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Home Bancshares Inc (NASDAQ:HOMB)
Q3 2019 Earnings Call
Oct 17, 2019, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, ladies and gentlemen. Welcome to the Home BancShares Incorporated Third Quarter 2019 Earnings Call. The purpose of this call 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 2019. [Operator Instructions] It is now my pleasure to turn the call over to Mr. Allison.

John W. Allison -- Chairman

Thank you, Jeff. Good afternoon everyone and welcome to Home BancShares Third Quarter 2019 Earnings Release and Conference Call. With me today is Tracy and Chris and John are on the phone. Brian Davis, Jennifer, Randy, Donna, Kevin and Steven and they all will be available after the presentation. Some of them will be presenting today. The quarter was now noisy, lot of moving parts, including we chose to call a $47.5 million BOLI. The result of which we had a one-time $3.7 million tax associated with it. The yield was -- I don't remember the exact [Indecipherable] that team, so we decided to call, we think we can do better with the money.

There were elevated pay-offs in this quarter and will continue into the next several quarters. Several years ago we instituted prepayments on many of our credit and that decision has elevated our income for this quarter and will continue in the future. We will remain disciplined on both loan rates and terms and not fall in the trap of being categorized as stupid binder. If we are correct, we think there is a little slowdown in the market and we're not opposed to that. We normally originated about $852 million a quarter, but this quarter we only originated $710 million, with New York doing $248 million of that at 6.52% and [Indecipherable] doing $462 million at 5.63%. There were less opportunities in most of our markets and many banks are racing after those few deals that are out there. It appears to be a race to the dumbest, we call it -- they're just giving the stuff away, with rights from both banks and [Indecipherable] often subors, coupled that with 10-year interest-only, add in little non-recourse and give 80% leverage and he won that deal. Congratulations, you have just won the stupid war. Excuse me, with banks and bankers are collapsing rates in terms, like a pup tent in a Hurricane.

We're going to do the right thing here and not sacrifice our future for short-term brag around. We have made the decision that let $300 million to $400 million loss because the right term and leverage are not conducive to long-term profitability of our Company. Higher leverage, longer term, low rate is the recipe that most of the crowd appears to be following. Warm Buffet said there is the tendency of executives to madlessly imitate the behavior of others, no matter how foolish it may be.

Jamie Dimon's quote was one of the toughest jobs a CEO has is to look at the stupid stuff that other people are doing and not do it himself. These statements come from two American icons that have proven -- that have proven business and investing skills. We should all listen to these experts. I just want to give you a feel of mine. Winners never quit and quitters never win. When the going gets tough, the tough get going. [Indecipherable] get out of the way, remain disciplined as hard it might be. These are really dangerous time from banks. The Street, analysts, shareholders all flat pressure for growth, growth, growth. This is a time to move cautiously. Banks have spent the last 10 years billing their balance sheet with quality high-yielding assets and we could destroy all the good we've built in much less time than it took to build.

The Fed is to operate 50 basis points, but the market has dropped to 150 basis points to 200 basis points. I can assure you that cost of funds have not fallen as fast as loan rates. So we know what happens to profit, it's pretty simple. Banks should not sell their future for short-term brag around. However, it appears at banks are dropping the rates much faster than they want to. This is a major sign of weakness in the quality of the producers and the relationship they have with their customers. Relationships are the most important degree with keeping customers in ample [Indecipherable]. Some customers will disappoint, regardless, but most will stay with you.

This is the path that Home has chosen. We will not sell our future because of short run in the market -- short downturn in the market. Quite to the contrary, we made the decision to build additional capital for the next year or two. In the event that there really is a downturn, probably $150 million to $200 million rise. That is, if we're able to maintain our best-in-class profitability. We will be working on continuing to improve our asset quality as good as it is, improve our operations, service our customers by spending more face time with them and work on efficiency. Little slowdown will pass, but if you sell your soul to the devil now, they will take a long time to get back just even, much less produce the best in class numbers as this Company is known nationally for.

Now let's talk about the quarter. I'm pretty proud of the quarter. EPS of $0.44, return on assets 1.93% and efficiency of 39.16%, and the net interest margin of 4.32% and had a little juice in it as $2.8 million in prepays is kind of juiced it up a little bit, I was telling Jim about that and he said, well -- he said don't take that away from yourself, give yourself credit for that because you had the foresight to put pre-pricing. So, he said good job. So we got a lot of those and going to see a lot of that rolled in over the next periods of time. Deposit rates are coming down slowly and asset quality is as good as it's been. Non-performing loans-to-loans at 0.54% and non-performing assets-to-assets at 0.45%. I don't remember when they've been that low.

Good expense control, loan yields -- loan yield 6.08% from 6.06% and we grew tangible book by 15% year-over-year. And this looked over the last five years, and I wanted to share with our shareholders over the past five years, we have grown tangible book from $4.95 to $8.93. That's a 78.38% increase. While at the same time, buying back our stock with a value of $212 million and that represents 10,842,000 shares. Had we not bought back stock, it would have increased our tangible book to 91.51% over the five years. We have paid dividends to our shareholders of $320 million and we've earned over $1 billion.

We have returned approximately 50% of our income to our shareholders through stock repurchase and dividends. Not many banks could have accomplished these amazing facts, while at the same time improving capital ratios. This speaks to the amazing profitability of this Company. Good job by all, that's why Home is name Best Bank in America by Forbes for the second year in a row. Buying back stock, growing tangible book, paying strong dividend and growing capital, all at the same time, certainly this Company has made the proper decisions for the long term for all involved and I can assure we'll continue to do that in the future.

Thank you for your support and Brian Davis is going to cover more indepth on margin. Brian?

Brian S. Davis -- Treasurer and Chief Financial Officer

Thanks Mr. Allison. The third quarter was a good quarter for our net interest income and net interest margin. I'm pleased to report the third quarter net interest margin of 4.32% was up 4 basis points from the 4.28% for the second quarter. On a tax equivalent basis, we recorded net interest income of $144.2 million for Q3, 2019 compared $142.3 million for Q2, 2019.

During the second quarter of 2019, the interest rate environment again did decline. For example, the 10-year treasury went from 2.50% on March 31st to 1.64% on September 30th. This decline has increased the prepayment speeds on our investment securities. As a result, we saw an increase in premium amortization of $515,000 from Q1 to Q2, then we saw an additional increase in the premium amortization of $373,000 from Q2 and Q3. As the premium amortizations have remained flat, from Q1 to Q3, our Q3 margin would have been an additional 3 basis points higher. Last year we had a few large payoff advance, which increased our margin. The first six months of 2019 did not include any additional income for large payoff advance.

However, the third quarter of 2019, we had several interest income advance primarily related to large payoffs. These advance totaled $2.8 million of interest income, an increase in net interest margin by 8.4 basis points for the third quarter of 2019. Accretion income for the fair value adjustments recorded in purchase accounting was $8.5 million during Q3 compared to $9.2 million during Q2 for a decrease of $778,000. This decrease lowered our NIM about 2.5 basis points. Another positive for Q3 was that we were able to achieve the yield on interest earning assets flat, while lowering the cost of funds on interest bearing deposits by 4 basis points from Q2. As a result, we reported an improvement of approximately $4,000 of additional net interest income per day for Q3, 2019 when compared to Q2.

With that said, I'll turn the call back to Mr. Allison.

John W. Allison -- Chairman

Thank you Brian, that's good stuff. Next we'll hear from Chris Poulton. Chris, how are you?

Christopher Poulton -- President

Good afternoon. Thank you. As noted, our third quarter was highlighted by a lower ending loan balance and higher fee-related revenues. For the quarter assets fell and what has become a bit of a seasonal trend, after positive net growth in Q2, we had $171 million net portfolio decline. You may recall, we had similar results in Q2 and Q3 of 2018, with declines this quarter specifically driven by -- largely by net pay-offs, which total approximately $350 million. Specifically payoff fund facilities in revolving line made up about 40% of the total. These facilities typically increase and decrease over time and we expect that at least some, if not all of this decrease would be reversed over the coming months and quarters. Quarter-to-quarter increases and decreases in our overall portfolio are expected and as we have discussed on prior calls, they are feature of our product line.

Larger pay down quarters are also generally accompanied by higher fee-related income. Q3 was no exception, as we collected additional fee and interest income as a result of these movements from the portfolio. On the production side year-to-date originations have been trending approximately $100 million ahead of last year and remain happy with the pipeline of expected closing between now and the end of the year. Right now based on transactions and underwriting CCFG has forecasted to have our highest year production since joining Centennial Bank.

With that Johnny, I'll hand it back over to you.

John W. Allison -- Chairman

Thank you, Chris. The report John. John Marshall, can you hear us?

John Marshall -- President

Yes. Sir. Good afternoon. And thank you, Mr. Allison for the opportunity to provide this third quarter update on behalf of Shore Premier Finance. Net interest earning assets increased $15 million in the quarter to reach $85 million in total growth since being acquired by Centennial Bank back in July, 2018. The growth in the quarter may be attributed to a nice mix of robust retail originations, higher draws on floor plan lines despite seasonal pullback in utilization rates and slightly reduced prepayment speeds.

Retail application volume was flat compared to the second quarter, but the dollar value was higher. We also booked an additional $14 million in floor plan in lines adding four new manufacturers that will result in increased future funding opportunities. I'm encouraged with the additional floor plan lines in the higher seasonal utilization in advance of the upcoming boat show season that will contribute to additional growth.

To further stimulate growth, we're also introducing a new super yacht retail finance program. After months of research and due diligence, we believe there is a financing opportunity in the super yacht space, defined as boats over 80 feet, with whole values in excess of $7 million. We've observed a shift in consumer sentiment as the market bull charge forward and recession appears to have been averted for consumers to achieve a positive arbitrage between their portfolio returns and the cost of their boat loan. The falling credit rate environment is also further fueling that fire.

Additional good news is we are favorable to our income goals by 10%. Lower provision expense and the lien nature of our business, with an efficiency rate below 30% have helped to boost profits. Across the 420 million retail portfolio, weighted average rates climbed 3 basis points in the quarter. However, variably price commercial advances are more immediately reactive to the vagaries in the market and experienced at 24 basis point pullback in rates. Our contribution to the bank's net interest income continues to increase each month. Also favorable to target, where our asset quarterly metrics, both compared to goal and prior quarter, 30 plus days delinquent loans breached a historical low of 20 basis points or $875,000. Non-performing loans at quarter end were just under $2 million, 6 basis points favorable to target. As a Harbinger of future asset quality trends, retail originations in the quarter, average FICO scores improved to 778. So very high quality paper and we experienced no commercial delinquency. Overall, I'm pleased with the team's performance and encourage as we move into the fourth quarter.

With that I'll conclude my remarks and turn the discussion back over to you Mr. Allison.

John W. Allison -- Chairman

Thank you, John, good report. I like those past dues 20 basis points, that's good start. We're going to go to Tracy and Steven. I guess I'll go to you Tracy and you go to Stephen.

Tracy M. French -- President & Chief Executive Officer

All right. Johnny, thank you. [Indecipherable] outstanding report of Home BancShares numbers and listening to Chri, Brian and John, I'm proud to discuss another strong quarter for Centennial Bank. For the quarter Centennial Bank's return on assets was 2.08%, ran an efficiency ratio of 37% and continue with some strong revenue of $173 million.

We continue to navigate through a challenging interest rate environment, obviously with the last two rate decreases in the most -- in the recent quarter and potentially more on horizon. Our bankers are focused on the long-term cultivating relationships, while maximizing return for this Company and our shareholders. Stephen will go over some details next, but I'd like to point out, we are pleased with our deposit growth over the year as the focus has been on core deposit relationships.

On the loan front, as Johnny addressed earlier, our lenders have been busy working opportunities, staying with prudent underwriting, terms and rates. This has proven to work for our Company over time, we're not betting our future on near-term results. I'd like to congratulate our mortgage company led by Keith Little, along with his sales staff and his operations team are very strong and busy -- busy quarter . As I mentioned, I'm pleased to see the improvement in an already strong asset quality metrics. I want to complement all of our lending team for their continued effort in this competitive landscape. I'm going to ask Stephen Tipton to give a little more detail on the loans and deposits. Stephen?

Stephen Tipton -- Chief Operating Officer

Thank you, Tracy. I'll give some color on production payoffs and the balance sheet movement for the quarter. We saw community bank production a little over $460 million in the third quarter, which includes $47 million production from Shore Premier. As Johnny mentioned the Community Bank footprint loan production slowed somewhat in Q3, but the contribution split remained consistent among the Arkansas, Florida and Alabama regions. As it has been mentioned, payoff volume increased $721 million in the third quarter of 2019, which is a couple of hundred million in excess of what we have seen in prior quarters. Chris has already highlighted the CCFG pay down and pay-off activity and the increased activity on the Community Bank side came primarily from Arkansas as several large development project stabilized and moved to the permanent market a little sooner than expected.

On the deposit side, we generally see some seasonality in the third quarter with the schools and municipalities we have in our footprint. We also saw customers with insurance money flow out as the areas previously affected by Hurricane Michael rebuild. As such, linked quarter balances declined $300 million, while year-over-year balances increased $422 million. The growth in the first half of 2019 has allowed us to take a look at higher tier pricing on interest bearing deposit balances. As we move forward, we will continue to evaluate opportunities for pricing improvement while managing funding needs to company.

With that, I'll turn it back over to you Mr. Allison.

John W. Allison -- Chairman

Thank you very much. We'll go to Randy Sims for the wrap up. Randy?

C. Randall Sims -- Vice Chairman

Thank you. Johnny. Well, congratulations to everyone for another great, but as you heard very noisy quarter. But even with the mix of transactions, as you heard from everyone, the numbers are once again very, very good. So let me just recap some of those strong numbers from Home BancShares and wrap this quarter up. We finished the quarter with total assets of $14,901,935,000. Income was $72.8 million resulting in diluted earnings per share of $0.44 as compared to $0.43 from the last quarter, which meets our market expectations. Our ROA was very strong, up a little at 1.93%, but consistent with the last two quarters at 1.92%.

More importantly quarter ends September produced a strong net interest margin at 4.32%, up 4 basis points from the last quarter at 4.28%. As you heard from our CFO, Brian Davis, there were very -- there were several influencing variables on both sides of the equation, but it's safe to say, we're very pleased with the consistency of the NIM over the past several quarters that is a key factor in our high-performance.

On the other side and once again our profitability was helped by a very strong efficiency ratio of 39.16%, as we continue to control our costs. Average deposits for the quarter were up just below just a little at $11.17 billion, but down for the quarter on its ending balance at $11.05 billion, resulting in a loan to deposit ratio of 97.5%, up a little bit consistent from 97.4% at June 30th. Average loans were down a little for the quarter at $10.9 billion versus $11 billion at June 30th. However, ending loans were down $281 million for the quarter at $10.8 billion indicative of our refusal to compromise our terms and rate for short-term gains. Our asset quality has and continues to be solid, with all ratios at record lows indicating a very optimistic and secure outlook.

As you heard, our Chairman, our tangible book value per common share, non-GAAP was at $8.83, And you heard him talk about the tremendous growth in that value, especially over the last five years. We now have three quarters behind us and our strategy has not changed. Protect the margin for the future, avoid the crazy deals in the market, repurchase stock, grow tangible book, improve asset quality and control expenses. Consistency in our key metrics. This is what we do. And that pretty much wraps everything up and I'll turn it back over to Mr. Allison.

John W. Allison -- Chairman

Thank you, Randy. I appreciate it. I've got some really interesting charts here, but I really didn't have time to -- how many banks? 69 banks?

John Marshall -- President

68.

John W. Allison -- Chairman

68 banks, and they are -- where the parent is in the US, non-Puerto Rican banks and excluding Raymond James and Sally Mae and it ranks us over the time, over the last two years in net margin, return on assets, return on equity, tangible common equity versus tangible assets, dividend yield, efficiency ratio and just for everybody's benefit, Home doesn't -- stands out in this with higher rating that everyone was categories, making very proud. I appreciate of bankers of what they've done and we will continue to work hard. I wish I had more time to go over that. We may make some travel suits for that when we travel in the future. Those are pretty, pretty important numbers. I think at this point in time, does anybody have anything else.

Jeff [Phonetic] Are you ready, for us to go to Q&A.

Questions and Answers:

Operator

[Operator Instructions] The first question will come from Brett Rabatin of Piper Jaffray. Please go ahead, sir.

Brett Rabatin -- Piper Jaffray -- Analyst

Hey, good afternoon, everyone.

John W. Allison -- Chairman

Good afternoon Brett.

Brett Rabatin -- Piper Jaffray -- Analyst

I wanted to first ask maybe John, can you talk about -- you talked about stability in the market, can you maybe just give us some flavor for what you're walking away from a pricing or terms perspective? Kind of give us some flavor of lines you're not willing to cross? And then also want to just to hear origination rates kind of what you're expecting kind of given where rates have gone relative to the current portfolio?

John W. Allison -- Chairman

Sometimes it's a good time to book a lot of loans and sometimes it's not a good time to book lot of loans. But as the Fed dropped 50 basis points, I'm telling you the lenders drop 150 to 200. And we're just not going to play at that level and we're beginning to see -- it is -- as I said it's a dangerous time. We're beginning to see loans in the 3's, we're seeing an 80% leverage, we're seeing a non-recourse mixed in. It is a time to be very, very cautious. I mean as I said in my remarks banks are probably in the best financial condition that they've been in ever maybe, at least we are and to take the chance in these kind of markets and go back to 80% leverage, it just doesn't make any sense.

We're just not going to do it. We made the decision several years ago on some prepays. I mean to put prepayment penalties and unlike you'll see over the next quarter or two, we made a decision that $300 million to $400 million lead this year, presently, right now. But we're not going to go up, now will sell our future. So you're seeing 3's, you's seeing [Indecipherable] non-recourse, you're seeing high leverage, you're seeing things that we saw back before the '08 crash. We're just not going to apply. This is my largest asset and we're just going to protect that assets. We'll book to good loans and we'll let the others go away.

Brett Rabatin -- Piper Jaffray -- Analyst

Okay, that's good color. The other thing I was curious about, you obviously defended the margin well in 3Q, would help the prepays. Can you maybe just talk about the kind of go forward outlook? Can you be able to reduce funding costs, I assume I slightly higher pace going forward, maybe just talk about how you think about the margin from here?

Stephen Tipton -- Chief Operating Officer

Hi, Brett. This is Stephen Tipton. Yeah, I think Brian got our updated outcome models here today. I mean it's still shows a little downward pressure. It went down 25 or down 50 environment, which is consistent with what we said last quarter. And we're constantly working the funding side, the deposits side, on where we -- I saw a report yesterday, where we had another $70 million or $80 million in balances, that we lowered by 25 basis points. So some of it, that's a month post the last rate cut. So some of it is timing related on the deposit side where we communicate these drops to the customers, but at 96%, 97% loan to deposit we are mindful of balances too, so it gives a little color for you.

John Marshall -- President

I'll add a little color on the -- also perspective on this. We are asset sensitive. When you were pricing gaps about 8.8%, which leaves us about $1.2 billion that is asset sensitive. We just take those numbers out, black box on the ALCO [Phonetic] model. It would show that 25 basis points decline could decrease the net interest income, everything held constant about $2 million or quarter or 6 basis points. And if we went down 50 basis points it would be pretty much double that, it would be $4 million for the quarter or potentially 12 basis points, that's assuming that we did nothing to change the mix coming out of black box on the ALCO model.

John W. Allison -- Chairman

I think when we travel with you and Donna and I travel, you saw the emphasis that we put on margin and it has been top of mind. I think we're going to see downward pressure a little bit because of competition on land. We're trying to do the good ones and let the bad ones go by or some of them are good credits, you just -- which does now go right at 3% non-recourse, which is not really bad.

I mean this too shall pass, we will be here forever and the back you go lock in, I mean, we're seeing a lot of 15, 20, 25 years. Some banks, lot of shadow banks, but they locking themselves in for a long time with some of these credits. And we hate to see some of these go, but I think that we will be better off in the long term, when the rate is higher rates in the future.

Brett Rabatin -- Piper Jaffray -- Analyst

Okay, great. Appreciate all the color, guys.

John W. Allison -- Chairman

Thank you.

Operator

Our next question comes from Michael Rose with Raymond James. Please go ahead, sir.

Michael Rose -- Raymond James -- Analyst

Hey guys, good afternoon.

John W. Allison -- Chairman

Hey Michael.

Michael Rose -- Raymond James -- Analyst

I just wanted to circle back to the margin commentary. So obviously 7 basis points of prepays, this sounds like you expect some level of prepays going forward to kind of boost the margin. So should we think about a level that's something around that for the next couple of quarters, just in terms of what you guys are expecting for prepaid. I'm just trying to get at, what's kind of the starting point for the NIM that we should consider and then build in whatever we're going to build, in terms of -- in terms of rates? Thanks.

John W. Allison -- Chairman

I think you're going to see a pressure on the NIM coming in. We have -- the originations thus far this quarter have not been at the rates that we wanted them to be. So that's obviously -- we have not originated a lot this quarter. However, the pipeline -- and finally, it is the highest it's ever been, it's about 2. -- 6.47 . So about two points..

John Marshall -- President

$6.47 billion at the end...

John W. Allison -- Chairman

Almost $2.5 billion and that includes Chris Poulton, and Chris has very strong backlog. So we have a good backlog to give us time to weather the storm I think. Any other comments on the margin? We have a lot of prepays and you can call juice if you want to. I was looking for someone to give us credit for having enough foresight to put those prepays in and Jim handed in, so, thank you, Jim. We have a lot of prepays. You don't see a lot of money rolling the income pretty quick here in the fourth quarter. If all of this stuff gets paid off because there is substantial pre-payments and I'm talking about substantial, I'm talking about some big loans with some 4%, 5%, 6% prepayment. So there'll be some substantial income company. And so that kind of takes a little of the spinning off a bit movement.

Michael Rose -- Raymond James -- Analyst

Absolutely.

Stephen Tipton -- Chief Operating Officer

Right now, it's actually reoccurring -- non-reoccurring income.

Michael Rose -- Raymond James -- Analyst

Yeah. No, I completely understand. It's a good thing, you guys put that in. Just had a question, I don't think if you guys addressed it in the prepared comments. Just wanted to get your thoughts on CECL. So, as I step back and I look at it, you've kind of have two buckets of loans that are traded kind of unfairly, with the unfunded commitments and then the longer dated marine portfolio. Can you give us some sort of expectation if you have it? What kind of the day one hit might be under CECL and how that might change your appetite to continue to grow CFGs and move forward? Thanks.

Brian S. Davis -- Treasurer and Chief Financial Officer

I'll take the part on the CECL, I mean, we have run our models and we're at the point where our auditors, BKD are in the process of auditing it. They have not given me their thumbs-up, thumbs-down opinion on it, they've been here a couple of weeks. We're also going through model validation. Once again they're probably going to be done in a couple of weeks, but haven't gotten the final report on that. So we're not prepared to actually give a number. I mean -- but we do anticipate that the ALLL will go up a little bit. Of course, that will be a hit to capital. We do anticipate being able to take advantage of the three-year phase in from a risk-based capital standpoint and phase it in over that. As far as as originating or changing our lending, don't think that that's going to impact a lot, the way that we're doing our loans. I mean, we'll have to fund ALLL as the loan portfolio grows and, but to be honest with you, for a lot of the history of this company, we have done that already, as we grew the loan -- when we had a growing loan portfolio.

Tracy M. French -- President & Chief Executive Officer

Our losses remind over what we analyzed shows that the type of lending we do, we've really not lost a lot of money there. I think your question was asking to change any of the different types of loans as of what we've seen so far that would happen.

Kevin D. Hester -- Chief Lending Officer

Hey Michael, this is Kevin Hester. The weighted average maturities for our portfolio are shorter than you might think. And even in the marine portfolio those prepayment speeds have been in the -- I will say, 3- and 4-year range out of that portfolio over time. So it's not going to make as much difference as you might think.

Michael Rose -- Raymond James -- Analyst

Understood. And maybe just one more, just broadly on loan growth. It looks like loans could end flat through kind of down this year. I understand why you've slowed that, it's twofold, right. It's prepayments and it's also being more prudent not giving away the -- given away the ship, which I understand. As we think about next year, if this dynamic continues to play out, I assume you'll take the same stance and we should probably just kind of project a lower rate of growth. Is that a fair way to kind of think about it? Thanks.

John Marshall -- President

Well, I hope not. But if the market stays like it is, then -- the kind of credits we're looking at and the rates we're looking at all those credits now, if that continues into next year, we will remain very conservative.

Brian S. Davis -- Treasurer and Chief Financial Officer

Well there's a lot of stupid awards to go around so...

John W. Allison -- Chairman

There is a lot of that. Again you think about it, what happened in '05, '06 and '07 and '08, with nobody putting money and [Indecipherable]. There was no money in any construction, but really, there was no money in. Well all bankers learned their lesson in '08, '09, '10 and '11, we got kicked in the tail. We just want -- we don't want to go back to that. We're not interested in that kind of -- that kind of business. This doesn't make sense to loan money at 3%. That's just -- it's just ridiculous. So we're just going to keep as I say, I guess how steady here, what we're going to.

Michael Rose -- Raymond James -- Analyst

No, I get it. We all like Prime better than the alternative. Thanks.

John Marshall -- President

Yeah, we we might go back Johnny.

Don't mention that Michael.

John W. Allison -- Chairman

That's what's we did then. We just went to one [Indecipherable] it worked out pretty good for us. We're just being conservative. We're just being ultra, ultra conservative in a market that is when you see -- when you see the Fed drop 50 basis points and bankers drop by 150 basis points and 200 basis points alone, it was kind of crazy. It was almost like a they turned out to wild animals at one point in time, and they were just running in different way. We got a quote for this and so and so is going to do this. Tracy and I were in Orlando. We talked of this big developer. He said I'm -- 3.25%, 7% [Phonetic] -- I mean, 3.25% seven-year non-recourse, 3.5% ,10-year non-recourse and he said -- I just looked him in the eye, we're out there and I said, well, we don't do that. That's not what we do and we're not going to do that. So you just have to let them know you're not going to play that game. However, we might get [Indecipherable], Tracy, is that right.

Tracy M. French -- President & Chief Executive Officer

I think, you're right.

John W. Allison -- Chairman

Yeah, so, anyway, you just got to get it -- relationships are extremely important right now, you get disappointed in some people, but most people stand up to the relationship.

Michael Rose -- Raymond James -- Analyst

No, I get it. great color, guys. Thanks.

John W. Allison -- Chairman

Thank you. Thanks for your questions.

Operator

The next question will come from Brady Gailey of KBW. Please go ahead, sir.

Brady Gailey -- KBW -- Analyst

Hey, good afternoon guys.

John W. Allison -- Chairman

Hey, Brady.

Brady Gailey -- KBW -- Analyst

When you look at loan growth and I guess loan shrinkage, if you guys -- the pay-offs, are they coming out of one specific geography like, is it CFG or Arkansas or Florida or is it kind of across the entire Home Bank franchise?

John W. Allison -- Chairman

Let Chris talk to CFG, speak to his CFG. Chris once we speak to that, we'll speak to legacy.

Christopher Poulton -- President

Sure. Hi, Brady. Yes, no, I think we're seeing -- for us, I think we see our normal level of payoffs. They come in different months, right? So I don't know that we're seeing anything happened on payoffs that we haven't seen happened before. Our challenge is that convincing our customers to pay off in an even 1/12 [Phonetic] fashion over the years was tough to do, so some quarters get higher than others, but the only may be a little different this time was some of the elevation in pay-off was in facilities, which is a little different and that we do have an expectation that those facilities remain outstanding and borrowers tend to reborrow. And so, we had one larger pay-off that hit this quarter that we've in the facility and we'd have an anticipation that some of that will get refunded back up over the next life of the facility, which is generally another year or two. And so that might have been a little different. But in general, I think we're seeing kind of the same things we normally see.

John W. Allison -- Chairman

And from our perspective, we have the multi-family builder that -- it's about $120 million and the decision was to let it go, because it's 3.25% non-recourse. We don't do that. And we're not going to do that and we had to lose it, but it is also $4 million with pre-price only. So that takes a little staying off when you got $4 million another pay down that happened this quarter was one that we wanted to happen, it's a multifamily, couple of multifamily units that was a classified credit that we thought was fine, but the regulator didn't like it. So we moved -- it was able to get finance and elsewhere with another bank -- much bigger bank and they took it out. So not only -- some of this is by design that we've moved out. I think someone asked about the the credits. The two credits we had -- the two, four credits, they moved to five [Indecipherable]. What I missed, Kevin is ready to upgrade it, but, however, especially to pay off it appears and it has a prepayment only. So that was gone. The other one was a complex, in the Panhandle, Florida, there has been no change on that. We're not worried about that credit anyway, but there has been no change. But some of it was us and some of it was the market and some of it was pricing for us to look at long-term fixed rate stuff, non-recourse, we're just -- we're not ready to do that.

Brady Gailey -- KBW -- Analyst

All right, so if loan growth is not going to be robust at least in the near term. I know, Johnny, you've been able to successfully grow EPS via M&A. Do you look to M&A a little more aggressively now that loan growth is slowing here?

Christopher Poulton -- President

I think we do. We have seen -- I don't know what's going on right, but there's lots of banks -- lots of banks coming at us. We've seen more banks in the last six weeks, than I've seen in six or eight months coming at us. Some of them make sense and some of them don't make sense, but that could be a plus for us down the road. We're just starting to play with that. We've look -- we really hadn't been real serious about M&A, but I think we're getting much more serious now. When you guys say that pricing opportunities are definitely more now than what they have been, expectation is still a little rich for us, but they're coming down though, that there are not expectations are coming down a little bit, I don't know if everybody is afraid as if who is going to win and banks will be in big time trouble or -- but there is something going on out there that is generating -- I don't know if it's regulators, I really don't know what it is, but there is something, they're coming at us faster than we anticipated them coming at us.

Brady Gailey -- KBW -- Analyst

And Johnny just remind us, like I know a lot of the deals you've done in the past have been scratch and dent. Is that still the focus? And then what is kind of the size range of targets that you would potentially look at and then what geographies are most attractive to you?

John W. Allison -- Chairman

I don't know if size is important. We did the Stonegate deal and from a shareholder value perspective, we didn't get anything out of that. It was a good lesson for us to learn. It is important in some markets to get the blessing of the shareholders of the organization. So I think we probably would be looking at a smaller-sized organization that gives us that wholesome local shareholder flyer that you don't get with -- that you didn't get with with Stonegate.

So not the Stonegate was a good try force, it turned out to be for us good profitable freight force and a great deposit market for us, but we didn't get the [Indecipherable] from the shareholders that we would on the smaller transaction. And I think that's important to the value of the company, because if it's heavily fund down, then it's just gone overnight, right. They don't get paid until -- they don't get there two in 20 or 20% of to whatever their payers and feel they sell the stock and get paid. So that's a good lesson for us to learn, but the bottom line to it is, which one is the most accretive to EPS for Home BancShares, and that would probably be one, it is somewhere around our markets because of the savings that we can generate. I still like Texas and I talked about it a lot, but we don't get a lot of savings out there. If we did a deal or two in and around Florida, I think we could pick up some good savings and probably pick up some shareholder value.

Brady Gailey -- KBW -- Analyst

Great, thanks guys.

John W. Allison -- Chairman

Thank you.

Operator

The next question comes from Jon Arfstrom of RBC Capital Markets. Please go ahead, sir.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Hey, thanks. Good afternoon, everyone.

John W. Allison -- Chairman

Hi Jon.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Hi, just a quick follow-up on that -- on Brady's question on number of banks coming at you. How is the quality of those companies in general -- quality of the loan book?

Brian S. Davis -- Treasurer and Chief Financial Officer

Well, I don't know until we get in. But, I'd say from with the good, I had to say it across the board, some of them might have stubbed [Phonetic] their toes and I guess they don't want to stub their toes. I guess it is sort of a poor sales sign. It's just a matter of price, I mean obviously this came [Indecipherable] also wanted to do with the failed bank, they bought similar items. So it all has to do with the price of the bank, what it does to Home. But I think overall banks are in the best shape, they have been in many, many, many years. So I think most of our good, it just depends on what it does. We're not going to do a deal for the sake of doing a deal. we go and do a deal, if it makes sense for our shareholders, and that is accretive to EPS for our shareholders and add some additional value or maybe a different market, but we can't much savings if we go outside Florida or Alabama or Arkansas. Unless Chris should buy something in New York, I don't think he is interested in doing that.

Jon Arfstrom -- RBC Capital Markets -- Analyst

All right. Also, you've been clear on your view on the Fed, but big picture thoughts on rates from any of you. Is there like a directional bias that you're managing to in terms of your company. You think we're going lower on the savings side?

John W. Allison -- Chairman

I think we're going lower. I don't, I don't -- some people think, we're going to go negative. I don't -- may be -- maybe a quarter or two. I think we may see that. I don't know that really -- it reaches a point where [Indecipherable] stimulate. So that's like another -- another quarter down or may be two down, will pretty much be the end of it, but some of the bankers are already -- they have already gone on the rates.

They were up, as I said earlier, if Fed raised up 50 basis points and they dropped 150 basis 0to 200 basis points on the rate. So it was kind of chaos out there for a little bit, we just got out. You know sometimes it's good time to hold, sometimes it is good time to follow. This was not a good time to -- not a good quarter to originate new loan spaced on competition and they're selling us that was in the market. So, even though we did originate $710 million, a lot of it never, never got up to our executive loan committee, because they plus it before it ever got.

Jon Arfstrom -- RBC Capital Markets -- Analyst

John, Randy Sims was amazed at the conference last last month. I think that question was asked to all the bankers in the room and reevaluating those answers a year later and they were all completely wrong. That's exactly right.

John W. Allison -- Chairman

That's exactly right. Every year they ask questions on what are rates going to do? What's the most threatening thing to you [Indecipherable] that best bankers in America, I guess, most of them were there and every year they've been 100% wrong. The year later. So I'm kind of the opinion after seeing that, two or three years, we need to think what we don't want. If rates are going down maybe rates will go up, I don't know.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Well, a year ago they went up, right.

John Marshall -- President

Yeah, last year they were going up and Tiff can tell me that somebody calling was, you do need to get ready, rates going little down, and I though [Speech Overlap].

John W. Allison -- Chairman

I'm going to tell you that in this country right now is that nobody really knows. Things may go -- rates will probably go down a little bit, but who knows what will happen after that, they could just release, it will come back up.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Okay. Okay. Kind of -- we're kind of turning the needle just a little bit, as it -- as the right change in the bad. You have a tendency, you won't twist that now, but we're just tweaking it or doing that and I think it's probably the best thing to do right now till you get to trend. I don't know want a trend is. It appears to me to be down, but that doesn't mean it will go down.

Yes, yes. Okay. And then I guess the last question. We kind of periodically bug you on Home $2.00 and obviously the rate environment has changed a little bit, but big picture goals for 2020, do you have any thoughts on that, on where you going to take this?

John W. Allison -- Chairman

I'd like to be the $2.00. I just don't -- we need a billion dollars worth of loans and it's just tough to get right in there. It's tough to get at a decent rate, so it might push our Home $2.00 by another year in my mind, but we'll get there. This has been an interesting -- it's been interesting. We normally all the goals we said in the past we hit within I think 18 or 24 months. And this has been a absolute battle getting here with all the changes in the payoffs and the rates and the rate movements. It's been interesting times.

But overall, Home has returned to the shareholders over $500 million in the last five years and we earned $1 billion and we running close to 2%. So we've been able to manage our way through this crazy environment and produced still sale best-in-class results. So hopefully we can continue to do that in the future, Jon .

Jon Arfstrom -- RBC Capital Markets -- Analyst

Yeah, well, it's quality. I agree. So thanks for the help. I appreciate it.

John W. Allison -- Chairman

You bet. Thank you.

Operator

The next question will come from Stephen Scouten with Sailor O'Neill. Please go ahead.

Stephen Scouten -- Sailor O'Neill -- Analyst

Hi guys, how's everyone doing?

John W. Allison -- Chairman

We're good, Stephen. I had -- enjoyed spending time with your people in Atlanta the other day.

Stephen Scouten -- Sailor O'Neill -- Analyst

I heard that. You guys have both been in Atlanta and not come to see me. So we'll have to speak --

John W. Allison -- Chairman

Well, yes, you should have come out. Centennial was really good. They -- maybe they had the top people out there, may be one --

Stephen Scouten -- Sailor O'Neill -- Analyst

Hold now, we'll figure that out one day.

John W. Allison -- Chairman

Let me tell you, it was extremely healthy. That was -- I really enjoyed there. I had a --

Stephen Scouten -- Sailor O'Neill -- Analyst

That's great.

John W. Allison -- Chairman

Back problem and I had to lean, but I would love to stay for another hour and have that interactions.

Stephen Scouten -- Sailor O'Neill -- Analyst

That's fantastic.

John W. Allison -- Chairman

Thanks for [Indecipherable].

Stephen Scouten -- Sailor O'Neill -- Analyst

I'm glad you're here, absolutely, absolutely. Curious what you're thinking on share buybacks from here. You said you might build capital. I think you mentioned $100 million to $200 million or you think and if you don't have the loan growth here in the near term that you might just hold the capital and not do more buyback activity here in the near term?

John W. Allison -- Chairman

No, we'll continue to buy back. We will continue to be in the market buying stock with market, but stop. We know that. We cut back on at somewhat, the way -- the amount we've been banned. We think it might be prudent to store up $150 million to $200 million. Worst thing could happen to us if we do that, we got a sub, it's due in 30 months.

Brian S. Davis -- Treasurer and Chief Financial Officer

March of '22.

John W. Allison -- Chairman

March of '22. We can pay way down the sub debt. Somehow, they've never convinced me how that works. I counted just capital and it shows up on the balance sheet as debt. So I don't understand how that works. I don't like debt. So we're thinking -- we're thinking that might be -- we might use the cash to pay down on that, kind of split in that, if it's $10 bill, we're kind of taking $5 and buying stock and about $5 sticking back. We're blessed to have the kind of earnings multiple this company has, where you have that kind of money to be able to do those things. I mean we pulled all the handles -- I don't know if you heard my presentation, but we have -- we've earned over $1 billion in the last five years, and we've given back to our shareholders over $500 million in stock buybacks and dividends. So while growing -- while growing -- growing all, but growing tangible book by 78% and our capital ratios at the same time. So it's a pretty good money maker.

Stephen Scouten -- Sailor O'Neill -- Analyst

Yeah, absolutely. No that's good. Is there a way to frame it up. I mean obviously you bought back maybe -- it was about $105 million in 2018, you bought back, it looks like maybe about $75 million, $76 million this year so far. Is it $100 million a year over the...

John W. Allison -- Chairman

That's probably...

Brian S. Davis -- Treasurer and Chief Financial Officer

That's probably close.

John W. Allison -- Chairman

That's probably good for you.

Stephen Scouten -- Sailor O'Neill -- Analyst

Okay. And then on the expense side, one of kind of follow up there is -- is this a good run rate in the quarter? Was there anything unusual in the salary line? In particular it looked like it jumped a couple of million bucks this quarter?

Brian S. Davis -- Treasurer and Chief Financial Officer

A lot of that was the bonuses paid of the -- New York with the payoffs.

Stephen Scouten -- Sailor O'Neill -- Analyst

Okay. So that would remain elevated as long as you continue to see payoffs, but if pay decline that number would also come down a bit?

Brian S. Davis -- Treasurer and Chief Financial Officer

That's correct. But the way Chris has it structured, that's part of this employee compensation and we don't have the legacy. It doesn't have our structured that way. So there will be in the -- if the $720 million for the more families payout in the fourth quarter, there will be about $4 million with the fees and there is no associated expense plan.

Stephen Scouten -- Sailor O'Neill -- Analyst

Okay, got you. Very helpful, very helpful. Okay, and then maybe just the last thing around the NIM. If I'm hearing everything you guys have said correctly, it looks like maybe loan yields are down a little bit from what you've booked already this quarter. So if loan growth does return a little bit, that would put more incremental pressure on your NIM than it would if maybe you just pulled back and stayed flat. Is that a correct way to think about it?

John W. Allison -- Chairman

[Speech Overlap] That's a tricky question. Loan growth returns, that will put more pressure on NIM. We're routing it lower already. That's probably right.

Brian S. Davis -- Treasurer and Chief Financial Officer

In theory, yes.

John W. Allison -- Chairman

Yes, I get it. In theory, that's probably right.

Brian S. Davis -- Treasurer and Chief Financial Officer

In this right environment as we fit.

Stephen Scouten -- Sailor O'Neill -- Analyst

Right. Right, OK. So, yes, it's a push pull between making more money or having better margins and better returns. So that -- no, it makes a lot of sense. Okay, guys, perfect. Thank you guys for all the color.

John W. Allison -- Chairman

All right. Thank you.

Operator

The next question will come from Brian Martin with Janney Montgomery. Please go ahead, sir.

Brian Martin -- Janney Montgomery -- Analyst

Hey, guys.

John W. Allison -- Chairman

Hey, Brian.

Christopher Poulton -- President

Hi, Brian.

Brian Martin -- Janney Montgomery -- Analyst

Hey, Steve. And I guess maybe probably for you, but just going back to the margin for a minute, I guess -- I guess if you get another rate cut or two, I guess just kind of from the core margin perspective, I mean, I guess do you expect -- I guess it sounds like you still expect some continued pressure there on the way down, but I guess do you expect the more rate cuts you get. I guess, is your expectation that the beta -- the deposit beta gets higher, so you get I guess more benefit, I guess or less impact?

Stephen Tipton -- Chief Operating Officer

Yes, potentially. I mean, we talked this morning. I mean, I think you had such -- on the deposit side, you had such a long period of zero rates and they ran up and gotten to 2% range and yes, everybody is excited to earn that. I mean, I think it will take some time as that appears that this may pull back down and we're seeing, and finally seeing this past month on the deposit side, CD volumes and those type things below the 2% range.

So another rate cut or two that people kind of go back to looking for security over yield that may help from a reduction on the rate side, but it's still -- there's still competitive environment on the deposit side -- in all of our areas we're in, you're seeing 2 plus percent ads out of competitors, both here in Arkansas and in parts of Florida. So that's just something we're having done to manage around.

Brian Martin -- Janney Montgomery -- Analyst

Yes, OK.

Stephen Tipton -- Chief Operating Officer

The numbers that Brian gave from a modeling standpoint I think are consistent with what we saw this quarter from a core perspective, if you strip out all the deposit things we talked about. But, I mean, again, as Johnny said I think in the environment that we're in, you get to take credit for those and we're going to see those continue for foreseeable future.

Brian Martin -- Janney Montgomery -- Analyst

Okay. And just maybe I guess just in general, just kind of going to the efficiency ratio, I mean it's a great level, I mean in this environment where revenues are being pressured, I mean, is there a lot more that, is there a lot more you can do or you see other opportunities on the expense side? How should we think about kind of efficiency as you go into next year? I mean, is it kind of flattish? Is it up a touch? And has it is drift up a little bit from where it sat in this in '19 to '20? Just kind of, how are you thinking about that in general?

John W. Allison -- Chairman

I'll just use of 40%. I think 40% is fair. I mean, we've, we brought in lots of new people into the Company over the last year or two and we've maintained that. I think most of that -- any spending from personnel, I don't see it right now. Randy, you about see any additional major spending?

C. Randall Sims -- Vice Chairman

Not anything major. There is still a few areas that need a person here and there, and unless we have a lot of growth, I don't see that increasing. I think your 40% is right on the mark.

John W. Allison -- Chairman

Yes so Townsell said, if we got to 41%, she'll come back and take it back over. So, [Speech Overlap]

Donna J. Townsell -- Senior Executive Vice President, Director of Investor Relations

[Indecipherable]

John W. Allison -- Chairman

So anyway, I'm just joking. As I get pretty solid around 40%, it might take a little over to go lower, but I think it's pretty solid.

Brian Martin -- Janney Montgomery -- Analyst

Okay. And that maybe for Brian, Just that FDIC credit. I guess that comes back in what mid next year? Is that how to think about that or is just kind of ballpark, when we should start putting that back in?

Brian S. Davis -- Treasurer and Chief Financial Officer

No the FDIC credit is like a one-time for us.

Brian Martin -- Janney Montgomery -- Analyst

Okay.

Brian S. Davis -- Treasurer and Chief Financial Officer

So, you saw the negative in the income statement. That's because we were able to reverse accrual for -- for Q2 and not have to make really much of an accrual for Q3. So...

Brian Martin -- Janney Montgomery -- Analyst

Okay, so it's back in [Speech Overlap]

Brian S. Davis -- Treasurer and Chief Financial Officer

It goes back to its normal run rate starting in Q4.

Brian Martin -- Janney Montgomery -- Analyst

Okay, perfect. Okay. That's all I have. Thanks guys.

John W. Allison -- Chairman

All right, thank you.

Operator

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

Matt Olney -- Stephens -- Analyst

Hey guys, good afternoon.

John W. Allison -- Chairman

Hi, Matt.

Matt Olney -- Stephens -- Analyst

Hey. Most of my questions have been addressed, but on the M&A discussion. It sounds like you're seeing lots of books out there. I'm curious, do you think this is a buyer's market right now? I'm try to get a better idea of what the pricing could be in an M&A transaction right now?

Brian S. Davis -- Treasurer and Chief Financial Officer

I'm saying it's much more of a buyer's market than we've seen in the last three or four years. John and we've actually had some reach out to us some time ago, that we didn't participate and haven't done anything yet because of the higher price. Maybe things are coming back. We think that, we think they might be coming down. As I've said to you when I look at the universe and how we starting to 2 times tangible and we run the 2% all the way, and the guy who is what we do something is running at 1% ROI, and heat trades -- he's trading at 1.8% or 1.9% tangible. So it has been frustrating to us to see that the weaker [Indecipherable]. There is no disparity between the best operators and the floor operators to speak out really, unless they stubbed the toe, and when they stubbed the toe, then the markets punishing them right now, but I don't know that you going to see a lot more -- there may be some more problems with asset quality, we have seen many in this quarter's thus far having -- people having an asset quality problems.

Matt Olney -- Stephens -- Analyst

So far it hasn't been as bad as it was last quarter. But you mentioned Florida as a market you're looking at and you've been buying in Florida for several years now, and I would think that you already know, some of these banks pretty well. So I'm curious, are some of these the same banks that you've danced with previously, or the books down there that you're seeing these new faces that you're less familiar with?

John W. Allison -- Chairman

Actually, it's a little of both -- it's a little of both.

Matt Olney -- Stephens -- Analyst

Okay.

John W. Allison -- Chairman

It's -- some that we dance with, we didn't do anything and then some that -- actually the last book we looked at was four bank this week right and -- taking the names. Two, we had danced around with and two we had not.

Matt Olney -- Stephens -- Analyst

So about half and half.

John W. Allison -- Chairman

But I think, I like to perhaps -- it's going to give -- I don't know why everybody is in a hurry all of a sudden, maybe it's the loan demand and rates and the difficulty of managing $15 million or $20 million assets in this kind of roller coaster economy, maybe they're just going the house, maybe they're taking the list [Phonetic] who is going to win. I don't know what happened, but something -- something is certainly out there -- when you ask them why they thinking about selling, I don't know if you already get the right answer.

Matt Olney -- Stephens -- Analyst

Got it. And then just switching gears, more of a modeling question, on the tax line item, you had some unusual movements this quarter. Any change in your expectations of that effective tax rate being around 24%?

Brian S. Davis -- Treasurer and Chief Financial Officer

Yes. Should change a little bit. Our marginal rate had been 26.135%, but with the Florida being a little bit lower, we haven't quite a bit of real estate down there in Florida, probably the marginal rate now going to go to 25.819%. We had been running an effective tax rate of about 24.1%. I'll look for that to be about 300 basis points lower down to about 23.8%.

Matt Olney -- Stephens -- Analyst

Got it and then --

Brian S. Davis -- Treasurer and Chief Financial Officer

That's what I would have told you approximately. I think you did it right, I like you told your [Indecipherable].

Matt Olney -- Stephens -- Analyst

And Brian, what about on the purchase accounting accretion, little of a step down in the third quarter. What's the outlook from here going into the fourth quarter and then the CECL's treatment for that going into 2020?

Brian S. Davis -- Treasurer and Chief Financial Officer

This last quarter we had $8.5 million of accretion and $6.2 million of that came from what I'll call just normal running off the normal operation and then we had $2.2 million of payoff accretion. What I've been witnessing is that about -- over the last year and a half is that it seems to be tripping down a little over $0.5 million per quarter on average. I would not be surprised to see us for total accretion be below $8 million for Q4. Maybe around $78 million, $79 million for accretion. As far as the change when CECL comes in, it really shouldn't change much, because everything that we have that's out there on that is accreting continues to accrete.

The little bit of change we might have is that we've had some non-accretable discounts that we've decided that were no longer needed. And we've been able to move those over to accretable. And that piece of the puzzle will stop in 2020. But we still have $78.4 million of accretable discounts on our books as of September 30.

Matt Olney -- Stephens -- Analyst

Got it. And then on the BOLI contract that was surrendered, what's the ongoing impact of that? Is that a few hundred thousand dollars in fee income that you were benefited from each quarter that will now stop?

Brian S. Davis -- Treasurer and Chief Financial Officer

I mean, obviously, in our non-interest income we had an increase in cash by a life insurance and it was $714,000 for this quarter. $135,000 of that was related to the BOLI that we cashed in for this quarter. That will not be reoccurring in Q4 or Q1 or any time in the future after that. We get our BOLI cash six months after surrendering and we surrendered it late in September.

John W. Allison -- Chairman

So we actually think we should see a pickup there. I mean we were yielding like 1.16% or something --

Brian S. Davis -- Treasurer and Chief Financial Officer

1.14%.

John W. Allison -- Chairman

1.14%. I mean we expand our head do better than that. So that's why we called [Phonetic] it there.

Matt Olney -- Stephens -- Analyst

Okay. Okay, guys. Great report. Thanks for your help.

John W. Allison -- Chairman

You bet. Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Allison for any closing remarks. Please go ahead.

John W. Allison -- Chairman

Thanks, Jeff. I guess we'll see in 90 days. We'll continue doing what we've done in the past, buying back stock and growing the tangible book value of the Company. Continue paying the strong dividend and growing capital at the same time. So I would say that we're kind of -- like what is it [Indecipherable] this has never had -- just let them go, this is reliable. Certainly Homes will come in the reliable companies, so we continue to hit good numbers and perform properly in these, all different kinds of markets and we look forward to talking to you all again in 90 days, and thanks for your support.

Operator

[Operator Closing Remarks].

Duration: 66 minutes

Call participants:

John W. Allison -- Chairman

Brian S. Davis -- Treasurer and Chief Financial Officer

Christopher Poulton -- President

John Marshall -- President

Tracy M. French -- President & Chief Executive Officer

Stephen Tipton -- Chief Operating Officer

C. Randall Sims -- Vice Chairman

Kevin D. Hester -- Chief Lending Officer

Donna J. Townsell -- Senior Executive Vice President, Director of Investor Relations

Brett Rabatin -- Piper Jaffray -- Analyst

Michael Rose -- Raymond James -- Analyst

Brady Gailey -- KBW -- Analyst

Jon Arfstrom -- RBC Capital Markets -- Analyst

Stephen Scouten -- Sailor O'Neill -- Analyst

Brian Martin -- Janney Montgomery -- Analyst

Matt Olney -- Stephens -- Analyst

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