Hello, and welcome to today's SmartFinancial Fourth Quarter 2021 Earnings Call. Hi, my name is Bailey. I'll be your moderator for today's call. All lines will be muted during the moderation for today's call. [Operator Instructions] I would now like to pass the conference over to our host, Miller Welborn. Miller, please go ahead.

Thanks, Bailey. Good morning, and thanks for joining us this morning for our Q4 2021 earnings call. We always enjoy this, and with this group, each quarter to talk about our progress and our company. Joining me on the call today are Billy Carroll, our President and CEO; Ron Gorczynski, our CFO; Rhett Jordan, our Chief Credit Officer; and Nate Strall, our Director of Corporate Strategy. Before we get started, I'd like to ask each of you to please refer to page two of our deck that we filed this morning for the normal and customary disclaimers and forward-looking statements comments. Please take a moment to review these. What a fantastic quarter by our team here at SmartBank, and a great end to a really strong year for our company. We've demonstrated again our ability to outwork the competition and execute our strategic plan. Our organic pace of growth has been impressive, and we see nothing slowing that down in the months ahead. Between very, very strong markets and the addition of several new sales team members that Billy will talk about shortly, we feel we are well-positioned to continue our current pace. As we jump into 2022, we're excited about what lies ahead for us this year. With that, I'm going to hand it off to Billy.

Thanks, Miller, and good morning, everyone. As Miller said, this has been one heck of a year for SmartFinancial. We wrapped up another solid quarter to close out 2021. And I believe this last year was probably as transformative as any we've had. The evolution our company has made in the last 12 months has been incredible, and our positioning for the future is very exciting. First, let me touch on some slides shown in our deck. Well, I'll reference page three. We -- first, we wrapped up our Sevier County Bank acquisition, achieving our targeted cost saves of over 63%. We've also done a nice job there retaining assets and the necessary sales team pieces, while picking up a great long-term core deposit base. This was a great transaction for us. Our Fountain Equipment Finance Group, that was acquired midyear, has had a solid production quarter. We remain very bullish on this line of business in 2022, as we now look to leverage the bank's footprint, the sales network. Organically, our investment in several new sales teams in the second-half of 2021 is progressing well. We've added over 25 bankers during this expansion, adding several great new markets to our franchise. During Q4, our [indiscernible] team has put the needed operational pieces in place, and we're excited to see this group go to market in 2022. We also made an exciting addition to our Wealth Management team by bringing on an experienced group in our Gulf Coast region that had previously managed over $350 million in AUM. This team is now fully integrated and having some great early success. Let me touch on our organic growth expansion now since that has been a major pivot for us. Page four provides a nice map. Those familiar with our story know…

Thank you, Billy. Looking at slide seven in the deck, our loan portfolio has continued to see steady growth throughout the past four years, ending 2021 just short of $2.7 billion in outstanding loan balances. That equates to a compound annualized growth rate of 20% over the same time period. Our average loan portfolio yield for the year 2021 was 4.67%, and was relatively stable throughout the year. We wrapped up the most recent quarter at 4.53%, down from an unusually strong Q3, but in line with prior quarters this year. We're extremely pleased with 2021 performance, especially given the challenging headwinds generated by the excess liquidity across all financing sources in the marketplace continuing to put pressure on loan yields. Likewise, our deposit portfolio has seen continued strong growth over that same timeframe, with exceptionally strong performance in 2020 and '21. During the current quarter, our core deposits increased over $220 million or 23% annualized. Between this growth and our focus on controlling funding costs, we've lowered our total cost of deposits to 22 basis points, a three basis point decline from the pervious quarter, and ended the year with a loan-to-deposit ratio of 67%. Ron will provide more information on deposit composition in a few slides. As you can see on page eight, our loan growth for the year finished strong, with Q4 net organic loan growth of over $75 million. Year-to-date, portfolio balance growth of $311 million represents an annualized growth rate of 12.4%. Considering these levels were net of $35 million in PPP loan forgiveness activity in Q4, and over $375 million in PPP loans forgiven since year-end 2020, this capped a very strong production year for 2021. Portfolio mix excluding PPP impact and geographic diversification in the portfolio remained consistent throughout 2021. We're very proud…

Thanks, Rhett. Let's move forward to slide 11, our loan loss reserve. As Rhett indicated, our strong credit quality has led to minimal provision for the quarter. At quarter-end, our allowance to originated loans and leases was up 0.74% and our total reserves to total loans and leases were at 1.31%. Given our positive credit outlook going into 2022, we expect to continue minimum provision going forward mainly to support new growth and conserve safeguard against unforeseen events. On slide 12, our deposit composition had little change for the quarter. Our non-interest bearing deposits grew 32% annualized and our non-interest bearing to total deposit ratio held at 26%. Looking ahead, we are cognizant of a potentially rising rate environment and its impact on deposit pricing. However, given the bank's current liquidity position, we don't expect significant near-term changes in deposit costs or composition. We do however anticipate a minimal downward re-pricing at some higher cost Sevier County Bank term deposits in the coming months. Moving on to slide 13, liquidity utilizations; during the quarter, we continue to experience liquidity build and in line with our previously discussed securities purchasing program began strategically putting excess funding to work. Our bond purchase strategy has been built around two central themes, discipline and patience. Our directive has been to take advantage of upgrade periods and taper purchases during periods of market weaknesses as we saw near year-end. As we move into 2022, we will continue to evaluate our liquidity utilization for support and not only our loan yields, but our continued purchase of securities. Even with purchasing over $250 million securities this quarter, our cash position remained virtually unchanged when compared to the prior-quarter with total cash just above $1 billion. Our net interest margin for the current quarter was 2.92%, a decrease…

Thanks, Ron, and to close, our markets are all performing extremely well. The Southeast is poised for great continued growth, and it's one of the reasons you're seeing this pivot through our strategy of using these commercial banking lifted opportunities. We're becoming recognized in our region is a great place to work, and I believe there are small groups of banks in that peer set, the high caliber bankers want to go when looking to make a move. We are becoming one of those places. The lending side of the house continues to be robust, production has been strong, but we're still battling some of the excess liquidity in the system that's leading to continued lower line utilization and some paydowns. But that said, our new teams are starting to build nice pipelines, and as these loans move on to the balance sheet, we believe that loan growth will continue in the low to mid teens on an annualized basis for the next few quarters. As Ron alluded to, we've got several moving parts as the new teams ramp up, as PPP income rolls off. But with 20% of our assets in cash, just a little rate movement upward should provide some nice window to that. We feel very good about our ability to produce solid metrics this year even with the investments we've made, and as we move into becoming a strong organic revenue growth company. The momentum that is being built as we execute our plan this year will be transformative to our financials. It's a very exciting time to part of this company as a client, as an associate, and as an investor, and we're well-positioned moving forward. So, I'll stop there, and we will open it up for questions.

Thank you. [Operator Instructions] Okay, so we do have our first question, and that question comes from Graham Dick of Piper Sandler. Graham, please go ahead.

Hey, good morning, guys.

Hey, Graham.

So, obviously, 2021 was a huge year for you guys on the strategic front with M&A, new hires, lift-outs, and market expansion. I'm just trying to understand it. Are you guys thinking about maybe slowing down this year, and really focusing on operating the franchises it has currently or are you still just seeing so many great opportunities out there that it might simply be too good to pass up maybe in the form of more lift-outs or new market entries?

Yes, it's a great question, Graham. You've been familiar with our story. I think we're always opportunistic. But at the same time, I really think our plan for this year is to really have this -- it's really more of just a blocking and tackling year. This is a year where we really are focusing on the integrations, in particular of these new team members, making sure that we have success in all these new zones, really focusing on expense controls, getting that efficiency ratio. And we've made some huge investments last year, and we're really excited about those. We need to make sure that those come to fruition like we want. So, I would say we're going to lean to a little bit more of what I would call a blocking and tackling year. Could there be some additional hires that come in their existing markets? Yes, possibly. We're going to be opportunistic on the hiring front, but probably not looking to replicate anything near what we did in 2021.

Okay, great. And that makes sense, definitely a really busy year for you all. And then I guess as that translates to expenses, I heard that $25.5 million guidance for at least 1Q. Are you thinking that might be sustainable for the next few quarters or just a little bit higher given you don't have anything planned to -- or I guess any plans for any big strategic initiatives to start the year or are you seeing [spec] [Ph] and you're seeing maybe a little bit wage inflation or general cost inflation or additional tax spend that might lift that higher, I mean maybe over $26 million as a run rate for the full-year?

Yes, it's -- Ron, I'll let you take that. And, obviously, you're getting -- I mean, wage inflation, I think we're all experiencing some of that. So, we know that there's probably a little bit of build into that. Ron, you want to give some color on your thoughts around forward guidance?

Yes. The Q1 $25.5 million, I think we'll match that around $26 million in the later -- Q3, Q4. I think we've already embedded some wage inflation in our numbers. So, I'm pretty confident that we probably won't go over that $26 million mark the later quarters, around $25.5 million, $25.7 million for the first two quarters.

Okay, awesome. That's very helpful. And I guess just the final thing for me, last one is just, those numbers on the asset sensitivity or, more specifically, your variable rate book, do you mind just going back and repeating those. I've got this $440 million number maybe in variable rate loans that are neither for the -- I might have misheard it, and just if you could just repeat that that'd be helpful.

Sure, we have $440 million that are out of [floors] [Ph] that will [indiscernible] price immediately, all within three months of a rate hike. And we have $600 million that are in floors. And after 50 basis points of rates up, we should see probably around the $67 million, $70 million turn to full flow [between the full variable] [Ph].

Okay, perfect. All right, that's it for me, guys. Thanks for taking my questions, and congrats on another really good quarter.

Thanks, Graham.

Thank you, Graham. The next question comes from Brett Rabatin from Hovde Group. Brett, please go ahead.

Hey, guys, good morning.

Hey, Brett.

Wanted to first to go to the margin, and I think, if I heard you correctly, you gave guidance for 290 to 295 for the first quarter. And I wanted to make sure I understood the linked quarter increase from the securities portfolio. Well, so, one, of that 290-295, I assume that includes the $460,000 and $1.4 million for discount accretion in the PPP fees. And then wanted to make sure I understood the commentary around the securities portfolio correctly. It sounded you guided about $500,000 in income from securities. Was just curious how much guided or what you bought during the quarter and how much the yield was on the acquired securities.

Yes, I'll take that, Brett. For the 292 is fully loaded with the accretion that was booked. In the guidance, we gave a little bit less accretion for Q1, but for the securities, we purchased during the quarter $250 million worth of securities. We're probably looking at 142-143 interest rate yield on those, with duration probably around 5%, at this point a little less than 5%. Going forward, we did purchase a little bit in 2022, $50 million so far, and we pushed our division down into the three, three-and-a-half-year mark, and that's probably around $150 million. So, that's a - does that answer your question, any more information on that?

Yes. No, that's helpful. And then as I just think about the 6% for a 100 basis point upside, and I think about the first quarter, and the possibility of a March rate hike, it seemed like between the liquidity that you have on the balance sheet, the re-prices and the loans that re-price, it seemed like your margin should be over 3% depending on rate hikes later this year. Would there -- I guess, am I thinking about it correctly? And is there anything that would be maybe an impediment to that?

Yes, we've -- other than the rate stock, we have done a scenario where [March's] [Ph] rates up for the first quarter is probably [indiscernible] just due it's going to be so late in the quarter. But we projected 25 basis point increases for March, June, and December. And we're looking at an additional $5.3 million of net interest income on that -- excuse me, of net income on that. So, we are -- our margin will go up with that, and especially if we have the loan growth we're expecting to get some yield off that probably $600 million of cash that we're sitting on. So, I think the [up-rate] [Ph] will be a trend going forward.

Okay, that's great color. And then, lastly, you just mentioned loan growth. I'm curious, that the dealer floor plan, in particular, does that ramp up pretty quickly here, and how much does that contribute to the low to mid-teens loan growth this year?

You know -- and Rhett, I'll let you speak a little more specifically the thoughts around that. Probably not much right out of the gate, we're at, as you know, as we look to bring these folks on we think this first quarter there's going to be a lot of transition opportunities for us, as you know, especially as dealer inventory is really a bit lower right now, their line utilizations are lower, which we actually think is a great time to probably get into this business as some of those opportunities present. But, Rhett, you want to give a little color on our Dealer Group and thoughts around that?

Well, Billy, I was going to basically kind of say pretty much the same you did. I think we'll see more impact there in the latter part of the year than the early part of the year. I think, as you mentioned earlier, we've spent most of the fourth quarter that went into the early part of this quarter in just preparing that division, that's a new line of business for us. So, getting software capabilities in place, getting everybody set up and ready to go has been a key focus and the utilization rates are still low in that space. So, I would anticipate it to be a little more impactful on the second half of the year than the front end of the year.

Okay, that's great color. Appreciate it. Thanks for it.

Thank you, Brett. Our next question comes from Matt Olney from Stephens. Matt, please go ahead.

Hey, thanks. Good morning, guys.

Good morning, Matt.

Good morning, Matt.

I want to ask more about the excess liquidity that you have right now. You've hired a number of new loan producers. So, I'm sure much of the liquidity is earmarked for loan growth this year, but it still seems like you've got room to deploy a lot more liquidity in the securities portfolio. What are the updated thoughts about how much you're willing to deploy into securities throughout the course of the year?

Yes, and Ron, just high-level, I mean, Ron, I'll let you kind of give some maybe a little bit deeper color. For us Matt, it's just been, we've just not been really excited. We felt like we needed to put some to work in Q4, which we did. And Ron the team were very, I think deliberate in the way they invested it and kind of watched the market to do that. Obviously, with projected rate increases in there, we're watching that closely. I think thought we'd like if we do go, we'd like staying shorter given what's going on. And I think at the end of the day, we really liked this position of additional liquidity strength right now. But Ron, I'll let you kind of build on that. While that does drag, it's a nice tool to have in the tool belt.

Yes, thanks. That's a good question. We originally wanted to purchase around $400 million of securities, we were about $100 million short, we are in pause mode, the kind of rates stabilize a little bit to see where this is going. We do anticipate to probably purchase another $100 million in the near future, and then kind of see where our loan growth is going, and more importantly, see our -- where deposit growth is going. So, again, so we can look forward to see let's pause, but we've been patient a long time, it's no sense to rush out today and go ahead and buying up investment securities may not be the best answer. But that's what we're doing at this point of time.

I appreciate that. And it's a moving target with lots of difficult moving pieces there. So, appreciate the color. And also want to make sure I appreciate the guidance around efficiency. I think I heard you say a mid-60% range. Just want to clarify is that the average the full-year and if so should be assuming a little bit on the higher end in the front part of the year and a little bit lower in the back half of the year?

Matt, I'm sorry -- this guidance is for the Q1. So, it's not for the full-year. We are higher for July and we will be down ending probably around the mid-60 range by year-end. So, yes, you said it will get better as we go forward.

Okay, thanks for the clarification.

Thank you, Matt. The next question comes from Feddie Strickland, Janney Montgomery Scott. Feddie, please go ahead.

Hey, good morning, guys.

Good morning, Feddie.

Good morning, Feddie.

I was just wondering, do you think the continued in migration of people into areas like Tennessee in the Panhandle can offset some of the pressures of higher rates on the mortgage side?

Yes, from a mortgage, just kind of from a mortgage revenue standpoint, Feddie, the demand size.

Correct. Yes, from a mortgage revenue standpoint.

We do. We've never been a huge refi shop anyway. Our focus has been more on purchase transactions and yes to answer your question is, we believe I think we believe that our mortgage line can stay -- can continue to be a good contributor for us, just with the inflow and growth that we're seeing population growth we're seeing resilience. Inventory is probably one of the biggest headwinds that when we talk to our teams out in the field, it's just lack of inventory, it's probably the biggest headwind, that is if that would stay reasonable, we feel -- still feel really good that mortgage can be a nice contributor going forward.

Got you. And then are you hearing anything incrementally different from customers on their business outlook? Are they seeing any kind of easing up supply chain issues, or is that -- has that been an issue for your customers?

It depends. Rhett, kind of chime in on what he's hearing from our market teams. But I think it's dependent on the industry. For the most part, I think most of our businesses that we're dealing with have been pretty positive, one of you may have some comment on this as you talk to some of our clients, the ones I've talked to feel pretty good about who we are. I think there are some supply chain challenges, but overall, most of our customers feel pretty good. I don't know -- [multiple speakers]…

We got to trust everybody a little bit. Hopefully it is bottomed in getting much worse, but they gradually get a little bit better. I think it's spotting, it's probably touched everybody in some sense. Rhett, anything from you?

I was going to say the same Billy. I mean, I think the supply chain, clearly you probably see it more or so in certain asset areas as far as equipment, just delays and being able to complete the purchase if somebody needs to add a new piece of equipment or expand the fleet or something to that effect, just finding available assets to purchase is still a challenge at times, but for the most part, just general business activity. Most clients were very pleased with '21, numbers are looking very good and the outlook that we're doing, most of them are bullish on '22 at this point.

Now that's great color. Thanks. And one last question. I was just curious; do you see opportunities to improve the margin even without the Fed hikes? It sounds like you guys have some prepared comments that's on paper gold deposit repricing coming up?

Rhett you have touch base on deposits?

Yes, deposit re-pricing will have some, that's probably very similar to what we saw last quarter 2 to 3 basis points for a max movement. If they will know that increase is coming out. We were created to improve the margin by taking our excess credit ever again 14, 15 basis points and putting investment security. So, we would be able to improve the margin, on the back of the napkin. We were looking our excess liquidity today. It's not hurting a margin around 40 basis points. So, it's, yes, we can probably move the needle one way or the other and get the margin elevated over time, with or without the Fed increases.

Got it. Thanks for answering all my questions and congrats on a great quarter guys. : Thanks.

Thanks, everybody. Thanks.

Thank you, Feddie. The next question comes from Kevin Fitzsimmons from D.A. Davidson. Kevin, please go ahead.

Okay. Good morning, guys. How are you?

Hi, Kevin.

Hi, Kevin.

Hi, Kevin.

Most questions have been asked and answered. I was just more kind of piggybacking on Feddie's last question there. Because when we think about the tailwind of favorable mix shift of earning assets of taking that extra security putting the work in the securities book, theoretically helping the margin, it seems like it would, it only becomes more evident if the flow into the bucket of excess liquidity starts to slow down a little, in another words deposit growth. So, I know, I think you guys in your prepared remarks said, you expect excess liquidity and deposits to remain high or elevated. I'm not sure what word it was. But is there -- should we be thinking more about a scenario where, we've had this really outsized deposit growth, but should we be looking out a number of quarters and starting to think about a much more limited deposit growth or maybe even having a quarter where deposits go down? And maybe I'm just curious how you would think of that, because maybe we're looking out at a pivot point where NII has been driven by balance sheet growth, while the margin has been getting hit. And could we be setting ourselves up for the opposite where if the positive growth really moderates you even without and then on top of the great hikes, you can really, I don't see why you wouldn't see healthy margin expansion. But then if that excess liquidity gets draining, which is a good thing for the margin, it may be a -- keeps a limit, on average earning asset growth. So, I'm just -- I know that's a lot, but I just wanted to throw that kind of scenario out there and see what you thought about the asset growth.

Yes, yes. Kevin, I think you're right. I think a lot of it's going to be -- a lot it's going to be asset mix movement. I mean, it really is at the end of the day and in the wildcard there is what the continued deposit growth number is going to be. I don't think there's any doubt we were surprised with the amount of deposit growth we saw in '21. But the great thing -- the good thing about is we've picked up a lot of these new teams and these are great relationship bankers and so we're moving other accounts in but yes I do believe that you'll see deposit growth a little bit and as we change that mix, that we're kind of going back to Feddie's comment, that should help margin on its own absent any real large rate increases from the Fed. So I think your comments are spot on and Ron anything from you?

No, I totally agree. And we've been modeling that one way or the other. You're going to leave in a different bank coming into pandemic and that little different bank coming out. And the one bogey we're getting our heads around, our hands around is to live best. We did hire good deposit gathers. So, we're trying to balance what is the probable answer, but that's a very good question, by the way, so --

[Indiscernible]

Great to have you, but --

Kevin, we are talking this morning, when this pandemic started, we said you know, what, there's something like this. There's probably some opportunities, we need to make sure that we're positioned as we come out of this thing to come out swinging and then I think we believe we have and I love where we're sitting today. And like I said, even though yes, but the additional liquidity is dragging margin a little bit, man, I'll tell you this. It's a great position of strength for us to be sitting in today. Like Kevin this asset sensitivity on the balance sheet gives a lot of flexibility with changing mix, putting some of it to work and investments at the yields to get where we like them. It's good spot to be in

Yes, now, I -- and I totally understand why it's difficult to make any kind of forecasts and prediction about deposit growth, but it seems that and partly, it's because we have a backdrop of rising rates now that the tone about excess liquidity seems like in the past quarter or so it has shifted from being the biggest drag on earnings to being a biggest opportunity look looking forward and I think that the positive growth aspect is key.

Yes, and then one additional thing Ron. I was trying my best to keep up with you in the rate shock scenario, would you mind giving those numbers again?

Sure. With the 100-basis points shock, a 6% increase in net interest income. Currently, we have $440 million abandoned rate loans without closed, another $600 million with and at 50 basis points. Of that $600 million, $67 million will go back to floating, so we have a little bit of always away of increases to get more of the floor, keep designs out of the floor position. And I'll deposit --

Got it. Great.

And our deposit date is -- for this is about 40%. On actuality based where we're at today, I think we can go lower than that.

All right.

Probably 30%, 35% range. So, I think, we still have some opportunities at this, but again, upward rates is going indicate, we are in the pretty good position going forward.

Got it. Thanks Ron.

Thanks, Kevin.

Thanks, guys.

Thank you, Kevin. Our next question comes from Stuart Lotz of KBW. Stuart, please go ahead.

Hi, guys. Good morning. I hope everyone's doing well. Just a few more questions from me, most of my stuff has been answered already. But Ron, if we could go back to your fee guidance for next quarter, I think you mentioned, you expect fees of about $6.9 million in the first quarter, which is a little up from this quarter. But if I understood you correctly, there was about $340,000 from a one-time gain or one-time gain this portfolio. So, just curious what you think is driving the higher sort of fee guidance next quarter?

Yes, we really have two items that are driving it, our mortgage line, the seasonality of the fourth quarter all are seeing a decrease. So, we're seeing that ramp back up more towards a Q3 production level. It's about $160,000, $170,000 increase. And also the big, the other items are well, we brought on this new wealth division that came on mid to late fourth quarter. So that's -- we're looking to get about $400,000 of increased revenue from that line item, those two loan will get us there, and also insurance again, less of an impact, still increasing probably more to Q3 levels. So, those three items are going to drive us back to that $6.9 million run rate.

Okay, great. And how are you thinking about a growth rate for the full-year on top of that? I mean, you think [indiscernible] income of 29 is reasonable, just given the hiring momentum and expectation for kind of improved contribution from some of your new teams there?

We're not really going into full-year guidance. But I think $28 million is attainable. And then some but we will take that quarter-by-quarter as we move forward.

Got it. And just one more for me, turning to capital, I think your TCE ratio and kind of risk based capital are a little bit I guess artificially low right now just going all the excess liquidity. But given your expectation for pretty substantial loan growth this year, is there any appetite to, I guess tap capital markets given would you see rates are going to start moving higher, maybe any appetite for common equity or additional sub debt? Just kind of any comments there? Thanks.

Yes, I'll jump in there, Stuart. Yes, for us, I think we're always watching what's going on in the market. And yes and we're -- we'll continue to look to be opportunistic, we do feel that the ratios have stabilized. It will get they got a little pitched with the acquisition, which we knew. But as we look to go ahead and project out into 2022, we feel pretty comfortable with the position, we've always been comfortable leveraging appropriately, we think that's the right thing to do from a shareholder standpoint. So, prudently leveraging it is something that we're comfortable with, but that said, we know where the markets are and look for -- could look for opportunities to take advantage of that potentially, as we look ahead into the year.

Great, thanks for taking my questions, guys.

Thank you.

Thank you, Stuart. [Operator Instructions] Okay. Our final question comes from William Wallace of Raymond James. William, please go ahead.

Thanks. Good morning, guys.

Hi, how are you?

Just real couple house -- I'm good, thank you. A couple of housekeeping questions, on the NIM guide for the first quarter, what is the PPP fees you all are anticipating?

PPP is $1.4 million.

I'm sorry, could you repeat that?

$1.4 million.

$1.4 million, okay.

Yes.

Okay, and then just on the loan guide. I'm curious and I apologize if I missed this again a little bit late. But I'm curious what pipelines look like coming into the first quarter versus coming into the fourth quarter?

Yes, from a loan pipeline standpoint, I'd say the pipeline looks -- look stronger going into Q1 than they did going into Q4 was good. I think Q1 is a little bit better, as you know pipelines you got to get them, it takes -- it just takes a while to get them through the process, through the system, get them out of the books. But pipelines are good, are really good. We feel these new teams are coming online well, with some nice momentum and feel pretty bullish on our pipeline.

And evenly spread through the market.

Yes, yes.

Yes, so to that last comment, what are the pipelines look like or what does production look like out of the existing producers not the new teams also are growing?

Good, I think when you look at the existing markets, I think we tend to probably battle the pay off pay down issues more in existing markets where we've got a stronger base, got a larger footprint. I think that's where it is. So, when you look at net growth out of those markets, those markets are not production is good, but their contribution to the net balance growth number is a little bit smaller. So, we think the new group, the newer groups can kind of help bolster that low to mid-teens guidance on loans.

Okay, great. Yes, that's very helpful. I appreciate all the color today, guys. Thank you.

Thanks.

Thank you, William. There are currently no further questions registered. So, I'll pass the conference back over to the management team.

Thank you, appreciate it. And thanks very much for your support of our company. If you're interested where we're headed, I hope you each have a great week. Take care.

And that concludes the SmartFinancial fourth quarter 2021 earnings call. You may now disconnect your lines.