Q1 2022 Independent Bank Corp (Massachusetts) Earnings Call
Good morning, and welcome to the Independent Bank Corp, first quarter 2022 earnings Conference call.
Before proceeding let me mention that this call may contain forward looking statements with respect to the financial condition results of operation and business of Independent Bank Corp.
Actual results may be different factors.
Factors that may cause actual results to differ include those identified in our annual report on Form 10-K .
Earnings press release.
Independent Bank Corp, cautions you against unduly relying upon any forward looking statements and disclaims any intent to update publicly any forward looking statements whether in response to new information future.
And events or otherwise.
Please note that during this call. We will also discuss non-GAAP financial measures as we review wherever you independent Bank Corp's performance.
These non-GAAP financial measures should not be considered replacement for and should be read together with GAAP results.
These refer to the Investor Relations section of our website.
Okay copy of the earnings press release, which contains reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and additional information regarding our non-GAAP measures.
Also please also note that the.
Being recorded.
I'll now like to turn the conference over to Chris or at least one president and CEO . Please go ahead.
Thank you Anthony and good morning, everyone. Thank.
Thank you for joining us today with me as always is Mark Ruggiero, our Chief Financial Officer, and we're once again joined by Rob Chris Holland, Our Chief operating officer.
Following last year's strong performance, we kicked off 2022 with solid results driven by our core underlying fundamentals.
Excluding merger related charges operating net income for the first quarter came in at $58.2 million or $1.23 per share.
Needless to say, our profound macroeconomic and geopolitical uncertainty persist for.
We've been able to keep our heads down and focus on the day to day tasks to service the needs of our growing customer and racks.
Mark will be taking you through the quarter shortly but highlights include while underlying loan growth continues to be masked by the ongoing expected runoff in the P. P P and acquired East Boston savings Bank portfolios.
Origination volumes across the board continue to be strong and our loan pipeline continues at robust levels as well.
Our deposit levels continue as a major source of strength and carry great intrinsic value in a rising rate environment. The total cost of deposits remained at a very low five basis points.
The core net interest margin rose nicely this quarter, while we remained well positioned for rising rates are.
Our investment management business continues to shine, despite compressed market valuations for much of the quarter our assets under administration remain.
The record level up $5 $7 billion.
Tight expense control remained in place as our operating efficiency ratio remained well below 60%.
And our capital levels remain in excellent shape. So we're off to a good start in 2022.
Beyond the numbers, we continue to move the franchise forward and a host of ways.
Most importantly, the integration with east Boston savings banks are proceeding very smoothly.
We're especially encouraged by the high deposit retention rates with experienced their stimulation their branch network and personnel has been excellent.
We're already getting good traction with expanding our relationships with east Boston as customers with our expanded product set.
Similar opportunities are being actively pursued across the full range of our consumer commercial and investment management businesses.
We continue to make inroads into the coveted western market in central Massachusetts will be opening a new branch in Westborough next month, bringing our total retail for printed eight branches in this region, which also serves as a nice complement to our existing commercial banking and investment management presence there new business generation that spark has been.
Quite good over the last past two years we.
We continue to expand our digital banking capabilities to keep pace with customer preferences. So there isn't necessarily now most recently, we incorporated zelle digital payments and our mobile banking system continued the rollout of your banking digital platform and planning for in Encino implementation greatly enhancing our commercial business loan front end.
And we continue to attract experienced professionals into our ranks who are attracted to about our growth potential and corporate culture.
One example, this past quarter, we've added side five senior professionals in our investment management business.
Some of them will help us capitalize on the opportunities with the east Boston savings customer base.
One accomplishment, we're especially proud of is having just received the number one ranking in new England in the J D power 2022 U S retail banking customer satisfaction study.
The third such time, where you received top ranking and is highly regarded survey and what is particularly noteworthy is that we achieved this on or even while we were engaged in a stimulating.
Boston savings and its large customer base.
This recognition is a true testimony to the enormous care respect and relationship orientation of my Rockland Trust colleagues.
Turning to the economic.
I picture overall economic activity was or is there a bus to end 2021 what fourth quarter 'twenty showing on GDP growth of six 9% nationally and seven 8% locally the labor market continues to be a bright spot both nationally and locally in March unemployment had to postpone the Clos and labor force participation rose.
So a post pandemic high and we hope that continues as hiring does remain challenging.
Needless to say the focus remains heavily on inflation with a surge of the fed continues to emphasize our hawkish tone reiterating commitment to combat inflation of the rate hikes and Mark will address the impact on rising rates. It in his comments.
Now versus a year ago, we certainly entered the new year is it materially different company with $20 billion in assets 123 branches 19, commercial banking centers 10 investment management centers and nine mortgage locations.
Yeah, we work very hard to maintain the same focus and discipline that has served us well over these many years, which at its core.
There's a relentless focus on relationship banking, which extends across all the customers and communities we serve.
We foster an environment of highly engaged colleagues to provide exemplary service to our customers who in turn reward us with more business as.
As such we remain confident in our ability to continue growing our franchise and delivering solid results I am pleased to say that our board of directors shares that view and recently approved a 6% increase in our dividend to continue to reward our loyal shareholders.
I'll turn it over to Mark.
Thank you Chris before we get into the details just a reminder, that we provided a deck to accompany the financial update for the quarter and I'll be referring to that Doctor all my prepared comments.
As such as noted on slide four of that deck 2022 first quarter GAAP net income was $53 1 million and diluted EPS was $1 12, reflecting the first full quarter of operations subsequent to the mid November merger with Meridian Bancorp and its east Boston savings Bank subsidiary when X.
Scrutiny pretax one time merger expenses of $7 1 million and their related tax effect operating net income and diluted EPS were $58 2 million and $1 23, respectively for the first quarter.
As noted on this slide key drivers of the quarterly results include 3.3% annualized net loan growth when excluding PPP loans. Despite the expected run off in the recently acquired East Boston savings Bank commercial real estate portfolio.
In addition, we continued modest cash deployment into the securities portfolio.
And this combination led to a core net interest margin of 3% when excluding purchase accounting and P. P P related impact.
Nicely from the prior quarter.
Despite an uptick in nonperforming assets, we continued to experience strong asset quality with minimal credit losses, resulting in a negative $2 million provision for the quarter.
In addition, the quarter saw solid fee income results, a few components of which I will provide a more more detail on in a little bit in.
And overall operating expenses were in line with our merger related cost save expectations.
Summary review the quarter's results as a reflection of our strong core fundamentals and a balance sheet position and poised to increase profitability moving forward.
On a GAAP basis, the results reflect a 1.06% return on assets and 7.16 per sorry percent return on average common equity while the operating basis results. Excluding the nonrecurring merger expenses, just noted were 1.17% and 7.85% respectively.
And although unrealized losses on the a F. S securities portfolio resulted in $8 10 decline in tangible book value per share the return on tangible common equity for the quarter on an operating basis was a solid 11.86%.
As we move to slide five I will now cover some key components of the quarter results.
As shown here inclusive of P. P. P. The loan portfolio stayed essentially flat at $13 6 billion.
However, as I mentioned, excluding P. P. P. Total loans grew at a healthy three 3% annualized rate for the quarter.
Excluding P. P. P loans. The majority of this growth occurred in the C&I and residential portfolios with line utilization increases driving growth in C&I, while the vast majority of mortgage production for the quarter was retained on balance sheet.
The 1.2% decline in commercial real estate was primarily due to continued attrition of the east Boston savings Bank balances, which was inline with expectations, while the legacy book experienced solid net growth for the quarter.
Turning to slide six we'll cover some additional insight into loan activity for the quarter.
As noted on the left side commercial loan origination activity was strong for the quarter with total closed commitments of $392 million and we remain optimistic for continued strong closing activity with a march 31st approved commercial pipeline of $307 million up from the prior quarter level of 242 million.
<unk>.
As for opportunities in our market, we continue to see the majority of Cree and construction activity centered around one to four family condo and apartment asset classes as well as pockets of office and industrial buildings, while on the C&I side. The majority of activity was in the technical service and retail trade industries.
Also noted on this slide you can see the P. P. P balances paid down to $100 million as of March 31st generating $3 4 million of net fees recognized this quarter compared to $7 5 million in the prior quarter with remaining net fees totaling $2 4 million.
On the right side of the slide we reflect some key metrics around the consumer books, including data on both mortgage and home equity closings, which were both very strong for the quarter.
As alluded to before 83% of the quarter as mortgage activity was retained in the portfolio.
The company's overall asset sensitivity and secondary pricing volatility allowed for a more consistent flow of closings into the balance sheet.
Although home equity balances continue to be muted by low line utilization strong current pipelines and application volume should improve future results.
Moving to slide seven deposit activity for the month reflects our continued focus well where core household growth with volatility over municipal and larger business deposits, resulting in relatively flat overall core deposit balances, while higher cost time deposits continued to roll off.
Core deposits as of March 31st now make up 85, 8% of total deposits and allowed for the cost of deposits to remain at a low five basis points for the quarter.
Which also serves as a reminder, that we certainly believe this strong deposit base will prove its value in the likely future rising rate environment, which I will provide a little more color on shortly.
Turning to slide eight we continue to provide insight on our reported net interest income and net interest margin along with details over P. P. P purchase accounting and other volatile or nonrecurring items to reconcile back to our core net interest margin.
And as you can see here the reported net interest income and margin increase over the prior quarter reflects the full quarter benefit of the east Boston acquisition, offset by $4 1 million and $1 1 million reductions in net P. P P fees and purchase accounting respectively versus the prior quarter.
Excluding these and other smaller nonrecurring items the core margin was 3% up nicely from the prior quarter level of 2.83%.
As we think about the margin going forward balance sheet asset sensitivity is certainly a topic that is of importance given future expectations.
As noted on this slide any movement in short term interest rates, primarily fed funds one month LIBOR terms. So for our prime we would see immediate repricing benefit and a federal reserve cash balances of one 7 billion and approximately 33% of our loan book that is tied to these indices.
Partially offsetting the loan benefit we have about $900 million of macro level hedges and another subset of loans with index floors that are currently in the money, which on a combined basis mitigate approximately 11% to 12% of that immediate loan pricing benefit.
Moving over to the asset quality slide nine provides some key metrics worth highlighting.
As noted previously nonperforming loans increased to $56 6 million as of March 31st driven primarily by a large commercial syndicate syndicated credit that is expected to be worked out with zero loss.
Net charge offs remained benign at 400000 or one basis point on an annualized basis.
Total delinquencies ticked down to only point to 9% of the portfolio and lastly, total loan deferrals at March 31st of approximately $305 million or two 2% of the total portfolio, reflecting a 78 million dollar decrease from the prior quarter consistent.
Consistent with the strong current asset quality metrics and outlook, a 2 million dollar credit reserve release was recognized reducing the allowance for credit loss as a percentage of loans two basis points to 1.06 as of March 31st.
Shifting gears to noninterest items Slide 10 provides details on noninterest income results for the quarter.
And as noted here deposit account fees increased nicely from the prior quarter as mentioned earlier with only 17% of the closing activity driven to the secondary market mortgage banking income decreased to $1.4 million, which is inclusive of a positive 257000 mortgage servicing asset increase some.
Really our capacity to absorb more fixed rate volume directly on balance sheet is momentarily resulted in decreased swap volume, resulting in a reduction in swap fee income to 600000 for the quarter.
In wealth management income decreased primarily as a result of market depreciation for most of the quarter. However, as Chris mentioned with an exceptionally strong quarter of new money inflows as of March 31, total assets under administration rebounded back to $5 7 billion.
Turning to the next slide total expenses of $95 5 million reflect a full quarter of the post east Boston savings Bank pro forma results, including $7 1 million of merger related expenses.
Excluding the merger expenses total expenses are reflective of quickly meeting our east Boston savings, 45% cost save target.
Having said that we are working through a couple of remaining lease terminations that we'll have modest one time costs in the future the timing of which will be dependent on executing final negotiations.
Lastly, the tax rate for the quarter was 24, 4%.
Finishing up on slide 12 is an update on full year guidance provided last quarter, we essentially reaffirm the majority of key drivers noted here on slide 12, with a couple of updates or points of emphasis noted.
Regarding loan growth on the heels of slightly better results in Q1 than planned we entered it we anticipate better first half results than originally expected with modest low single digit growth for the full year.
Also with the March rate increase and some level of future rate height expectations at almost near certain levels. The guidance. We provided earlier regarding the immediate asset repricing impact will certainly drive core net interest margin benefit going forward.
All other elements of our prior guidance guidance remained generally unchanged with the one exception noted being a reduced level of loan level derivative income for the full year.
That concludes my comments and we'll now open it up to questions.
We will now begin the question and answer session.
A question like that Star then one on your telephone keypad.
You're using a speakerphone please pick up your home court before Chris Mckee.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to some part of Austin.
Okay.
Our first question will come from Mark Fitzgibbon with Piper Sandler you May now go ahead.
Hey, guys good morning.
One of them.
First I wanted to say the new slide deck looks great. Its helpful. Thank you.
Oh I appreciate the feedback you bet.
First I wondered if you could give us a little more color on that $130 million syndicated credit that is in the workout process any any detail you could provide us an that'd be great. And also was curious is that was that an east east Boston loan or is that a legacy independent law.
Sure, It's a legacy independent loan in and as you noted in your reference it it's a piece of a larger syndicated credit.
Essentially in conjunction with it being set for majority in late Q4, one of the major tenants that vacated the space and our refinancing is in the works, it's very highly likely.
Ah Theres, a forbearance agreement that was executed to allow for additional time to work through that refinancing. The nuance problem. There Mark was that a forbearance agreement was executed 90 days after that maturity date. So we took a conservative position and put it on N P. As I think it's a little bit of a gray area.
The accounting guidance, but needless to say, we feel very comfortable with that credit its out of 60% LTV.
Making payments, it's current and we expect to see a refinance and full pay off either late Q2 or early Q3.
Yeah.
Okay great.
4 million, marking up $30 million, Oh I'm sorry.
$24 million Yeah, there's one other 6 million dollar new item in NPA this quarter as well, but the majority was this $25 million.
What was the other $6 million.
That's a it's a one off or if not our only enclosed mall.
Commercial real estate exposure.
They're working through an anchor tenant and again, there's plenty of collateral protection on that one.
It just slipped into nonperforming.
Okay.
Secondly, I wondered if you could share with us what your commercial line utilization rate was in the first quarter. I think you referenced that it starts to tick up a little bit I was curious what the Mets.
The metrics were around that.
Yeah, we look at.
Multiple elements of line utilization so C&I in general.
<unk> had ticked up to about 30% and that is still 6% lower than where we were pre pandemic.
Our ABL line utilization, which is a subset of C&I.
Is slightly under 50% that's about 4% lower than where we are pre COVID-19 .
The one area that we're seeing you know line utilization really remained pretty consistent and at pre pandemic levels as in the dealer floor plan, which is off of a lower exposure.
But what we're seeing some some finally some increases in utilization rates, but I think it's important to note, we're still well below where we were pre pandemic.
Got serves as a lever for growth should we start to see continued increases there.
Okay.
And then it looks like balance sheet liquidity, maybe around 10% right now what would be your target for that over time more.
Specific to just star cash balances yeah.
Yeah, you know what it was.
Interesting is where we're having a lot of discussions around.
Deposit volatility and potential outflow of deposit balances you.
You can see here in the first quarter, we stayed flat I think that's the first quarter in a while we actually haven't grown deposits. So we're being cautious about ensuring we maintain a level of liquidity on balance sheet and our cash position I think we're certainly as you know we were we're a bank that historically operates with.
With fairly low levels of cash so I think getting down to 5% of assets and certainly a comfortable level for us but.
But we are being cautious about being too aggressive in and letting too much outflow.
Okay, and then last question assuming the fed follows the the forward curve, which I think assumes eight more hikes this year.
How much do you think that margin could rise to by the end of this year.
I I thought a lot about how to best answer that because as you know it's it's a tricky question depending on the assumptions of when those increases happen. So I think the best way I can frame. It up for you Mark is any 25 basis point increase would result.
And about 800000 to $1 million of net interest income benefit on a monthly basis.
That's the anchor to think about the the dollar benefit. So if you know the March increase would give you nine months worth of that benefit or essentially you know $8 million to $9 million.
The way the fed expectation rate increases are layered in because it's going to happen over time, you won't see.
Full year seven times that number of benefit in 2022 .
But if you do the math on assuming a 25 basis point hike.
At each of the fed meetings that seven.
Hike scenario, we pegged wood went out about $25 million to net interest margin for the year is as you get later in that hyped cycle. You know you would expect some level of the benefit to go back on deposit pricing.
So I hope that helps frame it up but it.
It is tricky what the timing of when those hikes actually have 2022 impact versus your.
Full year benefit in 2023 right.
It's super helpful. Thank you.
You're welcome.
Our next question will come from Laurie Hunsicker with Compass point, you May now go ahead.
Yeah, Hi, Thanks, good morning.
Alright, just hang with asset sensitivity here do you have a refresh and I was thinking back into it I guess, that's what you just gave but do you have a refresh on your actual asset sensitivity with a 100 basis point shock I E.
As of December 31st that was a positive five 4% on net interest income do you happen to have.
A refresh on that as of March 31st Yeah.
You'll find it will be a similar answer there Laurie and just I think I'm reiterating what the math I just talked through with Marc.
If if you run that math and if you use the 900000 dollar.
Month number that I referenced and you and you do that four times and 100 basis points cycle that would be dirty 600, a month or $43 million give or take that's about an 8% benefit what.
What we obviously you have to anticipate when we're modeling out those shock scenarios without some deposit pricing increase and given our historical deposit betas, we think anywhere between two and 3% of that would be mitigated with elevated deposit pricing over time as well. So that's how you get to the five.
5.5% number we've been disclosing.
But the immediate asset benefit.
It was more like 8% on the margin and then we get some of that back on the deposit side.
Okay, Great and then just can you refresh us as to how you're thinking about deposit betas.
Yeah. We you know we again, we really see so much value in our core deposit franchise.
I think for these first couple of rate hikes, we feel given our liquidity position and our deposit base.
We're hoping we know there'll be an opportunity to not have to move much at all on deposits out of the first couple of hikes.
And then if history serves itself you know we experienced.
On our interest bearing deposits somewhere between 20% to 25% deposit betas, but keep in mind, we have a very sizable noninterest bearing.
Portfolio as well so you know the combination of that brings you to about 15 or 16%.
Deposit beta for all deposits, excluding time I think that.
Serves as a good barometer of our expectation of what we should we should expect going forward.
Okay, perfect and then.
Just quickly on the accretion income.
And I realize you know American masks jumped around here.
But that was that would be heats up how should we be thinking about that for the rest of 2020 tail.
Certainly the first quarter I would expect that to be a bit of an anomaly. So as you can imagine with.
Rates, where they were for still most of the first quarter there was still opportunity for.
Loans to refinance out at lower rates, so that the loans that did pay off a likely loans with higher coupons that actually carried a premium.
So you saw.
The negative impact on the margin as we had to recognize premium on those payoffs I think going forward, you'll not see that impact as much at all and I would expect you'll start you'll see the loan accretion back to a positive number you know whether that's a.
A million a million and a half per quarter, that's a little bit of a guess at this point, but I would certainly expect it to be a positive number and not flat like you saw in the first quarter.
Okay, Great. That's helpful and then just onto noninterest income.
You know couple of moving parts I guess.
Maybe helping us think about I mean mortgage banking, obviously will continue to be weak, but and that's F and O D fees that that's been a hot button you know how should we think about that how should we think about.
Lobbying and it maybe just putting putting some of that together if you can drill down a little bit on are you going to do any kind of customer relief on NASDAQ I know D side or how you're how you're thinking about that and then high level, how you're thinking about non interest income for the back half.
Sure I'll give you some color on the bigger picture perspective, and Rob will provide a little more detail on how we're thinking about the overdraft and NSC NSF question, but you hit on a couple of.
The major noninterest components, there with mortgage banking and swap fees and I think what you're what you're seeing in the first quarter is a temporary impact of.
Yeah, essentially what I think is two elements of our overall income statement that quite honestly serve as very good natural hedges to rate volatility. So when you look back at 2020.
As rates came down significantly and we lost a benefit in the margin we saw a record mortgage banking and loan level swap fee income.
As rates now are expected to increase that demand certainly comes under pressure.
We also have an asset sensitivity position that allowed us to put more fixed rate direct fixed rate exposure on the balance sheet. So you saw a temporary dip.
Those two feed components, but I think it is important that we continue to look at them in perspective of the combined income stream, both the margin and those components and over the longer term those will continue to serve as a as a natural hedge in a good overall benefit to the income streams. So I think youre seeing a little bit of a perfect storm.
Here in a three month window, where.
Our expectation of rates, increasing put a temporary slowdown in those two fee components without the benefit of the margin increase hitting the books yet.
And Rob can give a little bit of color on your overdraft is as we're doing some work there.
Hi, Laurie.
So total overdraft NSF uncollected fees for the quarter or just over $4 million that includes business about 80% of that number so $3 to $3 3 million as consumer activity.
Of course, we recognize the dynamics that are happening both from a regulatory perspective as well as now and even more so now a competitive perspective. So we've engaged a consultant to help us look at both our overdraft programs, but also look at our consumer checking offering.
That work is underway, we expect to make a whole lot of progress here in the second quarter and we'll be able to provide you more color come in the second quarter earnings Conference call.
Any changes would just be speculative at this point Laurie it's safe to say Oh.
We should expect piece to go down, but I can't really give you a number as to how much that might be at this point.
Okay. That's helpful. And then just one last question for me with the noninterest income. So obviously E B F b folded in.
Their debit interchange I now get hit by Durbin was that already reflect that ended this quarter or do we see that in other words is that an immediate reflect because they're they're obviously fully merged with you.
California adjustment that occurs how should we think about that that's already embedded in the current numbers.
Okay perfect I'll leave it there thanks for taking my question.
No problem.
Again, if you have a question. Please press Star then one.
Our next question will come from Chris O'connell with K B W.
No go ahead.
Hey, good morning.
Good morning.
I was hoping to just start off on the deposit side.
You saw some C. D declined this quarter and I know you know, there's some planned run off of our EPS These higher cost Cds.
You know with with the merger.
How are you guys thinking about that run off.
The balances for the remainder of the year.
Yeah.
We anticipated that to be quite honest christen and you know where.
But what we found an opportunity to some degree is actually leveraging our wealth management offering and in many cases at least in this rate environment. We found opportunity to talk to those customers that are having fairly higher coupon Cds rolling off and look for opportunities.
To put them in an annuity product through our wealth management offering so that's been a nice.
You know referral and synergy that we've been able to take advantage of so despite losing the C. D. Yeah, we haven't necessarily either lost a relationship or been able to place them in another offering.
So so that's been a nice lever we've been able to pull but I think we are to be quite honest comfortable allowing for the level of CD run off that we've been experience, we talk about the level of liquidity and cash we have on balance sheet today.
I think the clip we're seeing the CD book run off as well managed them. It's in line with with how we think about continuing to right size the overall balance sheet.
And you know a lot can happen between now and end of year with the rate environment, but you know we have levers to pull to two two changed CD pricing should we need to to counteract that but I think the level of pay off now it's been it's been very comfortable.
Great.
And just following up on some of the questions you know with regards to mortgage banking.
Obviously volumes are a bit under pressure from a macro level and you guys are holding more of the production on balance sheet.
Which makes sense.
But given just the decline so far I mean.
Does does the actual you know feline for mortgage banking.
<unk> substantially lower from here to $7 million or do you think going forward or does it kind of hold it around the million dollar range.
Yeah, No I think I think you will see it come down and I know I do want to be clear that the first quarter was actually a very strong quarter for mortgage banking I think you know what we haven't probably truly articulated here is really the pricing dynamic.
And you know again, our ability to to win volume and have good closing volume and a portfolio of product out pricing, we feel comfortable putting on balance sheet.
And as you can imagine with with the 10 year rising to where it is now and you've got market rates up over 5%.
That's a tough but the customer I don't think it's quite appreciate it that level of increase yet so secondary market pricing is reflecting I think a bit of a disconnect from where the consumer is expecting to have.
Our mortgage rate for 30 year quoted so we are we're very fortunate and have been able to continue to take advantage of that and have a portfolio of product offering that works for us. So.
So first quarter volumes were still very strong at just landed the majority of that into into balance sheet. I do think as rates continue to rise and you'll hopefully start to see some of that market.
Pricing be less aggressive I think volume will start to.
Dry up and I think overall mortgage banking will likely come down from where we were in Q1.
Got it.
Yes, it makes sense are more valuable on the balance sheet.
And then on the reserve.
You know you guys gave guidance for the provision.
The trend below net charge offs in Chile.
No no no impact.
<unk> from the NPL. This quarter is the general trend is still you know kind of towards the the 1% level at year end.
Yeah, I think that's safe to say all things being equal you know again, despite that that uptick in N. P. As we still feel very very good about the credit outlook here.
So I I think.
You know given all the uncertainty in the macroeconomic environment you wont see significant reductions like we did in 2021, but you know of.
1% to two where we are today feels like the right range to be thinking about.
Great.
And then lastly, just on the M&A front.
Yeah have you seen discussions pick up lately relative to last quarter.
Is it something that you're thinking about you know what the proximity of the B S be close and what are the markets that they are finding attractive you know at this point.
Yeah.
We continue to be I mean, you know our long track record of acquisition that we like to see that continue over time.
Know that we're very disciplined about it where so if something comes along that we find attractive and the price right that that's something we do if not we'd pass and we've said in the past that set of what we like is the.
Our Worcester East set of arcing to the north and south towards the Atlantic Ocean that set a swath. We is the bulk of our new England economic activity and is a franchise that we can manage and are in a way we can really stay close to our markets and our colleagues.
And our customers.
So.
Still it still receptive definitely.
Great. Thanks for taking my questions.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Chris on the Sun for any closing remarks, great. Thank you everybody. Appreciate you joining us today and we'll talk to you in three months.
Bye.
Yes.
Yes.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.