Q2 2022 UMB Financial Corp Earnings Call
Yeah.
[music].
Good morning, and thank you for attending today's U B M financial second quarter 2022 Conference call. My name is Danielle and I will be your moderator for today's call.
All lines will be needed during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question. Please press star followed by one on your telephone keypad.
I would now like to pass the conference over to our host Kay Gregory U M B Investor Relations.
You May now proceed.
Good morning, and welcome to our second quarter call Mariner, Kemper, President and CEO and Ron <unk>, our CFO will share a few comments about our results.
Jim Ryan CEO of <unk> Bank, and Tom Terry Chief Credit Officer will also be available for the question and answer session.
Before we begin let me remind you that today's presentation contains forward looking statements, which are subject to assumptions risks and uncertainties.
These risks are included in our SEC filings and are summarized on slide 43 of our presentation. Actual results may differ from those set forth in forward looking statements, which speak only as of today, we undertake no obligation to update them, except to the extent required by securities laws All earnings per share metrics discussed on this call are on a.
Diluted share basis, our presentation materials and press release are available online at Investor Relations Dot <unk> Dot Com now I will turn the call over to Mariner Kemper.
Thank you Jay and thanks, everyone for joining us today, our second quarter results included a 23% linked quarter annualized increase in average loans solid net interest margin expansion and continued momentum in our fee businesses.
From bond trading activities in <unk>, one fees were strong while we saw some market related pressure in trust and security processing and in the valuation of our equity positions. Additional drivers are included in our slides and Ron will share more details shortly.
Net income for the quarter was $137 6 million or $2 83 per share.
Operating pre tax pre provision income was $187 1 million or $3 84 per share financials for the second quarter included a pretax gain of $66 2 million from the sale of our visa class B ownership included in fee income and.
In conjunction with the gain we made a one time contribution of $5 million to our charitable foundation included in other expenses.
Pipeline and sales activity continued to be strong across the company.
In private wealth, we brought in nearly $750 million in new assets year to date on track to significantly outpace 2021 full year sales of $836 million.
Our institutional banking teams are continuing to perform well year to date, new business volume has increased 15% in corporate trust in escrow services and 68% in specialty Trust and public Finance is closed 68 deals so far in 2022 compared to <unk> 52 for the same period last year the team.
Recently closed its largest bond issue to date, a 146 million dollar general obligation bonds. As you may have seen in June we announced the agreement to acquire old National Bancorp's HSA business as well.
Healthcare services continues to focus on direct to employer space. This acquisition provides an extremely strong team along with more than $400 million in deposits that will complement our organic growth efforts moving to lending you'll see the drivers behind the growth this quarter on slide 24 top line loan production.
As shown on slide 25, again was very strong coming in at $1 3 billion for the quarter payoffs and Paydowns moderated some and were three 1% of loans.
Given the opportunities we see across our footprint. We expect continued strong growth in the third quarter.
We saw a nominal growth in C&I with balances increasing nearly 30% on a linked quarter annualized basis, while line utilization ticked up slightly in the second quarter much of the growth is due to consistent sales efforts paying off and new customers as well as our relationships are strong companies needing capital to continue to grow.
Average residential mortgage balances have increased 27% over the second quarter of last year as we've discussed previously we don't rely heavily on mortgage gain on sale revenue. However, we continue to grow our own portfolio and are seeing strong activity through our down payment assistance program delay the program launched in December of 2021 and is.
Geared towards underserved markets and it had more than 500, new applications year to date on.
On the other side of the balance sheet average total deposits for the quarter decreased 3% or 12, 2% on an annualized basis compared to the first quarter, while average DDA balances increased slightly and comprised 45% of average deposits.
While we've seen cycle to date beta on interest bearing deposits of approximately 34% I think this metric alone gives an incomplete view as it ignores the benefit of DDA balances, which has zero beta.
And the impact of borrowing levels, which is 100% beta I'd encourage you to look at our total cost of funds, instead, which had a beta of 22% thus far.
Additionally, we benefit on the earning asset side with our cycle to date betas of nearly 54% and a linked quarter beta of 61%. This compares favorably to others. We've seen report so far.
Our net interest margin expanded 25 basis points from prior quarter, driven by asset repricing and favorable mix shift in earning assets I will note that the deposit pricing. We're seeing is so far outperforming our internal expectations. We will continue to manage these costs as we can while opportunistically funding organic loan growth.
As you know we have a larger commercial institutional customer base relative to many peers as such we have some index deposits that tend to move more quickly with interest rate changes, but we look to the entire relationship and overall profitability of these relationships. For example, many public fund customers bring Treasury management.
Lockbox card programs and bond issuances opportunities and in addition to lending relationships. Our commercial clients May also have corporate card, where health care service products. Similarly, many of our institutional clients have asset servicing or suite product relationships. In addition to the lending relationships.
Moving to asset quality, our net charge offs were elevated in the quarter driven entirely by a $27 $7 million write down related to one single commercial credit. While this quarter's charge offs were elevated we expect that our full year loss rate will be consistent with our long term historical averages.
Proximately 30 basis points or less.
Nonperforming loans declined 84% from the prior quarter to 10 basis points of total loans as the overall portfolio continues to perform well.
Our reserve coverage ratio is now 87% of total loans in line with post so.
Day, one implementation levels.
I'll close by thanking our associates across the country for their hard work and dedication to our customers and communities.
I'm excited to execute on the opportunities we see in the second half of the year and beyond now I'll turn it over to Rob for some additional comments Rob.
Thank you Mariner, our strong loan growth coupled with the benefits of higher short term and long term interest rates drove a six 9% linked quarter increase in net interest income, we amortized $1 $6 million of PPP origination fees into income and the overall PPP contribution to second quarter net interest income was $1 7 million.
The $2 million last quarter, and $12 4 million in the second quarter of 2021 at quarter end, our PPP balances stood at $26 4 million down from $77 2 million at March 31.
Approximately 400000.
<unk> remained.
As shown on slide 21, our fed account reverse repo and cash balances declined to three 7 billion and now comprised 10, 5% of average earning assets with a blended yield of 83 basis points compared to 30 basis points in the first quarter.
<unk>, 3% decrease in average deposits for the first quarter was driven by outflows of commercial deposits, including the typical seasonal trends in public funds, along with capital markets and corporate trust deposits.
Total cost of deposits, including DDA was 20 basis points up from eight basis points last quarter and the cycle to date beta is approximately 18%.
Net interest spread and net interest margin expanded from the first quarter by 13 basis points and 25 basis points, respectively. Net interest margin benefit of 21 basis points from reduced liquidity balances at.
16 basis points from loan repricing and 11 basis points from the benefit of free funds offset by a negative 26 basis points related to the cost of interest bearing liabilities.
The estimated impact of net interest income with various rate scenarios as shown on slide 30.
And our rate ramp scenario, plus 200 basis points on a static balance sheet net interest income is predicted to rise three 1% in year, one and 12, 8% in a year or two.
This is predicated on repricing of our variable rate loans based on underlying changes to LIBOR sulfur and other pieces as well as deposit beta and mix shifts consistent with the prior cycle.
While it's early days, our second quarter beta experience was in line to slightly better than our model assumptions.
<unk> noted while the focus on deposit beta that's important we focused primarily on net interest spread management given that our future funding needs will depend on our continued efforts to fund our organic loan growth engine as we've done in prior cycles using cash flows from our high quality securities portfolio is another lever available to us too.
The loan growth opportunities, our average loan to deposit ratio remains attractive at 58% below our past highs in the low seventies loan yields decreased 23 basis points from the first quarter to 372%, 58% or about $10 6 billion of average loans are variable rate with 57%.
<unk> repricing in the next quarter and 64% repricing within the next 12 months as I noted these are largely tied to indices. The short end of the curve.
Additionally, the securities portfolio is expected to generate $1 $2 billion of cash flow in the next 12 months the yield on those securities Rolling off is approximately $1 eight 4% while purchases. This past quarter were made at an average of 296%. Those details are shown on slide 28.
We continue to reclassify securities to the held to maturity portfolio during the second quarter to help manage tangible capital and reduce the impact of rising rates on our equity.
<unk> HTM balances for the second quarter, excluding the $1 1 billion of revenue bonds that we've long held that back book were $4 1 billion. The composition of our HTM portfolio as shown on slide 28.
Our regulatory capital ratios remained strong with a total risk based capital at 13% CET, one at 11, 44% and leverage at eight 7% respectively.
Back to the income statement total fee income for the quarter as shown on slide 22 was $176 3 million, including the gain on the sale of our visa class B shares.
Fee income compared to the first quarter was impacted by the $66 $2 million gain on that sale as well as other market related valuations, including a reduction of $10 5 million in company owned life insurance income and a $4 9 million negative change in the security gain or loss line related to other <unk>.
QWERTY positions and a $4 2 million reduction in derivative income from back to back swaps.
Additionally, the first quarter of 2022 included a $2 $4 million gain on the sale of our factoring business as well as $3 million of healthcare services conversion fees.
Excluding those variances second quarter fee income compared favorably to the first quarter levels.
One of the biggest drivers of the fee income momentum in the second quarter was the $9 million quarter over quarter increase in brokerage fees were <unk> and money market revenue share fees are included in our income statement.
The decline in equity valuations had a modest impact on fees tied to <unk> and <unk>.
AUM levels in the trust and Securities processing line.
Noninterest expense trends are shown on slide 23, the linked quarter decrease was driven primarily by a $10 7 million reduction in deferred compensation expense related to the reduced coli income I mentioned, along with lower payroll taxes insurance and 401K costs.
Offsetting these reductions were the charitable contribution we made during the quarter $4 4 million in additional legal expenses related to general corporate activities and $4 5 million of increased incentive costs for company performance.
Our effective tax rate was 28% for the second quarter and reflected a smaller proportion of income from tax exempt municipal securities for the full year 2022, we anticipate that the tax rate will be between 19 and 21%.
That concludes our prepared remarks, and I'll now turn it back over to the operator to begin the Q&A portion of the call.
Okay.
You would like to ask a question. Please press star followed by one on your telephone keypad. If for any reason you would like to remove that question. Please press star followed by two.
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Pause here briefly as questions are registered first question comes from Jared Shaw of Wells Fargo.
Okay.
Hi, good morning, Quinoa, Brazil filling in for Jared.
Hey, good morning Star.
Starting off.
Good morning, starting off on the deposit side.
Just as you're thinking about funding the continued strong loan growth clearly you have plenty of on balance sheet liquidity with a 60% loan to deposit ratio you have 400 million $400 million of deposits coming on later this year from the OMB deal.
I guess, how are you thinking about kind of funding the loan growth over the next couple of quarters.
How aggressive will you be in chasing new partner relationships.
Yeah.
Okay.
Thanks, Mariner I'll take that.
Brommer, Jim anybody else have anything to add they can jump in but I think it's important that.
Sort of pay attention to what our balance sheet looks like it has looked like for a long time.
The first quarter, we always have our seasonal deposits run off and if you take the runoff you saw.
Through the first half of the year here really it comes down to about a half a billion.
$500 million that would be.
Indicative of what's happened to the whole industry as opposed to the whole that you've seen because the rest of it would have been kind of that typical seasonality of our deposit so I would focus on them being about a half a billion dollars.
Went off and.
I think a couple of things I'd note about that one.
You've seen utilization rates go up.
Her words are.
Chewed through their cash or starting to borrow energy costs and inventory costs costs are up in general. So I think it's indicative of customers really using their cash as opposed to money, leaving our balance sheet as well.
How I would really describe more what has taken place with with our deposits. In addition to that we've talked many times in the past about the 14 plus $1 billion, we managed for customers off balance sheet.
And we can bring any of that on at any time.
And pay competitive rates.
We've demonstrated that we can manage spread and margin expansion.
While also paying market competitive rates. So the complexity of our customer base institutional commercial large corporate really allows us a lot of flexibility to bring in deposits on and off our balance sheet and flex our balance sheet, when we need to so really not worried about it at all and we've seen this.
Before.
Okay. Thanks for that and I'm, just wondering in terms of the higher interest bearing deposit costs, how much of that was due to.
The mix shift.
But maybe some of the lower cost deposits.
Exiting to other vehicles versus <unk>.
Their customers, calling in and asking for higher rates or just posting higher rates across the board.
I would say you know we've talked about for about 29% are hard indexed or total.
And so that obviously moves immediately with rate changes the rest of it we're able to manage.
Obviously, 45% of our deposits are noninterest bearing.
I can maybe switch the story on a little bit and focus on more on what we focus on.
If you think about the whole balance sheet instead of just deposits.
We're only up 12 basis points on total on a liability side and were up 39 basis points on the asset side, we were able to.
We're able to demonstrate as we always are Fred expansion of 13 basis points in margin expansion of 25. So and then and then you think about net income ultimately being the ultimate driver. So you think about spread and margin being up along with NII being up 7%. That's what we focus on so our we're focused on.
Being able to.
Manage expansion of margin spread and ultimately manage the increase of net interest income, which ultimately results in.
Their bottom line.
Okay.
Okay.
Okay, and then switching gears to asset quality any additional color you can provide on that $27 $7 million charge off maybe what industry was in what's the remaining balance on that credit and how much you had previously reserved against that.
Yes, I'd say.
There can be some limited comments here because the credit happens to be in bankruptcy.
We talked about this credit in the first quarter identified it.
And mentioned on our call in the first quarter that we thought we might be able to resolve it positively as the bankruptcy procedures progressed into the second quarter.
We realized Steve.
Steve with complexity and the changes that that wasn't can be the case anymore and we.
We ultimately made the decision to take the charge.
There's nothing in what I would say.
Nothing that you could comment about it that would be related to any industry issues vertical issues underwriting issues per se and.
So it doesn't really there's no trending to point to here and as we've said before.
It's a one off we have a long history of sort of different.
Demonstrating that we have a one off situation now and then you know if you look at page 27.
You'll see the history in our deck you can look at 'twenty seven sort of tells the story sitting here with the commentary our Chief Credit Officer, Jim Ryan, Our CEO and myself three of us have been.
Running credit and non credit committee for more than two decades together.
And this is this is nothing new and nothing different we expect to return in the back half of the year to our historic levels of $30 2700, 37, or 2730 basis points of charge offs on an annualized basis, which is in line with our 15 year history.
So that's pretty much what I would say Oh, yes, I'd also add prospectively in the data you'll see that our.
Our npls have gone back down to 10 basis points, which I think is from all the reports I've seen the lowest.
Aspect as number of our peer group for Npls.
Yeah, that's perfect corollary to my my last question I guess that linked quarter decline in nonperforming assets.
It drove that was that return of payment was that just kind of.
We're looking at the at the underlying credits and moving them back to performing status I mean, thats a pretty good move there.
That largely again because of how we operate.
And at peak it has jumped because of this credit and now its decline back down to its normal levels.
Largely.
Okay. Thank you.
Thanks, Steve.
Thank you. The next question comes from Nathan race of Piper Sandler.
Please proceed.
Good morning, guys.
Good morning.
Rob.
A question on your if we add back the coli impact within salaries in terms of the overall operating expense run rate going forward.
Any thoughts just kind of directionally in terms of kind of a hobby.
Total run rate trends.
Back half of 2022.
Yes, I would say I would use the 214 that we reported this quarter and as we noted $10 million of deferred comp expense was a credit to expense. This quarter. So if you add $10 million is $2 24, and then take five away from the charitable foundation. So we get to 2019, I would say off the $4 5 million of legal.
<unk> expense increased some of it was tied to some extraneous factors that we don't expect to recur. So we're talking about a run rate of $2 17 to $2 18, plus or minus for operating expenses.
Okay, perfect and then just going back to the charge off in the quarter.
Loan that was charged off here in <unk> was that the same one that you guys flagged last quarter in terms of expecting some favorable currency.
Yes, and I'd, rather just mentioned a moment it is and I was just mentioned a moment ago as the bankruptcy procedures progressed from first quarter second quarter.
The situation has changed and evolved.
So.
Okay understood and then just in terms of it sounds like pipelines are in good shape and you guys are still expecting above average loan growth going forward and with the reserve now down to the day one level. How are you guys kind of thinking about the need to provide for growth.
The overall macro uncertainty that exists today.
Assuming charge offs go back to that 27 to 30.
Okay point range that you talked to earlier.
Yes.
So yes first answer we do expect loan growth to continue.
Favre.
Favorable levels as they've been.
And as it relates to two how we reserve against it.
And we've talked about this since Cecil the algorithm there is a lot more complex than it used to be.
We have to rely on Moody's.
So as we look forward into this.
Unemployment data is that evolves and go into a recession there's a.
A lot of unknowns about how all of us will have to factor in the economic data factors and how we.
How we build that into our algorithm.
So there are some unknowns there about how that I would suggest from my vantage point, we're staring at.
At least marginally.
Unfavorable economic data, which would which.
From an algorithm standpoint that will drive us to.
To reserve a little loan growth should drive us to reserve.
The thing that works against it related to the algorithm is if our data continues to get better.
Bad data rolls off in exchange for good data on our portfolio.
That pushes against us reserving so it's the connection and the relationship between the two of those.
But I would suggest that we would probably marginally <unk> reserving.
A little bit against the economic conditions in the loan growth that.
We see and it would be the prudent and right thing to do anyway and.
How that plays off against 87 basis points, I mean, our preference would be not to see it go down.
Answer ratio.
But we've got.
An algorithm that we have to live with and.
So I hope that's helpful and I don't know Ralph.
Okay.
Got it.
Super Helpful. And then if I could just ask one more just going back to the.
Balance sheet discussion from the earlier question I, just wanted to make sure I understand kind of the expectations for deposit levels in the earning asset base going forward. It sounds like youre expecting some additional outflows maybe a breakeven and then you have the HSA deposits coming on <unk>. So just overall, Ron perhaps how should we be thinking about the earning asset.
Base going forward with those deposit dynamics at play.
Yes, I don't think we expect to see further outflows in.
In the third quarter necessarily.
So I would say stable to maybe maybe grow a little bit based on our ability to bring on as I talked about earlier, we can bring on as much of the $14 billion, we have off balance sheet.
Pain competed at competitive rates I don't see us going backwards more of a stabilizing approach for the rest of the year and then having the.
HSA deposits coming on.
David.
Yeah and then.
Again remember, we can rotate investments into round two right. So we have a $13 billion investment portfolio, 58% loan to deposit ratio. So we've got that also working for us.
Some real time thinking on the portfolio side need in terms of just whether we reinvest our cash flows from our securities portfolio every month, we talk about it at our asset liability Committee.
Sometimes we choose to reinvest sometimes depending on what the deposit.
Outlook looks in loan growth outlook looks we might decide not to reinvest.
Okay understood I appreciate all the color you guys taking the questions.
Thanks, Nick.
Thank you.
Just a general reminder, it is star one on your telephone keypad to ask a question.
The next question comes from Chris Mcgratty of K B W.
Please proceed.
Hi, Good morning. This is Nick <unk> on for Chris Mcgratty.
K B W.
I wanted to start could you guys can just remind me what the monthly cash flow runoff is for your bond book.
Yes on page 28, you'll see the portfolio statistics.
For the next 12 months, we expect about $1 $2 billion to come from our portfolio.
Yeah.
Okay, that's great and then.
And just on the cash level, obviously, you guys kind of reduce cash you're down to about.
10% of average earning assets.
Can we look at this as kind of a floor for the cash levels.
We run that down.
Further to fund.
<unk> loan growth.
Yes, if you look at the bottom of slide page 21, we show the pre pandemic levels right. So if you look at the interest bearing deposits, it's slightly higher than where we were pre pandemic. So we could expect some.
Additional contraction in those balances, but obviously as you see on a quarter over quarter basis.
The response to what happened on the deposit side of the equation, we did see some normalization of these balances.
Oh sure. Okay. That's helpful and then.
Maybe just on the on the loan growth side.
As you look into the back half of 2022 is there any.
Any portfolios, where we could see some upside surprise.
And also potential slowdowns.
As far as different categories.
Well I think I mean from a growth standpoint.
We give you a picture into the upcoming quarter as we always do so third quarter looks strong as it has.
I would say it seems to be coming across the board from all categories and all regions.
We don't really get too far beyond one quarter look as part of the guidance goes but.
The indicators for growth seem to be good as you look into the whole back half of the year.
Ed.
As far as upside or downside.
We're all kind of deal at the same fact, there as it relates to we've got the fed decision today.
What happens with <unk>.
Because of the labor markets what happens with.
Back half this year I think.
As I said I think last quarter, you know comps.
Companies are doing pretty well, they're sort of sold out from last year on into through this year. So I think the impact of a recession is really a 23 impact so loan growth feels pretty good for the remainder as Jim Ryan the only one of the things that could be a downside surprise for banks would be increase in rates and at what point that people.
Decided not to take on the next project or is that backlog be canceled, but there is already booked but that isn't happening yet.
We're going to stay in close contact with our clients.
Sure.
Theyre already baking those increases into their projections.
Payoffs slow that could also be another factor, it's a benefit ratio we've seen from first quarter to second quarter, we're already seeing that moderate because of higher rates. So we went from mid fours three one on payoffs Paydowns. You also have utilization rates up marginally and I think both of those things will.
Louis based on the current book also about 60% of our new business in the second quarter was from new customers. So.
That also we should see sort of bogey things for the back half of the year.
Sure.
It's tough to construction companies about their backlogs Jim talks about that they will all say theyre still very strong.
And the only thing they see.
The developers, there's a bit of.
Softening in the <unk>.
Forward looking pipeline for developers, but thats being made up for larger projects public.
Public private and kind of large cut data farms and distribution facilities in multifamily.
Areas, where theres still a lot of need.
Making up for logistics and things like that are making up for some of that more expensive borrowing in Atlanta costs.
Yes.
Great that's great color.
Thank you for taking my questions.
Let's not forget also that rates are still at historically low levels right.
Talking heads talk about.
All the crazy stuff going on with rates were still at historic low levels. So.
I think they're saying.
Okay.
Thank you. The next question comes from John <unk> of Janney.
Please proceed.
Good morning, everybody.
Hey, good morning, John .
Okay.
Ron on the margin.
Obviously nice expansion.
Can you talk about maybe just give a little more detail do you have what the margin was maybe in June .
You should think about the margin going forward.
I don't think we get specifics just because of deposit inflows and outflows. It's hard to just use any months data, but I would say, obviously with the 25 basis points that we got in the second quarter, though is probably a little faster than probably for the industry and for us as well, but we continue to expect expect modest margin expansion going.
Forward.
Based on where we see loan pricing, we're going to be fairly disciplined on the deposit side and managing that as you heard Mariner talked about we're going to manage to net interest spread.
And make sure that.
That translates to margins being maintained our expanding from here, but at a more moderate pace in the second quarter.
Okay makes sense.
And Brian just one more question on the brokerage fees I mean, I get the higher rates in the <unk> one fees.
But I guess I was a bit surprised to see the jump from the first to the second quarter and if we get I think in prior quarters, you've talked about looking back to 2019, I think when we're brokerage fees were in for that for the whole year they were $31 billion.
Can you just talk about what was the net number this quarter.
Moving forward what are you seeing the brokerage line item to the extent you can.
Yes, I think it was.
Pleasant surprise for all of US obviously with the fed raising rates by 75 basis points in the back end of these investments being really short term in nature and where the treasury curve is it was a nice surprise for us. So what we said relative to the $31 million back in 2019 was that book of off balance sheet deposits, where we get revenue share in <unk>.
<unk> has doubled so clearly we see some opportunities as interest rates still elevated to.
To be able to mimic the 12 $12 $5 million run rate you saw in the second quarter.
And then ultimately happen quicker.
Alluded to it because the short end came up.
So with the yield curve has made a big difference in how quickly that happened and how quickly money markets were able to.
Invest and make money.
On the shorter end of the yield curve, which allowed them to share with us sooner.
So Rob Mariner just to clarify, though again, so we should see.
Stay at this level, if we get no further rate increases or even with further rate increases just given where the forward curve as I guess.
Yes, good marginally increase depending on what happens with our off balance sheet deposits right you heard Mariner answer about deposit question about <unk>.
Absolutely tap some of these off balance sheet deposits balances go down on the other hand, if our aviation and corporate trust businesses pick up faster than we expect we could see more deposits being added in the off balance sheet category and we can see more.
Volume driven increases to this line item, but I think.
Just like my question about margin I think the.
Any ongoing increases will be modest compared to second quarter levels, Yes. There is.
Of the off balance sheet book and then there's the rate paid right. So on the rate paid side and that's going to moderate though I think there's room it kind of depends on what happens the short end of the yield curve.
It is likely to moderate but I think there is some increased alone there with rates still rising.
And then and then it just pad size.
Size of the book.
I expect we expect it to continue to grow.
A lot of that has to do with.
What's happening with municipal underwriting on a national basis. It has to do with what happens with <unk>.
Aviation.
Planes being bought sold nodes.
Like that and so I again also sort of expect that to grow a bit.
So.
Okay makes sense. Thanks for the added color guys. Thank you.
Thanks, Joe.
There are currently no further questions registered at this time I will pass the conference back over to the management team for closing remarks.
Thank you and thanks for joining us today and for your interest in USD as always if you have follow up questions you can reach us at 81686071.
Thank you.
Sure.
Okay.
That concludes the conference call. Thank you for your participation.