Duane Dewey: No, that’s a very reasonable number and just noting that’ll be out for seven months of the year.
Gary Tenner: And then last question as it relates to that. I think there’s the note that M&A will be an insurance broker partner of the bank. Should we assume that that means that there’ll be referral business where you actually potentially generate some sort of fee income from that over time or just how to think about that?
Duane Dewey: Yes. The answer is no. There’s not an ongoing fee arrangement, but we went through a very painstaking process and this process of considering a partner we and the agency handpicked M&A to join forces with. We’re very excited about that ongoing opportunity for our production team, for our associates, for our clients. And we do continue to expect to have an ongoing relationship with MMA and build on 25 years of experience with the team that will be transitioning there. So we’re very positive but it is not a direct fee income referral type arrangement.
Operator: [Operator Instructions] Our next question comes from Michael Rose of Raymond James.
Michael Rose: Just following up on the capital question. I understand you’re going to be conservative maybe as it relates to buybacks. But is there a certain capital level that you guys are managing to before you would potentially look a little bit more at doing some buybacks just given where the stock is trading and what the earn back would be on the pro-forma tangible book. Or is it just kind of like you want to wait until all the actions happen before you would maybe look to buy back stock?
Tom Owens: Michael, this is Tom Owens. I think the baseline assumption would be based on our current sort of business as usual run rate of quarterly accretion and capital it will probably be on the sidelines. I mean, it’s always subject to market conditions. I mean, clearly, we have more capital now at our disposal. So, it’s subject to market conditions. But I think absent volatility in the market and what might happen with the stock price, I think the baseline assumption for the remainder of the year would be that we’re going to be on the sidelines on share repurchase and continue to accrete capital and support organic loan growth. Some of the initiatives that Duane talked about.
Michael Rose: And maybe if you can just as a follow-up, just on the organic growth side, is there anything that this new capital will free up and allow you to do that you might have been a little bit cautious on before? Meaning, would you look to maybe hire some more lenders, build out some on the fee side, maybe invest some more money there? Just looking for a sense of what levers this capital can be deployed into on the organic growth side?
Duane Dewey: Yes, as I stated earlier, I think this does give us some opportunity and I mean we’ve always had a preference for organic growth and we feel this does give us the opportunity. We’ve got very, very attractive markets Houston, Atlanta, Memphis, Birmingham, Mobile, et cetera, across our franchise where we can add talent across all those markets. And then like I mentioned earlier in a business like equipment finance where we’re starting to gain experience and get comfortable really understanding that business and feel there’s some opportunity to add production talent there. And then the last thing I’d note, the other consideration in that process would be exploring opportunities in new markets that we don’t currently operate in.
We’ve gained experience by opening the Atlanta market and we think there are some very attractive markets in and around regions that we already serve where we already have exposure and knowledge that we can add talent. And so we do think that this gives us a unique opportunity to expand and really focus more aggressively in some of those organic areas.
Michael Rose: And then maybe just finally for me, when I was working through the model last night, it does seem like some of the assumptions around EPS accretion could prove to be a little bit conservative. Just if you can maybe walk through kind of the puts and takes to the projected EPS accretion, the way you see it, whether it be impact from rates or ability to deploy capital maybe higher. I know you talked about maybe potentially having the opportunity to do more on the bond book. We’ve seen that with a few other of these sale transactions where you’ve actually seen more done on the security side. So just can you walk through kind of the puts and takes to that EPS accretion guidance? What could be better and maybe what the potential headwinds would be?
Tom Owens: Sure. I’ll start, this is Tom Owens. Clearly, with that amount of bond portfolio restructuring and particularly with respect to the volatility, we’ve had an interest rates in the market quarter to date here still somewhat early in the quarter, the amount of restructuring, the composition of the restructuring could end up these are pro-forma assumptions could end up being different here. We’ve done our — we’ve put our best thoughts together in terms of how we would restructure the portfolio. I think, Michael to me, it’s almost more interesting to talk about the puts and takes fundamentally and what some of the opportunities might be there ex the transaction. You think about the variability with respect to where the Fed might head with respect to interest rates, the impact on deposit cost.
I mean, I think that there’s an opportunity there. We continue to flatten that linked quarter increase in terms of deposit cost. I think there is when you talk about puts and takes, I think there is some opportunity to outperform there relative to the guidance. At the same time, there is some risk there, right, which particularly with respect to non-interest bearing DDA balances and the trends there. So when it’s all said and done when we consider the puts and takes, we left the guidance intact basically across the board. So I guess those are the thoughts I can share with you that come to mind.
