Q4 2021 First Financial Bancorp Earnings Call

Okay.

Hello, and welcome to the first financial Bancorp fourth quarter 2021 earnings conference call. My name is Alex and I'll be quote Tonight for Nicole today, if you'd like to ask a question at the end of the presentation. You can press star one on your telephone keypad.

If you wish to withdraw your question you compress style, let's say I will now hand over to Scott Crawley corporate controller <unk> scope.

Thanks, Alex Good morning, everyone and thank you for joining us on today's conference call to discuss first financial Bancorp's fourth quarter and full year 2021 financial results.

Dissipating on today's call will be Archie Brown, President and Chief Executive Officer, Jamie Anderson, Chief Financial Officer, and Bill Harrod, Chief Credit Officer.

Both the press release, we issued yesterday and the accompanying slide presentation are available on our website at www Dot. Thank you first dot com under the Investor Relations section, we will make reference to the slides contained in the accompanying presentation during today's call. Additionally.

Additionally, please refer to the forward looking statements disclosure contained in the fourth quarter 2021 earnings release.

Well as our SEC filings for a full discussion of the Companys risk factors.

The information we provide today is accurate as of December 31, 2021, and we will not be updating any forward looking statements to reflect facts or circumstances. After this call I'll now turn it over to Archie Brown.

Thank you Scott good morning, everyone and thank you for joining us on today's call.

Yesterday afternoon, we announced our fourth quarter financial results.

Which reflect an outstanding finish to an exceptional year, despite the challenging operating environment and interest rate backdrop.

Our quarterly results were highlighted by strong earnings significant core loan growth solid fee income provision recapture and improved credit trends.

We announced the successfully completed the acquisition of summit funding group during the quarter and we're excited about our future together.

The synergies gained by adding some its leading nationwide position in the equity and finance sector to our current product offerings will provide significant growth opportunities moving forward.

Someone has developed a diversified and nimble lending platform and demonstrated the ability to produce high quality and consistent origination volumes.

We're pleased to have some its exceptional asset management expertise and look forward to the growth potential created by combining our two companies.

Fourth quarter results remained strong across the board with adjusted earnings per share of <unk> 58.

Return on assets of 134%.

And an efficiency ratio of 62%.

Fourth quarter earnings were again highlighted by significant provision recapture of $7 $7 million.

As credit quality trends continue to improve and classified assets decreased by 36, 7%.

Fee revenue was also strong as record foreign exchange income from our Bannockburn unit more than offset some seasonal drop in mortgage income.

Loan origination activity improved to record levels and was approximately 27% higher than the third quarter with our commercial groups, leading the way.

Growth in the unfunded lines and construction commitments are expected to provide tailwind to loan growth over the coming year as they draw up we also completed the sale of approximately $144 million in commercial real estate loans.

Which both reduces our hotel concentration.

And our exposure to an industry that continues to be impacted by the pandemic, particularly in metropolitan Central business districts.

Excluding the impact of PPP, the loan sale and the summit acquisition core loan growth was approximately $149 million.

Or six 3% annualized which was our strongest quarter of the year.

We're very pleased with this organic loan growth considering we have continued to see record payoffs within our commercial real estate and commercial finance portfolios.

As those payoffs moderate and the summit portfolio builds we expect to see further strengthening in loan growth.

In 2022.

We're pleased to have deposit balances grew modestly across all customer segments as our customers continue to maintain substantial liquidity levels.

PPP forgiveness continue to wind down in the fourth quarter, three quarter and almost all of round, one and over 80% of round two loans have been forgiven.

We expect the majority of remaining round two payoffs to come over the first half of 2022.

Overall, our full year 2021 performance was exceptional as our participation in the PPP helped offset the pressure from historically low interest rate environment.

While provision recapture contributed to strong earnings and reflect the dramatically improved credit trends.

Pleased to see.

<unk> income again was very strong this year, given our strategic focus.

On that area of our business and expenses remained well managed despite inflationary pressures.

Lastly, our balance sheet and capital ratios remained strong and we're very pleased to deliver superior returns to our shareholders through aggressive share repurchases and a strong dividend yield.

With that I'll now turn the call over to Jamie to discuss the details of our fourth quarter results and then after Jamie's discussion I will wrap up with some additional forward looking commentary Jamie.

Thank you Archie and good morning, everyone Slide four five and six provide a summary of our fourth quarter and full year 2021 financial results.

We are very happy with our performance, which which included strong earnings core loan growth a significant decline in classified assets provision recapture and elevated fee income.

The highlights of our quarter included closing the acquisition of summit binding group and 6% annualized core loan growth.

In addition fee income surpassed our expectations as Bannockburn had a record income quarter wealth management remains strong and we recorded higher syndication fees during the period.

Noninterest expenses were slightly higher than our expectation due to elevated incentive compensation, which was tied to our higher fee income and overall company performance.

We were particularly pleased on the credit front as classified assets declined 37% during the period.

Net charge offs were elevated due to our decision to sell $134 million of hotel loans in order to address various portfolio concentrations.

The decline in classified assets combined with a positive economic outlook resulted in $7 $7 million of provision recapture during the period.

From a capital standpoint, our ratios our ratios are strong and remain in excess of both internal and regulatory targets.

Given the summit acquisition, we paused our share repurchase program and expect to remain on the sidelines in the near term. However, our board recently approved a new plan, which authorized 5 million additional shares to be repurchased.

Slide seven reconciles our GAAP earnings to adjusted earnings highlighting items that we believe are important to understanding our quarterly performance.

Adjusted net income was $54 $1 million or <unk> 58 per share for the quarter.

These adjusted earnings account for $6 million in tax credit investment write down $3 $5 million and legal settlement $4 million of summit acquisition costs and $2 million of other of other costs not expected to recur such as severance and branch consolidation expenses.

As depicted on slide eight these adjusted earnings equate to a return on average assets of 134% our return on average tangible common equity of 17, 4%.

And an efficiency ratio of 62%.

Turning to slide nine and 10 net interest margin declined nine basis points from the linked quarter to three 3%.

This decline was primarily driven by a decline in PPP forgiveness fees and lower asset yields.

The impact on the net interest margin from these changes was partially offset by an increase in other non PPP loan fees during the quarter.

Asset yields declined modestly during the period due to continued pressure from the low interest rate environment and the growth of the investment securities portfolio.

Over the course of 2021, we increased the size of the investment of the investment portfolio, which has negatively impacted the margin.

Our cost of deposits of 10 basis points was flat when compared to the third quarter.

Our near term outlook on funding cost remains the same we anticipate cost stability or a very slight decline as we have reached our pricing floor.

Slide 11 illustrates our current loan mix and balance changes compared to the linked quarter.

Loan balances decreased during the period, primarily due to declines in PPP and the Icrc portfolio.

The decline in PPP was expected as those loans have been forgiven, while the decline in <unk> was impacted by $144 million in loan sales during the quarter.

Excluding the impact from these two events as well as the acquisition of summit, we were very encouraged by $149 million of growth in the rest of the portfolio.

Slide 13 shows our deposit mix as well as a progression of average deposits from the third quarter.

In total average deposit balances increased $218 million during the quarter, driven primarily by increases in noninterest bearing deposits and public funds.

This was partially offset by a decrease in higher cost brokered Cds.

We continue to be mindful of deposit pricing and we will make any necessary adjustments based on market conditions and our funding needs.

Slide 14 highlights our noninterest income for the quarter as I as I mentioned previously.

Fourth quarter fee income remained elevated and was driven by record production from Bannockburn and strong wealth management results in.

In addition, other noninterest income increased 37% during the period, primarily due to a $1 2 million increase in syndication fees.

Noninterest expense for the quarter as outlined on slide 15.

Noninterest expenses increased $10 $6 million during the period that included multiple large transactions that we do not expect to recur. These.

These include $6 1 million of tax credit investment write downs $4 $1 million of costs associated with the summit acquisition, a $3 $5 million legal settlement.

And $1 $9 million of other costs, such as branch consolidation and severance severance expenses.

Overall core expenses were slightly higher than we expected an increase modestly when compared to the linked quarter.

This was driven by elevated incentive compensation.

Which was tied to higher fee income in the company's overall financial performance.

Turning now to slide 16.

Our ACL model resulted in a total allowance, which includes both funded and unfunded reserves of $145 million and $7 7 million and total provision recapture during the period.

The provision recapture was driven by a 37% decline in classified asset balances and improved economic forecast.

Net charge offs as a percentage of loans increased to 32 basis points on an annualized basis as the company sold $134 million of hotel loans during the period.

In an effort to address portfolio concentration.

This sale added $9 $2 million to our quarterly net charge off figure.

For further description of the loan sales during the quarter places please see slide 18.

Our view on the ACL and provision expense remains unchanged.

We believe we acted aggressively when building reserves in response to the pandemic and.

And have been relatively conservative and releasing those reserves.

In the beginning of 2022, we expect further provision recapture and reserves and reserve release, but at a more gradual pace than we saw in the back half of 'twenty one.

Finally, as shown on slides 20, and 21 capital ratios remain in excess of regulatory minimums and internal targets all.

All capital ratios remained strong despite declined during the period due to the acquisition of summit.

As I previously mentioned, we did not repurchase any shares in the fourth quarter and do not expect any additional share repurchases in the near term, while we while we rebuild our capital position following the summit acquisition.

Additionally, we do not anticipate any near term changes to the common dividend.

However, we will continue to evaluate various capital actions as the year progresses.

I'll now turn it back over to Archie for some comments on summit and our outlook going forward.

Thank you Jamie.

Before we end our prepared remarks, I want to comment on our forward looking guidance, which can be found on slide 22.

Loan demand remains strong, especially in our commercial businesses and we expect loan balances to grow mid single digits over the near term.

Excluding PPP in summit.

Securities balances are projected to come down slightly while deposit balances are expected to remain relatively stable over the near term with some modest seasonal outflows.

The net interest margin will continue to be positively impacted by the remaining P. P. P forgiveness payoffs.

We expect to conclude in the first half of the year.

Without any further substantial liquidity inflows.

And excluding PPP, we expect the margins to be relatively stable over the next quarter.

Our asset sensitive balance sheet positions us very well to benefit from the expected rise in interest rates.

Significant portion of our loan portfolio is indexed to short term rates.

And although there are many variables that play impacting magnitude and timing, we expect to benefit from rising rates, especially early in the cycle when deposit rate pressures are muted.

Regarding credit we expect further improvement in quality trends, we continue to expect additional provision recapture in the near term, though less than we had in the back half of 2021.

We expect fee income to be between 38 and $40 million in the first quarter, excluding the summit acquisition.

Seasonal and rate headwinds put pressure on mortgage banking income and we will see some decreases in overdraft income due to seasonality and updates to our program.

Specific to expenses, we expect to be between 91% and $93 million, excluding the summit acquisition, but this could fluctuate with fee income.

Regarding summit, we expect the acquisition to have a minimal impact on 2022 earnings.

With a slightly negative impact near term from the intangible amortization.

We expect the acquisition to provide $400 million in annual originations, which should provide a strong lift to loan growth as we progress through the year.

Lastly, our capital ratios remained strong and we will continue to elevate reevaluate capital deployment opportunities over the year.

Overall, we continue to be pleased with the strength and performance of our company 2021 was another successful year for first financial and reflects the outstanding efforts of our talented associates as.

As we move into 2022, we are optimistic about our prospects for growth.

And are well positioned for the rising rate environment.

Our focus remains on executing our core strategies delivering exceptional service to our business.

Consumer and wealth management clients and capitalizing on the momentum achieved in 2021 to deliver superior returns to our shareholders.

With that we'll now open up the call for questions.

Thank you we will now begin the Q&A session, if you'd like to ask a question you compress star one on your telephone keypad, if you'd like to withdraw your question you compression starts to.

You are joining us online today, you can make the flag cycle.

And show you on me to locally when asking your question.

Our first question for today comes from Scott <unk> from Piper Sandler Your line is now open.

Thank you good morning, guys. Thank you for taking the questions.

James I wanted to start with Hey.

Hey, I wanted to start maybe with you regarding the margins. So just make sure I understand you're saying stable with the three implied 3%, which is the basic in the loan fees is that the best way to think about it.

So help me out there Scott when you say the 3% in the loan fees.

Oh, the 3%, which is basically the basic margin plus.

The way you yeah.

I got it okay.

Yeah, So obviously without without any rate hikes, we are our kind of base margin is right around 305 call it and so yes.

Yes without rate hikes, we would.

We don't have any rate hikes, we would look at that to B W.

It would be relatively flat yes.

Okay, perfect and do you have sort of a rule of thumb, excluding PPP as well Scott right.

Yeah, Yes, exactly yeah, Okay, and then sort of a rule of thumb for how much each 25 basis point hike by the fed would help either the margin in basis points, our NII in dollars.

Maybe up to sort of thought on how you're positive betas.

Yeah. So.

I'll, maybe give you to two different.

Answers here in terms of like how it how it performs as we get the rate hikes in and the number of rate hikes. So.

In the first couple of rate hikes.

Mainly because we don't see the deposit side moving quite as much we get a little bit more benefit from the first couple of rate hikes, so and basis points our margin per rate hike in the first two would go up around eight basis points so in that call. It.

$11 million.

Range of benefits.

Net interest income in those first two and then after we get past. The first two that comes down a little bit just as we will probably start to see some deposit pressure at that point.

And that eight basis points comes down in that five to six basis point range of benefit.

So more like.

7% to a call at seven and a half million dollars.

In our increase in net interest income and those numbers are annualized numbers right Scott.

Amounts and and.

And so.

And then.

And then you.

Kind of go from there, but and then obviously when the fed would stop on the tail and the deposit side Factset catch up in and we get touch start to come down just a little bit but.

Soon.

So on the first four that's kind of how it would play out.

Perfect.

That's terrific. So thank you very much I appreciate it.

Yep.

Thank you Scott next question comes from Daniel Tamayo from Raymond James Daniel Your line is now open.

Thank you and good morning, everyone.

Good morning, Daniel maybe just.

Maybe just to follow up on Scott's question.

Can you just provide what your assumptions are in terms of deposit beta for the asset sensitivity.

The numbers you just yet.

Yeah. So.

Like I said in the first in the first couple of hikes I mean, we don't really see deposits moving that much at all.

So you know.

Because of nor in a normal scenario.

Deposits right now would be there would be a bucket of them paying negative rate, but so there are obviously the floor so they need to push through that floor.

In that first couple of hikes, and then but once you get past that I mean, our overall kind of Daniel overall weighted.

Uh huh.

Data would be in that 20% range I mean, it obviously within category is going to be skewed towards the.

Money market accounts and public funds, which would have a.

Much higher beta, but and then.

What savings is going to be on the lower side and whatnot, so, but when you kind of look at the deposits in total you're looking at around a 20% ish beta.

Okay terrific. That's helpful. Thank you.

And then switching gears here if you could just.

Provide your kind of what your thought process was on the loan sales and if there's any any other.

Loans or buckets of loans are you considering selling thank you.

Sure.

Good morning.

We took a look at we constantly monitor the market.

Just two.

And really see what the activity is.

And you know everything kind of set up right for.

Hotel sale and really the Genesis was looking at the portfolio.

You never have a patch.

Year, and a half two years.

And really take on opportunities.

All the risks down mainly heard you alluded to in his opening comments.

Mainly to the business traveler.

Sandy center type location dependent upon them.

Conventions in business travel and things like like as well as well as.

Some of our more challenged hotels in our portfolio.

In our watch and worse bucket.

And so it really included full service hotels.

Some limited service hotels.

And focused on where we felt that the short and medium term risk was the highest within our portfolio.

And we will continue to monitor the various.

Infill markets.

Portfolios, but we don't have anything.

Right now in our sights.

Daniel This is Archie.

I mean part of this is <unk>.

You know, we're all monitoring hotels.

We are a bit larger book going into the Pandemics, we are monitoring hotels and.

Most of them are rebounding really nicely, but.

So we're seeing some of those in the central business districts or maybe that came new online during the pandemic. They were just ramping up slower.

And with <unk>.

Continued concerns about where the pandemic is going we thought it was prudent to exit some of those that were more problematic in our mind.

Terrific I appreciate all the color that's all I had thank you.

Thanks Daniel.

Thank you Daniel our next question comes somewhat Chris Mcgratty from <unk>, Chris Your line is now open.

Hey, good morning.

Hey, Chris.

Hey, Jamie a question on the just the efficiency ratio.

How do we think about the cadence of it.

From here, maybe with with summit, and then with or without rates.

Yeah. So I mean, I guess without any rate hikes. I mean, you would you would see that efficiency ratio.

Moving up a little bit into that maybe 60 to 62 range, but I mean, obviously the rate hikes, we're going to benefit.

Significantly from the from the rate hikes.

I guess, if and when they come but it looks like they're coming here in March and so you started to see the efficiency ratio move back down.

In that.

More than that 50, 758% range.

Yeah, Chris This Archie I mean, it's fair to say, we really focus on <unk>.

Managing expense growth. So if you think 2% to 3% expense.

Expense growth typically in the fluctuations may occur in the the commission area, where we have higher fees from time to time, but that's what we focus on there and then of course the goal to get operating leverage and drive revenue higher so.

Like that about it that's how we manage the expense side.

So if we get the right rate hikes, and it should be pretty beneficial right.

Okay.

Then in terms of summit I think your guide is without fees and expenses could you just.

Just help us a bit on on what might go through each of those lines and also.

That $400 million that you talked about for originations.

How do we think about yet.

<unk> balance sheet in that stuff yeah. Thanks.

Yeah, So I mean, Chris I mean, given the fact that I mean this disclosed at the end of the year. So we got a.

Lot of moving parts, we're still working through the.

<unk> adjustments for purchase accounting related to that so we brought over from them around.

115 million ish and.

In assets in that split up between.

42 million and finance leases, which you see will run through the loan and lease.

<unk> line item and then there is around 75 million.

There are leases that are operating leases that will run through other assets and so on the obviously on those two buckets on the operating leases they get rental income that'll flow through noninterest income and then that of the.

The depreciation of the assets running through noninterest expense, but.

I mean, what are the things that that's why we didn't put a lot of guidance and information in the slides about them I mean, we're kind of flipping their entire model of how they are operating in terms of the amount.

In the past they were a originate and sell.

The vast majority of their production because of the size of the balance sheet.

And.

Our capacity to fund it and hold those types of assets. So going forward, we're changing their model quite a bit and.

We're going to our plan is to hold the vast majority of those.

And the the mix of that is still a little bit up in the air as we're just trying to optimize what we should what we should keep and then what we should.

The mix between financing and operating leases, so, but I mean overall like I meant like we mentioned in the slides the overall impact to 'twenty two.

We.

Still believe is relatively neutral now in the beginning in terms of in terms of EPS.

In the beginning in the first maybe couple of quarters, especially in the first quarter, we think it could be slightly negative just because we if you think about it like I said, we're flipping their model, where we're going to retain assets. So we need to ramp up the balance sheet as we're doing that we need to provide for.

In terms of provision expense and then but we have all of the fixed cost upfront as well and also the intangibles amortization so in the beginning.

And we think it's a maybe a slight negative maybe a penny to a penny and a half negative in the beginning and then as we progress throughout the year the balance sheet Bill.

That flips towards the back half of the year and really for the whole year, it's kind of a wash from an EPS standpoint, and then Christmas Archie that 400 million that we're talking about that's really that's summit standalone.

That's them doing what they've been doing but with a bigger balance sheet and the ability to do more.

We think there is upside we're not baking in certainly as we bring new.

New products to our existing commercial clients.

No were using leasing products somewhere but now we think we can have a better shot at.

It's getting more of those too. So we think there's quite a bit of upside in the $4 million.

Okay. That's helpful very helpful.

Just getting back to the related expenses, so I can back into the revenues, what's what's kind of a range for.

A full quarter or full year of expenses from the team.

So they have about $4 million ish, and what we would call kind of.

Like SG&A expenses.

At this point.

And then.

We look at their overall like first quarter and like I said, there's a problem credits as this is going to move dramatically throughout the year based on what we retain and what we don't retain and the types of leases, but in the first quarter. We look we're looking at an overall expense base, which includes the depreciation of those.

Assets somewhere in that $9 million to $11 million range in total.

Okay. That's helpful. Perfect and then last one on the buyback.

I understand the capital rebuild.

Is this like a sideline for maybe six months on the buyback or how should we how should we think about the new authorization in terms of beginning to pick away at.

Yes, yes, I would say youre close there it's really minimum.

Quarter.

But probably more like a couple of quarters, where we'd be.

Where we would be out.

Got it thanks, Jim.

Yes.

Thank you Chris as a reminder, if you'd like to ask a question that you can press star one on your telephone keypad.

Joining us online today, you can click the icon.

Our next question comes from John Armstrong from RBC Capital John Your line is now open.

Hey, Thank you good morning, guys.

Hey, John .

Okay.

Just one quick follow up on summit.

I understand what you're saying you've got some integration going on but.

Sure.

No real changes to the origination machine that they have.

12 months from now we could see another four or $500 million of leases on the balance sheet is that fair.

Hey, John this Archie.

Absolutely no changes to what they do in terms of the people and the clients in the process no changes at all I think James mainly focusing on the fact that we will we will probably hold more because we've got the balance sheet to hold and they didn't.

And the $400 million.

As you can probably 80, plus you would hope you could hold 80% of that or more.

We think the 400 disorders.

The minimum expectation for what we think they can do this year.

Okay any limits in your mind in terms of how large you. Let this go on your balance sheet.

Well.

Well I mean, I guess there are some point you could say, so but well the next two or three or four years I think we feel very comfortable that if they're if they're doing 400 and then.

10, 12%.

The increase on that year over year over year, we'd be very comfortable with that.

Okay.

You talked about Archie you talked about some moderation in payoffs, helping your loan growth at least expecting to in 'twenty. Two can you talk a little bit about that and what youre seeing.

Yeah, we just saw.

Certainly in our commercial real estate group, we saw significant <unk>.

Record payoffs levels, we saw so that and our finance company.

And even a little bit in our C&I business.

I do think there was some sort of rush, especially in Q4 because that was the.

The highest quarter for payoffs.

We get deals done to give things sold.

We think some clients who are thinking about potential tax policy in 2022.

So we just think there was a.

A big rush to get some things done at year end.

Yes.

We still think in the current environment. There is there is some payoff pressure but.

We think it is going to abate some from the record levels in the first quarter, that's probably the.

The primary thing I think we see there.

We did also part of the pressure there was CRE.

CRE loan pays off and we were.

We have great production in CRE are but a lot of it was in the construction side. So we don't get the immediate benefit of.

Of that hitting the balance sheet, but it should fund up here over the course of the year or so and that will give us a little bit of a tailwind as well.

Okay.

Bill a question for you.

Just to follow up on the on the hotel portfolio or the hotel sale, but how much interest is there in the market place and loans like that on I know you touched on maybe looking at a couple of other areas, but how active is that market.

We found that it was very active.

<unk>.

And the way that we construct the dense local pool.

Based on our review that was the best strategy.

And really.

The market.

Because we've been testing at all your long last year end.

The market was very robust in Q4.

Up from from Q3.

So it is very robust.

Yeah.

Okay.

And then I guess, one more on fees I know, it's difficult to predict and you're giving us some of the near term outlook on fees.

How do you want us to think about Bannockburn.

S mortgage in terms of maybe a longer term view on those.

Yes on Bannockburn, John we see continued growth.

<unk>.

Because they have incredible year think about it but we still think there is.

A couple more million dollars in revenue on top of that that they can do this year.

On the mortgage side certainly the rate increases have had some impact.

Also the margins are starting to come down and.

The fed actions around the balance sheet can have an impact on that as well. So I think we would tell you that we're probably.

Low mid twenties.

In terms of.

These origination fees down from our 2021.

See what happens to that could be slightly worse, but we'd say it's in that range anyway.

Okay Alright.

Alright, thanks for that but they're still pretty good.

Volumes are still pretty good they've come down a little bit seasonally but we still think there are good it's more.

It makes it makes for a couple of refi volume in later in the year and in.

Certainly.

Margins coming at us as kind of a double side of that impacting the piece here.

Yeah, it's an interesting market right because the purchase volume is still there but.

Obviously, we understand that James Ream slides so okay. Thanks, thanks, guys.

Yes.

Thank you John .

Next question is a follow up question from Scott <unk> of Piper Sandler.

Line is now open.

Hey, guys. Thank you I wanted to follow up on fees, just a little I mean, a lot of a lot of people, making changes to their overdraft policies would you alluded to.

I was hoping you could maybe put a finer point on what specific changes you guys are making in sort of any specific revenue impact anticipation you'd have there.

Yes, Scott this is Archie so just to maybe give some context. If you go back and look at 19.

And then look at where we're projected to be this year, we're probably down 30% from 19 levels already.

Are you projecting out 'twenty two.

<unk>.

Up through 'twenty, one compared to 19, and if you've looked at 'twenty, two Scott probably three or four things we did.

We did.

Kind of kicked them off the new year, we lowered we actually lowered our overdraft fee a little bit.

Okay.

We.

Increase the cushion.

Before you go into an overdraft SaaS, where you just in terms of getting charge.

We eliminated some fees, we put more caps on fees daily capsule Onthe, So just and a lot of areas tightening it down and.

If I said that.

8% to 10% decline, probably an overdraft revenue no we could get some upside offset to that with growing accounts, which we hope to do.

But if you said it isn't that high single digit rate in terms of impact.

Auto production income, that's probably what we talked about 22 I was a little bit.

I won't say surprised I guess.

The amount of change significant change we've seen in some of the larger banks, you're right out of the gate.

We will continue to monitor if we think our program is.

Remains competitive and could make further changes down the road, but you.

This is what we had in place to start the new year.

Got it okay perfect and then just wanted to follow up on expenses just to make sure I kind of on the same page with what you guys are thinking so Jamie.

Got the.

$91 million to $93 million in cost anticipated ex summit and it sounds like at least in the near term. We should expect all of our expenses to be closer to 100 million to maybe a little higher than that with the full run rate of of summit in there on that.

Kind of on a on a core basis, but it's the way the nuance would change that as you go more towards portfolio ing them that the summer expenses would decrease over time is that the right way to think about it.

Well, it's Scott so the first part is correct it'll be somewhere in that 100 to low hundred 100, 102 or whatever.

And then.

And then going forward, though it's going to depend on the.

So the operating leases are going to hit down there and so it's going to depend on mix at that point. So if we.

We are doing more of a.

Higher percentage in financing leases, then obviously those it up in margin in that.

Depreciation expense will come down.

But so yes, it's just going to depend on mix.

Got it got it so that'll be sort of I guess stay tuned for for what happens over a period of time.

Correct.

Okay. Good thank you.

Yep.

Thank you Scott we have no further questions. So I'll hand back to Archie Brown for any closing remarks.

Thank you Alex I want to thank everybody for joining us today.

Reviewing with US our year, we're very pleased with 2021 look forward to a great 22 in the.

Looking forward to talk to you next quarter have a great day bye now.

Thank you for joining today's call you may now disconnect.

Okay.

Okay.

[music].

Yeah.