Q3 2022 Columbia Banking System Inc Earnings Call
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Ladies and gentlemen, thank you for standing by welcome to the Columbia Banking systems third quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will be given at that time. If you are on the telephone and should require assistance during the conference. Please press star.
Zero as a reminder, this conference is being recorded I would now like to turn the conference over to your host Clint Stein, President and Chief Executive Officer of Columbia banking system.
Thank you Kevin you're welcome and good morning. Thank you for joining us on today's call as we review our third quarter results.
The earnings release and accompanying Investor presentation are available, we'll get baked out.
Our bankers really relentless focus on meeting our customers' needs is reflected in another quarter of consistent.
Handing performance.
Net income of $64 $9 million with a new record eclipsing the prior high set just last quarter.
Meaningful increase in topline revenue was supported by robust loan growth stable deposit base and an expanding margin.
The last rate cycle structural advantages of our deposit base, coupled with our wealth management capabilities allowed us to significantly outperform industry deposit betas.
At this point in the current cycle, we are seeing favorable results.
Teams throughout the company and remain focused on meeting the needs of our customers and continuing to scale our existing operations.
Same time working to get their unquote counterparts to plan for a seamless close of our merger.
But simultaneously focusing on sourcing cultivating and preserving long term relationships. We believe the combined company will best be positioned to respond with scale with future market share growth opportunities.
Preparation for our combination with Umpqua holdings continues to progress.
Both companies eagerly await regulatory approval.
On the call with me today are Aaron Deer, Chris Mary well and Andy Mcdonald.
So in our prepared remarks, we'll open the line for questions.
Before handing the call over to Aaron I need to remind you that we may make forward looking statements during the call for further information on forward looking comments, please refer to either our earnings release website or our SEC filings Eric.
Thank you Glenn and good morning, everyone.
Pre tax pre provision income was $88 9 million rose by $10 2 million on a linked quarter basis and represented a new company record.
This was driven by a combination of rising net interest income and higher noninterest income.
Total deposits ended the quarter at $17 9 billion, which was a slight decrease of $16 million in the prior quarter, but the overall mix improved with a higher level of noninterest bearing balances.
Moreover, much of the rate sensitive deposit outflows during the quarter reflected movement of funds with <unk> financial.
Total cost of deposits rose by five basis points to 10 basis points during the quarter first largely by the routine repricing of municipal deposits.
Allowance rose by 370 million to $11 7 billion. This represents a 13% annualized growth rate with balances propelled by 598 million of new originations and a one four point increase in the line utilization rate.
Total investment securities decreased $492 million during the quarter to $6 8 billion, which was split 69% available for sale and 31% held the maturity quarterly.
Quarterly decrease was driven by scheduled maturities premium amortization and pay downs as well as the fair value Mark on our assets.
Portfolio.
The expected yield on our current portfolio is one 9% up one basis point during the quarter.
Our net interest margin increased 31 basis points on a linked quarter basis to $3 47, as we benefited from the repricing of existing floating and variable rate loans as well as strong production of new loans at rates above the portfolio average.
Moreover, our funding costs increased only slightly higher as we benefited from our stable low cost funding base with half of our deposits in noninterest bearing accounts.
New loans were brought on at an average tax adjusted coupon rate of $4 73, which is up from $3 93 in the second quarter and higher than the overall portfolio yield of 453.
We continue to be well positioned for additional rate hikes as the fed battles inflationary pressures.
Noninterest income increased linked quarter by $1 6 million to $26 6 million.
This included a $3 7 million gain related to the sale leaseback of the building acquired from a former acquisition.
This was offset by a decrease in loan revenue up $1 million due to the cyclical decline in mortgage banking as well as lower prepayment fees on loans.
Noninterest expense increased by $6 1 million linked quarter to $101 million adjusting for merger related expenses of $3 2 million.
In the third quarter and $3 9 million in the second quarter noninterest expense increased by $6 7 million to $98 2 million. This increase was largely due to $3 7 million as higher compensation expenses, resulting mostly from higher incentive payouts a drop in capitalized loan origination costs from lower but still strong.
Production and a return to normal 401 matching expense after a favorable true up approximately 900000 in the second quarter.
Data processing and software and occupancy expense increase due to project timing and loan expenses increased due to fluctuations and client reimbursement timing for the current quarter. We project our expense run rate excluding merger costs to be in the mid nineties.
The provision for income taxes increased $1 3 million linked quarter to $17 $5 million, representing a 21, 2% effective rate. We continue to expect our 2022 tax rate to be in the 20% to 22% range, perhaps at the higher end of the range given our higher profitability.
Lastly, as we have previously discussed the rise in interest rates resulted in a negative fair value Mark on our investment portfolio reflected through accumulated other comprehensive income.
This is mark does not affect our regulatory capital ratios. It does weigh on our tangible common equity ratio and tangible book value. Excluding OCI. However, both our TCE ratio and our tangible book value increased during the quarter.
And with that I'll turn it over to Chris. Thank you Erinn loan production was our best third quarter on record and our fourth best quarter overall.
I'm, especially proud of what our bankers continue to achieve given an extremely competitive market for loans and competition remaining very aggressive on pricing and structure.
To achieve this level of growth, while stepping away from loans that didn't hear to our underwriting and our pricing disciplines speaks volumes about the quality of our bankers.
23% of the growth in our loan portfolio was due to increase in line utilization primarily in the professional services and entertainment sectors within the remaining growth driven by robust production across multiple sectors.
But predominantly in real estate leasing health care and agriculture.
Our pipelines continue to remain to our satisfaction.
The quarterly production mix was 55% fixed 36% floating and 9% variable.
Term loans represented $405 million of the total new production, while new lines, new lines accounted for $193 million.
The overall portfolio mix is now, 54% fixed 31% floating and 14% variable.
Overall, the composition of the loan portfolio did not change materially during the quarter, even with the increase in line utilization.
As a result of higher rates, we continue to see a decline in our residential mortgage production with sold loans dropping to $39 million linked quarter to $18 million for the third quarter.
During the quarter, we saw a marked increase in the transfer of deposits from Columbia Bank to CV financial services rising to 266 million from $95 million in the second quarter.
And as Aaron mentioned bank deposit balances remained level declining by only $16 million during the quarter the.
Our mix improved slightly and as of September 30 deposits were evenly split, 50% noninterest bearing and 50% interest bearing.
Overall composition remained consistent with 60% commercial and 40% retail.
We continue to expand and recently added an experienced team leader, who is building out a loan production office in the Phoenix market.
This was on the heels of our expansion into the Salt Lake City market and we are very pleased with its results as we continue to strategically invest in our retail network, our newest financial hub opened during the quarter and the vibrant Procter district of Tacoma financial.
<unk> financial hubs are full service locations that are uniquely focused on helping our clients achieve a comprehensive financial goals, including investments Trust services and other financial considerations.
I want to recognize the hard work and commitment of all of our bankers, who continue to support each other and our clients as we await regulatory approval for the upcoming combination with Umpqua.
They have done an excellent job anticipating and meeting the needs of our existing clients, which I expect to continue once the merger is final remarks, now I'll turn the call over to Andy to review our credit performance. Thank.
Thank you, Chris with just 314000 of net charge offs during the quarter, a $5 3 million provision drove a $5 million increase in the allowance.
The additional reserve was primarily driven by loan growth during the quarter and to a lesser extent a declining economic forecast.
We continue to see softening in the economic outlook evidenced by less favorable forecast for GDP unemployment and other key variables.
Offsetting loan growth at a less than favorable economic forecast was a continuation in the trend of improving credit metrics.
NPA to total assets and nonperforming loans to period end loans.
Those who only seven basis points and 12 basis points respectively.
There was very minor credit migration during the quarter with overall watch and problem loans falling from 499 million or four 4% of total loans too.
Two 490 million or four 2% of total loans as of September 30th.
Given these metrics, we expect loan growth in the economic forecast to continue to be the primary drivers of changes to our allowance.
In summary, while we continue to see solid credit metrics.
We will continue to remain vigilant to supply chain impacts from the award in Ukraine, rising energy costs inflation and the impact of rising rates on the housing and domestic economy in general.
Okay clear.
Thanks, Andy a regular quarterly dividend of <unk> 30 cents was announced earlier this month and will be paid on October 28 to shareholders of record as of <unk>.
17.
This concludes our prepared comments as a reminder, Andy Chris and Eric are with me to answer your questions.
Now Tonya will open the call.
Certainly as a reminder to ask a question you will need to press star one on your telephone please standby, while we compile the Q&A roster.
One moment.
Our first question will come from Jeff <unk> of D. A Davidson your line is open.
Thanks, Good morning.
Morning, Jeff.
Just a question about the expenses maybe for Aaron as he kind of chase that down it.
Expenses this quarter higher than the mid Ninety's guide wanted to see if theres any pull forward on cost that may help future run rates I know that you've talked to mid ninety's and you're sticking with that in Q4, but were there upfront expenses that may offset.
Going forward. Thanks.
Hey, Jeff I wouldn't call it upfront expenses per se, but there are timing issues that influence from one quarter to the next.
The mid Ninety's guide is.
Still kind of holds and if you look at where we've been through and through the year.
An average that out we were right in that range and I expect it to say so but.
The variability that you kind of see quarter to quarter can bounce around member.
Remember last quarter, we had there is that $900000.
Kind of benefit that we had our 401K through up there was also actually a medical.
Accrual benefit that we had in the second quarter as well there was it was around 500000.
And then we had a big swing in the.
Capitalized loan expense between the two quarters and that was actually a very like $1 4 million.
And then we also had about $1 million true up in our.
As far as the incentive plans just given the strong year to date performance that we've had.
Other items in the quarter that the data processing software expense was up a fair bit there.
There are a few things there.
A big part of that again was just kind of timing just to certain.
Sensors and when they.
When they hit during the during the course of the year.
We also just had some projects related to continued investments in the business.
And there were some.
Higher contract pricing as some of the tech contracts that we have to have built in inflation adjusters.
Occupancy line was up a little bit.
That reflected just some timing of repairs that were getting done during the summer months.
And as Chris noted, we opened our new Proctor financial hub and there were some expenses related to that.
Otherwise.
The other line I think that the increase there was largely some timing issues just related to certain fees that we pay on behalf of customers in terms of credit reports title insurance your SEC filings that sort of thing and then when we collect feedback from the clients.
There are some appraisal fees were higher in there and just some other onetime stuff as well so.
So just really just timing.
Nothing that was.
A recurring kind of thing that I would.
Draw attention to.
Okay, a lot of pieces there.
I guess I'm trying to get a sense for what you have shared.
On a combination with umpqua on.
Tangible book value and dilution.
We can track individually.
<unk> pressure, but.
Updating those marks and getting to a comfortable level either.
These shared specific figures there were some guideposts as to what you think pro forma tangible book could be thanks.
We haven't.
We of course are tracking that very closely and given a lot of thought to what that's going to look like in terms of where the marks can then but we haven't given any guidance on that front and I'm, referring to do so just given the significant volatility that we've had in the rate environment.
Okay.
Clint I wanted to maybe shift gears I think through.
Through the course of the since announcement.
<unk> expressed very limited I think he catches sort of regrettable losses on our personnel.
This is.
We've extended the close here I just wanted to get an update on that front, if <unk> seen any other departures that given that the.
The delay if thats impacting.
Decision departures or anything on that on that side. Obviously, we've tracked a couple hires but wanted to check in on that on the other side of that.
Yes.
Now when I think about <unk>.
<unk>.
I think the pace or the.
The number of <unk>.
<unk>.
In the third quarter.
We're much much lower than what we saw in the second quarter.
Nothing that I would say from a customer.
Facing.
<unk>.
Perspective.
Our direct support.
Of our.
Production capacities.
Elevate to the threshold, we've put in place of regrettable.
Attrition or turnover.
There is there is an individual and our risk group, who had the opportunity to.
Got to become the CRO somewhere else.
So I would say that we wish it was still part of our organization.
But that's that's.
Pretty far removed from.
From anything to do with production or anything it's more administrative.
So.
Not really anything that's <unk>.
Jumping out at me.
Ill.
What Chris weigh in here in a second but just leave you with is is if you look at the activities that continue.
Oh.
It was actually from a from an operational standpoint.
A fairly quiet.
We've determined that we use on our.
On our last board call was benign quarter.
That's all royalties given that we just manage the company through a global pandemic.
But.
When we look at the core operating performance of.
Of our company the.
Third quarter, we hit on everything that we would have hoped to have hit on at the start of the quarter.
Great.
Believe that when everybody reports, you'll see that we.
But one of the better performers on their deposit beta.
We've mentioned that.
Our part of our strategy in that regard one is just the strength of our deposit base, but also our wealth management capabilities and that that's a tremendous asset in terms of being able to minimize those costs.
And so.
There is nothing.
Guess, the reason I'm rehashing all of that is that.
If we had.
Any material regrettable turnover attrition, we wouldn't be able to accomplish those things.
Our top performing bankers are still out there.
Executing taking care of their clients growing growing their books.
And then that energy and excitement is what's allowing us to attract.
The new the new talent that is coming in.
Throughout our existing footprint, we continue to attract.
<unk>.
Talent and then it's also.
What we've done in <unk>.
Spansion into the Utah market again, Chris.
Lost over the.
T leader.
We've hired in the in the Phoenix market and we will start building that out as well so I'll step back and see if Chris has any.
Body that Tinder is radar that he would classify is regrettable.
Thanks, Jeff.
Jeff.
I wouldn't classify anything is regrettable, but TV an idea of some of the movement that takes place.
Residual there was a team leader for our retail business banking group.
Located here in the Puget sound he.
He had sold his house a year ago.
First the strong desire to relocate out of the Puget sound area.
We were working with them on that.
Option.
And another bank picked them up in the relocated to Spokane during the quarter now the team is intact the teams often producing.
When you look at somebody relocating to a different part of the market I wouldn't put that into a regrettable standpoint, good team leader, but it.
It won't affect our production going forward I can tell you that the teams that have joined us.
Specifically in Utah, they are hitting the ground running.
There are often producing and thats a really good sign.
To hit the ground quickly on that aspect of it and the other piece I would put out there and just to reiterate Clint and our top producers are staying with us and they see the vision.
I would tell you that our competitors are there.
They are calling or <unk>.
Very aggressive on opportunities in all of our markets.
And to date again, nothing that I would classify as regrettable or is going to affect our our ability to.
Execute on our strategy.
Okay. Thanks for the update.
Thank you.
One moment.
Moving forward. Our next question will come from David Feaster of Raymond James David Your line is open.
Hey, good morning, everybody.
Good morning, David.
Just maybe following up on the.
The transaction look I know this deal has taken longer than we all wanted it to but I am just curious as you an umpqua continue to run down parallel paths, both performing well extremely well independently could you talk about maybe how you all have already begun working together to maybe service some common clients or are even serve.
Larger clients like we've talked about I mean, obviously, we are already starting to see some new hires from.
Both sides with new talent being attracted to the combined entity.
But just I'm thinking maybe are there any ways that the longer time to close has been beneficial and maybe you could even make the integration smoother or is there anything anything like that.
Could come to fruition.
David you packed a lot into that question.
Yes.
It's been it's been.
It's been a few months since you've seen me, but my hair continues to get wider.
I think part of that is the challenge that we have.
We're still running two separate companies and we have to go out.
And.
Compete as odd as it sounds compete against each other within the marketplace.
As as two separate companies than we have.
Kind of a.
A firewall in between with the folks that are working on the integration. So there's things that we can't do.
The first part of the question relative to collaborating on large clients or really any client.
And so that that is a little bit of awkwardness that we've been placed in for the past year.
But what we can do is we can plan for the integration and we've decoupled.
Things that are specific to the systems conversion.
Product planning for the combined company all of those things.
From legal day, one so we're still able to make progress on that and Thats why at this point.
We still believe that.
Ed.
Systems conversion pending.
Receipt of I think.
All we're waiting on at this point now is.
The federal reserve and the FDIC and the state of Oregon.
Given their approval and then we announced our letter of agreement with the with the Department of Justice.
So assuming that those other two rig.
Tori approvals come in.
In the near future. We're on track for that that first quarter core systems conversion.
Where the time the extra time has been beneficial.
A year ago at this time, there was a lot of questions from people about our cultural compatibility and we've spent.
A lot of time in investor meetings talking about the <unk>.
<unk> of our of our cultures in our companies.
And we've.
Put.
Little over 1000 leaders between the two companies through.
A full day.
Cultural lunch session.
We wouldn't have been able to do that if we had closed.
On a more traditional six month timeline, so we had time to.
Clearly.
To identify the combined culture.
<unk>.
The culture activation content.
I'll get points for using those terms from chief marketing officer.
Yes.
And we actually have scheduled starting next month, where we will put it associates.
Across both companies.
Through a condensed version of that.
And so I think those things helped accelerate the social integration.
The systems integrations tracking just fine.
Along with.
Along our original timeline.
But the delay in the close has enabled us to.
<unk>.
Has enabled us to.
Get the social.
Cultural elements I think more defined and in front of folks. So I think thats going to be a huge benefit as we as we do get to the close and I think that's why the momentum each company's maintained independently is important and I think that will carryover.
And that momentum will.
Continue if not accelerate as we come together as one company.
Okay, that's great.
Thank you for that and then just looking at originations originations were really strong in the quarter I think a testament to what you were talking about in.
Retain that your key key personnel I'm, just curious what youre seeing on the demand front.
Has higher rates starting to impact the pulse of your clients are you starting to see any shift in demand just given the challenging economic backdrop.
Just curious what youre seeing on that front.
Yes, David.
Certainly.
All things considered in that.
I think the biggest issue is from a pricing standpoint, I Wouldnt say thats a truly affected demand.
Outside of for Us our mortgage team, which.
There's never been a huge source, it's very important to what we do.
But thats very interest rate sensitive.
There's still transactions that are going on there is plenty of C&I.
Theres plenty of CRE as well.
And as I mentioned, we're trying to hold the discipline to pricing and then certainly have always followed our discipline with Andy at the helm.
Our conservative underwriting and being prudent on that knowing that the.
The environment can change dramatically on us and I think we are.
In a good position there.
That keeps us out of some deals by not being a Max proceeds lender and things of that nature, and then just being very selective on the types of deals that we're doing and really trying to target.
<unk> relationships.
And working on that aspect of it I think demand in general.
As he is pulling back I wouldn't expect.
Numbers to be continue to be put up that up like this and records quarter after quarter.
The teams are finding their way into into prospects our clients are still actively doing things.
But overall, yes, I would expect it to pull back some.
Okay that makes sense.
And then just maybe touching on on deposits. It was it was great to see noninterest bearing growth in the quarter I was hoping you could just give us a little color on that and then maybe just touching on the other side. The outflows that you saw outside of that it sounds like it was mostly moving more rate sensitive climb.
Clients into the trust.
Wealth management side or are you starting to see more clients work through cash balances just curious what's your what youre seeing on that side and expectations for flows near term.
So David if I understand it sounds like kind of two different things there the the outflows to CV financial are really a byproduct of.
Finding out what the client is really looking for.
Are they is it truly a rate sensitive bank deposit or are they looking to increase their yield in Nigeria, we have excess funds that they can deploy outside of the bank.
It's no secret that there is more attractive returns.
In treasuries than there are in bank deposits and so we've seen we've seen.
Healthy move into.
Liquidity type portfolios, we're still seeing people that are that are moving money in and investing but most of that is truly for liquidity purposes.
The number that I mentioned.
Beyond that we still have our process, where we're talking to our clients. Some of them are walking in with specials from CD specials from banks down the street, they might have a $100000 for us and we ultimately find out and these don't go into those numbers, but then we find out there kind of an investment account somewhere and nobody's talked to.
I'm in a long period of time, and we get to make those referrals as well that helps to attract outside money into the bank deposits as well so.
So its really honestly, it's really full service and getting to know the client what theyre really looking for and then probably even more importantly, finding out where all of their other deposits in money, our house and really surrounding that relationship and we see we see that moving we also continue to bring in some new relationships.
It's not is not at the same pace and level that leader accustomed to historically, but we're still winning new relationships and I think that's really important and assigned to Hao.
Not only our bankers, but our clients are seeing the opportunities of the pending combination and.
The products and services and the complete set that we'll have going forward and they're making those moves now and I don't know if aeronaut said add anything in there or not.
I think you captured it.
Alright, thanks, everybody.
Thanks, David.
One moment.
And our next question will come from Matthew Clark of Piper Sandler Matthew Your line is open.
Thanks.
Hey, everyone.
Just wanted to close the loop on the merger discussion can you just remind us.
Come come conversion process, who is moving to what on the on the commercial side and.
It sounds like attrition has slowed here, which is great news, but can you just give us a sense for how youre going to try to defend and limit attrition.
With that the commercial conversion process.
Yeah. So.
The core system.
Is.
Yes.
We are going with on pause.
Fios platform.
And we've talked to.
Our existing core platform at Columbia and has been Benchmarked to about the size of what the combined company would be.
So it didn't really want to test new grounds with that.
With that system because.
Our intent is that we're going to continue to.
On a combined basis have opportunities to take market share and grow and especially in some of the de novo markets that both companies have.
Established a presence in the past year.
And so then back to.
How that maybe some of the other decisions.
Neither neither bank.
Sometimes in larger deals.
One bank is forced to do something because they fell behind in an area, maybe intact or something and they couldnt make the investments and catch up.
That wasn't the case or if the case here.
So really it came down to.
How do we how do we limited execution risk.
And so knowing that we're going to go with the Umpqua core that's in place today.
Their business online banking platform.
<unk>.
It's already typed in.
That system so.
So we're able to.
Reduce the risk of if we were to obtain a new system or Columbia system and its a very good platform there.
There's some capabilities that our bankers are really really excited about.
With that.
And so then how do we limit the.
I guess.
The risk of that part of it is the experience we have a very experienced team.
From from both organizations that have tried and true processes.
Sure.
Applying to in past learnings with other integrations and conversions.
So.
That's an important aspect of it.
<unk>.
Just planning more planning and Thats I guess, a follow up too.
My response to Davids question about.
Protracted approval timeline has allowed for additional planning and.
Scheduling of mock conversions and things and then there's some other things that we can do as we bring on new business.
I know our competitors.
Probably love for me to open the playbook up and tell them what that is.
But.
But it's just it's a comprehensive approach to making sure that the clients.
Our are taken care of communications open and they're supported throughout the entire process.
We're moving from one system to another on the consumer side it's.
Much easier we're on the same platform, we both use Q2 for that.
There is some functionality things that have to be.
Mapped out in the integrated but other than that it's the same same platform and can see aaron's itching to cheese.
Assigned directly to the.
The integration management office to weigh in here, so I'm going to step back.
And see if there's anything you want to clean up on what to what I said I think I think you captured it.
All I would say is is that there is a tremendous amount of planning going on I mean, we are meeting.
Equally with the teams coming together.
Evaluating systems and what the conversion on all aspects of that is going to look like.
Both from an employee experience from a customer experience and making sure that it's going to be as seamless as it possibly can be.
Any cases, we expect that to be just an absolute white fluffy handoff from one system to the other so that.
From the client's perspective.
It's just nothing but getting better so we feel very good about how that's shaping up.
Obviously.
With the delays in the.
And the approval there is thats created some some timing differences for when we might be doing things versus other times, but we still feel really good about that March conversion date.
Great. Thanks, and then last one from me just.
Looking at the.
Overall balance sheet on a standalone basis, obviously the deal is going to.
<unk> things here, but at least on a standalone basis, I mean do you feel like.
Yes.
Earning assets continue to shrink modestly and just run down the securities portfolio to help fund loan growth.
Yes, I mean, it's.
Obviously going to depend on what we see in terms of.
Loan growth and deposit flows but.
We continued to take about $60 million a month off the investment securities portfolio in terms of cash flow too.
To fund loan growth and Thats.
It's a pickup of about 300 basis points on that in that trade.
And that continues to expand obviously the.
The margin trends have been very favorable.
We continue to hold the line on deposit pricing as best we can I think the team is doing a very good on that front.
Looking at the at the spot rates between June 30, and September 30th are.
Total cost of deposits.
They are up four basis points between those two.
Sure.
We've been a lot of room to to see better.
On the earning asset yield so good good overall trends.
And do you have the monthly margin for September .
I do it was $3 63.
Perfect. Thank you.
One moment.
Okay.
And our next question will come from Chris Mcgratty of K B W. Chris Your line is open.
Okay great.
I apologize if I missed it.
It's not from one of your competitors this morning that.
Following the integration.
We are tweaking some exposure some portfolios.
I'm wondering if there's any portfolios or businesses you may deemphasize.
Take advantage of it during the <unk>.
When you Mark the balance sheet to put them together.
So I think.
Cut most of that.
So is the question of when we Mark the balance sheet is that gives us an opportunity to.
Step away from from from a certain asset classes.
Yes, yes, if there is any if there is any portfolios bigger small debt.
On a pro forma basis, you may not want the degree of the little bit larger any any opportunities to kind of do that at close.
Yes.
It does present that as an opportunity in.
Prior transactions.
We've done that Andy has done a masterful job over the years with the dozen or so that.
But a part of but that's something we've said it's different about what we do.
<unk> is similar.
I mean, what we do and what <unk> is similar enough, but just different enough that it's very complementary and there isn't anything that either of us.
We are doing on a standalone basis that.
But when we look at.
Putting the balance sheet together that we don't want to continue to do and continue to.
Maintain the expertise that we have in any particular area and leverage that across.
Our entire combined footprint so.
While it is something that it is.
<unk>.
An opportunity that can present itself, it's not one that that we see a need to take advantage of.
Great. Thank you very much.
Thanks, Chris.
And I would now like to turn the call back to Clint Stein for closing remarks.
Well. Thank you again for joining the call this morning.
Have a good day everyone.
And this concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly.
As Johan during Q&A, you can dial star one one.
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