Hello, and welcome to Business First Bancshares Q3 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to answer a question during this time, simply press star one on your telephone keypad. I will now turn the conference over to Matt Sealy, Senior Vice President, Director of Corporate Strategy and FP&A. Please go ahead. Good afternoon, and thank you all for joining. Earlier today, we issued our third quarter 2023 earnings press release, a copy of which is available on our website, along with the slide presentation that we will reference during today's call. Please refer to slide three of our presentation, which includes our Safe Harbor disclosures regarding forward-looking statements and the use of non-GAAP financial measures. For those of you joining by phone, please note the slide presentation is available on our website at www.b1bank.com. Please also note our Safe Harbor statements are available on page seven of our earnings press release that was filed with the SEC today. All comments made during today's call are subject to the Safe Harbor statements in our slide presentation and our news release. I'm joined this afternoon by Business First Bancshares' President and CEO, Jude Melville; Chief Financial Officer, Greg Robertson; Chief Banking Officer, Philip Jordan; and Chief Administrative Officer, Jerry Vascocu. After the presentation, we'll be happy to address any questions you may have. And with that, I'll turn the call over to you, Jude. All right, thanks, Matt, and thanks, everybody, for joining us. I know it's a busy time, and we certainly appreciate you prioritizing this conversation. During the third quarter, we continued to deliver solid, fundamental, shareholder-oriented operating performance, generating a core ROAA of 1.1% by exercising discipline around expenses and maintaining good margin stability, even as we grew organic deposits. Included in our core operating results were several non-run rate items, which I'll let Greg expand on in his section. However, even adjusting for these items, we still peg our run rate EPS, ROAA, and efficiency ratio at $0.67, 1.03%, and 62.4% respectively. Our third quarter was highlighted by balance sheet management, which yielded another quarter of solid capital accretion, strong deposit generation, margin stability, expense management, and continued healthy credit quality trends, all of which put us in position to be able to increase our dividend by $0.02 per share for the quarter, something we've been able to do for five years in a row now. I'd like to highlight a couple of specific accomplishments. First, we've been particularly focused over the past few quarters on managing growth within our capital structure, and I'm pleased to report that our results were again accretive to tangible, or excuse me, to TRBC, to TCE, and TBGPS, even factoring in the headwinds of additional AOCI. But not counting the impact of AOCI, we grew tangible book value per share $0.67, an annualized rate of 20%. We slowed loan growth during the quarter to 1.7% annualized, which reflects some slowing demand and continued selectiveness on our part, as well as unusually high pay downs and payoffs. We do still expect full year 2023 loan growth of 7%-8%. I'm most pleased to report growth in deposits of $176 million, or about 14% annualized in the quarter, and we accomplished this without causing material damage to our margin. Core NIM was down 3 basis points, but that factors in a gain of $455,000 on recovery from a previous charge-off, and the decision to hold an additional $150 million in excess liquidity at the cost of 6 basis points to the margin. Factoring out those two elements, our core margin would have been flat, even while we demonstrated continuing improvement in our loan-to-deposit ratio. Asset quality continued to improve in the third quarter, with non-performing loans as a percent of total loans declining to 0.33%, down from 0.36% in quarter two. The improvement was largely attributed to the resolution of two non-accrual loans through current period charge-offs of $2.4 million. Both loans were previously assessed for credit losses and fully reserved. I'd like to point out a few branch movements as we continue on our ongoing efforts to optimize our footprint. During the quarter, we opened our fifth Dallas-Fort Worth location with a new full-service location in McKinney, Texas. I was there recently for the ribbon cutting, and our team is very excited about the opportunities as we expand further into North Texas. With locations in McKinney and Frisco, we are present in two of the three fastest-growing communities in Texas. We also turned our LPO in Ruston, Louisiana, another fast-growing community, into a branch and moved a branch to a more growth-oriented part of Monroe, Louisiana. Finally, we also sold our Leesville, Louisiana, location, recognized a $932,000 gain on sale, attributed to the divestiture. I'll note we have added a couple of new slides to our deck that I think would be worth your focus and enhanced a couple others, particularly around our successful M&A track record, loan repricing opportunities, and composition of our CRE and office portfolios. One I want to particularly point you towards is found on page nine, which speaks to the consistent improvements we've made in various earnings-focused metrics over the past five years. EPS has increased by 81%, net income by 292%, while core efficiency has improved by 571 basis points. Importantly, we show tangible book value per share after adjusting for AOCI, growing by 33%, even while we have made the investments necessary to grow overall asset size by a factor of three over that time period, through acquisitions, team lift-outs, and strong organic growth. This growth has required investment, and those investments are paying off. We haven't yet, we aren't yet where we plan to be, but we're clearly headed in the right direction. That concludes my big picture remarks. Thank you so much for your time, and I'll now, now turn it over to Greg for his commentary on the quarter and then look forward to opening the call up to Q&A. ... Thank you, Jude, and good afternoon, good afternoon, everyone. I'd like to spend just a few minutes reviewing our Q3 highlights, including some balance sheet and income statement trends, and also discuss our updated thoughts on the current outlook. Third quarter non-GAAP core net income and EPS available to common shareholders, $17.96 million and $0.71 a share. It came in better than we expected and was driven really by number one, expense management, two, lower loan loss expense, and continued stable credit trends and slightly lower loan growth, as Jude mentioned. A stable net interest margin and slightly better than expected loan discount accretion. Before I dive into more of the specifics of the quarter, I'd like to take a moment to call out a few of the items that might not be readily identifiable, but are really important to put context into the quarter. Third quarter GAAP net income and EPS available to common shareholders was $19.1 million, $0.76 a share, and benefited from two fee income-related items that Jude mentioned earlier. The $932,000 gain on the sale of our Leesville location, and as a side note, that location, we sold those deposits for a 7% deposit premium. Also, the $517,000 gain on extinguishment of the Texas Citizens sub debt that we acquired in that acquisition. Excluding these items, our core non-interest income was $8.4 million, and this $8.4 million dollar figure is a fairly clean run rate figure for the quarter, and we see that as a stable figure for a run rate for 2024. A little bit of the explanation of that is that run rate for 2024 is stable because we experienced in 2023 some one-off one-time income items for that that we don't feel like that will be repeatable in 2024, but we do feel like non-interest income will grow throughout the balance of the year to make that stabilized. Third quarter GAAP non-interest expense was $38.6 million and included just $2,000 of merger-related expense. However, included in this $38.6 million was a figurative, a figure of about $500,000 in Mastercard rebate, which we don't expect to reoccur going forward. The third quarter non-interest expense also benefited from $200,000 unusually low in FDIC assessment and $200,000 unusually low other non-interest rated interest expense items. The Q3 run rate for non-interest expense figure is closer to $39.5 million, as we expect the FDIC assessment and the $200,000 lower expense item to kind of normalize going forward. As far as 2024, we feel like the non-interest expense will experience a mid- to high single-digit run rate going forward for the base case for the balance of 2024. Spread income also continued to grow and be strong in the performance, in which we attributed to the loan discount accretion of $2.4 million, coming in $500,000 higher than expected, and as well as the decision to hold on more balance sheet liquidity that Jude mentioned earlier, boosted our net interest income. I'll provide more color on these dynamics a little bit later in the discussion on the margin. On the surface, the optics of credit quality appeared mixed, but as Jude mentioned, we feel like our credit quality is stable and improving with those two previously discussed charge-offs that we discussed in quarters prior to now, that were fully marked, and we resolved them during this quarter. As far as the balance sheet, the balance sheet tends to remain healthy during the quarter, and loans that were held for investment grew about 1.7% annualized. A little lower than expected, but also consistent with our strategy, our strategy of loan growth. And as Jude mentioned, we feel like that we'll round out the year at about 7%-8% in annualized loan growth. We are proud of the fact that our loan growth for the quarter was really headlined by a continued loan yield of 8.6% on new and renewed loans for the quarter, and that is helping us continue to hold the margin in place. Deposits increased, as Jude mentioned, $176 million. If we include the Leesville deposits that we sold in that branch, that number would be closer to $200 million in deposit and gross deposit growth for the quarter. The $157 million in the new deposits that we generated through a couple of different CD and money market specials during the quarter were very well received by the customers, and our production staff did a really good job of pushing those through. During the quarter, another highlight is we were able to generate about $43 million in total new non-interest-bearing deposit accounts, and that added to our $14.3 million monthly average that we've been operating on for the last few months. We also managed to open $82 million in non-maturity deposits during the quarter at a weighted average, an offering rate of 4.25%. The September numbers for offering rates for all non-maturity interest-bearing deposit accounts was 4.36%. Non-interest-bearing deposits remains a challenge, and we will continue to put our efforts into that area as we move forward into 2024. Our non-interest-bearing deposits ended the quarter at 27.2% of our total deposits. Capital increased nicely during the second quarter. As Jude mentioned, TCE to TA up 3 basis points, and total risk-based capital up 22 basis points for the quarter. Tangible book value up $0.16 ex AOCI. Borrowings, as we mentioned earlier, decreased during the quarter, about $152 million, and that was really as a result of our deposit gathering campaigns. That allowed us to pay off all of our short-term overnight borrowings with FHLB, which were currently priced in the 5.70%-5.75% range. We also made, as Jude mentioned, the decision to hold the extra 150, $150 million in liquidity on the balance sheet as we continue to take advantage of the BTFP funding program earlier in the year, drawing down $300 million of that fund early in quarter one. That $ 150 million that we carry is really doing two things for us. It's continuing to hold liquidity levels in a range where we feel comfortable during this time, and also preparing us to be able to pay off that maturity coming forward in next March. Q3 GAAP net interest margin was 3.61%. That included $2.4 million in loan discount accretion, which was about $500,000 higher than what we expected, but we expect that accretion to drop back closer to $1 million a quarter run rate. The Q3 core net interest margin, excluding the loan discount accretion, contracted 3 basis points to 3.49% as Jude from 3.49% - 3.46%, as Jude mentioned earlier, and as he was alluding to the adjustments for the quarter and also the 6 basis points drag that we are experienced for holding that excess liquidity. Looking forward into Q4, we expect the margin to remain flat to slightly down, maybe a single basis point due to modest continued liquidity build and continued funding pressures. A little color on the second point here, we have over $100 million in lower cost FHLB borrowings that mature in early in the quarter, and we will work on refinancing a piece of it and paying down a piece of it. So that may negatively impact the margin as we go forward in the quarter. We, as I mentioned earlier, we are very proud of the production side of the bank with our continued loan yields coming in on new and renewed at an average of 160, and our deposit gathering that helps us maintain our margins. And now, to cover some of the betas from the quarter, I'm going to turn it over to Matt. Sure thing. So funding betas did increase during the quarter as expected. Cycle to date, total deposit beta and interest-bearing deposit beta was 41% and 56% respectively, which was slightly ahead of what we had anticipated by about 1%. And this is really a function of better than expected deposit growth during the quarter. Looking ahead to Q4, I'd expect the cycle to date deposit beta to increase roughly 4%, which is down slightly from the year-to-date quarterly beta increases of about 5%-6%. So still increasing, but at a slower pace. On the loan side, we continue to hold cycle to date betas on new loan yields at about 85%. We're at 84% for Q3 and expect to maintain. This reflects a weighted average new loan origination yield of 8.55 during the quarter. And with that, I believe that concludes our prepared remarks, and I think we're ready to open up the Q&A. Thank you. If you have a question, please press star one on your telephone keypad. To withdraw your question, simply press star one again. One moment please for your first question. Your first question comes from the line of Brett Rabatin. I'm sorry, the first question comes from the line of Matt Olney with Stephens. Your line is now open. You may go ahead. Hey, Matt. I want to talk more about the funding strategy over the next few quarters. You grew deposits quite a bit this quarter. I'm sorry, you grew deposits quite a bit this quarter, replaced some of the FHLB. And it sounds like that's going to be the strategy again these next few quarters, along with replacing some other wholesale borrowings out there. Can you just talk more about deposit growth from here and kind of expectations to match the loan growth? Thanks. Yeah. Thanks, Matt. What we're continuing to run internal campaigns for deposits, really relying on the production side of the bank to continue to generate deposit growth. As we mentioned earlier, the 14% we experienced this quarter was really, really good, and we're happy with that. Now, as you well know, across the industry right now, it's just deposits are still a battle every day. So it's something we're continuing to talk about and focus on. And if we experience the same successes going forward, then we'll really start to systematically start to unwind some of the higher costing liabilities, for example, like the FHLB. We've really tried to focus over the last year or so of really segmenting those higher cost funding sources into buckets, for lack of a better word, to where we can have optionality each quarter to try to unwind that and improve the margin. But that is reliant on us continuing to gather deposits. Now, we will experience, as we do seasonally, the end of the fourth quarter, the beginning of the first quarter, some municipality bills from a deposit standpoint. So we do expect that to come in over the later part of the fourth quarter and the beginning of the first quarter. That would, you know, give us more optionality on top of our typical deposit growth. One of the things that give us kind of hope is we really consistently not only gather deposits, but really gathered non-interest bearing, kind of in the face of the whole industry experiencing runoff in a non-interest bearing sector. So experiencing good account opening, both in numbers and in dollars, give us the hope that that'll keep continue to move that way. Okay, appreciate the commentary. And just to follow up on the outlook for the margin. I think, Greg, you mentioned flat to slightly down. I assume that was with respect to the core margin, excluding some of that accretion income. Yes. Is that, is that fair? Yeah, that's fair, and that's all really a function of, you know, the deposit flow that we bring in. We've really been experiencing, you know, pretty stable on the top end loan yield side. Still have a good, good pipeline with good volume. I think one of the things that is worth noting is, you know, our loan growth this quarter was really kind of muted by an outsized quarter of payoffs. You know, we had a little over $100 million in payoffs, all for good reasons, projects wrapping up or companies selling projects. So if we didn't expect that, and if we didn't have that, we still feel like our loan pipeline is in good shape, and our growth would have been, you know, up around the 4 or 5% range maybe this quarter, without that. But those yields, you know, like I said, 8.50, 8.60, coming in at that number. So the big factor for the margin, with the renewals that we have and what we see in the forecast from a renewal strategy is, really relying on what our deposit base does and how that growth continues to grow. Okay, appreciate that. And I guess if I think about that, that margin in the first half of next year, I know there's several puts and takes there that we've discussed before, but I guess what you're saying also is the liquidity could build in anticipation of the payoffs of the bank term funding program. Yep. I think that you said was in early 2Q. Is that, is that fair? That's correct. And, one of the things that we think that that'll help you is our slide on page 21 of the deck that we put in there, that really gives clarity into what we're gonna see as far as fixed rate and loan maturities coming forward in the next few quarters. So we think with that, we should be slightly accretive in the margin next year because of that. Perfect. Okay, well, appreciate the disclosures and the commentary, and I'll back in the queue. Thanks, Matt. Your next question comes from the line of Brett Rabatin with Hovde Group. Your line is now open. Hey, guys. Good afternoon. Hey, Brett. Hey, Brett. Good to hear from you. Wanted to start off on the C&D book, and just was curious if you were hoping to get that concentration below 100%, and just how you kind of think about, you know, that piece of the portfolio going forward, where you see demand and appetite from your perspective? Yeah, and I'm guessing you're referring to the C&D, the construction development book? Yes. Yeah. Yeah. Okay. Yeah. We think it is trending, you know, exactly where we thought it would, you know, going trending down below 100%. We don't see. We really haven't been originating any new C&D loans. So if you think back about at our production last year in Q2 and Q3 of last year, really we're kind of at we're experiencing right now the peak of the funding, because each of those loans is a 12- 18-month cycle. So we're getting to a point where we're, you know, a year out on some of them, getting towards the the, you know, kind of wrap up phase of those, where they'll be transitioning out of the bank or into owner-occupied or income-producing. So we don't expect that to be back up over 100. We think it's gonna trend, you know, it's trending down and gonna be, you know, right there in that space for a while. We're, we're not eradicating C&D from our portfolio. We just felt like we were a little bit unbalanced, a couple of quarters ago and, and felt like we needed to right-size that a little bit. So definitely want to stay below 100, and looks like we're, from our internal projections, we're, we're on pace to do that and, and stay there. A lot of our, outsized growth last year, you know, a portion of it was C&D, and if we slow down the C&D, we have we should be able to look forward to, just a pretty healthy, normalized, loan portfolio growth, over the course of 2024. Yeah, Brett, and I'll give you a little bit of color. A date, a data point that we include on slide 26, we've got about, $298 million C and D maturing over the next 12 months. So of that $700 million dollar total portfolio, just under $300 maturing. Now, obviously, a lot of that's gonna come back on balance sheet or remain on balance sheet, but I think that's a bullet point that kind of talks to, some of those loans, rolling off at some point over the next 12 months. Okay, that's helpful. And then speaking of slide 26, I'm just sitting here looking at it, and you've got those three charts at the bottom, the C&D by geography, owner-occupied and income-producing. And there's 42%, and a little over half on the owner-occupied CRE that are in all other geographies. Can you talk about those pieces? Are they still in Texas and Louisiana, but just not in one of the primary markets? Or what can you give guidance or give color on around? Yeah. Yeah, absolutely. So the other geography labeled there, that's not to be construed as outside of our core geographies or core footprint. All of that's within Texas and Louisiana. It, it's simply we, we picked the top 10 geographies by loan balances or by outstanding balances, and then the kind of catch-all, the other would be just everything else within our existing footprint. So we don't have anything outside of our kind of core Louisiana-Texas footprint. But the reason that we have those geographies listed above is it's simply force ranking the top 10 geographies by loan balance. So everything within our footprint. Just think of it, Brett, as outside the listed ones- Mm-hmm. - every other market that we serve in bank today. Okay. It just speaks to the diversification of the geographic locations. We believe in diversity of geography, and I think that number shows how well spread out we are over our footprint. Okay. Then just one last one for me. On the funding side, I missed the number that you gave for the DDA growth, the gross DDA growth that you had, but you're obviously being able to keep DDA balances relatively healthy versus maybe some others that have had more downside to that number. Are you one, what was that number? And then secondly, you kind of think there's mix shift change still from here, or do you kind of feel like you can grow the DDA to kind of keep the concentration levels the same? Yeah, the number was $43 million in total new non-interest-bearing deposits gross for the quarter. And the second number I gave to that was that that number helped us have an average of about $14 million per month so far year to date. And I do agree with your statement. That has allowed us to keep that non-interest-bearing like a lot of our peers have experienced, that non-interest-bearing just declining even further. So we're playing a little bit of offense, you know, by playing defense on that. Okay. And then, Jude, any comment on the outlook for that? Do you think you continue to keep that flat, or what's your thought on funding composition from here? Yeah, I think we, that was Greg talking, but, I think we are- Oh, sorry. If I remember, at about 27% non-interest-bearing, and I think we anticipate maybe, you know, losing 1% or 2% by the end of the year, which is in line with what we've said last quarter and possibly the quarter before. But we won't. We believe we'll finish up the year around 25% non-interest-bearing, maybe 26%. And we're not. It's a focus of ours, and as Greg mentioned, we are opening a lot of new accounts, and with the new branches that we've opened, we think that gives us an opportunity to call on new clients. And so our goal would be to kind of remain about that 25% over time if not improving it. Okay, great. Appreciate all the color, guys. Sure. Our next question comes from the line of Graham Dick with Piper Sandler. Your line is now open. Hey, good evening, guys. Hey, Graham. Hey, Graham. So I just wanted to just circle back to the loan growth front, and apologies if I missed this, but I heard there's, you know, a lot of payoffs this quarter. You're still in some pretty good markets. Dallas seems to be growing pretty substantially still. How are you guys thinking about loan growth going into 2024? Is it gonna be a pretty steady, you know, 7%-8%, kind of like what you're looking at this year? Or do you think there will be a step down, maybe as, you know, the rate environment continues to work its way through borrowers' appetite for new credit? Yeah, we think we'll return to kind of 7%-8% range for next year. You know, our pipeline and connectivity is still strong. We've purposely chosen to manage capital and manage margin, which has meant that we've done fewer loans than we could. And, you know, as we continue to work on earnings and growing within those earnings, that gives us more room for growth in loan book. But it's not a... It hasn't been a question of demand just dropping off a cliff. There is some slowdown in demand, but we also have been selective. But we feel confident that we can again, we'll have to have a little uptick in the fourth quarter to equal our 7%-8% projection for the year. An uptick would be, I think, in the 5%-6% range, maybe 4%-5% range. But then we feel well positioned to be able to kind of maintain that 7-8 over the course of the year. And again, to Greg's point, we would've been at that 4% or 5% without the unexpected payoffs. And I would emphasize the unexpected payoffs were all for good reasons. We just had developers that sold projects that came to fruition, which is how it's supposed to work. So we're pleased about that. Right. Yeah, got it. And then you mentioned on capital building internally, kind of, you guys have managed to this year. How are you thinking about capital priorities right now when it comes to, I guess, a couple options? First, being like organic growth, and then the second may be like a bond restructuring type transaction. We've seen a lot of that recently. And then I guess third, you did put in that new slide on M&A. So just wondering, you know, what your thoughts are on that front as well. So do you guys have a way you're thinking about capital allocation right now as it relates to those items? Yeah, I think number one priority is funding organic growth at a good, moderate, but healthy pace, one that grows within our capital stack and within our retained earnings. We do analyze opportunities to restructure the investment portfolio from time to time, and when that option seems to make sense, we'll take advantage of that. We haven't decided to pull the trigger, obviously, on that yet, but doesn't mean that we're not open to it. And then, on M&A, while it's not our priority in terms of how to spend capital, we do believe there will be opportunities for us to review and partnerships for us to consider, and we're prepared to do that, under the right circumstances, but don't feel like we need to do it. We'll just do it if it makes a lot of sense for our strategic plans. But number one priority is funding the organic growth. Okay, got it. Helpful. I guess the last one for me, another, I guess, sort of big picture question, but it looks like the 1% ROA target is within reach this year. Is there anything you're looking at for next year or the year after? Any new sort of level you guys are targeting or new metric you guys are looking at achieving? I think it's probably a little early. You know, we're in the budgeting process, just kind of begun it. Probably with the amount of uncertainty that's out there now, I think it would be a little bit too early to make any forecasts of improvement there. I mean, we're gonna. That's our goal. We wanna. We'll keep managing that and over a multiple year period. One reason we put in the chart about the five-year improvement and across all of the profitability metrics is that we wanted to show that we're committed to that being the key driver of how we make decisions over time. So we'll continue to work to... We, we do believe that over the long run, we'll move closer to that, to that 1.15-1.20 ROA. But, but, in the short run, it's a little hard to predict, given all the moving parts. And again, we're just beginning the budgetary process. We, we feel like this year was a big, a big step in terms of, achieving that 1% kind of baseline. And, we'll, we'll continue to, to work to build from here, from there. I didn't, we didn't put the M&A chart in to necessarily signal that we were getting ready to do M&A. We just, we did it just to show that, that, over time, the M&A that we have done, along with other decisions that we've made, have led to improved performance. I know from an institutional investor standpoint or from an analyst standpoint, because we were quite active on the M&A front, I think there was some concern that maybe we were just doing deals to do deals. I'm being a little dramatic there, but we take it as a point of pride that the deals that we have done have made us a stronger franchise. And so we felt like we had enough information now to do a little look back and prove out the case for our combined M&A and organic growth strategies. And we'll continue to make capital decisions with those longer-term goals in mind. All right. Absolutely, I hear you. Thank you, guys. Thank you. Your next question comes from the line of Kevin Fitzsimmons with D.A. Davidson. Your line is now open. Hey, guys. Good evening. Hey, Kevin. Hey, Kevin. Okay, first, I just want to do a little housekeeping, because I was trying to keep up with you as best I could, Greg, but I'm getting slower with my age here. But what you said about the fee revenue base, $8.4—you said $8.4 is a clean run rate and good to use for going forward. Is that correct there with what you said? Yeah, that's correct. And- A little bit of, a little bit of nuance that I may not have conveyed, but, you know, we think that's probably a clean run rate for 2024 because we had some one-off, SBIC, for example, and there was unexpected revenue in 2023 that really we expect that non-interest income to number to grow. But because we're gonna back out that, for example, $2 million out of that run rate that we experienced in 2023, holding that 84 flat really is a growth number for us. Got it. Got it. Okay. That's, that's good, good clarity. And then on expenses... You made the point that $39.5 is a better run rate, right? And there were, and then in 2024, more like mid- to high-single-digit off of that. Is that? And I, and I know you went through a couple of nuances from expenses, Mastercard, FDIC assessment. Yeah, Kevin, that's right. That's the right thinking, though. 39.5 is the kind of launching point, and then that percentage that I mentioned is, is right. Okay, great. You know, it might make—maybe it's, I don't know if you—it's something you're just looking at right now, but, you know, given what's still a challenging revenue environment on the expense side, is there anything specific you guys are looking at, or is, you know, in terms of moves, or is it more just an everyday battle on the expense side? How you're going to approach that? Yeah, I think, as far as interest expense, yeah, it's, it's, we're just working hard every day to try to gather those deposits and those expand customer relationships that ultimately help us win and, you know, reduce, like I'd mentioned, our reliance on borrowed brokered, those kind of things. And we think we've set up the balance sheet to where we, as we keep winning on the deposit side, we'll have the optionality to pay that off and help us on that overall space. I think, I think assuming your question was also, though, about non-interest expense, Yeah, I was kind of leaning- Yeah, I think. Yeah. Yeah, I think it's more of just a daily decision-making. There's not a part of our franchise that we feel like we need to cut off in order to save expenses. And we feel like one reason I mentioned the branches, branches earlier is that, and we have a slide in the deck to speak to this, but I think we've done a good job of continuing to rationalize the network over time, as opposed to allowing branches that we bought and or acquired in M&A or have become obsolete of our legacy branches, as opposed to letting that kind of hang out there, where we have to come back and do a 10% reduction. I think we've done a good job of every quarter analyzing our infrastructure and figuring out where we might, if not cut, maybe redeploy into more productive, growth-oriented locations. So we'll continue doing that real time on a quarterly basis, and that's kind of how we view hiring as well. One of the reasons that we've displayed good expense control this past quarter and the quarter before that is that we made some decisions about hiring or putting off hiring until we felt comfortable that the revenue would justify it. And so we'll continue on a quarterly basis, or actually on a real everyday basis, to think hard about investments in infrastructure and in people. You know, we did in 2022, 2021, we made quite a few hires of bankers, and we feel like there's still some capacity there in terms of portfolio and workload, particularly at this kind of slower loan growth rate, and as we've kind of transitioned over to focusing more on deposits as well. So I feel like we've got a staff that is capable of continuing to incrementally build, and I think that's a good spot for us to be in right now versus embarking upon a particularly expensive growth option. So expense control is something that we ought to be thinking about on a daily basis, as opposed to ignoring it until we have to, I guess, and that's the way we try to approach it. Yep. Okay. Thanks, Jude. Thanks, one last one, quick one from me. On the subject of deposits, you guys called out the Financial Institutions Group for contributing. Just curious if that was more something deliberate you guys were pushing, or was it more just the behavior of the client banks themselves in terms of giving deposits over to you guys? Thanks. No, I think our approach to FIG in general is we want to make sure that that's a relationship with banks that also are looking at other pieces of our product offering. For example, loan sales, customer relationships with our SSW Group. So it's not, we are looking for deposits, but I think it's not a deposit sales call strategy. We're looking for more of a relationship with all of those bank clients. Got it. Okay. That's about, that's about $200 million right now, so it's a, it's still a fairly small part of our balance sheet. Right. Okay, understood. Okay, thanks, Greg. Thank you. Thank you. Your last question comes from the line of Feddie Strickland with Janney Montgomery Scott. Your line is now open. Hey, good evening, gentlemen. Hey, Feddie. Hey, Feddie. Evening. Just curious, you know, as we look into 2024 and beyond, are there markets outside your footprint you'd be interested in expanding to, whether, you know, if it's organic, more likely organic in the near term and maybe longer-term M&A, or do you feel like you have plenty of opportunity within the footprint you have now? ... I don't really view it as a binary choice, I guess, is the way that I would say it. I mean, I think our priority and our most immediate opportunity is certainly within our existing footprint, and enough opportunity there to stay grace over for many years. So if that's what we choose to do. I do think that as we gain momentum and as we gain brand recognition, one of the - that's not just among client base, but that's also among potential teammates and employees that may be attracted to a bank such as ours. And if we come across the right employees, then we would be open to moving to other geographies if they're the right fit. While we have a general thrust of where we wanna invest, we also have been very banker specific in terms of the specific markets that we've... It's been more about the banker than it has been the location. For example, the McKinney operation that we just opened, although certainly on a numerical basis, when you think about the demographics, McKinney is a very attractive place to be. But we wouldn't have opened in McKinney if we didn't find a banker and a banking team that we felt were the right teammates in that market and that we trusted to help us grow our franchise. So as we think about future geographies, I do think we'll look in other places in the Southeast over time, most likely the Southeast. But the order of preference will be determined by the quality of partnership that we feel we can put together. So if that happens, that happens, and if it doesn't, we feel like we can deploy capital constructively over time within our current footprint. This is Philip. I would just add, as far as the McKinney hire is concerned, he, we are very excited about that opportunity, but he's actually been on staff for over a year and came to our Frisco office, immediately built up a portfolio so that when we did open McKinney, it wasn't a cold open. Just that set already paid for itself. Appreciate that. That's great additional color, and I, I get it. It's, it's all about finding the banker first. Just one last one from me. As we look forward into 2024, appreciate talking about all the moving parts, ROA, everything else, but do you think we could see core efficiency ratio below 60%, potentially in the back half of 2024? Yeah, I think that's our, that's what we're striving for. I think, looking at that, as you well know, really, the deposit gathering and deposit costs will be the key to that, but that is our goal. I think that's, that's probably a fair enough way to answer that. Understood. Thanks for taking my questions. Thank you, Feddie. Good talking to you. Thanks, Feddie. The final question comes from the line of Michael Rose with Raymond James. Your line is now open. You may now go ahead. Hey, guys. Thanks for taking my questions. Just a few quick ones. Greg, I was hoping you could kind of give a range or kind of quantify what the impact of the seasonal municipal deposits is and what we should expect. Yeah, that's. We usually see $150 million-$200 million come in over the course of a quarter. You know, that does impact the margin negatively because of the cost of those funds that come in. They're mostly interest-bearing. But I think the biggest part that we usually struggle with forecasting is that it is tax money, so it's all dependent on the speed at which it comes in. For example, last year, it came in very, very late, the end of Q4 and balance of it, Q1. It just really depends on when the taxpayers bring their tax payments in, but it's about $200 million in total. Got it. Helpful. And then, you know, it seems like, you know, loan growth is gonna, you know, kind of reaccelerate here as we move into next year. You guys have done a good job on the deposit side. Now, the loan-to-deposit ratio has gotten down in kind of the mid-90s, but it seems like maybe that's gonna go up again. I assume the target is to kind of keep that, you know, sub 100%. Is that what we're thinking? And, you know, I know you talked about some of the deposit stuff earlier, but is there anything more that you're looking at to grow some of the core funding? Thanks. Yeah, I think definitely we wanna—we'd like to stay below 100%. One of the reasons for the excess liquidity is to paying off the, that fund, but it's also is to make sure we have some wiggle room in terms of liquidity, so that we can do that, even if we have certain relationships that we feel the need to take advantage of. The governors on the loan growth, though, will be, capital, you know, retained earnings, capitalizing that growth and then, deposit generation. So we would love to, love to be able to generate deposits, at a rate slightly greater than loans. That may not hold true every single quarter, but over the course of the year, we feel like with our focus and results that we've demonstrated this year, and, you know, the results. So it's one thing to have the deposit growth, but it's another to actually demonstrate, internally, that the more balanced approach to growth pays off in terms of higher earnings. And that's a positive thing for us to be able to demonstrate, and we have demonstrated it over the course of the year, and as we talk internally, as we think about incentive programs, as we think about continuing to build upon the cultural aspect of placing importance on deposits, I don't see any reason that the improvements that we've demonstrated this year won't continue into the future. And we certainly, you know, you and I have talked before about 3.5, four years ago, three, three years ago, 3.5 years ago, we set a five-year plan. And, you know, part of that was achieving a certain level of growth in asset size, which we felt was, kind of a sweeter spot to be in. As we've come close to that now and are on pace to get there over within the five-year plan, that means, as I've talked about in previous quarterly calls, that it's a bit more of a focus on not growth, but on healthy, profitable growth. And so that means, that we're not gonna-- we won't return to, to, as high a level of loan growth, in the near future. Focus on balance growth, which would imply that we want to maintain that below 100% loan deposit ratio. And we certainly feel like the 8.78% loan growth next year that we feel we could do needs to be accompanied by a similar level of deposit growth. And that's our - that's what we're hoped to do. Very helpful, and that dovetails into my final question. It just seems like putting together all the pieces, looks like you guys, you know, should be able to eke out some positive operating leverage next year. Is that the way, you know, we should think about it? That's the goal. I mean, I think that we've been, that we're doing that. We've done that the last couple of quarters, and certainly want to continue to do that. So yeah, I'll be disappointed if we don't. Great. Thanks for taking my questions, guys. Absolutely. Thanks, Matt. Hey, hey, Michael? One other thing. Your point about seasonality in the tax loans coming in and out reminded me there's some seasonality in our expense base in Q4. I just want to be sure we highlight Q4 seasonally higher, about $1 million, a little over $1 million, on the expense side. So just wanted to make sure we didn't lose sight of that. All right. Do we get you? Any more questions? Yeah. I think we've lost our narrator. I'm here. I just- Oh. I was just- Okay. No, I'm here. I was just leaving more room for questions. Okay. If you would like to ask a question, you can press star and number one. All right. It looks like there are no further questions at this time. I would like to call-- turn the call over to Matt Sealy. I think I'll kick it to Jude for any closing remarks that you might have. Yeah, thanks, Matt. Well, appreciate everybody's time today. We were very pleased with the quarter. I mean, it's from a capital accretion to the earnings improvement to the focus on adding liquidity in an environment in which liquidity is hard to come by and doing so at fair prices that weren't damaging to our margins. I think from an operating standpoint, we had a great operating quarter. And I think continuing to do that over time will justify stock appreciation as the market normalizes at some point, which I know it seems like it's been a long time and it could potentially be a while. But at some point, banks will be in favor, and we feel like we're positioning ourselves to be one of the higher flyers in that, in that market. We'll keep grinding out operationally. Awful proud of our team and appreciate the interest. Happy to have any follow-up calls that we need to have. Have a good night. Thank you. This concludes today's conference call. You may now disconnect.