Q3 2019 Earnings Call
Good day and welcome to the independent Bank Corp. Threeq Q1 9 earnings conference call.
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The two excuse me. Please note. This event is being recorded I would now like turn the conference over to Mr., Brad Kessel, President and CEO . Please go ahead.
Good morning, Thank you for joining independent Bank Corporation's conference call. The webcast to discuss the Companys 2019 third quarter results My Brad Kessel, President and Chief Executive Officer, and joining me as Rob Shuster Executive Vice President and Chief Financial Officer.
Also joining us today, Steve Ericsson Executive Vice President Treasurer.
Before we begin todays call is my responsibility to direct you to the important information on page two regarding the cautionary note.
Forward looking statements.
If anyone does not already have a copy of the press release issued by independent today, you can access it at the company's website.
You W. W doubt independent bank Dot com.
The agenda for todays call will include prepared remarks, followed by question and answer session and then closing remarks.
As previously announced that Steve Ericsson, we'll be taking on the roles and responsibilities as Chief Financial Officer Dr. you see following robs retirement at January 31 2020.
There's no doubt we will miss Rob upon his retirement.
However, I'm very pleased that we were able to find and attract an individual like Steve and that we're able to do so with a transition period, allowing Rob anstey to work together through a couple of quarters since a year end to kinda budgeting process.
Today, we are reporting third quarter, 2019 that income of $12.4 million or 55 cents per diluted share versus net income of $11.9 million.
Or 49 cents per diluted share in the prior year period. This represents year over year increases in net income and diluted earnings per share.
4.4% and 12.2% respectively.
Overall, I'm very pleased with our third quarter as we were able to report strong results for the bottom line, both net income and earnings per share fueled by growth in that in net interest income and increase in net gains on mortgage loans and a credit loan loss provision primarily as a result of net recoveries on previously.
<unk> charged off loans.
Additionally, we had a very good quarter of loan originations.
Both portfolio Unsalable production, which net.
Portfolio mortgage loan sales and Reclassifications still yielded net overall loan growth for the 22nd consecutive quarter.
Asset quality continues to be very strong with low past dues and an acceptable level of watch credits. Additionally, we crossed the 3 billion dollar mark for deposits.
Turning to slide five of our presentation with a little more detail on the quarter impacting our third quarter results for both 2019, and 2018 or changes in the fair value due to price of our capitalized mortgage loan servicing rights.
For the three months ended September 30, 2019, a decline in the fair value.
Our capitalize mortgage loan servicing rights due to price decreased.
Non interest income by $2.2 million or eight cents per diluted share after tax.
This compares to a 610000 dollar increase in fair value due to price or two cents per diluted share after tax for the three months ended September Thirtyth 2018.
Positively impacting the third quarter of 2019 was a reduction of non interest expense.
$300000.
Or one cents per diluted share after tax related to the companies use of its FDIC small bank assessment credit.
Approximately $400000 Oh assessment credit remains available to offset future expense.
For the third quarter of 2019, a return on average assets and return on average equity were 1.42% and 14.64% respectively.
These ratios increased to 1.58% and 16.34% respectively, when excluding the after tax impact.
Oh, the MSR changes and the assessment credit.
Also for the quarter, our efficiency ratio at 63.8% was up slightly from a year ago quarter, 63.6%.
This third quarter 2019 ratio improved to 61.5% when excluding the after tax impact of the MSR changes any assessment credit.
For the nine months ended September Thirtyth 2019, the company reported net income of $32.6 million or $1.40 cents per diluted share compared to net income of 29.9 million or $1.27 cents per diluted share in the prior year period.
Slide seven of our presentation provides a good overview of our footprint.
Turning to slide eight.
Michigan business conditions continue to generally be favorable with low unemployment some job growth affordable housing and continued good demand for commercial real estate.
We continue to closely monitored the impact of the Jim you W. strike on our customer base as well as the Michigan market as a whole.
We are optimistic with last week's announced tentative settlement and are hopeful that union does in fact, ratify the settlement and resumed production.
Original portfolios are shown on page nine.
Our two strongest growth regions or the Grand Rapids region up 79 million in loan balances inner southeast, Michigan region up 55 million loan balances.
Some of the regional declines in deposits reflect the migration of larger deposit customers.
Two reciprocal deposits.
The next couple of slides cover a balance sheet.
Turning to page 10, we provide a couple of charts, reflecting the attractive composition of our deposit base.
And well as well as continued growth in this portfolio, while working to effectively manage our overall cost of funds.
Independent has $3.05 billion in total deposits of which $2.43 billion or 80% are non maturity deposit accounts.
Comparing third quarter 29 team to the same quarter one year ago.
We increased total deposits by $262 million were 10.1% this excludes brokered deposits.
Our total cost of deposits was flat on a linked quarter basis.
And is up 25 basis points, when compared to the same quarter one year ago.
Our success in growing deposits or manage the overall cost has been primarily through.
Growth in our commercial deposits and the sale of our insured cash sweep product to public fund entities.
Similar charts are also reflected on page 11, but in this case, we are displaying our loan portfolios.
We continue to target a diversified loan mix with the largest portfolio being our commercial book of business.
At September Thirtyth, 2019, or low mix included 42% commercial 38% mortgage 60% installment.
And 4% held for sale.
Total loans outstanding now aggregate to $2.85 billion, including 124 million of loans held for sale.
The commercial portfolio grew by $13 million were 4.4% annualized during the quarter.
Consumer installment loans were up $19.1 million or 70, 17.1% annualized for the quarter, primarily through our indirect lending Atlanta business, which targets, Michigan Marine power sports and RV dealers.
The mortgage originations for the quarter increased to $329 million up from the second quarter.
$241 million and up from the third quarter, one year ago, a $232 million.
Portfolio mortgage loans declined by $16.3 million, primarily due to $46.5 billion executed or pending portfolio mortgage loan sales.
In terms of capital management, earning assets were up 6% year to date, reflecting organic role.
Our capital levels continue to be strong with tangible common equity to tangible assets of 8.71% at September Thirtyth 2019.
Which is essentially unchanged from the June thirtyth, 2019th level. This level is well within our targeted Tc range of eight and a half tonight and a half percent.
We paid a quarterly cash dividend of 18 cents per share on August 15, 2019.
During the first nine months between 19 the company has completed the repurchase of 1 million 204688 shares.
At a weighted average purchase price of $21, an 82 cents per share.
At September Thirtyth 2019.
274298 shares remain in 2019 share repurchase plan.
This time I would like to turn the presentation over to Rob Schuster to share a few comments on our financials credit quality Cecil in our outlook for the balance of 2019.
Thanks, Brad and good morning, everyone I am starting at page 13 of our presentation.
We have discussed the year over year increase in our net interest income during his remarks, so I will focus on our margin.
Our tax equivalent net interest margin was 3.76% during the third quarter of 19, which is down 15 basis points from the year ago period, and down 11 basis points from the second quarter of 19.
I will have some more detailed comments on this topic in a moment.
Average interest, earning assets were $3.29 billion in the third quarter of 19 compared to $3.4 billion in the year ago quarter, and $3.19 billion and the second quarter of 19.
Page 14 contain some more detailed analysis of the linked quarter increase in net interest income.
There is a lot of data on this slide but to summarize a few key points.
The linked quarter tax equivalent yield on loans declined 13 basis points and the tax equivalent yield on investments declined 17 basis points. This primarily reflects lower market interest rates, particularly short term rates. In addition.
Investment yields were negatively impacted by a 25.2 million dollar increase and the average balance of lower yielding interest bearing cash balances due to a seasonal increase in deposits.
We were generally able to offset the adverse impact of lower yields on earning assets by a 93.8 million dollar increase in the average balance of earning assets.
The average cost of funds declined by two basis points to a 0.84% in Threeq you 19 from 0.86% into Q1 9.
We will comment more specifically on our outlook for the net interest margin and net interest income for the balance of 2019 later in the presentation.
Page 15 compares our quarterly average cost of funds to the monthly average effective federal funds rate during the quarter in the spot federal funds rate during the quarter.
Moving on to page 16, noninterest income totaled $12.3 million during the third quarter of 19, as compared to $11.8 million than a year ago quarter and $9.9 million in the second quarter of 19.
Mortgage banking related activity activity, namely gains on mortgage loans and mortgage loan servicing.
Caused most of the quarterly comparative year over year variability in noninterest income.
Brett already discussed the changes in the fair value due to price of capitalized mortgage loan servicing rights.
Our capitalize mortgage loan servicing rights asset of $16.9 million at September 30, 19 represented a value of just 68 basis points on our $2.5 billion of mortgage loan servicing.
Threeq you 19, net gains on mortgage loans increased to $5.7 million compared to $2.7 million in the year ago quarter.
The increase in these gains was due to increases in mortgage loan sales volume.
The mortgage loan pipeline and our profit margin.
Mortgage loan application volume was very strong in the third quarter and continues to be strong at the start of the fourth quarter.
In addition, we had $36.6 million of portfolio mortgage loans in process. The sale at September Thirtyth 19 on which we expect to record a gain on sale of approximately $1.1 million in October .
As a result, we expect another strong quarter of gains on mortgage loans to end 2019, followed by our normal seasonal slowdown in the first quarter of 2020.
As detailed on page 17, our noninterest expenses totaled $27.8 million in the third quarter of 19 as compared to $26.7 million in the year ago quarter in $26.6 million in the second quarter of 19.
Actual third COVID-19, noninterest expenses were just slightly above the high end of our projected range of $27 million to 27, and a half million dollars.
We'll have more comments on our outlook for non interest expenses later in the presentation.
Investment Securities available for sale increased to nine increased by $9.3 million. During the third quarter of 2019 page 18 provides an overview of our investments at September 32019, approximately 31% of the portfolio.
Earlier was variable rate and much of the fixed rate portion of the portfolio is in maturities or average lives of five years or less the average duration of the portfolio was about 2.65 years with a weighted average tax equivalent yield of 3% which is down to.
12 basis points from June 30 of 19.
Page 19 provides data nonperforming loans other real estate nonperforming assets in early stage delinquencies total nonperforming assets were $8.4 million or 0.24% of total assets at September Thirtyth 19.
Nonperforming loans decreased by about $700000 during the third quarter of 19.
At September 32019, 30 to 89 day commercial loan delinquencies were just.
0.04% and mortgage and consumer loan delinquencies were just 0.35%.
Moving on to page 20, we recorded a credit provision for loan losses of $271000 and $53000 in the third quarters of 2019 in 2018, respectively.
We recorded.
Loan net recoveries of $516000 and $950000 than the third quarters of 2019 in 2018, respectively.
Finally, the allowance for loan losses totaled $26.1 million or 0.96% a portfolio loans at September 32019.
Page 21 provides some additional asset quality data, including information on new loan defaults and on classified assets New loan defaults were just $4.3 million through the first nine months of 2019.
Page 22 provides information on our TDR portfolio that totaled $50.2 million at September 32019, a decline of $1.9 million during the third quarter. This portfolio continues to perform very well with 95.2% of these low.
Owns performing and 92.7% of these loans being current at September 32019.
Page 23 provides a detailed time table for our implementation of the Cecil accounting standard.
Im proud to say that we're one of the very first community banks to publicly disk well disclose the estimated impact of seasonal on our allowance for credit losses in our second quarter 2019 Form 10-Q , using June 32019 data we disclosed.
An estimated increase of nine and a half million dollars to 11, and a half million dollars in our allowance for credit losses under Cecil.
Using September 32019 data the estimated increase moved down slightly to a range of $9 million to $11 million. The primary factor driving this expected increase as the longer contractual maturities of our mortgage loan and consumer installment loan.
On segments. In addition, the midpoint of our range uses a two year economic for cash period, and a two year reversion period.
Page 24 hours, our update for 2019, where we compare our actual performance during the year to our original outlook that we provided back in January 2019.
Overall, we believe that our actual performance in the third quarter of 19.
Particularly when factoring out the negative fair value adjustment due to price on capitalized MSR ours was better than our original outlook.
We achieved actual annualized loan growth of 2.3% and 7.2% for the third quarter in first nine months of 2019, respectively.
Our loan growth was purposely slowed in the third quarter of 19 due to our decision to seller securitize $46.5 million of portfolio mortgage loans of this totaled $9.9 million was sold in the third quarter of 19 and $36.6 million.
Was transferred to held for sale at September 32019, and the sale will settle in October 2019, nearly all of the $36.6 billion, it's being securitized with Freddie Mac and we intend to hold most of these securities. So you will see.
See an increase in available for sale securities in the fourth quarter of 2019.
The portfolio mortgage loan sales were done for asset liability management reasons, including continuing to balance the mix of our overall loan portfolio.
As a result, we now expect our 2019 full year actual loan growth to be just a bit below our original 8% to 9% goal.
With the shape of yield curve and the additional expected cuts in the federal funds rate. We do expect some continued downward pressure on our net interest margin.
As I stated last quarter, we've reduced our original forecasted growth rate of 10% to 11% for net interest income for all of 2019 down to 8% to 9% that updated forecast assumed 25 basis point cuts in the federal funds rate in July .
Why September and December at this point, we still feel comfortable with the 8% to 9% full year increase range.
As to our net interest margin I wanted to make some comments about our efforts to maintain it despite a difficult environment.
On the cost of funds side, we did utilize interest rate caps that totaled $150 million at September 32019 to manage cost in duration of wholesale funds, particularly brokered deposits as a result of our use of caps we.
Can take advantage of lower market interest rates in fact, we have about $197 million a broker deposits maturing during the fourth quarter of 2019 with an average cost of 2.07% that we expect to replace.
At rates on average at least 25 basis points lower.
As to the rest of the deposit base, we continue to proactively manage funding costs and walk a fine line of retaining and growing deposits, while pushing down interest rates, where we can.
Bottom line, we expect our future cost of funds to drop more quickly than the two basis points you saw in the third quarter of 19.
On the asset side, we continue to try and extract every basis point possible on both loans and investments I heard and analyst ask another bank about interest rate floors on loans in a recent conference call only about 6% of our variable rate commercial loans have been.
First rate floors. In contrast, about 90% of our variable rate home equity loans have floors. However, we would need to see an additional drop in interest rates of about 150 basis points before a lot of these floors would begin to kick in.
Yes, our variable rate loan portfolio will continue to be susceptible to lower prime or LIBOR rates.
Looking longer term if history as a guide our lowest net interest margin over the last several years was 3.52% during 2016 when average short term interest rates were still well below 1%.
As to the loan loss provision, we expect generally stable asset quality metrics. During the last quarter of 2019. So loan growth is anticipated to be the main driver of our loan loss provision.
We would not expect to see a credit loan loss provision in the fourth quarter of 19 as the third quarter benefited benefited from strong.
Net loan recoveries.
Excluding the negative fair value adjustment due to price on MSR ours, our adjusted third quarter non interest income would have been well above the high end of our forecasted range due primarily to net gains on mortgage loans. We expect net interest income to be above the high end of our forecasted range.
The last quarter of 19 due to strong mortgage banking revenues, excluding any volatility associated with changes due to price in the fair value of MSR ours with respect to non interest expense, we expect to be at the high end of our forecasted range in the last quarter of two.
2019, we are above the range it would likely be due to a strong bottom line performance that impacts our performance based compensation accrual at year end.
Finally, our effective income tax rate was 20% in the third quarter of 19, which was exactly in line with our forecasts that concludes my prepared remarks, and I would now like to turn the call back over to Brad.
Thanks, Rob.
On October 22nd 2019, we announced that our board of directors appointed Rodney accrues to the boards of the corporation and the bank.
She will also serve on the corporations audit Committee.
This crews as the founder and CEO of uptick a talent development and solutions from providing services to fortune 1000 and government clients.
Optek provides innovative solutions for clients in the areas areas of analytics cyber security application development and connected vehicles.
Prior to founding uptick Ms cruise was a senior tax consultant for a big four SCPA from where she specialized in international tax planning.
She is a certified public accountant is active in a variety of organizations and has served on the investment committee of Bell, Michigan to help evaluate potential emerging technology portfolio companies.
We are delighted to an AD rania to the boards of directors of both our parent company and the bank. She is that is a dynamic executive who brings us a unique ability to leverage technology develop talent and provide insight on the digital economy. In addition, her background with the big for CP a firm.
Makes rania, an important addition to our organization.
Finally, we have listed our strategic initiatives on slide 25 during the first nine months of 29 team. We have made significant progress in each of these areas. We believe successful execution on these initiatives will continue to drive strong returns.
As a community bank at the center of all our strategies is staying focused on serving our customers and investing in our markets and in our people.
At this point, we would now like to open up the call for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you're using us speakerphone, please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then to at this time, we will pause momentarily to assemble our roster.
Our first question is from Brendan nozzle with Sandler O'neill and partners. Please go ahead.
Hey, good morning, guys how are you.
Good morning, Good morning, Brian .
Just wanted to start off on the margin.
I appreciate all the color you gave on some of the things you're doing to push back on the cost of funds as well as trying to maintain on the asset side.
If you could just kind of.
Wrap up those moving pieces into what you think you means for the NIM in the fourth quarter.
That would be helpful. And then what each incremental rate cut thereafter, you think would mean for the margin.
Well.
For the fourth quarter I I don't expect to see the same magnitude of drop that we had in the third quarter, the 11 basis points.
I think it would be somewhere maybe in between.
So in that.
Seven six to seven basis point range I think a lot of it is just going to depend on.
Asset mix a bit and then just some timing and the cost of funds side.
Longer term and in part of why I gave that sort of long term data point of 352 that was when rates were down in you know.
Not that come up from zero, but not much so I kind of feel like you know that sort of.
You know a low watermark for us.
So I I would see maybe a bit of but drift down but not toward that kind of levels. So we're at 376. So.
Maybe a bit of a drift down but hopefully all of our efforts will result in stabilizing it not too far away from where we're at right now.
And the other real goal is to continue to drive earning asset growth. So the dollars of net interest income continue to grow.
Understood that that's definitely helpful.
And then if I can sneak one more in there just moving on to the fee side of things.
You see a very very good number here in the third quarter. After you remove the MSR noise.
And I appreciate the outlook for the fourth quarter to be above the high end range, but as I look at things.
Given continued strength in the mortgage market and then the $1.1 million gain you expect to take it seems like fees could be meaningfully above the high end of that $11 million to $12 million range next quarter. So.
I guess, just one want to make sure I'm thinking about that correctly and then two if you could give a finer point on how much above that $12 million Mark you think you could be.
Oh, that's a great question.
I think given where the pipeline is and new application volume and as you mentioned the million dollar.
Gain.
On the 36.6 million that moved into held.
For sale.
I would certainly see.
A number approaching is strong as we were in the third quarter I think the one caveat I will give you is with the way we record the fair value adjustments.
The pipeline is likely to be lower at December 31.
Versus where it was in September 30.
So thats going to cause us to.
Have a downward adjustment and it's really going to be the magnitude of how much does that pipeline drop because actual loan sales are going to be as stronger stronger. So the wildcard is kind of the change in fair value related to the pipeline and to the extent.
And that that holds up.
In in App volumes hold it could be again.
Number very similar to where we were in the third quarter.
If the App volumes have a more of a seasonal decline then it could be off a bit but I I certainly would expect it to be lead to us being meaningfully above the high end of the range.
I would add to that in the third quarter 2019, we had a very strong.
Swap fee income quarter to about half a million dollars. Yes. That's in other non interest income. So we may not be quite at that level in the fourth quarter.
But.
The gains I would expect to be pretty strong in the fourth quarter I know I'm not giving you an exact number because it's tough to project the.
You know the one item on the pipeline but.
I I would be surprised if we are meaningfully above.
No thats very helpful color. So thanks, you're walking me through the moving pieces and thanks for taking the questions.
Well.
Again, if you'd like to ask a question. Please press Star then one.
Our next question comes from John wrote US with Janney. Please go ahead.
Hey, guys good morning.
Good morning, John Martin John Rob, It's been a great working with you over all these years I guess you have it looks a little extra time that place in golf next year.
Yup.
[laughter] Kuwait the Bonnie.
We won't have to you won't have to worry about interest rates and all that exciting stuff in the yield curve, but shareholders also worry about it.
Don't worry about it too much.
Hey, just a quick question just on your thoughts on the buyback obviously, you've still got.
About 270000 shares remaining between now and year end and then just thoughts on re upping the buyback plan for 2020.
Yep.
So I guess, John I'll jump in there so we had.
Through.
The second quarter.
So very very strong buyback.
Activity in fact, we.
Completed the full initial authorized amount of 5% and then our.
Board re up to an additional 300000 shares in the third quarter, we had a small amount of purchases.
For the third quarter.
Hi, I would say going forward.
We will continue to have.
The program in place.
And so it would expire at the end of 2019, I would think that our board with re upped that for 2020.
And we continue to look at.
All the opportunities that we have to put our capital to work and it's a balancing act.
And.
So.
The pace that we were buying at.
The first half of the you're obviously has slowed down but.
Prospectively.
So we could do some purchasing but not probably not nearly at the.
Pace that that we were at before.
Fair enough. Thanks, Greg.
Yes, I think that covers that while I think the other thing is it's a good lever if.
Organic growth and earning assets and loan slows a bit maybe it's.
Economic factors in the marketplace, but it's a good lever.
To try and continue to produce growth and earnings per share.
If there is some slowdown in asset growth.
Yes.
And I expect the stucco problem stocks for bank stocks will probably remain volatile so.
Just one other question you guys sort of address that a little bit just as far as the GM strike and.
Maybe you it's going to be over soon but just your comments it doesn't sound like you've seen any meaningful negative impact yet from the strike.
Yes, it's so we.
Internally.
Consult with our client base.
And there's there's no doubt that.
This has as impacted.
The Michigan markets and the National markets. If you go back to.
Pre strike.
There was some positioning by both parties that I think.
You know they had.
Set themselves up so that for a short period of time they could.
Survive without maybe being too negative and so while this has gone on I think longer than what people expected and anybody really wanted it appears that they're they're close and so.
Hey in our markets on the supplier side.
There have been lay offs.
As as production has has slowed RCC.
When we canvas our portfolio of clients.
Really they are looking longer term and quite frankly, there. They are bullish on on 2020, I mean, there there's a lot of uncertainty in the market, but they are definitely.
Optimistic about.
2020.
Okay. So thanks.
Yeah, I was going to add we havent seen anything impact wise either in the retail portfolio.
Good news or consumer loans.
On the commercial portfolio, where you know it's affected someone's ability to make their payments.
Okay. Thanks, guys. Thanks for the comments.
Our next question comes from Kevin Reevey with da Davidson. Please go ahead.
Good morning.
Hi, Kevin.
Rob Congratulations on your retirement, well deserved Steve I'm looking forward the working with you again.
Thank you Kevin.
So first question. If I was just curious where there are there other levers on acid side of the balance sheet, but you can hold.
In order to mitigate margin compression in a low rate environment.
No I think the the thing that we're just working the hardest on is trying to where we can hold the line in maybe expand margins a little bit.
New lending.
You know I.
Kind of.
Went through.
The fact that floors are not going to.
Prevent on the variable rate loans.
A downward drift there but.
I think those are the two key.
Elements is just trying to expand margin a little bit.
And.
Other than that I think earning asset growth.
And getting more dollars of net interest income as the other key.
Okay and the other thing I would say and we have a slide on it.
We do have a decent amount of portfolio that is fixed rate now to the extent to get prepayments you can still.
You know have some drift down there as well, but we're reasonably balanced in those portfolios.
Between fixed rate in variable rate. So we may not have.
Quite as much pressure as maybe someone who has.
A vast percentage at their commercial portfolio with variable rates.
And then your fixed rate loans.
Most of them structured such that if there is a.
In early prepayment that there's a prepayment fee that you can capture to kind of.
Did benefit a little bit.
From the last of a higher yield asset.
That is correct on commercial so.
Virtually all of the commercial loans that are fixed rate would have some form of yield maintenance or prepayment.
Penalty that is not the case on retail loans, so that on retail loans Thats just that.
Sceptical in the marketplace. So those loans there is.
The ability to refinance without without penalty, but again you know the one thing I would say as margins have kind of improved in the mortgage banking space. So.
The what we call the primary secondary spreads have widened out a bit so hopefully that will help on the mortgage side.
And then lastly, given Cecil and Youre focused on consumer lending do you expect to see any changes on point your focus given me.
The impact of diesel.
That's a great question.
I would say that we would be.
The as we have been this year I think we would be.
A active and in doing some portfolio.
Loan sales without recourse to try and moderate the growth rate there.
I think longer term you know the the.
Performance, it's more of a timing thing than anything else. So.
The credit losses are whatever they ultimately are and I think over time, we'll probably.
Refining.
Where provisioning levels are you know I think when at the start everyone is sort of in the same bucket of maybe being a bit on the conservative side as you start down the path with seasonal in terms of the modeling I think over time, you'll get better on the.
So I think overtime that it's not going to affect you know are.
Desire to do consumer financing, both mortgage and the RV power sport Marine, but I think we'll try to may be regulate those growth rates through through sales.
Great. Thank you appreciate the color.
This concludes that question answer session I would like to turn the conference back over to Mr., Brad Kessel for any closing remarks.
We would like to thank each of you for your interest in independent Bank Corp. and for joining us on todays call and we wish you all great day.
The conference has now concluded thank.
Thank you for attending today's presentation you may now disconnect.