BancorpSouth Bank
Q4 2020 Earnings Call Transcript

Published: 26 Jan 2021

[Operator:]

Good day, and welcome to the BancorpSouth Fourth Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions . Please note that this event is being recorded. I would now like to turn the conference over to Will Fisackerly, Executive Vice President and Director of Corporate Finance. Please go ahead.

[Will Fisackerly:]

Good morning, and thank you for being with us. I will begin by introducing the members of the senior management team participating today. We have Chairman and Chief Executive Officer, Dan Rollins; President and Chief Operating Officer, Chris Bagley; and Senior Executive Vice President and Chief Financial Officer, John Copeland.

[Dan Rollins:]

Thank you, Will. Good morning, thank you for joining us today to discuss BancorpSouth’s fourth quarter and full year 2020 financial performance. I will begin by making a few brief remarks about our fourth quarter and annual performance. John will discuss these results in more detail and Chris will provide more color on credit quality and our business development activities. After we conclude our prepared comments, our executive management team will be happy to answer questions. Let's turn to the slide presentation. Slide 2, contains the legal reminders Will's already talked about. Slide 3, provides the annual highlights for 2020. We have a number of items to cover on our fourth quarter results, so I'll keep the comments here pretty short. Looking back, we are very pleased with our full year performance. As we were finishing the first quarter, I doubt any of us expected to be able to report portfolio or PPNR of almost $400 million, up over 20% from 2019. I'm extremely proud of the outstanding efforts our team exhibited in 2020 to reach these results. The reported net operating income excluding MSR of $2.30 per diluted common share compared to $2.51 for 2019, earnings were obviously adversely impacted by the $86 million in provision that we recorded primarily related to the economic impact of the COVID-19 pandemic. From a business development perspective, we had an outstanding deposit growth year, reporting organic growth of $3.2 billion or 19%. This is obviously consistent with our industry peers and is reflective of the increase in liquidity resulting from government stimulus programs and other economic conditions.

[John Copeland:]

Thanks, Dan. If you turn to Slide 6, you'll see our summary income statement for the quarter. And reviewing the summary income statement net income available to common shareholders was $66.4 million or $0.65 per diluted common share for the quarter. As Dan mentioned earlier, the $5.8 million pension settlement charge was really the only significant non-operating item in our fourth quarter results.

[Chris Bagley:]

Thank you, John. Good morning, everyone, and happy New Year. Starting with Slide 9, you will see our funding mix as of December 31, compared to both the third quarter of 2020 and the fourth quarter of 2019. We reported $460 million in deposit and customer repo growth for the quarter, which is 9.1% on an annualized basis. Deposits and repos have grown $3.6 billion since the end of 2020, with approximately $400 million being attributable to the Texas First merger. We experienced deposit growth across the entire footprint, had four divisions exceed the 20% mark for annualized deposit growth. These were our Tennessee Metro, Central Arkansas, Northeast Arkansas and Texas Hill Country divisions. Our total cost of deposits declined to 38 basis points for the quarter from 44 for the third quarter. We continue to monitor adjust posted rates across all of our deposit product offerings, and we'll continue to adjust accordingly. Of note, the current time deposit cost for the bank at 1.28% for the quarter, which is higher than our current posted rates.

[Dan Rollins:]

Thanks, Chris. While 2020 provided many challenges that were certainly unexpected and unprecedented during our lifetimes, I'm proud of the accomplishments our team achieved despite these difficult circumstances. Our bank who has generated over $1.2 billion in P3 loans as Chris calls them in a very short period of time, reported record deposit growth and assisted our customers with other needs including deferrals and loan modifications. Our mortgage team exceeded our prior record production year by 60%. And our insurance team and wealth management team both reported meaningful revenue growth. Finally, our human resources, technology, and other back office teams supported all of these efforts directly, while also managing other projects included our COVID-19-related alternative work arrangements for our teammates, as well as several technology upgrades projects throughout the year. As we look into 2021, we are optimistic that we can continue to build on these successes. We are hopeful that our growth efforts along with the steps we have taken to improve efficiency, including branch and headcount reductions will allow us to continue to improve our financial performance. We are also cautiously optimistic that the vaccine rollout will allow us to return to a more normal lifestyle. We are ready to be able to get back out on the road and visit with you all in a face-to-face environment. With that operator, we'd now be happy to answer any questions.

[Operator:]

We will now begin the question-and-answer session. The first question comes from Jennifer Demba with Truist. Please go ahead.

[Jennifer Demba:]

Thank you. Good morning.

[Dan Rollins:]

Hey, Jenny.

[Jennifer Demba:]

Two questions. Wondering how much you think mortgage production and revenue will come off this year based on your current pipeline and your expectation for margins. And then my second question is regarding more capacity and interest in more bank acquisitions in '21. Thanks.

[Dan Rollins:]

Okay. I can try a couple of those. So, talking to the mortgage team today, we're running well ahead of normal first quarter performance. First quarter is also a seasonally slow time period. We continue to run well ahead of what we've seen in the past, I don't know that I have compared it to first quarter of 2020. But looking back historically, first quarter has been a very slow time period. I think we expect to see elevated mortgage revenues from normal throughout 2021. How that compares to 2020? I think we expect that 2020 will be the top end of that and we should settle back down from 2020 to a lower level in 2021. I don't have a number for that. But I know the team is out there today and they're continuing to run wide open. So, lots of activity. We're continuing to hear stories but there is limited product for sale in many markets that we cover. The days on market for homes is continuing to contract. So, that's all driving the low-rate environment for mortgages. Shifting to your M&A question and I think we continue to believe that our team can play. When we look at the two transactions that we've got in the pipeline today, we hope that they are close enough in the pipeline together that we will put those on our system, do a system conversion or operational integration at the same time. If we're able to do that, that certainly gives us capacity to continue to do more of that in 2021.

[Jennifer Demba:]

Thanks, Dan.

[Dan Rollins:]

Thank you, Jenny. I appreciate your help.

[Operator:]

The next question comes from Brad Milsaps with Piper Sandler. Please go ahead.

[Brad Milsaps:]

Hey, good morning.

[Dan Rollins:]

Hey, Brad.

[Brad Milsaps:]

Dan, just kind of curious if you could maybe offer a little more color on maybe expense trajectory this year. There are a lot of moving parts. You've obviously got the two deals coming in the back half of the year but just kind of any more color on kind of like the best starting point. I noticed that in the release, you didn't pull out the $5 million of asset write-downs in your calculation of core earnings for the quarter. Just kind of curious if there's more of that to come. Or if there are some expense savings you see from that, if I have that sort of defined correctly as branch consolidation, et cetera, that would lead to cost savings?

[Dan Rollins:]

Yes, I appreciate that. I think that you're on the right track. So you're right, we didn't pull out branch closure cost, that's just an ongoing process. But when we look back at our totals, let me give you some totals so you've got details. I didn't go back to 2019, but in 2020, we closed a total of nine offices, seven branches and two loan production offices. We opened four offices. So, we were down net there by five. And what we've got planned right now, I don't think we have any open new -- I don't think we have any new offices currently on the board to open in 2021. But we have eight closures that should happen, probably within the first quarter, maybe one of them, two of them will fall into the second quarter. But we're well down the path on closing eight offices in 2021. And some of the expense that you saw in 4Q is the cleanup of that, so that we're not carrying expenses for those offices and to the New Year. The expense run rate in 4Q, as John said, had lot of onetime items in there. Our health coverage expense was very low last year, comparatively speaking, certainly running below what our expectations were. I suspect that is a, all companywide benefit, people that didn't go to the doctor as much in 2020. It'd be interesting to see what happens to healthcare costs in 2021. So that true-up impacted us. The lower performance that we've done, because of the pandemic certainly impacted some of the equity awards that we've got out there that will not pay out at target amount. So that money was cleaned back up in the fourth quarter. The 100 people that were down in the fourth quarter we talked about in the third quarter. I think in the third quarter, we said we were going to be 80 to 90 people off. But when you look year-over-year, we were down 100 people from January 1st to December 31st. And during that time period, remember, we closed a merger transaction that brought on 50 or 60 people there. So in total, we had a great year working towards reducing our salary and overhead costs there. Our anticipation is that we will continue to be able to manage expenses in a way where we can continue to be improving our operating efficiency. When you look at operating efficiency ratio for 2021, clearly the mortgage trends helped us significantly last year. So I think you have to normalize that. But if you pull that back, I think we expect to be able to do pretty well.

[Brad Milsaps:]

Okay, great. That's helpful. And maybe just as my follow up for John. You guys have done a really good job managing your liquidity relative to other banks, you're just not sitting on as much you've built the bond portfolio. How much more of that you expect to continue just kind of trying to think about what that means for kind of NIM compression going forward?

[John Copeland:]

Brad, I think, I am optimistic about the margin and the fact that we've seen most of the effects of our asset mix dilution of the margin and squeezed on the margin. The core margin was up one bip for the quarter versus the third quarter so that gives me some optimism. If you back out, if you look at the core margin, you back out also PPP. We were down very slightly in the fourth quarter versus the third quarter. So what's going -- I'm optimistic about that. But the reality is that repricing, we've got about $3 billion in loans, fixed and variable rate loans repricing in the next 12 months, they're on the books now like a 4.35, something like that. They're going to reprice lower, no doubt about that. We are helped and I mentioned this almost every quarter helped by having roughly half of our variable rate loans and loan floors already. So rate floors. So that certainly helps. So I'm optimistic about continued margin about the ability to slowdown the squeeze there. Especially the point the fact that we had, I think a 38 bip deposit costs for the quarter and we have some room to push that down even further.

[Dan Rollins:]

We still got a high cost on CDs that we will continue to renegotiate.

[John Copeland:]

Yes, CDs in particular, we have about $2.5 billion in CDs that are repricing significantly lower than what they're on the books for now. So that's going to help as well. So I'm optimistic.

[Brad Milsaps:]

Okay, great. Thank you.

[Dan Rollins:]

Thanks, Brad.

[Operator:]

The next question comes from Brett Rabatin with Hovde Group. Please go ahead.

[Dan Rollins:]

Hey, Brett. Good morning.

[Brett Rabatin:]

Hey, good morning, Dan. I was hoping to get a little color if possible on just thinking about reserve release potential this year. And then maybe talking about the hotel book and how that's trending and how you're reacting to the current maybe lockdowns having some impact on hotels?

[Dan Rollins:]

Yes, we're fortunate to be in a footprint that has had less of the government restrictions placed on it than many other parts of the country. So I guess from that perspective, we're fortunate. There are people moving around, there's more and more events going on that are traveling a little more. I think there's fewer people doing that. But at least there are things happening there. I started with your second question on hotels, I'm going to let Chris jump in here. The detail that we put into the deck for you, we continue to see increasing revenue in the hotel, so their average room rate is climbing and the occupancy is climbing in that book. Clearly we've got a couple of hotels that are stressed and we've got a couple of hotels that have moved into substandard category. But overall, I think if in fact, the vaccine works and if in fact, the back half of the year people can begin moving around again, I think we feel like we've got borrowers that will survive and be fine. From an allowance for credit losses from an ACL release perspective that's a harder one. I don't know that we get to a release number in 2020. I guess it depends on when we see what's happening from a credit perspective, when things are getting closer to back to normal. I think we think we're properly reserved today. So I don't know that we need under today's environment a whole lot more, but I guess as you all know, it's all dependent upon the forecast that the economists give us at the end of every quarter. I think we continue to believe that it's looking a little better. So the need for additional funds is not there. I don't suspect we'll have any big bleed out. John, you want to jump on the ACL piece? And Chris, you can jump in on the hotels?

[Chris Bagley:]

Just a little color on the hotel book, I guess. It's granular by nature, the average loan size relatively small. Most of the book, 98% of the book is all recourse. Our position has been to monitor these stay in touch with the customer. We're on a 90 day review cycle for every hospitality credit, so that we can get the proper loan grade and filter it into our models for the allowance and credit losses. The strategy there is primarily being supported by sponsors with liquidity and guarantors and verifying that liquidity, that's why we've moved to the interest only approach. And we want to see a willingness and a capacity to pay and that's helping us there. There's clearly winners and losers in the book, that's why not all of them have gone to interest only. So I think right now we're less than half. So, got a diverse footprint, diverse products the hotel book across that footprint. Florida coast is a good example of where they're doing pretty well and those aren't moving to interest only. So it's somewhat geographic in nature based on the type of property that it is.

[Dan Rollins:]

The average LTV is relatively low and we think we've got a big reserve against that. John, you want to jump ACL release?

[John Copeland:]

In the ACL, we did have the $5 million provision for the quarter, as resolved primarily of our econometric service provider data provider, little bit of a downward adjustment or upward adjustment, and unemployment, which is the primary driver of our ACL model. So that's why -- we felt it was prudent to add a little bit to the reserve at the end of the quarter. As to release of those I don't expect to see any release of reserves in the near future.

[Dan Rollins:]

Thanks, Brett.

[Brett Rabatin:]

Okay. All right. Great. Thanks, guys.

[Dan Rollins:]

I appreciate it.

[Operator:]

The next question comes from Catherine Mealor with KBW. Please go ahead.

[Dan Rollins:]

Good morning, Catherine.

[Catherine Mealor:]

Thanks. Good morning. I just want to ask a question about capital. And you got about $6 million buyback outstanding. Of course, you've done two deals so far this year. I just wanted to get your thoughts on how active you think you could be in the buyback this year, given your TC ratio and these two deals? And also, can you give us an update on what you're thinking your capital ratios will look like pro forma for both of these deals as they close next quarter? Thanks.

[Dan Rollins:]

Yes, both of those deals are not going to move the needle much on capital ratios, a couple of basis points here, just not going to move the needle. One of them is a little bit accretive to tangible book, and one of them is a little bit dilutive. So in total, there's just not enough movement on the capital ratios out of the deals to get excited about. From a buyback perspective, let me remind you of how our buyback program worked throughout the year, I guess. Going back into 2019, so through 2019 and into 2020, the first quarter of 2020 we had a 10b5-1 program set up that was on autopilot and it was driven off of a metrics driven on the valuations in the market. Now where we're sitting today since the market has popped up so high, that metrics would not be executing today, which if the market move around, we're prepared to be back in the market and doing just like we did before. So, we're ready, willing and able to deploy capital. We want to make sure that our buyback program is in place and operating, and we've got capacity to do that. Clearly, the best use of our funds, we believe, is to continue to find merger partners where we can enhance our profitability.

[Catherine Mealor:]

Great, thanks. And then maybe one follow-up on the margin. John can you -- I think you mentioned new loan yields, you mentioned that you've got $3 billion of fixed to variable rate loans at about 4.35. Any sense as to where those are repricing on average and maybe where new production is coming on average today?

[John Copeland:]

New production over the last probably 60 to 90 days around 4%.

[Dan Rollins:]

Yes, we're hanging close to 4% or above.

[Catherine Mealor:]

Sounds pretty good. All things equal. That's great. Thank you so much for the color.

[Dan Rollins:]

Yes, I think that has to do again with ticket size. So Chris was talking about average loan size on the hotel, it's $2.4 million. And our average ticket size in total is very low, which is going to drive a higher rate. So we're pleased with that. Thanks, Catherine.

[Catherine Mealor:]

Yes, thank you.

[Operator:]

The next question comes from Matt Olney with Stephens. Please go ahead.

[Matt Olney:]

Hi, thanks. Good morning, guys.

[Dan Rollins:]

Hello, Matt.

[Matt Olney:]

Dan will put football talk aside for right now. We'll come back to that later.

[Dan Rollins:]

Okay, good.

[Matt Olney:]

On PPP, I think John mentioned there was about $2 million of accelerated fees in the fourth quarter. What’s the remaining level of fees that could be accretive from that probably over the next few quarters?

[Dan Rollins:]

117, give or take. I'm looking across the room, $17 million is still out there but accrete.

[John Copeland:]

That’s for the whole book. Next quarter '16 to '17.

[Dan Rollins:]

John saying, so $16 million will come off still this year. So first quarter, second quarter and hopefully not into the third quarter, so still some pretty big numbers.

[Matt Olney:]

Got it. Okay, great. And then on Slide 17 in your deck, I think you include the loans that have been converted to interest only for a limited time period. Can you talk more about those loans? What's the regulatory guidance you're getting for those types of loans? And how do you decide which loans qualify for that versus which loans do not qualify for that?

[Chris Bagley:]

Yes, Matt. This is Chris, I'll take that. So regulatory guidance is primarily comes under the CARES Act, which is driving the ability to do modifications and temporarily, I think, through the end of this year has been extended not to require those to be in a troubled debt restriction or TDR status. So that's one component of that. But our approach has been, again, staying in touch with the customers, getting is up to date and current operating statement as we can get, verifying liquidity across the sponsors, personal balance sheets and any other guarantors in the global cash flow where we can. And then just trying to determine what the best situation or restructuring for that customer would be and the goal of timing of getting them passed, hopefully what the vaccination and the pandemic and back to normal course of business and then also appropriate working with -- the regulators are currently giving us guidance, they'd like to see us work for their customers, but clearly we need to work with our borrowers in a prudent and safe fashion. So we're trying to keep those as properly graded and properly accounted for in our models.

[Dan Rollins:]

Does that help you?

[Matt Olney:]

Yes, that helps. I guess, just to follow up on that, is it safe to say under the CARES Act that those loans will not be charged off in 2021, just based off the guidance you receive from regulators?

[Dan Rollins:]

Yes, I think you have to walk through the process. So let's walk through these. So we've got loans today that are paying. So they're current on a payment, they're making a monthly payment to us. So they're current on a payment. When we get to the end of the interest only cycle the P&I payment will pick back up, so to get a charge off, you've got to get to the point where you've stopped making payments, and then you've got to run through a collection process. I don't see that happening in 2021 at all. Frankly, I think I'm back to where Chris was, I think we've got people individuals that are guaranteeing these credits. The loan to value is very low. I think we will have one or two that are going to pop in there. Don't get me wrong. But I think we feel overall really confident with what we've got on the books.

[Matt Olney:]

And how long is that cycle or the duration of those loans being interest only? Is it case by case or is it standard across? Any flavor you can give us for how long that duration is.

[Dan Rollins:]

Yes, most of them will run interest only through the summer, some of them into the fall.

[Matt Olney:]

Okay. We'll keep an eye on it. Thanks, guys.

[Dan Rollins:]

Thank you.

[Operator:]

The next question comes from Kevin Fitzsimmons with D.A. Davidson. Please go ahead.

[Kevin Fitzsimmons:]

Hey, good morning.

[Dan Rollins:]

Hey, Kevin.

[Kevin Fitzsimmons:]

Just a follow up on M&A, Dan. I know the first of the two deals was one that was being discussed pre-COVID and then got finished, once you guys got to a certain comfort level. And then this most recent one I would assume came together more recently. But I'm curious about the level of conversations and interest out there among would be sellers, what you're sensing? Is there a pickup in conversations, not for something that would be near-term, but just in terms of dialogue starting with would be sellers is that picking up?

[Dan Rollins:]

Absolutely. I think, as I've talked all conference calls last year, you got to go all the way back, there was lots of talk last year between bankers and the pandemic created opportunities for bankers to be talking to each other not necessarily about M&A, but just talking to each other about business in general, how things are going that builds relationships, and that turns into more conversations. And that certainly continuing to go on now. I think there are still -- I think today there are quite a few community banks that are trying to figure out how do they survive and go forward environment with more technology, more compliance, all the headwinds that the smaller banks applying into. And so there's a lot of opportunity out there, I think we will be in a buyers' market here for a while. I think there's probably more community banks that want to do something than there are buyers that will be able to do something.

[Kevin Fitzsimmons:]

And just on the two geographies of the two pending deals are quite different, and you guys have always had more of a -- it seems like a bias toward Texas with your deals. But yet as you demonstrate you're willing to look at other parts of the franchise in Tennessee for example, in Alabama. So does that signify any shift or you really just open to conversations really wherever happens to be in or adjacent to your footprint?

[Dan Rollins:]

Yes, I would say in footprint is where we want to talk. But we've always said that with anywhere within footprint is valid and when you look back over the last several years, we've done three transactions that were not in Texas, the Florida, Panhandle, and two Alabama based banks, and one in Louisiana and then the rest of the deal. So out of the 10 we've had four outside of Texas and six inside of Texas. And I guess if you looked at the number of banks that are operating in those states that are charged in those states, that's probably proportionally up out right. Now there are just so many more banks in Texas than there are in the other states that there's more opportunity in Texas. You're exactly right. We like the growth prospects in Texas but we also pick up the growth prospects in the Florida, Panhandle last year. We like what's happening down there. We certainly like the Chattanooga market where we have our foot in the water a little bit, this will certainly help us in that market significantly and gives us another presence still relatively small in the Nashville market. So this gives us some betterment in our demographics. Your question on I guess future is end market would be clearly preference for us. I don't think we want to go out of market just to go out of market. There's lots of opportunity within the footprint that we are currently covered.

[Kevin Fitzsimmons:]

Okay. Thanks, Dan.

[Dan Rollins:]

Thank you. I appreciate it.

[Operator:]

The next question comes from Jon Arfstrom with RBC Capital. Please go ahead.

[Jon Arfstrom:]

Thanks. Good morning.

[Dan Rollins:]

Good morning, John. Welcome down to the south from the cold North. I'm sure you're cold today.

[Jon Arfstrom:]

I have the space heater in the basement, that's why it's all good. Couple of I think that the queue for questions means I'm probably last, so I've got a few cleanup questions. Chris, can you talk a little bit more about the growth outlook outside of PPP? It seems like I don't want to say you're more optimistic but maybe less pessimistic than others. Is that a fair assessment? And just, what's the overall view on growing loans organically outside of PPP?

[Chris Bagley:]

A great question. Clearly, our mind and energies are focused on PPP right now, both from an origination perspective, and then the forgiveness perspective. So there's quite a bit of hands on deck dealing with that. But at the same time, we're seeing opportunities throughout our -- in certain segments of our footprint, and we mentioned Texas. I think we're seeing bright spots in certain parts of geographies, certain types of projects. I just think we're getting opportunities to look, I think the question will be over the next year is, where does the pricing settle down and can we pursue these opportunities at a reasonable price and get good margin. I think there's opportunities for us to consider there. I think Dan mentioned in his comments too, it's, I think our part of the footprint has been not quite as impacted by the shutdowns, and I think there's been some winners and losers because of that. And that's generating some opportunities, and also some risks that we're still monitoring, as you can see.

[Dan Rollins:]

Yes. I think I would just tag on to that. Right now, we're a small ticket lender buy and large. Our bankers are in the market dealing with customers every day, we're now a week in two days, or a week and three days into round to a PPP and we're pushing 3,500 applications in a week. So, our team today is clearly wrapped around, trying to make sure that this next group of PPP loans are all processed and processed quickly. But we do have to shift Jon and we talk about that a lot here. We've got to get to the point where we can shift back into a more offensive mode, make sure our folks are out calling, the footprint that we cover in the major metropolitan markets, whether that's Nashville or soon to be bigger in Chattanooga, or I mentioned the Florida, Panhandle a few minutes ago, all of the big Texas markets. There's great opportunity in those markets. And having our folks have the ability to get out and mix it up with customers in a more face-to-face more normal environment is going to be helpful, and probably critical to see that growth happen. So certainly, as soon as we can get the vaccine out and get people comfortable, that face-to-face contact is going and the economy is coming back, that will benefit us. But we do like the footprint that we're sitting in.

[Jon Arfstrom:]

Okay, good. Chris, probably another one for you on Slide 18. I'm probably asked about this every other quarter. But it's the mortgage gain on sale, and you used the term elevated. And when you look at the ride that that's been on over the last five quarters, it's been quite a ride. But is that in your mind is the $262 million still somewhat elevated? And I see the pipeline down a bit. I know it’s a hard question, but just give us your thoughts on that.

[Chris Bagley:]

Yes, we would still see it elevated. It's obviously been lumpy. It's lumpy, as we've talked about every other quarter like you said, it based on the volume and trends and the way the fees are accounted for. But I just think in a normal year, we would see that well below that. I don't think we've departed from our previous comments around the high 1 or 1.75 something like that.

[Dan Rollins:]

Yes, I would agree with that. And it's interesting when you look at that page, Jon, looking back at March 31 of '20 pipeline into the quarter at 5.70. We ended the year at 5.60. Give or take so close, depending upon how things are going in the quarter. Can we hold pipeline? If we hold pipeline that will help us hold margin, but margin is elevated, because of the volumes that are still running out there.

[Jon Arfstrom:]

Okay, that's fair. And then John, maybe one for you on Slide 7. I'm just curious on fees outside of insurance and mortgage. Do you feel like there's still recovery room in some of the other line items, specifically the deposit service charges? It seems like credit and debit and merchant is probably fine, maybe even a little bit elevated. But, some of the other activity based fees, are they back or is there still room to go there and there's some momentum?

[John Copeland:]

I think there's still room to go there. As we get into a more normal environment and I'm talking COVID-19, certainly activity and a deposit account can and should pick up over time. So I think there's some improvement possible there.

[Dan Rollins:]

When you look at what we're hearing from the hotel customers that we're talking to and others, many in the hotel business believe there is tremendous pent up demand to go somewhere. People are tired of being in the basement with a space heater. They want to go somewhere and Jon.

[Jon Arfstrom:]

That's right.

[Dan Rollins:]

And so, if in fact that happens, then I think some of this money that people have been able to save is going to get spent that will turn into some card fees. Certainly the deposit service fees can be a little bit dampened by the fact that we're carrying such large balances that is a negative on those. We're excited about for the first time in years and years. I can't remember the last time, talking to our insurance team, they're telling us that we have a hard insurance market and we're expecting to see premiums climb 10% or more this year. That turns into direct revenue for us on the insurance side. So we're expecting to see a good year on insurance.

[Jon Arfstrom:]

Okay. All right. Thanks for all the help. I appreciate it.

[Dan Rollins:]

Thank you very much.

[Operator:]

This concludes our question-and-answer session. I would now like to turn the conference back over to Dan Rollins for any closing remarks.

[Dan Rollins:]

Thank you all for joining us today. If you need any additional information or have additional questions, we look forward to speaking to you again. Please call on us. Hopefully we will all have a vaccine and a shot soon and we will all see you again face to face, next time we get together. Thank you all very much for participating. I appreciate the support of our company.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.