Q3 2021 First Citizens BancShares Inc (Delaware) Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the first citizens Bancshares third quarter earnings Conference call.
At this time all participants are in a listen only mode.
After the Speakers' presentation, there'll be a question and answer session.
To ask a question during the session you need to press star one on your telephone if you require operator assistance during the program. Please press Star then zero.
As a reminder, today's conference is being recorded.
I would now like to introduce hosted this conference call. Mr. Lerner Hart Senior Vice President of Investor Relations you may begin.
Thank you Julie good morning, and thank you for joining US today. It is my pleasure to introduce our chairman and Chief Executive Officer, Frank holding as well as our Chief Financial Officer, Craig next who will provide an overview of our third quarter results and we'll be referencing our investor presentation, which you can find on our Investor Relations website.
We are pleased to have several other members of our leadership team here with US today, he will be available for questions if needed.
After the presentation, we'll be happy to take quiet any questions you may have.
We have not yet closed the transaction with the I T grade we will be speaking today on first citizens Bancshares Standalone performance only and will provide an update of our planned merger with the I T.
Our comments will include forward looking statements, which are subject to risks and uncertainties that may cause our results to differ materially from expectations.
These risks are outlined for your review on page two of the presentation. We will also reference non-GAAP financial measures.
In the presentation reconciliations of these measures against the most directly comparable GAAP measures are available in the appendix with that I'll turn it over to Frank.
Thank you Diana and good morning, everyone. We appreciate you joining us today.
This morning, we reported third quarter net income of $124 $1 billion or $12.17 per share.
Delivering another quarter of strong financial results to our shareholders.
We continue to see positive trends in net interest income. Despite continued pressure on margins from our growing level of excess liquidity and the sustained low rate environment.
Noninterest income from our core fee income producing lines of business.
Also remained robust during the quarter and was up over the prior quarter.
Additionally, credit quality remained solid resulting in another.
Net provision benefit, albeit smaller than in previous quarters, it's been the previous quarter's benefit.
We achieved another consecutive quarter of loan and deposit growth both of which continued to be bright spots for our company as we remain focused on building long term relationships with our customers.
Total loans.
Adjusted for S. B E. P. P. P run all grew.
<unk> grew $437 million during the third quarter or by five 6% on an annualized basis.
We saw strong growth in both our consumer and commercial lines of business.
Deposits were up 1.1 mm $1.7 billion during the third quarter, representing an annualized growth rate of 13, 6%.
I'm sure. Many of you are looking for looking for an update on our planned merger with Citigroup.
On September 30, we announced the first citizens NCI Tee agreed to amend our merger agreement to extend the original outside date.
In the merger agreement from October 15, 2021 to March one 2022.
As we wait for the remaining regulatory approval from the Federal Reserve Board.
Not much has changed since that time and our understanding is that the application remained at the governor level.
As we noted in the last announcement, we stay in regular touch with the Federal Reserve Board.
And we have responded to all their questions.
We have not been provided a timeframe for their decision.
We understand and share the frustration regarding the length of time that has been required to obtain the necessary approvals for this merger.
This process can require patients.
As we noted last quarter, we have not been made aware of any regulatory problems with our application and we are confident in our ability to close this deal as soon as practical following approval.
Our goal has always been to build value for our shareholders and we remain committed to this goal and to our merger with <unk>.
When we announced this merger we stated that it was financially compelling and that it would create a premier nationwide commercial and consumer bank with the enhanced scale to drive growth.
Improved profitability and enhance shareholder value.
We believe this remains the case and our collective teams are excited about the opportunities that lie ahead for the combined company.
As we've said before we continue to work on integration planning with our CRT counterparts and leaders from.
From both organizations.
<unk> remained actively engage.
Engaged and committed to a successful combination of our companies.
In addition to merger and integration planning.
We continue to leverage our digital investments to drive revenue and accelerate our digital transformation.
We're now in the final phase of transitioning business in Treasury commercial clients to our new commercial platform.
Which has been well received by these clients these important clients.
We've also been working to implement process improvements to support our back office and recently completed an upgrade to our branch platform.
This change to a stable state of the art digital system allows for more efficient transaction processing and positions us to adapt quickly to changing customer needs.
As you can see by the growth in our wealth management income were focusing on deepening client relationships to grow. This line of business. We continue to grow our wealth business by both expanding into new markets and by enhancing the products and services available to help our wealth climb.
Meet their financial goals.
Our people are our top priority.
We continue to focus on talent development and retention of our associates.
Our objective here is to ensure we attract retain and develop associates to create a high performing sustainable company.
That will meet the strategic financial and operational goals of the organization.
As with many of our peers our ability to.
<unk> and retain talent has been tested this year as the number of people, leaving the workforce.
The competition for top talent is putting pressure on teams to retain their talent.
While the current environment for attracting talent is challenging we believe that first citizens is a desirable place to work and we have a lot to offer recruits as well as existing associates.
I'll now turn it over to Craig for a closer look at our financial results and then we'll open the line for questions.
Okay. Thank you Frank and good morning, everyone I'll start with page four of the Investor presentation, and I'll cover our third quarter earnings highlights.
Earnings for the third quarter as Frank mentioned.
Were $124 1 million down $28 $7 million from the linked quarter and down $18 6 million from the same quarter a year ago.
While earnings were down compared to both periods. We are pleased with our core earnings performance earnings for the third quarter translated into a return on average assets of <unk>.
Eight 8% and.
And our return on average equity of 11.29%.
Net income per common share was $12.17 down from $15 nine in the second quarter and $14 and three in the comparable quarter a year ago.
For the linked quarter, the most significant impact leading to lower earnings or a decline in the benefit from provision for credit losses, lower positive fair market value adjustments on our equity portfolio a decline in gain on sales of securities and higher noninterest expense.
Lower earnings from the comparable quarter, a year ago were due to the same factors, except for the provision benefit and the impact of fair market value adjustments.
Compared to the second quarter pre.
Pre provision net revenue declined by $22 million.
By decreases in SBA, PPP income securities gains fair market value adjustments and higher noninterest expense.
The first three factors contributed to a $23 $2 million decline in pre provision net revenue from the second quarter. So they were mostly responsible for the decline in pp NR during the quarter.
Net interest income was slightly up over the second quarter, Despite a $7 $1 million decline in SBA PPP income and continued interest rate headwinds.
Another bright spot was a $4 $8 million increase in core non interest income.
Higher noninterest expense during the quarter was driven by higher personnel costs occupancy and equipment expense and merger costs.
We continue to experience strong credit quality and low net charge offs.
In addition, macro economic factors.
To improve resulting in a further reserve release, albeit a smaller one than in the second quarter, resulting in an $18 $5 million decline in net benefit from the provision for credit losses.
For the year as macroeconomic factors have improved and we have sustained good credit quality. We have released $41 1 million in reserves compared to a reserve deal build of $36 $1 million last year related to the uncertainty surrounding COVID-19.
Turning to pages, five and six I will cover trends in net interest income and net interest margin.
Given another quarter of strong deposit growth, our cash balance with the fed increased consistent with prior quarters. We continue to monitor rates closely and look for opportunities to redeploy excess liquidity into loans and investments to grow net interest income despite lower.
The reinvestment yields.
Despite a decline in SBA PPP income and continued low interest rates.
Net interest income was up slightly over the linked quarter higher investment yields and average balances.
<unk> growth ex PPP and slightly lower deposit cost.
More than offset rate pressure on loans and a decline in SBA PPP income.
While SBA PPP loans continued to support overall net interest income the contribution from these loans is declining as forgiveness activity continues.
PPP loans contributed $20 million in interest and fee income during the third quarter compared to $27 2 million in the second quarter.
Net interest income declined by $6 $8 million compared to the same quarter in 2020.
This was primarily due to an $8 $9 million decline in SBA, PPP income and lower earning asset yields partially offset by higher average loans and investments as well as lower rates paid on interest bearing deposits.
While we are pleased with the increase in the absolute level of net interest income during the quarter as expected net interest margin declined by seven basis points from the linked quarter.
As discussed in prior quarters, we continue to operate with a liquidity above normal operating ranges, which puts downward pressure on net interest margin.
We have been pleased by the level of loan growth in the second and third quarters, which has helped to somewhat protect net interest margin from the impact of low interest rates. In addition, we have opportunistically deployed money out of cash into the investment portfolio since last year, our investment portfolio grew by $985 million.
Or just over 10% since September 32020.
Consistent with the prior quarter the decline in margin was mostly attributable to earning asset mix as our cash balance with the fed continued to grow.
One bright spot during the quarter was the investment portfolio yield was accretive to margin by three basis points.
We expect that net interest margin will continue to remain a headwind mostly due to continued excess liquidity the low rate environment and a reduction in SBA PPP loan income.
Quarter over quarter declines in net interest margin have moderated from the declines we experienced in 2020 and earlier this year and we will continue to seek opportunities to grow absolute levels of net interest income to offset declines in margins and margin through organic loan growth and opportunistic additions to our investment.
Portfolio.
Turning to page seven I will cover noninterest income, which totaled $122 $9 million.
For the third quarter.
Noninterest income decreased by $11 2 million compared to the linked quarter.
Mine was mostly attributable to a decline in securities gains in fair market value adjustments totaling $16 $1 million.
Core noninterest income increased $4 $8 million when compared to the linked quarter due primarily to high higher net service charges on deposits.
I'll linked quarterly income did not increase for wealth card and merchant taken collectively we continue to see momentum in these businesses supporting our bottom line.
Noninterest income increased $2 4 million when compared to the third quarter of 2020 taken together securities gains in fair market value adjustments were down $7 $3 million. So core noninterest income was up by $9 $7 million.
A significant factor in the increase was in wealth income as we continued to grow assets under management, driving higher advisory and brokerage fees as well as additional trust income.
We also saw increases in service charges and income from card and merchant services. These improvements were partially offset by a decline in mortgage income.
Driven by lower production volume.
For the remainder of 2021, we expect continued momentum in the wealth and payments related businesses.
We expect mortgage income growth will be a challenge as refinance activity slows as mortgage rates have risen.
But we do expect core noninterest income to be in the $109 million to $110 million range in the fourth quarter.
Turning to page eight I will cover noninterest expense.
Noninterest expenses increased by $11 $2 million over the linked quarter.
The largest increase was in personnel expense, which was up $4 $2 million over the second quarter.
The increase was driven by increases in temporary personnel cost revenue driven incentives.
Net staff additions, partially offset by lower insurance health insurance cost outs.
Outside of merger related expenses other increases in expense were spread among various categories and were mostly due to our continued investment in supporting revenue generating businesses and improving internal processes.
Core noninterest expense ex merger related costs to remain in line with the recent run rate of approximately $300 million to $305 million per quarter.
Turning to page nine we provide balance sheet highlights and key ratios I'll cover the significant components of the balance sheet on subsequent pages.
On page 10, I will cover loan growth for the linked quarter and year over year periods.
<unk> decreased by $174 million or by two 1% on an annualized basis this quarter primarily due.
Two a $611 million net decrease in SBA PPP loans, excluding PPP bonds, we experienced solid annualized organic growth of five 6%.
Over the second quarter.
The largest components were commercial and industrial owner occupied commercial real estate and consumer loans.
On a year over year basis loans were relatively stable as PPP forgiveness, almost completely offset a five 7% increase in organic loans.
Overall, we are pleased with organic loan growth this year.
And we believe that it will be mid.
Mid single digit percentage growth range moving forward.
The ultimate level of loan growth will be dependent upon continued economic expansion in our markets.
Turning to pages 11, and 12 I will cover our credit quality trends in the allowance for credit losses.
Credit quality continues to be a source of strength the net charge off ratio was six basis points during the quarter.
One charge off was primarily responsible for the increase from three basis points in the prior quarter.
The nonperforming assets to total loans and other real estate ratio was <unk> 65 at quarter end, the lowest level since the second quarter of 2019.
Given these trends and improvement and macroeconomic factors. We are at least 41 4 million in reserves to date compared to a $36 1 million dollar reserve build last year as I mentioned earlier.
Our allowance ratio ex PPP loans declined modestly from six 1% in the second quarter to <unk> $5 eight in the third covering net charge offs. During the current quarter, almost 10 times compared to a loan book with an average life of approximately four years, we are now.
Operating with an allowance ratio of just below where it was when we adopted <unk> on January one 2020.
I'm looking at it another way near the pre pandemic level.
We remain comfortable with our allowance level and while we do not expect that net charge offs will remain at these historically low levels perpetually, we have seen little indication that charge offs going forward, we will have a significant impact on the level of our allowance.
Moving to pages 13, and 14 I will cover deposit trends in our funding mix, we continued to experience strong deposit growth.
Continue to experience strong deposit growth during the third quarter.
With money market accounts and demand deposits, leading the way.
<unk> grew at an annualized rate of 13, 6% since the end of the second quarter and by 18, 5% on a year over year basis.
Our balance sheet continues to be funded predominantly by core deposits with deposits representing over 96% of our funding base at the end of the quarter.
We are pleased that most of our deposit growth occurred in core checking accounts and.
And at the end of the third quarter non interest bearing deposits accounted for approximately 43% of total deposits.
Consistent with the second quarter. The total deposit cost was seven basis points, which was down six basis points from the same quarter a year ago.
Looking forward, we expect that deposits will remain elevated and low deposit costs will continue to be a source of strength with respect to our net interest margin.
Turning to page 15, our capital position remains strong.
With all ratios above or within our target ranges.
As of the end of the third quarter, our CET one ratio was 11, 34% and our total risk based capital ratio was 14, 3%.
Most of the growth in our risk based capital ratios was attributable attributable to strong earnings during the year, partially offset by growth in total risk weighted assets as.
As we noted in prior quarters, our tier one leverage ratio continues to be impacted by significant deposit growth.
But it remains above internal threshold as earnings are mostly mitigating the impact of increased average assets, where we are comfortable operating at that level.
This concludes my comments. Thank you for joining us today and I will now open it up for Q&A.
Ladies and gentlemen, I think we have a question or comment at this time. Please press. The Star then the one key on your Touchtone telephone.
As a courtesy to others on the call. We ask that you limit yourself to one question and one follow up and then return to the call queue. If you have additional questions.
<unk> has been answered and wish to remove yourself from the queue. Please press the pound key we'll pause for a moment to compile the Q&A roster.
Our first question comes from Brady Gailey with <unk>.
Hey, Thanks, good morning, guys.
Good morning.
So I wanted to start on the expense base.
Compensation.
<unk> was up about $7 million linked quarter I think it was a little more than we had expected I know in the slides you call out some kind of temporary.
Increase in personnel costs I Wonder if you could just talk a little bit more about that and how we should think about that comp line going forward legacy FC NCA.
Okay.
Thank you for the question.
I would say that the third quarter was a little lumpy.
With some episodic expenses in there.
I'll hit the expectation would be for quarterly expenses to be between 300 $305 million.
Ex merger related costs, but third quarter was a little lumpy we were up 11 two.
Approximately 40% of that increase was related to personnel costs and if you break those components down we had.
An increase in temporary personnel costs, primarily related to our business online banking platform replacement that Frank mentioned in his comments and then that was followed very closely by revenue driven incentives and primarily that is in the wealth. There your debt what their income is up approximately 28% on a year over year basis. So they are really.
Tied into revenue or temporary given given the.
Technology related projects.
Also <unk>.
Processing fees to third parties increased and they are pretty much volume related primarily in wealth as well and that really tracks with the increase in assets under management and then also those expenses were up with our digital account opening efforts.
Consulting and advertising costs.
We're up a bit to support our digital banking efforts those are both in line with our budget expectation some of those just hit in the third quarter.
And then we also.
Replaced some branch equipment teller stations and those were below our capitalization enrollment in the third quarter. So we wouldn't expect a lot of those expenses to repeat every quarter hopefully the revenue driven expenses do repeat because that means we're doing well in wealth in our other income producing lines of business, but.
Do expect expenses to be in that $300 million to $305 million range.
And in future quarters ex merger related costs also had an increase in merger related costs during the quarter as well I didn't mention in that increase.
Alright, that's helpful. And then my second question is on Accretable yield.
Year to date, you guys have kind of been in that 11% to $13 million per quarter.
Legacy <unk> yield accretion how.
How much is left in that bucket.
Going forward, excluding anything that is.
It's going to be realized from CIC.
I do not have the actual remaining deferred or accretable yield number in front of me.
But we do expect that.
That that line item will continue to decrease in line with what you see and linked quarters I don't know if anybody has that number here available. It doesn't look like we have that number available, but we would expect that line item to continue to decrease.
As that portfolio runs off.
Pregnant and Craig actually one more just on that same 41 more on that same topic I know when you announced <unk> you kind of called out about $63 million of kind of net purchase accounting accretion I know the marks have changed a lot over the last year, but.
Feels like that 63 number could come down pretty notably.
How much purchase accounting accretion, we should expect from CIC next year.
We will be updating that when we close we are in the process of doing the evaluations now we don't have that information at this time.
Yes.
Okay, Alright, thank you guys.
Thank you.
Our next question comes from the line of Kevin Fitzsimmons with D. A Davidson.
Okay.
Hey, good morning, everyone.
Hey, Marty good morning, Kevin and Monica Kevin.
I just had a question about.
The excess liquidity is obviously a drag.
For all banks and it seems like it was an increased drag this quarter for you all and.
Some banks are kind of reaching the point, where they had been hesitating from.
Being more aggressive in putting that money to work.
And the bond portfolio, but we've heard some banks this quarter really.
Kind of changed their tune on that.
Keith.
Stepping up more aggressively so can you.
There's a lot of different variables here between maybe what your outlook for legacy loan growth is what your outlook for rates are if we're closer to rising rates and then obviously the opportunities from the merger.
In terms of what you can do to the balance sheet can you kind of.
Stack rank those or maybe there's other variables are not thinking of it in terms of why you might now why are you opting maybe not to be more aggressive.
On that front thanks.
Thank you Kevin I would tell you that we are.
Trying to be opportunistic and redeploying this excess liquidity as.
As I mentioned in my comments, we have increased our investment portfolio year over year by approximately $1 billion.
Which is about a 10% increase I can tell you that we have.
Closely monitoring rates and just just to give you some idea of the challenge.
At the beginning of the third quarter in July the five seven and 10 year Treasury fell by 17, 24, and 26 basis points, respectively, and it took the entire quarter.
For those to reverse versus the end of the second quarter. So during the third while we added during the second quarter. We didn't think it was prudent to add during the third quarter, given where rates were now we think we have we may have some opportunities one in the fourth quarter.
Great to have rebounded.
So we will we will continue to try to invest opportunistically there, but we don't think it was very prudent to invest into a lower rate environment when implied yields appear to be up as we move towards the end of the year.
We would prefer to operate with cash somewhere around the 4% of earning assets level and as you can look at our balance sheet and see where.
Operating at around 19%, so and that's really due to the fact that deposits remain elevated.
And we don't really see that changing.
In the short term and I'm glad you pointed out this is not unique to for citizens I think as an industry.
Wide issue. So it is a priority for us to grow organically loan growth or invest.
To protect our net interest margin as much as possible.
But I also think that having some excess liquidity in this is it.
Intentional.
To some degree will help us optimize our balance sheet when we do ultimately merge with CIP. So.
So we may be a little more elevated due to that than we would have been otherwise had we not contemplated a merger of this transaction I hope that makes sense, but I think that the.
Once line is we're trying to be opportunistic, but we don't want to make short term decisions that pool.
Poses to interest rate risk as we move forward.
No. Thanks, Thanks, Craig that's very helpful.
One other question on <unk>.
I completely understand the sensitivity sensitivity to it that you can't really.
Comment with the merger.
Application at the board level, but.
Maybe you can help us in terms of how to look at this there was a recent media report that that.
Disclosed a few complaint letters that were issued which.
Listen.
I would guesstimate that those kind of letters come with every deal.
Don't know how much wheat, a regulator would put an unsigned letter.
Got.
Is there any way to help us help gate help us gauge how to view those because on the one hand I think everyone is scratching my head thinking I'm trying to come up with a reason why it's taking this long on the other hand.
I wonder if.
These letters I would suspect you would know that you would know its an issue if it was a real issue and you've made it clear that.
You're not getting questions from them and secondly, the FDIC has approved the merger already.
I would suspect.
I suspect that they see these letters as well so.
Given just a few of those factors is there any way to help us how we should view.
Those kind of story lines when they come out.
Well, Kevin the first thing I'd say about the letter is that it was it was dated February mid February and that was during the normal public comment period.
Since then and before than we've been in constant communication with our regulators two of which have approved.
The transaction, while this letter was out there.
In terms of the fed I'm not going to speculate on how they view it but we have.
Addressed any issues they've had in general not necessarily specific to that letter since that time.
We are unaware of any problems.
Out there issues with our application. So that's the best answer I can provide about that letter.
And.
The approval process.
Yes.
I really appreciate that.
One last one for me just on loan growth when you say mid single digits.
Footprint and economies reopening in rebounding.
Could we be.
More on the way.
The March toward high single digit but.
Maybe it's just payoffs better.
Keeping your conservative right now.
I would say it probably would not be prudent for us to project high single digit loan growth I think.
Based on our pipeline.
Which we feel like a pretty strong right now we expect mid single digit loan growth going forward.
Okay, great guys. Thank you very much.
Thank you Kevin.
Thank you. Your next question comes from Brian Foran with autonomous.
Maybe on interest rates.
We think about maybe the fed raising rates in 'twenty, two 'twenty three whatever year it ends up being.
I mean, it seems like there should be pretty decent upside for both you and CIO side, but theres a lot of moving parts about.
Do some deposit screen now to deploy excess cash all right.
Great sensitivities, we get kind of match reality.
I was hoping you could just give us whether you want to qualitatively or quantitatively like when you think of rates going up 100 bps.
As the standard scenario, how do you clearly there is earning upside, but how do you think about how much or how big that earnings upside could be.
Either for citizens are ideally the pro forma.
This is a rule of thumb and I think this is a good comment will be directional but.
Every 10 basis points parallel shift in the yield curve up or down for us is equal to about a 1% annualized increase in net interest income so think $15 million of pre tax income for every 10 basis points parallel shift in the curve. So obviously.
100 basis points.
Would would add around 10% growth.
To net interest income.
So if there were asset sensitive so we definitely would be.
Benefit from rising rates.
And then maybe sticking with the same topic on prior calls you've given some good front book versus back book pricing color.
Can you just kind of give us some mark to market on what that looks like now in.
There is still a little bit of a gap there or are they starting to converge.
If you look at the if you look at the.
Second quarter.
New rates.
We're about 47 basis points lower than.
We'll run also new rates for around 328.
Runoff was around 370 540.
<unk> 47 basis points gap there.
That narrowed the 43 basis points in the third quarter, new rates came on while at lower rate loans ran off at lower rates as well so that gap stayed fairly stable 45 down the 47 down to 45 and that's all commercial lives.
The bulk of the sort of the bulk of the production is so we're still facing that.
Interest rate headwind on from the from a perspective of loan yield.
Fortunately during the quarter, though investment yields increased enough to overcome that drag on margin.
And then if I could sneak in a last one on the deposit growth has obviously been kind of lights out I mean, you've gone from 35 billion pre pandemic to 50 billion now.
I Wonder if you could speak to kind of two issues one on the negative side do you still think there's search deposits and client excess liquidity that you kind of mentally have to haircut or do you think 50 billion is kind of a.
Our full base you can work off of going forward and then on the positive side.
Kind of just remind us or update us on the kind of key strategies and opportunities to continue to grow.
Well I think our go to market strategies relationship focused or that sort of inherent in what we do and that.
I attribute a lot of that growth to that.
But we do believe some of the growth in deposits are transitory in nature for instance.
Since the end of last year.
We try to trace what's coming in from government stimulus and what remains is that of last year, we had about approximately $1 2 billion.
And.
Government stimulus deposits and the base and we think thats somewhere around 400 million now so despite that decline deposits grew.
From in the first quarter of 36, 4% annualized second quarter nine 1% annualized in this quarter 13, 6% annualized.
So we do think some of it's transitory, but we also think given that we've established relationships with customers that need some of these deposits are going to stick, we really can't quantify.
What that will be but.
Sure.
Pleased with the deposit growth somewhat.
All of it just keeps growing.
At least at these double digit annualized rates quarter on linked quarterly basis, most of its coming from our commercial customers.
And.
I think looking at earnings releases for other banks, we're not alone in this but.
But we do believe some of this will stick some of its transitory as exhibited by the fact, we had $1 2 billion increase this year or earlier this year and that those deposits around 400 million now side.
Core growth was sort of overcoming.
The transitory deposits.
That's great. Thank you for all of them.
Okay.
Thank you for your questions.
Your next question comes from Christopher Merrimack.
Yes. Thanks, Good morning, I wanted to ask Frank or are you about the.
Idea of impacting.
New hires within your markets, whether it's in your home state of North Carolina or in other parts of the footprint do you see new commercial lenders and others are SaaS coming on and listen.
The timeframe, even even before the merger is closed.
Christopher the sporadic holding.
We continue to hire new associates, and we're doing that.
All we can to do that.
And we've been reasonably successful in that space.
The orientation process for new Associates continues we have a strong robust process there.
It helps people.
But it helps our associates become productive in a reasonable time frame.
So while the competition for talent is very strong.
We are holding our own in that space and our story.
Yeah.
Whether it's pay and benefits and <unk>.
Work environment, we think we have a strong story in that space. So.
Theres no major.
All of them as being more challenging we are getting the job done.
Great. Thank you for that I appreciate it and just a follow up I guess on the impact of the tech spending that you outlined earlier call does that drop.
Overall per transaction costs in the future and do you see a material change in efficiency and again, just taking for first of all as a standalone prior to the merger savings.
That certainly is the goal.
Mentioned.
Process improvement related technology investment and the reason to make that investment to get to.
Payback in terms of transaction costs over time.
Great. Thanks, very much for taking the questions.
Thank you.
I'm not showing any further questions at this time I'd like to turn the call back over to our host for any closing remarks.
Great. Thank you and thank you everyone for joining this morning as always we're appreciative of your ongoing interest in our company. If you have any further questions or need additional information. Please feel free to reach out hope everyone have a great day. Thank.
Thank you.
Ladies and gentlemen. This concludes today's conference call. You may now disconnect have a wonderful day.
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
During the quarter.
Sure.
Okay.
Okay.