Q2 2021 Fulton Financial Corp Earnings Call
Yes.
Good morning, ladies and gentlemen, and welcome to the Fulton financial second quarter 'twenty 'twenty..1 results conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require assistance during the.
The conference. Please press Star then zero on your Touchtone telephone.
As a reminder, this conference call may be recorded I would now like turn the conference over to your host Mr. Matt Jos what director of Investor Relations.
Good morning, and thanks for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the second quarter of 2021.
Your host for today's conference call is Phil Wenger, Chairman and Chief Executive Officer joining.
Joining Phil or Curt Myers, President and Chief operating Officer, and Mark Mccollom Chief Financial Officer.
Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which we released yesterday afternoon destock.
These documents can be found on our website.
U L T dot com by clicking on Investor relations and dental niche.
Slides can also be found on the presentations page under our Investor Relations website.
On this call Representatives of Fulton May make forward looking statements with respect to Fulton financial condition results of operations and business day.
These statements are not guarantees of future performance and are subject to risks uncertainties and other factors and actual results could differ materially.
Please refer to the Safe Harbor statement on forward looking statements in our earnings release and on slide 2 of todays presentation for additional information regarding these risks uncertainties and other factors.
Fulton undertakes no obligation other than as required by law to update or revise any forward looking statements in discussing fulton's performance representatives of Fulton may refer to certain non-GAAP financial measures. Please refer to the supplemental financial information included with Fulton's earnings announcement released yesterday and slides 10.
And 11 of today's presentation for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures.
Now I would like to turn the call over to your host for.
So later.
Well, thanks, Matt Good morning, everyone I'll begin today's call by making a few high level remarks about our performance for the quarter and factors affecting the markets we serve.
And then Curt will discuss our business performance and Mark will share the details of our financial performance.
And after that we'll answer any questions you may have.
Fulton's performance continued to be solid in the second quarter 2000.22021.
Our record setting earnings per share of <unk> 43 in the first quarter, our second quarter earnings per share of <unk> 38 cents tied our previous record high.
We saw growth in certain segments of our business as Curt and Mark will discuss.
Asset quality remains stable.
The economy and the markets, we serve are showing improvement on.
Unemployment is in decline and the communities are reopening.
In fact as of July for the governments in the price states in which we operate have lifted mask requirements for everyone.
As the economy continues to open from business activity moving moves closer to normal we are increasingly optimistic about the future.
In recent months, we have seen several merger mergers and acquisitions in and around our market.
Our Fulton has taken a look at a few of these opportunities and we remain interested in supporting our growth through M&A.
We will continue to evaluate future opportunities to identify those which would be a good fit for our strategy and our community oriented style of banking.
As always we remain focused on our shareholders and we will remain disciplined on pricing.
For the end of the second quarter, we have not repurchased any shares under the $75 million share repurchase authorization approved by the board in February.
But we continue to assess share repurchase opportunities.
Yeah.
Throughout the past year I've referenced the challenges brought about by COVID-19.
I'm extremely proud of how our entire team adapted to these challenges.
Through their efforts, we were able to support our customers.
For the most challenging of times.
Now more than a year after the pandemic began.
We are pleased to see more people, becoming fully vaccinated are.
Communities reopening and life starting to return to some sense of normalcy.
Given this improvement we are now looking forward to bringing more of our own team back to Warren site work in early September.
While some employees will be permanently remove most will return to some level of on site or hybrid work.
The ability to connect in person strengthens relationships and our culture.
Which quite frankly sustained us during the pandemic and allowed us to continue to focus on our customers.
Now I'll turn things over to Kurt to discuss our financial performance.
Well, Thank you Bill and good morning, as Phil noted our second quarter performance produced solid results and I'd like to share some detail on several key areas.
Loan growth for the quarter was approximately $170 million or about 4% annualized excluding the impact on PPP loan forgiveness and originations.
We benefited from the diversity of our business model and strong loan growth from residential mortgage lending offset declines in our commercial business.
First let me talk about the PPP program.
PPP originations for wave III ended up at $750 million beyond.
Beyond our original expectations with $60 million originated in the second quarter and $690 million originated in the first quarter.
Our average wave 3 processing fee was for 5%, which was also well above what we had originally anticipated.
While the PPP program has ended for new originations, we continue to focus on loan forgiveness needs of our small business customers.
In the second quarter, we processed $639 million of PPP forgiveness requests.
And have remaining wave, 1 and 2 outstanding balances of approximately $360 million.
In total we have $1.1 billion in outstanding PPP loans as of June 30, and $35 million in processing fees yet to be earned.
Turning to commercial loans commercial real estate showed modest growth while other commercial categories declined.
Resulting in an overall decline in the commercial balances of $127 million on a linked quarter basis.
When excluding PPP loans.
We continue to experience commercial loans headwinds due to persistent low line utilization and prepayment activity.
Our commercial loan pipeline is down linked quarter, but consistent with year end levels.
Weeks, we have experienced growth in the pipeline consistent with all of our markets reopening.
We remain cautiously optimistic that commercial loan demand will improve as business activity and customer confidence increase.
In consumer lending our loan balances grew 284 million or 5.8% linked quarter on an ending balance basis.
This growth was driven primarily by residential mortgages as noted in prior quarters, our asset sensitive balance sheet provides room to continue growing this segment of high quality in market residential mortgage loans.
Overall, we anticipate loan origination levels to continue at a rate that is adequate to support the annual net interest income guidance and our outlook.
Turning to deposits growth for the quarter was modest however, total deposit balances are up for $3 billion or 25% since pre pandemic levels.
During the quarter, we continued to actively manage our deposit cost down and we are encouraged by the work of our team and the loyalty of our customer base, our total cash.
Cost of deposits for the quarter was down to 15 basis points.
Moving on to fee income wealth management commercial banking and consumer banking fee based businesses all delivered growth in revenue on a linked quarter and year over year basis.
Our wealth management business continues to perform very well.
During the quarter.
We purchased a small investment advisory firm, which help support the growth of our wealth business.
Our assets under management and administration grew to $13.7 billion at quarter end.
Up from $13.1 billion last quarter and $11.1 billion at the end of the second quarter of 2020.
These trends drove record quarterly wealth management income for the third quarter in a row.
Yes.
Turning to mortgage banking business originations were $875 million for the quarter.
An increase of 22% from the first quarter.
Okay.
However, a significant decline in gain on sales spreads combined with continuing to hold an elevated amount of loans on the balance sheet led to an overall decline in mortgage banking revenue linked quarter.
In addition, the decline in longer term rates also led to a $2 million increase to our mortgage servicing rights valuation allowance.
Further reducing overall mortgage banking income.
Overall, the mortgage banking business remains strong as we continue to experience solid origination activity and opportunities to either sell or conforming loans in the secondary market or increase our balance sheet with this product.
Purchase activity represents approximately 60% on total originations and has steadily increased in recent quarters.
The mortgage pipeline sits at $620 million remaining more than 2 times, our pre pandemic levels.
Capital markets revenue, which are primarily commercial loan interest rate swap fees declined in the second quarter.
This decline was partially driven by our willingness to provide longer term balance sheet fixed rates.
We expect swap revenue to return to more historical levels as we move forward.
However, this is dependent on customer preferences commercial loan demand and interest rate expectations.
Moving to credit and asset quality remains stable.
Delinquency remains low nonperforming loans were flat linked quarter and remained relatively stable since prior to the beginning of the pandemic net.
Net charge offs were $6.9 million or 15 basis points for the quarter. This compares to $6.2 million or 13 basis points of net charge offs in the first quarter on.
On slide 13, we.
We have again provided updated loan referral trends through June 32021.
Commercial deferrals further declined to approximately $122 million and stand at 9% of the commercial portfolio.
Consumer loans on deferral on Forbearance also declined and are now at $57 million or 1.1% of the consumer loan portfolio.
In previous calls we noted selected industries, we believe maybe up more risk due to COVID-19.
Slide 15 provides an updated summary of these selected industries.
Overall, our credit outlook remains cautiously optimistic for the remainder of 2021 and as a result, we have further reduced our 2021 provision for credit loss outlook.
Now I'll turn the call over to Mark to discuss our financial results in more detail.
Thank you Kurt and good morning to everyone on the call unless I note otherwise the quarterly comparisons I will discuss with first quarter of 2021.
Starting on slide 3 earnings per diluted share this quarter were <unk> 38.
On net income available to common shareholders of $62.4 million. This represents a decline of <unk> per share versus the first quarter of 2021 or.
Our second quarter performance included a slightly lower net interest income as well as lower non interest income offset by negative provision expense and lower operating expenses, which I'll cover in more detail later in my comments.
Moving to slide for our net interest income was $162 million, a 2 million dollar decline linked quarter, mainly due to less fees earned on PPP loans forgiven during the second quarter as compared to the first quarter.
Forgiveness for the quarter was $639 million and this represents only waves 1 and 2 <unk> 3 is not expected to begin requesting forgiveness until late in the third quarter and into the fourth quarter of 2021.
Our latest wave of PPP loans also have a larger average fee for 5% due to a smaller average loan size for this wave of funding.
As of June 30, we have approximately $35 million of PPP loans fees, yet to be recognized for.
4 million coming from the 2020 originations and $31 million from our first and second quarter originations this year.
Turning to the investment portfolio, we selectively redeployed some of our excess cash into mortgage backed securities and short term money market instruments. As a result investments grew $308 million during the second quarter.
As Kurt noted we saw deposits grew by approximately $90 million on an ending mallon base ending balance basis on our cost of deposits for the quarter was only 15 basis points on decline of 3 basis points linked quarter. We would expect our deposit cost is still migrate moderately lower in future quarters as we have approximately.
$660 million of Cds maturing over the next 2 quarters on a cost of approximately 80 basis points, which is significantly higher than current market replacement cost.
Our average loan to deposit ratio declined during the quarter from 89, 9% in the first quarter to $86.9 in the second quarter.
As I discussed last quarter, Fulton completed a balance sheet restructuring, which reduced our interest rate risk and improve several over performance metrics going forward.
This restructuring was fully reflected in the second quarter and is incorporated into the updated guidance I will provide at the end of my remarks.
Our net interest margin for the second quarter was $2, 73% versus $2.7 9% in the first quarter.
The 6 basis point decline.
<unk> quarter was largely a result from lower PPP loan fee recognition as well as additional cash on our balance sheet.
Turning to credit on.
Slide 5 our second quarter provision for credit losses was a negative $3.5 million versus a negative $5.5 million for the first quarter and a positive $20 million a year.
Go.
Compared to the year ago period, the initial impact of Covid had a significant impact on our allowance for credit losses in the first half of 2020.
But as the economic outlook continues to improve the amount required in our allowance for credit losses has declined.
As always this could change in future periods based on new loan origination volumes loan mix net charge off activity and economic projections.
Slide 5 also shows our normal quarterly credit metrics, our allowance for credit losses, excluding PPP loans as declined 14 basis points since the end of last year and currently stands at 1 point for 6%.
Moving to slide 6 noninterest income excluding securities gains was $52 million down $10 million from last quarter and down $1 million from a year ago.
Our fee based revenue showed modest increases in wealth management commercial banking and consumer banking, but were outweighed by a decline in mortgage banking revenues.
Banking revenues were impacted by a decline in gain on sales spreads of 114 basis points linked quarter on down to 185% after spending much of the past year on approximately 3%.
We also elected to portfolio about $230 million of salable mortgages onto our balance sheet. Thus far this year.
This has impacted our short term mortgage banking revenues, but may provide a significant long term benefit to net interest income versus the purchase of investment securities.
Lastly, our MSR assets was $36 million on the balance sheet at June 30.
This balance is net of a $6.5 million mortgage servicing rights valuation allowance.
As Curt noted during the quarter. We reported in addition to the valuation allowance of $2.2 million due to decline in longer term interest rates.
Wealth management revenues were $17.6 million for the quarter, an increase of 1.7% from the first quarter and an increase of 31% from the prior year.
Moving to slide 7 noninterest expenses were approximately $141 million in the second quarter down $38 million linked quarter. This.
This decline was largely due to $32 million of debt extinguishment costs, we recorded in the first quarter related to our balance sheet restructuring.
Excluding those items, our remaining expenses declined approximately $5 million.
Primarily due to lower salaries and benefits expenses compared to the prior quarter.
This was due to lower bonus accruals for the full quarter impact on our cost reductions and the absence of a onetime COVID-19 bonus paid to frontline personnel in the first quarter of 2021.
We also saw seasonal declines in occupancy expense of approximately $1.5 million.
Our effective tax rate was 16% for the quarter consistent with the first quarter.
Slide 8 gives you more detail on our capital ratios as of June 32021, we maintained strong cushions over the regulatory minimums in our bank and parent company liquidity remained very strong.
On slide 9 we provide our updated guidance for 2021.
We expect our net interest income to be in the range of $640 for $660 million.
We expect our provision for credit losses to be in the range of $10 million to $20 million.
We expect our noninterest income to be in the range of $220 million to $230 million.
And we expect the operating expenses, excluding charges related to the balance sheet restructuring to be in the range of $560 million to $570 million for the year.
Lastly, we are aware that many of you look at pre provision net revenue or <unk> as a key metric to assess the profitability of core operations.
We also know that many of you calculate this metric differently.
We've included our version of this metric in the financial tables of our press release.
We will also like to point out a couple of additional items to consider as you assess our ppm on our results.
First our PPP fees earned have declined $7.5 million from the first quarter to the second quarter.
Also MSR valuation allowance adjustments resulted in an $8.3 million swing from a $6.1 million decrease in the valuation allowance in the first quarter to a $2.2 million increase to the valuation allowance in the second quarter.
When considering these additional items, we believe our PNR has shown marked improvement from the first quarter to the second quarter as a result of our first quarter balance sheet restructuring, earning asset growth and better cost containment.
With that I'll now turn the call over to the operator for questions Ashley.
Sure.
At this time you have a question. Please press Star then the number 1 on your telephone keypad.
And your first question comes from Frank Schiraldi with Piper Sandler.
Morning.
Craig It's Brian.
Wonder.
I realize.
That there hasn't been any change to NII guide just wondering about some of the some of the moving parts there and I wondered if you could talk a little bit about.
The outlook for loan growth and within that commercial loan growth in the back half of the year.
Yes, Frank for the.
NII guide.
There is.
You've seen so far this year.
We've recognized.
$19.5 million on $11.5 billion in PPP fees in the first 2 quarters of the year.
We still have.
We still have $35 million to go.
And the timing of that I mean, we have our own estimates as to when that will be recognized.
Which may differ from yours.
But we would anticipate.
Possibly see a slight decrease in PPP fees in the third quarter, and then have that step back up again in the fourth quarter just based on the timing of this third wave of our PPP recognition.
And then we've seen results now through the first half for the year, we would expect business results.
To improve in the back half of the year incurred can give you more color on that.
Yes, frankly, we look at originations commercial originations in the first 2 quarters they were pretty consistent.
<unk> quarter, we saw elevated prepayment.
Activity. So I think for growth as we look forward would be based on what prepayment activity is.
On the pipelines have been building over the last 6 weeks.
And as things reopen and business activity increases we do think pipelines will continue to grow. So we think we have more momentum in the second half I think the growth will depend though on.
Those.
Prepayment factors just as an additional information car dealers are for planned portfolio linked quarter was down $70 million because car dealers can't get cars.
Floor plans are not as utilized as they were so things like that can provide us momentum in the second half.
Okay and then.
You mentioned, Phil you looked at some of the deals.
M&A that have taken place in market.
Is it fair to say that you feel you can more on.
Actively pursue deals in the back half of the year given given your confidence level now on <unk>.
Macro environment and I wondered if you could just remind us of what what sort of too small in terms of asset size.
To pursue in terms of whole bank deals. Thanks.
Yes, I mean, I think we will be as active as there are opportunities Frank and.
I think they'll continue on a second half of the year.
We'd like to be looking at banks over $1 billion.
But 1.
Wouldn't be impossible that we could look at something smaller that was.
Really strategically positioned well within our footprint.
Great. Okay. Thank you.
Yes.
Your next question comes from Daniel Tamayo with Raymond James.
Good morning, guys.
Good morning, Dan.
Maybe if I could dig into the NII from from the NIM side, a little bit.
What is your assumption.
For excess cash levels.
On slide <unk>.
Increased again in the second quarter, but what is your assumption for those levels within the guidance for the rest of the year.
They did it and on our guidance as a day tick up a little bit again during the third quarter, because that's when we tend to see our muni business at a high watermark for the year.
And coming back down.
A little bit in the back half, but candidly we don't see.
<unk> much decline.
In <unk>.
Excess cash levels here, because I think as an industry, we've been we've been wrong.
As an industry as 2 deposit levels.
And deposit levels continue.
To stick around longer than we anticipate.
So.
Well, we'd like to run with a lower level of cash than we currently have I think the expectation is going to remain elevated certainly through the end of the year.
Okay.
Thanks for that and then switching over to fee income.
Alright.
Comment you made about it.
Interest rate swaps within capital market income growth.
Back to normal.
What kind of environment do you need for that do you need rate go up from here or do you think this level of swaps would be kind of the <unk>.
Run rate, assuming we don't get on interest in rates or or even without that you think that this was a depressed level on the second quarter.
Yes, Dan it's occurred just a little more color. There you know the second quarter was on light quarter for us.
We were putting more fixed rate loans on the balance sheet.
We are continuing to offer that it really comes up it comes down to loan origination mix and larger deal mix and types of loans. So we do think linked quarter as we look at the third quarter will be stronger in <unk>.
Again, just to remind you we're coming off the high watermark I think we did $16.8 million last year, which was our best year ever from that we do expect it to moderate from there, but again the second quarter was 1.
Great I appreciate the color thanks for answering my questions guys.
You bet.
Your next question comes from Russell Gunther with D. A Davidson.
Hey, good morning, guys.
I wanted to hey.
I just had a follow up on the.
The expense comments earlier, let's see if I caught this rate. So you guys have done a really nice job keeping a lid on that and the recent initiatives can you just remind us of those previously announced are they fully in the run rate now as of the second quarter or.
Or is there more to come.
Yeah. They are they are fully in the run rate, but remember Russell when we announced that $25 million. We did say that we were going to invest a portion of that into some of our digital technology initiatives. So if you look at our income statement you can see.
On the on the category for data processing and software you can see the first 2 quarters of this year, that's been running anywhere from $1 million to $2 million higher.
For quarter than what our run rate was in the prior year.
So that's going to be the 1 offset to those cost savings, but other than that yes, you should expect them to be fully in the run rate okay.
Okay.
For Mark and then I guess as you look out and start thinking about 2022 do you contemplate additional initiatives to.
We'll continue to keep a tight lid on expenses are there opportunities to.
Do something similar going forward.
I think there will be constant reinvestment in our franchise, but but I don't anticipate there being.
Investment in the franchise that is going to change the trajectory of our expense levels I would expect at this point that there would be.
Not nominal increases in certain categories, but nothing.
Nothing materially off the run rate that you've seen.
Okay. That's.
That's great and then just switching gears you Phil you touched on the buyback a bit in prepared remarks with a discussion around M&A I mean, how should we think about you guys being active or not with repurchases is it more of a hope to.
Atlanta deal until we Shouldnt expect to see in the market or.
How are you guys contemplating that.
I would say.
So it would be driven.
More by the.
Price of our stock.
So we do think we have enough capital to do a deal and buyback but.
But we wanted to do both of them at the rate price.
Okay understood.
Thanks for that and then just a reminder, as to sort of what that.
Price to tangible book multiple earn back is.
For repurchases for you guys.
Yes. So if you look at kind of current levels for us right now.
That ends up being.
TBB dilution earn back of about 2.2 to 2.5 years for.
Kind of in the mid Fifteens, right now, which.
As fairly attractive relative to.
Certain M&A transactions, so it would be kind of equivalent to buying a bank.
Kind of in that 120 to 130 tangible book growth.
Yeah, no absolutely okay, guys well, thanks for taking my questions Thats It for me.
Thanks Roger.
Your next question comes from Erik Zwick, with Boenning and Scattergood.
Good morning, guys, Hey, good morning Langer.
First question I guess for Mark maybe on your comments about the gain on sale margins declining for the residential mortgage I think you said from kind of that 3% range down to about 185, or so now Im curious is that largely just market dynamics or is there just been a change with you holding more of those loans on your balance sheet and what you are.
Putting into the secondary market curious what impacted that and then I guess second part would just be.
We think those gain on sale margins settle out here on this range or is there more downward pressure as we move through the year.
Yeah, Yeah, I think it's more Ben.
While we have shifted.
The mix a little bit on it in terms of our originations have shifted a little bit from last quarter. They were about 49% purchased 51 refined to this quarter they were 60% purchase 40% refi.
So theres been a little bit of a shift in terms of product type.
I would say, it's more just demand for product.
Has driven down on gain on sale margins and if you look back to where we were sort of first quarter of 'twenty and earlier, so going back to pre pandemic you had a for a 5 quarter stretch there where our gain on sales spreads were.
Fairly tightly banded between about 135 basis points on a 155 basis points.
We would expect.
Our original expectations internally, what there wasn't it was going to migrate back to that by the end of the year.
I think things came down a little bit more quickly than we anticipated in the second quarter, but I think where we're going to end up by the end of the year is still going to be in line with our expectations for spreads.
That's great detail. Thank you and then the second question from me.
I believe in your prepared remarks, you mentioned that you are bringing more.
For your workforce back to the office starting in September, but there'll still be a component that works for <unk> curious what that ultimate kind of percentage of employees that will work remotely will be kind of compared to pre pandemic levels and how that makes you think about your real estate needs going forward over the mid to long term.
Yes, so pre pandemic I'd say, we had a few people who worked remotely.
As we are moving forward I'd say, 6% to 10% of our staff will be fully remote.
Yeah.
A big chunk will be hybrid.
So we will be looking at all of our real estate and I would suspect over time.
Decrease.
Great. Thanks for taking my questions today.
And again for any questions. Please press Star then 1 on your telephone keypad.
And your next question comes from Matthew Breese with Stephens, Inc.
Good morning.
And I was hoping for a little bit more detail on the.
On the interest rate sensitive loan portfolio. So last quarter you provided that I think you had $12.6 billion of loans, either tied to prime or LIBOR.
How much of that is subject to floors, where you wouldn't benefit from higher rates until rate hike, 2 or 3 and maybe talk a little bit about the last rate cycle.
Where we really didn't see loan yields inflect until the second or third hike.
Hike along the way any differences this time do you expect.
Yes, so Matt we have about $2.5 billion.
Of loans that are currently at their floors.
We have total loans with floors is about $4.8 billion.
But we have no loans that are below their floor. So your question really gets to if theres rate increase would we need to see to before rate impact. The answer is really no on that we would see sort of the full reset of that.
With rate increases.
Okay. So we wouldn't see the same delays last time.
We would not.
And then the other question I had is residential loans continue to drive for a big portion of the recent loan growth.
Balances are up to 19% of total loans at what point do we start to see you take your foot off the gas pedal, where exposures enough and where you you sell more of the production versus retaining.
Yes, so we continue to be.
Asset sensitive on 1 on the more assets that are banks that we track in our peer group.
So we think there is theres still room to continue putting high quality.
Customer base mortgages on our balance sheet, we have.
We have based on our on our current origination levels I mean, I think there's capacity to at least through the balance of this year.
To continue to do that and you trade off is it again right. Now if you are year to date, we've taken $230 million of production that we Havent sold we just said in the second quarter, our average gain on sales spread was 185 basis points.
So there is a.
A real short term impact rate there of about $3.5 million to $4 million in mortgage banking gains.
When you put those loans on your books do you have a year 1 reserve that you have to put on those residential loans under Cecil, but then if you assume that those loans are going to stick around on your books for 5 or 7 years, and then there's going to be a very material positive impact on to your NII avenues mortgages on the books versus say the Alt.
Turning to rate now with that 1 point for $1.5 billion in cash we have and deploying that in the MBS lets just say versus those residential mortgages.
Okay.
And could you talk a bit about the securities portfolio outlook for the balance of the year.
Yes, I think I would expect it to stay pretty range bound from where we ended up in the second quarter.
We did.
Did I mean, I mean, a lot on that depends on obviously, where the 10 year goes and then the last couple of days, it's been going on on the opposite direction.
<unk>.
As I said in my prepared comments I mean, we selectively redeployed on some of that excess cash in MBS in longer term rates went up we will continue to be opportunistic to maybe put some of it there.
We don't want to.
Extend duration too much in the investment portfolio, because our investment portfolio is primarily there is liquidity tool.
And ultimately we want that excess cash balance to be redeployed.
Into loans as opposed to investment securities understood. Okay last 1 for me.
I E.
Exclude commercial swap fees.
The other commercial fee income line item, so merchant card income cash management and other commercial banking.
All really nice quarters up sequentially.
What were the drivers behind.
Those type of fee fee income improvements.
Yes.
I would just point to increased business activity.
And underlying transactional activity as well as.
Affectively managing the earnings credit that would offset any of those fees and on.
Treasury business.
But we're seeing increased activity in business and in all of those categories.
Do you feel like these kinds of levels are sustainable or level, you can grow off of from here.
Yes, we expect them to continue to growth.
We'll see what pace, they grow and it'll really be tied to kind of underlying.
Business activity of our customers, but we do anticipate them continuing to grow okay.
That's all I had thanks for taking my questions.
Thanks.
At this time there are no further questions I will hand, the call back for closing remarks.
Well, thanks, everyone again for joining us today.
Youll be able to be with us when we discuss third quarter results in October.
That concludes today's conference. Thank you for your participation you may now disconnect.
Okay.