John Allison: I don’t know if you’re on. We have an offer or Kevin has an offer on the Florida property for more than our carrying value. And I don’t – I mean I’m very pleased with I don’t like taking property back, you can tell. But I only had one property to go look. I already knew the Florida property, one property to go look at. So I want to go look at it. I want to walk it, walk through it, smell it, touch it, and I’m pleased with what I saw. So – and we’re now 70% loan-to-value in this appraisal, which is a recent appraisal. So, we feel good about that. You think about it, had we done an 80-20, we’d be upside down now. But we didn’t. We did a 50-50 almost I’m afraid. So, anyway, I think we’re in good shape.
I concern myself with a little bit of a guy with 4.5% loan and suddenly it’s 9. And as Kevin said, if you don’t think that’s going to not create some problem somewhere, you’re being awfully naive. So – but we haven’t seen it. We have not seen it. And I mean all of this – all this rate increase is not priced in right now. I mean, we’re continuing to increase and we got $1 billion worth next year to reprice. So it’s not all in the marketplace yet. So these people that are sitting out there with a 4.5% loan today or 5% are pretty happy with it. Even though they fussed at the time, they want a lower rate. They’re pretty damn happy with the rate on it now. So I don’t anticipate – who knows, but who’s in better shape in the country to fight that battle in Home if there is a problem.
Stephen Tipton: We went through the loans that repriced the third and fourth quarters. We went through those and had a significant increase coming. We went through those two quarters ago, didn’t see a significant issue. We’re doing the same thing now for the credits that mature next year that Stephen was talking about, that $800 million to $1 billion. We’re looking at the larger ones of those now, just to see if we think we’re going to have any issues and that way we’ll be ahead of the curve if that happens to be the case.
John Allison: You take $1 billion worth of loans and you raise it 400 basis points to 500 basis points, it generates lots of money for the bottom line. So we’re optimistic we’ll catch up.
Jon Arfstrom: Okay. Well it’s good, you were careful 12 and 18 months ago. I know you’ve talked about that in the past. Just one more – Yes, I know it was hard at the time, but because we’d ask about loan growth every quarter, and you weren’t doing it, but it makes sense today.
John Allison: Jon, we’re going straight in…
Jon Arfstrom: Chris, just one question.
John Allison: We’re going straight into Bitcoin and Fintech, like I told you at RBC, we’re going.
Jon Arfstrom: Alight, that’s funny. You just resisted all of the temptations, which is good. Just Chris, what do you – Chris, what are you seeing on your pipelines and the quality of the pipelines? And that’s all I had, but just curious.
Christopher Poulton: Yes, sure Jon. We look at a lot. We get the phone rings a lot. We take a look at a lot. We had growth this quarter, it was – all the growth was in our facilities business on the real estate side. So we have facilities out to lenders and serial acquirers, etc., and they’re active, especially on the loan on loan side. So, most of the growth we had were banks aren’t necessarily getting aggressive on things, but that opens up opportunities for non-bank lenders, and those people need friends too, and we provide that leverage. I like that trade today because it lets us come in at a very, very low basis and it’s helpful to the borrower as well. Our product is useful to the extent that we can help people achieve their goals and their returns.
And sometimes a senior loan at five over at 40% cost isn’t going to help the underlying borrower achieve their goals, but by partnering up with some non-bank folks that go make that loan a little higher leverage, a little higher cost, and a little different structure, and then we come in behind that at lower leverage. We’re helping everybody. So we’re seeing good demand for that product. We like it. We’ll continue to probably – when I look at the pipeline today, there’s a number of asset ads on our facilities that we’ll look at today where we’re continuing to look at other single asset new opportunities. I think somebody mentioned earlier about loan growth and about getting aggressive for loan growth. I think you don’t need to get aggressive today to make loans, you need to be patient today to make loans.
And I think that’s what we’re seeing more than anything is we’ll be patient and we’re happy to help people achieve their goals, but we’re not going to get aggressive.
Operator: Our next question comes from Michael Rose with Raymond James.
Michael Rose: A quick question here. Just, Stephen, I just want to dig into the deposits. I’m sure like everybody else, I’m getting bombarded by 5.5%, 6% CD rates, and your loan-to-deposit ratio has crept up a little bit. Obviously the mix has changed a little bit. Just wanted to get some assumptions and kind of outlook as we think about next year as it relates to betas where that mix could trough and what you guys are doing to just make sure that loan to deposit ratio doesn’t really accelerate from here. I know there’s not a lot of loan growth, so that helps, but just wanted to see what the strategies are, and any updates on the deposit side.
Stephen Tipton: No, that’s fair. Hey, Michael. I mean, certainly, if you look back over the first part of this year, we were clipping 10 basis points to 12 basis points a month in terms of an increase on interest-bearing deposit costs. That’s slowed a little bit just in terms of the number here lately. The calls and the conversations haven’t necessarily. So maybe that’s just something as yields have drifted up over the course of the year. I mean we – I think we’ve said for the better part of a year or so, we were at 20% or 21%, I think, non-interest-bearing deposits to total kind of pre pandemic. And so that said, it’s logical to think that maybe it drifts back that direction. But it certainly is the #1 conversation we have on a daily, weekly basis with their presidents, the folks that are out driving the business in the field.
And like I mentioned, at loan committees, in terms of deposit gathering and opportunities there, we’ve had a nice relationship in Texas that functionally started from scratch, give or take. That’s grown to be a good $20 million, $30 million relationship today just over the last month or so. So, it’s those targeted type things that are tied to loan relationships that are probably going to drive volume over time, at least we think.
Michael Rose: Great, that’s helpful. And then maybe just as a follow-up. Johnny, at the beginning of the call, I think you obviously pointed out something that’s fairly obvious to most of us, that the only way to expand profitability is to either grow revenues or cut expenses. You spent some time maybe talking about the expense side, but just maybe as it relates to the fee income side, are there areas that you can invest in or deepen your presence in that might help just on the revenue side?
John Allison: Well, it’s primarily – we’re not buying any securities to speak of right now, but we’re primarily got some opportunity on several loans. The advantage we have is we got the ability to fund them. And not everybody has got the ability out there today to fund these loans. And when you start talking about 10%-plus on loans, that gets our attention here. If they’re good loans, period. We underwrite. We don’t change our underwriting standards because it’s got a tenant in front of it, I can assure you that. So I think that’s primarily where we’re going to go. We looked around for other opportunities. We’re constantly looking for other opportunities. There’s got to be some more fallout through this crisis.
