Q4 2019 Earnings Call

good morning, and thank you for

Joining the call today's results reflect another solid quarter in an outstanding year in which we achieved record core earnings before I discuss the highlights 2019. I'm very pleased to report that in January . We announced a series of planned Capital actions that we intend to execute this year these actions include them in the company's quarterly common stock dividend from Thirty to forty cents per share beginning in the second quarter of 2020 and a common stock repurchase program of up to five hundred million dollars. We also announced the Redemption of our 8.25 series D preferred stock of which $20 million is currently outstanding.

Additionally on December 31st 2019. We acquired a $74 million credit card portfolio in Puerto Rico.

In a separate transaction. We also acquired the rights to issue credit cards under the JetBlue co-branded loyalty program and Puerto Rico and we plan to launch this new product came in half of twenty-twenty these actions evidence to strength of our Capital position, which allows us to return Capital to our shareholders. When we continue to invest in our faith. Please turn to slide three. We reported core earnings for the four years for the full year our annual net income of 671 million reflects an increase of Thursday from our 2018 adjusted net income of $487 2019 results benefited from strong deposit and Loan growth in both, Puerto Rico.

credit quality

Could you need to be positive a 2019 in Puerto Rico most indicators were better than or close to pre hurricane level?

In the US critically was solid throughout the year and reduced our exposure to the taxi Medallion Market to $19.

Our Capital levels are strong with here and Tier 1 capital and Tier 1 common ratio at 17.8% are tangible Book value and the 2019 at $55.10 a 17% increase year-over-year in Puerto Rico. We grew close by 1.5% wage increase our deposits by 10% and our net interest margin was 4.3% and our us operation, we grew loans and our deposits each by 9 a.m. And our net interest margin was 3.32%

A reporter Coronet income of $167 million which included an 18 million tax benefits was slightly higher than the same quarter and $33 million or 24% higher than the adjusted. Net income with the fourth quarter of 2018.

Fourth-quarter results were driven by lower taxes and higher non-interest income partially offset by lower net interest income higher provision package and higher expenses.

Net interest income was lower compared to the previous quarter.

The fourth quarter was the first quarter to reflect the cumulative impact of the three recent interest rate Cuts as such the lower yields in our loan is my portfolios. We're only partially offset by increases in investment and money market balances credit quality results continue show favorable Trends off.

the credit metrics of

Bppr operations reflect the lower non-performing those lower and inflows and stable net charge-offs.

The increase in net charge-offs in the US operations was related to the taxi Medallion portfolio, which has now been largely resolved.

Please turn to slide 5 for an update on the environment in Puerto. Rico economic activity stabilized in 2019 after a post-hurricane rebound in 2018.

This occurred despite the macro and political uncertainty that persisted throughout the year and has continued into early 2020.

With respect to migration Trends the most recently released passenger data for the same one airport reflects that the net number of people who left the island through September was approximately $55,000 excluding 2018, which was substantially impacted by the flow of people coming back to Puerto Rico following the Hurricanes off data for 2019 reflects a favorable variance compared to the same period in two thousand fifteen sixteen and Seventeen, which average wage of a hundred nine thousand feet. We will need to see whether the reason cizmic activity in the South will have an impact on this trip.

additionally

The US Census Bureau recently recently estimated that as of July 2019 the population of Puerto Rico remained flat versus 2018. This Compares favorable to the to the 1.7 average annual decline in the population since 2010.

Employment trends remain stable throughout the year and dissolved in December total employment which includes self-employed individuals was down 1.4% versus December 2018. The unemployment rate was 8.4% and December which is consistent with level seen earlier in 2019.

Validate employment was flat year-over-year with both private and public employment essentially unchanged compared to the same period last year.

The Auto industry continued to perform well in 2019.

106,000 new units were sold down 1% compared to 2018 but up 27% and 24% versus 2017 and 2016.

Sales were down 6% in 2019 when compared to 2018 though. There was considerable surgeon activity in early two thousand two thousand eighteen months following the hurricane 2019 sales were 31% and 17% higher than a 2017 and 60.

The dollar value of our customers debit and credit card transactions in the fourth quarter grew by 6% compared to the third quarter and by 2% versus the same. A 2018 our consumer loan origination Transit Puerto. Rico have also remained solid, especially in the auto and personal loans dead.

Our mortgage originations while still historically low levels were 7% higher than the previous quarter driven primarily by a higher home purchased activity.

On the commercial loan side balance has increased sequentially we continue to expect the incremental lending opportunities will be tied to the performance of the local economy month and ongoing recovery efforts.

Popular customer support orrico grew by 8400 this quarter and have increased by $45,000 since December 2018.

As we have commented before the sustainability and pays a further progress in the Puerto. Rico economy will be heavily dependent on the magnitude and time a federal recovery funds flowing into the island.

It is pertinent to the funds has been slower than many at hope this delay is related to concerns regarding the appropriate oversight of the disbursement of federal funds moved recently hard authorize the use of eight point five billion a cdbg-dr fun subject to strict oversight requirement in addition to the 1.5 billion previously released. Well, this is definitely positive recent controversy relating to the distribution of emergency supplies may increase concern over low-wage oversight. It is difficult to predict whether this ultimately will impact the amount in timing of recovery funds received. However, we continue to believe that these funds will be significant and have a positive impact on the economy.

I will now offer a brief update on.

Matters related to the seismic event that have impacted the South Western part of the island including a magnitude 6.4 earthquake on January seventh month. I want to emphasize the disadvantages not compared to the widespread destruction and damage caused by Hurricane Maria.

The damage is mostly concentrating sixty minutes of holidays, which with the exception of phone said are relatively small.

Fortunately, none of our employees suffered physical harm and our facilities are in sound condition.

Unlike Maria talking to make Asians were unaffected and power was restored within days. We resumed operations on the day following direct quake and provided uninterrupted service in all the three of our 164 branches in Puerto. Rico are operating normally.

We're in concert.

Vacation with our employees and working closely with our customers to help them with their specific needs.

Well the impact on our operations was limited many of the residents in the South suffered significant damages to their homes.

Public Schools remain closed and then shoeing aftershocks have made it extremely difficult for people in the region to regain a sense of normalcy.

As we have done in the past, we swiftly responded to our foundation which has close ties with non-profit organizations and communities in the South to bring immediate assistance to those affected.

A little more than two years ago for Ricco faced and manage through the impact of hurricane Maria.

Although the scale these events is not comparable to the rear. We made a tentative to the impact. It could have in certain sectors of the economy principally in the hospitality industry.

Puerto Rico

Are once again demonstrating overwhelming solidarity and support and arm facing the situation with the resolve to move forward. We will continue working with them to Puerto. Rico will once again demonstrated spirit and ability to rebuild. I will now turn the call over to Carlos will discuss if an answer results in Greater detail.

Thank you, Ignacio. Good morning, before we turn to fourth-quarter results. Let me expand popular year 2019 for for our net interest income increased by 9% year-over-year to 1.9 billion do to solid long road along with robust. Go lower than interest margin in 2019 are provision expense wage increase by approximately 37% to $166 billion on the back of improved credit Trends excluding the FDIC related benefit in 2018. Non-interest income increased by approximately 8% year-over-year driven by Improvement across most most segments operating expenses incurred four percent in the year to 1.48 billion higher personal cost and professional fees or the primary drivers.

For possession was robust and ended the year with tangible book value per share increasing by nearly nine dollars per share to 5510 and accommodate with you with Israel improving by 88 basis points year-over-year to 17.8% is Brooklyn was achieved even after the purchase of 250 million dollars of comments page and an increase in our constructed that's Ignacio mentioned overall an outstanding year plz sent a slight 6/4 quarter results, as usual additional information is provided in the appendix to the flight deck today's earnings, press release details variances from the third quarter.

Then interest income for the quarter was 467 million down $10 million from the third quarter. The primary driver of this decline was a decreasing rate would occur during the third and fourth quarters of 2019, which along with our asset mix led to a 17 basis points construction name. This impact was somewhat upset but higher commercial loans in both Puerto Rico and in the US Auto personal loans at BPR and lower interest expense.

Result is consistent with our commentary last quarter that lower interest rate negatively impact our results by four to five million dollars per quarter for every 25 basis-point drop in range other factors, like acid makes the shape of the yield curve also impacted tested.

We expect our marketing to improve from fourth-quarter levels as a result of president spectations of stable rates the gradual reduction in our sensitivity and the eventual normalization of the levels of Puerto Rico government deposit.

Regarding deposit levels, exceed our expectations. The margin Improvement could be less with our net income will benefit.

At the end of the fourth quarter Puerto, Rico public deposits were roughly ten point five billion, which is down from the end of Q3, but consistent with the balance is communication in our last webcast.

2019 our loan portfolio grew by 907 million or 3% despite a runoff or $420 million in our Legacy mortgage and Western people for you.

20 we anticipate slight growth a loan balances for popular in Puerto Rico. We expect to see growth in most segments including Commercial Auto and purchase despite continued Runner, you know Legacy mortgage and Commercial performance in the US. We anticipate commercial lending to be the primary driver of higher loan balance off.

Provision the fourth quarter increased by ten point six million dollars. It's equation legal would expand on this during his credit commentary.

Non-interest income increased by nine point seven million in the. The Improvement was due to an increase in Insurance fees during primarily by higher contingency missions, which usually happened in Q4. We benefited from a three million Improvement in Mortgage Banking results may be due to MSR valuation adjustment and finally bought a 4.7 million variable variance in the adjustment to Indemnity reserves on previously sold loans.

Total operating expenses were three hundred.

Maybe 1 million 14.1 million higher than the prior quarter.

Personnel cost increased by ten point six million in the quarter these increases were driven by actual incentives and headcount higher commissions and incremental investment in employee benefits and trained professional fees increased by four point six million primarily due to higher expenditures in regulatory, accounting and Technology fees of setting part by law legal fee.

Business promotion cost for 4.8 million higher in the fourth quarter reflecting the traditional seasonality of this expense line.

These increases were partially offset by lower other operating expenses by 9.5 million mainly due to lower operating losses and the non recurrence of a two point six million jobs lost related to an undeveloped corporate sites, which was placed for sale during the third quarter.

Probably sharing expenses for nine point four million in Q4 and total of 28.8 million for the if we exclude the 2019 profit sharing wage, which by definition is not budgeted our average quarterly experience for the year was $362 Million consistent with our original guidance or through Thursday is 64 million.

B20 we expect average quarterly expenses to be around $383 million be increased from 2019 is mostly driven by higher expenses in the following categories.

Personnel as we continue to invest in training and compensation with the related benefits. Also increasing a tight labor market in Puerto Rico. I mean the age where we operate in the mainland contribute to this increased technology as we continue to modernize our digital capabilities pure obsolescence and address regulatory month cyber and compliance need some of the increased results from the completion of multi-year Technology Investments that now start to be amortized. I finally business promotion especially expenses related to reward programs for clients many link to our credit card offerings in Puerto. Rico wage growth in our digital channels.

Part of this higher technology and rewards expenses are related.

expectation of higher levels of activity by our clients

Obviously, we will strive to come in below this expense this level of expenses if possible subject is for 2020 reflect this goal.

Our effective tax rate for the quarter was 8% which includes a previously disclosed benefit of 18 million related to revisions of the amount of exempt income wage for the years 2015 to 2017 excluding these judgments are effective tax rate would have been 18% or 20/20. We expect the effective tax rate to be within a range of 19 to 21%

Please turn to slide seven.

Marcato levels remain strong relative to Mainland peers as well with respect to well-capitalized regulatory requirements.

I think I mentioned I just started this call are announced 20/20 Capital plan includes three actions first and increasing popular quarterly, and dividends by 33% or 10% to forty cents per share. We expect to implement this increase for our next quarterly dividend in Q2 secondly will bring anything in stock repurchase program of up to five hundred million dollars.

What are recent?

Buyback programs have been executed via SRS the detailed implementation plan for this buyback is still under consideration.

Finally on Friday. We announced the Redemption of the remaining of standing balance of popular 8.25% Seriously preferred stock as the Securities represent high club.

Our, directly to one ratio was 17.8% offer 17.5% and tangible Book value increase in the quarter by $1.69 per share to $55 a month.

The increase was driven by our quarterly net income partially offset by lower on realized gains an investment and the impact of our common and preferred dividends.

Or return on Equity was 12.8% in the fourth quarter and 13.4% in 2019. We will continue to pursue our Target of maintaining and improving our double did not return on tangible link. Please turn to slide a we have continued our evaluation and implementation efforts for Cecil based on our analysis Thursday. We have been made that the allowance for loan and Lease losses would increase by a range of 220 to 350 million or 67% to 73% of the existing Reserves.

this

Can increase slightly lower than last quarter's is driven by the Puerto Rico mortgage credit card and Auto Loan portfolios.

Based on this estimate that they want impact of the Cecil would result in a decrease in Tango Book value of approximately $2 per share or 4%

He's popular allowance already exists exceeds 1.25% of loans. The incremental allowance resulting from Cecil would be excluded from Total capital.

In accordance with President regulatory guidance. We plan to face in that they want effects of Cecil on regulatory Capital over a three-year period

A such we estimate the day one impact to result in a reduction of CT and total capital or approximately 25 basis points after the adoption of Cecil popular will continue to be well-capitalized.

The adoption of Cecil the corporation has made the election to break the existing pools of purchased credit impaired or PCI loans previously accounted for on the recipe off on their Cecil. This phone's will be accounted for us individual loans instead of pools of loans up to now PCI loans have been excluded from being reported off performing Duty estimation of cash flows at the pool level.

Upon transition to the individual loan measurement distance will no longer be excluded from not performing status.

This change in accounting treatment would have resulted as of 1231 nineteen in an increase of $283 million in report that NPS.

This increase is composed of $156 billion in loans currently reported or 90 days past due. Not as MPS and 1/2 twenty-five million in long are not delinquent in their payment terms, but would be reported as non-performing do two other credit quality considerations again this month I can report an infield would be as of December Thirty One 2019 and could change by time. We report our 33120 results under Cecil.

let me

That is reporting change does not in any way alter or increase the credit risk containing popular as low-performing. However, the accounting treatment of the loans will result in higher reported Enfield.

The corporation would pursue renegotiations resolutions and Loan dispositions that may reduce this postseason report that empty per we are still finding our simulations of the effects of the new season models on the provision for 2020.

So we are not in a position to provide additional insights and provision at this time with that. I will turn the call over to this.

Thank you, Carlos and good morning.

The credit quality metrics for the corporation continue to show favorable Trends in Puerto Rico. Our credit metrics reflected lower non-performing loans lower inflows unstable net charge-offs.

We reach agreement with the majority of our taxi Medallion buyer Wheels borrowers result resulting in an increase in net charge of excluding this Impact Credit quality metal remain favorable. We continue to be attentive to the performance or portfolios and related credit metrics.

In terms of our exposure to earthquake areas, approx 8% of our mortgage and 11% of our consumer loan portfolios pertain to areas declare a major disaster.

So far as customer inquiries and requests for modifications have been Limited.

In terms of standing direct exposure to the Puerto Rico government municipalities and other instrumentalities at your end. The balance was 432 million a decrease wage twenty six million when compared to last year.

Recently flight number nine to review credit metrics at the end of the year.

Non-performing assets decreased by 26 million to 650 million this quarter driven by a non-performing loan decrease of 30 million of set in part by playing more you increase of four million. The declining non-performing loans was mainly driven by improvements in both Puerto Rico and the US

Puerto Rico

mpls decreased by 22 million with a ninety million reduction in commercial and it was Million reduction in mortgage. The decreasing commercial was mostly the result to commercial loan relationship while the decreasing mortgage was mostly due to the continued Improvement in the portfolio.

These reductions were offset in part by higher consumer of nine million. Mostly related to Orleans.

Following the acquisition we have experienced an increasingly delinquency MPL and net charge-offs in our auto loan portfolio. Mostly driven by decision of the portfolio and higher relations in lower FICO segments.

Well we

Attentive to this trend we're not overly concerned some deterioration was expected following the acquisition of a current portfolio and changes in the relation mix month. We remain pleased with the result of their position.

In the sales decreased by eight million mostly due to an npl construction loan Souls during the quarter.

The other year the ratio of total loss helping portfolio was 1.9% compared to 2.1% in the third quarter of 2019.

Increasing oil was mainly the Puerto Rico mortgage portfolio. We start to slide number ten to discuss any influence.

MPL store is positive so I'll be brief.

Compared to the previous quarter impulse of excluding Consumer loans decreased by twenty-three million driven by improvements in the Puerto Rico commercial portfolio as the price included the impact of certain trouble depth restructure commercial real estate loans.

Improvement was upset in part by a slight increase of five million in August portfolio.

The influence of us were relatively flat quarter-over-quarter.

starting to slide number 11 networks of amounted 282 million

analyze 1.21 percent of average loans helping portfolio compared to 68 million or 97 basis points in the previous quarter the increase of $15 million from the prior quarter was primarily related to net charge-off to our taxi Medallion portfolio of nineteen million reflecting agreements which with a majority of our taxi Medallion borrowers at the end of the year narrowed reserve the current value of this portfolio was ninety million were approximately 19% of its unpaid principal balance.

Of the remaining exposure 80% is under certain agreements.

Excluding the tax impact the corporation a charger will have improved by five million or four basis points natural job in Puerto Rico for a flat quarter of the corporations allowing for loan losses decrease by 35 million from the prior quarter to four hundred seventy eight million. Do you remember a decrease of 18 million Puerto Rico coupled with a decrease of 70 million in the US?

In Puerto Rico the decrease was mainly related to our decrease in the commercial qualitative research of set in part by an increase in reserve to the auto loan portfolio.

In the the decrease in the allowance was driven by the previously mentioned charged off to the taxi Medallion portfolio.

The provision for loan losses increased to forty-seven million from thirty-seven million the prior quarter with an increase of six million Puerto Rico an increase of four million in the US.

Summarize for the quality metrics continue to show favorable trends for the fourth quarter in Puerto. Rico results were better or stable on a quarter-to-quarter basis wanting the we reached Thelma agreements with our taxi Medallion Barbara's impact in charge of excluding this resolved for the US or scroll down without I would like to turn the call over to Ignacio for his concluding remarks. Thank you video and Carlos for your update 2019 was an outstanding near purple are dead. We achieved record Financial results and accomplished important Milestone the integration of our auto business the asset purchases in Puerto Rico and our recently announced plans Capital reflect that strength

We Begin 20/20 on a solid footing and excited about our prospects a year or Puerto Rico franchise is unrivaled it's consistently grown our retail and Commercial customer base and now serve 1.8 million customers, however, we do not take our eruption position for granted and we remain focused on enhancing our customer experience across all channels

How much branch?

Network is enhanced by renovated digital Solutions. Approximately 915000 of our clients are active online and eighty percent of Life use mobile devices to interact with

In December 52% of our deposit transactions in Puerto Rico were processed through smart ATMs and mobile devices a figure that has been growing across the breadth and depth of our retail and Commercial product offering in Puerto. Rico allow us to meet the evolving banking needs of our customers.

Operation the mainland State while more focused provides diversification to our footprint. We have a strong commercial lending unit that is complemented by a specialized National lending businesses Condo Association Banking and Healthcare.

Investments in ever Tech and BT and BHD long contribute to earnings and represent unrecognized values. We are encouraged by our results and remain focused on enhancing shareholder value. We are now ready to answer your questions.

And I'll begin the question-and-answer session to ask a question. You may press * then 1 on your touchtone phone. If you're using the speaker phone, please pick up your handset before pressing the keys off. If any time your question is been addressed and you like to withdraw your question, please press * then two at this time. We'll pause momentarily to assemble our roster.

First question comes from Alex Cordell Piper Sandler, please. Go ahead.

Hey, good morning, guys.

The first off just wanted to drill in a little bit more to Cecil and I appreciate Carlos your commentary on not being in a position to provide guidance on future provisioning at this time, but just with the reserves approaching 3% and and losses conceivably being Incorporated already in that Reserve. Is there really a scenario where that Reserve does not start to come down in some sort of fashion as 2020 approaches or a progressive.

I think as we mentioned mentioned by Carlos we are not providing guidance on it, but I can do things that you are expected to affect the levels of allowance money for the the portfolio girls were not so that's a fact on the other charge of respect to have charger and there's might be slight growing portfolio. So everything else being equal that should lead me it's like wrote in England.

I'm sorry. Can you say that again? You said the the lounge should grow?

Everything else being equal growth in the portfolio. Unfortunately two additional growth in the lounge. Yes.

Okay, and then

Switching gears to talk about longer with a little bit saw some nice commercial loan growth this quarter with any of that tied to specific post hurricane Maria recovery money back into the island. It's hard to time. I mean some some of the some of the our constructions clients probably have some but I would say was not directly tied in a recovery efforts against some of the lines for our our clients that do work. We're increased and they use some of those lines but I would not have tributed primarily to that. I went through a primary just a general economic activity.

Okay.

And then just a final question for me as we think about expenses for 2020 the $383 average. Is that include profit sharing or is that something that if you've pretty good year would wind up increasing expenses again? No, it is it does not include profit-sharing because obviously we we have to to be at home several targets to for the profit-sharing to start coming in. So it does not include any profit sharing.

Okay. Thanks for taking my questions.

Next question comes from Gerald Cassidy RBC, please go ahead.

Good morning, everyone morning morning. How are you? Good Carlos. Can you show me this if I recall in the past when you've returned the capital to shareholders through the stock repurchase programs you seem to have been able to kind of do it in the beginning, you know, right after the approval in an accelerated fashion with this five hundred million that you were approved for this time around. Is it going to be spread out more evenly over a 12-month period or should we expect more of it to be upfront? How are you guys thinking about that? It's a good question. We're in the middle of of consultations with all our esteemed Investment Banking coverage teams. So we it's not totally decided yet exactly how we're going to do it. You're okay. And then in another question you guys seem to have some good success and engaged.

in your customers in the digital transformation you

You have given us, you know additional statistics. Can you give us an idea or or half of your customers now in digital or two-thirds or how much more do you have to go? And then what kind of benefit from a cost standpoint do you possibly see in the Horizon where maybe you need fewer branches or smaller branches et cetera? Yeah. I mean if you look at our total number of customers, we we cite them as 1.8 and so 915 are active online, which means that they transact at least I think once a month so more than my life. I see, you know, we we continue to work on digital we have found that in in Puerto Rico our customers all those are active online. Also appreciate the the the the bulb in the branches. We will continue to experiment on our Branch size and how we how we can incorporate digital into the branches how we can use our smart ATMs and also we just open Thurs.

Which is sort of a digitally based Branch where we don't we don't take we don't.

Process any deposits for a hotel so you know what what continue to working on that with the branches like but again, if you ever been to our branches, you know, the number of transactions are branches are still down. The number of digital transactions are grown exponentially, but the number of you know of regular paper transactions have only decreased slightly off. So there's not there's not a correlation between the exponential growth of the digital so we'll have to wait but we're looking at this closely were experimenting you come to San Juan you ought to see that branches most on what it's really cool. You know, that that that's one of the interesting differences between our business and Puerto Rican that this was most of our fears in the mainland. I'll see now in the mainland wage mostly what banks have seen is a transfer transactions out of the branch into the digital channel as in Nancy mentioned our brand Channel considered to be very very robust and it's real dead.

Going down very much. But all the growth is happening on the diesel channels. So we we are we're doing more transactions as our our clients things digital the but they are they do not stop going to the branches when they are diesel clients.

That might be slightly different than the moment and interesting enough, even when you ask customers one. What if one of the most important elements they look at when they pick a bright. It's still Red Bank is still the price Network. And one thing to keep in mind is that there's been tremendous consolidation in Puerto Rico the last four years and the number of branches in Puerto Rico as a whole has reduced dramatically and Puerto Rico. The number of branches four hundred thousand people is still in a well below the US.

Very good you guys obviously talked about the success of the Wells Fargo auto portfolio acquisition in the integration into your organization. You mentioned this quote purchased a credit card portfolio seventy-four million dollars in receivables. Two questions. One is are there potential for more portfolio like Acquisitions that you see in maybe 2012 and then second, you know, is there any interest in building out the density of your New York or Florida franchises with actual whole Bank Acquisitions? I think to the first point we thought we'd like to characterize ourselves opportunistic fires. So, you know, I don't think there's a lot of Reliable Auto transactions left in Puerto Rico, but we keep you know, Finding and digging and Thursday are willing to sell we are open a stick buyer. So we'll keep looking in terms of the you know, probably I think we're pretty comfortable with our footprint and in in the New York area code

I should be looking for probably to grow the south Florida. But you know again, we're off to opportunistic we

We're not going to do anything. That doesn't make economic sense just for doing a transaction. Thank you very much.

And if you have a question, please press * then 1 our next question comes from Glen Mara Keith Brunet in woods, please go ahead.

Hi, good morning guys morning. So last Friday's announcement for the Redemption of the series be was there anything else in your Capital plan that had Redemption of the straight preferred or the trust preferreds out there that we're are all the components our Capital plan. There are now programmed. Okay, just a follow-up on Alex's question, you know with an a l l that looks like. It's around the 3% range post Cecil day one and maybe charge-offs going down to 75 basis points and 2% loan with I guess the way the street is kind of thinking about it, assuming the portfolio mix doesn't change, you know, it would kind of indicate that the provision the streets provision for for next year of around $200,225 is a reasonable methodology under those parameters. Would you kind of agree with that or not? We've heard we've heard a lot of dead.

People are approaching the this.

Different different ways party the most common approach with her is the one you just described so that that sounds reasonable. Unfortunately under six of the fact that this approach cannot incorporate. Anyway is any change in the input variables to the model so, you know, my answer is that it sounds reasonable but despite the fact that it's reasonable it could end up not being accurate because again, it is impossible for for for for anybody to solve be able to change the input variables into the models of public Bank reporting. So, yeah, it sounds like the right ballpark but doesn't mean it's going to give you the right hand.