe they're not going to fall, maybe they -- I hope they don't.
But if they start falling one after the other after the other, then I want bank shares to be one of the survivors. So I'm not saying that's going to happen. I hope that doesn't happen. I did call the Fed funds rate, I said it's going to be 6%. I think it's going to be right at 6% before it's all said and done. But it is -- that was just the experience. And I have no experience, let me say that. I may be overreacted. I have no experience with liquidity crisis up until now.
This is -- it really got my attention to liquidity and the financial system really got my attention when they moved all that money from SVB overnight. I mean just boom, and they didn't know what hit them. So I think it's just time to be safe and careful and smart. I mean, maybe some -- we still make -- probably will have the best year in this corporation's history. So that is not bad.
I mean, I'm talking about that. I mean we -- $400 million, I think all our investors will be happy and I think you'll be happy with $400 million, Stephen, and we're at $208 million in the first 6 months. And I think we're going to see more pressure on rates going forward. If we can get repriced and we can get the $760 million up 3 or 4 basis points on those, $300 million to $400 million, I think we're going to be able to have a good third quarter and a good fourth quarter.
And with Kevin and Chris and John bring some more business, they'll bring business. We've got, I don't know how many dollars we got probably $1 billion out there working right now. So we know these people and probably not going to do a lot of stretching and go outside looking for people I don't know, which we've done in the past. It will have to hit us in the face. We're just -- I just think it's time to be careful. When you got the balance sheet, Home's got right. You don't want to mess it up.
Yes. Well, yes. And to your point, I mean, the markets rewarded you for it, you're outperforming by 25%. So what's that $1 billion in market cap, give or take. So yes. I mean that's played out in your favor for sure. How do you think this might materialize in the M&A environment? I mean, you've always done a great job of capitalizing when there's opportunities. Do you think we see a wave of opportunities anytime soon? I mean are you saying it's more of a '24 sort of environment? How are you thinking about that potential?
I think we should. I think we should. I mean a lot of Boards and Directors that are sitting there are looking at their balance sheets today, if they understand the balance sheets, they understand what they're looking at, have to be kind of popped up, so to speak, looking at 110%, 120% loan to deposit and not making any money and margin going through the -- going down -- margin going straight down, I mean it is not -- if you haven't made the right moves, it's not a good place to sit.
If you've made the right moves, like Home did, it's a great place to sit. And we just got -- I'd rather be lucky than smart, we got lucky and made the right call on what to do with our reserves, our deposits. We made the right call. So I'm not trying to scare the world. I told somebody -- I spoke at a conference a while back and I saw one of our investors sitting there and I said, "I know this lady, she is going to call me, so what are you badgering the banking industry for?" I'm not badgering the banking industry. I just think some of the bankers got themselves in trouble. They've got themselves in trouble, and they can't make any loans.
I mean they can't make a loan. They don't have any liquidity to make a loan with it. It's about as time as ever to see things. We just care if there are some opportunities for people like us. I understand that. And we'll take advantage of a few of those. But we're always keeping up money in our pocket to pay out our uninsured deposits.
Yes. No, that's good. I guess last question I had is just actually around kind of Shore Premier or maybe just in general, kind of the marine and RV space. I'm seeing some weakening there in terms of values on those types of products as demand kind of seems to normalize to pre-COVID levels. What do you guys see in there in terms of valuations and demand and so forth in those spaces?
I think it's totally fine. I'm not saying a lot of slippage there. John's on the phone. I don't think he's got the slippage couple of past dues he had on boats, but I mean you have those from time to time, but like we've got one repo boat that's in the Virgin Islands somewhere. So we think we got it. I think we're fine with it. So outside of that, we haven't seen anything. John, you got any comment?
Stephen, thank you for the question. No, I think valuations, both values are holding up nicely. There's still limited supply of new boat inventory. And so I think that's all driving up the values just a bit. Our average loan size now has crept up from $600,000 to about $800,000. So -- and again, we're still bringing in -- I think our average loan to value is somewhere around 65%, 70%. So we're still requiring a lot of equity, but the value seems to be holding.
I think the inventory is come up with the RV side, Stephen. I think on the RV side, I think that the inventory is catching up there. I'm saying a lot of -- because I drive, I see there's lots of huge lots. And I think we had such demand during the pandemic. I think that's waned a little bit. So the RV side, we don't have -- I don't know -- we don't have any dispute of RVs.
So -- but I think that side is due for a little slowdown. I think you're probably right, if you're seeing. I mean the key is our -- both of those what we do mostly large are not -- we don't finance -- you remember, we don't finance a 14-foot flat bottle or 25 Mercury. We don't do that. If you come back...
Yes, you probably not been able to see the things that I'm seeing. I'm not seeing these $800,000 boat. Yes, that's out of mile we'll have. So that's helpful. I appreciate it.
I might try to get -- I'm going to put it in the ducks and you come in, we're going in.
The next question comes from the line of Michael Rose from Raymond James.
I think I'm going to have to frame this transcript with -- given there's words in this -- on this call. I don't think I'll ever hear on a conference call again. So appreciate the dialogue. I just had...
I read your stuff. You said there's nothing wrong to shrink a little bit. You want to shrink a little bit, get lean on me, and there's nothing wrong with that. So I thought that was a pretty good comment from me.
I appreciate you bringing that up, Johnny. I just had just a couple of kind of questions. Maybe just back to kind of M&A. Just, Johnny, how do you think this all plays out? And I think some of the rhetoric that's out there on the hills that they're more open to kind of M&A, but there's clearly some near-term components that make the math pretty challenging.
But just given how competitive it is out there and how many banks you still have, it looks like there will be a lot of consolidation at some point. You've been doing this a long time. You've done a lot of deals. Just wondering more broadly, how you see this all playing out over the next 5, maybe 10 years?
Michael, I think you're going to see Boards of Directors as I said earlier, if they recognize the shape that they're in and their investment in those banks, I think you're going to see them coming out. I think management is going to come out with some of them. And I think the Board is going to more come out, I think they're going to want to look let's turn this into trade right money if we can turn it into trade right money.
I think that's going to happen. The problem is going to be with the buyers. That's going to be the problem is with people like us that require us.
And are we willing to take a chance? Are we willing to -- can we go and turn around enough to where we feel comfortable with it and not be afraid of a liquidity crisis? I mean I think something is going to have to be done with a good premium banks of the country if they want consolidation and continue with some kind of Fed line that allows the good banks, the good operators to go clean up some of the other stuff.
As you think about today, we're going to buy something -- Home, as you know, is in great shape, and we go buy something today that gets us and not as good a shape, that's a scary part. And if the economy rates still stay high and they still stay catchy, I don't believe you're going to see a lot of M&A. I don't believe it can be done.
I think I've told you -- I don't remember if I told Donna and I looked at a bank in Dallas area 2 months ago and their 110% loan to deposit and their margins going straight in a tank. And I said, "You want me to pay you a premium for that?" I mean think about it. I mean, I don't have -- I said what you want is your problem to become my problem. And I said, "I don't want your problem." I don't have your problem. I stayed out of that and I don't have your problem.
So I don't want to get our bank in there. So I think you're going to see real -- particularly the good banks that run the top 15 or 20 banks that are acquired, I think you're going to see them be very conservative, and there's going to have to be some kind of backup with -- have to be some kind of backup to have the ability in the event that they get -- you do a transaction and you get a run on that line, that could scare, that could take Home down, right?
So where we sit -- that's why we're so damn conservative on doing anything on M&A. We might buy some loans. We're looking at a loan package, we may buy some, we may do that. We may buy some loans. But -- and when we do an M&A deal, we work with some people that have the quality of balance sheet that we have, but those are traditionally the acquires. So you got these weak sisters out here, they're bidding up for money and run their margin in the ground, that's not going to get fixed in 45 days or 90 days.
It's going to take a while to fix that. And then you go to the securities book, and it depends on how long the duration is. It may be years before a lot of these things turn around. I'm not being a nice sayer. You're usually the most conservative on the street. I'm just being realistic and conservative about what I see.
Totally got it. Appreciate the comment. Just two quick ones for me. Just given some of your comments, and I agree with them, just consumer may be a little bit stretched, but you're seeing kind of occupancy levels at hotels being really strong again the summer, maybe more of it's in Europe.
But any sort of fears and then are you guys taking a closer look in places that you did during COVID, whether it be restaurants, hospitality, tourism-type stuff, hotels, et cetera? And are you starting to classify some of those properties at this point.
Michael, this is Kevin. No, I'm not seeing any weakness particularly. My comments were really around just seeing the markets begin to normalize a little bit. We all kind of expected, particularly in Florida with all the hospitality that '21 and '22 couldn't be real and long lasting. And we knew that when Europe opened up that there was probably going to be a normalization.
So we've expected that and anticipated it. I'm not saying that Florida is going into a recession. That's not -- my comments were really that we just see a little year-over-year softening and kind of heading back towards the 2019 kind of scenario more than continuing to move upwards. But not any weak, this is not creating anything in our portfolio that I've seen at this point.
Actually, our hotels really helped us pretty well. When you think about it, you remember when we did that deep dive and we found those water hotels and extended stays were just really -- they never missed a staff and it's been really pretty amazing. And they continue to raise prices on those hotels, and they just keep -- people keep going.
I knew we could get a little optimism out here on this call. That's good. One last question. Just the other income was that...
[indiscernible].
Exactly. You just talk about life. Just on the other income was up a couple of million bucks. I think about $4 million. I know it's bounced around the past couple of quarters, but anything of note should be aware of in there?
Now our securities, Brian, do you got color?
I mean we have some equity investments that are accounted for under the equity method. And during Q1, we had $3.8 million of income on those investments, and we had $7.5 million of income on those investments for Q2. So probably the $3.8 million, $3.5 million is probably more of a normal run rate. We had a kind of a windfall from one of our investments.
We invested in SBICS. We've invested some SBICs and they really -- we've been in them several years now. It may have been really good performers, very, very good performers. So we bank these people, and we invest with them, and it's been one of the better investments of my life looking at it over time. So we expect them to continue. There's no guarantee that will hit that next quarter, but I think Brian is right, $3 million, $4 million, $5 million run rate is probably good.
The next question comes from the line of Brady Gailey from Stifel.
Most of my questions have been answered, but I just had one quick one on the margin. I mean the margin has seen a nice level of expansion for over a year. But this quarter, it kind of leveled off around that 4.3% level. How are you thinking about the margin outlook going forward? I know, John, you're pretty skeptical on the back half of the year with the rate environment, some deposit promos from some of your peers. How are you all thinking about the margin outlook from here?
Brady, this is Stephen. We posted 4.28% for the quarter. I think our June margin was 4.29% but had about 4 or 5 basis points of event income in it. So it was off 4 or 5 basis points. I think I told John on the outset of the call, I think something in those single-digit decline going forward is what is likely. We've got the opportunity on the loan side in terms of repricing.
And on the deposit side, we were pretty aggressive in April and May on the heels of everything in March in terms of passing on rate adjustments and those kinds of things. So we may can fine-tune some of that. But yes, I think we'll fare better than most on the back half of the year.
We're going to have double-digit increase in margin and watch them fight around this table. I watch them follow underneath the table. We are -- let me -- we're all hands on deck. Let me tell you, we're all hands on deck, and I'm going to be disappointed if we don't maintain a strong margin, I mean, the $750 million of repricing, we -- those are our customers. We're going to be able to get 300 basis points or more on those deals. We've talked to all regional presidents, and regional presidents somewhere, they talked to their people. We want be able to continue to do that.
And we have about $750 million schedule of payout. And maybe instead of -- they may be at 5 average, maybe there's 5 or 5.5 and we're right in 9 or 8.5, we'll see what we can do to keep some of those. So I think it's got downward pressure, but I think we've got a good shot at holding it within range. Somewhere in this, give or take 6 or 7 to 10 basis points.
Our final question comes from the line of Brian Martin with Janney.
Just one follow-up to Brady's question. Just on the margin, Stephen, I guess, would your expectation be that it does begin to kind of trough fourth quarter, maybe first quarter? Is that kind of what you're thinking time wise? I don't recall the timing of what those loans repricing were. But is that kind of a fair outlook at this point?
The loan repricing is over -- on the second half of the year, and it's pretty consistent at $100 million to $150 million a month that come due. Yes, I think so it just depends on balance sheet size and what we see in terms of the interest rate environment, both competitively and just the shape of the curve, too, right? The length of time we've been inverted here and then what we've seen from competition.
But I've been reading and seeing some of the earnings releases so far and seems like some of the banks that have already reported say they may not be as aggressive in the second half of the year on deposit pricing as they had been in the first half. So we'll see.
Got you. Okay. And then just, Stephen, just -- whoever, just on kind of the deposit outflows, you talked about the seasonality this quarter with the taxes. I guess how are you thinking about deposits if the loan growth or the loan demand isn't robust at this point? It sounds like the pipelines are okay there. But in your comments about shrinking maybe a bit, is that how to think about the deposits as we look in the back half of the year?
Well, we're going to balance those based on need for loans, we're going to balance those. I mean there's no need, as I said earlier, carry $1 billion of extra deposits in our pocket today. So we're not doing that. You get all the deposits that you want are expensive, but you get all the deposits you want. We've got room to go in any direction to get deposits. That's -- someone said we lost deposits. Well, part of that is purposely right. We're just balancing the deposits with the loans.
So we'll play the deposit side with the loan side. If the loan side goes up, we'll go on the deposit side or vice versa. So I think we've played it pretty well thus far. We're about 82% loans and deposit somewhere in there now. I think that's fine for us. And if we need more, we can get them.
So they're just expensive. So you don't want to carry around something you pocket that cost you money that there's no value to you whatsoever today when you know you don't get them tomorrow. You can go to 2-year, 3-year or 5-year money. So if you wanted to -- or you can do some -- how much loan we got in bulk, Stephen?
Our internal limits give us about $1 billion forward runway. We're like 2% on broker deposits to liabilities today.
We haven't done any bars to speak. And we're keeping our powder dry. That's the fine, keep your powder dry. I don't want to get overreacted here. I want to get past all of this concern over bank runs. I want to get -- personally, I want to get that behind us because that could happen. It could get It can get overnight.
Right. Okay. Perfect. And then just last one for me. Johnny, you talked about the liquidity scare just talking about the soft landing and potential recession and credits still continuing to hold up really well. I know you had the one credit you talked about. But where is the biggest area? I mean, do you see a big credit-related recession, if you will, as you get into next year? Is that kind of what you're thinking at this point? Or do you think it's more of a soft landing and you can kind of manage through this? Just kind of big picture of your outlook on how that plays out.
Well, we had that discussion yesterday. Kevin and Donna, myself and Stephen, Tracy yesterday, Brian, we had that discussion in here. He may have a shot. I think he's going to have -- I didn't think he have a shot at a safe landing. I didn't think he had a chance. He has -- on one side, the inflation is better. So I'm going to give this administration credit to that. This inflation is better. And one thing they've done, and I don't know how to help tell you the truth with Trump spending money and Biden spending money, I don't want to have an act they did it.
I worry about the U.S. dollar. I don't know that's getting far faster, what about the U.S. dollar, what they're going to do with it? And I worry about this Fed point you're bringing out. I mean Roosevelt did it back in the '20s. And then when we came back and then mix and missed with it, the money and the gold in the '70s and then I hate to see a mess with it again right now.
So I don't know what's going to happen. I saw gold jumped $40 yesterday. I'm not the only one thinking that something could be already out there somewhere. So usually, we get the value when they start messing with gold and coins. And that's really it. I don't really have -- I don't have -- I can't put my arms around it right now. Kevin, you -- we talked about it yesterday about whether we can land safe or not. If we can land safely, that's time, but something has to give somewhere as -- I mean, as Kevin said, commercial real estate prices really have not come down.
The assets of -- home prices are up, there really needs to be somewhat of a little bit of adjustment somewhere. I don't know if that is a slowdown. I think we could see a slowdown for 5 or 6 months, call it a mini recession. I don't know that, that would hurt anybody. We did that and maybe get some price adjustments. We really haven't seen a lot of price adjustments. Kevin, you...
As we were talking yesterday, I mean, rents are so high and prices for homes are so high. The one thing we don't have today is an overhang of housing. So that's a positive, I guess, in the direction that maybe there could be a soft landing. We talked about it for what an hour yesterday, and I don't think we came up with any answers one direction or the other.
So the best thing I think we can do is continue to block and tackle and make the right calls daily here and let the rest of that play out and be prepared for whichever way it happens to go.
It's -- you got to think about where we're going to be in a year and where we're going to be in 2 years and where we're going to be in 3 years. What impact and the different variables there and what is this and what is that and that's the process that goes on around here. And we don't know what that is yet, but we'll try to protect ourselves. We can't protect yourselves on all wings, but we'll try to protect ourselves on most of the wings.
So I know I didn't give you the answer that you want, but we don't have it yet. You know what, you'll get it when you get it. You walk around, work on it, it'll will hit. As everything has happened over time with this company a hit, we walk around sometimes and don't have the answer, but we never quit thinking about it until we finally get the answer. So hopefully, we'll get the answer on this one before too long. Thanks for your support. You bring a big support for a long time. Thank you.
There are no additional questions at this time. So I would like to pass the conference back to Mr. Allison for closing remarks.
That's been a long call today. Thank you for your interest and your time. We'll talk to you in 90 days and maybe things will be a little brighter in 90 days than they are today. It's time to be comfortable and smart, premeditated with moves and make good loans and protect your chuckwagon. Thanks, everyone. Goodbye.
That concludes today's call. Thank you for your participation. You may now disconnect your lines.