Q4 2022 Premier Financial Corp (OHIO) Earnings Call
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Good morning, amongst the problem. They have financial Corp, fourth quarter 2022 earnings conference call. All participants will be in a listen only mode. After today's presentation there'll be an opportunity to ask questions. If you would like to ask a question. Please press star followed by one or no telephone keypad. Please note. This event is being recorded I would now like to.
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Thank you good morning, everyone and thank you for joining us for today's fourth quarter 2022 earnings Conference call.
This call is also being webcast and the audio replay will be available at the Premier Financial Corp website.
At Premier Fin Corp Dotcom.
Following our prepared comments on the Companys strategy and performance, we will be available to take your questions.
Before we begin I'd like to remind you that during the conference call today, including during the question and answer period, you may hear forward looking statements related to future financial results and business operations for Premier Financial Corp.
Actual results may differ materially from management.
Forecasts and projections as a result of factors over which the company has no control.
Information on these risk factors and additional information on forward looking statements are included in the news release and in the company's reports on file with the Securities and Exchange Commission.
And now I'll turn the call over to Gary for his opening comments.
Thank you Paul and good morning to everyone. We really appreciate you joining us today.
As a comment as we begin I want to acknowledge that Mac guarantee a gentleman who has been a participant on this call for a number of years will not be with us This morning.
Matt has accepted a role as CEO at a very fine institution over in Western Massachusetts, and I wanted to take a moment to thank him for all he has contributed to us over the years, it's very much appreciated and we wish him well as new endeavor.
Last evening, we reported net income for the quarter of $25 3 million or 71 cents a share with full earnings for the year topping $102 million or $2.85 a share.
The fourth quarter saw a continuation of the theme for Premier in 2022 strong loan and deposit growth driving net interest income tempered by higher growth related loan loss provisions and a weakened residential lending environment.
In addition, Q4 expenses underperformed uncharacteristically for the organization this quarter.
For the year loans were up 20% deposits are up seven 7% and net interest income was strong.
Through the three first quarters of the year.
Oh excuse me the first three quarters of your deposit pricing lag very purposefully and margins expanded the <unk>.
Fourth quarter results reflect higher repricing velocity and select deposit portfolios, along with an increase in noncore funding and thus the margin has retracted.
The fed's actions over the third and fourth quarters have elevated our clients' deposit pricing expectations and when combined with our increased utilization of noncore funding sources. Our total cost of funds are likely to remain elevated in the near term.
Patent management has never been more important.
We've made meaningful strides in repricing, our most elastic deposit business lines to ensure deposit retention and in support of growing our deposit base in 'twenty, three and Paul will have much more on this topic shortly.
Overall loan growth for the quarter was up $239 million at 15% on an annualized basis.
Ran a little hotter than we had telegraphed at the end of the third quarter.
Commercial growth was up just shy of 13%.
The higher than anticipated load growth triggered a hike in our loan provision figures for the quarter as well as it has all year as is.
The impact on such growth.
Full year total loan growth totaled 1.17 billion with the commercial growth of 20% consumer was up 26% and residential mortgage growth came in at 25%.
The new money commercial commitments were 1.75 billion for the year.
Obviously, a very big year for the team and good momentum going forward in a nice combination of business to both existing and new clients.
C&I originations totaled 41% in the fourth quarter and it continues to be a primary focus for our commercial team while line utilization remains under 40% because our clients are utilizing our cash on hand.
Residential mortgage originations for the quarter came in at about $200 million and $1 billion for the year, that's about 75% of the expectation we had when we entered 2022 when the year looks so different.
Difficult market and a difficult market and a challenging.
Environment to be selling to the Fannie and Freddie network, our gain on sale continues to underperform historical lever in terms of basis points.
Swings in residential construction hedges.
<unk> unfavorably impacted fourth quarter revenue, that's falling residential rate environment in November actually negated a positive hedge position that we recorded in the third quarter.
So net net the two quarters combined the right number got posted but it certainly had an unfavorable impact on the fourth quarter alone we estimate it to be about four sets.
So think of that is timing within the two quarters.
12, 31 delinquency was 74 basis points and that's very much in line with the performance over the course of the year net.
Net charge off trends remained very low at one and a half basis points of net charge offs for the year. When you exclude a large charge off that we took in the mid year that.
We had specifically reserved for in 2021.
Nonperforming loans were down 4% versus the third quarter.
Paul I'll give it over to you to more details. Thank you Gary I'll summarize some of our fourth quarter and full year results beginning with the balance sheet growth.
Total loans, including those held for sale increased by $239 million during the quarter, representing 15% annualized growth or 25% year over year growth.
You mentioned growth occurred in all categories, including commercial residential and consumer.
Deposit growth was also healthy where we added $100 million of customer deposits in the quarter for 6% annualized growth or almost 8% year over year.
Noninterest bearing deposits led the way with over 9% annualized growth in the quarter, while interest bearing deposits grew almost 5% annualized.
Due to loan growth outpacing deposit growth, creating a continued reliance on higher cost of FHA Ob and an accelerated deposit beta we did experience some compression of net interest income and margin during <unk>.
Excluding PPP in March.
Loan yields increased 27 basis points to 451%.
Total interest, earning asset yield increased 31 basis points to 421%.
These represented betas of 18% to 22% respectively.
The increase in the average effective federal funds rate for the quarter.
Deposit costs, excluding marks and broker deposits increased 34 basis points to <unk>, 72% for a 22% beta in the quarter.
However, total cost of funds, excluding marks, but including broker deposits and floating rate borrowings increased 41 basis points to <unk>, 97% for 28% beta.
The increase in cost of funds in excess of the increase in earnings.
Interest, earning asset yields and led to the margin compression for <unk>.
On a full year basis, net interest income increased $15 million or almost 7% on a tax equivalent basis and $29 million or 14% on a core basis, excluding PPP in March.
Net interest margin also increased four basis points to 328% on a core basis.
Next noninterest income of $14 2 million for <unk> was down $2 5 million from the prior quarter, primarily due to mortgage banking.
Mortgage banking income decreased $4 3 million on a linked quarter basis.
Due to a $4 6 million decrease in gains.
Bye.
300000, higher MSR valuation gains.
This was primarily driven by hedge bush fluctuations.
In prior quarters, our hedges increased in value as rates increased and mortgage prices decrease.
And the reverse securities <unk> at an accelerated pace such that our prior hedge gains were effectively eliminated.
As a result of accumulative net hedging as a wash at the individual quarters can be volatile.
Volatile interactions occur like in <unk>.
Security gains were $1 2 million in <unk>, primarily from $1 3 million of gains on the sale of $8 7 million of equity Securities, which were partially offset by 100000, a decrease valuations on our remaining unsold equity securities.
We also sold $9 6 million of available for sale Securities for minor gain in the combined $80 3 million of proceeds from security sales will benefit net interest income to get into the first quarter of 2023.
On a full year basis, noninterest income declined $17 million with $5 million from security gains and $12 million from mortgage banking, which decreased due to lower production saleable mix and margins.
Expenses of $43 million were up four 7% linked quarter basis.
From a further lower deferred costs related to the lower quarterly residential mortgage loan production as well as higher health care benefit costs that increase in <unk>.
There are positive trends the prior two quarters.
On a full year basis expenses increased $7 million or four 6%.
Primarily due to compensation and benefits, which increased due to higher staffing levels for our growth initiatives.
And higher base compensation for annual increases.
Yes.
The adjustments that we mentioned previously.
The allowance increased $2 2 million in <unk> due to $3 million of provision expense for loan growth offset partially by 830000 of charge offs.
Our asset quality remained solid during the quarter with annual decreases for nonperforming loans and classified loans of 30% and 37% respectively.
At December 31, our allowance coverage of nonperforming loans was 215%.
Finishing the balance sheet as capital with quarterly increase primarily due to earnings in excess of dividends and an $8 million positive valuation adjustment on the available for sale securities portfolio.
At December 31, our tangible equity ratio was 678% an increase of 11 basis points from 930.
And excluding <unk> would still be approximately 9% at 12 31 consistent with 930.
Additionally, our regulatory ratios remain comfortably in excess of well capitalized guidelines.
With tier one capital at approximately 10, 1% and total capital at approximately 11, 9%.
Holiday basis at 12 31.
That completes my financial review and I'll now turn the call over to Gary for some additional remarks.
Thanks, again, Paul I'll share a few thoughts on our financial performance expectations for 'twenty three as is our norm.
Expect point to point, earning asset growth.
More modest, 5% or so plus or minus in 'twenty three.
Average balance growth will benefit from the very strong 22 growth trajectory we've experienced.
Pipelines entering 'twenty three are a bit lighter as you might expect.
Deposit growth will be in line with the balance sheet growth and.
And our core net interest income excluding P P.
<unk> grew $29 million in 'twenty, two versus 21 in that same momentum and trajectory will be a benefit to us in 'twenty three.
We have a bit more margin uncertainty in the first six months of the year, we think we could see movement in either direction to some degree.
Until things settle down with the fed and customer expectations. We do have 50 bps fed turns cooked into our plan for the upcoming year.
Provision for growth and modest net charge offs meet our expectations no meaningful movement in unemployment as expected, which.
Which would affect potentially the provision expense.
Noninterest income otherwise will range between 3% to 5% up.
We have.
The typical cost containment measures, we expect three 5% or so a year over year, we continue to support our digital bank enhancement program for this year, which is our mobile and online offering and this year. Also 23 will include the annualized effect of the midyear salary adjustments we made in 'twenty two so three to five.
Three 5% is an aggressive number for 'twenty two as a whole we were up four 6%.
Which I think would be a bit higher than we'd anticipated, but well within that.
The environment and what we're seeing with peer organizations.
Our efficiency ratio targeted for 'twenty threes, just a hair over 53% and we do have.
Positive operating leverage when we adjust 22 for the PPP and security gains impact.
So we've given you a lot to work with there and I'm ready to turn it over for questions.
Thank you if you would like to ask a question today. Please press star followed by one or your telephone keypad.
We do have a question. Please press star followed by two when the parent to ask a question. Please ensure you're saying if I need to Nike.
And our first question today cause she Brendan muscle of Piper Sandler Brendan. Please go ahead. Your line is open.
Hey, good morning, guys how are you.
Good morning Brendan.
Just to start out on the mortgage just want to make sure I kind of interpreted your commentary right. It sounded like the some of the past two quarters is kind of the right run rate.
Going forward is that does that kind of imply like roughly a million and a half to start the year in total mortgage banking income on a quarterly basis.
I think we were a little north of $6 6 million for the year as equal closer to eight.
Now I'd like to a quarter that would include the servicing income along with the normal gain on sale. That's why it was slow to answer there the six and a half might meet the gain on sale, but overall fee income would be yes.
Right.
Okay.
Your point on helpful.
The hedge activity kind of overstated Q3, and with the rate movement that if it hadn't occurred we'd still be sitting sitting on it.
But the rate movement that they offset in Q4, so that's the mismatch.
Okay understood understood. Thank you and.
And then maybe one more from me before I step back certainly hear your comments Gerry on kind of margin sounds like plus or minus from here depending on variety of factors better.
Putting things I mean.
What gives you confidence that we will see another quarter or two of compression of this magnitude in the in the fourth quarter.
Yeah.
Well in.
And Paul can share some details we have dug into the product portfolios in the business portfolios as we've gone through our our pricing strategy in response to some of that higher demand and asking the organs of our clients as well as our intent to raise new money in the market.
And we've really find very many.
Managed betas in our consumer book.
The majority of our business book, and so forth and we've isolated all of our efforts around wealth management and certain segments of our business client, where we see that elasticity.
And the competition really being peers and we have at this point I'll take wealth management book as an example, that's up our money market book of about a half a billion dollars.
We have repriced, 75% of that book.
So I guess, if I would leave you with anything I'm not sure everybody has got to that point, yet, but they will.
<unk>.
But that was one.
We're wanting to raise deposits first thing was let's not unintentionally lose deposits by dragging our feet too long in that book.
But that gives you some indication of where we've been very busy and getting repriced.
And so we don't have that to deal within the a and.
In the next six months.
So.
There is that and I think we've isolated the other.
Portfolio is to understand the elasticity and we feel pretty comfortable that we will be able to contend to sort of slow place them.
Rate increases.
I'm sure the competition elsewhere.
No.
No you pretty much hit it I mean included in the business would be bought funds.
And those would have.
Beta is traditionally than some of the other bucket is partly just due to the product mix. So I can start a product like.
Like that that's the obvious one I mean, we do have pricing that is linked to the federal home loan banks so to the extent.
The fed's not going to do.
225 basis points of movement in a quarter.
And then 23 would be a little bit more stable relative to that that large funding source as well right.
Okay Alright, thank you for the color I appreciate it.
Yep.
Thank you and the next question go to Michael Perito of <unk> Debbie Michael. Please go ahead. Your line is open.
Hey, good afternoon, guys. Thanks for taking my questions.
Hey, Mike.
So you know obviously, Gary you provided quite a bit of commentary for next year, but just to confirm on the efficiency ratio kind of taken into.
Consideration of all different parts I mean, it sounds like you expect to be more.
In the full year range and then the fourth quarter. You know I think you said the 53% I just want to make sure that I'm thinking about that correctly, which would likely assume some some rebound in mortgage maybe some stabilization in NIM and then you have the cost efforts that they that you mentioned does that is that fair.
Yes sure.
Mike just fall on the full year estimate for efficiency you it won't be the fourth quarter run rate.
Some elevated expenses there as we mentioned, but that's.
That'll be coming back down.
Yes, NIM plays out the way that we're talking about here.
And if mortgage we're not projecting it to really rebound.
I expect it to be kind of steady state.
If you look at it on a full year basis 22 versus 23 mix will be different gains might be should be a little better, but we won't have the MSR gains that we had this year.
But servicing an excess of amortization, so net net call it a push yourself on mortgage.
That's how we're getting into to that full year efficiency estimate. The fact that we've got it's not as high as our traditional never but we do have positive operating leverage kind of helps maybe keep a cap on the efficiency ratio.
Got it. Thank you for clarifying and then just you know on the on the maybe a follow up to the the NIM kind of line of questioning you know I mean.
When I think about the fourth quarter and what happened you know in terms of the NIM compression.
Isn't really seem like kind of the.
The foundational elements of how you're going to be structured changed it just seems like loan growth accelerated in a quarter, where incremental funding was expensive right and so I guess the follow up I would have is you.
You guys guided to slower, earning asset growth, but like what's the line to sight on that I mean, it sounds like pipelines are a bit slower to start the year is it more environmental is it both environmental and you guys being more selective as you know is is there more of an effort to kind of target a specific earning asset growth rate that will be easier to fund in this environment or is it just kind of the way.
The cards are playing at this point in time.
I think your comment on the environment combined with targeted attack.
<unk> will be bought us by design.
Whereas.
Take the fourth quarter I think we had targeted that we thought we'd see 1% to 2% growth. We saw double that in the third and fourth quarters were both quarters, we thought we would see a pullback.
The client.
From our clients on business.
Just kept coming so as we plan for 'twenty three.
There'll be certain asset classes and transaction types that.
Core customers and so forth that we'll get.
More preference our attention and we will manage our number from a growth standpoint too.
To deliver those sort of.
The growth that we talked about a little more so than we've had to do in the past.
Is it just a simple Gary is limiting the on balance sheet mortgage production I mean that would seemingly if you. If you have decent growth elsewhere and you just put a lot less mortgages on that would seem really get you to like six or 7% point to point growth on the loan book I mean is that is it that simple or is it more nuance than that.
You know, Mike we started it in 'twenty two back in the middle of the year or two.
Do just that on the mortgage book, we still have some funding that's coming from that because you know we're in a we're pretty big construction player. So commitments that we had made back in 'twenty. One we're funding all during 'twenty two.
Even though we werent still originating in that space.
But so rest assured that we have backed off and made some product adjustments and we're back to about a 70% sales versus portfolio mix and we had allowed ourselves to get off of that when the pricing was so for Fannie and Freddie Mac in the second quarter of <unk>.
Last year, we won't be doing that this year.
Same thing on the consumer side, we had a really great consumer growth through the first three quarters and then we put the tamps on it mostly around indirect which is what that portfolio is designed.
To do and we really haven't grown that book in any meaningful way over the last four months, we are creating our capacity for balance sheet growth through commercial.
But having said that if we just let commercial run given the team we've got in the market. The way. It is now we might be surprised at how much growth we see.
Just as a commercial channel so we will be managing our effort.
A little more so in 'twenty three to make sure that we don't outrun our.
Appetite and get over our skis too much on the right side of the balance sheet catch up with the last night.
Got it and then just lastly for me.
Yes, we look to next year.
Just on the guide you provided should still be generating pretty good capital internally you know I think the back half of this year will probably be the low point on capital for you guys, especially if the balance sheet growth kind of moderates and just thinking wondering.
Are you seeing similar M&A headwinds and does that free up maybe some capacity to do some buybacks in 'twenty three or just any updates on the capital plan would be great. Thank you guys.
Yes, Thanks, Mike.
Yes, it does create that kind of capacity Budd.
We've turned the corner here on capital So we're going to let this chug most likely for a while here and kind of let that grow a bit but.
See opportunistically, if it makes sense, we got over it but sorry $1 million of.
Approved shares for our buyback plan.
That we could deploy if it made sense at the time, but.
We don't have definitive plans right now to do that at this point. So we'll just monitor the market.
You know over time, we've what we've always said we play a balanced scorecard on equity utilization, we want enough there to support organic growth, we want to provide the dividends.
And shareholder return through that vehicle.
And buybacks are a part of that shareholder equation.
With the balance sheet growth that we've seen right now feels like balance sheet organic balance sheet support gets a bit of a priority.
But it didn't change the scorecard is just the timing of how we're using our capital more fully deployed right now.
Great. Thank you guys appreciate it.
Thanks.
Yes.
Thank you and as another reminder, if you'd like to ask a question. Please press star followed by one on no telephone keypads and our next question Christopher Merwin at Golf Janney Montgomery Scott Christopher. Please go ahead. Your line is open.
Hey, Thanks, Good morning, So Gary and Paul I wanted to kind of go back to some of the comments I think you know, we're making at the beginning of the call about loan yield pricing and just better understand the kind of beta is on the loan side and maybe even earning assets. Two is there an opportunity for those to be stronger this next quarter or two.
And do you think that'll look differently as this year shapes up.
Yes. Good question, Chris there is some possibility for that but.
But.
There is some variables in there right so on the loan side.
Generally we have a lag in terms of the repricing on that because.
Our variable or floating rate loans reprice first of each month. So the action that happened in December we won't feel until January and so on so.
What happened in that fourth quarter from the fed and it'll take a little while for that to kind of fully come through.
And those yields so that's a tailwind for us.
<unk> here.
Part of it will depend on what happens in the C&I book.
We're still at pretty low utilizations, they came up a little bit during the year, but but not that much. So if we get more action there same thing in the.
<unk> and such that are the higher yielding floating rate type stuff that could be a positive for us we're not going to count on it.
It comes great.
But that's where we can get some incremental lift because we're pretty low on those utilizations today.
On the flip side just a reminder, we do have that swap that we had done a couple of years ago.
So that now that were.
Where we are on LIBOR.
Little bit of a drag and thats why our loan yields and overall, earning asset yield drag just a touch.
It was about 70 bps in the fourth quarter there so.
But if we if we do get to the point here, where the fed pauses in rates can stabilize we will hit our IMAX impact on that and then you know that's a future upside honestly if rates can.
Start to normalize.
Late 'twenty three or into 'twenty, four and so on now that will start to come back and then we will get.
Extra lift coming down on that side on the yield on the asset yield side as well as well said Paul I mean, if there's a silver lining on the current situation is just that.
I know when we watch the quarter unfold.
Loan betas, we're outrunning our deposit betas in October they've got closer in November and then they've got almost neutral, but what really in December but what really changed with December was when we were getting full throat other federal home loan bank activity and from a just a funding beta regardless of the source of the funds all of a sudden we become.
Liability sensitive because of what was going on with the federal home loan bank rate and as Paul mentioned, the swap was now more in play and so forth. So.
December was kind of a change month for us on the overall balance sheet.
And.
That's upside going forward as dramatic or as quickly as it showed up it can evaporate.
As fed behavior changes.
No that's a great background and that all makes complete sense I mean in my thinking was kind of big picture you have still a lot of advantages for you still have access to a bunch of liquidity your debt's not high by any means it's kind of stable from last quarter.
And you have.
Benefits that we've talked about do.
Do you have a sense, even though I know, it's early to call the whole cycle for the rate move.
But the betas kind of come in high twenties, low thirties, I mean, I think you've made comments in prior calls it is procured if your thinking is any different in terms of the cumulative beta as you look out a few more quarters.
Yeah, I think we've always talked about <unk>.
We're still in that range.
At this point, though with the way the fourth quarter played out it might be mid to higher <unk> versus the low thirty's that we were originally thinking.
But we're still in that range.
And one way to break it down Chris that I have been looking ahead.
Look at the big piles.
Of our deposits are right, we've got $2 billion of savings in <unk> that don't really move they they haven't moved we don't plan to move on so.
Effectively zero beta there.
We've got $1 billion of our time deposits.
Full cycle, those will probably have a 30% to 40% beta once we're all set and done with the specials and promo is kind of driving that.
And then we've got about $2 billion of our money market accounts.
Well, it's in business in up funds and things like that as well as retail on the retail piece hasn't really moved.
That's our high beta pile right. So that's going to be 60% to 75% of data by the time, we're done with us.
So you blend that altogether in the 5 billion of those deposits, excluding brokered and that's a 30% to 40% line, but then you throw in our our interest bearing anywhere in the I'll.
Call it back down into the 30% range. So.
After the side, obviously, it would be or our other funding sources, whether it's F. H L E broker deposits.
And those are high beta things. So that's what drives up our overall cost of funds like we saw here in the fourth quarter.
And we've been making concerted efforts to grow the deposit base our core deposits.
We had a higher than anticipated loan growth in the quarter. So we werent able to eat into the <unk> like.
We would've liked but.
We're going to keep pushing our court.
Core deposit growth and that will.
Get better as time goes on here and we will get.
Full upside on the FHA.
<unk> pay down debt as they come through.
Got it thanks for all the detail and then my last question. Just was a reminder, about the cash flow that you get from the investment portfolio, whether it's quarterly or annually, how often do you think about it.
Mhm yeah.
We're around $75 million ish per year, we're still in that range at the current in the current environment and we do plan for for roll off.
But we also like I mentioned in my opening comments earlier when the opportunities come up we're taking advantage of them. So.
We exited about half of our equity book for some very nice gains chemo gains of about one $3 million from when we bought them and we enjoyed the dividend yields while they were were good but those.
The ones, we exited were all below our incremental borrowing cost. So we got out of those and that just helps our NIM go forward same thing on the on the bond book.
There are.
Here and there are opportunities that come up on here about there that.
We're not going to get a gain off of that.
Okay, but again the yield is below our incremental borrowing so we can exit that and not take a direct P&L hit.
And deployed into southern NIM accretion, it's small stuff here and there, but every little bit is helping.
Sure and then also has a positive move on the Sci and tangible book, obviously correct correct Yep that's right.
Great. Thank you for all the background. This morning, our yield to the next caller.
Thanks, Chris.
Yeah Brendan hybrid.
Oh, yeah, sorry about that still on my apologies.
Just some clarifications on a few of the items you mentioned, Gary the earning asset growth of 5% is that full year over full year or is that off the <unk> 22 base into <unk> 'twenty three.
12, 31% to 12 31, the average growth was much better than that.
Loans would probably be another percent above that but securities will break out at least a percent.
Yes, that's perfect Super helpful clarification.
Then just on the cost outlook I think you said, 3% to 5%.
The midpoint of that suggests that the run rate.
Hold around fourth quarter level, if not even a little bit better just can you talk a little bit about some of the leverage you have throughout the year to kind of hold that that cost run rate roughly in line with the fourth quarter.
Sure.
This focus I actually had three 5% relative to the growth of a range for the year. We have a we have some opportunities from a cost perspective, as we right size a few segments of our organization.
And acknowledged.
Situation that we're in and some projects that are a little less crucial going forward might be put on a partial delay and so forth. So nothing thats going to change the strategic of the direction of the organization.
But the normal trimming that you will do.
With throughout the organization and throughout business groups were.
Where it's appropriate to be doing so that combined with just our normal good diligence, but it's kind of in our DNA.
Always looking for the.
Lease value added 2% to 3% of what we're doing and how to redeploy it to the best or the next two or 3%.
And that's still.
So important to our organization.
Yes, I think we again $4 six up over the prior year.
It's probably going to be a pretty reasonable number versus what the industry as a whole delivers year over year.
It would be an indication of that.
I would expect we'd be in the.
The better side of that average.
Yeah, Alright fantastic. Thank you for the clarification there.
The three 5% much appreciate it.
You bet.
Thank you and as another reminder, if you'd like to ask a question. Please press star followed by one on no telephone keypads I may have another follow up from Michael Perito of <unk>. Michael. Please go ahead. Your line is open.
Hey, guys. Thanks, sorry, and then I apologize if this was in Kerry's guide and I just missed it but just on the tax rate for 2023 should we be assuming more something in line with the full year versus the fourth quarter. It looks like the fourth quarter was.
A smidge lower than normal.
Yeah, I mean, you can use a 20% effective tax rate estimate and it'll be plus or minus from there does it won't change much.
Okay perfect. Thank you guys.
Thank you we have no further questions I'll hand back to Gary small for any closing remarks.
Well, thank you and I do have a closing comment or maybe something to just keep in mind for perspective.
Would suspect.
That over the next 12 to 24 months inflation's going to resolve itself or at least to the amount of distraction. We currently are involved with in.
And the inverted yield curve will abate and the cost of funds curve will return to something a bit more normal.
For us.
And.
That'd be a good day.
However, the business that we've booked over 22, the 20% growth clients that we brought onboard the clients. We serve that's going to be with us for the next seven to 10 years.
The value that that will bring to the organization over that period of time, I think will outweigh the.
Bumps that we're experiencing right now.
And just.
Once you would understand we keep our eyes on the horizon, Although we're staring right in the weeds as well, but that is kind of the way we view the business. We're trying to take the steps that add the most value for the shareholder and the organization over time.
And and balanced that with some of the issues of the day.
And Thats what were busily engaged with right now.
Thank you all for joining us this morning.
Thank you. This now concludes today's call. Thank you so much for joining you may now disconnect your lines.
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