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Home BancShares Inc/ARÂ (HOMB 0.86%)
Q4Â 2018 Earnings Conference Call
Jan. 17, 2019, 2:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
See all our earnings call transcripts.
Prepared Remarks:
Operator
Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated Fourth Quarter 2018 Earnings Call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued this morning. The Company presenters will begin with prepared remarks, then entertain questions. (Operator Instructions)
The Company has asked me to remind everyone to refer to their cautionary note regarding forward-looking statements. You will find this note on page 3 of their Form 10-K filed with the SEC in February 2018.
At this time all participants are in a listen-only mode, and this conference is being recorded. (Operator Instructions)
It is now my pleasure to turn the call over to Mr. Allison.
John W. Allison -- Chairman
Thank you, Sean. Welcome to Home BancShares fourth quarter year-end conference call. It's hard to believe that another one has passed in 2018 and 2018 also was the 20th year for our Company, 20 year anniversary. Congratulations, all. 2017 was a great year, resulting in about $200 million in income, and now 2018 has come and results in about $300 million in income for our Company. That's a 50% increase. That's not too bad when the world was supposed to be coming to an end.
With me today is Randy Sims, Tracy French, Donna Townsell, Brian Davis, Stephen Tipton, Kevin Hester, Jennifer Floyd. All will be available for Q&A and -- in the -- after the first presentation ends.
Chris Poulton, Donna Townsell and myself traveled extensively during the last six months of 2018, trying to understand investors' sentiment toward buying stock. We were told that the boogeyman was under everyone's house that there was a reason behind a victory, that there was an imminent recession, that the fat monster had returned, and my friend Vince, after several whiskeys by the way, said he thought it might be the effects of killing Osama Bin Laden. Actually, they were all wrong. The reality was that Peter Pan can no longer fly, the Minnie Mouse left Mickey for Goofy and The Ghostbusters and The Man with Two Brains had flown in a Piper Cub with Frankenstein piloting to take over the banking industry. Nevertheless, we said Batman, Superman and Nancy Pelosi to save the day and they built a wall around the airport and saved us all. At least, we -- at least, we finally got it figured out.
Let's go to some real facts. The quarter was actually pretty good. The as adjusted numbers were EPS $0.44; net income $75,819 million, not too bad; return on assets 38.30. Expenses were basically flat ex the hurricane and merger expense. Organic loan growth stuck its head up a little bit at $239 million in loan growth. I don't know if that was -- I guess part of it was the fact that -- the payout slowed down somewhat. Asset quality remains strong. We have one acquired Stonegate credit of about $8 million that did not sell this quarter. The loan is -- we thought we had it sold, the loan is both classified and specifically reserved, and the Company does not anticipate any loss in that one. It's about $8 million, we hope to get rid of that next quarter.
Non-interest expense -- non-interest expense was flat to down ex-merger expense. Of the $239 million in loan growth, $37 million came from Shore; $116 million of that came from the Arkansas legacy port book, and New York generated $86 million. Florida and Alabama were basically flat for the quarter.
The Company had record originations of $1.1 billion. If you remember, that's kind of been teeing up. It was $940 million, $970 million, and then now $1.1 billion. So that's $1.1 billion, at an average rate of 6.07%, that's up 57 basis points. Legacy generated $759 million of that at 5.87%. Shore generated $82 million of that at 5.45%. And New York generated $295 million at 6.74%. We continue to be in the repurchase business. We repurchased 5,308,000 shares in 2018, with 3,444,000 of those shares coming in the fourth quarter, while they were killing bank stocks. We'll continue to be active in 2019.
Let's talk about CCFG's performance. CCFG is presently 10% of our assets, with about $1.5 billion in loans, and of that, about one-third of their book is construction. CCFG has made pre-tax, pre-provision income for 2018 was approximately $75 million, a little above $75 million. I don't think it's fair that the Street gives this segment of our business a much lower PE multiple, which impacts our overall PE by dragging down the Community Bank PE. I don't agree with this because CCFG is a minor part of our assets and is extremely profitable. At the end of the day, they created $75 million plus in pre-tax, pre-provision income and that increases shareholder value and EPS and say what you want to say, that's real trade and (inaudible) money.
Thank you all, our all supporters, who -- who've been with us for many years, and to hell with the naysayers. This has been a wonderful 20 years, and many have been with us since we started, and others have been with us since we did our IPO in '06. Thank you for your support. We're extremely loyal to our shareholders, and we'll continue to run this great Company the way we have in the past.
2019 should be interesting for all of us as the pendulum swings too far in both directions. The market has been so crazy that the piling-on effect has driven down bank stocks to the lows of early mid-80s. Great time to pick bank stocks because they've been treated -- the good ones have been treated worse than the bad ones because they had more room to drive those down.
I've bought more bank stocks personally in the last two to three weeks than I've bought in many, many years. It's not a fact. It's -- it's almost a dartboard, you could draw one out of -- out of the bowl. I want to reiterate something that I've said to you kind of look at my notes from back last year, I think, it was the first quarter last year, and as we were talking about bank stocks and I said, obviously, someone locked it -- locked our bank stock.
Forbes ranked Home BancShares The Best Bank in America of all banks, from $8.8 billion to $2.7 trillion. What an amazing honor that was for our people. I want to thank the HOMB team for a job well done, and I said let's do it again for '19. The ball is certainly teed up perfectly for a great year end '18. Randy, I'm looking forward to another powerful year. These are -- these are the comments I made January of last year, and I said, Randy, I'm going to turn it over to you. So I'm going to -- going to turn it over to you right now, Randy, before we go to Q&A.
C. Randall Sims -- President and Chief Executive Officer
Thank you, Johnny.
Well, another great fourth quarter to complement another great year. Congratulations to all our employees and Directors for a very successful 2018. You all have made a difference in our continued success.
Now, normally, I lead off by highlighting the number of record quarters and profitability, you know, like, for the 31st time that our fourth quarter income exceeded the fourth quarter in 2017 and, by the way, over $47 million. But instead allow me just a few minutes to talk about something even better. And that is the last 20 years of record growth and profitability.
We have now completed 20 years as a banking organization since we opened up here in Conway, Arkansas. And as an aside, I might add that I have survived, I mean, completed 34 years of working for Mr. Johnny Allison. I can still remember in late 1998 asking Johnny what his real expectations were for the new bank. He replied, well, I would be satisfied if we just had a good community banking organization and grew it to about $250 million. Well, we finished this past year at over $15 billion. 20 years; it has been a wild and crazy ride, has it not?
John W. Allison -- Chairman
Absolutely.
C. Randall Sims -- President and Chief Executive Officer
Here are just a few highlights. We started in a trailer with 10 employees, growing to $100 million in three months. There were 386 stock certificates in our first issuance of stock to local shareholders. We placed an emphasis on customer service, and that has never changed. I remember, the fun of cooking cheeseburgers and hotdogs at football games, plus a host of other great fun community events over the years, and that has not changed either.
We placed an emphasis on innovative products for our customers, and that has never changed, but it's been copied often. We survived the craziness of the year 2000 with the regulators, and we are still trying to survive the craziness of the regulators today. I should get an amen on that one. We concentrated one year on an efficiency project that changed the way we operate, resulting in a model of management and a leap in profitability, and we have stuck to those principles today.
We became a publicly traded company in July of 2006. We thrived during the recession. We raised capital in two days and bought failed banks over a period of several years. It changed our cooperation forever. We bought the Liberty Banking Corporation in Arkansas, expanding our footprint throughout the state of Arkansas, doubled their profits in less than a year and the best deal we've ever completed.
We bought and bought banks in Florida and now cover the entire state. Some were good, and we fixed the poor performers. The result is great profitability today. We opened an operation in New York. Regulators, analysts and just about everyone continues to question that. Even today, our New York office simply continues year after year to make more profit than any other region and with pristine asset quality. The cost of that particular acquisition, deal, or whatever you want to call it zero.
The last 20 years has been nothing, but consistent and growing profitability, just like the ROA of over 2% for this past year. Now, I could keep going on, but I'm to the point, it sounds like I'm lost in a Billy Joel song, so -- and I will continue to repeat myself. And what is that? That is the fact that since our inception and then as we became a public company, I can proudly say our corporation has performed through good times and bad. If the economy is bad, we have capitalized on opportunity. If the economy is good, we have capitalized on opportunity. We've seen a few bumps in the road over the last 20 years, but outside of that, nothing but success.
Now, to the craziness of today. We have an economy and a political environment that we have never seen before. Our markets continue to see good times. Nothing to scare us. So a pretty good economy, as far as we're concerned, but maybe not so much on the political side. So consider this, we are trading -- trading today around $18, give or take. The last time we saw that price was the second quarter of 2015 and our EPS that quarter was $0.25. Try comparing that to our EPS for the fourth quarter of 2018 at $0.44, adjusted.
Now, talk about crazy. I think that is a world record of not making any sense.
John W. Allison -- Chairman
Admit. I don't know if we were too high then, we're certainly too low now.
C. Randall Sims -- President and Chief Executive Officer
Makes no sense. But then when I consider some of the things over our past 20 years, I realize, we will get past this, the politics, everything else and make the most of our opportunities, as we look forward to our 21st and another successful year in 2019.
Now, I will end my comments and I appreciate the little time and the editorial that I have been allowed with this off the press -- hot off the press item that is pure evidence of what I've been discussing, preaching or whatever you want to call it. I'm so proud to be able to announce today that Forbes for the second consecutive year, has named us the Best Bank in America. What an absolute honor. Thank you, Johnny, for allowing me to make that announcement. 20 years, and it just keeps getting better. How about a round of applause on that one?
John W. Allison -- Chairman
Yeah. I get it. I get it. We should have a (inaudible) here.
C. Randall Sims -- President and Chief Executive Officer
Well, we should add a band.
John W. Allison -- Chairman
Yeah.
C. Randall Sims -- President and Chief Executive Officer
We should add a band. But with that, I will turn it back over to you.
John W. Allison -- Chairman
Thank you. That's quite an honor. I looked at my phone this morning and I was working on my speech at home, and I saw where Donna Townsell was calling me three times in about 30 minutes and I thought something must be up, she never calls three times in 30 minutes, and she gave me the news. Funny story was, she was telling marketing and some information out about three weeks -- two weeks ago or three weeks ago, said we can't use the Forbes stuff anymore, we used it last year. We could say that we were, in that year, but I asked her how do you know we're not going to get it again. I said that if they liked us last year, they will love us this year.
And I don't -- I don't know why I just felt that way, and then bam, we get it -- she tells me this morning that we -- we won the Forbes award for the second time -- two times in a row. So that's pretty -- makes me pretty happy, pretty proud, so, incredible honor. Yeah. Congratulation to everyone, and I found my -- my info. What I read while ago was the info I had a year ago, when -- when we were having our conference call, and there it is. And I said, let's do it again in '19, and bam we did it. So how about that? Congratulation to everyone.
Sean, we're pretty happy around here. Are you ready for Q&A?
Questions and Answers:
Operator
We will now begin the question-and-answer session. (Operator Instructions) Our first --
John W. Allison -- Chairman
Sean --
Operator
Oh, yes. Go ahead.
John W. Allison -- Chairman
Sean, are you with me? Sean, this is John Allison. I have one -- we don't have any (inaudible) this time and we don't have any hand clappers, and I've got something to celebrate this Forbes' second time around. It's appropriate to Arkansas. So I'll hold it for all our friends, that's an Arkansas duck call so, oh, yeah, I've heard that before. I thought it's pretty appropriate. You can go at number one, if you want, too, Sean.
Operator
Sounds great, Mr. Allison. Our -- our first question comes from Matt Olney with Stephens. Please go ahead.
Matthew Olney -- Stephens -- Analyst
Hey, thanks guys. Congrats on the Forbes news, and Johnny, I like the duck calls out there.
John W. Allison -- Chairman
Well, we -- I thought we'd do something rather conservative (ph). I was asking if they had them late today in the world, they were. So Donna got some hand clappers and they work very well, so I just got a duck call, blew it. So -- thanks, Matt.
Matthew Olney -- Stephens -- Analyst
So want to start on the -- the core margin in the fourth quarter. It seems like all during 2018 the core margin was pretty flat, but it dipped pretty hard in the fourth quarter. Help me understand the dynamic of what happened in 4Q, and then -- and then what's the outlook for the core margin in 2019?
John W. Allison -- Chairman
Okay. I'll let -- I'll let -- I'll let Stephen and Brian cover that, and maybe Chris jump in a little bit on that after that. But actually what you're going to see is the margin is pretty flat. What you saw, big drop was -- is all explainable and -- I don't know, which one of you, want to go first with that, Brian or Stephen?
Brian S. Davis -- Treasurer & Chief Financial Officer
I'll give a little color and then I'll have -- pass it off to Stephen sitting on my right. I mean, what we had for the most part for the core margin, there was $3.8 million from New York that came in from some minimum interest and default interest on a few loans that they had that paid off in the third quarter, so the third quarter was a little bit inflated by this $3.8 million. That's about 12 basis points, overall. And if you're looking at our 16 basis point decline in margins, we had a $1.3 million in accretion decline, and that's a little over 3 basis points. So between the decline in accretion and the decline from New York for what I'll call -- maybe not necessarily non-reoccurring, that pretty much explains the entire decline in the margin.
Stephen Tipton -- Chief Operating Officer
That's fair. Matt, this is Stephen. I'll take a little bit of that, too. You know, I think what we saw obviously in Q4 from a payout perspective, those numbers softened quite a bit. Payoffs in Q4 were about $540 million. They were $330 million, $340 million less than what we saw last quarter. And maybe more of a little -- more of a normal quarter compared to Q1 and 2. So those -- those bounce around and are hard to -- certainly hard to predict and what we ended up seeing in Q4 was -- was a -- was quite a bit lower level of payoffs, which had some impact on the NIM.
John W. Allison -- Chairman
Chris, do you want to comment.
Christopher Poulton -- President, Centennial Commercial Finance Group
Yeah. This is Chris. I'd add -- probably the only thing I'd add is, we had about three times the amount of payoffs in Q3, as we did Q4, but in addition to that, most of our payoffs in Q4 were paid off at maturity. And when you payoff the maturity, there is very little income acceleration in Q3. Most of the payoffs were early payoffs and those have income acceleration, including the minimum interest. So it wasn't just the volume, but I would also say the type of payoffs, where when you payoff the maturity, there's less accretion -- there's less acceleration.
John W. Allison -- Chairman
That answers. Matt, that -- that answer your question? Any other questions about that comments?
Matthew Olney -- Stephens -- Analyst
Yeah, I guess I'll make sure, I fully appreciate this. So if -- if the third quarter was pretty heavy in terms of the NIM interest payments and the fourth quarter is pretty light, is it more normalized level of those minimum interest payments somewhere in between or how I think about a -- about a normalized level of payments for them?
John W. Allison -- Chairman
Chris?
Christopher Poulton -- President, Centennial Commercial Finance Group
I think it's hard to do it on a quarter-to-quarter basis. What I would tell you is that on a year-to-year basis, over the course of a year, we generally do get acceleration. I would say this past year, we probably had a little higher than a normal year. But in any given year, we are going to get that. I would tell you quarter-to-quarter, if you averaged it out, yeah, you would expect it to probably be in between there. But -- but I can tell you that in the first quarter, it will be an average quarter, the second quarter will be an average quarter. It's really -- we look at it more on a year-over-year basis. And the third quarter, a lot of those happened at the end of the quarter. We had thought they might flip over into Q4 and then it would have looked -- they would have looked fairly flat.
Matthew Olney -- Stephens -- Analyst
Okay. And then a related topic I think was some of the fees in the third quarter and fee income, I believe were also associated with some of the paydowns from CFG. Can you kind of quantify what that was in the third quarter and then what do we see in the fourth quarter from that?
Brian S. Davis -- Treasurer & Chief Financial Officer
I mean, I can take a little bit of this. Chris, you might want to kind of chime in. But like for the other service charges, and fees were down $1.4 million and approximately a little over $1 million of that is coming from CFG because, once again, you had less exit fees, et cetera, from the payoffs.
Matthew Olney -- Stephens -- Analyst
Okay. So just wrapping this up, how do we think about the core margin dynamics from here? I understand there could be some volatility from some of these minimum interest payments that Chris was talking about.
John W. Allison -- Chairman
We started January 1, with about 4.07 and we have -- we bought Shore, which diluted down 5 basis points or 6 basis points or 7 basis points. So probably think about 4, that's kind of where we're hanging in. We originated $1.1 billion this quarter, record quarter of originations, and those are up 50 basis points. That's pretty impressive number, so, Matt. So as you know, we've set that trend -- we are turning the boat, we're turning that big portfolio around over a period of time, and increasing those rates, so I'm pretty -- I'm pretty pleased with that.
If in fact the Fed has -- has set -- they're going to sit still for a little back -- a little bit, that's pretty positive for us. We will have those immediate impact of that $1.1 billion in that are tied to, basically to the, whatever the Fed does. So we've changed that program a little bit here. We grew deposits about $270 million, and that's 270 (ph) for the quarter, change is, we don't put more emphasis on the cost of funds rather than the deposit growth. We had it on cost of funds and deposit growth. We'll be focusing strictly on the -- the winners, so those groups will be on the -- on the cost of funds. So I'm -- I'm actually optimistic that we continue to write -- they're going to all roll their eyes here because I think that the margin all will be increasing at least staying -- at least flat. Stephen's rolled his eyes, so I'll let Stephen take it from there.
Stephen Tipton -- Chief Operating Officer
That's fair. I mean, Mr. Allison mentioned that the production this past quarter and we talk about the payoffs, I mean that all areas of the Bank have done a great job in being able to increase rate quarter-over-quarter production for Q4, which -- which is committed balances. So a good portion of that has not yet funded, but the combined production of $1.1 billion for the quarter was at 6.07%, payoffs rolled off at 5.50%. So I think the combination of an increase in production rates and as those balances pull up relative to what pays down, gives us comfort and seeing that happen going forward.
John W. Allison -- Chairman
I think the margin, really, even though it looks like it has jumped around, you'll see it little jumping around, that's really since the first year after you merged Shore and it's remained fairly stable. I think we have a shot at maybe moving that up. We continue -- but our team continues to write, where they write at 6.07%, 6.10%. They continue to move those up -- those rates up, I think we've got a shot at moving margins up. So overall it's been a pretty good margin year. We really had what looks like a big drop probably was not a big drop. It's kind of a one-time event. I think, Chris, kind of some of that loans that left during the third quarter, I think Chris was -- what I'd say, Chris, you were encouraging some of that?
Christopher Poulton -- President, Centennial Commercial Finance Group
I think that's right. We -- we look at it in toward the beginning of the year and second quarter identified a few that we thought over the course of maybe 12 months or so we probably encourage them to go find financing elsewhere. I thought it would take 9 months to 12 months, 6 months to 12 months to get those out. It took about three months, which I think speaks to the strength of the secondary market during the summer. But I think we got all the ones we identified are moved on and they moved on a lot faster than we anticipated. So I might overshot that a little bit, but I think I'm still happier that -- that we executed.
Matthew Olney -- Stephens -- Analyst
Okay, guys. That's great color. I appreciate it. I'll hop back in the queue, and congrats on the last 20 years.
John W. Allison -- Chairman
Thanks, Matt.
Operator
Our next question comes from Brady Gailey with KBW. Please go ahead.
Brady Gailey -- KBW -- Analyst
Hey, good afternoon, guys.
John W. Allison -- Chairman
Hey, Brady.
Brady Gailey -- KBW -- Analyst
So a 4% core margin, what -- what about yield -- accretable yield? Well, I think last year, you all did a little over $41 million of yield accretion. Where do you think that shakes out in 2019?
John W. Allison -- Chairman
I'll take that one. We did $9.4 million in accretable yield in the fourth quarter. As a general rule of thumb, we kind of expect that that might go down from the -- the baseline about $0.5 million. So I mean it's hard to project out too far in advance, but if you were kind of to ask me, where I think it will be for Q1 would probably be around $9 million or just slightly under $9 million. Part of the decline that we had in the accretion yield for this quarter was the fact that $800,000 (ph) of it was a decline in payoff accretion too.
Brady Gailey -- KBW -- Analyst
Okay. And then you mentioned you having a lesser amount of loan payoffs that resulted in a loan growth of 9% linked quarter annualized, which is a lot higher than kind of where you guys had been running. How are you all thinking about loan growth in 2019? Do you think we could keep this kind of mid to upper single digit growth level this year?
John W. Allison -- Chairman
Kevin, you want to take a shot? (inaudible) the board?
Kevin D. Hester -- Chief Lending Officer
Well, I mean growth was -- it was a combination of, as Stephen said, record production for the quarter and a more normalized level of payoffs. Will that level stay at the fourth quarter level of balance, there's -- really can't -- no way to know that today. I think if we started the quarter not (ph) looking at that strong of a book. So between the payoffs being more normalized and really hitting the fourth quarter hard, I think is a really great quarter, but I wouldn't push for that -- expect that in 2019.
John W. Allison -- Chairman
We had --
Kevin D. Hester -- Chief Lending Officer
High single digits would be tough, I think.
John W. Allison -- Chairman
Yeah. We -- we -- actually the forecast for the fourth quarter pricing was down about 100 -- or Stephen 140 (ph)?
Stephen Tipton -- Chief Operating Officer
Early in the quarter, it was 150.
John W. Allison -- Chairman
Yeah, 150. Shore would be (inaudible). I mean, it's hard to get your arms around that deal because you never know what people are doing out there and forecast more payoffs than we thought would come in and then anticipate as much loan growth being closed, as we got close. So we were forecasting it down, and it end up being at $239 million. It's presently forecast that first quarter would be down, but that can change -- that can change in a week or three days. And if that happens, all of a sudden something doesn't payoff and something else comes down, and you just start building -- building your loan volume.
C. Randall Sims -- President and Chief Executive Officer
I mean, I think the average over the year, Stephen mentioned that the -- that that production has always been really good. I think Johnny and I hit the road last year, and we had indicated we thought the pipeline wasn't really strong with early in the quarter, so we've asked our team to be much more conservative on the projections, and as we do quarter-to-quarter, but the activity that we see out there in the pipeline, that doesn't show up on the pipeline seems to be pretty steady. So we'll keep our fingers crossed, if payoffs slowdown a little, that will be great. And one quarter is probably not -- not a rule to go by, but the production side, we hope is.
Christopher Poulton -- President, Centennial Commercial Finance Group
We didn't -- we didn't let Johnny predict loan volume, all quarter long and we ended up having a $239 million quarter (multiple speakers).
John W. Allison -- Chairman
Yeah. I've been waiting. If you remember, we did -- I do not forget loan volume anymore since I got egg on my face after the first quarter. I thought it's going to be good, but I didn't want to say that, but I spelled (ph) it one day.
Christopher Poulton -- President, Centennial Commercial Finance Group
I heard Johnny say that in a Board meeting is, all I want to say, you know, a way in.
John W. Allison -- Chairman
Yeah, I felt, loan growth half of that, thought we're going to have it. So I didn't want to say the word.
Brady Gailey -- KBW -- Analyst
All right. Then -- and then finally from me, just on M&A, we saw a -- you all saw a deal there in Arkansas yesterday. I know it's tougher with the currency trading where it's at, but Johnny how are you feeling about the likelihood of you all doing M&A in '19?
John W. Allison -- Chairman
We may -- we are not adverse to do an M&A. We're looking around see what makes sense. We are just -- we are looking -- we are feeling -- actually feeling pretty good. I mean the Boogeyman man didn't get us. I'm -- 'm actually feeling pretty good, asset quality remain good. We're pushing up rates, growing deposits, growing loans, I don't know what -- I don't know what else. I mean I'm pretty happy -- I'm pretty happy. I mean, it's been a tough year though with all the pessimism out there, it's really been a tough year. But overall, it's been a good year.
And I suspect it the next year, so it's flat and we only make $305 million next year. It's still best in class or $310 million, so -- or make $290 million. You know, what the company -- when the opportunities are there Home BancShares (inaudible) get their fair piece of the -- piece of the market. We will get our fair share of the market, when it's there. We won't do anything stupid in the meantime, and we won't give stuff away, and we'll just remain disciplined, as we always have. And when it gets real good, we will be there to play, if it gets real bad, we'll be there to play. So I really like our -- I like our position, I like where the company is sitting right now.
Brady Gailey -- KBW -- Analyst
All right, got it. Thanks guys.
John W. Allison -- Chairman
Thank you.
Operator
Our next question comes from Jon Arfstrom with RBC Capital Markets. Please go head, Jon.
Jon Arfstrom -- RBC Capital Markets -- Analyst
Thanks. Good afternoon.
John W. Allison -- Chairman
Hi, Jon.
Jon Arfstrom -- RBC Capital Markets -- Analyst
Congrats on 20 years.
John W. Allison -- Chairman
Well, thanks. It didn't seem like 20 years, but time flies doesn't it?
Jon Arfstrom -- RBC Capital Markets -- Analyst
Yeah, it does.
John W. Allison -- Chairman
When you're having fun.
Jon Arfstrom -- RBC Capital Markets -- Analyst
Having fun. Just a different way of asking Brady's question, how do you -- how do you feel about repurchase appetite at this point? You -- you were active, but obviously, you're not as satisfied with the stock price. So just curious what you're thinking on that?
John W. Allison -- Chairman
No, we're going to continue to buy the stock. I mean, we have requested the regulators to allow us to buy just short of $200 million worth of stock if we choose to. So we're in the game, where -- we're in the market. And I remember -- I remember back in the mid '80s, early '80s, when bank stocks were selling the book and -- or book in a quarter, I remember those days and that kind of reminds me that where I'm at, so I've been buying these bank stocks. We don't really have to be real smart to buy bank stocks that is almost through a dart, particularly if you buy the good ones. So I'm pretty comfortable.
Jon Arfstrom -- RBC Capital Markets -- Analyst
Okay. Good. What does your crystal ball say about the HOMB $2.00 run rate?
John W. Allison -- Chairman
Well, I think it may -- I think it may have pushed out a little bit, I think it may have pushed out a little bit, but not far, not too far out, think maybe another 6 months to 12 months what we kind of thought around here that we might push it out. But that's really because -- not really because -- I mean, when you look at a $1.1 billion in originations of fourth quarter, I mean, we're doing lots of business. So that deal could turn on a dime and you could end up with a $800 million plus quarter or $600 million.
If you look at the theme of this deal, it's kind of pretty consistent and I think it was $950 million, Stephen, $975 million and now $1.1 billion in originations. So it's not -- it's not a flash in the pan, it's actually happening every quarter. And if we can get the paydowns to slowdown, as I've said earlier on the phone, people said, well, HOMB took off, they grew $450 million or $0.5 billion this quarter. It's not the fact that we're generating -- we're originating the loans, it's just that we're getting the payoffs. And you can say, our revenue was down a little bit in this quarter, but all this got booked what if you look at the average loans on the books, it was minus $20 million for the quarter. So the revenue would start rolling in off of those. I can look at -- it's a daily report and see the difference already.
Jon Arfstrom -- RBC Capital Markets -- Analyst
Yeah. I'm going to ask about just the period end versus averages as well. Does it feel like payoffs are easy and originations are up? Or what is the relationship there?
John W. Allison -- Chairman
Actually, I'm optimistic that payoffs are easing, and they certainly did. We look back to fourth quarter last year and they slowed down fourth quarter last year. Correct, guys? They slowed down a little bit. Randy, do you have a comment.
C. Randall Sims -- President and Chief Executive Officer
Well, I was just going to say if you -- if you heard also Florida was flat. So they got hurt a little bit by the hurricanes, and as they come back, I'm already getting emails on where I live in the Panhandle of some sales that are going on of houses and everything. So as that comes back, that's just going to add to it. So I mean, we've had last quarter's success really without the case of Florida and that usually we see in the numbers. So I'm pretty optimistic like Johnny because you're going to see that come back, as it gets closer and closer to spring. The lion's share of origination came out of the legacy Arkansas footprint, which is pretty a legacy there and good numbers, good rates on those too.
Jon Arfstrom -- RBC Capital Markets -- Analyst
Yeah. Okay. And then just one more on the margin. I know there's been a lot of questions there, but does it -- when you look at accretion and fees Q3 versus Q4, would you say Q4 is depressed and Q3 was obviously you said a little bit elevated, but would you view Q4 as a depressed number relative to where you normally expect it to be?
John W. Allison -- Chairman
Yeah, I would because -- because we sometimes talk about the additional interest income that comes from New York and it's -- sometimes, it's fairly lumpy. But we've had some lumps along the way that just that one lump is little bit bigger than the next, and then all of suddenly just kind of fell off this quarter. So I didn't really have anything of significance to provide any additional juice to the margin this quarter. So it would be kind of depressed. Yes.
Jon Arfstrom -- RBC Capital Markets -- Analyst
Yeah. Okay. All right. Thanks a lot.
John W. Allison -- Chairman
Hey, Jon. Did you like the -- did you like the -- did the duck call sound good to you, I mean.
Jon Arfstrom -- RBC Capital Markets -- Analyst
Yeah. I thought it was -- is it a mallard call?
John W. Allison -- Chairman
Yeah. That's right.
Jon Arfstrom -- RBC Capital Markets -- Analyst
I appreciated the Grease peg (ph) reference more than the mallard call. Thanks.
Operator
Our next question comes from Stephen Scouten with Sandler O'Neill & Partners. Please go ahead.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
Hey, everyone. How are you doing?
John W. Allison -- Chairman
Hi, Steve. How are you.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
I'm doing -- I'm doing all right. I'm doing all right. So, guys, I know -- I know Johnny you just said you got maybe $200 million you request and to -- to buyback additional stock. But is that -- is that kind of what you think is the best use for your earnings today. I mean, you all are obviously still making a bunch of money. So is that what you see is today, where the stock is the best use of that growing capital base?
John W. Allison -- Chairman
It is to me. We'll probably do a little more for our shareholders at some point in time maybe another little dividend increase. But overall, I think it's -- I think it's placed with Stephen, and as Stephen said if we like it at 23 and 24, I would love it at 18, so and we do. So we -- you can see obviously, we stepped up the repurchase to about almost 3.5 million shares in the fourth quarter, let me just, don't throw the baby out with the bathwater, so we just bought it, we just kept buying it.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
Yeah. No, definitely. And when you think about capital, I mean, would you take TCE down to maybe 9% to continue to buyback shares, if its here or how do you guys think about how much of that capital you would use?
John W. Allison -- Chairman
Well, we maybe, we might do that. Brian?
Brian S. Davis -- Treasurer & Chief Financial Officer
Well, I mean, really what we're doing right now, if you look at this $200 million that you talked about, I mean, that's really the free capital that we raised through retained earnings. (multiple speakers). So those levels -- at those levels, we wouldn't get to those numbers is what I'm trying to say.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
Yeah. Understood. Yeah, I was wondering if there would be incremental beyond that if the market stays depressed where it's been?
John W. Allison -- Chairman
I don't know. We look at that. We looked at doing an offering, what they call it, the convertible, and we looked at that. We looked at two or three different things and to me that stuff look good, but it didn't. I'm glad we didn't do it at that time, stock was about $22 and I didn't ever imagine that the stock would go to $17, $18 that never crossed my mind.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
Yeah.
Brian S. Davis -- Treasurer & Chief Financial Officer
But that's pretty enticing to me, at those levels to step up and buy, $18 (ph) load of it. I mean that's -- it's -- when they take bank stocks, as the world has, take bank stocks before that they've been in the past and if experience and what happened in the past is any likelihood of what's going to happen in the future. That's what's got Johnny tweaked on buying the bank stock and you buy the good ones that you know. But you could actually thought a dart hit any of them, they will -- they will probably all will go up.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
Yeah. Fair enough. And on the originations that you guys had the $1.1 billion. Can you talk a little about how much of those originations were funded versus what still unfunded and kind of what segments of the portfolio are driving most of that growth?
Stephen Tipton -- Chief Operating Officer
Sure. Hi, Stephen, this is Stephen Tipton. On the -- I would say all in a little over half of what -- of what was committed in Q4 funded that we had about $800 million -- a little over $800 million in production -- non-CFG production and $400 million of that funded, and then the typical funding percentage of what we see out of Chris' CCFG offices is in the 50% range. So let's say that's a good gauge to use. And you know, I guess with the production that we've seen from Shore, that's a nice C&I component or C&I/consumer component there, and then I would just say otherwise generally kind of a mixed bag of CRE and construction and temporary CRE.
John W. Allison -- Chairman
Shore had a little jump in past dues that was not really Shore's. At least, we're not accepting that as Shore's past dues up. We did a pretty job -- pretty poor job here of pass the baton from one runner to the other runner and about three-fourths of that or half of it's already current and paid as agreed. It wasn't that the old spike there that we think was mostly our fault. At least, we're taking the blame for it right now, and we'll see -- we'll see in the next two or three quarters.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
Okay. Fair enough. And maybe one last question from me just kind of as we think about the efficiency ratio. I mean, obviously, it remains impressive still under 40%. I mean, are there any major expense initiatives that you have to undertake or regulators making you invest anywhere that you wouldn't have otherwise or anything that will drive that incrementally higher from here?
John W. Allison -- Chairman
Pardon me. I mean, the regulators -- the regulators don't lock up 38% efficiency ratio. I don't think that will be my opinion. And they'd like for us to hire another -- we got 1,800 people, they like for us to have at least another 1,700, but -- we are hiring, we are hiring, but we are maintaining our efficiency thus far. I think I've told someone to -- that hopefully we'd cap it at 40% or above.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
And that sounds good. And that sounds good. Well, congrats on the 20 years, guys. And Johnny, I think you got about 10 days left to use that -- that duck call. So get after it.
John W. Allison -- Chairman
Yeah. So I have to -- I have the meeting today and then I have the -- have our Board meeting tomorrow. And then it will be a live duck call in the woods, Stephen.
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
There you go. The question is which is easier, shooting ducks right now or picking bank stocks on that dartboard. That's the real question.
John W. Allison -- Chairman
Let me tell you this. It's easier to pick bank stocks than it is to shoot a duck. Yeah, and I've got tens of thousands of ducks (inaudible)
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
Thanks, Johnny. Appreciate it.
John W. Allison -- Chairman
Thanks. You bet.
Operator
Our next question comes from Brett Rabatin with Piper Jaffray. Please go ahead.
Brett Rabatin -- Piper Jaffray -- Analyst
Hey, guys, good afternoon.
John W. Allison -- Chairman
Good afternoon.
Brett Rabatin -- Piper Jaffray -- Analyst
I'm kicking myself for not bringing my duck call to the office today.
John W. Allison -- Chairman
When (inaudible) Arkansas, you missed me blowing out loud.
Brett Rabatin -- Piper Jaffray -- Analyst
Wanted to ask -- you commented about the negativity or the skepticism in the market, and I'm just curious, are the plans for '19 any different for CFG or Shore Premier? And then maybe give us any color you can on how we should think about the profitability of those two areas in '19 versus '18 maybe.
John W. Allison -- Chairman
Well, I suspect that I would be pleased if we had similar profitability out of Shore -- and actually a little more out of Shore and a little more out of CCFG, I'd be happy with that. I think overall that it should be a pretty good year, something that blow up somewhere, and I don't see thing to blow up. There is lots of pessimism, lots of fear and pessimism, but we've seen that before. I mean, we've seen that in the market in different spaces of the market and it just so happens right now -- well, lots of different -- they've taken a lot of -- lot of different markets down, but they're taking banks down substantially. So I don't know if that answers your question.
Brett Rabatin -- Piper Jaffray -- Analyst
Well, I guess I'm just trying to figure out if you view the current market, as an opportunity to do more things, particularly in CCFG or if you view that as -- just keep on doing what you're doing and maybe you're a little more careful or watch a little more. I mean, I guess I'm just trying to understand your mindset on that in particular given that -- that environment out there, where people are worried about the credit in general.
Kevin D. Hester -- Chief Lending Officer
No, I'll answer. For Shore, I mean we're ramping up the commercial side, what they do. They have added pretty much with their previous operation had -- had wound down just because of the way it worked out. And that growth -- a lot of that in the fourth quarter was that commercial side just ramping up. So we see it, particularly for Shore, as an opportunity and I think -- we think that's going to be a good year for them.
Stephen Tipton -- Chief Operating Officer
And Brett, on New York's operation, if you know, we just opened up our office in Dallas this past two months ago, and so that should ramp up some opportunity there, and that office also is working with our community banks too that will give us some avenues that we haven't had in the past. So I think with Kevin -- what Kevin said on Shore and what Chris is doing in Dallas, along with the community banks here that certainly open some opportunities for us there.
C. Randall Sims -- President and Chief Executive Officer
2019 is just like any other year. Mr. Allison expects record-breaking quarters, again, that has not changed. So everybody's going to make more money.
John W. Allison -- Chairman
Yeah, we have -- New York -- New York is about a $1.5 billion, they can go to $2.1 billion without a cap on them at $2.1 billion, unless we did there about 15% of assets. So you can kind of -- you can kind of extend that out, if you want to what New York close. If in fact New York gets there by the fourth quarter of next year, I'm not saying they will because those numbers -- they don't have to do that. They take what someone gives them. But you look at New York and when they ramp up to $2.1 billion and Shore's growing -- I think Shore originated $86 million worth of growth they booked like $40 million like about half of that or $30 million. What they booked?
Christopher Poulton -- President, Centennial Commercial Finance Group
We had about $80 million in production from Shore in the quarter and little shy of $40 million in net growth. So I think they're doing -- they're doing as we thought or a little better.
John W. Allison -- Chairman
If you got New York -- I mean you got -- I guess, the person (inaudible) you got a $1.1 billion in originations for our company, which is record originations, at record rates at 6.07%, 6.08%, so that's encouraging to me. Can we outrun the cost of funds and can we outrun the expense side? I think we can. You pull out margin acquisitions for this quarter and hurricane losses, and you see flat to down on the expense side, so other than some regulatory stuff and hiring some people there, we've got some expense going up. We can keep pushing rates up. Hopefully, we can continue to get better on the cost of funds side. If we can do that, I think we can increase our spreads and -- with or without loan growth -- with or without loan growth, I think we're going to make more money.
Stephen Tipton -- Chief Operating Officer
And in the Panhandle, as you know, just went through the hurricane not too long ago and they are one of our good producers that down there, Johnny, and I just spent some time with North Florida's larger customers, and it appears that there's more opportunity there. The South Florida is beginning to kick in. So we -- I just think it's -- opens up pretty good. And then the Dallas office could -- if the community bank does have a lot of sale, they can pick some up there and vice versa. So it's -- I think the opportunities are several different directions.
Brian S. Davis -- Treasurer & Chief Financial Officer
Yeah. It's all good -- it's all good because of what -- what the economy does depends on investor attitude out there, developer attitude and what they want to do, what the business world wants to do.
And then as Stephen reported, North Arkansas was one of the heavy hitters this past quarter.
Stephen Tipton -- Chief Operating Officer
Yeah, we're seeing that in the Arkansas too.
Brett Rabatin -- Piper Jaffray -- Analyst
Okay.
C. Randall Sims -- President and Chief Executive Officer
I mean, construction -- construction and remodeling from the bridge of Panama City Beach on all the way to almost Carrabelle is going to be -- in Florida, it's going to be record all time. I mean, it's going to be rocking and rolling next year.
John W. Allison -- Chairman
And we're the 500 pound gorilla in there. So we try -- we got major presence there, great people on the ground, Jim Haynes and his team.
Brett Rabatin -- Piper Jaffray -- Analyst
Okay. That's a -- that's great color on that. And then, I just want to make sure I'm clear on -- there's a lot of commentary on fees and discount accretion and what not. But I want to make sure I understood on the cost of deposit side, it sounds like you're saying you do think that you're over more of the hump than less of the hump in terms of deposit betas. Are you expecting deposit betas to be a lot more reasonable relative to where they have been in the past few quarters in the next one or two, especially?
John W. Allison -- Chairman
I think that's correct. We are going to put emphasis on the cost of funds, which we really hadn't been doing. We put an emphasis on growing deposits, but -- like we're going to put emphasis on that we have, as of yesterday before emphasis on cost of funds. And I think we had like 15 basis points increase, and 15 basis points increase, and we had 16, last quarter, basis points increase and we'll see if we can get that down a little bit. Actually margin would have been -- margin was kind of flat to up. You really dig into it for the quarter. So we're still hanging around that 4% margin, maybe 3 at 97 (inaudible) I think that's where we're going to be and maybe be able to spread that up a little more, maybe improve that somewhat in the next couple of quarters. If we can control cost -- if we can slow the cost of funds down, we're going to grow the margin because we are not real quick pushing up rates on the loan side. You agree with that, Steve? (multiple speakers) Okay.
Brett Rabatin -- Piper Jaffray -- Analyst
Okay. I appreciate all the color. Thanks, guys.
C. Randall Sims -- President and Chief Executive Officer
Thank you.
Operator
Our next question comes from Brian Martin with FIG Partners. Please go ahead.
Brian Martin -- FIG Partners -- Analyst
Hey, guys.
John W. Allison -- Chairman
Hi, Brian, how are you?
Brian Martin -- FIG Partners -- Analyst
Hey, not bad. Hey, Johnny, just on your last comment about the deposit strategy, I mean, what in particular are you guys doing or have you changed on the funding side? I guess you're saying you're more focused on the cost versus the growth or I guess there -- is there something to it?
John W. Allison -- Chairman
Correct. That's correct. We've had a kind of a combination there of growth and cost of funds. I think we lost a little side in the cost of funds for the growth. And so we'll try this a little bit to see if it works out, tell you about two quarters from now, how -- how I think it worked, or you'll see it. Actually, you'll see it. So I don't have to tell you, you'll see it.
Brian Martin -- FIG Partners -- Analyst
Okay.
John W. Allison -- Chairman
Se we need -- we need -- we really won't toss -- want the Fed could rise. We really want the Fed could rise, we lack. And if they toss, which I have a suspicion they're going to pause here for a little bit, although it's get positive -- it gets positive for us.
Brian Martin -- FIG Partners -- Analyst
Okay. And the biggest driver of the potential to raise the core margin is more on the funding side and managing that rather than it sounds like you're going to continue to get better loan yields or inch that up, but if you get the margin moving higher, it's going to be more driven off of the funding side and kind of what you're doing there.
John W. Allison -- Chairman
I think that's fair, but -- maybe 60-40 -- maybe 60-40 on the --
Brian Martin -- FIG Partners -- Analyst
On both?
John W. Allison -- Chairman
Maybe 50-50. That's probably a 50-50 number. That's probably 50-50, and we're getting the yields. I mean you see us getting 6.07%, 6.08%. We're not giving the stuff -- we're not giving it away. And our people, it took a while when since we had to draw a 6% (ph) and send it out to them, Brian, and show what a six looks like, lot of them, they even know what a six looks like. So we drew pictures of sixes and emailed them out to all our lenders, so they would know what -- what it looked like.
Brian Martin -- FIG Partners -- Analyst
I got you. I appreciate it. And just maybe one question for Brian, just on the fees that were in the service charges, kind of the exit fees. Brain, how much was -- how much specifically was in the fourth quarter? I guess is that -- you said it was a -- did you say there was a $1 million decline? I just didn't know how much was -- what was actually in the fourth quarter level.
Brian S. Davis -- Treasurer & Chief Financial Officer
It went from $2 million to $1 million, similar to third quarter.
Brian Martin -- FIG Partners -- Analyst
I got you.
John W. Allison -- Chairman
$1 million reduction from third to fourth, and that was a Chris' payoffs.
Brian Martin -- FIG Partners -- Analyst
Yeah. Okay. And then --
John W. Allison -- Chairman
I mean, it's sweet when you need it, Brian, because it's real money. It comes in the door and it's real money, but it hurts the next month.
Brian S. Davis -- Treasurer & Chief Financial Officer
Yeah. But it was down from $2 million to $1 million, so from a theory standpoint it could go to zero, but they seem to have some of it every quarter.
John W. Allison -- Chairman
Yeah.
Brian Martin -- FIG Partners -- Analyst
Okay. And similar to the other question, really I mean this level is more normal depressed I guess when you look at fourth quarter because I know you're saying you're getting some every quarter, just trying to understand what this quarter look like.
John W. Allison -- Chairman
I'll let Chris -- Chris will run with that. He has most of the fees on that. Chris, you want to talk about?
Christopher Poulton -- President, Centennial Commercial Finance Group
Sure. Yeah, those were little down. I would say it was a little depressed and some of that being that some of what we would normally have expected to occur in the fourth quarter occurred in the third quarter. So some of the payoffs that would generally have occurred in the fourth quarter, maybe even the first quarter, they are coming up -- occurred in the third quarter, so you accelerated it. These are all -- most of this was money, we were eventually going to get as just what period of time it comes in. So I would say the fourth quarter fee income number was running lower than it ran in the last three quarters. And again, but -- and year-over-year, we had a little more fee income this year than we had last year, but we would expect the -- we would expect the fee income to moderate over time.
Brian Martin -- FIG Partners -- Analyst
Okay, perfect. And just the last two from me. Johnny, I guess, just talking about expenses or kind of the efficiency ratio, I mean, do you guys expect to see positive operating leverage in '19 and just kind of from an expense standpoint, it sounds like the current run rates are pretty good level and it probably doesn't move a whole lot off of this level. You talked about hiring a few people and some regulatory stuff. But it doesn't sound there is any major increase coming on the expenses from the current level.
John W. Allison -- Chairman
I don't -- I don't see it. Anybody see it, it's around the table here or anything, I'm missing out, I don't know if I missed something, but I don't see it. I think we're pretty -- that we're pretty flat on expense side than the regulatory side. I don't --
C. Randall Sims -- President and Chief Executive Officer
No big expenditures to come in anywhere, price are you seeing there?
Christopher Poulton -- President, Centennial Commercial Finance Group
I think we're managing that along the way. Naturally, as we go with $15 billion going forward, we got the new Dallas operation coming, so you're going to have some things that we're preparing for, but hopefully the revenue and the little bit of growth that we're seeing offset some of that expense.
Brian Martin -- FIG Partners -- Analyst
Yeah, OK.
John W. Allison -- Chairman
Our bonus program has been a little bit restructured that if you don't grow income, you don't grow bonuses. If you grow income, you can grow bonuses and if you reduce income, you reduce bonuses. So that's kind of the new -- came out of the comp committee this time that I didn't reduce bonuses this time, they left them where they were. But if you had -- if your region was down, they left them where they were. But if your region was up, you could go up in bonuses, but that's kind of the new unwritten rule around here.
Brian Martin -- FIG Partners -- Analyst
Yeah. Okay. And the last one, Johnny was just on the reserve and kind of provisioning, it's been negligible with the credit performance thus far. It doesn't sound like there's anything on the horizon that's giving you guys a lot of pause. I mean, I guess is that -- I guess, if you assume it's going to stay at low levels and I don't know if that stays at zero indefinitely what's kind of your outlook on credit and provisioning?
John W. Allison -- Chairman
Yeah. Actually it's really in pretty good shape. You would run those numbers by Stephen that will do.
Stephen Tipton -- Chief Operating Officer
Yeah. Hi, Brian. This is Steven. We talked about that a lot over the last couple of weeks and one Kevin might give you some kind of commentary what we're seeing from the hurricane reserve perspective and what we think we can do over the next couple of quarters. But looking at reserve coverage non to performing NPLs or gross dollars were $64 million or so I think at year-end, quarter-end. There is about $22 million or $23 million of that number that are purchased impaired acquired loans and I think maybe differently than some of our other peers do, we give you the total gross dollar amount of non-performing. So if you really look at what is non-performing that would technically be eligible to be covered by the reserve. We've got $108 million, $109 million in ALLL that covers $42 million, $43 million in true non-performing loans. So we still feel really good about your 2.5 times reserve to non-performing, kind of taking that analysis and feel really good about where we are there.
C. Randall Sims -- President and Chief Executive Officer
Kevin, you comment on this.
Kevin D. Hester -- Chief Lending Officer
Okay. No. As to the hurricane, you know, we're a year out from Irma and we put aside $30 million a year ago, I think with Michael hitting the Panhandle, where we're going to shift a significant portion of that $30 million over to a Michael event to look at for the coming year. And there's probably some number $5 million, $6 million, $7 million, somewhere in that number that we internally think that goes back to the general reserve based on what's happened in Irma, what we think might happen in Michael going forward for this coming year.
Brian Martin -- FIG Partners -- Analyst
Okay. So I guess it's -- you've got some flexibility there to manage going forward so. All right. Well, I appreciate the update and congrats on 20 years, Johnny.
John W. Allison -- Chairman
Hi, thanks. I appreciate. It's been a -- it's been a hell of a run, it's been a lot of fun and we've ended up -- these guys not many, they have built to help a nice company and I see the reason why we'll continue doing what we're doing in future, we've done in the past. And thanks for your support, Brian, a bunch.
Operator
Our final question comes from Michael Rose with Raymond James. Please go ahead.
Michael Rose -- Raymond James -- Analyst
Hi, guys, how are you doing?
John W. Allison -- Chairman
Fine. How are you?
Michael Rose -- Raymond James -- Analyst
Good. Just a couple of follow-up questions. So last quarter you guys talked about potentially repurchasing some TruPS. Obviously, understand where the stock is that that maybe the better option, but wanted to see if you guys were -- were kind of still looking at that. And then on the $200 million that you mentioned, I assume that's kind of incremental to what's you already have out there, I think you have about 4.9 million shares left. What's the approval process for that and how does that work? Thanks.
C. Randall Sims -- President and Chief Executive Officer
I'll take that. As far as paying up the TruPS, I mean, even though we're over $15 billion, we still get to account for that as Tier 1 capital. It's not until we have an acquisition that's at the $15 billion or above that we lose the Tier 1 capital treatment. So the way I look at it, it's still pretty cheap Tier 1 capital. So when we have our next acquisition, I can see us really looking it harder at paying off those TruPS. But until then, I don't think that we'll actually do that. As far as the approval process goes for the repurchase, the regulators asked us to submit a plan at the end of the year to say how much stock we might need to repurchase and they get the opportunity to at least approve or disapprove. And they have approved just for -- just under $200 million.
Michael Rose -- Raymond James -- Analyst
Okay. It's already been approved.
John W. Allison -- Chairman
I don't know, if they approved it. I can't say -- I don't know if they approved it. They didn't -- just approved it.
C. Randall Sims -- President and Chief Executive Officer
It is an interesting way to read. The regulators never get the joke.
John W. Allison -- Chairman
I -- I never commit too much out there. It was interesting reading there I cannot juggle.
C. Randall Sims -- President and Chief Executive Officer
So they didn't say no, they didn't say, yes. So we move forward.
Brian S. Davis -- Treasurer & Chief Financial Officer
But if you're also curious about how many shares that we could have authorized, I mean, the Board is the one that actually sets the number of shares to be authorized to be repurchased. But then we also have to take the extra step and get the regulatory approval too (multiple speakers).
Michael Rose -- Raymond James -- Analyst
Okay. And then maybe just a follow-up question. Can you guys talk about, it seemed like loans were flattish in Florida. How much is competition playing into that and how much is just normal course of paydown activity?
John W. Allison -- Chairman
I think it's just part of it. I don't -- I mean, Arkansas was up $150 million, $170 million (ph) that's kind of unusual for Arkansas to be up that strong. Now, I could just -- I kind of like the diversity of Florida and Arkansas, and New York and Alabama, just kind the way it worked, I mean, Alabama was flat, Florida was flat, but -- Kevin?
Kevin D. Hester -- Chief Lending Officer
And the competition is the same. I mean, it's shifted a little bit from -- I mean, rates are always an issue, right, but it's shifted a little bit more from rates to advance rates on collateral. We see -- as we've -- you would think later in the cycle, you'd see people dial back a little bit and we are seeing some people go the other direction and increase their advance rates. And that's -- I think we fight that as much as anything.
John W. Allison -- Chairman
We see a little bit of -- 80% advance rates in the sub-fives or sub-six (inaudible) that you see some competitors doing that really don't make a lot of sense. Not a lot of we run into, but somewhat we run into is uncharacteristic for some of those companies. I guess they're trying to build their book or something. I don't know why they're doing it, but it's -- good companies that are uncharacteristically doing some of that. We'll match that -- if it's hitting us, we'll match it if we have to. We don't want to, don't make a lot of sense, but we'll match it if we have to.
Michael Rose -- Raymond James -- Analyst
Yeah, just ask because obviously another bank up -- down there got acquired this quarter, and I've been -- I've heard that there has been a little bit of a lessening in competition from that one particular --
C. Randall Sims -- President and Chief Executive Officer
I think you're exactly right and I'm glad that was gone. I think that's -- I think that's good for us. I think it's good for Florida, particularly good for South Florida.
Michael Rose -- Raymond James -- Analyst
All right, guys. Well, thanks for taking my questions. Congrats on 20 years. I don't know what a duck call is. But if you ever need any guns, we got plenty up here in Chicago. Thanks.
C. Randall Sims -- President and Chief Executive Officer
(multiple speakers) could have guns in Chicago.
John W. Allison -- Chairman
I thought it was illegal to have guns in Chicago.
Michael Rose -- Raymond James -- Analyst
Good luck with that.
John W. Allison -- Chairman
All right. Thanks.
Operator
All right. This concludes our question-and-answer session. I would like to turn the call back over to Mr. Allison for any closing remarks.
John W. Allison -- Chairman
I just want to say thank you everyone for joining us today. Great year. Great quarter. Hopefully, Matt team, I won't ask much more out of this book from Matt team other than just be the Best Bank in America again. Other than that, make $320 million or $330 million, I'll be happy with that, and keep our past dues and our asset quality, where it is now and other than that, that's a long ways from that $250 million little community bank that you have owned it, and you'd be happy the rest of your life.
Christopher Poulton -- President, Centennial Commercial Finance Group
(multiple speakers). And you're making more net income than you were supposed to do an asset.
John W. Allison -- Chairman
(multiple speakers). Absolutely, you're right. Thanks -- thanks everyone, for your support. We enjoyed -- we enjoyed the conference call and I hope you all enjoyed too. Thanks.
Operator
Thank you so much for your time everyone. The conference has now concluded and you may now disconnect.
Duration: 64 minutes
Call participants:
John W. Allison -- Chairman
C. Randall Sims -- President and Chief Executive Officer
Matthew Olney -- Stephens -- Analyst
Brian S. Davis -- Treasurer & Chief Financial Officer
Stephen Tipton -- Chief Operating Officer
Christopher Poulton -- President, Centennial Commercial Finance Group
Brady Gailey -- KBW -- Analyst
Kevin D. Hester -- Chief Lending Officer
Jon Arfstrom -- RBC Capital Markets -- Analyst
Stephen Scouten -- Sandler O'Neill & Partners -- Analyst
Brett Rabatin -- Piper Jaffray -- Analyst
Brian Martin -- FIG Partners -- Analyst
Michael Rose -- Raymond James -- Analyst
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