Simmons First National Corporation (SFNC) Q3 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Simmons First National Third Quarter Earnings 2015 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to hand the meeting over to Burt Hicks. Please go ahead.

Good afternoon. I’m Burt Hicks, Investor Relations Officer of Simmons First National Corporation. We want to welcome you to our third quarter earnings teleconference and webcast. Joining me today are George Makris, Chairman and Chief Executive Officer; Bob Fehlman, Chief Financial Officer; Marty Casteel, President and CEO Simmons Bank, our wholly owned bank subsidiary; and David Garner, Chief Accounting Officer. The purpose of this call is to discuss the information and data provided by the company in our quarterly earnings release issued this morning and to discuss our company's outlook for the future. We will begin our discussion with prepared comments, followed by a question-and-answer session. We have invited institutional investors and analysts from the investment firms that provide research on our company to participate in the Q&A session. All other guests in this conference call are in a listen-only mode. A transcript of today's call including our prepared remarks and the Q&A session will be posted on our website under the Investor Relations Tab. During today's call and in other disclosures and presentations made by the company, we may make certain forward-looking statements about our plans, goals, expectations, estimates and outlook. I'll remind you of the special cautionary notice regarding forward-looking statements and that certain matters discussed during this call may constitute forward-looking statements and may involve certain known and unknown risks, uncertainties and other factors, which may cause actual results to be materially different from our current expectations, performance or achievements. For a list of certain risk associated with our business, please refer to the forward-looking statements caption of our earnings press release and the description of certain risk factors contained in our most recent Annual Report on Form 10-K, all as filed with the SEC. Lastly, any references to non-GAAP financial measures are intended to provide meaningful inside and are reconciled with GAAP in our earnings press release. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. With that said, I’ll now turn the call over to George Makris.

Thanks, Burt, and welcome, everyone to our third quarter earnings conference call. In our press release issued earlier today, we reported record core earnings of $25.6 million, an increase of $14.9 million or 139% compared to the same quarter last year and record diluted core earnings per share of $0.85, an increase of $0.22 or 35% compared to the same quarter last year. This is a six consecutive quarter at which we reported record core earnings. We continue to make good progress with our revenue enhancement and efficiency initiatives. Our core efficiency ratio for the quarter was 57.5% compared to 64.9% in the same period last year. Our core return on assets for the quarter was 1.33% compared to 0.95% in the same period last year and our core return on tangible common equity for the quarter was 15.99% compared to 12.84% in the same period last year. As a result of our recent acquisitions and ongoing efficiency initiatives reported in the last several periods, we have and will continue to recognize one time revenue and expense items which may squee our short term financial results they’ll provide long term performance benefits to our company and shareholders. Our focus continues to be improvement in our core operating income and core efficiency ratio. Core earnings for the third quarter of 2015 exclude the following noncore items. $521,000 in after tax merger related expenses, $1.3 million in after tax gain on the sale of three Salina, Kansas branch banking operations, $185,000 in after tax branch right-sizing costs and $4.5 million in after tax charges related to the termination of the company’s loss share agreements with FDIC. Including these noncore items, net income for the third quarter was $21.6 million, an increase of $12.8 million or 146% compared to the same period last year. Diluted earnings per share were $0.72 an increase of $0.20 or 39% contained - compared to the same period last year. For the quarter we achieved strong legacy loan growth totaling $228 million over the second quarter of 2015 and an expanding core net interest margin of 3.93% up from 3.51% in the same period last year and 3.87% in the second quarter. On a core basis, we increased non-interest income by $13.5 million or 89% over the same period last year. This increase is driven primarily by the integration and expansion of our acquired business lines. Core non-interest expense increased by $26.2 or 65% over the third quarter of 2014. This increase is primarily due to incremental operating expenses of the acquired Delta Trust, Community First and Liberty franchises. As previously mentioned, during the quarter we announced that we entered into an agreement with the FDIC to terminate our loss share agreements divided in four FDIC assisted acquisitions that we completed in 2010 and 2012. The one time after tax charge of approximately $4.5 million is primarily related to the write-off of the remaining FDIC indemnification asset and settlement charges paid to the FDIC. It’s important to note that the charge was only timing in nature as those expenses would have been included in our financial results over the next several quarters. We expect to realize future benefits associated with the termination including reduced operating cost, retention of all loss recoveries and simplified financial reporting. However, we will assume all of the risk loss associated with any assets or expenses previously covered by the loss share agreements. As a result of loss share termination, all FDIC acquired assets are now classified as non-recovered. All acquired loans are recorded at their discounted net present value; therefore, they are excluded from the computations of the asset quality ratios for the legacy loan portfolio, except for their inclusion in total assets. At September 30, 2015, the allowance for loan losses on legacy loans was $30.4 million, while loan discount credit mark and related allowance on acquired loans was $71.4 million. This equates to a total of $101.8 million of coverage for a total coverage ratio of 2.1% of gross loans. The allowance for loan losses on legacy loans equates 1.07% of total loans and 181% of non-performing loans. Non-performing loans as a percent of total loans were 59 basis points which is an improvement from 65 basis points in the second quarter. For the third quarter of 2015, the year-to-date annualized net charge off ratio excluding credit cards was 0.12% and the year-to-date annualized credit card charge off ratio was 1.3%. Our capital position remains very strong. At September 30, common stockholder’s equity was $1 billion and tangible book value per share was $21.89. Our tangible common equity ratio was 9.1%. Before opening the line to questions, I’d like to discuss few recent announcements and other significant events. On August 17th, we announced that David Bartlett, our President and Chief Banking Officer who will retire in January 2016 following the distinguished banking group. David has played a key role in positioning our company for continued growth and success. David will be missed, but we have a deep and talented bunch of bankers, they are prepared with same known expanded roles. Concurrent with the announcement of David’s spending retirement, we made the following announcements. Barry Ledbetter, he most recently served as Regional Chairman for Central and Northeast Arkansas will assume the duties of Chief Banking Officer. Barry has been with our company for more than 30 years and has an exceptional record of performance including serving as Chief Executive Officer of Simmons Bank of Northeast Arkansas prior to our charter consolidating in 2014. Matt Reddin has been named Chief Lending Officer, which is a new position for our company. Matt will work to develop community bank lending teams. He will have a leadership role in the bank’s loan approval structure. Adam Mitchell was named Chief Retail Officer, which is also a new position for our company. Adam will work to ensure the efficient delivery of products and services throughout our retail branch network. Freddie Black will assume the duties of Regional Chairman for the spite of Arkansas. Freddie will now see all of Simmons banking operations in Arkansas. Barry, Matt, Adam and Freddie are each uniquely qualified to assume these new roles. They will position our company well for future growth and continued success. Over Labor Day weekend, we completed the conversion and integration of First State Bank headquartered in Union City, Tennessee. This significant conversion completes the integration of all bank acquisitions today. Simmons now operates under a single bank charter. In April this year, we announced and we signed a merger agreement with Trust Company of the Ozarks at Springfield, Missouri. TCO has scheduled a special meeting with shareholder on October 28th to considerable approval of the merger agreement and the merger transaction. It’s proved by the TCO shareholders, the transaction is expected to close shorter day after. We anticipate merging in TCO and Simmons First Trust Company in the Simmons Bank in late 2015 or early 2016. As a reminder this acquisition will increase total assets under management for our trust department by more than $1 billion. This concludes our prepared comments. We’ll now open the phone line for questions from our analysts and institutional investors. I’ll ask operator to come back on the line and once again explain how to queue in for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Stephen Scouten from Sandler ONeill.

Hey guys, good afternoon.

Good afternoon. Stephen, how are you?

I am doing well. Maybe not - you guys given the moving your stock here today, so congratulations on that.

It’s sort of scaring.

It’s fine. I like - my whole spring is green today, it a good day.

Yeah, good.

So, curious a little bit about kind of the expense run rate from here, if I could get a little more detail here especially as it relates to the first day the conversion and kind of what we’re going to see in regards to the cost saves to come out and kind of the timing of those remaining cost saves on that deal?

Okay, I’ll start with that and Dave and Bob may want to jump in. I’ll tell you that all the numbers that we reported this quarter will deponent in the non-interest expense. And you know we’re really divine for that because as we did the acquisitions, we probably didn’t press unless order we could have, making sure that we didn’t cut in the any other muscle in any of those locations. And once again I will remind you that both with Liberty and First State, we did not close any branch locations. So we expected minimal cost saves to begin with. We also had the severance payments for those folks at First State and we’re retained here in the third quarter. So that’s a little bit of the tick up. We also had a change to our incentive programs which you probably recall, our shareholder said will prove in June of this year in some of those accruals added about a $2 million expenses this quarter sort of catch up. So we’ve gone from a one year incentive plan to a multiyear performance plan and some of the shares that were included in that plan were sort of a catch up this quarter. We have [indiscernible] and if you are asking what we expect going forward, I would tell you that probably 62 million to 63 million a quarter as what we would consider to be normal as of today’s operations. Obviously our budget process is underway and what are expenses will be in 2016 is going to be a prime focus for us. So we’re - I guess from utility as we’re still trying to get our arms around all the integration pieces from quite honestly 11 bank conversions over the last two years and now we’re all under one on barrelage pretty to us where we have opportunities to improve and I think we’ll target on those in 2016.

And Stephen, let me clarify a couple of things. First the non-interest expense on the GAAP basis was 67.9. The noncore items were 1.3 million. So our core non-interest expense was 66.6. And as George said a minute ago, we had several items that did come up during the quarter that were somewhat acquisition and timing related, they are core items, but they - some of them may not be recurring going forward. We also - the foreclosure expense was elevated for the quarter. There were several properties that appraisals came in on an annual basis and those were updated. So what I’d give you is as George said there was about $3 million of that 66 that is really non-recurring on a basis but it is core items, so was that $63 million range as George said is how we came back to that number.

Okay, so you kind of think about the run rate around 63 and then you’ll have the first day cost saves coming out move meaningfully what’s left those and still think you can get now 61 to 63 range on that basis.

That’s correct.

Okay, great. Great and when you - organic loan growth you know looked really strong in the quarter but I know you get some of the movement from the acquired book over into the organic books. So can you talk about what the breakdown is there and kind of what you saw on a true kind of legacy organic growth perspective and kind of where that growth came from?

I’d be glad to try and do that. Our legacy loans were up 228 million. Of that number, 36 million migrated from acquired to legacy. So we had a pretty good net legacy loan growth of a 192 million. We did have a $151 million decrease in the acquired bucket. Some of that was anticipated with the result of maybe some pay downs in Liberty and First State customers. But was also had a considerable amount of impaired loans paid off this month some $17 million which we like to see. So we’re still placed with our legacy loan growth and the markets that are still driving that are the Little Rock MSA, Wichita, actually Pine Bluff in Southeast Arkansas, St. Louis and those markets [ph], they still - they are still very, very good for us and we see a lot of upside potential in those markets.

Okay. What do you think you guys can sustain. I mean do you still think you can sustain a net kind of mid-double-digit sort of loan growth paste of is that a little too aggressive given continual pay down levels or where do you guys you could shakeout?

It’s probably a little aggressive considering that I am not real sure all the play downs have happened here. So we still plan in the 7% to 10% range. We think that that is sustainable over the next couple of quarter anywhere.

Okay, makes sense. Any additional upside from your Ag growth this quarter or is that - because the pay downs there are kind of the seasonal effect starts to migrate out in the fourth quarter, right. So is there any upside impact in the current quarter there?

Well, we were - our lending level in the third quarter, it will start paying down in the fourth quarter and accelerate into the first quarter next year. It used to be a real significant issue but based on our current size and the percentage of Ag loans that we have in our portfolio today, while we’ll see a little tick down, it will have the same seasonal impact that most of you have been used to see in over the last three-four years.

Okay, makes sense. And then maybe just one last clarifying question from me is on the accretion number that you guys gave in the presentation and the number that you tend to give as you calculate your core NIM, what are those two numbers, just I’ll make I’m clear on that. I think I saw 14.9 million in the presentation, is that –?

Yeah, our accretion - this is Bob. Our accretion for the quarter was 14.9 million. What we did out, there is kind of run rate, there was about 7.5 million in normal accretion that’s been amortized related to purchase accounting. For the quarter, as George mentioned, we had significant pay down in non-performing impaired loans that were acquired. Those loans had substantial marks on them. Those are nonaccretable marks, while you still have them on the books. When they payoff, you accrete that to income, so about 7 of that million was related to those loans.

Okay. So when you guys normally talk about your core NIM, you just back out the kind of schedule accretion, is that right?

Yeah, yeah, if you go back a couple of years, we used to talk about the excess accretion but now that we no longer have the - under the loss share agreements FDIC loss share agreements, it’s all the same numbers. So we go this quarter and going forward all you’ll see is the total accretion that’s on the books.

Okay, so that’s -

And in back all of that have to get to the core NIM.

Okay. So the - okay, so the numbers like that we talk about last couple of quarters, I think was 6.1 million in 1Q and like 2.9 in 2Q, is those numbers kind of pair with the 7.5 million number that you mentioned?

Well, I can give you the quarter - for the quarter for the total with 14.9 million total accretion in Q3. In Q2, it was 10.1 million and it was 10 million in Q1.

Okay.

And I would say you know the numbers change every quarter but somewhere in that $7.5 million. So you know going forward we would expect 7.5 million that will be declining, decreasing overtime but yet on the other side, we don’t know what loans will pay off especially in the non-performing, we want those pass and as they do that number can increase. So that’s one of those volatile numbers that we - it’s hard to project.

Gotcha, gotcha. Thanks for the clarity there. I appreciate it.

Sure.

Thank you. And our next question comes from line of Brian Zabora from KBW.

Hi. Good afternoon.

Hi Brain.

Let me just follow-up on that question the accretion side. You also have the FDIC, your loss you are expiring, so if you going to keep all the - any improvement there. So you are looking at that 7.5 million schedule, does that change it all with a loss share now exited?

No - Brain, this is David. No, it really doesn’t change, that’s where our projections going forward is that the accretion is going to about 7.5 million. What it will do is it will eliminate the indemnification asset amortization. That’s been running about $2 million in negative non-interest income on a quarterly basis. So we won’t see any change in the NIM based on the exiting the loss share, but you’ll see a bulk in our non-interest income of about $2 million a quarter by eliminating that amortization.

And Brain, under GAAP, the accretion is completely separate from last year, so whether you are in or not, the accretion is the exact same.

Okay.

So there is nothing to do it all with the loss share. Just, as David said, just that loss share exited the non-interest income.

Gotcha, so I - so all historical numbers that you have included that FDIC - the accretion from the FDIC -

Exactly.

Perfect, perfect, gotcha. Okay.

Yeah, I just - the numbers I gave on total accretion was just FDIC and non-FDIC.

Perfect, that’s very helpful. And then on the deposit side, you have a lot of liquidity there. Is there a target for loan deposit ratio we could think about it, you still want sort of runoff, maybe some - given that liquidity, just your thoughts around this deposit?

Well we are rating now, that’s a whole lot better than 70 which I think is about the number were we’re about a year ago. 85 to 90 would be the ideal spot for us. You know we’ve had great shift in our balance sheet, you know securities are shrinking a little bit, our loans are growing and we’d like to continue that trend. I am not sure we want to actually manage that through running off any more deposits. You know I am pretty comfortable with where we are, our funds is reasonable, we might have a little bit of an opportunity over in our Tennessee market, other deposits were a little higher than ours, but we’re pretty comfortable with our level of deposits right now. And I would see us take any proactive efforts to run off any more those deposits.

And Brain, what you are seeing on liquidity is we did have a decrease in the security portfolio about some hundred, 2,000 and $30 million, a lot of that was due to cause. And as the tenure dropped and rates dropped for peer, we’re holding back, we’re investing that, our intend is not to hold back for a long period of time but we’re working for the right opportunity they would put it back in. So you’ll see our security portfolio go back up, we would expect over the fourth quarter that will keep us at that 80% level. We’ve said several times we don’t intend to keep $1.8 billion security portfolio, we’ve let that drop down to about 1.6. If we had the loan growth there and the deposits help where they were, we’d be well into what that security portfolio will migrate down to 1.3, 1.2 somewhere in that range.

Okay, great. And then just lastly, as you are closer to 10 billion asset, there is all about, as you at expenses, you are - what you talked about maybe a 62ish kind of run rate, is that the consideration maybe additional expenses related to - approaching the $10 billion in asset mark.

Well, I would say, yes it does, I am not sure we can quantify exactly what that is. As you are probably where we’ve really beeped up our risk management team internally to prepare for that and as we’re talking look at DFAS expense and other compliance expenses, you know in the first year of DFAS, we are probably going to expect $3 million of expense. And perhaps that point probably a million of ongoing expense with regard to additional staff, validation and all those other expenses that deal DFAS process. You know we’ve talked about the government amendment cost, we still expect the roughly $5 million after tax. So there going to be some significant expense once we hit that point. But all DFAS expenses will be prior to that $10 billion mark. So I would expect over the next 12 to 18 months a lot of that expense will be built in to our expense structure.

Okay. Anyway that’s for talking all my questions.

Thanks Brain.

Thank you. And our next question comes from the line of Matt Olney from Stephens.

Hi. How are you?

Hi Matt.

A lot of my questions have been addressed but one of the metrics we’ve talked about before in this call that you guys have been focused on is the efficiency ratio. I am curious what you updated that’s on the efficiency ratio over the next few quarters?

Well, they are probably ahead of our projections. I am not sure that we couldn’t have done better as we mentioned earlier from that expense standpoint, we’ve been really pleased with our revenue generation and of course we’re going to have Trust Committee be on board with another billion dollars in managed asset. So we expect that number to continue to rise as far as revenue goes. You know our target was below 60% for the fourth quarter. I think I’ll be pretty comfortable that we’re going to may able to hit that as we’re talking about internal goals for 2016, I am going to really press to a 55% of loan efficiency ratio because I think that’s very realistic now. You’d ask me, you go that was realistic. I probably would have said no. But I think we’ve done a really good job of managing both sides of that equation with some obvious upside potential on the expense side.

Okay, thanks George. And then going back to loan growth, it sounds that there could be some more pay downs that you mentioned earlier. How do I think about trying to quantify the amount of pay downs and in terms of the timing, what would you expect on the pay downs?

You know, I would tell Matt, we’re not aware of any other relationships may have pay downs. That usually comes you know early on in process. I hope that we’re not talking about pay downs going forward. We usually build in 10% to 20% pay downs in both loans and deposit run off. So far we’ve not hit those numbers with any of the acquisitions. We’re not anywhere close with First State, we think we’re stable up in Springfield, and we’re actually growing that portfolio, we’re had a couple of lenders up in Springfield. We think Tennessee has great upside potential. So I am not expecting anymore but I’ll caution you is that the runoff is not hit our model numbers, so we still want to put that out there for consideration.

Okay, that’s helpful. And then last question from me, the outlook for the loan loss provision over the next few quarters, what you guys expecting right now?

I would tell you that what we do this quarter is going to be pretty normal going forward assuming we don’t have any unexpected problems. You know one other things that we need to realize with regard to our provision is that the loans that migrate from the acquire loan bucket to the legacy loan bucket and therefore once that are going to require the allowance are only the good loans. So if we have acquire loans that are in payer that have a credit mark against them, they will stay in that acquire bucket for the life of the loan with that credit mark against him. So whereas a normal portfolio will have risk ratings across the entire gambit, they will acquire allowance against them plus migrating over are only the good loans of the acquired portfolio. So that percentage is likely to continue to shrink because we’re only adding good loans to that legacy portfolio.

And as you migrate loans over to that bucket, how do you think about the provisioning for those loans, bigger loans that you mentioned George, during the migration process?

Well, I just figure it our normal loan loss calculations by stone, they are writing.

But as George said, they are going to migrate - when you migrate over, obviously the provision will need to go up but it’s going to be at the lower applicable rate because they are much, they are healthy loans, the impaired loans don’t more over.

They are not moving the needle much on the allowance.

Yeah. So as George said, I think what you saw in the third quarter plus it could be a little bit higher because of the migration but not of that different.

Okay. Thanks guys.

Okay. Thank you, Matt.

Thank you. And our next question comes from the line of David Feaster from Raymond James.

Hey, good afternoon, guys.

Hi David.

Most of my questions have been answered but we talked a lot about accretion expectation, could you give us your thoughts on your core NIM, is that 3.8 to 3.9 around still fair as you increase your securities portfolio next quarter?

Yeah, I think what you’ll see. You know third quarter is going to be a highest of the year. Fourth quarter will take down a little bit with the seasonality. But I think we’re still comfortable in that 3.80 to 3.90 range probably in the Q4 going down close around the 3.80 side. Keep in mind, in Q1, it will drop that is almost seasonal quarter, while there is not as much of an impact as George said awhile go on the Ag piece, but when you take the Ag piece, the credit card piece, Q1 will drop and it will be below 3.80 and you’ll notice the significant drop in Q1.

Okay, that’s helpful. Could you give us an update on the Trust Company of the Ozarks, how they have been performing and maybe some of what’s happening there and what led to the delay in closing?

Dave, this is Marty Casteel. Trust Company of the Ozarks, the entire staff there, they are doing a great job, they are all hanging in there. We have just been looking for the closing and as far as regulatory process, we will close this next week as we mentioned earlier. However, they are still in place, maintained all the customer relationships, they are excited about joining our operation, we’re excited to have, we’re making plans to do some relocation with actual facility to move them over to our largest concentration of banking associates and banks assets in Springfield. Everything is going according to plan at this point.

David, I’ll tell you, there is - we’re probably 30 days behind where we anticipate in closing in the first place. We’re all little bit late getting in our applications, getting the S4 file, and then the SEC had just couple of minor questions related to the S4. So you know every time something like that happens, we had a week or two to expected timeline and that was the delay no real issue at all.

Okay, great. Last one from me. Have you continued low rate environment changed your outlook at all and how you are trying to position the bank whether it be balanced in general or just did overall strategy?

Well, I would say that it really hasn’t changed our strategy, but we’re still trying to stay short in our investment portfolio on our reinvestments as we possibly can. I think we mentioned couple of years ago, we made some longer term tax free municipal investments sort of balance out our yield, our securities of portfolio. From a loan perspective, you know, it’s pretty competitive out there regarding pricing. Right now what we try to avoid the long term fixed rate commitments, so we are trying to keep that maturity at a very short reasonable rate. So you know the markets adjusted at least the once a week and seem to be very similar. So I would say we hadn’t changed our philosophy a whole lot. You’ve we’d like to see some certainty and market group right instead of artificial rights but that’s the environment we work under in. I think we have to turn along.

Okay, great, thank you.

Thank you. [Operator Instruction] Our next question comes from the line Peyton Green from Piper Jaffray.

Yes, good afternoon. I just want to make sure I heard this right. So you mentioned you’ve got about 300 million in liquidity that you got runoff, so that would take the balance sheet from about 7.6 billion and 7.3 billion that would give you kind of 35% growth give or take to the 10 million mark. And did you mentioned you are going to spend the $3 million or $4 million going forward to prepare to be a 10 billion asset bank or is that something that will take place further out of the future?

Well, that’s a good question with regard to timing. The earliest would be over the next 12 to 18 months. And quite honestly, nobody has asked about M&A, so I’ll just go in and talk about that a little bit. You know we continue to be tight and pretty active and some discussions what we think would be very good merger partners across our footprint even outside our footprint. I have no timeline for any of that today, except that we believe that is still a great strategy for our organization in just depending on what my develop over the next you now six to nine months. We really might not have any choice says to the timing of spin in DFAS money. I will tell you this, we have spent a lot of time with advisors who have been through this DFAS model creation and it’s now at least worse for me to find out everything that’s involved. So what the timing is going to be, I can’t tell you exactly before successful were some of these merger partners it would be sooner rather than lighter. But organically if that was going to our growth strategy, you are right. We can delay that DFAS preparation for some period of time.

Okay, it would more than likely come in conjunction with an acquisition that’s fairly an advance of, is that fair?

That’s correct.

Okay. And then I mean so does the 62 million to 63 million in quarterly expense, is that take that into account or should we be thinking of growing that say by mid-’16?

I would tell you that I would expect expense savings to makeup or any additional expense of DFAS to stay in that 62 to 63 range.

Okay. Okay, so at the margin, you would expect a very low marginal efficiency ratio given loan growth?

Yes, I would say that that’s probably accurate, a boarder of 58 or so now to get 55 would be an achievement that I would think would be very good for 2016.

Okay. Alright, great, thank you very much.

Thank you.

Thank you. And our next question is a follow-up from the like of Stephen Scouten from Sandler ONeill.

Yeah, thanks guys. Sorry to hop back in, but I was wanted to ask about M&A, you touched on a little bit there, George, but I am curious you know on the last call it sounded like any incremental M&A would sounded more like 2016 type event, is that still the case or you are guys feel like you could announce a deal, I mean you’d be prepared to announce a deal if the right deal came along today?

You know we would be prepared at any time to announce deal if the right deal came along. You know I feel pretty good about where we are today, all the integration is behind us, we are sort of doing to post mortem now to say okay, what we do well, what can we better, how do we manage the next acquisition. So we’re learning as we go along. You know the timing is not always up to us. Most of the time, it’s up to the merger partner and really what works for them. So we continue our discussions and as that gets slighter appropriately we would announce that. You know we would be prepared anytime to do that. So I really can’t tell you whether we expect something first quarter 2016, second quarter or fourth quarter 2015, discussions are ongoing today.

Now that’s fair. And then I guess two things with that, you don’t feel like even I guess with the delay of the Ozark Trust, you don’t feel like there is any regulatory impairment that would slow your potential do incremental M&A? And secondarily kind of given the conversation around the DFAS expenditure, would it be fair to assume the deals you are looking out today could be much more sizable maybe then you were - they are more in the past that would take us near or through that 10 billion number?

Well I would say individual acquisitions would not be greater than what we’ve done in the past; you know we just got through 1 million - $1 billion and a $2 billion acquisition at the same time. So you know they are on at a whole lot of those after that we’re looking at today. But cumulatively, you know we could over a 12 to 15 month period accumulate many more assets than what we’ve done recently. Regulatory was slow than it’s my believe that our regulatory expect us to continue to be active in M&A arena. And they expect us to get $2 billion to $10 billion level. So - and this [indiscernible] say it obviously. I think they expect us to be mature in our process instead of promising that we will do it at a later date. So the way they are looking at are rating this is a little bit different than it has been in the past. And I think that’s what good thing because last thing we want to do is get into an acquisition, file an application and all the sudden say, where are you now, we’ve really need to add this done before we’re prepared to give you approval. So we’re trying to avoid that. I don’t see that happening, you just never know. And I’ll say this too, we continue to hear that public comments and agonist comments are becoming more and more prevalent. Recently there been some favorable things that have said, look these comments really don’t hold lot, so we’re going to ignore them and let this transaction move on. We hope that’s what’s happening. As you know we have a six month delay because of the public comment, we bought the Liberty and the First State transaction. So you never know when that’s going to happen. And what we would consider to be a normal approval process goes into overdrive. And a whole new set of ash come into the picture if a public comment happens. We never know when that might occur.

That’s it, great. Thanks George for the clarification. I appreciate it.

Sure.

[Operator Instructions] And this concludes our question-and-answer session for today. I would like to turn the conference back over to George Makris for any closing comments.

Okay. Well, thank you all for your interest this afternoon. We appreciate all you do for our company. And if you have question, feel free to call Bob Fehlman. You all have a great day. Thank.

Thank you. Ladies and gentlemen, thank you for your participation in today’s conference. This does conclude the program and you may now disconnect. Everyone have a good day.