Q1 2022 NMI Holdings Inc Earnings Call
Good day and thank you for standing by welcome to the LMI Holdings, Inc. First quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded.
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I'd like to hand, the conference over to our speaker today, Mr. John Swenson with management.
Thanks Andrea.
Good afternoon, and welcome to the 2022 first quarter conference call for National online.
Im John Swenson, Vice President of Investor Relations and Treasury.
Joining us on the call today are Brad Shuster Executive Chairman, Kevin Pulitzer, President and Chief Executive Officer, Rohit, Molecular Chief Financial Officer, and Julie Norberg, our Chief Accounting Officer.
Financial results for the quarter were released after the close today. The press release may be accessed on <unk> website, located at National <unk> Dot com under the investors tab.
During the course of this call we may make comments about our expectations for the future.
Actual results could differ materially from those contained in these forward looking statements.
Additional information about the factors that could cause actual results or trends to differ materially from those discussed on the call can be found on our website or through our regulatory filings with the SEC.
If and to the extent the company makes forward looking statements. We do not undertake any obligation to update those statements in the future in light of subsequent developments.
Further no one should rely on the fact that the guidance of such statements as current at any time other than the time of this call.
Also note that on this call we refer to certain non-GAAP measures in today's press release and on our website. We've provided a reconciliation of these measures to the most comparable measures under GAAP.
Now I will turn the call over to Brad. Thank you John and good afternoon, everyone.
I am pleased to report that in the first quarter National MRI again delivered strong operating performance significant growth in our insured portfolio and record financial results.
We also reached an important milestone.
With April marching National <unk> 10 year anniversary.
We founded the company in 2012 with a goal to provide a differentiated commitment and standard of service.
Clear vision as to how we shouldnt gauge in the market to drive value for borrowers our lender customers our employees, our shareholders and other important stakeholders.
From the beginning we focused on building national M. A N a sustainable risk responsible manner.
Positioning our business to support our customers and their borrowers and deliver for shareholders across all market cycles.
And we have had tremendous success over the past 10 years.
We have helped over one 4 million borrowers gain access to mortgage credit and opened the door to affordable and sustainable homeownership in communities across the country.
We have established a national customer franchise with a foundation of partnership Trust and innovation.
We have built a talented dedicated team and established a culture of collaboration integrity and performance.
Where our employees feel energized and valued.
Our success over the past 10 years traces directly to their hard work and dedication.
We have developed a comprehensive credit risk management framework spanning individual risk underwriting.
Granular risk selection and pricing through rate GPS.
And the comprehensive use of reinsurance to ensure our performance across all market cycles.
We have built a large high quality and high performing insured portfolio with significant embedded value.
With our outperformance through the stress of the Covid pandemic, highlighting the unique strength and positioning of our book.
And we have delivered consistently strong financial results for our shareholders achieving.
Achieving a unique combination of both high growth and high returns.
Looking forward I believe national <unk> is well positioned to continue to lead with impact innovation and success.
We expect that we will continue to build franchise value by delivering important solutions for our customers and their borrowers.
That will continue to build embedded value by growing our insured portfolio with discipline and a balanced focus on risk and return.
And that will continue to build value for our shareholders.
Delivering strong growth.
Consistent returns through the cycle and compound growth in book value per share with that let me turn it over to Adam.
Thank you Brad and good afternoon, everyone.
National <unk> continued to outperform in the first quarter delivering significant new business production.
Strong growth in our high quality and short portfolio.
Record financial results and continued success in the capital and reinsurance markets.
We generated $14 2 billion and then IW volume and ended the quarter with a record $158 9 billion of high quality high performing insurance in force.
We achieved record GAAP net income of $67 7 million or <unk> 77 per diluted share and.
And record adjusted net income of $67 5 million also 77 per diluted share.
GAAP return on equity for the quarter was 17, 5% and adjusted ROE was 17, 4%.
We began to repurchase common stock under the authorization program that we announced in February and.
And earlier this week, we completed an excess of loss reinsurance transaction.
Securing layered risk protection on our most recent <unk> production.
The transaction builds upon the broad success that we've achieved in the risk transfer markets to date and.
And provides us with approximately $290 million on incremental team here is funding capacity at an attractive cost of capital.
Overall, the mortgage insurance market environment remains constructive despite the emergence of an increased set of macro crosscurrents.
Pricing is stable and balanced, allowing us to fully and fairly support borrowers while at the same time appropriately protecting risk adjusted returns and our ability to deliver long term value for shareholders.
Credit performance continues to trend in a favorable direction with underwriting discipline remaining paramount across the mortgage market.
House price depreciation, providing a sizable equity buffer.
And broad resiliency in the job market supporting the consumer.
And lenders and their borrowers are still turning to the semi industry inside to.
To provide critical Downpayments support.
While the sharp increase in interest rates since the beginning of the year has caused refinancing activity to slow considerably purchase demand remained strong.
On balance we anticipate some degree of pullback in total industry and IW. This year following the record levels of production in the sector delivered in 2020 and 2021 however.
However, we still expect the market will be large by historical standards and that secular trends the demographic tailwind of the millennial generation and increasing number of first time homebuyers in the market rising home prices and an increased need for down payment support.
We will drive a compelling long term opportunity for the industry.
Rising rates have had a dramatic and favorable impact on the persistency of our in force portfolio.
Our 12 month persistency ratio improved to 71, 5% at March 31 from.
<unk> from 63, 8% at year end.
Increasing persistency is a significant positive.
Serving to increase the expected lifetime premium revenue.
Earnings capacity and embedded value of our in force portfolio.
The average 30 year fixed rate mortgage is now five 4%, which is well above the weighted average note rate and our in force portfolio.
We expect our persistency will continue to improve meaningfully.
And drive further increase in our embedded portfolio value as we progressed through the year.
The broader macro environment is dynamic highlighted by persistent inflation anticipated fed tightening lingering risks from the pandemic and geopolitical instability with the war in Ukraine.
Despite these headwinds the job market remains healthy.
Consumer balance sheets are strong.
As prices continue to appreciate in an accelerated pace and underwriting standards remain rigorous.
We're confident that we've made the right investments from day, one to position our business and secure our outperformance across all market cycles.
We have attracted a talented and dedicated team to drive our success every day.
The trust and partnership of our customers with our focus on service value added engagement and technology leadership.
We prioritize discipline and risk responsibility as we've grown our in force portfolio building, the highest quality and short book in the industry by a wide margin.
We've led with innovation and the risk transfer markets securing comprehensive reinsurance coverage on nearly all of the policies we have ever originated and.
And we've established a strong balance sheet with a robust funding position and sizeable regulatory capital buffer.
Going forward, we believe we are well positioned to continue to serve our customers and their borrowers.
And our employees and their success and deliver consistent growth returns and value for our shareholders with that I'll turn it over to Robyn.
Thank you Adam.
We delivered record financial results in the first quarter with significant growth in our insured portfolio and continued strength in our credit performance driving record revenue and bottom line profitability.
Net premiums earned were a record $116 5 million.
Adjusted net income was a record $67 5 million or <unk> 77 per diluted share.
And adjusted return on equity was 17, 4%.
We generated $14 2 billion of Ni W. In the first quarter, including $13 4 billion purchase volume.
Primary insurance in force grew to $158 9 billion up 4% from the end of the fourth quarter and up 28% compared to the first quarter 2021.
12 month persistency in our primary portfolio improved significantly.
<unk> 71, 5% compared to 63, 8% in the fourth quarter.
We expect persistency will continue to improve meaningfully as we progress through the year.
A real positive for us given the strong credit profile and embedded value of our in force portfolio.
Net premiums earned in the first quarter were $116 5 million compared to $113 9 million in the fourth quarter.
Approximately 95% of our premium revenue in the period can be traced to policies that were in force at the beginning of the quarter.
This is recurring revenue and highlights the value of improving persistency.
As our insured portfolio expense.
We're able to harvest and increased revenue stream from our in force book for an extended period.
We earned $2 9 million from the cancellation of single premium policies in the first quarter compared to $5 1 million in the fourth quarter.
Reported yield for the quarter was 30 basis points compared to 31 basis points in the fourth quarter primarily.
Really reflecting the decreased contribution from cancellation earnings.
Yes.
Investment income was $10 2 million in the first quarter compared to $10 million in the fourth quarter.
Underwriting and operating expenses were $32 9 million in the first quarter.
Compared to $38 8 million in the fourth quarter.
We incurred $260000 of expenses in connection with capital markets activity during the period.
Adjusted underwriting and operating expenses were $32 6 million.
Impaired to $34 8 million in the fourth quarter.
Our GAAP expense ratio was a record low 28, 3% in the quarter and our adjusted expense ratio was a record low 28%.
Highlighting the significant operating leverage embedded in our business and the success, we've achieved in efficiently managing our cost base as we have scaled our insured portfolio.
Our credit performance continues to trend in a favorable direction.
We had 5238 defaults in our primary portfolio at March 31.
Compared to 6227 at December 31.
And our default rate declined less than 1% at quarter end.
We released a portion of the reserves. We previously established for potential claims outcomes on our early Covid default population in the first quarter.
As a result, we recognized a claims benefit of $620000 with the reserves, we established on new defaults in the period fully offset by the release.
Interest expense in the quarter was $8 million and we recorded a $93000 gain from the change in the fair value of our warrant liability during the period.
GAAP net income was a record $67 7 million or <unk> 77 per diluted share for the quarter.
And our adjusted net income was a record $67 5 million or.
Or <unk> 77 per diluted share.
Total cash and investments were $2 1 billion at quarter end.
Including $106 million of cash and investments at the holding company.
Shareholders' equity as of March 31 was $1 5 billion.
And book value per share was <unk> $17 84.
Book value per share, excluding the impact of net unrealized gains and losses in the investment portfolio was $18 97.
Up 4% compared to the fourth quarter, and 18% compared to the first quarter of last year.
In the first quarter, we repurchased $5 million of our common stock.
We have 120 million of repurchase capacity remaining under the program we announced in February .
Earlier this week, we entered into a $290 million excess of loss reinsurance agreement with a broad panel of highly rated reinsurers.
The excess of loss agreement is functionally the same as in Ireland and provides us with coverage on policies originated primarily between October one of 2021 and March 31 of this year.
From a 2% attachment point up to a 675% maximum detachment.
The transaction carries an estimated four 5% weighted.
<unk> time pre tax costs.
We're pleased to have achieved such a favorable outcome in the excess of loss market.
And to have extended our comprehensive risk transfer program into this valuable segment of the reinsurance market.
Reinsurance remains a core pillar of our credit risk management strategy.
<unk> us with meaningful protection against losses in stress scenarios.
And an efficient source of growth capital for our business.
At quarter end, we reported total available assets under <unk> of $2 1 billion.
And risk based required assets of $1 3 billion.
Excess available assets were $786 million.
Our new excess of loss agreement is not included in these figures.
As it was completed after quarter end.
The $290 million Treaty will further bolster our excess position and provide even more funding runway for future periods.
In summary, we've achieved record results in insurance in force net premiums earned.
Total revenue.
Expense ratio.
Net income and adjusted net income.
Our credit performance continues to stand out in a favorable way and as we look ahead. We believe we are well positioned to continue delivering strong mid teens returns and compounded book value per share growth for shareholders.
With that let me turn it back to Adam.
Thank you Ronnie overall.
Overall, we delivered strong results for the quarter with significant new business production and increasing persistency driving growth in our high quality insured portfolio and favorable credit performance and expense discipline driving significant profitability and strong mid teen returns.
We built national MRI to outperform across all market cycles looking.
Looking forward, we expect that rising interest rates and the accelerated pace of house price appreciation will remain dominant themes through the remainder of the year.
Against this backdrop, we expect to continue building franchise value.
Leveraging our best in class team and technology leadership to further extend our customer reach.
We expect to continue building embedded value growing our high quality high return insured portfolio with the benefit of both rapidly improving persistency and significant new business production.
And we expect to continue building shareholder value delivering strong growth consistent returns and compound growth and book value per share. Thank.
Thank you for joining us today I'll now ask the operator to come back on so we can take your questions.
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Our first question for today comes from Mark Devries from Barclays.
Yeah. Thanks, Adam I think you indicated you see pricing is stable in balance here, but just given some of the growing macro uncertainties and risk of recession do you see that pricing is kind of biased higher or do you think pricing already kind of adequately compensates you for these risks.
Yeah, Mark to your question, maybe I'll talk about what we've done from a pricing standpoint, most recently and then trying to offer a view more broadly.
As of now.
We frequently find tune rate GPS pricing is the risk environment and our risk appetite evolved we haven't made a what I'll call broad changes to our pricing framework. We're right at this stage, but we're always monitoring what's happening in the macro environment and also our own internal data to guide.
Our decisioning.
What we have done I would say has made some changes around the edges with the focus on higher risk business and higher risk classes that we expect would be most directly impacted by inflation led downturn, so with a focus on FICO and DTI markers.
It's what we always do we are obviously monitoring.
What's happening out there right now we still see balance right. There is a number of macro headwinds that have emerged that we tallied inflation interest rates commodity prices risk from the pandemic supply chain disruptions.
Balanced that Dubai, Theres still a lot of really strong data that we're seeing both from an internal standpoint, and externally that the job market remains healthy consumer balance sheets are strong in house prices are continuing to appreciate so we've made some changes on our end.
For certain risk buckets, I'd say on balance we think we're more likely to see pricing move higher than it is to to go down.
But we've also always been on the leading edge on increases in the face of stress.
Perhaps generally more conservative in our posture there.
Okay. That's helpful.
And next question could you discuss kind of a dynamic.
The expense ratio and the operating leverage you discussed now that lapse rates are starting to moderate and you don't have to write as much new insurance to grow insurance in force.
Sure.
I'd say generally speaking.
We've always aimed to manage our business with with significant.
Discipline in.
We've had great success in leveraging into what is largely a fixed expense base as our portfolio grows.
The marginal cost that it takes for us to right.
New business, whether it's volume and a record environment as we have for the last two years or perhaps an environment, that's a bit more moderate it doesn't change dramatically and so it's not really a I'll call. It a volume dynamic that's driving movement in.
<unk> expenses.
It's really just a function of us being disciplined about where we deploy investments where we choose to.
To apply.
<unk> expenses and see some real benefit as our portfolio continues to grow from Q4 to Q1. The other item is that persistency factors in here one it helps to bolster our portfolio growth and because operating leverage is really about having a larger and larger portfolio with a larger and larger revenue base to absorb what is.
Yes.
More of a fixed expense base, obviously persistency helps but the other factor that comes into play we mentioned it a few times on calls last year is that when turnover in the portfolio has accelerated it also causes us to recognize DAC amortization at a more accelerated rate than in Q1.
Yes.
That dynamic normalized with interest rates moving higher persistency improving meaningfully.
Part of the improvement that we saw from Q4 to Q1 is a normalization of the DAC amortization.
Amortization rate.
Got it that's helpful. Thank you.
Thank you. Our next question comes from Rick Shane with Jpmorgan.
Hey, guys. Thanks for taking my question.
Look I think Mark's touched on something important here, which is sort of the.
Plus or minus of the current environment and the challenges competitively.
In terms of what mortgage originators their incentives.
Obviously, you have pricing power in underwriting power, but I'm curious if operationally there are things that you do to manage risk.
During these periods of time.
Yes, it's a great question.
Touch on a few things one right in order for us to effectively manage risk in periods, where there is.
More noise volatility and perhaps less certainty about the path ahead.
We can decide to action strategies today, we've always said from the start that in order to get the full benefit of all the risk management strategies that are available to us or that we've developed we have to spend the time and make the decision to.
Go live with them when the market is really strong and so that's exactly what we've done right the benefit for us of having an individual risk underwriting approach, where we can get.
To get our hands on loan files and evaluate the the flow of risk in real time coming through to have rate GPS into source. The overwhelming majority north of 95% of our niwa volume through our pricing engine, where we can make real time decisions about risk return and and mix that we want to see and.
Also to have a comprehensive reinsurance program in place all of those strategies that we've we've gone live with in prior periods are the ones that we see as being really valuable for us in a period, where there is a little less certainty in a little bit more noise from from a macro standpoint.
And so what we're doing today is not necessarily actioning, new tools or strategies utilizing all of that which we built in prior periods.
Okay.
Helpful answer Robert Thank you so much.
Thank you. Our next question comes from Bose George with <unk>.
Hey, guys good afternoon.
Can you talk about what Youre seeing in the island market just given some of the volatility there and in terms of the <unk> transaction that you did I mean, it's part of it.
To stay away from the island market until things calm down a bit over there.
Yes, that's a good question I'd say like all public debt markets. The island markets experienced some turbulence over the last few months.
And I think we've always focused in all of our capital and reinsurance efforts on tapping the most efficient sources of funding.
And obtaining coverage that provides us with the most meaningful.
Potential to absorb loss at this point and for this pool of policies, we found better execution in the <unk> market in the island market and we're really happy to have done the deal that we did.
We've got great partners in the reinsurance market, we've been active there on the quota share side for years, we've got a high quality panel that supported this transaction at a really attractive cost of capital and it further diversifies our risk transfer program right now we're not just quota share in Ireland, where photo share Ireland and excess of loss and we will look to be programmatic.
And how we layer on risk protection in the portfolio still going forward, but now we've got another outlet for us to consider them.
We got we found a better outlet in the excess of loss market and Thats something we will consider each time, we're looking to transact and in future periods.
Okay, Great makes sense. Thanks, and then actually you noted that you started repurchases.
Is it anything material and just given your growth rates.
In terms of more material purchases when could we expect that.
Sure well, so we announced $125 million authorization in February we did $5 million.
Paul at the month and a half rates in mid February announcement from that point through when we went into blackout.
And we said at the time that the authorization runs through the end of next year that we would expect to be roughly ratable through the course of the authorization period and that's still our plan is to focus on executing the 120 million that remains.
On a roughly ratable timeline through the remaining life of the authorization period.
Okay, great. Thanks.
Thank you. Our next question comes from Ryan Gilbert with BTG.
Hi, Thanks, good afternoon guys.
Adam was hoping.
You can just.
I guess <unk>.
And on your views on how you think the purchase origination market plays out over the rest of the year and I guess, the extent to which.
Your company generally you can.
Again market share given increased affordability challenges.
Yes, it's a good question and I'd say it without our Crystal ball is.
Is no clearer than anybody else is we have seen balance right. We certainly have an environment, where they are still a number of drivers pushing borrowers into the market from a purchase standpoint.
There is still a fear that rates could move higher that house prices will move higher.
So it's bringing buyers into the market to get ahead of that there is a dynamic which we see which is rents rent is increasing meaningfully and owning a home with a 30 year fixed rate mortgage becomes a form of.
Rent control to a degree right now have fixed payment with certainty and security and beyond that the demographic drivers there's a large number of.
People, who are reaching the age where we would typically see them active as first time homebuyers all of that still continues to come through and it's balanced by the fact that affordability is a little more scratched with rates moving higher and prices continuing to increase.
We think on balance that we'll probably see a purchase market that is larger overall than it was last year, but.
Modestly so right where it is.
Overall purchase origination volume not MRI and IW for purchase.
Within that I think the opportunity is still there for us in size as an industry and as a company to really provide support as prices move higher.
As rates move higher there is an increasing need for downpayment support and so we're we're really excited at the opportunity that we have through the course of the year to continue to support purchase borrowers.
Okay, great. Thanks for that.
Questions on your reserve per default it looked like it was up pretty considerably on a year over year basis.
Quarter over quarter as well.
The thing to call out there and how would you expect.
That to trend over the course of 'twenty two.
Sure. So look our our reserves just to make sure I understand on the reserve per default that we're carrying.
At the end of the quarter correct, yes sure.
So the reserve that we have for each default it obviously.
Is it.
It reflects the reserve on both our existing default population from earlier periods that remain delinquent at quarter end and also the reserving decisions that we've made on the new defaults that emerged in Q1 and even though we did released some of the reserves that we were carrying on early COVID-19 defaults and haven't really strong quarter from an overall credit performance.
Warming standpoint, and claims extent expense standpoint, we did continue to age all of the other delinquencies that remained in in default status and so it's really that is the aging of the the carryover defaults. If you will that increases that the reserve per default over time so at quarter.
And I think we were carrying 19500 protocols compared to 16600 at December 31, and it's it's entirely the ageing of the defaults that carried from last year into and through the first quarter balanced a bit by the reserve release that we had during the period.
Okay, great. Thanks very much.
Yeah.
Thank you.
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Our next question comes from Doug Harter with credit Suisse.
Thanks, you mentioned that.
The lower deck.
Amortization kind of drove it was a contributor to the lower operating expenses.
I guess can you just quantify how much of that and is that is this level of operating expense kind of the right run rate going forward.
Yes, Doug it's a good question I would say that most of the improvement we saw from Q4 to Q1 related to the DAC dynamic there were other items that that came through but largely that balance each other out some moving up some living down payroll cost in Q1 tend to be a bit higher than they are for the remainder of the year for us there is the FICO reset.
<unk> and the timing of certain it projects, though.
Coming in a bit behind and so all of those balanced out in terms of.
What you should expect for.
The remainder of the year, we do expect to see some increase in overall expense level as we continue to invest in our growth and see a continued rebound in our portion.
Our typical travel and entertainment spend and some other payroll costs given the current environment.
All that we say is going to be balanced by the general discipline, we take to managing expenses and the benefits that we realized under our outsourcing arrangement on the it side. Our goal is to be as efficient as possible and we may see we may see a modest increase quarter to quarter as we progress through the year.
Great. Thank you Adam.
Okay.
Thank you. Our next question comes from Mark Hughes with <unk> Securities.
Hey, good afternoon. This is like our mirrors in for Mark Thanks for taking our questions today.
First I guess, you mentioned the mortgage industry interest.
Insurance market remains constructive and pricing is stable in balance.
Given the dramatic change in mortgage rate, you anticipate making any adjustments to pricing through the year to retain business and keep market share.
No.
It is.
It's a question.
We we don't price our policies based on the underlying note rate we price our policy is really based on our goals for risk adjusted return standpoint.
Our policies arent.
Yearly renewal pilot renewable policies like other pockets of the insurance market. So when we put insurance in place on alone generally speaking the coverage remains outstanding for an extended period, it's cancel of all under certain circumstances.
As Malone ages and it cancels if the loan itself is retired because of our refinancing.
But our our policy pricing doesn't really impact whether or not the loan refinances and whether or not the policy cancels up. So we're much more focused not on the interest rate environment itself in isolation, but instead on on the macro backdrop and our expectations for credit performance for each loan we insure.
Okay. Thank you for that.
Maybe one sort of higher level question with mortgage rates increasing.
I see.
Increasing through the year.
Especially as fed funds.
It might be.
They are expected to increase through the end of the 2022, it seems refinance activity will slow from current low levels.
Over for the overall mortgage market I'm, just curious do you benefit from a period of low refinance activity, whereas the current PMI mortgages.
On are unable to refinance and possibly get out from under PMI.
Yes, so and it's a great question and certainly one of the items that we've been highlighting we would call that persistency. It's the stickiness of our policies. So this slower rate of turnover in the mortgages that we ensure the stickier our policies become and that's critically important because the longer we hang onto policies. They continue to provide.
With a premium revenue stream.
And it really has the effect of increasing the lifetime earnings capacity of our portfolio and an increasing the embedded value as we think about it of our in force book of business and so generally speaking <unk>.
Creasing persistency is a is a real positive, particularly when.
The credit profile of the loans that we have in our portfolio.
The borrower strength, the underlying equity position because of past HPA all of it is so strong.
The increased revenue stream that comes from extension of those policies far far outweighs any additional claims that might come through because the policy to have a longer life themselves.
Okay. Thank you for that that's that's extremely helpful. Maybe just one more from us.
Hopefully you could share.
What are you seeing in terms of recent new business trends in the last few weeks, especially as mortgage rates has gone up any change in recent momentum.
No.
I would say, we're still seeing I'll call it seasonal movement come through.
Repurchase activity has been low for some time and that Hasnt changed it can only go so low.
We're sort of asset.
Already at a major from.
From a refi activity standpoint.
<unk>.
Volumes remain constructive.
But we were also at the same time.
If you look.
Back to where things were in 2020 in 2021 really 2021, its obviously slower but.
Seasonality is still coming through with general strength in the spring season purchase market remained strong and constructive and refi is already down so low and it just remains there.
Okay, great. Thanks for taking our questions.
I'm showing no further questions at this time now I would like to turn the conference back to management.
Okay.
Thank you again for joining us will be participating in the <unk> housing conference on May 10th and the Truest Securities Financial Services Conference on May 25th both in New York as.
As well as the <unk> real estate Finance and Technology conference virtually on May 26, we look forward to speaking with you again soon.
This concludes today's conference call. Thank you for participating you may now disconnect.
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