Q3 2019 Earnings Call
Good morning, everyone and welcome to the National Bank Holding Corporation 2019 third quarter earnings calls my name is Mariama and I will be your conference operator for today.
Time, all participants are in a listen only mode. We will conduct a question and answer session follow following their prepared remarks. As a reminder, this conference is being recorded for replay purposes I would like to remind you that this conference call will contain forward looking statements, including statements regarding the company's loans and loan growth deposits.
Strategic capital potential income streams gross margin taxes, and non interest expense actual results could differ materially from those discuss today.
These forward looking statements are subject to risks and uncertainties and other factors, which are disclosed in more detail in the company's most recent filings with the U.S. Securities and Exchange Commission. These statements speak only as of the date of this call and National Bank Holdings Corporation undertakes no obligation to update or revise these statements.
It is now my pleasure to turn the call over and introduce National Bank, holding Corporation's Chairman, President and CEO Mr. Tim Laney.
Mariama good morning, and thank you for joining National Bank Holdings third quarter 2019 earnings call I have with me, our Chief Financial Officer oldest Burkins and Rick Newfield, our chief risk management all for sure.
We're pleased to report another record quarter live earnings on the strength of solid loan balance growth strong growth in noninterest bearing deposits and record fee income.
More specifically, we grew loan balances at an annualized rate of 10.7%, while growing noninterest bearing demand deposits at an annualized rate of 12.9%.
Record fee income was driven by our residential banking group with a solid contribution from hours consumer group.
Finally, it's important to note that we remain very focused on expense management and we believe we're setting ourselves up to realize additional operating efficiencies in 2020, all those things.
Thank you and good morning.
Jim already mentioned, we're very pleased to be reporting and another quarter of record earnings driven by solid loan and low cost deposit growth and a great performance by our residential mortgage business.
For the third quarter reported record quarterly net income of $21.6 million in the record earnings per diluted share of 69 cents. This.
This is an increase of $1.4 million sort of 6.7% on a linked quarter basis, and and 18.7% increase over the third quarter off 2018.
As we reported in our earnings release this was a busy quarter for us on many fronts I will call out some of the key drivers as I cover various parts of the balance sheet and income statement.
In terms of organic loan growth. We are pleased with the trends. We saw this quarter led by strong commercial loan activity, our new loan originations. This quarter were $319.2 million, an increase of 9.9% over the second quarter 2019, and a 16.2% increase over the production level.
During the same quarter last year.
How did your nations continues to be well diversified across various geographies and asset classes.
The regional economies in our markets remain solid and growing despite macro uncertainty around global economic growth.
Our small business middle market and consumer clients generally maintained a positive for adult.
I've ever given the increased uncertainty be took the opportunity to improve portions of our loan portfolio. This quarter and expect to continue these efforts during the fourth quarter as well.
Our strategic strategic actions combined with increased climbed to refinancing activity. This quarter resulted in an elevated loan paydowns and payoffs levels.
What do you have today basis outer hydrogenated non acquired loan balances have grown as strong 10.7%.
We expect to achieve the full year 2019 long growth guidance up 10%.
On the other side of the balance sheet, we continued to be very pleased with the growth of our low cost relationship deposits.
Average non interest bearing deposit balances grew 12.9% annualized on linked quarter basis.
And our non interest bearing deposits now represent 26.1% of total deposits, what a 2.5% improvement from a year ago.
Total average transaction deposits grew 5.1% annualized.
And we expect to deliver our on our full year guidance for average transaction deposit growth in the mid single digits.
Oh transaction deposit costs decreased one basis point from the prior quarter to a low 39 basis points in the third quarter.
Heading into the fourth quarter, we have taking actions to further lower interest rates are no deposit accounts.
We have $2.4 billion in average money market savings on the other interest bearing deposit accounts to which we are rapidly responding with pricing adjustments.
I expect to realize a continued drop of transaction deposit costs in the fourth quarter of the result of these actions.
Fully taxable equivalent net net interest margin for the quarter was 3.91%.
Linked quarter decrease of nine basis points entirely driven by the 225 basis points fed funds rate cuts.
Decreases in line without expectations of 85 to seven basis point drop 40 to 25 basis point caught in the fed interest rate target.
Looking ahead, if the fed follow through with of widely expected interest rate card at the end of October our margin will continue to be impacted envy now projected fourth quarters fully taxable equivalent net interest margin to be in the low three eightys.
Consistent with the prior guidance, earning assets should end the year at around $5.4 billion.
With regard to credit our overall loan portfolio remains in very good shape.
We moved swiftly to address the one problem loan that came over with the People's Bank acquisition, which we discussed during the second quarters call.
As a result out of annualized net charge offs. This quarter were 66 basis points.
Excluding the charge off related to this one acquired problem loan demand portfolio net charge offs in a main very low at three basis points annualized year to date.
The provision expense this quarter was $5.7 million on and included $4.2 million related to this problem loan.
Just to recap.
The time to People's Bank acquisition. The day, one loan Mark was $9.8 million more than sufficient to cover this specific problem loan expense as well as the rest of People's loan portfolio.
As of September 32019, we still had $6.1 million the purchase Martin, meaning that we will continue to be amortized into our earnings over time.
We see no systemic issues across our diversified and give annual loan portfolio and in fact, nonperforming loans declined quarter over quarter and on a year over year basis within non accrual ratio improved to 58 basis points from 79 basis points.
June 32019.
For the fourth quarter VR expecting provision expense to normalize to cover our originated loan growth at 1% in annualized.
Annualized net charge offs of 10 to 15 basis points.
During the third quarter be realized record non interest income of $24.8 million, which was $4.1 million higher than the second quarter 2019.
While we showed solid results in our service charges and bankcard fees. This quarter's highlight was the $14.7 million in mortgage banking income, which exceeded our guidance.
Our core residential mortgage business is built on the purchase market and we continue to benefit from operating and strong local markets.
Additionally, this quarter our teams capitalize on the low mortgage rates that have fueled the refinancing activity, which in turn provides a nice hedge to the margin pressures.
To give us some color this quarter refinancing activity represented 50% off the origination volume as compared to 26% during the second quarter 2019, or just 16% the same quarter last year.
Looking ahead, we project, both the home buying and refinancing activity to slow down, especially during the second half of the fourth quarter heading into the holiday season.
We project our total non interest income for the fourth quarter 2019 to be into $17 million to $18 million range.
Regarding expenses, our third quarters noninterest expense totaled $43.8 million and decreased $2.7 million from the prior quarter.
This quarter, we closed on to Oreo property cells that have been and works for sometime.
Gained from these Oreo sales totaled $6.5 million and whether the quarter's a contra expense within our non interest expense.
Our previous guidance projected these gains to cover this year's problem asset workout expenses and we are very happy to have exceeded the guidance.
Additionally, this quarter, we announced the consolidation of for banking centers that will occur in the fourth quarter of 2019.
As part of this effort, we incurred a 900000 dollar impairment charge during the third quarter, which we expect to earn back within a year through improved operating efficiencies.
We do not expect these consolidations to have any material impact on our ability to grow and service our low cost deposits.
Since 2015 be have either consolidated or closed a total of 22 banking centers as we continuously look to improve.
To improve our operating leverage to allow us to to invest in the digital convenience is that our clients expect.
Excluding oreo gains problem acid workout expense in the banking center consolidation charge non interest expense in the third quarter increased $2.8 million. This increase was driven by a 2.9 million dollar increase into total compensation line as a result of that hard residential mortgage performance.
For the fourth quarter, we expect our total expenses to be in the 45 to 46 million dollar range.
The effective tax rate for the quarter was 20%, reflecting the higher taxable income.
For the fourth quarter of 2019, we expect the effective tax rate to be in that previously guided 18.5% to 19.5% range.
That concludes my comments.
Thank you all this.
We are proud of having delivered another record quarter of earnings with increasing returns on tangible assets and tangible common equity.
To be clear, we're not pleased with the expense taken during the quarter related to the previously discussed acquired loan.
We'll share with you that despite the reliance on audited financial statements in connection with this relationship. We've uncovered regularity is if not suspect activity that continues to be investigated.
Moving on.
As it relates to capital we finished the quarter with a 10.9% tier one leverage capital ratio.
Our tangible book value per share was $20.45 and we're pleased to have increased tangible book value, 13.4% over the past 12 months, while having increased our quarterly dividend 35 points <unk> percent over the same period.
On that point, we'll open the call up for questions.
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Mariama. Thank you to ask a question you will need to press star one on your telephone to withdraw your question press the pound or hash key please standby, while we compiled acuity roster.
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Your first question comes from Jeff Rulis with D.A. Davidson. Your line is open good morning, Jeff.
Good morning, Tim and all this morning.
Following up on the on the credit side.
Sounds like an identified credit obviously from the People's one that you discussed I guess im just trying to get to that.
The approach here and.
Maybe some body language suggest is there more sort of processing of these type loans like you're going to get more aggressive to try to churn through that non accrual book or is this a true one off and we should see more stability in the non accrual level and charge offs.
Sure Jeff. Good morning. This is Rick let me, let me answer your questions. So.
Yes. This is alone that came over with the People's acquisition and I will share the loan exposure is related to a subcontractor and this is a sector in which our bank.
Has maintained minimal exposure in fact loans to any type of contract or subcontractor or just over 1% of our total loan portfolio.
Ill also point out is all this as we've had success and working through other problem loans acquired two peoples and with better results than our initial credit marks.
And finally really to put perspective on the overall portfolio I don't see any systemic issues or negative trends in our loan book in fact, nonaccrual loans classified loans and criticized loans all decreased during the third quarter.
And we've been steadily decreasing our nonperforming assets over the last 18 months.
Yeah, Jeff I'll jump and this is all this again on the on the purchase Smart TV had will be behind the 9.8 in the landmark on that portfolio.
And Tim support as right to Rick's point is that.
Well I was disappointing this one credits one offs thing as the rest of the portfolio be vivo performed much better and creating Denmark and are in out earnings.
Got you had the remaining 25 million non accrual.
Are there some lumpier credits in there is that pretty granular from here. This was one of that kind of moving through the snake or <unk> of the 25 million left what's.
Anything more chunky or sizeable.
Jeff No. This is Rick again actually it's very granular at this point to us. So no there is nothing of size.
In a nice sort of distribution across different loan types again, no particular concentration.
Got you Thanks, and then the.
I guess any thoughts on expectations.
Sounds like you exceeded expectations on the the gain on our Oreo outstripping problematic workout.
How about kind of rolling that forward to 2020 or Q4.
So on the expectations for the data business two items right great. Great question, we're not at a point, where we're ready to provide 2020 guidance, but I think if you look at our track record.
On recoveries managing Oreo.
Nothing less than strong and we expect that content that trend to continue in terms of working through anything we acquire and delivering a strong and economic return as we can.
Gotcha, and Tim you you closed with kind of the capital levels pretty robust any way you could.
To gauge on on deployment.
That.
And you know alternatives there as well as all this I don't know if you've got any initial cecil related.
Guidance or thoughts ahead of.
Next year or should you want to see slow Thursday, So first I.
I mean, not we haven't disclosed any cecil impact yet I'm looking to do that with the fourth quarter's earnings call along with the rest of the 2020 outlook on you know we've been working feverishly behind the scenes on it all you know it's fair to assume that we do still as of September Thirtyth had approximately just.
Just shy of $400 million of acquired for acquired loans that were accounted under purchase accounting devoted acquire some allowance set aside for that you know that could be three to $3 million to $4 million, but other than that nothing specific at the moment.
All this may kick me here, Jeff but.
We're not seeing anything that would represent a.
Surprise is now I think Armada and I know you want to wait until fourth quarter, but I'm, yeah. Our model saw coming out very very consistent to what you start seeing some other banks a bigger banks reporting in terms of if you look at by asset classes CNR loans, having little less maybe up our loans needed.
Anything consumer or mortgage type of the has over longer locks to it as a bit more so it would be not seeing anything surprising I think I think we benefit here from having a a robust strong.
Short term see an eye loan book.
And then and then to your earlier question on on capital.
I I typically give a bit of a robust answer around.
The focus on a continued increase in our dividend on a semi annual basis. The importance of Optionality is it really relates to M&A.
And and again, the belief that having a strong capital base.
Does create that optionality for so I'm I'm going to leave it at that right now Joe.
And buybacks is that part of your.
Optionality not a tool that that's aggressive have been used but any thoughts on that specifically, yes. I mean, you of course, we have the history early on of buying back. So many of our shares opportunistically at very low prices with a very short earn back that right now we actually.
Would not target that unless there was some radical change in the markets as an immediate opportunity.
Great. That's it for me Thanks, Hey, Thank you Joe so.
Your next question comes from guarded Maguire with Stephens, Inc. Your line is open.
Hi, Good morning, good morning, good morning.
Maybe stored on the expenses. All this can can you clarify whether that 45 to 46 million was a total expense level for Fourq, you or was it core.
It's total at this point being not expecting any on the two Oreo property sales to be realized in third quarter had been we've been talking about those.
For a while they were not related by the way it just happened to hit in one quarter for us so.
At this point, though I'm, just giving a toll total expense guidance.
Got it and then you guys mentioned efficiency opportunities next year. So the for branch closures in the release, but there anyway, you can size up what the opportunity is or what's kind of top of mind when when you talk about efficiency opportunities.
Look we continue to monitor the activity of our clients. The way. They are using now we're banking centers. The use of digital alternatives, finding that right balance striking that right balance between appropriate levels of brick and mortar and options is important to us we.
Had a track record of consolidating banking centers, where it is made sense in fact, selling some and other situations, where it made sense and that activity should be expected to continue at some levels were also lower moving away.
Many cases from the typical kind of consumer oriented banking center identifying targeted locations to serve either small business with our business bankers and we think thats very powerful in the markets, where we do business we've been doing some testing around this and its yielded.
Really nice results for us so we're very big on that move it does create in a fish or excuse me efficiencies and in of itself as we make some of those moves and then targeting other centers for serving more fluent clients that do more business with us as well.
Well, so there's a mix of consolidation activity.
Transitioning to digital leveraging some centers more as business centers, and then others for clients that have consumer clients that have I'll call. It much more robust relationships with us than than something that might be considered transactional.
So we're pretty optimistic board and about where we can go in terms of continuing to both drive revenue, while taking extents down to do it as we look to 2020.
Okay. So this would provide the opportunity to potentially lowered the expense base or is this just stemming the growth.
Yeah, well not ready yet to provide 2020 guidance, but I think of the the speed and efficiency up which we execute on that small will drive some of that but 10 in directionally you're right.
And then just any update on that you talk spansion, how that's going whether they're contributing meaning pretty meaningfully and what kind of anything you feel like you're at there as far as the build out did you say what kind of any inning, but yes, I would say well look clearly you know were.
Just getting started right, but we continue to really like what we see.
It's a very strong team there and it's only going to get stronger the focus again is middle market and small business as well as residential banking.
It's a thriving market I, just I don't want to talk it up too much because I don't want to attract other competitors, but it's a oh my goodness. It is an attractive market and to answer crescent it as countries starting to contribute already to be up performance.
I mean it.
We still investing we still an expansion mode. So the expensive still on the larger set aside and the contribution but.
The contribution on on on the loan originations deposit growth.
The fee income is already there are coming from that market.
Alright, thank you off them so.
Thank you Gordon.
Your next question comes from Nathan race with Piper Jaffray. Your line is open Wanna Nathan.
Hey, it's five shown on for an eight how you guys doing a good morning.
I wanted to turn to loan growth and maybe can you talk about.
Which markets are.
During the past for you right now and if you're maybe seeing are projecting strength and specific markets over others.
And fourth quarter and 2020 right. So you know we benefit both on a long growth and deposit growth standpoint from the fact that virtually every one of our core markets are operating better than the national averages on virtually every metric. So I would say that's a tie that continues to lift all boats.
So in those markets and and our teams worked very hard to capture our fair share.
Clearly when you think about a market like the front range of Colorado, It's a standout but I should also be even call out some of our specialty groups that operate with in our geography within our markets that are doing quite well wall.
Doing a great job managing risk Oh.
Managing the risk related to the businesses. So I would tell you we're actually seeing solid contribution at this point across all of our markets and remain pretty optimistic as all this.
At the front of the call.
All right what would you add or Rick anything you would add.
Tim I think I think you hit it I mean, we continue to see very diversified in terms of industry type and maintaining low exposures on commercial real estate overall and and contributing across would you describe again is very strong markets as well, while our commercial real estate balance is still remain at or just below.
So 100% of the tier one capital I will add that with the low rate market and all this alluded to this we have seen the natural refinancing a into longer term debt structure or a fair amount of our commercial real estate debt and we.
We're perfectly fine with that we feel like as trusted advisors to our clients, helping them find those opportunities to refinance into longer term low rates makes all the sense in the world at the same time I think you know we conduct semiannual stress testing on the total loan portfolio and each.
Last year that drives a certain amount of what we described as pruning activity that I think all this also touched on that that you know is just about looking at.
Looking at it at the exposure of certain relationships that were not comfortable with based on the latest stress testing and moving to proactively move it out of the bank. So that's a natural ebb and flow that's been occurring now we're into our third year and Rick you may want to take just a moment and talked about some of the latest.
The results of the stress testing sure Tim I'll touch on a briefly.
I think I've shared this a couple of times before on these calls but.
While we're not required to do stress testing and our asset size, we conducted twice a year testing one with our internal teammates and one using a third party that we find to be very conservative and really takes a hard look and we do this bottoms up so we're looking at hundreds of individual loan files were not doing just fine.
I have a.
Some kind of quantitative methodology, so Tim to your point it gives us insight into specific opportunities to exit loans that are performing just fine, but as we look at stress scenarios ranging from current sort of base all the way to a very severe that would be on top of what we experienced or worse than the great risk.
Session, we're able to take those actions and to your point some year over year, we've actually seen improvement in loss rates in the overall stress under any of those economic scenarios, which is quite encouraging. So so to answer your question in terms of production look we feel good about the contract.
Vision of all of our markets, we're obviously somewhat cautious with more and more talk of.
Economic downturn, we're fortunate in that our markets are all performing better than the national averages on virtually every metric and at least our internal testing on our loan portfolio as well as the third party testing.
Continues to support a strong book.
That's awesome color and if I could just follow up with one more you talked about the training.
Certain relationships would you say a majority of the pay downs came from that review and taking the opportunity to.
To evaluate the loan portfolio or was it more payouts due to rate or structure from competition.
Yes on the radar structure from competition I don't even think of the longer term Perm Financers is competition to us I mean, that's not our our for US long term financing is five years, you know and so.
I don't think of it as competition I would say in the commercial real estate space that certainly had its impact in terms of that natural transition Rick what would you add thank you I think to your point, Tim it's balanced and that some of that is natural and doesn't necessarily reflect issues.
Or view of those clients, but certainly within real estate, we're taking advantage of a very aggressive market, where we see there could be opportunity to prune. We're also doing that on more cyclicality vulnerable and that tends to be client by client because our portfolio is so diversified it's not like a single sector may be that were.
Focused on right I mean in an example, you may want to speak to which most of this activity has been conducted over the last two or three years. The talk about as an example, where we're at all in our AG. Our aggregate exposure. That's a great example, Tim and not one that to your point is a reasonable recent phenomena, we started probably over three years ago.
With us not only a specialist team with the right portfolio management, an underwriting approach, but also with a view that we've got this long term pressure on row crop livestock and other AG producers and we need to diversify and work our way out of that segment and more downstream into.
For a diversified and better capitalized AG AG AG clients, which has resulted in really no issues within that AG portfolio. In fact over the last year, plus I think less than $20000 and total charge offs.
But that would be one example, certainly in real estate, we remain selective for some time and I think thats just prudent as you pointed out as an ongoing process. So maybe the short answer to your question would be up it's been a real balance between.
What we would view as natural payoffs or refinancing and then the kind of pruning activity the that Rick Rick has described.
Awesome, that's great color guys. Thanks, Hey, thank you.
Our next question comes from Chris Mcgratty with KBW. Your line is open good morning, Chris.
Hi, This is actually Kelly motta on for Chris Today morning, Kelly.
Thanks for taking my question.
Maybe just.
Staying on credit for once again.
Hoping you could provide an update on the size of the energy, but as well is the reserve level on that.
Sure Kelly this is Rick so a couple of comments there I mean, we ended the quarter at.
Roughly $46 million and energy loans to be clear, we havent originated a new energy loan at over four years, we've been working that portfolio down over time in fact year to date is down nearly 10% from 12 31 2018 in terms of the performance. It's very stable I mean, we've we've managed.
That exposure down significantly over the last several years and the clients that we have within that book are performing well expect us to continue since we're not originating new to see that trend down further over the next a number of quarters any specific reserve commentary on that or no not really spread.
Things are role I mean, there's nothing unusual there no almost all stable. We do have one very small non accrual loans that we've had for some time expect to finally workout, but that's that's really not any news and the rest of the portfolio.
As like stable.
Great and then maybe a question on deposits I believe all this in your prepared remarks, you mentioned that you expect deposit transaction deposit cost to.
Continue to trend lower given just how your deposit base outperformed on the way up I was hoping you guys could help us figure out a way to think about how deposit they should perform now that that is cutting.
Yeah, and I don't know if it's it's got to be symmetrical and on the way down away. It was way up but I can tell you that be we have taken a very hard look through starting in June with it in first grade coat.
So July I should say and in September being proactive.
And then touch to the extent of there being exception pricings with declines in in touch with every single Cline as they understand the rate the rate environment that's changing.
And I can tell you that you know if we get reported an average basis 30, 939 basis point, a transaction deposit cost for the quarter on the spot basis at the end of September . It was 36 sobi already seeing another three basis point pickup in the run rate.
Heading into this fourth quarter and Thats before if the fed continues to cutting again vocaltec further actions.
Did you get that Kelly 39 at the ended the quarter on the spot today 36, we feel good about the trends, particularly as we continue to grow core operating accounts noninterest bearing accounts with our small business and midsize business clients. That's that's just a huge huge success.
Our story for us.
Last one more thing on just just to.
For the time deposits. That's a book obviously, that's been locked in on that has its time to run off and and dot cost for time deposits went up 10 basis points. If you looked and link quarter basis. It will continue drifting slightly higher nowhere near to the to the extent of 10 basis points that we saw in the in the.
Quarter, but just the way the nature of that book is it a pricing it's still expected to address little bit higher this quarter and then normalize on top of start coming down in 2020, and again to be clear there not the I mean, we were already we had already aggressively priced down our CD rates. This is just the lag of that.
Period, where rates going up while the lower previous rights were burning off so we view that as as temporary and it's so we're watching at work through the pipeline as one would expect.
That's great color. Thank you guys. Thank you.
Your next question comes from Tim O'brien, with Sandler O'neill and partners. Your line is open.
Good morning, guys I Tim warning.
Couple odds and ends questions.
First on the.
And I were there any interest reversals, either tied to the charge off for or perhaps prepay benefit any onetime items that affected eni this quarter nothing material to them.
Okay, Great and then.
You talked a little bit about the sub contractor those loans that segment or portfolio being.
Just over 1% total loans.
As most of that book of business did most of it come from peoples.
Hi, Tim Good morning. This is Rick no. It people certainly had a handful and we only have a handful total and national So it's a combination right.
Okay and then.
With regard to the energy book and this is just to Tom do follow on Kelly's question. There was a little upturn sequentially in quarterly balances 43 million 46 million is that tied to like an operating line that was being utilized or something because youve. Obviously havent you didn't originate any new loans in the quarters.
With that as Tim that's exactly right. We had some drawdowns this quarter, we actually had paydowns on some of those same lies in the previous quarter. So you know again, some ups and downs, but overall trending down.
And then one last question with regard to commercial real estate.
Lending and how that fits into your overall strategy and Tim has been all you guys have been pretty clear about that through the years, but.
With regard to like owner occupied commercial real estate, when you're chasing our relationship that how do you view.
The market conditions and conduits trying to get.
Put on 10 years sub 4% fixed rate loans on stock for commercial real estate, how do you balance that with bringing serving your clients I guess these commercial relationship clients Tim what.
Do you want to make those loans is their value and making alone like that and giving on term and.
Or or extending term a little bit on that just to keep the whole relationship or how do you balance out or what's your philosophy or thoughts there.
Our balance it with a long term view of saying, we're going to be the best trusted advisors weekend for our clients and if that if theres an opportunity in the cycle in the market for our client to access longer term low cost financing then we're going to work to move with them in that direction and.
Support them as they make that move.
We in many respects define.
The heart of the relationship because having those core operating accounts the depository business and then again burning that trusted advisor status. So you're not going to find that we're inclined to stretch out of our policy limits on term or price to make.
That happened, but we'll work with our clients to help them achieve their goals. If that's what's important and I would I would turn to Rick to ask Rick if you've got any other thoughts on that no I think thats exactly right and I kind of reacted to the word chase and again, Tim as you said, it's earning a relationship.
Based on trust and what's best for the client and ultimately maintaining.
A win win or quality for the bank and if the best answer is financing elsewhere that were initially support that would that long term view of the client and Tim I know, we've talked about this and pet pass and you know this but a powerful tool we use at our banker level is every bank or is looking at the right.
Terms theyre, creating from every client relationship and frankly, if you start down that rabbit hole of chasing term and price. They quickly see their their direct contribution or are there proxy for profitability is actually going to be negatively impacted so it's right.
Reinforced at the bank or level, all the way up through the organization and I think thats pretty clear.
Thanks for answering my questions guys you bet.
Thank you and I am showing we have no further questions. At this time I will now turn the call back to Mr. Laney for his closing remarks. Thank you Mariama I'll I'll simply say I know everyone on the lines busy I'll say, thank you for joining and we'll certainly take any follow up calls should they come later have a great day.
And this concludes today's conference call if he would like to listen to the telephone replay of this call. It will be available beginning at approximately two hours and will run through November 5th 2019 by dialing 8558, Fivenine to 056 or 4045373 406.
And referencing the conference I'd of 6784 Athree nine.
The earnings release, and an online replay of this call will also be available on on the company's website on the Investor Relations Relations page. Thank you very much and have a great day you may now disconnect.