Q4 2022 Third Coast Bancshares Inc Earnings Call
Greetings and welcome to the third Coast Bank fourth quarter and full year 2022 earnings conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it is now.
Now my pleasure to introduce your host Natalie Hairston with Dennard Lascar Investor Relations. Thank you not only you may begin.
Thank you operator, and good morning, everyone. We appreciate you joining us for our third test Bancshares conference call and webcast to review, our fourth quarter and fiscal year 2022 results with me today is Bart Caraway, Chairman, President and Chief Executive Officer, John Mcwhorter, Chief Financial Officer, and Audrey Duncan Chief Credit Officer.
A few housekeeping items, there will be a replay of today's call and it will be available by webcast on the investors section of our website at IR Dot T. C. B S. S. P. Dot com there will also be a telephonic replay available until February three 2023 and more information on how to access. These replay features were included in yesterday's.
Earnings release.
Please note that the information reported on this call speaks only as of today January 27th 2023, and therefore, you're advised that time sensitive information may no longer be accurate as of the time of any replay listening or transcript reading.
In addition, the comments made by management. During this conference call may contain forward looking statements within the meaning of the United States Federal Securities laws.
These forward looking statements reflect the current views of management, however, various risks uncertainties and contingencies could cause actual results performance or achievements to differ materially from those expressed in the statements made by management.
The listener or reader is encouraged to read the company's prospectus or the annual report on Form 10-K that was filed on March 17th 2022 to better understand those risks uncertainties and contingencies the COO.
Comments made today will also include certain non-GAAP financial measures additional details and reconciliation to the most directly comparable GAAP financial measures are included in yesterday's earnings release, which can be found on the third test website now I'd like to turn the call over to <unk>, Chairman, President and CEO , Mr. Bart Caraway Bart.
Thanks, Natalie and good morning, everyone. Thank you for joining us today.
I'll begin by highlighting significant events for the full year and fourth quarter. John will then provide a more detailed financial review and Audrey will give a credit update then before we take your questions I'll return to discuss our outlook.
Third coast had a remarkable first full year as a public company.
2022, we were successful in executing the company's business strategy, both financially and operationally.
Financially speaking here some highlights third coast reported record level growth of over 50% and gross loans deposits and total assets during 2022 when compared to 2021.
Specifically gross loans increased to $3 1 billion, our best year, yet we believe the steps taken during 2022 to grow the loan portfolio have set up for a strong foundation for future periods.
Deposits also reached record levels, increasing to $3 2 billion fueled by extremely strong business development efforts from our newly hired an existing lenders and total assets grew to $3 8 billion. Despite the changing economic conditions and aggressive interest rate hikes.
Likewise, we reported excellent fourth quarter results.
We exceeded internal expectations on net interest margin and return on assets and net income.
Asset quality remained strong.
Australia by overall excellent asset quality ratios and metrics and we significantly increased liquidity at year end with strong deposit growth.
From an operational perspective, we successfully opened four new branch locations in Georgetown Fort worth Kingwood, and San Antonio, Texas, bringing our total to 16.
The company added incredible bench strength in operations risk and compliance with the additions of Michael Dechert as Chief operations Officer.
And Vicki Alexander as chief risk and compliance officer and.
And we promoted top talent internally with our promotion of build the Bora to Chief banking officer.
Together with other third coast leaders.
Since her experience and deep industry knowledge of our management team highlights the banks ability to drive significant efficiencies as we continue to scale operations compliance and commercial banking.
The bank advanced its commitment to environmental social and governance with campaigns geared towards E statements adoption and sustainable corporate habits third coast also commemorated Arbor day by planning over 340 trees to honor each of our talented employees.
Finally, there 'cause furthered its commitment to diversity equity and inclusion are providing unconscious bias training for managers and staff launching a women's in banking employee resource groups and establishing the bank's diversity Council.
<unk> 2022 performance is the direct result of the bank's talented staff and experienced leaders each of whom are dedicated to and engaged in the company's strategic vision. In addition to our employees I'd like to take a moment to sincerely. Thank everyone involved with the bank's continued success, especially the bank's customers.
Investors directors and management.
Dark coast pledges to give future and existing clients the personal service they deserve while assuring our commitment to maintaining exceptional asset quality.
With that I'll turn over the call to John for more detailed financial review John .
Thank you Bart and good morning, everyone. We provided the detailed financial tables in yesterday's earnings release, So today I'll review select balance sheet and profitability metrics for the fourth quarter and the full year 2022.
As Bart mentioned, we experienced strong loan growth in the fourth quarter and full year 2022 gross loans increased to $3 1 billion at year end, an increase of 135 million or four 5% from $2 97 billion in the third quarter and an increase of 1.04.
$4 billion or 52% from 2 billion in the fourth quarter of 2021.
Sequentially, our loan growth was well diversified with real estate loans up 72 million from September 30th and commercial loans up $29 7 million from the same period.
On a full year basis real estate loans were up $526 million and commercial loans were up 448 million.
Deposits totaled $3 2 billion at year end, representing a sequential increase of eight 4% from 2.98 billion, an increase and an increase of 51% from $2 1 billion in the prior period.
Net interest margin for the fourth quarter of 2022 was 375% compared to 3.77% for the third quarter of 2022.
This better than expected performance resulted from continued asset sensitivity improved mix and higher average quarterly noninterest bearing balances.
Net interest income totaled $32 2 million for the current quarter, an increase of two 5% from $31 4 million for the third quarter of 2022.
Accretion on purchased loans for the quarter declined 771000 in loan fees for the full for the quarter declined to 104000.
On a full year basis net interest income totaled $116 5 million.
An increase of 28, 6% from $90.6 million in 2021.
Noninterest income totaled a $1.8 million in the fourth quarter compared to $2 5 million in the third quarter of 2022.
<unk> zone sales of the guaranteed portion of SBA loans decreased sequentially from 729000 223000 for the fourth quarter and.
In addition derivative fees decreased from 313000 217000 in the fourth quarter.
Noninterest expense totaled $22 6 million for the fourth quarter down from $22 7 million in the third quarter declines in salary expenses were offset by increases in occupancy legal and professional.
The employee head count increased 9% over the past year and in addition to the year over year increase in legal and professional fees related to increased cost associated with doing business as a public company as well as increased regulatory assessment expenses, resulting from increased rates and <unk>.
Total asset growth.
Net income totaled $7 5 million in the fourth quarter compared to $6 8 million in the third quarter.
Dividends on the series a preferred stock totaled $1 4 million for the fourth quarter due.
Due to the timing of closing of our preferred offering we declared two dividends in the fourth quarter one at the very beginning and one at the very end as a result, we picked up an extra 16 days for a little over $200000. If not for this fully diluted earnings per share would have rounded up to 45 cents per share.
On a full year basis net income totaled $18 7 million in 2022 compared to $11 4 million in 2021, an increase of 64%.
That completes the financial review and at this point I'll pass the call back to Audrey for our credit quality review.
Thank you John and good morning, everyone asset quality remained strong year over year nonperforming assets decreased by $5 million or 29% to $12 3 million as of December 31st for the fourth quarter of 2022 nonperforming.
Assets increased $1 9 million from $10 3 million.
32022.
As of December 31st 2022, the nonperforming loans to loans held for investment ratio remained low at 0.39%, which increased slightly from 0.35% as of September 30th.
And decreased from 0.75% as of December 31st 2021.
Provision for loan losses recorded for the fourth quarter of.
2022 2 million and the allowance for loan and lease losses represents 0.98% gross loans during.
During the three months ended December 31st 2022, and 21 net charge offs were 708002 0.4 million respectively. On a full year basis net charge offs were $1 1 million and $2.6 million in 2020, two and 2020.
One second.
The annual net charge off rate declined just four basis points for 2022 compared to 15 basis points for 2020 one.
The bank has adopted seasonal affective January one 'twenty two 'twenty three due to the change in methodology, we have increased reserves by $4 million before.
Before Bard covers our outlook I wanted to share some additional information about the diversity Council as Mark mentioned earlier as the co chair of the Council, we plan to foster an environment of respect and acceptance as well as build awareness and education regarding diversity issues among other initiatives.
Each of our council members brings diverse professional experiences it will support the grid.
We're excited to launch this initiative, one that scares us towards becoming a more diverse company and a champion of equity with that I'll turn the call back to Bart Barthes.
Thanks, Audrey turning to summarize.
We enter 2023 with similar goals as 2022 to grow revenues faster than expenses and to maintain our strong credit culture. We will do this by focusing on key strategic priorities first we will continue our efforts in sourcing sustainable low cost deposits.
While expanding and diversifying revenue streams throughout 2022.
The bank made several strategic partnerships with digital partners, including Treasury Prime and alloy labs.
We expect the foundation, we built to offer these services in 2022 will come into focus during 2023 with the rollout of several new programs.
We remain focused on retaining and attracting new commercial and retail customers. The bank continues to make important investments in technology enhancements, such as improving the new account onboarding and customer experience, we intend to leverage these innovative digital channels to not only improve the bank's ability to.
Retain its excellent customer base, but also attract and acquire broader relationships. We are committed to identifying innovative ways to serve the needs of our customers, while facilitating cost savings through digital transaction migration.
Third we will continue to manage expenses and improve efficiencies that strengthen our company.
We are pleased to report flat expenses over the last three quarters of 2022, even with our sizeable growth and we expect that expenses will remain relatively flat in the first quarter of 2023 at.
At the same time, we continue to look for opportunities to control costs associated with our tremendous growth by streamlining and scaling business operations to further improve our efficiency ratio.
We're not yet where we want to be in terms of efficiency and our execution and processes, but we're taking decisive actions to ensure we continuously improve over the next 12 months.
Finally, we will continue to be opportunistic and taking advantage of the strong markets across Texas, particularly in those markets. We operate we believe the strength of the Texas economy puts us in a better position to pursue potential growth opportunities.
We are optimistic that our prudent business lending model and profitable.
Business operating model will continue to try to thrive in 2023.
Combined with our commitment to these strategic initiatives, we have an unwavering commitment to deliver disciplined fundamentals that drive solid loan originations excellent credit quality and improved efficiency. We believe third coast is well positioned to deliver profitable growth in 2023, and beyond ensuring safe and sound banking.
<unk> and focusing on generating superior customer and shareholder value. This concludes our prepared remarks I would now like to turn it back to the operator to begin the question and answer session operator.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the FERC one moment.
While we poll for questions.
Thank you. Our first question is from Bernard one good Lucky with Deutsche Bank. Please proceed with your question.
Oh, Hey, good morning, guys. So.
Which is better than your guidance.
There was some excess loan accretion and three Q and I think on a core basis that number is closer to 369. So I was just wondering if you could just walk us through that improvement.
Ex that accretion and I know you mentioned, a little bit less I believe accretion in this quarter. So I was just wondering if you could walk us through some.
Some of those components.
Yeah Bernie It was just a really good quarter for the margin that was somewhat unexpected I mean, some of the pressures that we still have continue to exist we.
Our cost of funds is going up our deposit betas are high but on the flip side on the loan side, 79% of our loan portfolio was floating. So we we are asset sensitive I mean, we've been saying that all year and certainly it. It proved true this quarter and if you even though our period in.
Noninterest bearing demand deposits were down our average quarterly demand was up so so it was a good quarter.
All the way around I mean, our average loan to deposit ratio was a little bit higher quarter over quarter, but our spreads were good our mix was good and you know if you factor out the accretion from last quarter. The margin was was actually up from last quarter, certainly would not expect that again, we still.
Have the same pressures that we did last quarter. So I I'd, certainly guide to a slightly lower margin than than we are today.
Okay got it so for <unk> slightly lower margin.
And then what are you assuming.
I'm fed hikes or anything therefore for <unk> anything you cannot provide without the assumptions.
Yeah, So 25 basis points and extra week I mean, we're just going by what the market is forecasting for that so 25 at this time and twenty-five next time, we don't have anything else modeled in but you know it's not going to have a huge effect on us if we're slightly asset sensitive and you know rates go up another 50 basis point or even 100 of it should be a net.
Positive that that we don't explicitly have factored in.
Right and then and then the lower NAV QQ is more on the maybe on the deposit pressure.
Essentially being a little bit more than the asset side.
Correct.
Okay, great. Thank you.
Our next question, Brad Millsaps with Piper Sandler. Please proceed with your question.
Hey, good morning, guys.
Good morning, Brian .
I appreciate you guys taking my questions.
For you guys.
Still really good loan growth in the quarter, maybe slower than some of the recent trends.
Bart I was writing quickly during your comments, but just kind of curious if you guys could provide sort of what your appetite would be for for loan growth.
In 2023, you know a lot of moving parts out there, but just wanted to kind of get some additional color on <unk>.
What do you think you can do this year.
Yeah, I think maybe the best way to to convey what we're looking at is can give you a full year picture, but what we're targeting is 500 million in net loan growth for the year and so like we told you all before it will be lumpy.
Through the year, but you know we believe that 500 million in net loan growth, which is still pretty nice growth factor for us.
<unk> will bring us probably the best efficiency and the best you know are a way that we're looking at to still get to the 1% ROA by second half of the year. So for US I think that is very manageable, we have a very strong team and a very strong pipeline I would tell you. We are just more and more particularly.
<unk> on the lending side from a risk return I mean, we could do a lot more volume if we wanted to but we're really making sure that we manage the asset performance from an ROA standpoint.
Hello, Brad.
Yeah, Yeah, that's very good and would you expect it to be kind of a similar mix in terms of variable rate versus fixed that's kind of where the.
The current portfolio stands and I guess, how and in what ways do you plan to fund. It I know you guys have talked about.
Our growing deposit pipeline in the past, but obviously you could get to bridge the gap in a way I would think you would need to bring in some lower cost funding, which which is a challenge for everybody in this environment.
Yeah. So from the mix standpoint, I think for the next couple of quarters will be very similar.
I would say that the builder finance has slowed down and maybe we'll have a few payoffs in that area, but the corporate banking in the community banking still remains very robust and so you'll see.
You know because the portfolio is large enough now youre not going to see big swings on it but you'll see a lot more probably on the C&I side grow if anything.
And in terms of of covering the deposit side you know, we're starting to see some of the initiatives. We're working through come to fruition again, we talked about from the deposit side that you know we have a multi pronged approach where getting the entire bank involved from treasury in retail in community banking and all the specialty functions.
We're starting to see that begin to grow and matter of fact, you know retail had a great last quarter, where they contributed more than their historical percentage to the growth now so we feel very comfortable with that with the $500 million in loan growth that we will be able to support that with the deposit gathering.
Okay great.
And remind me maybe often this but do you guys adopt.
Do you guys adopt CTO at this past January I think that's correct, but I may be off there just curious if that's in fact, correct and if theres any changes that you expect.
We did yeah January 2023.
Yes, Yes January yes, yeah. This month right just.
Just kind of curious any you know any.
Did you guys give us any color on maybe what that adoption of reveal do you expect you know much many.
Many significant changes in the reserve.
Going forward, just just curious your thoughts around that.
Yeah. So we added four.
Go ahead and enjoy it yeah. That's okay [laughter]. Okay. This is Andre yeah, we adopted in January 1st of 2023 we did a 4 million dollar provision.
Provision based on the new methodology that was.
Based on the general reserves.
Going forward I don't I don't see US you know.
We had we did what we needed to.
Come by and I, and I don't see any big changes to that and it again it was not.
Specific reserves it was all based on the methodology and the new way of looking at general reserves.
Yeah, and if I could add a little bit more color on that Brad is that it really came to the macro environment, that's where you know the the.
Reserves came in with it from our own portfolio seems to be holding very steady we're very pleased with you know.
The quality of the loan portfolio, but with the national headwinds macro environment that does have an effect on C sold that's where.
The onetime provision came in.
Sure. It makes total sense that gets you up to like to round, one tangible ones. Okay.
Alright, thanks for the color I really appreciate it.
Thank you Brad.
Thank you. Our next question is from Michael Rose with Raymond James. Please proceed with your question.
Hey, good morning, guys hope you're doing warranted.
Good morning, I'm, sorry, if I missed this I hopped on a little bit late but I'm. Just wondering if you know kind of general thoughts for expenses I think you Might've said I might have heard this medicine had kind of flattish for the year.
Some of the puts and takes I mean, obviously theres inflation you guys.
You know I think are still hiring.
Hiring is a growth company, there's there's higher FDIC cost you have.
You know the Fintech partnerships my I don't know if theres any incremental investment there.
I was just looking for some of the puts and takes as it relates to <unk>.
As we move into the first quarter and then through the year. Thanks.
Sure. So Michael what Bart said is that he thought expenses would be flat for this first quarter not not for the year I wouldn't wouldn't necessarily expect that but if you think back over the last year. You know first year as a public company. We had increased insurance increase legal I mean, we are growing fast who are rare.
Tori assessment for higher you know just a lot of headwinds related to being a public company and most of those are behind us I mean, we do have the everyday inflation that we all have to deal with that.
You know, we're squeezing things as much as we can everywhere, we can and the management team is committed to you know not spending money today until we get to a better profitability number. So so this next quarter and hopefully the second quarter. Two we we think expenses are going to be relatively flat.
And that we're going to continue to grow and you know that's really the same messaging. We had all of last year is that we're gonna grow grow revenues a lot faster than expenses and we expect that to continue and if I could offer a few more thoughts on that.
We brought on a management team that are coming from much bigger banks that I've seen ways that we can be even more efficient.
Still haven't gotten the full benefit of some of the technology that we're implementing but that will happen over the year. So we're still fighting as John says inflation. Yeah. That's that's very difficult you know labor is.
Expensive everything seems to go up some but you know I think we've been very judicious with both adding resources.
And also looking at our operations and Reconfiguring them and reengineering them to be more efficient. So I do believe that we do have a strong platform to continue to grow and at the.
Pace of the expenses should be minimal compared to the pace of the revenue.
That's helpful. I appreciate the context and color there.
Just moving back to two deposits a.
A couple of quarters ago, you guys had some some big outflows the mix change it looks like it's stabilized year round 15.
15% DDA, Yeah, I know, there's there's some puts and takes in last quarter, you kind of talk about a 95 ish percent loan to deposit ratio.
Is that still kind of a context and from a mix perspective, I mean would you would you expect things to kind of stabilized here or is there maybe some more more degradation to the mix.
Yeah, I would say if anything it'll improve Michael you know if you think about you know over the last year, it's a lot easier to bring over of loans and deposits Theres just a much longer lead time to bring deposits over and we were working on deposits I think much sooner than most.
Of our peers that you know everybody's working hard on deposits today, but I think we have a good head start.
The next couple of quarters, I'm pretty optimistic about our deposit growth ive, even on the demand side I don't see that number getting worse by any stretch in it if a few things break our way it could be a lot better yeah.
Yeah, I kind of echoed that that I'm pretty optimistic we have a lot of areas, where kind of relationship overlap technology that we're giving to get some some very nice desirable customers.
They are coming on board some with some fairly large noninterest bearing accounts, but if nothing very good core accounts, regardless when where other so we're seeing we're getting a few wins here and there that as that continues to build I think it will help us change our deposit mix and of course, we want to grow noninterest bearing.
That that is our goal to do that and continue to grow core.
Fast as we can but I'm starting to see some nice nice pipelines of deposits that are coming in and so as John says I do believe we have room for improvement and we're going to start seeing those improvements. Despite the fact that it's probably one of the hardest times to raise deposits.
Helpful. And then maybe just finally for me I feel like I ask this every quarter, but.
Any updates on it.
The ROA target that's out there I know, it's a challenging environment.
I just wanted to get.
Any sort of updated color on thoughts there obviously, the cloud expenses will help but.
The slower pace of loan growth. Obviously this is somewhat of a detract or two so I just wanted to look for any updated thoughts she goes up thanks.
Yeah, I mean, we're still targeting that 1% ROA in the second half of the year and you know to get there we need to improve you know six to eight basis points a quarter end.
Oh, My I think we're on track to do that yeah, I feel I feel good about as well I think I think it's for US. It's a again a multi pronged approach for us it's.
A little improvement in cost of funds some more revenue growth and then keeping expenses low.
I think it is very achievable.
Yeah.
Okay. Thanks for taking my questions guys.
I appreciate you.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Our next question is from Matt Olney with Stephens Inc. Please proceed with your question.
Hi, Thanks, Good morning, guys, just a few follow up.
Modeling questions here.
John I think you mentioned the preferred dividend was a little bit elevated this quarter, just remind me what the normal quarterly preferred dividend will be from here.
Yeah, I think it's a million $197000 a quarter, if I remember right.
Okay.
And then on F. H L. B it looks like you had some advances in the average balances in the fourth quarter, but look at the end of period. It looks like you may have paid these office.
Is that right and any more color on how much you plan to utilize F N b.
And in 2023.
You know, we'll use it as we need it I'm at the end of the year. We didn't we had good deposit growth, particularly in December . So we paid off all our borrowings any of our borrowings are going to be very short term either overnight or or maybe just for a week or two.
You know it depends on the lumpiness of of our loan growth.
As you can imagine managing it over the last year, we knew we were going to grow loans fast deposits are harder to predict exactly when they're going to come in so we have had to borrow from time to time from the home loan Bank to fund the loan growth then we could see some of that this year too it just depends on how lumpy.
The loan growth is in.
But the timing play out see right. So I mean, sometimes its pods can be a little lumpy as well.
I mean, the home loan bank borrowings today are more expensive than anything else out there. So it's <unk>.
Definitely our last choice.
Okay.
And any color on the yields on some of the newer originations.
The loan side.
Yes, so in the month of December we.
We booked about $113 million in new loans with a yield of 675 and that was before loan fees. So after fees were certainly averaging well into the sevens.
Okay.
And then how many of them.
Missed this but did you disclose what the accretion amount was in the in the fourth quarter of any any expectations of kind of what's what's remaining from here.
It was actually zero.
And maybe even lessons here I think we market up 9000 dollar. So we we had a net swing from the third quarter to the fourth of 771000 I think was the number.
And I would not expect much accretion going forward, we've recognized most of it and what we do have left a recognized will be.
Relatively immaterial and spread over a period of years. So there's there's just not much left.
Okay.
And I Wanna get Audrey some more airtime here on credits.
Okay, well you're.
Thinking about now with the fed is trying to slow the economy and put some more pressure.
Pressure on some of the some of the borrowers out there what loan categories or what kind of markets are you most focused on right now.
So were you know well unfortunately, even with that we're in a we're in a great state. So things are still really looking good here where.
Focusing on <unk>.
On the C&I, you know C&I growth, we're still well diversified so I'm really not concerned with one one particular area I think as John said, then the builder group. This.
Is that again as you know.
We saw a little bit, but I'm, saying.
Things are still yeah from asset quality perspective looking.
Looking good for us.
Yeah.
And I'm, sorry did you want to add anything there.
Yeah, I mean, Matt I guess, what I would add is that you know we we tend to try to look ahead in our underwriting with it and Audrey calls it recession protection and essentially what <unk> gone through his hat has an entire process, where she kind of layers on top of that where the lenders have to.
Answer you know, what's what's the impact of a potential recession to any of our customers and you know some additional monitoring as.
As well so I think you know we've been in contact you know frequently with.
Our customers and certainly in the underwriting side you know she's added a few more questions and maybe a few more calculations that they have to do.
To make sure that we're in good shape, but thus far.
Even that more detailed enhanced.
Due diligence that were doing on it.
Our portfolio is in really good shape.
Yeah, we're not we're in the process of going through that process now as Mark said the recession.
Protection and.
You know looking at the portfolio kind of.
Grading them, so to speak high medium and low risk for a protracted recession contacting customers getting updated projections.
I'm doing some additional strength.
Stress testing of our loans, but to this point.
Not not.
Seeing anything that's greatly concerning.
Yeah.
Any any migrations that you saw during the fourth quarter into special mention or classified.
I know are classified as actually for the quarter really remain low there that's below 4%.
You probably noticed we had an increase in NPA that one 9 million that was actually five loans that we placed on nonaccrual and the largest was an 800000 dollar SBA loans and it's got a 75% guarantee and then the other four were you know 300000.
Average balance so.
You know very very granule, they're not any big individualized mhm mhm.
Okay, well, that's all for me I appreciate the color. Thank.
Thank you taking my questions.
Okay. Thanks for the questions.
Thank you our next.
Our next question is from Brad Milsap with Piper Sandler. Please proceed with your question.
Hey, Thanks for taking a follow up I just wanted to point of clarity on the ROA target I noticed in the release you present, the ROA, excluding the preferred dividend.
I was curious.
The 1% that you're talking about should we think about that inclusive or exclusive of that preferred.
Dividends that are that you guys have each quarter.
Yeah, I was thinking of an exclusive.
Four 1%.
A 1% ROA before the dividend okay.
Makes sense, Okay. I just wanted to make sure I was on the same page. Thank you very much sir.
Thank you.
Thank you there are no further questions at this time I'd like to turn the floor back over to Mr. <unk> for any closing comments.
Yeah.
Thank you Paul.
Thank you all for joining us on the call and for your continued support of <unk> Bancshares and we look forward to speaking to you again next quarter, you'll have a good weekend.
Okay.
This concludes today's conference.
You may disconnect your lines at this time, thank you for your participation.
Yeah.
Okay.
Yeah.
Okay.
Yeah.