Q4 2020 First Internet Bancorp Earnings Call
Okay.
Good day, everyone and welcome to the first Internet Bank Corp earnings Conference call for the fourth quarter and full year 'twenty and 'twenty all participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero on.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on attached on phone to withdraw. Your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Larry Clark from financial profiles and please.
Go ahead, Mr. Clark.
Thank you operator.
Good day, everyone and thank you for joining us to discuss first Internet Bancorp's financial results for the fourth quarter and full year 'twenty and 'twenty.
The company issued its earnings press release yesterday afternoon, and it's available on the company's website at Www Dot first Internet Bancorp Dot com.
In addition, the company has included a slide presentation that you can refer to during the call and you can also access these slides on the website.
Joining us today for the management team are chairman, President and CEO, David Becker, and executive Vice President and CFO, Ken Lubbock.
David will provide a company update and Ken will discuss the financial results. Then we'll open up the call to your questions before I begin I'd like to remind you that this conference call contains forward looking statements with respect to the future performance and financial condition of first Internet Bancorp that involve risks and uncertainties.
Various factors could cause actual results to be materially different from any future results expressed or implied by such forward looking statements.
These factors are discussed the company's SEC filings, which are available on the company's website.
The company disclaims any obligation to update any forward looking statements made during the call. Additionally management may refer to non-GAAP measures, which are intended to supplement but not substitute the most directly comparable GAAP measures.
The press release available on the website contains the financial and other quantitative information to be discussed today as well as the reconciliation of the GAAP to non-GAAP measures at this time I'd like to turn the call over to David.
Thank you Larry and good afternoon, and thank you for everyone for.
And for joining us good day.
And we're very pleased with the fourth quarter and full year results.
And that May have created some substantial challenges there and the year as you all know, but we adapted to the condition of their customers navigate and impacted the pandemic and continue to identify and capitalize on growth opportunity.
We delivered record net income and record earnings per share and both the fourth quarter and for the calendar year.
And by very strong revenue growth higher net interest income and robust mortgage banking revenue and increased SBA loan sales.
Our significant earnings growth throughout a historically low interest rate environment and uneven economy demonstrated the power of our business model and our increasingly diverse revenue streams.
Over the course of the year, we drove down our interest cost and favorable deposit repricing opportunities.
But the profitability is our fourth quarter fully taxable equivalent net interest margin expanded 24 basis points from a year earlier.
Additionally, we maintained strong credit quality, even after we took the extraordinary step and the form of loan deferrals and help our clients, whether the public health crisis and.
Nearly all of our borrowers who need a payment relief resumed payments well before the year ended as of January 15th we only we had only $8 $3 million and loan balances remaining on the pearl or well under 1% of the total portfolio down from a peak of almost 647 million.
And late May which was about 22% debt portfolio we.
We deepened ties with our clients and see this experience and remain optimistic and our customers' collective ability that fully bounce back and succeed in the year ahead on.
Credit metrics remain among the best and the industry because of our strong credit culture and disciplined approach to underwriting. We also focus on certain specialty lending line that our target lower risk asset classes, such as our public finance single tenant lease financing and healthcare finance business.
During the quarter and for the full year nonperforming loans and net charge offs and remained low and we also continued to build reserves conservatively positioning the bank to begin 2021.
And finally, we deliver and on a key strategic priority by strengthening earnings generated capital throughout the course of the year.
Our team delivered annual net income of $29 5 million and fourth quarter net income of $11 1 million.
Each company records as we boosted profitability throughout 2020.
Revenue and the first quarter of 2020 increased 52% from a year earlier, the $31 5 million driven by continued strength and our direct to consumer mortgage business and our bankers met the surge and demand brought on by low interest rates and winning business with a demonstrated commitment to excellent customer service.
Our mortgage pipeline is strong heading into 'twenty and 'twenty, one and we expect this business line to remain an important component of our profitability as interest rates remain low and both the purchase and refinance markets continue to experience high demand all across the country.
Our small business lending area with another vital contributor to our growth without more momentum during the fourth quarter as the accelerated build out of our national platform and 2020 resulted in increase them on production and the higher gain on sale revenue there is tremendous potential and this business internet with attractive opportunities on both.
Sides of our balance sheet.
And we brought on talent and expertise in 'twenty and 'twenty that will help drive further growth and originations and 'twenty 'twenty one.
We are forecasting originations of around $225 million. This year. The majority of which are SBA <unk> loans that are expected to produce gain on sale revenue of between $14 million to $15 million for the full year.
SBA lending is an important element of our long term strategy and we are proud to play a leading role in providing financing for the entrepreneurs and small businesses that drive job creation across our country.
As I noted our asset quality remains strong and we are cautiously optimistic about 2021.
To be sure. The pandemic continues to present substantial difficulties for many Americans. We are monitoring it on a loan portfolio closely and working with our clients to help them bridge from this challenging environment, while we anticipate will be a strong economic rebound once we as a country achieve widespread virus and.
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As we look ahead, we are confident and the strength of our franchise and our growth potential.
Fight the pandemic, our digital business model enables us to serve our customers without interruption and allows our team to focus on our core lines of business and earnings growth and so.
Always I would like to thank the entire first Internet bank team for their hard work and dedication to excellent customer service their collective effort and teamwork are ultimately the reasons for our record performance and 2020 and our optimistic outlook for the year ahead, and our employees are at the heart of our strong board play sculpture.
They are the reason first internet was recognized for the seventh consecutive year on the Indianapolis Star's top workplaces, and central Indiana less with that I'd like to turn the call over to Ken to discuss our financial results for the quarter.
Thanks, David and as David mentioned, we were very happy with our performance for the fourth quarter and full year delivering record revenue net income and earnings per share. We generated these strong results with very modest balance sheet growth during the quarter and the year, which is consistent with our disciplined balance sheet management.
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Our business model emphasizes capital efficiency and increasingly diverse revenue streams that drive increased profitability and our financial results reflect solid execution of this plan.
Now, let's turn to details of our results for the fourth quarter.
And record diluted earnings per share of $1 12, an increase of 30% from our third quarter results and up 56% from the fourth quarter of 2019.
Profitability improved significantly with fully taxable equivalent net interest margin, increasing 24 basis points to 191% a return on average assets of 1.0% to 2% and our return on average tangible common equity of 13 eight 4%.
Over the last 12 months, we had to adapt to a swiftly changing operating environment related to the COVID-19 pandemic with interest rates falling to record lows and uncertainty about the economy and credit quality, we were able to successfully navigate these challenges and deliver outstanding results, including a rapidly improving net interest margin.
For lower deposit pricing and stabilized asset yields strong revenue growth and excellent credit quality and looking at slide four we saw these trends begin to develop and the third quarter and once fourth quarter results are all reported we believe our performance relative to similarly sized institutions.
Compare even more favorably.
Looking at slide six total portfolio loans at the end of the fourth quarter were $3 1 billion and increase of $46 3 million or one 5% from the third quarter commercial.
Commercial loans increased to $73 1 million or 3% compared with the third quarter due primarily to production and health care finance and construction lending. This growth was partially offset by lower single tenant lease financing and public finance balances due mostly to prepayment activity and the single tenant portfolio.
And the sale of some public finance loans during the quarter.
Consumer loans decreased 25 from $3 million or 5% compared to the third quarter due primarily to increased prepayment activity and the residential mortgage portfolio and seasonally lower production and the recreational vehicle and trailer portfolios.
Moving on to deposits on slide seven.
And overall deposit balances were down 3% from the end of the third quarter. We saw continued improvement and the composition of the deposit base during the quarter Cds and brokered deposits decreased $135 million or seven 6% on a combined basis, while noninterest bearing and interest.
Bearing deposits increased $44 $3 million or 18, 4% on a combined basis.
<unk> and broker deposit balances declined as higher cost CD maturities were largely funded with on balance sheet liquidity all replaced with much more attractively priced money market accounts and lower rates Cds.
This activity lowered our cost of interest bearing deposits 22 basis points and the quarter and we still see opportunity to reduce deposit costs in 2021.
Due to the combination of significantly lower money market pricing and the continued CD repricing opportunity and we are forecasting interest expense savings of approximately $25 million for 'twenty and 'twenty one based on the current deposit pricing environment.
Turning to net interest income and net interest margin on slides eight and nine net interest income and net interest margin on both a GAAP and fully taxable equivalent basis showed strong improvement compared to last quarter and you can see from the net interest margin bridge on slide nine deposits and loans had the largest.
Positive impact on margin during the quarter.
Although the average balance of interest, earning assets was essentially flat from the third quarter interest income from earning assets was up about 3% driven mostly by a more favorable mix of assets, reflecting the deployment of on balance sheet liquidity and the redeployment of cash from the securities portfolio to fund new commercial loan origination.
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Average loan balances were up about $73 million or over 2% from the third quarter due mainly to growth and health care finance and construction lending as well as higher average balances and small business lending and.
In addition to the shift and loan mix. We also recognize the higher level of prepayment fees, both of which helped drive loan yields higher during the quarter.
And the near term, we expect our yield on interest earning assets to remain relatively stable as we continue to deploy liquidity to fund new loan originations.
We are pleased to have delivered a 24 basis point improvement and our fully taxable equivalent net interest margin during the quarter and expect the upward trend to continue next next quarter and throughout 2021.
Turning to noninterest income on slide 10.
Non interest income for the quarter was $12 $7 million up slightly from the third quarter. The increase was driven primarily by increased gain on sale of loans, which was due mainly to a higher amount of SBA seven a guaranteed loans sales in the quarter as well as the sale of public finance loans that I mentioned earlier.
Mortgage banking revenue was strong again during the quarter, but declined modestly from the record level, we generated in the third quarter.
With respect to small business lending activities and our increased origination activity translated into 100% growth and SBA gain on sale revenue from the third quarter with the accelerated build out of our small business lending platform. We expect that the fourth quarter's level of fee revenue from SBA loan sales.
Is the reasonable run rate for the near term and as David mentioned, we are targeting total revenue from this line of business to be and the range of $14 million to $15 million for the full year of 2021.
Looking forward into 'twenty and 'twenty, one while we expect mortgage revenues to remain strong and the near term we are not forecasting it to be at the record level achieved in 2020 that being said, we are not forecasting a drop and annual non interest income as the decline in mortgage revenue and should be offset by our expectations for increased gain on.
On sales revenue from SBA lending activities.
With respect to non interest expenses as shown on slide 11, the decreased to $14 $5 million was mainly the result of last quarter's $2 $1 million write down of two legacy commercial Oreo properties, excluding that impact noninterest expenses increased slightly.
On a linked quarter basis, driven primarily by a 200000 dollar increase and loan expenses and a 200000 dollar increase and consulting and professional fees, but was partially offset by a $400000 decrease in salaries and employee benefits.
The increase and loan expenses was due primarily to costs associated with the nonperforming loan relationship and professional fees were up due to the timing of third party loan reviews, and some other smaller consulting fees.
The lower salaries and employee benefits expense was due mainly to the timing of incentive compensation and the company's small business lending division and lower incentive compensation and the mortgage banking division due to lower mortgage production quarter over quarter.
Now, let's turn to asset quality on slide 12, the allowance for loan losses increased $2 $6 million or almost 10% to $29 $5 million, resulting in an increase and the allowance to total loans to 96 basis points or 98 basis points, excluding paycheck protection.
And program loans.
Are both up 7% or seven basis points from the linked quarter.
As growth and the loan portfolio was modest during the quarter the increase and the allowance for loan losses was driven primarily by changes in portfolio composition as well as further modifications to qualitative factors and our allowance model to reflect the ongoing economic uncertainty related to the COVID-19 pandemic.
In addition, we increased the specific reserve on an existing non performing single tenant lease financing relationship by $1 $1 million as.
As a result of the continued reserve build we recognized a loan loss provision of $2 $9 million for the fourth quarter up 14% from the third quarter.
Overall credit quality remained stable during the quarter as nonperforming loans to total loans of 33 basis points was comparable to 32 basis points at the end of the third quarter.
Net charge offs of $300000 were recognized during the quarter, resulting in net charge offs to average loans of four basis points as compared to one basis point in the prior quarter.
For the full year 2020, net charge offs to average loans was a relatively low six basis points.
While we continue to build our reserves out of an abundance of caution and the ongoing uncertain environment related to the pandemic. We also still feel very good about our asset quality and credit performance as evidenced by the modest amount of net charge offs to day.
With respect to liquidity and capital as shown on slide 13, our overall capital levels remain healthy at both the company and bank levels with a solid earnings performance for the quarter, our tangible common equity to tangible assets ratio increased to $7 six 9% from $7 two 4% and.
And third quarter. Additionally, tangible book value per share increased to $33 and 29.
Up from $31 98, and the third and fourth and.
In terms of our outlook for 2021, we believe we are extremely well positioned for the lower interest rate environment and there are a few things I want to reiterate and summarize for you.
As mentioned earlier, we are forecasting approximately $25 million of interest expense savings for the year from deposit repricing and you combine that with stabilized asset yields.
It should improve slightly in future periods due to a better asset mix, we are expecting significant gross and net interest income and expansion and net interest margin for 2021.
We also expect and maintain a strong level of non interest income going forward.
And as mentioned earlier, we are forecasting 2000 $14 million to $15 million of gain on sales revenue from SBA loan sales next year, which will be supplemented by increased servicing revenue as our managed SBA portfolio grows.
When combined with a solid outlook for mortgage banking revenue, we feel confident and our ability to generate a similar level of annual non interest income again in 2021.
We remain cautiously optimistic regarding the impact of the pandemic on the credit quality of the loan portfolio. We are vigilant and are monitoring and underwriting procedures and do not see elevated credit losses on the horizon at this point.
Because of these earnings earnings drivers, we anticipate improved profitability in 2021 with quarterly return on average assets and the range of 95 basis points to 1%, although first quarter, maybe a little bit lower due to annual expense resets, primarily and salaries and employee benefits.
And finally with increased profitability and modest balance sheet growth expectations. We are forecasting increased capital levels with tangible common equity to tangible assets expected to be and the range of eight 4% by the end of 2021.
With that I will turn it back over to the operator, so we can take your questions.
We will now begin the question and answer session to ask a question you May Press Star then one on you touched on phone and.
If you're using a speakerphone please pick up your handset before pressing the keys.
And that anytime your question has been interest and you would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
The first question comes from Brett Travertine and with Hockey Group. Please go ahead.
Hey, good afternoon, everyone.
Yeah.
And.
I wanted just to start with you you talked about there's a there's obviously still some savings to come on the interest expense side of the equation, but you you also manage the balance sheets and aided the margin and the fourth quarter can we just talk for a second about the expectations for loan growth and 21, and then you know.
One of the things you might be doing with the balance sheet to help manage that margin higher.
Oh, Yeah, and I mean on the loan side.
And what we expect to do is like many other institutions out there.
We have quite a bit of excess liquidity is still on the balance sheet a lot of cash and.
And.
And that will allow us to really grow the loan portfolio without necessarily growing and the balance sheet.
So we continue to deploy as you've seen we had.
We grew the health care finance portfolio.
Debt portfolio may not grow as much year over year, but we still expect.
We expect some solid growth there.
We're having a lot of success on the construction side, which has a higher yielding product there.
And and we've just and and the small business lending side as well, even though we're selling quite a bit of the guaranteed piece of that will still grow the on guaranteed piece and those are coming on at <unk>.
The $5, 50% to 6%.
So really the managing the loan yield on that side and I guess, the all in earning asset yield isn't really going to be a function of.
Deploying excess liquidity from will review from cash into the portfolio.
Okay. That's helpful. I mean, it looks to me like the margin could get to a kind of a two and a quarter a run rate.
And at some point this year does that seem fair to you guys.
Yeah, that's a that's a good forecast but.
Okay.
And then the other thing I Didnt wanted to just touch on was you know and expectations for expenses and I know you're going to have somewhat of a reset and the first quarter and can you just talk about the expense build this year, what you might be investing in and how we should think about and you're managing the efficiency ratio.
Yeah, I mean on the on the personnel side Youre going to Youre going to see and increase in compensate you know year. If you look at year over year forecast for annual compensation costs, Youre getting and Youre going to see an increase there just simply because of the investments, we've made and that and the small business unit.
We brought on a lot of talent there over the course of the year.
And obviously, that's not fully baked into our 2020 number.
But youre going to youre going to see and increase in compensation there and again, we also continue to add folks in.
Other areas across the bank as well, but that comp and salaries number will be up.
And we work and you know where we are.
Obviously, you continue to invest and we will have some market and marketing initiatives on the table this year too.
You know help build some of day contributed to the small business checking and and small business money market growth.
Probably marketing May go up a little bit this year as well as even though we expect mortgage to remain strong.
And we'll probably have to increase from some marketing cost on the mortgage side as well.
Okay, that's and that's helpful. And then if I want to make sure I heard the number correctly, if I thought I heard you say the ROI, you're expecting was at 95 to one O. Five yes, 95 to one where it will probably be like I said first quarter.
We have probably some of the expense resets that you'd normally see a lot of them on the salary and the comp side of things with our employee benefit resets.
Merit increases that that type of thing and.
So first quarter may be a little bit lighter, but certainly as we get into the second and then the back half of the year third and third and fourth quarter.
Are looking at a solid kind of one range.
One other issue that might bump is just that we've been in the first quarter on the SBA side, everybody knows there's another round of PPP coming to the marketplace for both first time and second time.
First on the borrowing side, they're redoing some of the roles on the seven day program.
A little bit of confusion in the marketplace right now focus on the SBA side, they're also kind of come back on new loans. After the first of February.
With some payment deferrals or payments to be and actually made by the federal government not really deferrals and they'll make cash payments like they did last spring. So a lot of folks are kind of sitting on their hands right now and the SBA world.
And Theyre also upping insurance levels, and 90% of the loans et cetera. So a lot of activity there on the back office side that might slow down a little bit of origination, but when it's all said and done and we think it'll help tremendously and the balance of the year. So might be just a tad bit of a slow start but it should come on strong and.
And the second third and fourth quarters.
Okay.
And thanks for all the color and congrats on a great quarter.
Thank you.
Okay.
The next question comes from Nathan race with Piper Sandler. Please go ahead.
Yeah, Hi, guys good afternoon.
Good afternoon day.
Was hoping to start on credit I got on and kind of late I apologize, but we're just hoping for any other details on that single tenant and.
Relationship that went overdue.
And with your debt specific reserve and the quarter interest and any other thoughts on just the.
Our provision outlook as we enter 2021.
Technically it was not a new relationship Nate it's the one that we had but reserves against back and the early part of last year a couple of shopko.
Stores that had closed.
We have a personal guarantee and we validated that the owner of the properties and more than able to cover that personal guarantee on the loans. So we did not reserve against that.
And regulators are gearing and auditors' came in and it didn't make our position so just to back it up and safety. We added another $1 million from reserve on that low, but we do anticipate any.
And getting that $4 million and back.
From the owner of the properties.
So it's really not a new problem at the old loans that.
The audit team just wanted us to reclassify a little bit.
Okay, great and helpful.
Sure.
And I was going to say and they just for the outlook for the year on on the reserves are on the on the provision levels I think.
You know we've done a pretty good job of bumping our coverage levels over the course of the year with the allowance in terms of gross dollars as well as the coverage of <unk>.
Going up almost.
Third.
Also as we said and our in the prepared comments. It's net charge offs have remained relatively low and right now we're not necessarily forecasting a lot of credit losses on the horizon.
So I would expect at least as we sit here today and probably the level of provisioning will be down relative to what we did this year, but we still expect to continue building the reserve and and expect bye bye.
By by year and will be well above.
Coverage ratio in excess of 100 basis points.
On the portfolio.
Okay, Great very helpful. And then just switching over to fees and I think the MBA forecast and volumes to be down and you know 20, 22% and.
2021 and <unk>.
Your expectations just in terms of you guys and you can kind of outperform.
That level or just generally how are you thinking about that line entering.
'twenty and 'twenty one.
Yeah, I think when we look at the forecast for this year, obviously, our we did and it was.
$23 million plus of mortgage revenue this year and our forecast and some of the numbers. We provided earlier on our way outlooks and stuff. We are certainly not forecasting that in fact, we have on.
Our cut we're cutting it by a third and our forecast this year.
A lot of that again has to do with the NBA outlook as well as just more competition and the market you know last year.
There was so much demand out there that that mortgage mortgage originators were able to.
Ratchet up margins a little bit.
And just the dial back just to be able to handle the workload and with originations forecasted to be down this year.
Probably margins will come down a bit too. So we're trying to take even though I think our forecast for 2021 on mortgage is still at <unk>.
Would be extremely strong by historical standards, it's coming down.
From what we did this year and Fortunately, we're in the position would be.
The investments, we've made and SBA debt that we have a clear pathway to backfill and debt. So as I said and the comments, we really don't see and decline in overall non interest income. It is just the mix and and those line items is going to be a little different.
Got it that's helpful.
And it makes sense and if I get yourself and one more housekeeping question on the tax rate going forward.
Corky level, a good run rate to use going forward.
That was probably a little bit inflated just when you think about we had record pre tax earnings and record revenue and taxes and the first part of the year were pretty light. So there was a little bit of catch up there this quarter.
I think the run rate going forward is probably a high teen number is probably the right number to put in your model.
Okay.
Okay perfect Congrats on a great quarter, guys and a great year. Thank you.
Thank you Nick.
The next question is from George Sutton with Craig Hallum. Please go ahead.
Okay.
Thank you David in your prepared comments, you mentioned that you continue to identify and capitalize on opportunities last year, and I would point out SBA and and P. P. P where two of those I'm curious, how you're thinking about particularly on the identification of opportunities and and what sort of others.
Things you might be pursuing this year that might not be obvious to us.
George we continue to look at opportunities, obviously, theres a lot of verticals and we're not in and kind of specialty finance lending side of things on.
Chatting with a group and California at the current time is that potentially another vertical.
So we're actively looking and we'll tell all you guys have you got somebody out there and send them our direction.
Particularly anything that can be done on a national footprint based on like we've done with SBA and and the other verticals of health care services, and we've gotten into I know theres, a lot of forecasts and the industrial about stepped up and M&A activity.
And here in 'twenty and 'twenty, one for us to go and as we discussed in the past pick up a traditional bank doesn't make a lot of sense.
But there are a lot of banks that have a particular franchise and our.
Given vertical of lending and specialty finance companies out here were continually and we.
Probably sounding one day or two NDA and some bumps of opportunities. We're taking a look at some of them and have some very and played a pricing.
But we're constantly looking at opportunities I would tell you that the current time Theres nothing Ah.
Close to.
Being finalized.
Ken and I spend a lot of time looking at new space and new opportunities for us.
So let me ask the same question a different way and I'll give you good credit for running the bank kind of very conservative basis last year, given the pandemic and.
The economic challenges, but with things starting to prove I think what I'm hearing from you is a willingness to potentially hit the accelerator just hitting the accelerator. If you find the right opportunities is that a fair way to summarize it.
That's a fair way to summarize it yes.
Perfect. Thanks, guys.
Thank you.
The next question comes from George Sutton with.
Oh, sorry. The next question comes from Michael <unk> with Kb definitely and please go ahead.
Yeah.
Hi, good afternoon.
Good morning, or good afternoon, Mike and Michael.
Regarding the deposit portfolio when you look at other like digital challenger banks, many of them offered checking and high yield savings accounts as opposed to ease and and I was just wondering if there is any opportunity or any strategic plans to accelerate the remix on the deposit.
Portfolio towards more of that makeup.
That's kind of taken place through the course of 2020.
I don't know whether you caught it about a month ago. The Newsweek magazine rated us as the best small business checking account and America.
We put on a concentrated effort to bring in.
Money market and and small.
On a business checking accounts.
Tumor checking accounts we spent.
Fair amount of money and the latter part of two.
2019, the upgrade the onboarding process for new accounts.
And had some pretty antiquated software from Pfizer and that was taking 17 to 20 minutes, where a person and get through and application. We've now got that down to three to five we brought those same tools over to the small business.
And on the latter half of 2020, so if you go back and look.
Cds as Ken reported and his statistics dropped and the checking and money market accounts are picking up.
If you look at most of the Fintech opportunities out there our products are very very comparable to theirs, we're not able to go quite up the food chain that they are on some of them because.
Of the cost of funds and obviously you guys and I'm looking for a bottom line from our side that doesn't have brackets on it that they have so the.
The marketing expense and the.
These quite honestly are the the rates that they're paying today.
Makes sense for us, but they're still.
Millions of consumers out here, particularly in the consumer and small business because of the pandemic over the course of the past year are.
Millions and millions of people, who could not get to the branch had too.
Moving to the internet or the mobile phone electronic devices to get access to the financial information and obviously, we've been doing that for 20 years plus as I stated we didn't have that worried about all the branch.
<unk> first pass here that our peers debt so that enabled us to stay focused on the business make some good money and increase our customer base. So as those consumers and Theres a number of surveys out here show that 90% up on do not want to go back to banking the way they used to pre pandemic. So once they figure out that their institution.
And it doesn't really have feature functionality that they are looking for we're.
We're picking them up or you know setting records on new account openings and serve.
Services for the second half of the year. So I think that's going to continue on into 2021, and you'll see that product mix, even chef a little bit more.
And thanks for that color and you guys mentioned 14 and $15 million number for SBA gain on sale and 'twenty, one but can you just provide some color on your long term expectations for that business line say two to three years.
Okay.
And the current time I was asked the same question by one of the employees on a meet the CEO call yesterday up and there are.
I don't think we really have a cap on the small business opportunity is.
Ken and I have stated in previous calls as the SBA comes on board, we have the option of selling the insured piece, which generates.
Non interest income or we can maintain it and we're picking up account balances the SBA product just fits our bank and <unk>.
Dominantly, well and I think that customer mix is great for us from a personal standpoint, being a 40 year entrepreneur myself I love the idea of helping small businesses all across the country. So we went from about 100 million. This year to $225 million next year, I think Mark Gibson and kind of heads up our sales team is on this call.
And if I tell you, it's going to be 300 million plus a year after that he's probably painting on the other end of the line right now but.
And I really don't think we have a limit and and we can continue to find good people and good opportunities that wouldn't really fits we can grow SBA exponentially without straining our capital without straining our balance sheet and just continue to put great earnings to the bottom line. So it's a it's a tremendous niche for us and where product.
That has a lot of niches and.
There's a lot we can do with that and I anticipate it growing pretty geometrically over the next few years.
Great. Thanks, Thanks for taking my questions and happy new year.
Great. Thanks, Michael Thank you.
As a reminder, if you have a question. Please press Star then one.
This concludes our question and answer session I would like I would like to turn the conference back over to David Becker for any closing them.
And I ask.
Well guys I'd just like to say thank you for joining our call. Today. Obviously these calls there are a lot more fun and when it's all good news.
But I hope you enjoyed it as much as we did and we hope everyone remains healthy and safe. During these challenging times have a great day. We appreciate you being here. Thank you.
Yeah.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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