Q2 2022 CrossFirst Bankshares Inc Earnings Call
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I would now like to turn the call over to Heather Worley Director of Investor Relations. Please go ahead.
Good morning, and welcome to the cross first Bancshares second quarter 2022 earnings conference call before we begin please be aware. This call will include forward looking statements, including our business plans and future financial performance and the acquisition of Central which as we mentioned on the announcement call how we warfare.
Forrest and stopped when snake It operates a central bank and trust in Denver, and Colorado Springs, and farmers and stop in Spain, and New Mexico.
These comments are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from these statements are forward looking statements are as of the date of this call and we do not assume any obligation to update or revise them.
Sept as required by law statements made on this call should be considered together with the risk factors identified in today's earnings release, and our other filings with SEC.
We may be referring to adjusted or non-GAAP financial measures a reconciliation of non-GAAP financial measures to GAAP financial measures can be found in our earnings release. These non-GAAP financial measures are not meant to be a substitute for or superior to financial measures prepared in accordance with GAAP. This presentation.
It will include remarks regarding the second quarter financial results from Mike Maddox, President and CEO of cross first bancshares than cloud.
F O Cross first Bancshares and Randy Rapp President across first bank.
At the conclusion of our prepared remarks, our operator, Jason will facilitate our Q&A session. At this time I would like to turn the call over to Mike <unk>, who will begin on slide four of the presentation.
Thank you Heather.
Good morning, everyone and thank you for joining us today as we discuss our second quarter 2022 result.
This is an exciting time for our company with the pending acquisition of Central Bank, which was announced in June .
I am pleased to share that we've submitted a regulatory application and are actively planning for an anticipated close in the second half of this year as.
As we continue to get to know the central team.
It confirms our view that our companies are a great cultural fit.
And we expect the combination will deliver enhanced products and services for our clients.
As I mentioned during the announcement call. We believe this merger as a great. It's a great right opportunity for both cross first and central.
We are confident the addition of top tier channel like Scott page and his team make this deal a win for cross first and our shareholders.
The deal is expected to bring all of central as market leaders, a private banking line of business that is well established in Denver.
Low cost deposits and experienced SBA team that we can leverage across our existing markets and our mortgage operation.
Can create additional fee income opportunities.
The ability to provide enhanced technology and expanded products and services paired with our larger balance sheet will deliver added value for our clients and shareholders.
This transaction is immediately accretive for our shareholders and will deploy a portion of our capital for growth with an estimated earn back under three years.
As you know talent acquisition and development is a major component of our corporate strategy.
We have added 13, new producers this year, including eight in the second quarter.
We believe our entrepreneurial culture is a differentiator and helps us attract high caliber talent.
Ensuring that we have the right leadership in place is critical to executing on our strategic initiatives.
An excellent example of this is the promotion of Randy Rapp as President of Cross first bank.
Randy will overseas sales and business development technology infrastructure operations, along with his oversight of credit and risk management.
His promotion also allows me to focus on the company's long term vision to achieve strategic and sustainable growth.
The challenges of a rapidly evolving banking landscape and spend more time with our shareholders customers and prospects.
We hired a new general counsel this past quarter Amy Abrams.
She is responsible for the oversight of cross first legal affairs, and corporate governance matters and brings a wealth of experience in public company and Securities law matters.
We continue to advance our market expansion in Texas with the approval of our regulatory application for our new pressed in central location in the park city's area of Dallas.
We are happy to announce the hiring of Coty Kaiser to lead our entrance into the Fort worth market.
His deep Fort worth routes and he has.
And his team have significant experience with middle to upper middle market companies in the Fort worth area.
We expect to be filing a regulatory application for our fort worth location in the near future.
As a part of our strategy to add talent to help US scale, we have hired a new operational leader J C. Feaster, who will serve as chief operating officer of the bank.
JC has a strong operational background and will be instrumental in continuing to optimize our processes and efficiencies as we expand.
Turning to our financial performance we.
We reported $15 5 million of earnings and our team produced $179 million of loan growth during the quarter, which is an annualized rate of over 16%.
We know growth without strong credit is not sustainable.
I'm proud of the improvements we've made in our credit quality and the work our team is doing to ensure we closely monitor the impacts of rising rates and a shifting economy.
We must manage risk appropriately and take a balanced approach as we build long term value for our shareholders.
We continue to focus on technology, and providing an exceptional client experience.
Mentation of our new digital platform for clients is on schedule and we expect to go live in the fourth quarter. This will provide a unified digital experience across all channels.
Most importantly, we are committed to driving shareholder value.
With another quarter of solid earnings we added to our strong capital position, while investing for our future.
We have continued our stock buyback initiative as well as invested in technology and talent for future growth.
We are well positioned with a great team supporting dynamic markets and I couldn't be more excited about what we can accomplish the rest of this year and beyond.
Our team continues to execute as one team one bank with a shared vision of excellence.
Now I will hand, the call over to Ben to cover financial results in more detail.
Thank you, Mike and good morning, everyone.
As Mike indicated we earned net income of $15 5 million or 31 cents per share this quarter and we maintained our solid loan growth.
Quarterly return on average assets was 1.12% and return on average equity was 10.15%. These.
These ratios were the result of strong core performance. Despite some outsized costs during the quarter.
We are happy with the consistency of these ratios, which are driven by strong earnings and the execution of our growth strategy.
Our interest income in the second quarter increased 11% on a linked quarter basis to $52 8 million.
This was driven by rate increases strong loan growth and accrual improvements, which was a million dollars of the change.
Interest income also includes one additional day in the quarter, which was offset by lower loan fees, primarily due to triple P loan forgiveness.
Our average loan balances were up two 4% quarter over quarter and average yield was up 28 basis points.
Interest expense was up 1.5 million for the quarter due to rising rates.
Our percentage of demand deposits remained consistent despite the competitive rate environment.
Overall, our cost of funds increased 11 basis points this quarter.
Mostly due to rates and to a lesser amount increased borrowings in wholesale funding.
Our total deposits beta against the F. O M. C increases this year was about 30 through the end of the second quarter, though we made some rate moves at the end of June that will push that somewhat higher for the rest of the year.
Net interest margin was up significantly to 352% on a fully tax equivalent basis, we expect margin to remain in a consistent range to the first half of the year or potentially expand in a rising rate environment, although deposit migration in pricing could be headwinds.
Our balance sheet sensitivity expanded with 70% of our earning assets repricing of maturing over the next 12 months with much of that being in the first 90 days.
I would also note we no longer have any significant amount of loan rate floors in effect.
Noninterest income for the quarter was $4 2 million and declined about 700000 from first quarter due to lower credit card transaction volume, partially offset by better treasury fees.
We remain focused on increasing credit card volume and we had notable growth in the number of credit card clients. During this quarter, increasing the diversity of this revenue stream.
Noninterest expenses for the quarter were $29 2 million up 1.6 million from the first quarter.
This increase was due almost exclusively to employee separation costs and costs related to the central acquisition.
Salaries and benefits decreased to a more normalized level as the first quarter included incentive payments and related taxes.
We also experienced unexpected increase in technology spending related to our digital product conversion.
We anticipate noninterest expense to be in a range of $28 million to $29 million for the next two quarters outside of additional merger costs that we'll see around but closing.
We will continue to manage our cost base tightly given the current environment and strike a balance between growing earnings and investing for the future.
Our tax rate was 25% for the quarter.
Slightly from last quarter and in the range, we expect for the rest of the year.
Turning to the balance sheet, we had robust loan growth this quarter as Mike mentioned at 16% on an annualized basis dips.
Deposits were up nearly 3% from first quarter with modest growth in noninterest bearing deposits as well.
Notably our noninterest bearing deposits are up 42% over a year ago, and our bankers remain focused on growing DDA accounts.
Our capital ratios remained strong as we generated significant earnings.
We experienced some additional unrealized losses to the securities portfolio as longer term rates moved right moved up right at the end of the quarter.
But we believe this will resolve in the longer term as the interest rate environment moves through the cycle.
We intend to continue to hold our securities until values improve and we exclude the unrealized loss from our regulatory capital calculation.
We repurchased 238000 shares in the second quarter and.
And we will continue our buyback under the additional board authorization, we received in May.
With strong loan growth this quarter, our loan to deposit ratio increased slightly to 95%.
As I noted we affected some deposit rate increases near the end of the quarter to drive additional deposit growth and we have significant capacity for borrowing or wholesale funding if needed.
We had another great quarter and are well positioned going into the second half of the year.
I would like to turn it over to Randy for a more detailed discussion of credit and the loan portfolio.
Thank you Ben and good morning, everyone.
Like to take this opportunity to express my appreciation to Mike Our board of directors and our management team for their support and confidence as I begin my role as president of the bank.
I look forward to working with this dedicated driven and talented team of banking professionals to deliver outstanding financial performance as we continue to expand and grow our company.
In my new role I will continue to have oversight of credit and risk and have confidence in the leaders of those vital areas as well as the people processes and procedures, we have added and implemented over the past several years.
Maintaining good credit quality metrics will be a key objective moving forward.
We continue to actively monitor the uncertain economic environment, and our loan portfolio by routinely visiting with our clients to understand potential impact to their businesses and financial performance. We recently completed a thorough loan portfolio analysis applying stress factors to interest.
Rates and operating profits to identify potential weaknesses. This.
This exercise affirmed our current grade accuracy and resulted in minimal great changes in the portfolio.
Enhanced portfolio monitoring will be imperative given the increases in inflation rates short term interest rates supply chain disruptions employee wages and commodity prices, which could impact portfolio performance moving forward.
As previously mentioned in Q2, we reported a 4% quarter over quarter loan growth rate or 16% on an annualized basis, we experienced loan growth centered in C&I and commercial real estate portfolios with a large percentage of the growth this quarter coming from C&I.
The energy portfolio continued to decrease during the quarter, dropping 37 million to $226 million or 5% of our total loan portfolio.
Portfolio over turnover rates stabilized during the corner, but remained slightly above our historical average illustrating the higher continued level of loan payoff activity.
We expect this turnover rate to continue to decrease over the next several quarters.
C&I line utilization increased during the quarter to 50% from 40 point 42, 5% in Q1 of 2022.
In Q2, we experienced improvement in some of our key credit metrics.
Slide 12 illustrates in Q2, we saw a slight increase in our classified loan totals classified loans increased nine 8% during Q2 to $85 million.
The increase was attributable to downgrades in the C&I portfolio related primarily to credits negatively impacted by supply chain issues classified.
Classified totals in the energy portfolio reduce 25% in Q2 to $12 million and now represent 15% of total classified loans.
Our classified loans to total capital and combined allowance for credit loss reserve ratio ended the quarter at 12% up from 10, 7% at the end of Q1, we expect this ratio to remain in this range in 2022, but could see some short term volatility.
On the current uncertain economic environment.
In Q2, nonperforming assets decreased $4 8 million to $30 8 million or five 4% of total assets due primarily to decreases in several C&I and energy transactions.
Over the past year Npa's have decreased from one point O 9% of total assets, 2.54% of total assets, 19% of nonperforming assets remain in the energy sector down from 46% in Q2 2021.
This sector continues to be positively impacted by the sustained higher commodity prices at the end of Q2, we had a combined allowance for credit losses to non accruing loan ratio of 221%.
Moving to slide 13, net charge offs for the quarter remained low at 1.1 million, resulting in an annualized net charge off ratio of 10 basis points.
The net charge off rate for the trailing 12 months was 9% down nine basis points down from 13 basis points. The prior quarter. We expect this lower rate to better represent the anticipated net charge off activity for the remainder of 2022.
As previously messaged.
We adopted Cecil on January one 2022. So this is our second quarter reporting under this methodology at.
At the end of Q2, we reported a combined allowance for credit losses of $61 1 million or 1.35% of total loans.
Combined allowance includes the allowance for credit losses on loans of $56 million and reserves for unfunded commitments of $5 1 million for the quarter. The bank reported provision expense of $2 1 million compared to a small release of reserves of 625000 in Q1.
Our provision to net charge off ratio for Q2 was 193%.
In closing we are pleased with our balanced loan growth improvement in nonperforming asset balances and lower quarterly net charge off activity. We continue to closely monitor the U S and global economic indicators for potential impact on our markets clients and prospects as we evaluate our portfolio.
Oh, and new credit opportunities, we are fortunate to be located in some high job growth markets with more favorable economic trends I look forward to answering any questions you might have shortly this wraps up our prepared remarks, and now I'll turn it back over to the operator to begin the Q&A portion of the call.
Thank you we will now begin the question and answer session.
The question you May Press Star then one on your Touchtone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two please limit yourself to one question and one follow up if you have further questions you may reenter the question queue.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Michael Rose from Raymond James. Please go ahead.
Hey, good morning, Thanks for taking my questions Alright.
Alright, Michael just wanted to good morning, just wanted to start on the loan growth outlook. So you reiterated the guidance I think what I'm hearing is relatively positive given the markets that you're in.
Obviously.
The first go office in the Phoenix expansion and the deal will help at some point down the road, but.
Why did you not raise that guidance I guess I'm trying to figure out I mean, do you expect a slowdown in some of it self imposed is it.
Just given maybe competition.
The ability to fund growth attractive spreads.
Or are you starting to see maybe a pullback of retrenchment from some customers we heard that from a smaller Texas back yesterday, just wanted to kind of get your kind of updated outlook and maybe if there's some conservatism baked in there. Thanks.
Thanks, Michael.
There is some conservatism baked in there I think we're just trying to be prudent not really knowing.
What's going to happen with the economic environment, what continued rising rates is going to do.
Two to loan demand we are in great markets.
With expanding in Phoenix, we're excited about Fort worth.
The the Dallas Metro area continued substantial growth, we're seeing growth really across the board in our markets, but we still feel like 10% growth is a good number and.
You know hopefully maybe we can do a little better than that but.
We're just trying to be thoughtful about our approach here because the future is a little bit cloudy with what's going on in the economy.
Yes.
Okay, Great and then maybe for Ben can you just kind of walk us through the updated expectations.
On the on the margin.
Obviously, assuming you know $3 75, a fed funds at the end of the year.
That would imply if you're if you're going to have a margin somewhere where it was in the first half of the year that would imply some compression in the back half of the year and if we don't get to that level of fed funds rates can you just walk us through the sensitivity and maybe some of the puts and takes so we can better understand how to think about the margin or as you move forward.
Yeah.
Sure Good morning, Michael.
Well I think the.
We expect the margin to be relatively consistent with second quarter and some opportunity for expansion as rates come up as I as I mentioned, we did make some strategic deposit rate changes at the very end of the quarter to drive better deposit growth to fun.
And our loan growth, which as we've all talked about has been very strong.
That.
Beta I think we'll be we're modeling something in the neighborhood of 50% for the remainder of the year most of that will come in in money market, which is really where we see the most competition for our customers and where we have to be the most responsive.
Don't have a different rate forecast I think than anybody else. So we're assuming the fed continues to move and gets up to two three.
375, which is consistent with with expectations.
The one other headwind we have is that we did have about a million dollars of NIM improvement in the quarter purely from loans coming off of non accrual. So I never expect that to occur in my modeling or in my guidance, so netting that together.
Other.
I haven't projected a big increase but there's certainly opportunity.
Yeah.
That's very helpful. And then maybe just one final one for me just somebody at the ATM and credit card.
Interchange was down pretty meaningfully Q on Q is there any sort of seasonality in there I think what we've heard from some of the other banks have reported is there's actually really positive trends. So I was little surprised to see that down as much as it was can you just give us any color there. Thanks.
Michael It's a little deceptive.
We have won substantial customer, who really had outstripped volume outsized volume for quite a while.
That business in particular has slowed a bit but if you look at our overall credit poor credit card portfolio. It is growing and we're growing clients and we're growing cards and the general trends in the overall portfolio are really good.
We just had one large customer whose volume slowed a bit and and it's just related to some.
Some seasonality of their business.
Okay. Thanks for the color I appreciate it.
The next question comes from Brady Gailey from K B W. Please go ahead.
Thank you good morning, guys.
Hey, Brian Brady.
Maybe one more just on the deposit rates your cost of deposits for the quarter was up to 42 basis points. I was just curious if you had the spot rate as you exited the quarter. It sounds like you guys made some changes there but.
Where's the starting point.
Headed into <unk>.
Yeah.
Brady that would be just a little bit over one one O five one O seven.
In that neighborhood.
100, <unk> so cost of total deposits.
Over 100 basis points.
I'm sorry that that's.
That's new money expectation.
Give me just one second here I'll tell you the.
Spot and.
Total deposits Brady.
The 42 Bips.
Total funding a little bit higher right. When you add in our FHL B borrowings sorry, that's the that's the one O five I was giving you deposits 42.
Okay, and then so Mike I mean, when I listen to your comments.
Promoted Randy New General counsel.
A new CEO , a new head of Fort worth you are investing in technology. It feels like you all are.
You're spending a lot of money to kind of position the bank for the long term I'm just wondering bigger picture do you get the feeling that there's still a lot of our continued investments that needs to be made we need to grow this franchise or have you done a lot over the last six months to the point, where you can somewhat take a breather as far.
<unk> is investing in new initiatives for the bank.
Yes.
I think we have made a lot of the investments and Brady as you know several of those those positions are replacement positions.
And for example, promoting Randy.
There was no new net add of people. So it was really more a reorganization.
Restructuring of our organizational chart.
The hiring of J C was a that's something we've been looking at something we budgeted.
As we continue to expand our Amy.
Amy Fouse Who's now our CAH Aro, who has run operations since 2009.
Just had to shed some of her her titles as we grow and and JC came from a really strong regional bank with a lot of experience. So we think he'll really help us on the process and efficiency side.
But yeah, we've made.
Much of the investment.
Going forward more of it will be if.
If we enter a new market right will be well, adding talent.
Okay.
Great. Thanks for the color.
Thanks.
The next question comes from Jennifer in Denver from Truest Securities. Please go ahead.
Thank you can you just talk about what prompted you to conduct the the loan review you discussed during the second quarter.
And.
And can you just talk about what your provision outlook do you think could be in the second half of the year.
Yeah, Hey, good morning, Jennifer this Randy happy to answer that.
We just looked at the rising rate environment, Jennifer and some of the negative economic data that was out there and said you know, let's put the portfolio through a stress test just felt like that was appropriate given where we were in the economic cycle and we built out a fairly robust.
Commercial real estate Trust stress test model to run different scenarios through so we're able to utilize that and on the C&I portfolio. We just looked at all borrowers of $10 million and above and stress those for interest rate and for drop in operating profit just.
Just to get a a bit of an idea what what what early indicating.
Early warning signs there were and as we said in our comments I mean, the portfolio held up very well through that stress test, but that was really the genesis.
<unk> that.
Provision we are as I said, we're in our second quarter under Cecil we're still learning a little bit how cecil reacts to different inputs as you know and you've heard from the other banks. The are the change in our in reasonable and supportable forecast can move that provision quite a bit.
But we would say that the provision level, we had in Q2 would probably be representative of what we would expect in the remaining quarters.
Great. Thanks, so much.
The next question comes from Andrew Liesch from Piper Sandler. Please go ahead.
Hey, good morning, everyone.
Morning.
Kind of a quick follow up on the longer view is that how you identified some of these loans that were moved over to some standard or is that.
<unk> already on your radar and.
That with the.
No supply chain issues that substandard classified as a better rating.
Sure Andrew This is Randy good morning.
So the the one credit I referenced that had the supply chain issue had actually been identified prior to the the stress test and so really the stress test did not show any material.
Great changes in.
In the portfolio and again, we'll continue to monitor that but that's not a onetime exercise that to continuing exercise as we get.
Companies start reporting our Q2 numbers will we'll rerun that with updated information. So that was not a one time event, but are the other credit had been previously identified.
Andrew Andrew I would just add I mean.
It was just something that we looked at and we want to make sure we're really appropriately reserved and with with rising.
Rising rates with inflation with supply chain with everything you read out there. We just really wanted to double down and make sure. We didn't have any issues in our portfolio and knock on wood and much like you're hearing from a lot of the banks, we are not seeing it show up yet in our customer base and so.
We're going to continue to closely monitor our portfolio, we're going to stay on top of it like we always do and and really try to be proactive as we need to.
I don't know I think that's a that's a good move at this point in the cycle.
Then just over to the margin discussion follow up there I guess what are you guys seeing on the loan beta it's all these rate hikes and passing on.
We got the higher rates on new new loans. So there's a lot of that is being competed away.
Yeah.
Hey, good morning, Andrew well, probably the best fact.
In fact to give you there is that as I said, we're about 70%.
Variable or re pricing.
61 of that 70% I think is in the first 90 days. So a lot of sensitivity in the loan portfolio. We had 28 bps right of expansion in the loan yield quarter over quarter as I said.
We expect it to be.
To move in a similar pattern right as we see increases here.
For the rest of the year.
So we're really really happy with the variability of the of the portfolio and and as I said in my comments I think there is opportunity for expansion there.
Yes, Andrew this is Randy I would I would add to that that you know on the floating rate I think we're seeing some expansion in margin deals are you know everything is competitive, but we're seeing a little bit more priced.
Pricing than we had seen.
A lot of movement from customers to look at fixed rates. So we're being cautious on that front, but on the floating rate, we're seeing margin expand slightly.
Okay.
Very helpful. Thanks for taking the question two I will step back thanks.
Thank you Sandra.
The next question comes from Matt Olney from Stephens. Please go ahead.
Thanks for taking the question wanted to follow up on the loan growth topic, and I think Randy you mentioned the change in the utilization rates I want make sure I got this right. It was 42% in the first quarter and an increase of 50% and <unk> did I get that.
That's right Matt.
And any color as far as any specific industries, where you saw.
More considerable movements in <unk>, because that's a that's a pretty notable change for just one quarter overall.
Yeah.
And so during the quarter, we saw a good balanced growth between CRE and C&I, you're asking specifically within C&I and really within the C&I portfolio. We had good geographic diversity around our footprint and we also had good industry diversity. So there was no one outlier that that had an increase and.
Some of the top increases Matt we're in engineering financial services Health care.
And professional and technical services so.
Yeah, obviously, we watch that at the industry level and we saw broad based growth there there was no one outlier.
Okay. Thanks for that Randy and then as far as the C&I credits that were impacted by the supply chain.
Which industries that was mostly most focused on.
You know Matt on that it's it was a supplier to a big box sporting goods and as you've seen you know a lot of the big box.
Retailers are.
Got caught with high inventory levels and this client was caught up in that where you know they're having the big box guys are having to sell through some of that excess excess inventory before they restart purchasing at the same level. So that's our that's the segment.
Okay.
Appreciate that.
And then circling back to the funding strategy it looks like the funding strategy and in.
And <unk> was to utilize some borrowings and take down some liquidity.
As we roll into the third quarter. It sounds like you've already updated deposit pricing. So should we assume that the loan growth in the third quarter should be primarily funded by deposit growth from here.
Matt that's the goal right.
You know over the past 18 months, we really are.
We're able to run off a lot of wholesale funding.
Due to our core deposit growth and so in the second quarter, we did.
Add a little bit of that back, but you know, we're still going to fund our loan growth with core deposits in.
We are.
We've put in deposit pricing in place to do that and I'm really proud of the fact that we've grown DDA, 42% over the last 12 months.
And so we're going to continue to focus on growing checking accounts and funding our balance sheet with.
With core deposits when you open new markets.
The loan growth always comes a little faster than the deposit growth and so Phoenix for example, although they're doing a fantastic job there basically almost funding themselves had tremendous loan growth but.
Deposit growth always lags a bit and so all of that will will rationalize over time.
Okay and just following up on that I think Ben mentioned on the call some of the new deposit pricing.
Just over a 100 basis points for some of the new money coming in I'm curious how does that compare for some of the wholesale channels.
Uh huh.
For the back half of the year.
I think that number Matt was a wholesale number he gave you.
Yes, there are.
Comparable.
Matt.
Not a huge amount of difference between.
Wholesale and what we would we would pay for new money at retail it's our our goal generally for those to be in a similar range.
Okay.
Okay. That's all from me guys. Thank you. Thanks.
Thanks, Matt.
Again, if you have a question. Please press Star then one.
Yeah.
There are no more questions in the queue. This concludes our question and answer session I would like to turn the conference back over to President and CEO , Mike Maddox for closing remarks.
Well I want to thank you and thank everybody for joining us today.
Really really proud of our quarter.
As I said earlier, we're very well positioned for the rest of the year and beyond we're very.
Very excited about the opportunity to add a terrific team of bankers. So the cross first family and in Colorado and New Mexico.
You know that opportunity will provide us great core funding and access to some really dynamic market. So.
Yeah, just really proud of our team and just again want to thank you all for joining us and I look forward to talking to you at the end of the third quarter.
Please direct any follow up calls to Heather at cross fit Dot com.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
[music].
Yeah.