Q2 2023 ConnectOne Bancorp Inc Earnings Call
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And welcome to the connect one Bancorp, Inc. Second quarter 2023 earnings Conference call.
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[noise] conference calls reviewed.
The second plan.
<unk>.
On today's call will be Frank drinking out chairman and Chief Executive Officer.
Executive Vice President and Chief Financial Officer.
So with us.
Pregnant.
Thank you for me I know.
And treasure.
I'd also like to caution you that we may make forward looking statements. During today's conference calls that are subject to risks and uncertainties actors that may cause actual results to differ materially from expectations are details.
The violin.
I was looking statements included in this conference call.
As the date of this call and the company is not obligated to publicly update or revised.
In addition, certain terms used in the trial or non-GAAP financial measures.
Delusions of which are provided in the company's earnings release.
People are scheduled which has been filed today.
The S. P. C may also be accessed through the company's website.
I will now turn the call over to Frankfurt.
Please go ahead. Thank you Sir good morning, everyone. We appreciate everyone. Joining us this morning for as cool as you saw in this morning's earnings release connect once performance Wow negatively impact.
Like that policy continues to demonstrate strong stable qualities challenging operating environment.
The beginning of ear and drive the turmoil in March we have maintained and even increased claimed deposit cause.
Cause we have diligently supported deep into our client relationships along with any new ones.
Further.
245 or so.
Liquidity, while maximizing Martin short the policy.
Top tier uninsured deposits coverage ratio of about 250 per cent.
I'd like to summarize some of the key operated highlights from a quarter and then of course, you can give us some more detail later.
I was expecting a loan portfolio remain mostly flat for the quarter, although lomax improve.
I hope the 17% annualized growth rate C N I invest.
The investments we've been making in this area are beginning to move the needle on both sides for a balance sheet.
A capital levels remain strong, which reflect a more prudent philosophies and hedging strategies I've seen a minimal negative impact J O C. R.
Common equity increased 911, 9% as of June 30th which release well above your averages and are tangible book value per share increased 13th consecutive quarter 20 to 30 or 40 per cent over that period.
That interest margin compressed sequentially by about 19 basis points largely due to the shift from non interest bearing demand of the interest bearing accounts. However.
Both are net interest margin and Eth friends seemed to stabilize at their current levels, though in the cooler at least at a time of day, though of course, we'll discuss a little bit more about this in detail later.
Credit quality roommate excellent with delinquencies as a percentage of total loans remain near zero and just 0.04%.
This reflects high credit standards are well diversified portfolio and more importantly, our relationship based client philosophy in regards to our commercial real estate portfolio cause we mentioned the previous calls cause it's very minimal exposure to office, New York City office, representing less than 1% of total loans.
Our aggregate office exposure is largely ignored in new Jersey, which includes high tendency specialty services and multi use buildings. The total is about 5% of our total portfolio.
That before that portfolio is performing well is all past week.
Now multifamily portfolio historically, our loans were underwritten with Croutons standards, including high eternally determine D. S. D R's Whoa of T V 's.
In addition, lone Otherize includes stress testing for interest in cap rate increases and stresses on potential net operating income.
In terms of rollover risk we have extensively reviewed our portfolio to determine the current level of risk first of all only about $60 million in a multi sent a new Orleans world Spiriting significantly pricing during the remainder of 23 and 190 million in the following 12 months.
Those large majority are financially strong longtime clients at the bank and close very limited risk in some cases, where proactively seeking credit enhancement such as additional collateral and R. P. G 's and have largely been successful in this regard. We also have the ability and we will utilize this in very limited cases I.
Right or amortization concessions in order to maintain sample performers.
Overall, while audible pipeline remains robust.
Anticipated relatively flat outlook regarding overall loan growth looking ahead, we're well positioned with growth opportunities in key markets, such as long Island in South, Florida and in deposit brief vertical C&I, along with health care.
And others.
At the same time, we expect to see a decrease in multi then when they were purchased a man, obviously down and great competition still challenging.
Moving onto our operating strategy, we focused on integrating technology and infrastructure investments. This.
Optimization will get a position connect one for the future, while enhancing our franchise value where.
We're executing on several innovation initiatives focused on enhancing the client experience wild digitizing workflows and expanding opportunities to support or deposit franchise drive organic growth.
For example, we recently launched our partnership with mantle and successfully integrated with the first phase of this omnichannel deposit origination platform. We're also creating opportunities across new verticals. We continue to build our franchise referral and lending platform in conjunction with both lives and during the course quarter, we continue to enhance its infrastructure and new users.
Increase and increase our clients overrule workflow efficiency and drive revenue.
Actually I'm pleased to share the S. B a lending platform continues to gain traction it is accelerating or non interest income growth, we recorded $500000 in games during the second quarter and aim to improve on that in the quarters ahead.
While we invest in ways, our clients can access our products and services and continue to make enhancements and audio systems and communication tools were also seizing on opportunities driven by the market disruption.
Hi, performing revenue producing talent to support future growth.
Over the past several months Barnboard about a dozen client base and team members in both new and existing markets.
Connect one continues to leverage opportunities to grow smartly, we continue to prudently manage expenses. This includes our ongoing focus on optimizing operations staff counts and branch footprint, while also leveraging technology to increase human capital efficiency.
Saying that well we understand this may be somewhat different message than you're hearing from other banks many of them more cost cutting or implementing expense cause cause. We believe the current environment presents particular opportunities to invest supporting connect once distinct growth strategies and offer the potential for attractive the terrorists. It's the law.
It's a P is consistent with our track record of superior growth and profitability over the longer term.
Regarding our outlook for the remainder of twenty-three although the industry is facing headwinds we firmly believe that the next one's conservative client centered model diversified balance sheet solid liquidity and track record of prudent underwriting and profitability physicians us for the challenges ahead in the flexibility to continue to invest.
And are valuable franchise.
And with that I'll turn it over to Bill Bill Okay. Thanks, Frank Good morning. Thank you all for joining us today.
Get to your question shortly but first like to start off with some comments regarding the positive side of liquidity first off we where we are in very good shape regarding client deposit floods here.
Finding client deposits is all deposits other than broker and in this economic environment, where first the money supply an aggregate deposits are contracted second.
Second where Rachel humidity bank deposits have been migrating to the largest banks, we have maintained and even have grown our client deposit base and that's true whether you analyze the trends on a point to point on an average balance Pacers now.
We did increase broker by more than a million during the latter part of the first quarter.
That was to increase on balance sheet cash liquidity, but we have largely wound that down during the second quarter. So that contributed to a decline in average aggregate deposit sequentially, but not client deposits which are up.
In terms of overall liquidity. We are now covering are uninsured is unkind rise deposits by more than 2.4 times and that is a very very strong metric.
So the next era I liked the cover the net interest margin. We did experience another 19 basis points of sequential compression, but there's good news here and that the low point for the margin actually occurred in April .
May and June saw some margin expansion.
Several moving parts here first non interest bearing demand, which declines heading into the month of April April or may the relatively concept for the remainder of the quarter.
Second since we had been proactive and aggressive with rate increases early on during the cycle. We were generally able to hold off right. Please rate increases for months with the current quarter.
Looking at deposit rate trends, we we appear to be approaching our terminal beta which is about 50 to 55, depending on how you measure it.
As far as the name for the remainder of twenty-three there are factors working in our favor and stomach asked on the positive side.
Projected do alone funding rates are approximately 8.2% and are expected to replace loans going off the books Ah rates below seven is about $300 million a turnover per quarter that we project and that to manage a million turnover excludes any research next yesterday's fed rate increase will likely help the margin on.
B, a slightly and finally, the knowledge spreads a mad man appears to be flattening out as I've spoken to this before the value of P. P. A is even greater and higher made environment.
Working against the margin is it continually pricing of C. DS in this regard we have about $400 million per quarter over the course of <unk> over the course of the next year and an estimated hundred basis point increase in costs.
I just mentioned that we have been able to hold firm on deposit pricing recently, we of course are keenly aware of the competition could intensified which would accelerate our deposit costs. Once again, so when you add it all up.
And then it gives some conservative guys here and say that although we expect some further compression.
It is not likely to be anyway, you know what we've experienced over the past year I would hope compression at that it would be no higher than the single digits.
And longer term.
We are in a liability sensitive position I would expect that material margin expansion when that converted delker returned to a traditional shape run some preliminary modeling and so the rough cut we'd expect for every hundred basis point drop in short term rates, we'd see a 20 basis point improvement and then it's just margin.
Over the course of a complete cycle would bring us back two or 340, maybe a little higher long term margin and along with that all the other metrics that reflect the high performing banking organization.
Unexpected as we will in some respects is frankly, she's talking about follow up our longer term strategic deal, we will capitalize on opportunities for talent and will continue to invest in technological improvements now. This is not to stay with one also focus as we always do on efficiency in terms of continue rationalization always.
<unk> and reallocation of resources, depending on the changing landscape. For example, we have players at closing other New Jersey branch late in the year and we recognize some of our peers have reported cost cutting programs. However is a top tier efficient bank with non interest expenses as a percentage of ashes consistently last.
The low 0.5 per cent, we are in a constant up to the optimization mode. So given all I've just stated I'm gonna forecasts expense grow some approximately 5% on an annualized basis.
On the notice they confront we remain optimistic about our growth prospects, especially given the momentum from SBA. We reported 500000 of gains a score expect that number to increase in the coming quarters and both lie is expected to contribute to the non interest income growth as well.
Now moving onto the ACL and credit Frank mentioned this as well credit quality remains sound with delinquencies. It just four basis points of total loans a quarter at a net charge offs for the quarter with just five basis points annualize the non-performing asset ratio was basically flat increasing slightly point.
Five 3.48, and a quarter I go but it is down from 690 year ago. The.
The provision for the quarter was $3 million and as you know it's difficult to projects seasonal modeling for right now.
My outlook is similar provisioning for the remainder of 2023.
A little bit about capital capital remains a very strong levels and it continues to grow stock repurchases were modest at 270000 shares during the current quarter. They were completed in about $15 per share. It's good 20% below the current stock price and with a stock still trading today below tangible book value.
And what we believe is a significant discount for long term value. We plan to continue that program at a summer of pets similar tastes for the duration of 2023, our dividend, which was increased last quarter still represents just a 33% pay out even based on this quarter's EPS. So we have a good cushion for stock repurchases and.
Where we get the questions I'll turn it over to Frank again.
Thanks, Bill and summary, despite the ever changing environment and the headwinds being faced by the industry, we remain committed or long term strategic priorities as we have in many prior cycles connect one deep experienced team continues to remain focus on serving our clients building a best in class pain, and creating long term.
Values to our shareholders.
Confident.
And our commitment to improving and building upon artists' things of operating platform and maintaining our people focused mission will allow us not only remain resilient.
Advantage of the unique opportunity.
Forward to sharing our continued progress in the quarters ahead with that we're happy to take your questions operator.
Yes. Thank you at this time, we will begin the question and answer session plus a question you have pet star.
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Before pressing the case just try your question Please press star too.
At this time, we will pause momentarily to some of the roster.
And the first question comes from Michael Burrito, with K B W.
[noise] Hey, good morning, guys. Thanks for taking my questions.
An island.
Bill just a quick clarification five per cent expense growth what what's what's the period of time on that is that is that an annual twenty-three number or is that for the back half of the year next year I I'm, sorry, if I missed that but I didn't hear the well I would say it's good for the next couple of quarters and you know, we'll see I think it's going on the revenue side before.
We give further guidance for 2024.
Okay. So so five per cent growth all planets annual annualize.
Annualized would divide that by far for the sequential number got it perfect alright. Thank you for that I'm, just curious about behind that you know I imagine you guys mentioned it I think frankly chairs prepared remarks, you mentioned in the released it sounds like they're still opportunities around all the dislocation in the local market here Uhm Frankie maybe skull.
<unk> deeper on that you know I mean I have to have you started I feel like there's always kind of two durations of of that type of disruption. There's the initial wave then people then there's the second wave I mean, where do you think we are in that process and and what are the types of talents that you guys are are looking at I mean, I imagine there's lots up you're not looking at as well or not interested in just curious if you could spend a minute on that.
Yeah.
I, probably wouldn't spend any time on what we're not interested in but I can tell you that I think we're in between that first phase in a second phase certainly a lot of people are still shell shocked by some of the changes that you know some of the turmoil that erupted in.
Mid to late March.
And there are folks that are still trying to figure out you know where they Wanna go what they Wanna do or how they want to do it I think there there is a second wave forming which are people that have been either displaced or have a default into other organizations and finding out that it's not so great. There so they're seeking out.
Someplace that resembles home to them, we're taking advantage of both of those on top of which are all the opportunities in the marketplace relative to the <unk> Ah that's occurring in a market, which is really driving a lot of people out of some of these larger.
Larger sized regional banks and into places that resemble you know a place where they can get done where they can actually she cancelled the client.
Dialogues.
Able to be seen as a decision maker so as far as we are seeing opportunities here, what we're taking advantage of clearly we're beginning to see the transformation of our CNI operation here, which has been a long time.
But we keep getting really great talent, there and it's in in all parts of that pocket, but it's it's also allowing us to extend our reach into other adjacent markets that that that our customer in New York today. So we're really excited about somebody opportunities that we've been able to pick off.
I don't know that any other time you'd have been able to do so and that's why we're speaking up about the expenses, where everybody's talking about layoffs and cost containment isn't that we actually see it coming the other way and we see that this is the time to double down.
You'll get the best talent that we cannot afford.
We think that's gonna be that's gonna be.
Positive or any longer.
Awesome.
That's helpful. Maybe a follow up on that for literature on the S. B a side can you remind us.
The size of that team today, and and maybe just some near term expectations around origination gross I mean that was a nice line item. This quarter. A few guys just curious where that could trend over the next few quarters here.
Yeah, we have a very good pipeline ahead of US. The team is about 10 people, there's probably for a business development slash originators on that team and the Mexican support by now we're remaining optimistic for that line of business now, we're getting and find out the 19 <unk> of course.
Oh, so I'm looking at deals that were saying no tail, but primarily belongs that we have in that pipeline are are pretty strong.
Okay.
It's just a decent.
Run rate was based on the pipeline Amanda sure can move around a little.
Yeah. Mike. This is this is bill I'd say, a minimum of 500000 and possibly of December 2000, and that's just for this year and then we'll fix here okay. Okay Yep perfect. Thanks, and then just last one for me then I'll step back just frankly I apologize if I missed this but I was wondering if you could expand a little bit more just on.
The dynamics of when kind of a resumption of balance sheet growth makes sense for you guys and and and what are the key kind of <unk>.
Contributors to that decision as it macros at pipeline levels as an incremental spread all the above just curious how you guys think about that if you can give us some expand thoughts that'd be great.
You know my when I when I look at it what what I see is that inter.
Interest rates instead policy have definitely dampened demand and so you know we see a lot less purchase activity Z a lot less business combination, we see a lot actually.
Things that generate with ice a business that we'd like to be involved in so I would say half wider slowdown in our ability to put on new and more assets.
To generate balance sheet grows his background like on the other side you know certainly when restart to look at credit metrics and what makes sense for us to do and where we want to put our focus again, there's just less demand for or less initiative on our part to go after a certain types of business a certain.
[noise] lines of business.
Our pipeline actually is surprisingly pretty strong but for the most part it's replacing existing business are coming off the the just the natural cycle.
And I do think as as the Feds sports loosen up a little bit as people start to get more comfortable with where in the right environment actually is and as the economy in general just I I hate to use the word rebound cause I don't really think it's that bad, but if the economy sucks.
The next phase I.
I do think we're gonna see a natural increase in demand and so we should start to see some accent generation along with deposit generation I think the two things are gonna come in and cause offence fix it split off the accelerator relatives, the interest rate increases and the the quality of tightening.
I think we'll start to see deposits like a call back in and I think we'll see the band for business type loans, increasing again.
So of course, they always keep it not even spreads and profitability. So you know just like in the past, we're not gonna Chase you almost based on pricing so.
How how aggressive the competition also.
Taxes and to out larger grocery we have.
Yeah.
Yeah that'll that'll make sense. Thank you guys for for taking my questions. This morning appreciate your car.
Great minds.
Thank you and then ask question customer diet Tomorrow with Raymond James.
Thank you good morning, guys mm, okay that'd be just.
Maybe just first on the Ah Securities portfolio.
Kind of.
Similar question to the loan growth of your.
You're letting that come down a little bit over the last few quarters, how how how far are you comfortable letting that come down before you you want to start providing for.
For some additional securities again.
You know we we.
We we try to keep it under a certain level of total interest starting assets I'm thinking the Max it is probably around 10% of it it's gone down to where it is today at 8% so.
You know, it's not that big a number either way for us, but for now probably flat I wouldn't want to see it go down too much okay, just from from and on balance sheet liquidity perspective.
Okay. Thanks Bill.
And then maybe just to dig in a little bit on the on the margin comments that you had I think you said no no I'm guessing seems to get pressure is what you were expecting from here I guess, putting aside the the potential for.
Change in the in the yield curve for or any kind of cuts. If we stay relatively flat from this level how do you think.
That's kind of the most.
Third quarter, and then relatively stable after that or or more more.
I hate, giving exact projections on the net interest margin, but it's hard to say right now that there could have been at least a compression.
There used to be a comic.
Additionally, the deposit side, but the structure of the way.
Assets and liabilities and repricing right now I'm looking at.
A margin that's.
Maybe just a little bit lower than a whereas today wherever we can find out.
Okay Alright.
Alright, I appreciate that thanks for taking my questions.
Okay.
Okay.
Thank you that's perfect. Thanks for all your type of Sandler.
Good morning.
Just on the Bill I, just want to make sure I heard the new loan funding. It sounds like you said, 8% is is where the pipeline is.
Is that right.
Yes that is right.
Well, we've been bugging loans.
What is the the make up of that is that you know in terms of CNI stabilized Cree construction, what what's mostly in that number.
I don't think it's a big portion of Cni's, frankly mentioned that we've had some good growth in CNI.
During the call even though the loan portfolio is flat we had some good growth and C. N. I. So that's what's driving <unk>. Some of the race, which is not you know a good races, but boson at and it also allows deposits.
Okay and I just wondered if you could just maybe talk a little bit more about the the area of the the market you guys around in terms of C. N I like what you know the average size of loans. They the the geography that drove that growth in the corner or the make shift and a quarter.
You know it was in there generally real estate collateral as well in there just kind of curious you can get a little more color on the C. N I grew up in the corner.
Yeah, I think it's a little bit of everything you just said so it's it's predominantly within our market footprint clearly the New York Metro market.
It is loan size was anywhere generally from $3 million to $15 million in size.
Mostly businesses there is some real estate involved where there's an owner occupied building involved in a particular, whether it's 90 factoring or you know something else that's going on here in northern New Jersey market or in the long Island market.
But mostly it's just pure C and I'm using this one thing for a variety of different reasons, it's very diversify amongst many different segments.
At all.
Common in that there.
Most of the family owned businesses.
Apple pie and the other common denominator and these are mostly clients that we probably would've never seen before but for all the disruption that's going on where they either don't have the banking more or.
Really dissatisfied with the changes in the bank that Iraq because of either a merger or some of the turmoil from from from mid March.
Okay, Alright, that's helpful and then bell and you're and you're sort of I guess soft margin guidance are our thoughts on margin going forward that does that I guess would include some continued mix shift into CNI from from <unk> and just wondering I don't know if you can give any sort of.
Thoughts on on how much you know we're talking in terms of of CNI growth or mix shift through the end of the year that kind of minds up with your last thing or whatever it was single digit margin contraction from here.
Yeah, exactly that's it but it's not that great in terms of mix and the entire portfolio.
Yeah, It's just a couple of basis points in terms of margin, it's not the not the real driver. It was a real drivers are that the non interest bearing demand leveling off and that we're seeing less pressure on the deposit pricing side, because we raise prices earlier and had more precious than others early on to the site.
Okay. So yeah, it's not a big driver, but just curious you know what do you think and make sure that back out for Ya I'm, sorry, if I missed that in terms of you know a potential girlfriend <unk>, maybe maybe just a couple of per cent on the Pie chart.
And then just just lastly on efficiencies.
Let me think about you guys have always been a very efficient bank, obviously and just given what defense done in the contraction and margin you know you have fish cincy ratios now above the 50% Mark.
In your mind do you think you just need to get back to more normalized margins to get back below that 50 per cent range, particularly as you look at further investments does that is that the best way to think about it or yeah. Yeah. Yeah. Yeah. The banks that were at 50 are now it's sick we were at 40, whereas 50 banks there were 50 right now.
<unk> the thing that's constant though is the non interest expense as a percentage of assets that if you. If you if you analyze peers.
That basis, you'd see we weren't one of the best and that sort of holding constantly so based on that number if we got the margin backed up to 340, or so I think we'd be back on that efficiency level of 40 per cent or so.
Gotcha.
Okay, great. Thanks for all the color.
Alright, Thanks Fred.
Thank you and once again. Please press Star then one if you would like to ask a question.
And the last question comes from Matthew Breeze with Stephen Link.
Hey, good morning.
What am I doing that.
Hey, Bill you know I I sent some cautious optimism on on the demand deposit front and stability in the mix of deposits.
That held up right. So far in July are you seeing continued stability.
It's it's.
It's it's gone it's at the level of off completely in the second quarter, and then I saw a little debt and fairly early in July and so it's hard to tell right now whether or not you know we're continuing to see demand deposits flow you know usually what happens is that what is happening for other banks as well so I wonder what others are experiencing.
But my belief is is that it's it's certainly leveling off compared to the speed that it was declining earlier in the year.
Okay.
And then I appreciate all the the NIM commentary, yeah, maybe just give us some update on the NII outlook, it's been coming down for a couple of quarters, you know for obvious reasons deposits and rates.
Is this a four and your view or are we near floor.
We try to submit it stays on.
Then a truth speaker.
That interesting yeah, because if we have obviously, if we are flat lungs and is Martha depressed and then just think I'm just gonna go down and that's just math, but I think we're getting close to margin finding out and I do even though we're talking about plaque road will probably have a small amount of growth.
Oh, Yeah of course of the year.
And so that's that's for this year next year is a is a is another story probably get that even if we're not back just very large amounts of growth it'll probably be you know in the single digits and we'll start seeing widen the margin again.
So I hope that helps you with your models.
Yeah, Yeah, it does and maybe maybe touching on fee income uhm the gain on items and I believe that's tucked within you know other income it's been volatile right. What are what is the breakdown between.
Both lie S. P. A other items and is this quarter's 3.4 million dollar rate.
Something we can work off oven and grow off of.
Yeah, My best guess would be yes, that's something we can we can grow off of.
Terms of the S P a increasing a little bit in both y as well.
So both light generates about a million a year and in revenue and right now we're on a $500000 a quarter pace.
S. B, a we did have some CRE sales and that was causing the volatility that I was aware of it's been a tough market to that right now, but it's something that we.
We will pick up again, and they're a bunch of value for this area. We have we have relationships with that look to us for for product and so I feel good about this being the bottom and that leads to see growth from here.
Okay.
Freesheet that last one Frank.
It helped for some color on the late June Interagency guidance around theory accommodations and work out basically the regulators are saying.
We acknowledged commercial real estate headwinds. Please work with your customers what does that mean in practice you know what do you think the tools are that are you know at your disposal and how does this pan out from a disclosure standpoint in your view.
Yeah, I I think that.
Just from a high level perspective.
Anything that we've seen has really been the delta between what the <unk>.
Contractual change and the obligation of alone is relative to his interest rate and what is a market rate today is where the changes occurred I don't want to give anyone the idea that we've done anything for anybody to go along with the market.
How many times did you have a contractual obligation you know at 250 or 300 basis points off some index and that's way outside of market. Then obviously you know we're gonna try to make it a combination I just tell you though that it is.
Pretty.
Phew.
ER in between the most.
Most folks who just happy that we were doing long whatever the contracted rate was but those that really orange and want to seek out a better alternative somewhere else. There options do that in very few cases, if we had to actually sit down with a borrower and say hey.
You know, we know you raise supposed to contraction changed X, but we're willing to take in Hawaii, you know get you through the next cycle.
My comments were that if we need to do that and it makes good economic sense, we're gonna do that where client focus back that's the that's the non technical answer automatically.
I don't know what I don't know where I come out on this whether it was constructive or not that that statement by the regulators you know the the accounting for modifications changed so that already happened and that that's a good thing because it does it if you modify alone held the borrower and it continues to perform everybody wins.
Borrower the bank and our shareholders. So those are good things and it shouldn't sit on your books as a non-performing acid. If you will so we still have disclosure for loans that we modified during the period that are troubled but it doesn't last forever as long as that long continues to perform so I'm.
Not really sure how constructive it was not it was like no big deal. Obviously, we don't want to give it a we don't Wanna give it away, but in the cases, where it's either absolutely needed you know that's a tool we we've always had and will use.
Okay understood I appreciate that may be just as a follow up you know in the case, where you do have you know maybe Ah Ah Ah Ah bad set of circumstances, a nasty right reset combined with a with a nasty cap right reset.
Are you finding that your client you borrowers are willing to put additional cash and equity into the deals you know a so called cashing refi to keep the property and and in their pocket so to speak.
Yeah, No I would say definitely that is that is the case I think for the for the in the cases, where we have sat down with that type of borrower that has you know maybe he got caught up in a in a in a in a transitional property, where things didn't work out exactly the way they wanted and now the rays resetting they've been more than willing to give.
This personal guarantees other collateral potential cash into the deal whenever it's gonna take the right size alone.
As you can see by our credit metrics, we have not run into the bus or a problem alone in that regard. So I think we are reasonable here connect one bank in working with our clients and I think the clients because of the quality of our client base has been reasonable and working with us.
Right well I appreciate all the color. Thank you for taking my questions.
Right Yeah.
Yeah.
Thank you.
A question and answer session I would like to be trying to afford a management plan cousin comments.
Well.
Thank you everyone again cause it's on a day and certainly look forward to speaking with you all again or a third quarter conference call. So have a nice day and enjoy the rest of your summer. Thank you again.
Thank you the conference's all concluded thank you for attending today's presentation.
At your lives.
Goodbye.
Yeah.