Q3 2019 Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Eagle Bancorp Inc. third quarter 2019 earnings Conference call.
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I don't I like to <unk> and the conference to your Speaker today, Charles Let me since Chief Financial Officer. Please go ahead Sir.
Thank you Victor Good morning. This is Charles Levinson, Chief Financial Officer of Eagle Bancorp.
Before we begin the presentation I would like to remind everyone that some of the comments made during this call maybe considered forward looking statement.
Our Form 10-K for the 2018 fiscal year, our quarterly reports on Form 10-Q , and current reports on form 8-K identifies certain factors that could cause the companys actual results to differ materially from those projected in any forward looking statements made this morning the company does undertake.
The update any forward does not undertake to update any forward looking statements as a result of the new information or future events or developments. Our periodic reports are available from the company or online on the company's website for the FCC website I.
I would like to remind you that while we think that our prospects for continued growth in performance are good. It is our policy not to establish with the markets any earnings margin or balance sheet guidance now I would like to introduce Susan real the president and CEO of Eagle Bancorp.
Thank you Charles I'd like to welcome all of you to our earnings calls to the third quarter of 2019.
We appreciate your calling in this morning, and your continued interest in Eagle Bank as usual Chad Williams, our chief credit officers also with US. This morning scan and Charles will be available later in the call for questions.
I'm pleased to announce that we achieved another quarter a strong profitability.
Net income for the third quarter of 36.5 million.
Wow.
Well that is in a decrease from our earnings of 38.9 million in the third quarter of 2018 and slightly below the second quarter 2019.
Profitability still ranks among the highest levels of community banks in the United States.
Return on average assets for the quarter was 1.62% and the return on average tangible common equity was 13.25%.
We are also very pleased to report that with solid growth in loans deposits and market share during the quarter at September Thirtyth, we've reached $9 billion until the last night.
For the quarter the earnings for a dollar seven per fully diluted share as compared to $1.13 per share in the third quarter of 2018.
As mentioned in the press release, it with two significant nonrecurring expense items.
Which is somewhat offset each other so that exclusive of those items our earnings for the quarter would have spent 37.1 million or dollar eight per fully diluted share.
I will discuss the details of the FDIC insurance credit and the changes to our board structure later in my remarks.
Given the trend of margin compression across the industry. It is not surprising nothing major factor influencing our profitability in the third quarter was the decrease up and net interest margin.
To 3.72% for the quarter.
That was compared <unk>, 0.14%, a year ago and 3.91% in the second quarter 2019.
Like many of our our peers our margin has been significantly impacted by the very difficult interest rate environment.
We clearly felt the effects of the flat yield curve and the disconnect in the markets between the loan pricing and deposit right.
The decrease in the margin was attributable to several factors the yield on our loan portfolio was 5.39% for the third quarter, that's compared to 5.69% in the third quarter 2018, and 5.61% in the second quarter of.
This year.
The decrease in loan yields was related to close lower LIBOR rates during the period, which directly impacts 41% afford portfolio and the lower rates on new loans during the quarter.
Loan pricing is very competitive in this market, especially as we have become more selective in the transactions we are booking.
For the third quarter, we were able to achieve excellent growth in deposits, while keeping our cost of interest bearing deposits at 1.89% equal to the right in the second quarter. If this year.
We reduced our composite cost of funds for the quarter by two basis points to 1.28%.
Even with the strong deposit growth, we maintain DDAC, 30% of average deposit balances for the quarter.
Most importantly, we have been seeing a softening in the pricing of deposits in the Washington region over the last couple of months and believe this bodes well for the fourth quarter.
The margin in the third quarter was also impacted by a change in our asset liability mix, we work to increase our liquidity and reduce the loan to deposit ratio during the quarter, we added $453 million in deposits without increasing our cost of funds rate. The addition.
No funding was primarily core deposits, which went into now accounts and money market accounts average liquidity for the third quarter was 142 million greater than in the second quarter of 2019, and we had an average loan to deposit ratio of one or two.
<unk> percent for the quarter, which was an important objective.
As we've said many times at Eagle Bank, we do not focused on just one factor, but maintain our efforts on all of the key performance indicators. So offsetting the decrease margin for work continued strong contributions to to profitability from the very favorable efficiency ratio.
Continued loan and deposit growth solid asset quality and noninterest income.
The efficiency ratio for the third quarter was 38.34% for the quarter on a GAAP basis.
As we continued our prudent approach to expense management.
As I mentioned earlier, there were two nonrecurring expense items, we recognized during the quarter, one which have credit of $1.1 million from the refundable FDIC assessment, which we had paid into the fund over nine quarters dating back to 2016.
Okay.
Credit was received when the total FDIC insurance fund reached 1.38% of insured deposits. If the funds remains above the 1.38% target level, we will receive an additional credit of approximately $600000 in the fourth quarter.
For 2019.
The other nonrecurring item was an expense of $2 million for acceleration of share based compensation as certain directors resigned and the board.
Oh.
The company in the bank were consolidated and reorganized.
We'll have some comments later regarding corporate governance exclusive of these two nonrecurring items the efficiency ratio for the third quarter would have been 37.95%.
Even including the two nonrecurring expenses expense items for the third quarter the ratio of non interest expenses as a percent of average assets was 1.5% as compared to 1.58% in the third quarter of last year.
Judiciously managing expenses, we continue to make the necessary investments in systems and personnel and organizational structure as we grow toward $10 billion regulatory thresholds.
Legal accounting and professional fees with $3.6 million for the quarter as compared to 2.7 million in the second quarter of 2019, and 2.1 million in the third quarter of 2018.
Legal fees related to the ongoing investigations were 1.9 million for the third quarter of 2019 as compared to 700000 for the second quarter of 2019, we expect that the legal fees related to these matters.
Could remain at elevated levels at least through the end of 2019.
In regard to these investigations there isn't much we can say beyond the fact that we continue to fully cooperate with the various agencies.
Most of the work is being handled by the law firms. We have engaged the efforts within the company are concentrated with few members of senior management. So that we can continue to focus on providing exceptional customer service and growing the bank.
I might add if there are no regulatory restrictions on our normal operations at the bank due to the investigation.
As you know we began our share repurchase program during.
The third quarter, we had previously received regulatory approval for that program, but before announcing and commencing the program in August we went back to our primary regulator and verified their continued approval. We're very pleased with the results to date of the share repurchase program from in.
Section on August nine through September Thirtyth, we've repurchased 822200 shares at an average price of $40.58 per share.
Because the calculations are based on weighted averages the program did not create much EPS accretion during the third quarter of 2019, but should have a more beneficial impact in the fourth quarter and going forward.
Her repurchase program expires on December 31st 2019, and we will evaluate an extension of the program prior to that date.
Another confirmation of the strength and consistent financial performance of the company is the recent announcement by the Kroll Bond rating agency that they have reaffirmed our senior unsecured debt rating of Triple B plus for the company an a minus at the bank level.
During the third quarter, we generated loan growth of 167 million on a point to point space.
Growth rate of 2.3%.
Average loans for the quarter showed an increase of 13% over the third quarter of 2018, the annualized growth rate of 9.2%. We saw it in the in the third quarter is in line with our strategic objectives. The total of new loans booked during the quarter was about.
$316 billion down from the average of 400 million over the last four quarters.
The largest increased during the quarter within CRT income producing loans with a very small increase in a DC loans, while we continue to see strong loan demand in the market. We remain selective throughout the credit approval and monitoring processes loan pricing is.
Additive and we are sensitive to established customers with whom we can structure higher quality loan transactions.
Eagle Bank was built through relationships banking, and we continue to nurture and improve our bonds with our valued customers.
The economy in the Washington area remains strong while the pace of population and job growth has slowed from the tourist pace of 2017. It is steady at about 25000 net new jobs per annum and the new jobs are in the higher income white collar positions the.
Tech sector continues to flourish in northern Virginia. The most recent reports from the Fuller Institute at George Mason University indicate increases in both the co incident, and leading indicators for the Metropolitan Washington region.
Average deposits for the third quarter increased 13% over the third quarter of 2018, and 6% over the second quarter of 2019.
As I mentioned earlier, we made a concerted effort to build deposits during the quarter to add liquidity and to reduce the loan to deposit ratio, we still prefer to stay relatively short.
Inder relative short for the duration of our deposits average cdss or percentage of average total deposits were 20% for the third quarter as compared to 19% at September 32018, more importantly, Deejays average 30.
Percents for the third quarter of 2019, our ability to retain and grow deposits demonstrate the value of our relationship first approach to bank.
During the last several months our customer base has been tremendously supportive of the bank. We have had almost no account or deposit attrition during this period.
I would like to commend our relationship managers support staff and branch personnel, who have done a wonderful job of communicating with and providing outstanding service to our customers.
We're very pleased to note. The recent report from the FDIC on deposit levels and market share in the Washington Metropolitan area for the annual period ending June Thirtyth 2019 shown in the report Eagle Bank had deposit growth of 10.5% while the income.
For the entire market was 4.9%, we continue to grow market share, but with the share of only 3.2%. We feel there is still tremendous opportunity for organic growth in what many analysts consider to be the one is the best markets in the country.
We increased our presence and visibility in the Washington area. This week when we opened our new loan production office in Prince George's County, we are excited about the opportunities there and have staff that new office with bankers to know that market. The key for US has been in steel is that adds.
We grow we being we remain.
We retain feel and high touch.
Customer service of a community bank that is what we continue to deliver through our relationship first approach to the market.
We are adhering to our basic else Alco strategy of maintaining or moderate position for rate sensitivity and avoid taking excessive interest rate risk over the long term, we are slightly asset sensitive with the short duration in the loan portfolio and 60% of the loan portfolio.
In variable or adjustable rate loans about 41% of the loan portfolio is indexed to LIBOR, which definitely hurt us in the third quarter, but we feel that it is that correct long term strategy, we do have floors in the pricing structure of 42% of our loan.
And they will start to kick in if short term rates decline further.
Noninterest income was plus for us during the third quarter as it grew to 6.3 million.
As compared to 5.7 million in the third quarter 2018.
The gain on sale of residential mortgages was 2.6 million for the quarter as compared to 1.4 million in the third quarter 2018, and 1.9 million in the second quarter of 2019.
This was the one area, where we had to benefit from the decrease in the rates during the quarter.
The bank continues to maintain solid credit quality at September Thirtyth, 2019, and Ta base as a percentage of total assets, 4.66% as compared to 0.20% a year ago and 2.45% at June 32000.
And the 19.
Nonperforming loans were 0.76% of total loans at the end of the third quarter as compared to <unk>, 0.22% at September 32018.
0.51% at June 32019.
The total of nonperforming loans at September 30 was 57.7 million, which included one loan in the amount of 16.5 million, which brought current shortly after the end of the quarter.
Excluding that loan the total of nonperforming loans would have been 0.5, 40% of total loans at September 30, and the NPS would have been 0.48% total assets.
We we continue to come to constantly evaluate the portfolio and take aggressive and aggressive approach to placing loans on non accrual status net charge offs for the third quarter 2000, 19.8% as compared to 0.5%.
Third quarter of 2018 on an annualized basis net charge offs were just 0.12% for 2019 year to date.
The allowance for loan losses was nine point, 0.98% of total loans at the end of the third quarter. The provision expense for the quarter was 3.2 million consistent with our allowance methodology. The current economic climates and are minimal charge off history.
At September 32019, the coverage ratio was 128% hundred 73%, excluding the cleared loan as compared to 452% at September 32018, and we believe that we are adequately.
Research.
Since our last quarterly press release and earnings call in July we have had the opportunity to touch base with many of our shareholders and our our valued advisors about the status of the company. We've spoken about the realization that our company has been changing from the smaller rapidly growing bank.
We were a few years ago should the more mature, perhaps a little slower growing but still a high performing company, we have been working on and taking steps through the transition process for some time in.
In many instances well before the retirement of Ron Paul six months ago.
And the new roles taken on by our chairman norm poses some myself.
Some of the activities do you have seen in the last two quarters are the results of much planning and development, which we have now implemented. They include the payment of the cash dividends, which we reinstituted in the second quarter are paying again for the third quarter and plan to continue.
It also includes the share repurchase program, which we commenced in the third quarter. These two items are clear recognition that we want to provide a return to view our shareholders in ways beyond just share price appreciation.
We're also committed to maintaining a sound organization in all aspects in July we announced the strategic reorganization of the board.
Which combined with earlier changes to our committee structures will enhance the board's ability to provide oversight of the company as a large organization. We are also revisiting our management committee structures, so as to better coordinate all important strategic and risk management matters.
We also have discussed with pride affect that.
The hit to the margin caused by the current interest rate markets.
We are still highly profitable well capitalized and growing community bank.
We were able to adopt the cash dividends in the share repurchase program the cost of our strong capital position.
From what the impact on capitals those programs over the past year. The total risk based capital ratio improved from 15.74% to 16.8% at September 32019 over the same period, the tangible common equity ratio.
Joe improved from from 12.1% to 12 point, 13%.
I'm going to close with one final but important statistic.
Our profitability in capital management over the past year have led to growth in the tangible value book value per share from $27. An 84 cents at September 32018 to $32 in one sense today, an increase of 15%.
Yes.
Thank you again for joining the call. This morning and for your continued support of Eagle Bank that concludes my formal remarks, we would be pleased to take any questions at this time.
As a reminder, ladies and gentlemen, you asked the question you need to press Star one on your telephone to.
Withdraw your question first account Keith.
Please send finally I'd like to enable Austria.
And our first question on crossing the line.
Catherine Mealor from KBW, Sir you may begin.
Thanks, Good morning.
Catherine.
Let's start with the margin.
And maybe dig into the deposit side can you talk a little bit about.
Maybe what deposit cost have done in those two recent months or weeks just given the recent fed cuts.
And your expectations for your ability to lower immediately your money market accounts.
It is going into fourth quarter. Thanks to our thing Catherine This is Charles.
The deposit rates in our market have shown a little bit of softening given recent.
Recent weeks.
That's something that Weve.
Learn in talking to other folks around the country has happened in other markets. Unfortunately in our market, where where all the banks here are so loaned up the competition tends to remain fairly stiff although.
Again, some of those stubborn rates are starting to soften up. So my expectation is that we will and we actually have already made changes to our.
Our money market rates and we'll continue to do so as.
As a probability for another rate decrease looks looks pretty good at the end of this month I think it's about 86%.
So I would expect there to be some.
Awesome savings in terms of funding costs.
Going forward in the near term.
So to your money market right now are saving them money market, our 185, where would you say they are today.
[laughter], where were just over 1% on that on the top tier money market accounts at this point.
And.
Often you hear about this notion that once rates fall below 1% it tends to change the landscape.
A little bit so, yes, that's right, where we are and our top tier.
Yeah.
Got you I'm, sorry, right at 1% you said just above what [laughter].
Well, thank you [laughter].
Got it one more time, just above 1% just about 1%, okay, great great great.
So I mean it so if we think about next quarter I mean, Directionally do you feel like we still have more NIM compression as the as live or.
Still pushes loan yields down, but we don't get a commensurate decrease and and deposit cost quite yet.
Right I I guess Directionally, how are you kind of thinking about where the margin goes from here.
Sure Yeah, I would not be surprised to see some some additional compression in the margin in the near term.
We do however, I would not expect them to be as dramatic as we saw between the second third quarter.
We feel pretty comfortable with the liquidity position, where it is today, which which certainly played a role.
We do have Cds that are on a weighted average basis have about a 12 month.
Average life and those will be repricing, new Cds that we put on over the last year. So we'll be repricing.
Also have as we talked about.
Our our money market rates that could have been brought down and repricing those deposits.
As rates continue to drop we also have floors on our loans. So on the other side of the balance sheet, we do have a little bit of protection.
I think another 25 basis point move in will be pretty pretty much sitting at the floors and if there is yet another move down.
We ended the year, we'll see the benefit of summer.
Those rate decreases spilling into it to the 2020.
So that's that's a little bit of color around my expectation for the margin, but yes to your point, a little bit I wouldn't be surprised to see a little bit more compression, but I would expect some stabilization going into 2000.
Great Okay.
Well, Chris how do you think about.
As a fair pays per Lundgren next year it feels like.
You made a comment that.
Now kind of transitioning can be highly profitable, but more mature a company with kind of slower growth than you have historically, so what level of growth do you feel like it's appropriate to part of economic cycle and given your.
Sure side.
Catherine we are still projecting a high single digit growth rate.
We think that's where we'll be comfortable last.
And within that high single digit.
Yes. It did you talk a little bit about you're focused on on where you're pulling back in terms of loan types in where most of that growth will come from.
I would say would being far more selective on construction loans. So we're not out of the construction lending business, but we're being far more some selective than we have been.
Restaurants, and hospitality, we're being very cautious with also.
Got it.
Okay.
Well thank you.
Thanks Catherine.
Thank you and our next question comes from Brian Casey Whitman from Sandler O'neill you may begin.
Good morning, good morning take facing.
Yes, first just wanted to ask on the tax rate. It's that's picked up over the last two quarters or so it is 20% a good rate to use going forward or could we see some relief.
I think you know.
In the fourth quarter, I would expect that tax rate to remain relatively.
Around the same area, but.
A lot of those expenses.
So did with.
With Ron's retirement and.
Hi.
Yes that the the lack of deductibility of those expenses will fuel off going into 2020, and I think will normalize back around the 26%.
Area and going forward beyond that.
Okay got it thank you.
Just thinking about expenses. So isn't just look at maybe the salary and benefit line. This quarter you know they exclude the onetime cost you know you had a pretty nice relief there I guess, what do you attribute some of that decline two and then I also just wanted to get a sense for how talent attrition has gone over the last several months through some of the.
The outside of noise I mean have you been able to to keep all the the lenders or just kind of give us an idea of how how your talent attrition has gone.
We have had turnover I mean, we're in a business whether its turnover were always looking at top bringing on people and there are people. Unfortunately that leif sometimes that turnover is good.
We have attracted some good people we have a strong team in both the lending teams and the support areas and we're continuing to build on that we are looking to fill some critical high level senior management positions and we have some good good leads.
In that area also.
Okay.
In terms of the cost.
Here, we are kind of getting towards the end of the year and and.
Some of those.
Incentive accruals that we're making are being trued up based on.
Our expectation for production towards the end of year, which.
Which we did.
As a result that you see in the financial today.
Thats part of it.
Got it I guess, but bigger picture I mean, do you think you can keep holding the efficiency ratio below 40% as you incur maybe some elevated costs related to going over 10 billion or with other continued I T expenses, you guys kind of referenced or I.
I guess.
Can you keep can you keep the efficiency ratio this low or is that.
Sure tick up a little bit.
We think Casey that it may pick up a little bit but will be what are your below.
Now.
We have spread the cost of going over the $10 billion Mark over a period of years. So last year, we get some we did some this year will add some more next year.
So we have been up prudent in that and not taking the hit all at one time. So we do expect that the the.
Efficiency ratio will still be at a 40% or lower I'd also keep in mind we are.
Saddled with some of these additional legal expenses at this point that.
We hope to.
To to a different use going forward in terms of those expenses. So.
That will help again growing towards that $10 billion, adding to infrastructure, adding people growing out our risk management.
Apparatus, so yeah, I would agree with season it.
40 year or below is the expectations.
Okay, Great I'll just ask one more question, let somebody else to hop on maybe just a little bit of color on that that one nonperforming loan that was brought current.
How long was it on non accrual what was a loan type location in any kind of color you can give us would be helpful.
Our Casey it was one loan in prime location.
An avenue.
That.
Have matured and Wasnt promptly address.
It.
Was addressed.
The documentation and the funding didn't come in until after the Thirtyth.
No it was never.
On non accrual, but it was over 90 days at September Thirtyth. So we included in the over 90 day category.
If that 60% loan to value property it.
Really.
Terrific location. So I don't have concerns from a credit standpoint, we just isn't.
Weren't able to get it.
Regarding humana and cleared by the end of the quarter.
Very helpful. Thank you guys.
Thanks Casey.
Thank you next question comes from the line of Chris Sir Christopher Marinac from Janney Montgomery May begin.
Thanks, Good morning, Jan just wanted to continue along the same lines, which you.
What's new on the classified fine in criticized or those trends going to be similar to what we saw last quarter or did they kind of directionally follow what we saw in the appears at 930.
There's not going to be add tremendous amount of ships, but there is a bit you might recall that we had a number of loans that were included.
As a result.
And if our customers and.
That had a number of projects with us.
The hit transaction, which you may have read about.
Todd hit.
We're in good shape, but it's still in receivership says as loans are being carried in that.
Substandard category, we also anytime that alone become nonperforming or go to every 90 days, where automatically downgrading to a substandard level, so you're going to see that 16, and a half million in there as well.
Sure.
Typically and.
We don't have a ton of migration at any given time, but one.
In the 20 million range can make a big difference in what are.
Average risk rating is it down from.
Ross, we extend about 1% in terms of the.
Criticized and classified.
Portfolio, the average risk rating I'm, sorry is down about 1%.
Criticized and classified portfolio has grown by.
About.
Oh gosh.
20.
2 million in the last quarter.
So a lot of it is going to be moving back out of there as we progress through these.
So net net it sounds like you've got some in coming in from all color, an outgoing but not materially.
Gotcha, Okay, great. Thank you for that I appreciate that and I'm. Charles just quickly for you I'm does does the wholesale sort of dependency get incrementally better because you have to deposit growth. This quarter and then obviously the loan deposit ratio ticked down I mean does that just where liquidity ratios just get better because of the success in Q3.
Yes, I think you'll see that we had a little bit a reduction as we measure our core deposits and now.
I think as result of the regulatory relief the reciprocal deposits being included as core generally.
We did see a little bit of improvement there. So yes, I think thats.
Right view.
Okay, Great and then last question.
How do your typical prepayments work in this type of environment today.
Generally help help you or does it create more are they have a turnover.
Just with customers wanting to refinance as rates go well just kind of curious on structurally if the way that you're set off sort of helps you what what's customers.
I think.
We generally get the first bite at the Apple at the customers looking to have their rate decrease either through.
Refinance or a modification so we try to take a realistic look at the market and the customer and the particular deal effect on our risk based return in our pricing policies and whenever possible retain that customer looking at full relationship.
They are sometimes when customers are with us say through construction and stabilization in their ultimately going agency. That's a situation where we may have rollover I think.
In the past you've seen that churn in the portfolio on the construction side and one of the benefits to adding the.
Income producing portfolio add more rapid rate is that we do have a longer stabilization period.
Most of those loans carry prepayment penalties, so we're not as vulnerable on those either.
We tend to retain our customers based on our relationship if we can be competitive on the pricing.
Great. Thank you very much for the background I appreciate the office this morning.
Thanks, Chris.
And our next question comes from the line of Steven Steven commentary from GE Research you may begin.
Hey, good morning.
Worry Steve.
Hey deposit growth was really strong this quarter for you guys kind as a big tick up from what we've seen in past quarters was there anything you guys are doing differently or what's the market different or was it just you know a lot of wins came this quarter.
Yes, I attributed to continual development of.
Nation chips.
With our customers, there's certainly a market element there as well you know.
Folks are getting perhaps a little skittish about late cycle moving more into cash and that could certainly have have a play.
A play a role in some of that movement.
Okay.
Thanks for that and then the other the other thing it was really positive I think this quarter was.
The tick up in loan sales.
Was there anything going on there other than like mortgage volumes were higher.
So there was more there to sell or were you guys taking share was there anything else there.
No I figure is simply a.
Product of tracking what that would that tenure treasury.
Rates were down and volumes are up.
So yeah, we did see some benefit from from that this quarter.
Okay very good thank you Hey, Steve.
Thank you and our next question comes.
Comes on line of Eric as Rick from Boenning, and Scattergood you may begin.
Eric Your line maybe on mute.
Good morning are you able to hear me.
We are now higher.
Great. Thanks.
With regard to the changes in the boardroom this year or the reorganization and then more recently the departure of three members.
Two questions I guess first are there any near term plans to add any additional board members and second what initiatives are priorities are top of mind I was a board today.
We are.
Always looking for new board members and.
And the skill sets that will help us to fill in some of the gaps that we might need on the board. We have we've a candidate as strong candidate at this point that we're expecting to to make an offer to.
And then in the very short distance.
We don't have a goal on how many directors we would have I mean 18, we've always been told a team with too many directors to we don't have a goal for numbers just when the opportunity comes up to get a good qualified director we will may.
They can move on that.
Okay, and then in terms of I guess, what the board being smaller now everyone. I guess, maybe gets a little bit more opportunity to kind of voice there their preferences, I guess any any changes or any.
Adaptations to you know initiatives are priorities that that the board is looking at today.
No I would say, we've always had outspoken directors. So even though we had 18 they were always very involved and and outspoken in involved with the bank.
So no we don't have any.
Any problems with with any of that we we try and to just build the board with the right skill set as we move into a larger organization and can better meet the expectations of the regulators and our shareholders with absolutely.
Maybe just kind of one follow up there I'd say a company does grow and become more mature or just a skill set that you look for change a with a potential board number on new higher.
No not totally but there are some like now we're looking at adding a risk committee, which as we move past. The 10 billion dollar Mark that is something that is recommended not required and one of the board members that we recently brought onto Reefal Laplaca will head up that risk committee, so getting out giving us the.
Opportunity to bring on people that are qualified to do things like that is a key objective for us.
Great. Thank you for taking my questions.
Thank you I'm not showing any further questions at this time.
Let's turn the call back over to Susan real for any further closing remarks.
Okay I want to thank everyone again for being here and attending today and.
Look forward to talking to you at the next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.