Q2 2021 Peoples Bancorp Inc Earnings Call
Good morning, and welcome to Peoples Bancorp, Inc. Conference call. My name is Eileen and I will be your conference facilitator today's call will cover a discussion of the results of operations for the quarterly period and 6 months ended June 30th 2021.
Please be advised that all lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer period.
If you would like to ask a question. During this time simply press Star then 1 on your telephone keypad and questions will be taken in the order they are received.
He would like to withdraw your question Press Star then killed.
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Please be advised that the commentary on this call will contain projections or other forward looking statements regarding peoples' future financial performance or future events. These statements are based on management's current expectations. These statements and this call which are not historical fact are forward looking statements and involve a number of risks and uncertainties detailed and people.
Securities and exchange commissions filings.
These include but are not limited to the completion and integration of current and planned acquisitions, including the pending merger with Premier Financial Bancorp, Inc, and any future acquisitions, Mitch, which may be unsuccessful or may be more difficult time consuming or costly and unexpected and the risk of expansion into new markets peoples ability to obtain all the.
Remaining regulatory approvals of the proposed merger with Premier Financial Bancorp, Inc, or on the proposed terms and schedule and the adoption of the merger agreement by the shareholders of peoples.
The ever changing effects of the COVID-19, pandemic on economies and markets and on our customers Counterparties employees and third party service providers as well as the effects of various responses of the governmental and non-governmental authorities to the Covid COVID-19 pandemic, including public health actions directed toward the containment of the COVID-19 pandemic.
And the development availability and effectiveness of vaccine.
Changes and changes in the interest rate environment due to economic conditions related to the COVID-19, pandemic or other factors and or the fiscal and monetary policy measures undertaken and the implementation of related economic stimulus packages, which may adversely impact interest rates the interest rate yield curve interest margin loan demand and interest rates.
Competitive nature of the financial services industry, the impact of assumptions estimates and input used within models, which may vary materially from actual outcomes, including in connection with the current expected channel the continuation of the LIBOR and other reference rates, which May result in increased expenses in litigation.
And adversely impact the effectiveness of hedging strategies and.
Certainty regarding the nature and timing cost and effect of federal and state banking insurance and tax legislative or regulatory Tory changes or actions and changes in accounting standards policies estimates or procedures management believes the forward looking statements made during this call are based on reasonable assumptions within the bonds of their knowledge of peoples business.
And operations. However, it is possible actual results may differ materially from these forward looking statements peoples disclaims any responsibility to update these forward looking statements. After this call except as may be required by applicable legal requirements peoples second quarter 2021 earnings release was issued this morning and is available at peoples Bancorp.
Dot com under Investor Relations.
Conciliation of the non-GAAP financial measures discussed during this call to the most directly comparable GAAP financial measures is included at the end of the earnings release. This call will include about 20 to 25 minutes of prepared commentary followed by a question and answer period, which I will facilitate and archived webcast of this call will be available on people.
<unk> Bancorp Dot com and the Investor Relations section for 1 year.
Participants on today's call will be Chuck solar risky, President and Chief Executive Officer, and Katie Bailey, Chief Financial Officer, and Treasurer, and each will be available for questions. Following opening statements Mr.
Mr. Solar risky you may begin your conference.
Thank you Ali good morning, everyone. Thank you for joining us.
And some exciting news to share with you regarding our second quarter, which includes total loan balances declined 1% per the quarter. However, we had loan growth of 4% annualized compared to the linked quarter and <unk>.
Moving PPP loan and the lease balances.
Net interest income growth of 11% compared to the linked quarter with a 19 basis point expansion of on net.
Interest margin.
On the base business income increased 10% compared to the second quarter of 2020.
Our total revenue grew 13% compared to the second quarter of 2020.
And our efficiency ratio adjusted for non core cost.
Compared to the linked quarter.
And the last 3 months we are on.
And so integrated and streamlined processes with our North Star and leasing Division, which is a division of peoples Bank. We acquired book store at the end of March we began accounting for it.
And again I'm counting 4 on April 1st.
Division is growing as we had anticipated and benefited both on net interest income and margin during the second quarter.
Vision has added over $12 million to lease balances since acquisition.
And and annualized growth rate of 59% per the quarter. They also provided over $4 million of interest income and added 29 basis points to net interest margin per quarter.
We have spent a lot of time and the recent months visiting and planning with our partners is a premier financial Bank Cool and then 2 banking subsidiaries Premier Bank and citizens Bank.
We have developed plans on integration training client impact and are working and are working to communicate with both the associates and the clients of freedom here to make this a seamless transition at this point, we are on target to meet our anticipated expense reductions.
Continuing to move forward and plan to close the merger of late and the third quarter over 2020.1.
Object to the satisfaction of customary closing conditions.
<unk>, we will from the Ohio Department of financial institutions and peoples shareholders.
In addition, and May we acquired a small insurance agency located and Pikeville, Kentucky.
Complement insurance services, we already provide and that geographic area.
Recently, we were recognized by Forbes magazine and second is bad.
The state Bank, and both states of Ohio, and West, Virginia and a.
1 of them 16 banks and the country to be recognized in Q1 more states this year.
We are the smallest as far as assets side of the bank B and recognized in 2 states overall.
Overall, there were nearly 5000 and banks eligible for the award from War.
We are also on it with the top workplace designation from Cleveland Dot Com and Cincinnati Dot com.
The recognition that we have received Oakland and these designations and others proves that we work hard to do the right thing for our clients associates and communities and shareholders.
Moving on to our financial performance for the second quarter, we reported diluted earnings per share and 51 cents.
And net income totaling $10.1 million.
While diluted EPS declined compared to the linked quarter. This was mainly due to a higher provisions for credit losses, driven by the establishment of the allowance for credit losses related to the North star on leases.
At the same time, we had significant growth and net interest income and net interest margin both due to the acquired leases.
Acquisition related costs totaled $5.5 million for the quarter and was 7.6 million for the first half of 'twenty 'twenty 1.
These costs reduced diluted EPS by <unk> 22 for the quarter and 31 for the first 6 months of 'twenty 'twenty 1.
As we have noted previously we anticipated that earnings will experience volatility volatility related to a provision for credit losses and future quarters.
For the second quarter, our allowance for credit losses was relatively unchanged in terms of dollars. While the addition of the acquired leases required us to record provisions to establish the allowance for credit losses on that portfolio.
This resulted in $3.2 million of provision for credit losses during the second quarter.
After the additional portfolio our provision for credit losses would have been minimal for the quarter.
Moving on to a low modifications at the end of June on Covid related loan modifications and stood at over 17 million.
Nearly all of this amount represented the commercial modifications consisting of 2 relationships, while consumer modifications totaled $500000. The.
The increase and commercial loan modification and balances which were around $12 million at the end of March was related to 1 hotel. Operator, however, the aggregate payment relief totaled 6 months, which is consistent with our approach to other customers operating in this industry.
Both commercial relationships with debt to resume normal principal and interest payments this quarter and no issues and.
Dissipated.
We continue to be pleased with our credit quality metrics and the current portion of our loan portfolio was 99, 1%, which was higher than at the linked quarter and.
Our quarterly annualized net charge off rate was 9 basis points, which improved from 13 basis points and the linked quarter.
This rate included the lease net charge offs, which were lower than we anticipated and were around 2% of lease balances for the second quarter.
On nonperforming assets grew $1.1 million compared to the linked quarter and.
Compared to the end of March and non accrual loans declined 1.7 million or 7% and was largely due to many smaller relationships.
Also compared to the linked quarter and all loans 90, plus days past due and accruing <unk> increased $2.7 million and was driven by 1.5 billion and past due leases.
In addition, we had 1 commercial loan of $1.4 million moving to the 90 plus days.
Past due and accruing category during the second quarter.
And pass through March 31st on criticized loans decreased by nearly 3 million and was due to the payoff of several smaller commercial relationships and this.
Italy on classified loans declined almost $7 million.
As we had and upgrade of 1 commercial relationship with the pay off of some smaller relationships.
As for our loan portfolio balance declined over $37 million compared to the linked quarter and.
Although we added the lease portfolio during the quarter, which totaled around $96 million at quarter, and and have loan growth and other categories.
These were more than offset by a $162 million decrease and PPP loan balances.
Well, our PPP loans, we have originated to date, we have had 70% in terms of dollars on those loans, either paid or paid down or forgiven by the SBA.
If you exclude PPP loans and leases on loan growth compared to March 31st with 4% annualized.
Construction loan balances increased $22 million, while consumer indirect loans grew $18 million and for the second quarter. The leasing division added over $12 million and leases during the second quarter at the same time on commercial loan production for the first half of this year was at its highest level and I'll come.
<unk> history. However.
However on loan growth, which has been muted by the low line of credit utilization rates, which.
Which finally stabilize during the second quarter, albeit at a historically low level and.
Instead of a drastically decreasing it increased $3 million compared to the end of March.
Capacity utilization rates at the end of December 2019, we are still down nearly $80 million and outstanding line of credit balances.
We continue to grow on number of total households during the second quarter. Our total households are up 2% compared to June of last year.
I will now turn the call over to Katy for additional details around our financial performance.
Thank you Chuck and.
Chuck mentioned the leases had a positive impact on our net interest income and margin during the quarter.
Our net interest income grew 11% compared to the linked quarter and our margin expanded by 19 basis points.
The leases provide and over $4 million and interest income and 29 basis points to margin.
During the quarter, we recognized $3.4 million and income related to deferred fees and costs on the P. P. P loans, which was a decline of $1.4 million compared to the linked quarter.
The recognition of P. P. P income during the second quarter added 15 basis points to net interest margin compared to 28 basis points from the linked quarter.
Our net interest margin, excluding the impact of leases and the P. P. P loans was flat compared to the linked quarter.
Along with him along with the improved loan yields we were able to grow our investment yields my recent decision to restructure some of our portfolio.
In addition, we reduced our cost of deposits to 24 basis points, which is the lowest we have had and the last 5 years.
And while also reducing our funding costs of 27 basis points, which is the lowest and our history.
The positive impact of these measures was offset by the excess liquidity, we had during the quarter, which resulted and inflated cash balances and reduced our net interest margin by 13 basis points.
We continue to monitor and look for opportunities to grow our margin, which has been challenging and this low rate interest environment.
Compared to the second quarter of 2020, our net interest income increased 14% and our margin grew by 26 basis points.
Again, the least division and provided a significant portion of this improvement while our investment yields were challenged and our funding costs were controlled.
For the first half of 'twenty 'twenty, 1 compared to the prior year on net interest income grew 8% and margin was up 2 basis points.
Through the first 6 months of 2020, 1 we have recorded $8.1 million and income related to deferred fees and costs on the P. P. P loans compared to $1.9 million during the first half of 2020.
For the first half of 'twenty 'twenty, 1 the P. P people on and kind of at a 21 basis points to net interest margin and for the first 6 months of 2020 reduced net interest margin by 1 basis point.
For the first 6 months of the year, we maintained higher cash balances due to excess liquidity, which negatively impacted net interest margin by 12 basis points.
For the second quarter, our reported efficiency ratio improved to $68.6 per cent compared to 74 per cent and the linked quarter and it was still higher than 62.3 per cent a year ago.
For the first 6 months of 2021, I reported efficiency ratio grew to $69.5 per cent compared to $64.5 per cent for 2020.
Compared to the second quarter and first 6 months of 2020 the increases on our efficiency ratio were driven by the higher non core costs recognized during 2021.
And on adjusted basis, which excludes non core costs, our efficiency ratio improved to $64.2 per cent compared to $65.2 per cent per the linked quarter.
We are optimistic that excluding noncore cost we believe we can reduce the efficiency ratio to the very low sixty's during 2020.2.
During the second quarter, we were able to generate positive operating leverage compared to the linked quarter.
Our fee based income, which is noninterest income excluding gains and losses declined 6% compared to the linked quarter.
The decrease was primarily due to the annual performance based insurance Commission, we recognized and a first quarter of each year.
At the same time, our electronic banking income and trust and investment income each grew by double digit percentages compared to the linked quarter.
Our fee based income grew 10 per cent compared to the second quarter of 2020, which was almost was also mostly due to higher electronic banking income and trust and investment income.
For the first 6 months of 'twenty 'twenty, 1 compared to 2020 fee based income increased 11% due to the gross and electronic banking income Trust and investment income and insurance income.
On a year to date basis, our fee based income grew to 31 per cent of total revenue compared to 30 per cent for 2020 on.
Our acquisitions this year will negatively impact. This metric. However, we continue to look for opportunities to grow our fee based businesses, which are beneficial to our overall our total revenue.
Our total noninterest expense grew 5 per cent compared to the linked quarter.
We had non core expenses of $2.5 million for the second quarter of 2021.
Our intangible amortization and more than doubled compared to the linked quarter from the intangibles associated with the North Star and insurance acquisition.
Salaries and employee benefits costs also grew comparatively quarter, which reflected a full quarter of and the Northstar Division and associates.
Our total expenses related to the leasing division for the second quarter were around $2 million and exclude the non core expenses.
Our electronic banking expense was directionally aligned with the increased electronic banking income I already mentioned.
Our total noninterest expense increased 25 per cent compared to the second quarter of 2020 and 18 per cent from the first half of 2020.
Compared to the second quarter of 2020, our non core expenses increased $1.3 million and were up $2.9 million compared to the first 6 months of 2020.
We also had the additional $2 million of expense associated with operating on new leasing division.
The remainder of the increase was driven by higher salaries and employee benefit costs and.
And data processing and software costs.
Our increases in salaries and employee benefits costs were driven by the impact of the deferred cost and early 2020 from the P. P. P loans we originated.
Also contributing to the increase were higher medical costs and sales compensation related to production as well as and the increase we made to our 4.1 K match for associates during 2021.
We have a lot of noise and our expenses compared to the prior period. If you exclude the noncore expenses and the impact of the expenses associated with operating operating our North Star Division during the second quarter of 2021, which totaled $2.1 million. Our total noninterest expense was relatively flat compared to.
On the linked quarter.
While we did see reductions from our annual first quarter items, such as health savings account contributions stock based compensation and higher payroll taxes. These decreases were offset by higher sales and incentive compensation associated with our increased production and higher 401, K costs due to the <unk>.
<unk> and are matched to employees.
If you exclude the non core expenses, the second quarter operating expenses of Northstar and the operating expenses associated with the premium finance acquisition, which were $661000 for the second quarter of 2021 and compared to the second quarter of 2020. Our total noninterest expense increased 13% and strength was driven by <unk>.
Higher salaries and employee benefit costs, which grew around $3 million.
The impact of dirt deferred costs associated with the P. P. P originations in 2020 accounted for much of this increase while we also had higher sales and incentive compensation from increased production tier 4.1 K costs do increase and are matched to employees and higher medical insurance cost.
In addition, our data processing and software costs grew $518000 compared to the second quarter of 2020.
On a year to day basis, if you exclude the non core expenses second quarter operating expenses of Northstar and the $1.6 million of operating expenses associated with the premium finance acquisition for the first 6 months of 2020, 1 and then our total non interest expense increased 7%, mostly due to higher <unk>.
Salaries and employee benefit costs.
We had the same increases and the and line items as I mentioned compared to the second quarter of 2020, which were partially offset by lower stock based compensation expense.
We also recognized higher data processing and software costs and FDIC insurance expense.
The increase and our FDIC insurance expense was due to the remaining credits that had been recognized during early 2020, along with higher premiums related to our PPP loans impacting our calculation.
In summary, we controlled our expenses, while recognizing some necessary costs to grow our business in recent quarters.
Moving to our balance sheet, our investment portfolio was relatively flat compared to the linked quarter and and comprised 21% of total assets.
And it's slightly higher than the 18% to 20% that we typically target.
Our core deposits, which excludes CD balances declined 1% from the linked quarter and <unk>.
Most of the outflows of deposits were from money market accounts, while we also saw some reductions and noninterest bearing checking as well as the seasonal reduction in governmental deposits, which usually carry a higher balance and the first quarter.
Our demand deposits continued to comprise 45 per cent of total deposits at June 30th 'twenty 'twenty, 1 consistent with the linked quarter.
We strive to have strong capital levels and continued to do so at the end of June.
And our ratios did decline somewhat they were impacted by the Northstar acquisition for which we did not issue any equity.
However, we anticipate that our capital ratios will improve upon the anticipated completion of the merger with Premier and the third quarter and once we have moved past the acquisition related costs.
We will continue to look for opportunities to effectively deploy our capital, while maintaining well capitalized metrics.
I will turn the call back to Chuck for his final comments.
Thank you Katie we on.
Utilizing on skilled acquisition themes as we work to integrate the data associates and clients of Premier we have had great interactions with the teams from Premier and will work towards a smooth transition for everyone. We are optimistic about our future and the new market area and the opportunities we have to positively.
Impact that new communities and the clients we will serve.
We are pleased with the recent addition of our leasing division and the expert team from Northstar.
And it into our organization both quickly and are picking up speed, which we expect to continue through the remainder of the year turning back to our results for the quarter and some of the highlights were improved net interest income and margin compared to the linked quarter positive operating leverage compared to the linked quarter.
<unk> for the noise of the quarter, we believe our expenses were well controlled.
Net loan growth of 4% annualized compared to the linked quarter and excluding PPP loans and the acquired leaf balances.
Quality continues to be stable compared to prior quarters, we have increased households, compared to both March 'twenty 'twenty, 1 and year and our return on average tangible equity was 14, 6% compared to 2.5 per cent for the first half of 2020 and our return on AD.
Average assets was 1.2% for the first 6 months of 2021 compared to 17 basis points from the same period and 2020.
I would like to share a couple of thoughts related to the remainder of 2021.
We anticipate on third and fourth quarter core non interest expenses, which excludes the premier acquisitions will range between 37 and $38 million per quarter.
We expect to produce loan growth of between 3 and 5% annualized for the full year, excluding PPP loans and acquired loans and leases.
And this will continue to be dependent on line of credit utilization rates remaining stable and any unexpected pay down activity.
Although we had anticipated a higher gross charge off rate going forward with the added leasing division. We believe the charge off from this line of business might come and slightly lower than we had expected originally.
While it is early to talk about 'twenty 'twenty 2.
Current Street consensus has our earnings per share projected at $2 and 99.
Which excludes Piper Sandler and their estimates do not incorporate our premier acquisition.
We are highly confident that we will be $2 and 99 and this concludes our commentary and we will open the call for questions. Once again. This is Chuck fellow risky and joining me for the Q&A session is Katie Bailey, our Chief Financial Officer.
I will now turn the call back into the hands of our call facilitator. Thank you.
And it will now begin our question and answer session to ask a question you May Press Star then 1 on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
And I saw your question. Please press Star then 2.
Our first question today will come from Scott <unk> with Piper Sandler.
Good morning, guys. Thanks for taking questions on it.
Scott.
Let's see so I guess just on on the loan growth dynamics I think Chuck when you were talking about utilization and.
Some of your prepared remarks, you give them on and sort of a dollar based on so you guys comfortable saying sort of where your commercial utilization rates are on a percentage basis and sort of what what do you think of a typical.
Level is historically, we ran between 52 and 55%.
At the end of the quarter, we were 33, 5%.
So for.
For Eternity, we bid and the low 50% range. So it's about a 20% reduction.
Yeah, Okay perfect. Thank you and then can you maybe just some thoughts on the margin a lot of moving parts going on these days, but if we sort of take the reported level of $3.45, now and sort of understanding you've got.
Most recently the benefit from from N S. L. But then you've got kind of elevated the people.
Fees in there, what's your best guess for where that level ends up going from here.
Yeah, So you touched on and I and we quoted and in the script and the $3.45 does include about 15 basis points of benefit for PPP loans. So to the extent that continues to run off that will continue to decline and that decline from 28 basis points from the first quarter, So and 13 basis points were lost and because of less.
Forgiveness and.
And then there is some accretion in there and that picked up because of the NFL acquisition, but it was only 7 basis points, though.
Thank you.
And I take out the 15 basis points Youre at 330 am and again that has the impact of the cash day the excess liquidity.
Quiddity, we still have which we continue to maintain some of that we are seeing it reduced a little debt. So we might get some benefit but the $3.30 is kind of a good starting point and that we think will hover around there.
Okay perfect. Thank you and then that I guess presumes some ongoing level of.
Purchase accounting benefits that will lead the way sort of slowly over time I imagine like over a period of a few years is that right that's right.
Okay, Perfect Alright, and then I guess just final question.
And maybe thoughts on drawing down the reserve from here, if we exclude day day, 1 adjustment from N S L.
And basically no no provisions I think I calculate like a $200000 recapture so call effectively zero maybe.
Maybe thoughts on drawing down the reserve further from here, just given what you're what you're seeing and the credit environment.
Well remember next quarter, we're going to have the closing and have to put up the reserve for premier Yeah.
I would say that.
Flat.
Some come and backhaul away minimal amounts.
Okay.
Perfect. Thank you guys. Thank you.
Our next question comes from Steve Moss with B Riley.
Good morning.
And Steve maybe just.
Maybe just following up on on the reserve here Chuck just in terms of the drivers and economy seems to be improving and I guess I was thinking it would probably be a bit more in terms of the reserve release I you know I hear you on the day, 1 there but.
<unk>.
And in terms of what would it take to you know ex premier to get back towards the pre call. It.
What was it 90 basis point level or so.
<unk> was implemented.
Improvement and the forecast for <unk>.
GDP and unemployment.
Marilee in Ohio on the drivers to our model and as they continue to improve we will see more money come back.
Okay.
Do you think it could be pretty meaningful offset to the premier a day 1 provision.
Yes.
Okay.
Okay. That's helpful and interest in terms of the loan pipeline.
Where are you on good production, but lack of utilization just where are you seeing.
Opportunities for group gross on the commercial side and it doesn't look like you know your consumer business is doing well as well just kind of what are the drivers here going forward. If you will.
Well first off we had great production and the first half of the year and commercial.
But I would say that the customers on a wash with liquidity and we continue to see people use cash as opposed to.
On borrow.
We're optimistic we're going to see good growth and on our premium finance business, we are going to see great growth and the leasing business.
We continue as I said and record production and the first half of the year. So.
And consumer businesses have been very solid.
And mobile business has really had a standout year.
And as well.
And long as low as a cause to be sold and they're gonna be bought.
And the other is obviously huge supply chain.
Issues so.
I think under normal circumstances.
We would be seeing double digit loan growth with our current production.
And just.
Pay offs and those.
And the excess liquidity.
Okay.
Helpful. And then just 1 quick 1 more question just on mortgage here and I realized gain on sale margins came down and you just kind of curious as to the drivers for you guys and how to think about that line of business going forward.
We're selling less were basically keeping more of the more of them from mortgages on our books.
Okay, great. Thank you very much.
Thank you.
If you have further questions. Please press star then 1 to join the queue.
Our next question comes from Russell Gunther with D. A Davidson.
Hey, good morning, guys good morning.
I just to follow up on the loan growth and Chuck I'm doing great. Thanks, guys I'll follow up on the loan growth guidance of 3 to 5 per cent for the year ex PPP and and acquired loans and leases just to clarify does that assume that the utilization rate stays at these lower levels and and <unk>.
Return to something closer to historical correct.
Okay.
Very good and then on the efficiency ratio target and I. Appreciate the color you gave us there.
Could you walk us through the main drivers of how you achieve that low 60 is it largely low revenue growth are there anticipated.
Expense catalysts beyond the modeled cost saves from the deal just some of the puts and takes there would be helpful and.
And a big piece of that is the premier acquisition and.
At closing and we have 30% of the.
Spence is coming out and.
We continue to make investments and our infrastructure here, but we think we can have.
<unk> gross.
And 3%.
Excluding the acquisitions.
So that's those are the key pieces.
Okay, and then maybe just a follow up to the revenue side of that and and the margin discussion earlier so.
And you're at 330 is a good starting point and near term and it's the P. P. P benefit declines, but how do we think about the timing of the cash balance reduction that would kind of get you close back up to that $3.45, and given the margin accretion from the leasing portfolio.
And if the normalized NIM from something closer to $3.45, or do you expect this 330, you were talking about the sustained for an extended period of time, Inc.
Yeah, I think that's the.
Alright, that's what we continue to scratch our heads about is our liquidity and how long will the deposits and the cash and stay with us.
And we quoted and in the script I think we said that the cash and the higher level of cash added 12 to 13 basis points are tucked. It was a drag on margin of 12 to 13 basis points for the quarter. So if you add that back if we get back to work.
Standard cash levels, you would get back to that $3.45, and a reasonable timeframe. It's just what is the timeframe and unfortunately I don't know I think we are starting to see some of it.
Leave not a drastic rate or anything so I think it'll be here through <unk>.
Portion of it will be here through the year at least and into next year.
Okay, well that was it for me.
We may have some opportunity on that.
To the extent that the premium finance and leasing businesses grow faster than we expect.
Okay understood well. Thank you guys for taking my questions Thats. It for me. Thank you.
Our next question comes from Michael Perito with K B W.
Hi, Chuck Kelly and good morning.
And then.
I just had a couple follow up questions maybe to ask Russell's question, a little bit differently. So I guess, if we kind of takeaway premier for a second and I mean, it sounds like the overall balance sheet, though I mean, you guys would.
We expect it to remain kind of and its $5.5.1 billion type type range near term given everything youre seeing today I mean, what the mixes blow on that obviously can shift but is that generally a fair assumption as you see it for the time day.
Yes.
Okay.
And then on and on the D side I was curious.
No.
The trusted and vascular unit had another nice quarter I know there was some seasonality and the insurance, but you've kind of already seen some pretty solid growth there and any kind of specific thoughts on on the outlook for those 2 line items.
And through the year here.
Well the investment business has been doing great and has been doing great for a long time and as long as we have fewer days like yesterday and more days like today.
And we will continue to do great.
And the insurance business.
And as a hardening and that's always as a benefit.
Folks either and the agency business so we like.
We like how that looks right.
Right now so we're very very bullish on both of them and just as a reminder, and the investment business and we have a retirement plan business, which is a little unusual to date on bank and particularly on equal lets say the bank on a 5 and that business well the smallest about reinvestment.
And as it continues to grow very fast.
Okay.
And I guess, just lastly from me I mean, the expense guide is near term and it's pretty clear, but I was wondering if you could maybe.
Talk about the dynamics below that a little bit more and you start to think out towards next year I mean.
I'm sure you guys are investing and your business as we go.
While the overall you gave us the overall kind of expense.
Range for the next 2 quarters I mean is it fair to think that you know electronic banking and data processing cost software costs should continue to grow and are are there and kind of what are the offsets to some of those investments and growth and I guess, how long do you think you guys can continue to maintain the expense kind of range while still.
Investing at the rate you're investing.
I think over time, we will become more efficient even investing at the rate that we're investing I think that our data processing cost next year will be relatively on a percentage of and.
And you imagined the costs against the size of the institution and I think will become more efficient.
So.
And I'm pretty optimistic.
And on all of that.
Yeah, I would just that kind of debt I don't think we have deferred maintenance on whether its buildings or technology, we've been investing along the way.
And so there's no <unk>.
Major projects.
And the next.
2 to 6 quarters that we have.
Have to undertake.
Okay helpful. Thank you guys. So I appreciate you taking my questions.
Thank you.
At this time there are no further questions I'd like to turn the call back over to Mr. Soloway for any closing remarks.
We thank you for being with US today, if you remember if you remember nothing else about our call. Please remember that we are highly confident that we will be $2 and 99 next year. Thank you again for joining and we remember that our earnings release and a webcast of this call will be archived on peoples Bancorp Dot com.
Com under the Investor Relations section.
Everyone, Good health and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.