Q2 2022 NBT Bancorp Inc Earnings Call
Good day, everyone. Welcome to the NBT BandCorp second quarter 2022 Financial Results Conference call. This call is being recorded and has been made accessible to the public in accordance with the SEC's Regulation FD. Using presentation slides can be found on the company's website at nbtbandcorp.com.
Before the call begins, NBT's management would like to remind listeners that, as noted on slide 2, today's presentation may contain forward-looking statements as defined by the Securities and Exchange Commission. Actual results may differ from those projected. In addition, certain non-GAAP measures will be discussed. Reconciliations for these numbers are contained within the appendix of today's presentation. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Thank you for listening.
Instructions will follow at that time. As a reminder, this call is being recorded. I would now like to turn the conference over to NBC Band Corps President and CEO , John H. Watt Jr. for his opening remarks. Mr. Watt, please begin.
Thank you, Josh. And good morning, everyone. Thank you for participating in this earnings call, covering NBT Bank Corps 2nd quarter 2020 to results.
Joining me today are MBT's Chief and Edge Officer Scott Kingsley and our Chief Counting Officer and The NHCCya System A U-K-R-G-E-U group. Hi everyone, I'm Brent Brutz and I am the Director inPartition Institute, and I'm a
We are extremely pleased with our results for the second quarter of 2022, including earnings per share of 88 cents, RLA of 128 and an RLA TCE of 17%.
I'd like to take a moment here to highlight activity in our businesses. Lone growth continued to be strong. Our commercial business generated 310 million loan originations an increase of 24% over the last quarter. being far enough..
You know, it's clear to us that our commercial and small business customers continue to successfully navigate the challenging operating environment in the face of supply chain issues and inflation, and NBT is there to support them.
The second quarter performance of our SunGauge residential solar partnership is also notable. Our originations were strong in the quarter and credit quality continues to be pristine.
Our fee-based businesses continued their strong performance with total line interest income at nearly 33% total revenue for the second quarter. Our fee-based businesses continued their strong performance with total line interest income at nearly 32% you
Although we are very mindful that the forward environment is likely to be volatile through six months, we observe a very strong consumer. Balance is in personal checking accounts, through in the second quarter.
credit quality in consumer loan portfolios is very healthy.
The link will see across all consumer loan categories is below pre-pandemic levels.
I'm happy this morning to report that at a meeting yesterday, our board of directors approved a 7% increase in the dividend, or 2 cents a share, to 30 cents, making this our 10th consecutive year of annual dividend increases.
As we head into the back half of the year and the potential for increased levels of uncertainty and volatility, we are well positioned with strong liquidity and capital levels, a diversified business mix, a highly effective risk management practice, and a team of experienced professionals.
So with that said, Scott, I'm going to turn it over to you to talk in greater detail with respect to our financial performance. And following Scott's remarks, we're happy to take your questions.
Thank you, John , and good morning, everyone. Turning to the results overview on page four of our earnings presentation, our second quarter earnings per share was 88 cents, which was down from 92 cents a share reported in the second quarter of 2021, and two cents a share lower than the first quarter of 2022. These results were achieved despite a $3.4 million decline, or six cents a share, in PPP income recognition compared to the second quarter of last year.
and a $700,000 decline in PPP income from the first quarter of 2022. The $700,000 decline in PPP
The improvement in that interest income over the two comparative quarters was the result of solid organic loan growth, productive incremental deployment of a portion of our access liquidity into investment securities, increases in the Federal Reserve's targeted Fed funds rate and the continuation of historically low funding costs. And the continuation of historically low funding costs.
We recorded a loan loss provision expense of $4.4 million in the second quarter, compared to a provision benefit of $5.2 million in the second quarter of 2021, or a 17-cent per share swing, and a provision expense of $600,000 in the first quarter of 2022.
Net charge-offs in the second quarter were $800,000 or four basis points of loans compared to seven basis points of loans in the second quarter of 2021 and 14 basis points of net charge-offs in the length first quarter. Our reserve coverage increased slightly to 1.21% of loans from 1.18% at the end of March.
The next slide, page five, shows trends in outstanding loans. On a core basis, excluding PPP, loans were up $162 million for the quarter, and included growth in both our consumer and commercial portfolios.
Our total PPP balances as of June 30th were down to just over $17 million, which forgiveness almost complete for both the 2020 and 2021 vintage loans. We recognize $1.3 million of interest and fees associated with PPP lending during the quarter, and we have just $400,000 in unembratized fees remaining.
Excluding TPP recognition, low yields were 16 basis points up from the first quarter of 2022, reflective of higher yields on our variable rate portfolios as well as higher new volume rates.
Moving to the slide on deposits, we were down $433 million from the end of the first quarter, which was a result of a $100 million broker deposit maturity within the quarter, as well as seasonal declines and municipal deposits.
The matured broker deposit was the last of our wholesale funding, which we secured in the early and uncertain days of the pandemic.
Our quarterly cost of deposits remains flat at seven basis points and we continue to add new accounts.
The next slide looks at the detailed changes in our net interest income and margin. Net interest income increased $8.4 million as compared to the second quarter of last year and up $7.2 million from the first quarter of 2022, reflective of higher yields on earning assets.
reported second quarter net interest margin was 3.21% of 26 basis points from the first quarter of 2022 and up 21 basis points from the second quarter of 2021. Looking forward, with interest rates rising, the yields on our variable rate earning assets are expected to continue to move higher. We also expect to reinvest our loan and securities portfolio cash flows at levels above current blended portfolio yields. And as such,
we would expect to see more opportunities for additional core margin improvement. Although we believe our deposit funding profile is best in class, we would expect some level of deposit beta to be present in the beginning in the third quarter.
Our balance sheet still continues to exhibit a meaningful level of asset sensitivity.
Moving to the trends in non-interest income on page 8, excluding security gains and losses, our fee income was up 8% from the second quarter of 2021 to $42.2 million, but lower by $600,000 from the linked first quarter. More broadly, non-spread revenue was 33% of our total revenue in the second quarter of 2022, and remains a key strength and value driver for NBT. And remains a key strength and value driver for NBT.
Our Retirement Plan Administration businesses experience strong, year-over-year growth driven by higher activity-based revenues and continued organic growth. Wealth management fees were lower than the length first quarter, as well as the second quarter of 2021, due primarily to market performance.
Banking fees improved almost 11% from the second quarter of 2021, driven by both higher card related income and service charges.
As a reminder, the bank is subject to the provisions of the Durbin Amendment to the Dodd-Frank Act beginning in the third quarter, which caps our per-transaction compensatory opportunity for debit interchange.
We estimate this will reduce quarterly debit card interchange income by approximately $3.7 million or almost $0.07 a share.
Turning to nine interest expense, our total operating expenses were $76.1 million for the quarter, which was $4.7 million or 6.6% above the second quarter of 2021. Souries and employee benefit costs of $46.7 million were up nine and a half percent over the prior year and included merit-related salary increases as well as higher performance-based incentive compensation and increased medical expenses.
Total operating expenses were also hired in the linked first quarter of 2022, reflective of one additional payroll day, annual merit pay increases, which we process annually in March, and higher medical costs.
We'd expect core operating expenses to drift modestly upward over the next several quarters as we continue our efforts to fill a higher than historical level of open positions in support of our customer engagement and growth objectives.
In addition to investing in our people, we expect to continue to invest in technology-related applications and tools in order to advance our customer-facing and processing infrastructure.
On the next slide, we provide an overview of key asset quality metrics. A walk forward of our loan loss reserve changes is also available in the appendix to the presentation.
As I previously mentioned, next charge-offs were four basis points of loans in the second quarter of 2022 compared to 14 basis points in the prior quarter. Both NPLs and NPAs declined again this quarter. We are continuing to benefit from our conservative underwriting and we have been experiencing higher than historical levels of recoveries.
As I wrap up prepared remarks, a couple closing thoughts. We started 2022 on strong footing and we are pleased with the fundamental results achieved in the first half of the year. Improving net interest income, solid results from our recurring fee income lines and exceptional credit quality outcomes have more than offset higher levels of non-interest expense which has allowed for productive gains in operating leverage.
Our capital accumulation results over the past sub-recorders continue to put us in an enviable position as we consider growth opportunities for the balance of 2022 and beyond.
With that, we're happy to answer any questions you may have at this time.
Thank you.
Anyone with a question at this time can press star and then one one on your touchstone telephone.
Again, that's star then 11 on your touchstone telephone for a question. One moment for our questions.
Our first question comes from Alex Tordal with PSC. You may proceed with your question.
Hey, good morning guys.
Morning. already out.
First off, I was just hoping you guys will have a little bit more color on the momentum in the commercial loan portfolio with respect to growth that you saw during the second quarter. Is that momentum strong enough to carry into the third quarter and maybe give us a little bit of color on sort of which geographies are the strongest and where new loan yields are coming on relative to the 4.08% of book yield?
Sure, let me talk about where we're seeing the growth and then Scott will follow up with our view of long-yield and where we can go from here. It's been very strong Alex, as you know in the first queue we experienced growth in excess of what we would normally experience in the markets we serve and that's a post-pandemic that is positive for us and positive for our customers.
now and will continue to build out over the next 12 months. And the demand there continues to be high in those markets. On the C&I side, we see business owners expanding their plant capacity, buying equipment, becoming more efficient, all the kinds of things that a community bank like NBT knows how to support and is very.
of the year driven by higher rates, but the pipelines are still active and moving towards closing through third Q and towards the end of the year. Scott, why don't you talk about yields a little bit. Sure. Alex, and let's take this sort of in two chunks. During the quarter, especially the early parts of the second quarter, we were certainly still adding new assets that hit, had interest rates in the low fours.
because we were making pipeline commitments that were out there prior to that. As the quarter came to an end, very few of our assets were not getting a look at 5%. So probably still closing some assets in June in the high fours, but generally speaking, the pipeline commitments have now moved out to where most assets that are attractive for us are in the 5% level.
Great, that's really helpful. And then, you know, with respect to credit, you guys did put a little bit more into the ACL this quarter. Is that can you talk to kind of the thought process there? It doesn't seem like anything you're saying would suggest that that was warranted, but obviously there's a lot of uncertainty on the horizon for the back half of the year. You know, maybe just kind of what drove that specifically drove that ACL increase for you guys.
Yeah, so Alex, again, excellent point, you know, from a timing standpoint. I would call our approach from a reserving standpoint in the second quarter's prudent. You answered your question within the construct that you just asked, which is the level of uncertainties, you know, probably has us thinking that the waiting of downside versus the waiting of a baseline forecast.
are probably pretty close to each other at the current point in time. So again, kind of think about what we did is we provided enough provision to cover the minimal level of charge-offs we had and then we provided enough to fund the growth that the portfolio experienced and then a little bit more because the macroeconomic conditions ever so slightly had modest deterioration during the quarter.
Okay.
And then just a final question for me, just with respect to M&A, we've talked a lot in the past about kind of the desire to do a deal. Now that you guys are over 10 billion, obviously you guys have been very...
I guess cautious on approaching a transaction. Just curious.
with the rapid change in interest rates.
and all the volatility in the markets. The transaction today is something that you can pursue.
So great question, Alex. And our strategy hasn't changed as expressed in last four quarters that, yes, you're right. We are very selective in terms of ensuring that we have the right partner to drive our strategic growth. But there are a lot of conversations with potential partners that can continue. I guess Scott and I would observe that there was a slight pause in second queue while those partners considered the impact of a shock in the...
have been able to continue to have dialogues around. It's still active and again, what do we think about when we're approaching one of those opportunities? How does it accelerate our otherwise established strategy? And what kind of partner from an integration perspective will we be able to do a deal with? And we want to make sure that in the end.
of 225 basis points in four months is a shock, right? That's a shock to the rate structure. So what does that mean? So for purposes of our consideration of potential partners, we've had to look at the impact on beginning regulatory capital of impacts of AOCI reductions and potential interest rate marks on loan portfolios.
Certainly doesn't mean we think less of the operating characteristics of a business we might be interested in. But we at least need to be cautious and understand what does that do to opening equity? What does that do to opening capital ratio levels? And we need to be responsible with that. And I think there's a little bit more clarity now as to where we are probably going to stand relative to long term rates. And that's probably helpful in sort of rekindling some of the dialogue that we were having earlier in the quarter.
Great, thanks for taking my questions.
Thanks for taking my questions. Thanks, Alex. Thank you.
Thank you. One moment for questions.
Our next question comes from Chris O'Connell with KVW. You may proceed.
Good morning.
So, wanted to start off on the expense guide. I know it came in a little higher this quarter on some of the seasonal factors you mentioned and to modestly drift higher from here. I was just hoping to get a little bit of color into maybe the longer term trends because it's not really right relative to the 73 to 74 million guide last quarter.
You know, this will put you guys kind of toward the upper single digits for growth in 2022 versus, you know, more, you know, low to mid single digits previously. Does that mean that you're making more hires this year and that, you know, the pace kind of moderates in 2023? Or does it not really change the long term outlook? Thank you.
Thanks for a specific question. So let me start to frame that, you know, coming out of the first quarter where our operating expense rate was closer to 72 million. A couple sort of probably optically astute to discussions would be around. The first quarter we were not still fully engaged. There was still enough sort of COVID uncertainty out there in the early stages of the first quarter where some of our things like marketing initiatives and group gatherings.
very well relative to some of our incentive objectives. So for us, incentive compensation is a higher proportional value of our expense run rate in 2022 than it certainly was in previous years. And that probably continues for the balance of the year, given some of the success we're having. Your question relative to how do we think about that going forward and modest uptick in expenses? Another payroll day in the third quarter, but even amounts of payroll days in the fourth quarter with the second quarter. Just a way to calculate. So just a way to calculate. Just a way to calculate.
And then from there, I would say if we could hire a few more people to help us with our customer facing objectives that we have from a gross standpoint, we'd be happy to bring those aboard. But I still think you don't get meaningfully above sort of that 76-run rate going forward. Mm-hmm.
Okay, that's helpful.
As far as the deposit moves this quarter, I hear you on the 100 million of brokered CVs. How are you seeing – I guess if you could quantify the muni seasonal magnitude, that'd be great, and maybe how much of that you think would be coming back in, and then how are you thinking about just deposit flows and what you're seeing from customers going forward on overall deposit growth?
Excellent point and thanks for asking the question, Chris. So to your point, what we had was a pool of brokered money market funds that matured in the second quarter, that we actually secured at the early stages of the pandemic from a liquidity standpoint. And clearly we didn't end up needing that. But obviously in those particular cases you just run those to maturity. And the other 300 millionish drop in deposits for the
that they all either applied for or were granted, as part of the pandemic, some of the incremental costs they incurred in the last couple of years, there was actually drawdown of some of those funds. Just on our healthcare entities alone, that was close to $75 million in the quarter. Don't think we think that piece is coming back in the near term. The third quarter is typically a net positive for us on municipal deposit flows. Then people collect school taxes in the month of September . Normally we have enough.
So there are offerings out there with some of the aggregators that are meaningfully above where our core rates are relative to money market opportunities. Do we think some of our larger institutional and municipal customers may avail themselves of some of that higher rate before we'll get them to that higher rate? Probably. Do we think it's a meaningful piece of our $10 billion deposit portfolio? We don't. We don't. We don't.
So I think that's how we're thinking about it, Chris.
The beauty of us is we're still adding net new units from a Depository standpoint and that's the important thing adding new accounts on a net basis is always the you know That the point of reference for us account balances can change over time. But as long as you're adding new accounts, you're probably progressing
Okay, got it. That's helpful. And then kind of just piggybacking there. I hear you that deposit costs start to move up in the third quarter. And just trying to see if there's any more color there or any way to frame that. Obviously you guys have had low betas in the past and we're expecting to be running below the market.
at least initially here, but just given the magnitude of the moves and the speed, any colors to the magnitude of what you guys are thinking of the outcome. The magnitude of what you guys are thinking of the outcome.
Sure, and I would probably do a little bit of bifurcation within our deposit portfolio and tell you that we have in the neighborhood of $7 billion worth of DDA checking and saving deposits that we don't see the rate movements there being very substantial at least for the next six months.
So what are we managing? We're managing that other $3 billion in deposits, where the customers are a little more interest rate sensitive. And in fairness, we would expect to be having some discussions with some portion of that part of the deposit base about the deposit. About the deposit base. About the deposit base.
So what are we managing? We're managing that other $3 billion in deposits where the customers are a little more interest rate sensitive. And in fairness, we would expect to be having some discussions with some portion of that part of the deposit base about Fed.
Fund rates being up 225 basis points, I think, as of tomorrow. And we should maybe get some modest piece of that. And we'll be very deliberate about that, Chris, and to your point. We love our starting point. Based costs at seven basis points with going into the quarter of $300 million of net liquidity, we have the affordability to take obvious, you know.
in an up-rate environment. And we've had great success with that in the past. It's an integrated approach on the front line in every branch, in every commercial lending office, in the business banking sector of our businesses, and a lot of collaboration on the finance side with those folks to make sure that these customers that we've been serving for many, many years have their needs met, but also...
we continue with our long history of being very careful on how that beta moves quarter to quarter to quarter. So we feel good about all the tools we have in place to do it. And we would expect that we'll replicate our practices in the past, and we'll see what the outcome there is, but we feel good about how we're gonna move forward in the short to medium term.
Great. Yep, I hear you. And on the fee side of the business, we're just hoping to get an updated outlook as to how you're seeing the retirement plan business, wealth and kind of the insurance segments, even some of the market impacts going into those into the third quarter and then.
What if you know if you could quantify the contribution is significant from the H.A. Rogers announcement?
Chris, take a shot at that. So first and foremost, we like all three of those businesses. We continue to think all three of those businesses are investable in terms of their organic growth objectives as well as the potential for both on acquisitions as we've done, especially in the retirement plan space over the last several years. To your point, you're right. Equity market performance does have an impact on their revenues. It's not all of their revenues.
business. We're also doing things from a technical infrastructure standpoint in all of those businesses to try to expand our services, to try to expand our product base while we're adding to a wider group of customers. One thing we've talked about at some detail internally is we really haven't transported a lot of those attributes, especially on the wealth management side, into our new markets in New England, and that's an opportunity.
Now that means finding good people, but those people are out there and we're having chats with those people. So we would love to round out our services in some of those markets we've been successful at from a commercial lending standpoint with a full scope of MVP products.
Please, officially I take my questions. Thank you.
Oh, quick on that, I missed it. I forgot to, the small insurance agency that we acquired in New New York, it's just that, it's small, but it fits us very well. It's, you know, we have common customers on the banking side. You know, the principle of this business has been an NBT customer and an NBT advocate for many, many years. And, you know, we're just happy to be able to expand that outcome. We think that's a great opportunity for fold in. And in fairness, if we could find a few more of these, we'd be happy to do them.
Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone.
Our next question comes from Matthew Breeze with Stevens. You may proceed.
Good morning.
Hai'm.
First one for me, just in the appendix of the presentation, you show that the overall loan portfolio is 62% fixed and 38% adjustable slash floating. How much of that is pure floating and through floors? And then I was hoping for a bit of color around duration on the fixed side and then the adjustable side.
All right, so let's take a shot at the user and first, and then we'll work on the duration of the question, Matt. We think there's about $2 billion worth of pure variable. So when the Fed funds changes, and that presumably moves through primary changes or live or so for changes, quote, we get promoted later that day. Now, do we do our experience that benefit from our customers immediately? There's probably a one month lag just based on where the customer is. Come on.
whether we're getting 75 or 100 tomorrow. So that'd be the start point. I think generally, I'll say this about from a duration standpoint, generally we have a lot of five year repricing type instruments in our commercial loan book. We may be offering terms that go out seven to 10 years on a fixed side in certain cases, but usually the duration of those instruments don't last that long.
at higher new volume rates as rates continue to move up.
Understood. Okay.
And then this leads into my second question. You know, Scott, in your opening remarks, you kind of let us to believe that you expect nim expansion, at least in the near term. You had mentioned you haven't gotten the full benefit of the rate hikes for about to get another, at least it seems to be consensus that we get another at least 75 basis points. That we get another at least 75 basis points.
This week, plus perhaps another 50 to 75 basis points later in the year.
Is it possible that we see kind of repeat performance on the NIM expansion this quarter, in the third quarter, or could you give us some idea frame for us better, what you anticipate on the NIM for the duration of the year? how long is it possible that we SEE, to know if the pit exceed on last quarter? you
Yeah, so for the duration of the year, so let me again break that into a couple different buckets. You know, part of the second quarter's net interest margin expansion came from the fact that we had a meaningful drop in cash equivalence. We don't have that same drop in cash equivalence coming in the third quarter, but to your point, we will get the full quarter impact of some of those changes in Fed Funds rates. So the sheer impact, as I said, was in an...
probably tell you, haven't had to do much yet. But that's coming and we need to have productive conversations with some part of our customer base that addresses that and that's coming.
Do I think 21 basis points? I would be happy to book that today. Or 26 basis points. Probably not all of that, but I think a decent portion of it.
Okay, and then I noticed that the loan portfolio breakout is a little bit different this quarter. Specialty lending is now broken into Rezzi Solar and it looks like other consumer caught the balance.
you the loan portfolio break out is a little bit different this quarter. You know specialty lending is now broken into Resi Solar and it looks like other consumer caught the balance.
Beyond just the Resi Solar piece, if I think about that legacy specialty lending book, what else was in there? What made up the Delta? Just give us the numbers and the yields and the historical kind of lost content there. Yeah, so you're right. We did do that and during the quarter we had some productive conversations with investors, folks like you and potential investors that were looking for a little bit more clarity because we.
They have had higher than our blended book yields historically, but we've also experienced a little higher level of net charge off in that portfolio. And those were, you know, denser in other healthcare-related consumer, unsecured credit outcomes. They performed very well historically. It's been a net positive for us historically. You know, what's also in there now is, you know, that since Springstone was acquired by Lending Club,
to the extent that we were still participating on their platform were really not today. So I would argue that portfolio was in a runoff status, which we're fine with. We're fine with reallocating some of those outstanding into other portions of our portfolio. Recall their Matt, once Lending Club acquired Radius Bank, they had a charter that enabled them to originate directly. So we no longer were in front of them originating that category of loans.
that speeds up because you're not generating anything new. On the SunGates side, really productive growth has been experienced in the residential solar world. And remember that's a national platform. So we've really geared up to be able to, quote, take more of that. It meets our credit attributes in terms of our credit box. We dictate those outcomes.
So we're very happy with the credits that we're putting in there. And as a reminder, man, I think you know this, but that's a better than average customer with a better than average FICO score. Somebody who makes the decision to do a $25,000, $30,000 investment in their own property for a solar array is not just run of the mill from a customer standpoint. So we like the attributes of that. Could that grow again at the pace that we've experienced over the last four or five quarters or another couple of quarters?
There's a potential for that. I think it'll be really interesting to see what happens in that market with higher demanded yields, because that's where we are today. You know, the yields that are necessary in order to stay, you know, productive in that portfolio are moving up. Does that change how the customer base views that opportunity relative to their net utility savings? Does that change how installers view those opportunities? I think the jury's still out on that. But if we could get the desired yields that we think are appropriate today, we're certainly going to...
potential for deterioration and credit quality on the back of it.
So, I think I said in my comments up front, Matt, that we have not observed through the end of second quarter any deterioration in the consumer's behavior or in the consumer credit portfolios. We saw growth in consumer checking accounts.
With that said, we're very aware that the proportion of the annual, or the weekly paycheck allocated towards gas and heating is gonna go up and we're watching that closely. We think the consumer has a nice cushion going into it. The other visibility we have here are several large integrated commercial home heating while propane fuel distributors who we're close to.
Consumer credit from a past due, not performing, and charge-off perspective can't get any better than it is today. So will there be an eventual reversion to the mean, the traditional levels of performance of those portfolios over time? Sure, I would expect that would happen, but I don't see it happening in one quarter or two quarters. It's gonna take some time for that to occur.
from a past due, not performing and charge off perspective can't get any better than it is today. So will there be an eventual reversion to the mean, the traditional levels of performance of those portfolios over time? Sure, I would expect that would have happened, but I don't see it happening in one quarter or two quarters. It's gonna take some time for that to occur. Got it.
That's all I had. I appreciate you taking my questions. Thank you. Thank you, Matt. Thanks, Matt.
That's all I had. I appreciate you taking my questions. Thank you. Thank you, Matt. Thanks, Matt. Thank you.
Our next question comes from Alex Ferdall with PSC. You may proceed.
Just one quick sort of nitpicky follow-up question. With respect to Durban kicking in the third quarter, that ATM and debit card line has kind of bounced around a little bit over the last couple of quarters. Is the $3.7 million reduction, should we be using $9.75 from this quarter as the starting point from that, or does that number include something that maybe is not going to recur?
So Alex, within that line item is also true ATM utilization fees that we get when our customers that aren't ours end up hitting some of our ATM sources. I think when we look at that 3.7, that's probably a number that we looked at and said, what were our run rate for the first half of the year? And I think we think somewhere between 7.4 and 7.5 million is likely to be the outcome.
of like before you experience the winter misery of people not showing up and going to the the
All right, thanks for taking my follow.
Thanks Alex.
Thank you, and I'm not showing any further questions. I will now turn the call back to John Watt for his closing remarks.
Thank you, Josh. And again, thank you all for joining this call. We're very excited about our performance in the second quarter and the prospects looking forward and we appreciate your interest in that story. Look forward to catching up with all of you at the end of the next quarter. Thank you.
Thank you, Mr. Watt. This concludes our program. You may disconnect. Have a great day.
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