Q2 2023 Financial Institutions Inc Earnings Call
Good morning, everyone and welcome to today's conference call tied to a financial institution announces second quarter results.
Name is that and I'll be coordinating the call for today.
At the end of todays presentation, there'll be an opportunity to ask it.
So I'll ask a question. Please press star one on your kind of think he put to join the question queue.
I would now like to turn the call. If that's okay cool director of Investor Relations speaking.
Please go ahead whenever you're ready.
Thank you for joining us for today's call, providing prepared comments will be president and CEO , Marty Birmingham and CFO Jack plants. They will be joined by additional members of the company's finance and leadership teams. During the question and answer session. Today's prepared comments and Q&A will include forward looking statements actual results may differ materially from forward looking statements.
Due to a variety of risks uncertainties and other factors, we refer you to yesterday's earnings release, and Investor presentation, as well as historical SEC filings, which are available on our Investor Relations website first safe Harbor description and a detailed discussion of the risk factors related to forward looking statements well also discuss certain non-GAAP financial measure.
It is intended to supplement and not substitute for comparable GAAP measures reconciliations of these measures to GAAP financial measures are included in the earnings release filed as an exhibit to a form 8-K.
Please note that this call includes information that may only be accurate as of today's date July 28, two.
2023, I'll now turn the call over to President and CEO Marty Birmingham.
Thank you Kate good morning, everyone and thank you for joining us today.
Our company finished the first half of 2023, and a very solid position.
Our second quarter performance was highlighted by incremental loan growth that supported modest net interest income expansion and a continuation of strong and stable credit quality metrics.
We also took steps to enhance our wealth management business merging our two registered investment advisory subsidiaries.
With this merger current capital as additional size and scale to better compete across our footprint for institutional clients retirement plan sponsors and high net worth individuals and families.
Operating under one brand also streamlines, our business development efforts, primarily deepening relationships with existing well.
<unk> and banking clients.
Second quarter net income available to common shareholders was $14 million or <unk> 91 per diluted share up from $11 7 million or <unk> 76 per share in the first quarter of 2023 and down from $15 3 million or <unk> 99 per share in the prior year period.
And considering the year over year decrease in quarterly net income the company recognized a normalization of loan loss provisioning in the current quarter versus the impact of the large commercial recovery in the second quarter of 2022 and.
In addition to higher quarterly noninterest expenses.
Past investments in talent.
And an increase.
Insurance assessment.
These increased expenses were partially offset by lower taxes in the current quarter, which benefited from investment tax credits placed in service.
I would note that much of our investment in human capital took place in 2022.
We believe that this coupled with our previously announced organizational restructuring completed in December .
Has positioned us well for the future.
From an expense standpoint in the near term and in terms of outperformance in our markets in the long term.
We have attracted high quality talent to our organization.
Clothing experienced individuals joining from larger players who want to be a part of our growth story with a true community bank.
On a linked quarter basis, our net income growth was driven by a lower level of provision.
Higher noninterest income and lower income tax expense in the current quarter.
Jack will provide more color on our income statement and performance relative to the first quarter 2023 in his remarks.
Deposit gathering remains a top focus and as of June 32023, total deposits were $5 billion.
Down $106 4 million or two 1% from March 31.
Primarily due to normal seasonal public deposit outflows within our sizable public deposit portfolio, which includes local municipalities and school districts.
We see a seasonal decrease in the second quarter based on cash flow requirements of the customers.
Similarly, first quarter public deposits are typically higher as a result of inflows from tax payments and state funding during the period.
While seasonality is the primary driver of decline in public deposits. We are seeing a normalization of deposit levels in this space post the stimulus injection recognized during the pandemic.
Nonpublic deposits increased from the linked quarter.
We continue to see disintermediation of lower cost demand and savings deposits into higher cost time deposit accounts and similar trends for new account acquisition amid the current interest rate environment.
Competition for deposits is strong in our markets similar to the rest of the country and we're focused on expanding our deposit base and expanding our reach.
We launched a new marketing campaign for money market accounts, just this week and are beginning to see some of our anticipated banking as a service or bass deposits come onboard.
We consider bath deposits to be an alternative.
The high cost wholesale funding.
Reciprocal deposits also grew during the quarter as this has become an attractive option affording our larger customers the benefit of FDIC insurance on accounts greater than 250000.
Total loans were $4 4 billion at June 30, reflecting an increase of $154 5 million or three 6% from March 31.
Led by commercial lending.
Overall, our commercial portfolio was up five 7% during the second quarter.
We continue to believe that full year loan growth will be concentrated in the first half of the year as.
As we aim to reserve balance sheet capacity for our best customers with full relationships.
Commercial mortgage growth in particular is expected to slow due to a combination of softer demand a bit of a challenging economic environment and higher pricing.
Our pipelines are more modest than in prior periods with our overall commercial pipeline at June 32023, less than half of what it was at year end 2022, and a third of the size. It was one year ago.
Change is even more notable in the mid Atlantic where our pipeline is about 20% of what it was on June 32022.
I'd like to discuss our mid Atlantic region, and a bit more detail given the continued national media coverage.
Challenges facing major metros and office space in particular.
For context. This team sits in a suburb of Baltimore and primarily serves customers headquartered in and around the Baltimore in Greater Washington D C area.
The majority of loans are for projects and properties throughout Maryland, and Virginia and outside of the Central business District of DC.
As a result, our committed credit exposure within D. C itself is very limited at just $25 million and none of our commitments in the Metro DC area are for large floor plate buildings.
Office space accounts for just over a third of our mid Atlantic loans and properties within this asset class and region are primarily located in heavy traffic areas, where hospitals with a fair amount of medical leasing and high occupancy levels.
As many industries in metros grapple with the return to office trends in the workplace I would note that our commitments related to much smaller buildings located outside of D. C where non federal workers are returning to the office.
The health of our commercial portfolio remained strong and we reported just two basis points of net charge offs to average commercial loans during the second quarter.
Our residential loan portfolio grew during both the three and 12 months ended June 32023, despite the higher interest rate environment and tight housing inventory impacting home sales in our market.
Primarily due to our partnerships with new homebuilders.
Additionally, internal process enhancements have led to improved cycle times for both mortgages and home equity loans.
Consistent with our other loan categories, we made pricing adjustments to improve margins in this line of business.
As expected consumer indirect loan balances at quarter end were down modestly from both March 31, 2023 and June 32022.
This is due in part to our efforts to moderate production in this asset class, while maintaining our focus on credit quality.
As well as lower number of applications.
The increased cash deals leasing activity and aggressive rate offers for manufacturers.
The average portfolio FICO score of our indirect portfolio continues to exceed 700 and new production during the quarter came on at a weighted average coupon of.
931%.
Our credit team is very experienced in this line of business and actively managing the portfolio to secure recoveries where possible.
<unk> indirect charge offs were only 12 basis points for the second quarter down from both the linked and year ago quarters.
Our disciplined approach to credit risk management continues to support strong asset quality metrics overall.
For the second quarter, we reported 23 basis points of nonperforming loans to total loans and annualized net charge offs to average loans of just six basis points.
Provision for credit losses on loans was $3 2 million in the second quarter supporting the allowance for credit losses to total loans ratio of 113 basis points and 503% of nonperforming loans at June 30.
We remain confident in the overall performance and health of our loan portfolio. Despite the volatile operating environment.
This concludes my introductory comments and it's now my pleasure to turn the call over to Jack plans for additional details on our results and updates to our guidance for 2023.
Thank you Marty good morning, everyone.
Interest income of $42 3 million was up 522000 from the first quarter of 2023 is interest income from loans was partially offset by higher cost of funds in the current rate environment.
Our overall cost of funds in the quarter was 203 basis points up 41 basis points from the linked first quarter.
Disintermediation within our nonpublic deposit portfolio into higher cost time deposits.
Along with additional broker deposits brought on in the second quarter to manage the seasonality of our public deposit portfolio and to help fund loan growth.
Contributed to margin compression in the second quarter.
Net interest margin on a fully taxable equivalent basis was 299 basis points for the quarter.
Third to 309 basis points in the linked quarter.
As Marty mentioned and in line with the guidance we provided in April we.
We expect that loan growth will be concentrated in the first half of the year.
Our commercial pipeline, which includes commitments secured but not yet funded is down considerably from where it stood at the end of the linked and year ago quarters.
Relative to the magnitude of <unk> rate increases that occurred in 2022, and so far in 2023, our total deposit portfolio has experienced a cycle to date beta of 31, 2%.
Including the cost of time deposits.
Excluding the cost of time deposits the non maturity deposit portfolio had a beta of 12%.
Noninterest income totaled $11 5 million in the second quarter.
Up 542000 on a linked quarter basis.
This growth was driven by a number of components illustrating the diversity of our noninterest revenue streams.
In the second quarter, we recorded a net gain of 489 on tax credit investments placed in service in the current and prior periods.
Driven by our historic tax credit with a New York State component that was placed in service in the second quarter.
While these gains are nonrecurring in nature, we continue to evaluate opportunities to manage our tax rate, while supporting a meaningful projects in our communities that support historic preservation and low income housing.
Investments from limited partnerships increased 218000 quarter over quarter, which was driven by favorable performance underlying investments.
These along with increased swap income offset a lower level of insurance income in the second quarter, there was largely seasonal.
Reflective of contingent revenue that is typically recognized in the first quarter of the year.
Investment advisory income of $2 8 million, our largest fee income contributor was 104000 lower than the previous quarter.
Primarily due to lower transaction based fees in the most recent period.
Noninterest expense was flat on a linked quarter basis.
As lower salaries and benefits occupancy and equipment and professional services.
All of which are typically higher for us in the first quarter of the year.
Were offset by higher other expenses.
<unk> interest charges related to collateral held for derivative transactions.
I would also note that the FDIC insurance expense increased due in part to the final rule that went into effect earlier this year, increasing the initial base deposit insurance assessment rate schedules uniformly by two basis points.
Coupled with balance sheet growth driven by commercial mortgage loans.
Income tax expense was $2 4 million in the quarter.
Representing an effective tax rate of 14, 4%.
Compared to $2 8 million and an effective tax rate of 18, 7% in the first quarter of 2023.
We recognized federal and state tax benefits related to tax credit investments placed in service <unk> amortize during the second quarter of 2023.
761000.
Compared to 584000 in the linked quarter.
Our accumulated other comprehensive loss stood at $134 5 million at June 32023.
We reported a TCE ratio at June 30, a 553%.
And tangible common book value per share of $21 79.
Excluding the OCI impact the TCE ratio and tangible common book value per share would have been 753% and $29 66, respectively.
We continue to expect these metrics to return to more normalized levels over time given.
Given the high quality and cash flow nature of our investment portfolio.
I would now like to provide an update on our outlook for 2023 in key areas.
Given our year to date loan growth and expectation that growth will be concentrated in the first half of the year.
We are adjusting our full year 2023 loan growth outlook to low double digit growth from the previous high single digit expectation.
Our commercial pipeline, which includes commitments secured but not yet funded is.
It is down considerably from where it stood at the end of the linked and year ago quarters.
We now expect our full year NIM of 300 to 305 basis points.
Where the range is narrowed and the bottom is five basis points lower than previous guidance.
Given the continued funding cost pressure that we've experienced.
Our forecast assumes the forward rate curve that reflects the latest 25 basis point increase that occurred this week.
Along with economist predictions for fed activity to be muted for the remainder of the year.
Given the continued strength of credit quality metrics.
We expect full year net charge offs of between 25 and 30 basis points.
10 basis points lower than previous guidance.
We now expect the 2023 effective tax rate to fall within a range of 17% to 18%.
Down approximately 1% from previous guidance.
Reflecting the impact of the amortization of tax credit investments placed in service in the current quarter in recent years.
Coupled with the impact of revised margin guidance on pre tax income in the second half of 2023.
Recognizing the margin has been pressure through higher funding costs.
As observed through year to date trends.
We expect our annualized ROA to fall within a range of 85 to 95 basis points for 2023.
Our expectations for flat noninterest income.
Excluding nonrecurring and semi recurring items.
Mid single digit full year expense growth.
Single digit growth in nonpublic deposits remain unchanged.
That concludes my prepared remarks, and updated guidance I'll now turn the call back to Marty.
Thanks Jack.
Overall financial institutions incorporated and five Star Bank are well positioned heading into the second half of 2023.
We continue to maintain a healthy capital position exceeded well capitalized minimum standards for the bank.
We are very focused as we have been on deposit gathering.
Our balance sheet is strengthened by the granularity of our community banking franchise, we operate through 49 banking locations across our upstate New York footprint, which have average deposit balances per branch of approximately $78 million, excluding reciprocal and broker deposits, we have top three market share.
More than 70% of the counties, where we have a branch presence.
And our first or second in eight of those 14 counties.
Independent of the balance sheet, our available committed liquidity remained strong and stable at approximately $1 1 billion.
Our focus in the near term remains the same.
Protecting our margin limiting noninterest expense and expanding our customer base across all areas of our diversified financial services company.
That concludes our prepared remarks, operator, please open the call for questions.
Thank you Bruno and to our Q&A session.
Brenda if you'd like to ask a question. Please press star followed by one thank you Pat.
Our first question comes from Damon Delmonte from <unk>.
Your line is now open. Please go ahead.
Hey, good morning, everybody hope everybody's doing well today.
Thanks for taking my first question.
Alright. Thanks, so much my first question just regarding the outlook for loan growth here in the back half I mean, clearly a very strong first half and I was just wondering what do you think is driving the smaller pipeline does that.
Is that being more reflected by just slowing demand from borrowers, which does imply that maybe economic conditions are kind of slowing or is it more of you guys.
Just kind of sharpening the pencil a little bit more and being a little bit more selective with the types of credits that youre, adding.
I think it's a combination of both.
The.
Our borrowers the economy's been dealing with the recession that.
It's not showing up but theres certainly a lot of uncertainty and volatility and that is impacting confidence levels in terms of moving forward with projects both in real estate as well as in our C&I.
Portfolio, but at the same time, we continue to.
Push our spreads up as a result of the market's resetting increases in rate and the capital debt markets resetting.
Which is slowing down demand as well as selectivity on our side of it David were trying at this point now to reserve.
Space on our balance sheet for those that have the deepest and broadest relationships with us.
Got it okay. That's good color. Thank you and then maybe one for Jack on the on the margin outlook could you just remind us a little bit about the asset side of the balance sheet.
How you are positioned in the next couple of quarters as far as re pricing goes in when you look at I guess loans and securities cash flows.
Yes, David this is Jack so.
As we have been structured in the past were north of 30% about 34% of the balance sheet is positioned as a variable rate structure. So.
You'll see the benefit there with increases in fed funds rates.
As far as cash flows concerns we are continuing to guide on a 12 month basis.
<unk>, a $1 billion in cash flow coming off primarily the loan portfolio of about $130 million coming off in the securities portfolio.
And Thats just a function of the continued growth we have seen this year and the cash flow nature of our total loan portfolio, which has a duration of about four four years.
Got it okay. So your guidance for the margin is pretty favorable compared to some others that we've heard today.
On the deposit pricing side do you feel like it's starting to rationalize a little bit and the mix shift is slowing.
We've continued to see consumer demand for time deposits as Marty mentioned, we just rolled out this week.
Soft launch of our money market campaign.
Going to have some more formal advertising behind that beginning next week. So our expectation is we'll see a lift there on the consumer side for non maturity deposits and that we're we continue to remain focused on that fast deposit pipeline, which we've previously guided to on a full year basis of about $150 million.
We've seen a lot of momentum post quarter end.
Really in July and are about a third of a way there as we speak today.
Great. Okay. Thanks for all the color that's all that I had thank you.
Thanks Damon.
Okay.
We will take our next question from Alex <unk> from Piper Sandler Alex. Your line is now open. Please go ahead.
Hey, good morning.
Okay.
Good morning, guys.
Hi, Alex.
Hi.
I wanted to go back to your comment Marty on reserving balance sheet capacity for the best customers and just sort of figure out exactly what you mean by that is it.
Is sort of the constraining factor on loan growth a function of liquidity is it a function of capital is it a function of concentrations in specific segments.
Segments, and just get a little bit more color on how you think about it.
The capacity issues, so that we can sort of.
Incorporate that into.
Some of the longer term.
Balance sheet complexion and growth projections that we have.
So the first half of the year loan growth has been driven by our pipeline of cycling in our commercial real estate book and inherently those loans do not come with a lot of deposits and as a result of that.
That's where we're also seeing the tempered growth on our borrower side and as well actions we're taking.
Driving our spreads up and.
<unk>, our lenders to pursue and drive.
Relationships.
Okay.
It's really about trying to target more customers that have deposit relationships than specific constraints on the balance sheet today.
Yes, Alex this is Jack that's exactly right. So the focus is to step away from transaction only type opportunities and those that come with.
Deposits, partially fund the outstanding balance to take a little bit of pressure off of wholesale funding and then look for opportunities to build full relationships a lot of wealth management and insurance businesses.
Okay.
And then does that sort of leads into my next question, which is the merger of the two investment managers and you kind of alluded to a little bit in your prepared remarks, Marty, but I'm just curious if there's a way to sort.
We define.
The opportunity that may be in front of us the larger company now just given more capacity I think that you mentioned and just how to think about some of the other potential efficiencies both on the revenue and expense side that could be associated with the completion of that merger.
Yes, Alex this is Jack I'll take that so day one of that merger was effectively may 1st. So we're early stages of that merger, but really the opportunity there was to right size of the business as a function by creating more of a focus on high net worth managed accounts and lesser focus on the retail broker dealer type.
Relationships that are traditionally offered in the branch network and from a revenue standpoint, you can see that that impacted <unk>.
Transaction fee income by about $104000 during the quarter.
However, we did observe a greater reduction in expenses, which resulted in a higher EBITDA margin for that business, which is now trending above 25%. So we do have some operational opportunities down the road, but we're in early stages.
Great and then one question on the on the auto I think you mentioned that new the new weighted coupon is around 9% to 30, which sounds.
Pretty enticing in terms of.
Actually in growing that as a sort of a mix of the balance sheet just to kind of improve margins, but.
Yes.
Has the structure of those loans change to allow for the larger coupon like is the amortization period extended out.
Just to kind of keep the sort of the normal payments lower just kind of help me understand how customers are reacting to that rate and whether or not.
It could actually wind up being a better asset class and one of the maybe you want to have a little bit more on the balance sheet.
Consistent kind of with our comments relative to commercial we've been focused on spread in that business as well.
Maintaining our approach to.
Credit and the focus on 700 above credit scores and our tier one bucket.
That's again, taking advantage of the market's resetting and driving wider spreads there.
We agree it's an asset class that we've been comfortable with it has served us well and is performing very well.
Right now, which gives us some options relative to try.
Trying to defend.
The NIM.
Great.
I think if I'm remembering correctly. It is normally around a 30 month product that just in terms of the sort.
The life of the typical loan is that extended out as a result of rates moving higher.
As the churn was a bit slower.
Yes, Alex this is Jack so but over the course of the past.
I would say two to three years customers have had.
More of a desire to move into the five or six year term, which has had a little bit of an impact on duration extension in the portfolio. So we've moved from about a three year duration to about a three three year duration.
Great. Thanks for taking my questions.
Thanks, Alex.
Thank you. Our next question comes from Nick <unk> from the whole day, Great. Nick Your line is now open. Please proceed with your question.
Good morning, everyone. How are you today.
Good how about yourself I'm doing very very well. Thank you.
So first on the tax credit business, you mentioned the noise in that number for the quarter as you added new credits and booked a gain what are your expectations for that fee item and is that included in the flat year over year for your guidance.
Yes. This is Jack I can take that one so we do have a pretty active pipeline.
Low income housing tax credits historic tax credits.
Our in process.
The timeline around when they are placed in services.
Exactly that's not an exact science, but it does impact.
We are in and inform our forward tax rate guidance.
Okay.
And then great credit performance in the consumer indirect book was there anything atypical like large recovery that benefited the charge off number this quarter I know you touched on the underwriting standards, but more broadly speaking are you being more selective in that portfolio as well.
So we did have a very strong recoveries in the quarter and used.
Used car prices have moved around I think as a result in our experience.
The coupons going up so dramatically used car prices are in demand. It's one way consumers are navigating the higher cost of cars and associated loans and as a result of that where we have had to work through situations in terms of repossessions and liquidating collateral it's worked out.
In our favor.
Okay, and then just just a follow up on the lower sequential investment advisory results can you help us reconcile the reduction in transaction based fees with the AUM increases from the strongly positive equity market results in the quarter.
Sure. So when you think about the.
Allocation of that customer buckets about 65% equity 35% fixed income.
We viewed historically wealth management firm is including Courier capital legacy HMP, and then that retail branch network in that retail branch network is what drove the higher transaction volume that was in <unk>.
Platform that we're on.
Focus less on that moving forward and more on the high net worth individuals and that was a.
<unk>.
A short term pain point in the merger, but we're working through that and focusing more on building deeper relationships with larger account balances.
Got it.
And then lastly on the best initiatives I'm, sorry, if I missed it what were the <unk>.
Deposit balances at June 30, and are you still expecting $150 million in deposits by year end.
Yes, we are still expecting $150 million by year end they were nominal at the end of the second quarter I think they were around $2 million.
We're about a third of the way through about $150 million target as we stand today.
It's pretty ratable in terms of.
How youre thinking about.
The results going forward, we should see a big increase in the September quarter is that correct way of thinking about it.
Yes ill ask Sean will take that one yes, yes. So that's correct. So we saw increased momentum through the month of July and that's continued to build.
As we move forward.
Great. Thank you for taking my questions.
Thanks, Nick.
Thank you as a final reminder, if you'd like to ask a question. Please press star followed by one on your pillar. Thank you Pat we will take our next question from Matthew Breese from Stephens, Inc. Matthew Your line is now open. Please go ahead.
Hey, good morning.
I just wanted to touch on the tangible common equity ratio at five 5% understanding much of this is a OCI driven I guess, Mike My question really is.
What is the duration securities portfolio, and how long will it take to recoup.
Lost a OCI all things equal.
And if in fact takes that long or are you comfortable waiting.
Long too to recoup at all.
Yes. This is Jack I'll take that question. So in the last year, we've seen about $150 million in cash flow.
Sorry, the last 12 months seen about $150 million in cash flow come off the securities portfolio.
The duration is influenced primarily by shifts in the five year point of the curve.
And I feel that we're about fully extended in that portfolio when measured at as of the end of June the modified duration was five 9%.
As to your comment about being comfortable with waiting that long for that to fully recover and we continue to look at opportunities to optimize the balance sheet. When it makes sense. So if there is an opportunity for us to look at that portfolio.
Recoup some of that.
Principal with an earn back that's desirable you take advantage of that.
Understood Okay.
And then at quarter end, and where did your commercial real estate concentration stand.
I mean at least for the call reports, it's been kind of inching closer to 300 not quite there yet.
And then maybe just discuss comfort levels with over time kind of puncturing through and go beyond 300, and any sort of regulatory discussions around that.
So we're still under the 300.
Pushing to 90 ish percent and we.
We were very comfortable with our approach and the business that we built but obviously as we take that step it's meaningful from a regulatory perspective and from our own enterprise risk management framework and we need to do we want to prepare to do that thoughtful and deliberate way when it when it happens.
Understood Okay.
Jack you talked a little bit about best deposits. The goal is still there making headway in July what are the cost of those deposits. So far that's coming in the door.
We view them as an attractive alternative to the cost of wholesale funding and I really don't want to give out the pricing structure as we view that as a competitive advantage, but it's a discount to fed funds.
Okay.
The last thing just on the tax business trying to I'm trying to figure out its contribution to the overall bottom line.
How do you calculate that and what is your estimate in terms of that tax business its contribution to EPS this quarter.
The benefit that we received this quarter was about <unk> <unk> per share from an EPS standpoint.
But it is part of a much larger strategic initiative for the company.
We really initiated this business activity in 2018.
We recruited talent that had expertise that could help us engage with the opportunity to marketplace deliver our bank in this manner to those sponsors that are dealing with historic or affordable housing as I'm sure you can appreciate.
The extension into CRA and community development activities.
In the markets, we're serving is significant in terms of its impact and.
That aspect of it.
Our commitment to the wellbeing of the communities, we're serving yes Marty.
Marty if and they all had there this is all kind.
Kind of a line of business for US we have commercial expertise in house that engages with these.
Opportunities in our footprint, we underwrite the loans and the tax credits in house, they're not purchase so we have deep understanding of them and internal capacity.
Policies around how much exposure, we are taking in that regard.
Are they mostly tied to housing I recall in the past they were.
Tax credit investments around the northeast mid Atlantic that involves kind of the solar credits.
I think one of them one shower.
Are there ways you can prevent those sorts of unfortunate outcomes with what youre doing.
Yes, so as Jack was saying these are opportunities, where we are working directly with the sponsors many times.
They are operating in our markets there for projects that are well identified.
Renewing if historically.
Tax credits renewing on urban building, where black or something of that nature. If it's affordable housing it still could be renewing.
Neighborhoods, either rural or suburban or urban but bringing.
Portable housing too or supported housing to the.
To the market to bear and it works out very well because housing stock is.
In those categories is limited and generally older and it gets these projects end up performing as expected.
Matt we do not have any solar focused tax credit investments.
Great I'll leave it there. Thank you for taking my questions.
Thanks, Matt.
So nathan's question is from the line. So I'll now hand back to Martin Birmingham for any closing comments.
Thank you very much for joining our call today, we look forward to talking to you again.
And part of our third quarter discussion.
Thank you. This now concludes today's conference call for today. Thank you very much for joining you may now disconnect. Your lines have a great rest of your day.
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Okay.
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