Q2 2021 Great Western Bancorp Inc Earnings Call
Noninterest expenses of $59 million were up slightly from $57 million from the prior quarter the.
The increase was driven primarily by salaries and benefits due to merit increases and January and higher accrued incentives Oreo costs remain low in line with stability and the Oreo asset levels and we also benefited this quarter from a true up on RFT IC assessment overall.
Overall cost of tracked below expectations. So far this year, but we still expect and uptick towards $61 million to $63 million per quarter that gives effect.
Supporting our key initiatives around improved technology, and also improving our asset quality.
This quarter, we recaptured $5 million of provision for credit losses on loans compared to $11 $9 million provision and the prior quarter due to the reduction in loan balances and the current quarter.
Moving to slide eight you'll see our ACL was $296 million at the end of the quarter compared to $309 million from the prior quarter with the decrease due to lower loan balances.
In addition to the $296 million of ICL with $27 million.
Mark against that long term fixed rate portfolio loans, and $569 million, which was down $43 million from the prior quarter.
And our ICL and fair value Mark combined with a $2 $4 million unfunded commitment or is it puts our total credit coverage ratio at 386% of total loans, excluding PPP loans.
On slide nine we see total capital increased 80 basis points to 15, 1% tier one capital increased 90 basis points to 13, 6% and <unk>.
Common equity tier one capital increased 80 basis points to 12, 8% during the quarter.
And also at tangible book value per share increased to $9 $75 per share up from $19 <unk> per share and the linked quarter.
And possibly earnings reduced risk weighted assets and reduce dividends and helping and prove that our capital levels. We continue to believe it is prudent to manage our capital given our asset quality combined with the current environment, which while improving still has some uncertainty and the outlook consequent quaintly. We once again declared a dividend and <unk> <unk> per share for the quarter ended 31 March 2020.
One.
We will continue to evaluate capital.
Management and close conjunction with the level of classified assets, which again showed some improvement this quarter, but do remain elevated overall.
Looking at deposits, they increased by $191 million and the quarter to $11 6 billion, while average balances were up $139 million and mix continued to improve as average time deposits decreased 15% or $193 million during the quarter.
Our total deposit cost of 16 basis points was down five basis points from 21 points in the prior quarter and down 59 basis points from 75 points a year ago.
Loans at the end of the period were just over 9 billion a decrease of $506 million from the prior quarter were 373 million when excluding the PPP loan decline.
Proximately $130 million of the decrease was related to the repayment of higher risk weighted loans, which included the sale of a 23 million hotel loan that was showing deterioration.
The remaining decrease consisted primarily of declining balances and the non owner occupied commercial real estate segment through refinances to the secondary market, some seasonality and line pay downs and a general trend of deleveraging across commercial and consumer customers holding higher levels of liquidity.
With that I'll now hand over to our Chief Credit Officer, Steve, Yes to give an update on credit progress asset quality metrics and key loan segments.
Thank you Pete and good morning, everyone.
As Mark stated priority number one continues to be improving our asset quality and <unk>.
We have made further progress following improvements from last quarter.
Our stronger credit culture is evolving and parallel with our focus on credit risk management portfolio management and specialized credit administration.
We saw a consecutive quarter of improvements and a non accrual and classified metrics with success and exiting problem loans, along with making a few risk rating upgrades loan deferral requests have dropped significantly with the balance of our loans on some form of deferral down totaling $19 7 million or <unk> 24.
Percentage of total loans, excluding PPP and the majority of those are making interest payments and the progress on our small business initiative as Mark outlined will allow us to be much more efficient with the administration of our smaller commercial credits are commercial loan workout groups are making progress and our.
And with our workout of classified assets I am pleased with our progress on asset quality and credit risk management, and how our execution is moving us toward a stronger position.
On slide 13, we have a summary of our asset quality metrics net charge offs were $7 8 million or.
Three 4% of loans annualized and excluding the sale of a deteriorating classified hotel loan this quarter net charge offs were $2 5 million or one 1% of total loans annualized.
Classified loans were down to $674 million, a decrease of 6% from the prior quarter classified AG loans were $292 million and 9% decrease from the prior quarter driven by pay downs and a few upgrades.
Classified and non AG loans were $382 million, a decrease of 4% due to a number of upgrades and the pay off of a larger hotel loan partially offset by $41 million of hotel loans downgraded to sub standard in the quarter non accrual loans decreased further to $285 million.
A few payoffs and minimal downgrades, and we have momentum and reducing the balance coming out of the quarter.
On slide 15, and 16, we continued to provide an overview of key loan segments and our portfolio.
On Slide 15, you will see total accommodation book of $939 million, which is comprised of $784 million of hotels, excluding casino hotels $115 million of casino hotels, and $40 million of PPP loans, the hotel portfolio reduced by 39.
And this quarter.
88% of the total portfolio is and footprint and well diversified across more than 100 small to midsized locations a.
A year after the pandemic began and coming out of the winter season $498 million and hotel loans are pass rated along with all $115 million of Casino hotels are also pass rated and we will remain diligent in managing the portfolio with their transition to spring and summer.
On Slide 16, you will see our AG portfolio is diversified across grain and livestock segments.
And as Mark noted the outlook for AG is showing upside driven primarily by increased demand for U S agricultural products line.
Last few USDA reports and projected further reduction in corn and soybean inventories, which as of April has farm price estimates of $4 30, bushel for corn and $11 25 per bushel force soybeans, both indicating good margin opportunity for producers lost III milk.
<unk> reported by the USDA notched up to $16 15 per hundred weight and March and remained and the remaining 2021 futures are tracking 10% to 15% above that.
Our health care portfolio has generally shown stability through a COVID-19 cycle and we continue to be proactive and identifying early risk indicators to determine appropriate risk ratings that wraps up my credit commentary alternatives now back to Mark. Thank you, Steve and operator, we are now ready for the question and answer portion of the call.
We will now begin the question and answer session to ask a question. Please press Star then one on your telephone keypad. If you are using a speaker phone. Please press Star then two and please pick up.
Hi, I'm sorry, please pickup your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to risk.
And similar to our roster.
The first question comes from Jeff <unk> from D. A Davidson. Please go ahead.
Thanks, Good morning.
Good morning, Jeff looking looking at that.
And the progress made on the credit cleanup.
It sounds like you've got continued.
Loan workouts occurring wanted to just check in on the on the net loan growth outlook in terms of the progress you've made and maybe when that could turn potentially positive and then sort of related to that and if you could speak to the provisioning level or are we going to have to wait till net loan growth.
Before we see potentially a positive.
Thanks.
Yes, sure Jeff I'll start this and Mark and then I'll turn it over to Pete and Steve for additional comments. So when we think about our net loan growth or where we are.
From an organizational standpoint, we have been focused on ensuring that we get to a place where we are working those.
Problem credits out and are looking at the portfolio and being proactive around how we start to manage those credits out before they deteriorate and also institutionally.
Institutionally has.
Taken some time and attention away from our normal business, calling activities as has the pandemic. So when we talk about where do I think or where do we think our loan growth is I would say that the engine is started again, we are seeing increased pipelines, we are seeing and increased activity.
But for us because of the current asset quality focus.
It has in some ways.
Load down what growth, we would have seen over the last couple of quarters. So am I encouraged about our opportunities for growth and the future, yes, and I encourage that we are seeing that activity and that our pipelines are increasing.
And this last quarter. It was a material increase over the prior quarter I am I don't want to get overly optimistic about what that means but I do believe that the second half of the year things will be better for us and as that engine gets ramped back up again and Thats, our focus turns to more business development activities as we have the other parts of our hotel portfolio.
Ring fenced with a specialized group our normalized our normal workout group I feel like we're in a better place than we were before and that activity is starting to increase Phd of other comments I think that's really well said mark overall, though Jeff I'd expect loans to be flat to slightly down just as we continue to run off the classified book and the loans that.
And the ones that are causing us some stress side from a top line perspective, but as Mark said top line from pricing and we're seeing some really good activity and the market and.
And Geoff as Mark mentioned, our strategic business services, which is our workout group four commercial credits handles most of our classified credit sales are not handled and the field. So that they can focus on bringing in new business as well as mark outlined we have our specialized hotel group that are dealing with the more challenged hotel credits. So the plan is.
Those rooms will focus on continuing and improving our asset quality and the other groups will focus on growing assets.
And the provisioning.
And that might oversimplify it is a flip to growth, but just some thoughts on that.
And that provisioning level.
Thanks.
Yeah look really comfortable with it Jeff obviously it depends on the level of non performing non performing assets, but as you saw during the quarter were comfortable coverages is adequate based on asset quality and and as we said the decline. This quarter was really as a result of the decline and balances.
Outlook, we're not really releasing reserves due to the improved outlook is yet just as we wait to get customer financials, and and also look to see how some of those hotel exposure has performed through the summer.
I appreciate it thank you.
Thanks, Jeff.
Our next question comes from John <unk>.
<unk> from RBC capital markets. Please go ahead.
Good morning, everyone.
Good morning Jud.
Steve one of the comments you made in your prepared comments and use the word momentum.
And on non accruals.
Since quarter end can you can you talk a little bit more about that and from.
<unk>.
30000 feet. It seems like everything is getting better.
From a credit perspective and then.
<unk> made some progress on non accruals, but.
And there can be a quarter, where you think we're going to see a big big step down and non accruals.
Coming relatively soon.
Oh.
As I've learned with asset quality and what the makeup of our portfolio. It can be lumpy when we show improvement like last quarter, we had the hotel sale and we had some really good improvement and non accruals I see that hopeful and the future. So I am encouraged as I look at our workout loans and what I am saying for the next quarter I'm very encouraged that we can see.
Progress and the non accrual.
And we just don't really outline where that's going to be until monies and the bank. So to speak until we are.
We actually see the actual pay off so I'm very encouraged by what I see and I am hopeful that we will see some momentum there and.
And I don't see anything that would discourage me from that statement.
Just wanted to be very careful until we actually see those loans paid off.
Could you maybe give us the top.
Three to five.
And non accrual balances how concentrated is this at this point.
So our non accrual balances are concentrated more I would say and add to that.
Two thirds of Zag and Thats more of our legacy from a few years ago and so we're working those extremely aggressively and hard to work through those and we have appraisals on all of those we feel that we've got those mark to the right balances. We do have a hotel loans and that's also on the larger non accrual balance that we see continued.
Continued improvement on.
And so we also don't see significant amount of specific reserves and that non accrual balance and so if all of those factors. We are encouraged especially with a proven and AG that we.
Further validates my comment on the momentum.
Mark maybe a question for you.
Kind of goes to overall confidence I guess, but.
Talk a little bit above.
Capital allocation.
What you'd like to see happen.
Over the next few quarters in terms of.
Dividends or even.
Potentially thinking buyback.
Yes, and we Havent had an internal conversations around that I think for US. It is still too early given where our non accruals are and why our overall asset quality is.
With that momentum that Steve referred to and with some of the other elements that we are seeing.
Throughout our performance.
I am comfortable to say that let's.
Let's see that asset quality improve once we see that material improvement then discussions around dividend or share buyback all of those things are back on the table, but.
Consistent with our conservative approach that we've taken over the last 12 months I want to see that material improvement and then we can have the conversation about how to how to best.
Put that capital to use.
Last question and this goes to the same topic, but you've spent a lot of time digging through the company.
Looking at the economy.
Are you more optimistic it seems like a silly question, but.
And we're still seeing this elevated non accrual balance and we're seeing the loans come down, but you're talking about improvement youre talking about potentially better loan growth. Just how are you feeling about things Mark and general.
Yeah, and it's a question that we ask ourselves and I asked myself, often I do feel much better about where we are and while I would love to see faster improvement in our non accrual and classified levels. The fact is if we did see that faster improvement it would likely mean that we were accelerating our losses and so the fact that we are being prudent.
Fact that I know based on Steve's team and all of the hard work. They are doing that I would expect to see continued and even more sizable improvement this quarter and I see.
And how and what the organization is responding to some of our key initiatives like the small business center and the overall and to end lending process revamp are going through the fact that pipelines are improving the fact that overall sentiment and our markets is getting better economic activity is higher.
Employee engagement is better all of those elements from me lead me to that increased optimism and I also know that we have an engine of our performance that like.
And I mentioned before it was maybe a bit and neutral last year as we were trying to solve some issues.
Now clearly and drive.
And we're getting revved up so I am far more optimistic about the second half and going into 2022.
Okay, alright, thanks for the transit against.
Thank you.
Our next question comes from Abraham.
From Bank of America. Please go ahead.
Hey, good morning.
Good morning, Brian.
I guess I just wanted to follow up again on credit.
And I heard you correctly your reserves at a three and 5% ex PPP.
Total non accruals or AG lending, which.
And I think you mentioned and no specific reserves. Historically this has had de minimus loss content.
So I appreciate you don't want to give any specific guidance and outlook on reserves, but talk to us in terms of what do you think the loss recognition is going to be some of these things move to the bike and is it safe for us to assume debt a lot of debt and 5% of reserves one comes back into the into capital, which is already very strong and <unk>.
And you could remind us what steady state.
<unk> D and <unk> would look like for you if we get back to a normal environment and six months from now in terms of your balance sheet.
Yes, certainly so in terms of loss timing.
<unk> going to make any comments around that so we.
As I mentioned earlier, we do not see significant loss and our non accrual book.
And in the form of specific allocation the appraisals that we have against those properties. Those agribusiness properties that we spoke and I spoke to earlier.
There are a few COVID-19 impacted non accruals.
Hotel that we have a decent allocation against as well as <unk> that we have a decent allocation against so I don't want and I, just want folks and all of those Colby.
COVID-19 impacted industries have the higher specific allocations and then as far as future reserves and I'll, let Pete speak to the specifics.
Because of the uncertainty of hotels and hospitality, we are encouraged by everything we say and everything we've talked about but until we see the actual improvement come and the next six months, we are being very careful with how we're reserving against our hotel and hospitality book, which has minimal non accrual at this.
And.
And and minimal classified.
We are just being very careful on how we view that because of the uncertainty over the next six months Ebrahim I think that the more normalized provision level in terms of that six month timeframe I think that's a little bit too soon as.
As we've seen with some of these non accrual assets I just take time to work down so and I think it will be more than a six month period to move back to a more normalized level.
When we do certainly from a provision coverage level Abraham Yeah, and we certainly hope we don't have to be where we are now and we hope we can move back and more in line with peers might be a little bit more elevated just because we have that AG book and when you say a little bit more volatility. So certainly we might carry a little bit more and a reserve there.
Peer to peers, but certainly our hope is to get.
Back more in line with with where others are at the moment as we move down and those non accruals.
Got it and I guess on the.
Other question Mark for you.
Give us an update in terms of things that youre doing I think to improve from the franchise.
You highlighted some of the progress made over the last few quarters.
Look forward I mean, it seems like speeds.
<unk> guidance is actually lower than where you've been.
Talk to us in terms of.
And does that take into account any future investments spend on technology, and pushing and then and how are you thinking about in terms of just adding bankers and and and what markets and looking to expand into.
Sure. So yes, the guidance for the expenses is down a bit from our previous guidance.
And for US as we do our our deeper dive into the organization look at where our strategic initiatives are and we are very comfortable with that guidance. We are able to make the types of investments that we need to to move the organization or do you use the words that you used transform.
What we want to do I am encouraged by our ability to get.
Some of the benefit of these key initiatives early on and we talked about the small business center and we know that we have our commercial.
And to and lending process revamp, which the level of engagement from our our bankers is exceptional and we have.
Deloitte coming in to help us to provide additional counsel and accelerate some of those improvements I think about.
And where and how we.
We want to continue to support the markets that you mentioned growth. So we think about Tucson, and we think about Colorado Springs about Fargo about Kansas City additional growth in Omaha, and des Moines, and we have opportunities and eastern Iowa.
And so for us it's not a shortage of markets, where we want to grow we will look to hire either experienced.
And experienced bankers and our teams of bankers and some of those key markets.
Had some significant upgrades.
In Colorado Springs for example, and our commercial leadership and so just expect us to do that on a continued basis to make targeted investments and those key markets as well as making sure that we make it easier for our employees to do their jobs to those technology improvements and process improvements.
And I feel really good about about how thats progressing and knowing that there's a lot more work to do but we're clearly making that kind of progress we need to.
Ebrahim and lower expense guidance really is just recognizing Oreo expense run rate is tracking lower than what it has done historically Abraham so still very much investing and the business, but just acknowledging that with Oreo balances sort of flat to declining debt will be doing a little bit better day weekend.
Got it thanks for taking my questions.
Thanks, and thanks very much.
Our next question comes from Andrew Liesch from Pete Pete Piper Sandler. Please go ahead.
Hey, good morning, everyone.
Good morning, Andrew.
Yes.
<unk> question on the overall allowance level and not necessarily and the near term because you have the classified and some of the non accruals yet to work through but you won't get.
Loan portfolios for for many years, where do you think like we're talking two to three years down the line from here, where do you think the reserve ratio ultimately settles out.
Well I would like to see non accrual loans stabilize at about $100 million to $125 million on a stable state.
I hope to be better than that and three years I hope.
I definitely would have a better goal from myself from that but I think if we can get at that level of non accruals and.
And then I'll, let Pete talk to the allowance with that but I think if I could get to that level of non accruals, we as a bank and get to there that we will you will.
How should we be less questions about asset quality and we won't be talking about other questions. So I think that.
And kind of where I see us and where I hope, we can get to and the allowance will probably follow suit with that.
100% of great sales, so Andrew if we're getting back to more normalized <unk> levels and that.
One one and a quarter level, then I think from a reserving perspective, then we pulled back a little bit more in line with some of the peer peer analysis I know you've released over the course of the quarter, Andrew maybe a little higher as we said Judy Judy wagon and just to protect around some volatility.
Not materially away from PS.
Got it got it.
You've covered all my other questions. So I'll step back thank you.
Thanks, Andrew.
Our next question comes from David Long from Raymond James. Please go ahead.
Good morning, everyone.
Good morning Debbie.
And I appreciate the color that you guys have given on some of the progress the bank has made and and maybe Mark and I know, it's still early in your tenure.
You've talked about moving on a more competitive small business presence and.
I'm, just curious where you stand there and if there is any tangible evidence you can point to some success at this point.
Yes, we lost a pilot March 29, so I would love to have more tangible evidence and we will definitely for the next call, but so far the pilot is very much in its infancy.
I did have a chance to check in with the team and also with the.
Several of the pilot bankers and again early returns, albeit.
A small sample size is very positive that the thing that's most encouraging and I keep going back to this is within the organization and small business initiative really has three key elements. The first is just really improve and simplify how we originate and manage our small credits that improves the client experience, but it also significantly improves the employee.
Experienced because historically, we have originated those smaller credits and manage those smaller credits the same way, we manage $5 million to $10 million credit. So the amount of work involved the amount of oversight was significant and yet the upside or the the benefit to the organization was not necessarily in line with all the work and costs.
Put into it the second benefit for US is that we can now be much more efficient with how a banker can handle a bigger pool of clients within those markets. So they could maybe help 50 customers before now and they can help 100 150 customers.
The last piece for me is that small business is a great way to grow low cost sticky deposits. It's also away through a packaged program to also increase our noninterest income through Treasury management and merchant services or other activities our services, where today, we don't really have a large portion of that business. So the small business element.
Is really important for those reasons and again on top of that creating additional capacity for the organization to go out and grow those larger credits as well. So we'll have more tangible evidence for you in the next conversation David but that right. Now is really all we have because the pilot again just began March 29.
Sure. Thanks, I appreciate that color and then my second question relates to the PPP.
Program and just curious on your thoughts and I know you talked about $13 million left and fees and <unk>.
Do you see the forgiveness, playing out with the rest of Ron one and then with the round two through the end of the year and do you think it maybe goes into next year at all and thanks.
Look I think it does get a little bit into next calendar year, if you're talking if youre talking calendar just to keep it keep it clean, but yes, I think it probably will will drift out a little bit but you know as you saw this quarter with just over $9 million and your revenue, it's starting to accelerate so I think materially the next couple of quarters and maybe less material after that.
Got it thanks, guys I appreciate it.
Thank you.
Once again, if you'd like to have ask a question. Please press Star then one our next question comes from Damon Delmonte at <unk>. Please go ahead.
Hey, good morning, guys hope everybody's doing well today.
So Mike and David <unk> question, and just Hi, My first question just relates to the and the margin and the outlook. There I think Peter you had mentioned.
And the expectation is for some some core pressure on the margin I was wondering if you could talk a little bit about that and kind of your thoughts around the excess liquidity and and how you're managing that well that just stay and and low yielding fed funds or would you look to move that into securities and the interim.
Yes, Thanks, Damon Hill look I would expect to see some pressure there because we had some some of that liquidity increase was actually towards the end of the quarter. So in terms of that liquidity drag youll see some of that with a full effect come through this quarter and we're not seeing significant deposit outflow at this stage.
We think that will stay around for the moment diamond and so that will cause the pressure and.
And then just in terms of deploying that being measured bit look and we're trying to just take advantage of where we do see some opportunities so and we've put on some boldly and the last quarter and certainly we bought a little bit of bank sub debt as well. So the team will just continue to chip away at that and look at opportunities, but I would expect cash and low yielding balances to be elevate.
And it here for the next quarter as well.
Okay great.
And then Mark I think you've kind of touched on this and one of your other responses back.
And when the growth returns.
You've characterized very well and your and your commentary about being ready for opportunities could you just kind of remind us again, where some of the greatest opportunities and our footprint line and.
And I just from a geographic perspective please.
Yeah sure. So I'll start kind of in the mid western and northern parts of within Fargo for example, I.
And I feel like we have a really best in class commercial team and so being able to leverage that and make some additional investment in the Fargo market I see opportunity as we work our way down the Midwest and clearly in Omaha, and des Moines, and we have opportunities for continued growth with and South Dakota, obviously not.
And geographically challenged in that regard South Dakota, we still think that within Sioux falls and some of our other key South Dakota markets. There is there is growth opportunities Kansas City.
Really big opportunities for us and and opportunities for us to go out and get some bankers and really make a difference and that market, we talked a bit about eastern Iowa, we had a nice win and eastern Iowa.
This past week and I would expect to see additional wins as we continue to expand and our eastern Iowa footprint as you move over to the Arizona market and I think about Tucson and area, where we have some presence, but again much bigger upside and opportunities to grow and that market, Colorado Springs in the Colorado market, we have a new banker leader.
And out there and we're starting to see some early early.
Progress there and then just overall, the Arizona and column, our Colorado markets are clearly are areas for growth. We've shown over the years that we can grow and that market and I would expect us with the leadership and team in place there to continue to see.
A nice growth pattern for those two states moving forward.
Excellent and it's a great rundown and I appreciate the color. That's all that I had guys. Thank you very much.
Thank you.
Our next question comes from Janet Lee from Jpmorgan. Please go ahead.
Good morning.
Good morning, Brian.
And following up on Mark's comment about having to see a material improvement and.
Non accrual before.
Assessing buybacks or raising dividend what level of non.
Non accrual ratio are you, referring tier is that like 1% to 1.5% of Steve Hardy, who is being a call or could it be higher than that youre, considering increasing capital and returns.
Yes, it could be a little hot in that channel. So that's a long term Gulf from Steve.
And that will look towards but yes, it could be a little bit hot and that.
When we when we look to deploy some capital absolutely could be.
And if you like.
2%.
And is that look we haven't gotten into specifics I think the key for us really is sustainable improvement.
Moving to our number in one quarter, it's really just getting comfortable either two to three quarters that we've seen and sustainable improvement and that number generally just sort of more of the the thing we're looking at rather than just sort of a black and white line to be honest with you and the number I was referring to was really where we believe that asset quality will be on and adequate state and the state where we will no longer.
Be high focus on me and will always be a high focus for me and make sure that we retain good and strong asset quality, but as far as us being able to and also globe, where we want to be but that doesn't mean that before then there is a lot of other things we can do as a bank.
Got it.
And I understand it's hard to predict but given the prospect of the economy reopening tourism and travel coming back.
Overall basis, assuming that the recovery continues to take hold is it fair to say that this may be the last quarter, where we may see additional sort of material hotel downgrades down that route or should it be another quarter or two where we see additional hotel downgrades are you still sort of.
And on assessing how year hotel relationship like hotel borrowers are working.
And he basically largely done.
So we are taking a very cautious approach, we tried to be very timely and our risk rating and.
I would say that tourism, we anticipate doing well. The next two quarters I think people are getting back to going out of visiting and Youll look from our footprint. We have a lot of great places to visit a lot of great places to go and stay on hotel saw but we also have some business hotels and I do not.
Not seeing business travel being to the degree that it has been in the past and it will hopefully improve and the future, but I don't see that getting much left and the next two quarters, so that uncertainty and the fact that we really don't know what's going to happen with the vacation and.
Tourism season.
Makes me want to pause and also launched.
As I look at the financial statements coming in we have to make sure. We have documented cash flow going forward. So I do want to be careful and ex two quarters I would say is uncertain and I'm optimistic and hopeful but it's uncertain.
Alright, that's great. Thank you.
Thanks, very much yet.
This concludes our question and answer session I would like to turn the conference back over to Mark <unk> CEO for closing remarks.
Thank you so much Emily and thank you all for joining the call today as we mentioned we're excited about our continued progress. Please reach out with any follow up that you have and have a wonderful day take care.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.