Q1 2024 Colony Bankcorp Inc Earnings Call
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Speaker Change: Good day, everyone and welcome to colony Bank's first quarter 2024 conference call.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: You May register to ask a question at any time by pressing the star and one on your telephone keypad.
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Speaker Change: I'll be standing by if you should need any assistance it is.
Speaker Change: Now my pleasure to turn the conference over to colony's Chief Financial Officer, Mr. Derek shown that.
Derek: Thanks, Savi before we get started I would like to get to our standard disclosures.
Derek: Certain statements we make on this call could be constituted as forward looking statements within the meaning of the Securities Act of 1933, and the Securities Exchange Act of 1934.
Speaker Change: Current and prospective investors are cautioned that any such forward looking statements are not guarantees of future performance, but involve known and unknown risks and uncertainties.
Speaker Change: Factors that could cause. These differences include but are not limited to pandemics variations of the company's assets businesses cash flows financial condition prospects and other results of operations.
Speaker Change: I'd also like to add that during our call today, we will reference both our earnings release, and our quarterly Investor presentation, both of which were filed yesterday. So please have those available to reference and with that I will turn the call over to our Chief Executive Officer.
Speaker Change: Thanks, Derek and I want to thank all of you for being on the call today and for your support of colony, where.
Speaker Change: We're pleased with our improved operating results in the first quarter as well as the progress that we've made over the last several quarters, we've managed to build on our core customer relationships strengthen our complementary lines of business.
Speaker Change: And align expenses with our current growth outlook, all while continuing to innovate and enhance our customer experience.
Speaker Change: I first want to thank and congratulate our team members on a great quarter, it's their commitment to achieve our internal mission to build a sustainable high performing independent bank, that's driving our improved earnings.
Speaker Change: In the first quarter operating net income increased nearly 400000 and a lot of that is driven by continued improvement in our non interest income lines of business.
Speaker Change: Noninterest income increased almost $1 million on the operating basis.
Speaker Change: Last quarter, we mentioned that we expect to see a few more basis points of margin decline and we did see one basis point during the first quarter, which was slightly better than our expectations. We.
Speaker Change: We saw some stability and slowly and the rise of our cost of funds during the quarter. However, as you all know.
Speaker Change: We've entered into the second quarter, we've seen the rate environment heat back up the five and 10 year Treasury increased over 40 basis points since the end of the quarter and you've also seen the likelihood of rate cuts. This year continue to diminish.
Speaker Change: That's driving more competition for deposits in the marketplace and we will see that put continued pressure on our funding cost.
Speaker Change: Given that while we're closer to the end of margin contraction, we could see margin decline another three to five basis points from here.
Speaker Change: This environment stays where it is now.
Speaker Change: Before we start to see that recover and expand we believe in the second half of the year.
Speaker Change: There is going to discuss.
Speaker Change: The next items in more detail, but during the first quarter, we did make some strategic balance sheet adjustments, including the sale of securities and some loans as well as to pay down broker deposits and borrowings.
Speaker Change: These adjustments are part of our ongoing balance sheet management, and we likely will see similar transactions, particularly the securities sales going forward. When we believe they are appropriate and helpful in future earnings.
Speaker Change: We're glad to see our complementary lines of business continue to progress the performance of those lines are highlighted on slide nine.
Speaker Change: There is seasonality to our marine RV entire merchant service lines of business. So when you look at Q1.
Speaker Change: Last year, we saw a lot of improvement over Q1 this year.
Speaker Change: Even though they're down a little bit from Q4, we do expect marine RV to be profitable going forward and merchant to reach profitability in the next quarter site.
Speaker Change: The biggest driver in the increase in our noninterest income was from gains on sale of SBA loans.
Speaker Change: During the first quarter, our Sps L. Our small business specialty lending group hit the high Mark over the last year or so.
Speaker Change: We continue to see success with our small dollar lending program and expect to see those do well over the next several quarters.
Speaker Change: For mortgage in the first quarter is typically a slower quarter for mortgage in in any kind of environment and of course, we still see a.
Speaker Change: Challenging interest rate environment for mortgage however, we did see our mortgage group break come pretty close to breakeven in the first quarter and certainly improvement over where we were in the first quarter of 2023.
Speaker Change: We didn't see loans declined during the first quarter, primarily as a result of the sale of portfolio mortgage loans that I mentioned earlier and that Eric will go into more detail.
Speaker Change: And some criticized loans that paid off during the quarter.
Speaker Change: However, if you look at our average balance of loans, we were down only about $3 million quarter over quarter and average balance and our current low levels today and our pipeline indicate we should expect some modest loan growth for the rest of this year, which is what we've been.
Speaker Change: Forecasting the last few quarters.
Speaker Change: Total deposits did go down quarter over quarter, but that was primarily due to the pay off of a broker deposits. We are glad to report that our core customer deposits increased by about $12 million.
Speaker Change: Over the last quarter, and we remain focused on building core deposits and deepening our customer relationships.
Speaker Change: Expense discipline remains a priority and all of those noninterest expense increased slightly from the prior quarter. It was offset by increased noninterest income.
Speaker Change: So our net noninterest expense to average assets, which given our business lines is really how we think best to judge our operating efficiency that number was 138 on an operating basis in the first quarter, which is exactly the same as it was last quarter and a significant improvement from it.
Speaker Change: <unk> 78 in the first quarter of 2023.
Speaker Change: We feel good about our overall credit quality nonperforming loans decreased quarter over quarter. In addition to the decrease in net charge offs over prior quarter.
Speaker Change: The charge offs, we have seen a primary primarily related to the guaranteed portion of our SDA evolves. We expect to see some we did expect to see that increase in charge offs as we talked about in the last couple of quarters and we expect to see some of those small dollar loans to have that as well.
Speaker Change: Started to see that however, those loans do.
Speaker Change: Have a great premium that we sell those full works and so we think it's a great revenue source for our Sps L team, but overall very profitable product.
Speaker Change: Innovation as I mentioned earlier, despite the focus we've had on expense control. We continue within our base innovation, it's important part of our growth strategy, our ability to better serve our customers effectively and efficiently.
Speaker Change: Our team Scott a number of innovation initiatives that they're working all that will give us a better customer experience and boost our customer service standards of being a collaborative profit simple and we're looking forward to seeing some of that rollout through the rest of the year.
Speaker Change: I'm going to turn it back over to Derek Who's going to go over the numbers, it's more detail.
Derek: Thanks, Keith I'll start off with our earnings for the quarter on a GAAP basis net income decreased 265000, but excluding the loss on security sales operating net income increased about 376000.
Derek: Interest income increased from the prior quarter, but was slightly outpaced by the increase in interest expense, which led to a decline in net interest income of about 220000. This led to a slight margin decrease of one basis point from 2.70% in the prior quarter to $2 six 9% this quarter.
Derek: The margin decline was a little less than our expectations as Heath mentioned earlier and we still do expect to see some margin decline in the three to five basis point range before we start seeing any expansion.
Derek: We have been seeing some slowdown in the increase of our cost of interest interest bearing liabilities.
Derek: It was $2 five 8% in the first quarter up eight basis points from the fourth quarter.
Derek: So compare the increase from the third quarter of 23 to the fourth quarter of 'twenty, three was 24 basis points from 2% to 6% to 250%.
Derek: If interest rates stay where they are for a while we will continue to see our cost of funds increase but we expect it to be at a slower pace than what we saw throughout 2023.
Derek: On an operating basis noninterest income increased 973000 during the first quarter. This was primarily a result of an increase in SBA gain and related fee income of 535000 and is related to the increased gains from the newer small dollar loan products.
Derek: Net service charge and fee income was slightly down due to fewer days during the quarter.
Derek: And revenue from both wealth and insurance showed some small increases from the prior quarter.
Derek: Our boldly income did increase quarter over quarter, but was a result of a onetime claim payout in the first quarter.
Derek: Noninterest expense totaled $24 million and most of that increase was in employee compensation and benefits. The first quarter is when we see annual salary increases go into effect, we typically see more payroll taxes at the beginning of the year and four one K match resets on last quarters call. We mentioned that we would.
Derek: Likely see an increase in expenses in the first quarter and that we were still targeting at 140% percent net and Aida assets.
Derek: Operating net NII to assets was 138% in the first quarter and we see it being around that 140% range for the next few quarters.
Derek: Total noninterest expense of around $20 million is what we're expecting on a go forward basis, but it could be slightly higher based on activity and we would anticipate that that would be set with noninterest income.
Derek: Provision expense totaled $1 million for the quarter net charge offs were slightly down quarter over quarter total nonperforming loans decreased $3 8 million from $10 2 million last quarter to $6 4 million this quarter.
Derek: Of the 665000 of net charge offs 535000 of that was from the guaranteed portion of SBA loans, and our Sps cell Division.
Derek: Mall dollar express loans, which are 85% guaranteed has slightly higher losses, but they also have higher premiums so unsold.
Derek: We have recently tightened our underwriting a little on these and are still seeing good volume. So we think they're going to be a good product long term.
Derek: Total loans held for investment decreased $24 5 million from the prior quarter. However, as Heath mentioned earlier, our quarterly average is down only about $3 million.
Derek: Overall loan demand has slowed but the driver for this quarter was primarily the sale of $8 million a portfolio of mortgages for $84000 gain and payoffs close to $10 million in loans that no longer matched our credit standards.
Derek: Based on our current pipeline, we still expect modest loan growth this year and.
Derek: And on the last call, we said that we expected to see that pick up in the later half of the year and that's still what we're anticipating.
Derek: Total deposits declined $22 million was due to the pay off of $34 5 million of broker deposits we grew customer.
Derek: Core deposits by $12 5 million and that still remains a primary focus area for us.
Derek: Additionally, we paid down <unk> borrowings by $20 million during the quarter and in doing so further reduced our reliance on higher cost funding.
Derek: We did not have any outstanding overnight borrowings and still maintain a strong liquidity position.
Derek: The overall value of our investment portfolio increased and led to an increase in OCI from about $1 3 million quarter over quarter.
Derek: We did sale investment securities for a $555000 loss during the quarter and a few details about that are highlighted on slide 33 in the investor presentation.
Derek: Fair value of those securities was around $8 $6 million with a book yield of 2.0% to 5% are conservative estimates put that earn back at about two years, but could be shorter if deployed into loans.
Derek: It's likely that we will do some more restructuring going forward in those transactions would probably be somewhat similar size.
Derek: The portfolio mortgage sales pay downs on wholesale funding and investment security sales are all part of our prudent balance sheet management strategy, and we feel that continuing to optimize our funding mix alongside restructuring underperforming assets puts us in a better position for overall margin improvement.
Derek: Mortgage is still seeing stable production relative to the higher rate environment. The first quarter pre tax profit was right around breakeven and a big improvement over the first quarter of last year.
Derek: And our Sps cell division the smaller express loans are doing well and offsetting some of the slowdown we've seen for the larger SBA loans.
Derek: And we continue to see improvement in our startup complementary lines of business. The breakdown of income on a pre tax basis is on slide nine.
Derek: Marine and RV lending is seasonal and we're just getting into the prime season. Now however, we see considerable improvement when compared to the first quarter of 2023.
Derek: Heading into the 2024 season, we've almost tripled the number of dealers in our network when compared to the end of March last year.
Derek: And we've recently implemented auto Decisioning software, which is aligned with our underwriting guidelines and enables us to quickly respond to dealers in our network.
Derek: Merchant services has also made great progress when compared to the first quarter of last year. The total number of customers are up 46% since last March the total number of quarterly transactions were up 92% in the first quarter of <unk> 24, compared to the first quarter of 'twenty three.
Derek: And the total quarterly volume is up 75% compared to the first quarter of 2000, <unk> volume continues to increase and we have the capacities to significantly grow revenue with our current resources without adding a lot of additional expense. We also see this as a great lead product and developing full customer relationships.
Derek: With potential customers.
Derek: Colony wealth advisors continues to add revenue and increased assets under management and we see a lot of opportunity to add and for colony insurance. We recently expanded our product offerings by adding a life insurance specialists to the team we feel adding life insurance to our list of products allows us to better serve our customers and generate additional revenue.
Derek: That concludes my overview and now I will turn it back over to Heath for any final comments before we take questions.
Heath: Thanks, Derek that does wrap up our comments and with that I'll call on Abbvie to open up the line for questions.
Abbvie: At this time, if you would like to ask a question. Please press star and one on your telephone keypad.
Speaker Change: Remove yourself from the queue at any time by pressing star Q. Once again that is star one to ask a question, we'll pause for a moment to allow questions to queue.
Speaker Change: And your first question comes from the line of David Bishop from the Hub Group. Please go ahead.
David Jason Bishop: Yes, good morning, gentlemen.
David Jason Bishop: Good morning.
David Jason Bishop: Hey, guys just curious.
David Jason Bishop: Very strong quarter from the small.
David Jason Bishop: Small business.
David Jason Bishop: Pigment.
David Jason Bishop: Probably double what it was last first quarter does that sort of drained the pipeline should be.
David Jason Bishop: Sort of a.
David Jason Bishop: The dramatic falloff from here or do you think that that $2 billion of approximated thats a pretty good run rate moving forward I'm just curious how we should think about overall fee income.
David Jason Bishop: Second quarter and beyond as you sort of rebuild the pipeline.
Speaker Change: Yes, so we do expect that it might not be quite as strong, but we do expect it to be stronger than previous year's volumes in the Sps L Group with the addition of this.
David Jason Bishop: There's I think a lot of opportunity there.
David Jason Bishop: Of course other fee income as we look out for the year.
David Jason Bishop: Q1 is always light and our customer related fees, whether the R.
David Jason Bishop: Our deposit account fees are interchange and all that so second quarter, we would expect some of those things to pick back up normally and despite mortgage challenges that are out there.
David Jason Bishop: Certainly expect the second quarter to be stronger.
David Jason Bishop: Then the first quarter.
David Jason Bishop: For from our mortgage side, so we should see good fee income going forward.
David Jason Bishop: Okay.
David Jason Bishop: And then.
David Jason Bishop: I know earlier in the reporting season, I think some some peers were hearing some.
David Jason Bishop: Some issues, maybe in the RV and marine.
David Jason Bishop: Marine segment.
David Jason Bishop: I guess related to inventory build are you seeing any sort of.
David Jason Bishop: Blips or issues, there related to RV and marine lending.
Speaker Change: No we have seen a little bit.
David Jason Bishop: Charge offs there nothing significant of course, we we're newer into that that business. So it's not quite a season.
David Jason Bishop: Maybe some some other portfolios, but our outlook for that is good. We're just kind of gearing up into the marine portion of the season generally this time of year. So while our mix is roughly half by the end of the year, we will start to see a pickup in marine.
David Jason Bishop: During the spring buying season for RV will generally pick up back up at the fall. So its probably a little early to make any projections on the RV side, but the marine side looks strong and the demand looks good there there's available inventory.
David Jason Bishop: <unk> had been challenging in the past so don't feel like the inventory on the marine side is.
David Jason Bishop: It is an issue with too much or too books.
Speaker Change: Got it.
David Jason Bishop: I appreciate the the NIM outlook there.
David Jason Bishop: The securities restructure have any any sort of impact there.
David Jason Bishop: In terms of investment yields just curious how we should think about that moving forward should we continue to expect some runoff of the brokered deposit funding source.
Speaker Change: Yes, so I think with the.
Speaker Change: Sure.
Speaker Change: The security sales.
Speaker Change: This is that we did this quarter is probably not going to have a huge impact on the margin overall, but I think continuing to.
Speaker Change: These types of.
Speaker Change: See these types of transactions as they make sense, we're going to overall kind of help speed up some of the improvement that we expect there I mean, especially if we see continuing loan demand and can reprice as underperforming assets into loans.
Speaker Change: So I think that's going to be.
Speaker Change: That's going to be positive going forward for earnings and then we.
Speaker Change: We've been we've been managing to pay down broker deposits and I think we'll continue to do that as we have that availability.
Speaker Change: So we should see it come down a little bit, but we're well below when you compare to our peers.
Speaker Change: Our level of brokered deposits. So we feel pretty comfortable there and then we have the optionality to get some if we need it but I think our focus has been paying that down as much as we can.
Speaker Change: And I would just add Dave Yeah, as I mentioned.
Speaker Change: The quarter ended and then over the subsequent a little bit right at the end of the quarter and then.
Speaker Change: Last few weeks, you've seen rates move back up significantly.
Dave: I know in listening to a lot of the.
Speaker Change: The earnings calls the bigger banks were pushing hard to drive some deposit costs down, but what we're seeing.
Speaker Change: More our competition with regional and community banks, we're seeing.
Speaker Change: Pretty strong competition for deposits still so we're going to push or to drive customer deposits as affordable as possible that we may.
Speaker Change: Especially as loan growth picks back up we may have to pull in some brokered for little bit like we've done in the past to find it and then go out that generate it from our customers to balance it out do.
Speaker Change: Do shorter terms and try to keep those at a minimal.
Speaker Change: Got it and then last question I'll hop back in the queue.
Speaker Change: Just it looks like maybe three or four loans on the commercial real estate side put into the classified.
Speaker Change: Any commentary just on the puts and takes of what youre seeing on sort of the.
Speaker Change: Criticized and classified front.
Speaker Change: What we're really the only thing we're really seeing on the criticized classified Kevin and his own coming out of the SBA lending group.
Speaker Change: <unk> has seen the biggest amounts of rate change since our most all variable rate loans and so we're just continuing to see some of that weakness that we've talked about like the last couple of quarters. So we don't see material.
Speaker Change: Challenges from that and as you've seen our reserves remain strong we haven't had to provision a lot for those but we got pull demand and work through them.
Speaker Change: Great. Thank you.
Speaker Change: Your next question comes from the line of Christopher Merrimack from Janney Montgomery Scott. Please go ahead.
Christopher William Marinac: Hey, Thanks, Good morning wanted to ask more about the office portfolio. Mr. Any part of that that is criticized and can you just give us an update on kind of what youre, saying on bad debt service coverage for those particular loans.
Speaker Change: Yeah, Chris and we outlined a slide on our on our office portfolio. So I think you get a pretty granular.
Speaker Change: Our view on that we are not seeing challenges on the office side again, our office is different from most given our lack of exposure to major market. So most of our offices into one to three.
Speaker Change: Story categories again, we all say break down the loan to value there.
Speaker Change: And we're not seeing any real challenges in that sector of the portfolio.
Speaker Change: Okay. So criticized so low and then the debt service coverage ratios are still above.
Speaker Change: Whats the LTV would have indicated any waste.
Speaker Change: Correct.
Speaker Change: I guess.
Speaker Change: We want to be clear like we may have a little bit, but we're not seeing any major trends in that direction or any challenges.
Speaker Change: Where we're doing.
Speaker Change: Office properties refinancing with major changes in debt service coverage. So it's just really been a non event for us.
Speaker Change: Great. Thanks for the slide to follow that that's very helpful. So on.
Speaker Change: On the margin and Dave kind of asked this already too, but can we take the implied payback and kind of apply that to the next quarter and then build upon that would that be kind of a fair because it sounds like there is still an evolution on the securities portfolio ahead.
Speaker Change: Yes, I mean, that's what we're doing and I think our intent really is probably.
Speaker Change: While rates remain elevated.
Speaker Change: Look at the portfolio, what I would call chip away at it like this.
Speaker Change: I think we discussed in the range of 10% to 20% of of operating net income for the quarter as what we sort of be willing to do in terms of what we're willing to take loss because we want to continue to build capital we want to continue to build tangible book value.
Speaker Change: But we want to start positioning ourselves for improvement on the other side of this and obviously EBIT even now.
Speaker Change: So we'll continue to chip away at that again, what we're saying there and under two years is basically if we were to go by security or to just pay off the borrowings if we're able to get.
Speaker Change: And it evolves in the seven to eight.
Speaker Change: Range, we'll be able to EBIT and pay those off faster.
Speaker Change: We're going to be helpful.
Speaker Change: But yes.
Speaker Change: Just given the dollars, we're talking about relative to the entire.
Speaker Change: Portfolio.
Speaker Change: I'll take a few quarters for those to start adding up to something meaningful.
Speaker Change: Great. That's helpful. Thanks for that and then last for me is just add new hires whether it'd be in Savannah Augusta Atlanta Whats.
Speaker Change: It will be trained on that will you have additional ftes this year.
Speaker Change: Yes, so we are really.
Speaker Change: Holding our own with our team that we currently have I think we are having the discussions now are starting to build back up that talent pipeline and general really as a company. What we're doing is we're looking at our opportunities and our resources across the bank and develop in.
Speaker Change: Resource allocation plan, so that as we believe the opportunities are getting better and the opportunities to grow that we put those into the places that we believe we can be most effective.
Speaker Change: With growing revenues quickly and then also making sure we can support that.
Speaker Change: We do think there are some big opportunity really probably the two opportunities that we have the most are.
Speaker Change: In this rate environment.
Speaker Change: We can add treasury.
Speaker Change: On the commercial side and they get profitable very quickly.
Speaker Change: Versus may be when we were in a low rate environment, but that differential to get the fee income we can get in and the noninterest bearing deposits and we have had good opportunity at hiring some of those folks from larger regional banks and then secondarily as we get more comfortable that loan demand is.
Speaker Change: Going to go up not just yes.
Speaker Change: Loan growth has been muted some of that is.
Speaker Change: Pulling back making sure we have good credit quality in that we're pricing appropriately in a pretty dislocated market some of thats been customer demand as well so it might be later in the year or into early next year when I think.
Speaker Change: The gas now when when we'd be looking to add commercial bankers, but we want to do that.
Speaker Change: In conjunction with margin expansion in a way that as we recover we start to be able to net produce more income it start growing back to FERC, one ROA goal within our longer term with 'twenty.
Speaker Change: Yeah.
Speaker Change: Great that makes sense.
Speaker Change: And Chris we do have plenty of capacity to get us through growth right now with the bankers we have on board.
Speaker Change: Capacity with what we have.
Speaker Change: Okay.
Speaker Change: I'll follow up with that's great. Thank you Keith and thank you Derrick.
Speaker Change: Thanks, Chris.
Speaker Change: Once again, if you would like to ask a question. Please press star and one on your telephone keypad now.
Speaker Change: Your next question comes from the line of David Bishop from the Husky group.
Speaker Change: Okay.
Speaker Change: Quick follow up.
David Jason Bishop: Heath I know, maybe it's maybe too early in the ballgame, but any green shoots from the additional call down in Northern Florida, just if you're seeing any sort of.
David Jason Bishop: Production.
David Jason Bishop: Results in the pipeline either on the loan and deposit side from his addition, thanks.
Speaker Change: Yes, we are.
David Jason Bishop: <unk> and <unk>.
Speaker Change: Good activity in the in the Florida market.
David Jason Bishop: Of course, I'll go throughout our footprint and I've been down there recently.
David Jason Bishop: D Copeland, our president down there now seeing customers with our team and our prospects with our team. So we do expect to have loan and deposit growth down there and I think in the coming quarters, you'll start to see that and we'll be able to lay that out for you as we have success there.
Speaker Change: Got it and then Derek.
Speaker Change: Okay.
Speaker Change: Opex guidance here was the $21 million $20 million.
Speaker Change: Just curious if you could go over the operating expense guidance again.
Speaker Change: So we're still targeting kind of $20 million a quarter it could be a little bit higher if we see activity.
Speaker Change: But if we if it was higher than we saw more activity, we would anticipate that it will be offset with additional.
Speaker Change: Noninterest income so kind of really when we think about it we're looking at a 140 <unk> assets is kind of what we're forecasting for the rest of the year.
Speaker Change: And remind me how you calculate it again at that Opex modestly.
Speaker Change: Our fee income sources.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: Noninterest income minus noninterest expense divided by average assets.
Speaker Change: Got it.
Speaker Change: And Dave we just we believe that.
Speaker Change: When we tried to compare ourselves to other banks that don't have some of the revenue generation lines of business like we do.
Dave: What do you think that's a better measure than <unk>.
Speaker Change: Patiency ratio because several of those businesses, they're inefficient on the efficiency ratio side, but they are very good for ROA and ROE V. So we like to break it down to that compare our peer group.
Speaker Change: Based on that net to average assets to kind of level, the playing field to those revenue businesses.
Speaker Change: Got it I appreciate the.
Speaker Change: The numbers.
Speaker Change: On the merchant services.
Speaker Change: It looks like that's breaking here that do you expect that to approach breakeven or EBIT pre tax profit by the by the second half of the year.
Speaker Change: Yes, I think we'll definitely start churning profits into the second half of the year there.
Speaker Change: That's all recurring revenue business. So we'll just continue to build in.
Speaker Change: I think we got a lot of opportunity on that side.
Speaker Change: Continue to grow at EBIT faster than we have been growing it as we have the successes within our customer base.
Speaker Change: The opportunity there.
Speaker Change: And you also see deposit opportunities as well I think you said before.
Speaker Change: Yes, I mean, what we see is that when we get a call in our first time business customer. It is really hard to go in and leads on the deposit product side unless the customers had some kind of challenge issue or problem move.
Speaker Change: Moving the business deposits Treasury services and all of that is just a long process, but what we find for the most part is we can walk out of there in our first call with their merchants statements because they're unhappy with the service and they think they are paying too much in fees and we're generally able to come back to them quickly and.
Speaker Change: <unk>.
Speaker Change: And give them.
Speaker Change: Better service perspective, but also give them a better a better fee proposition on those as well and so it's just an easy way to develop a new relationship and then we can start building on that and it just takes more time to develop the deposit side. So we see it more use the opportunity to use it more.
Speaker Change: And more as kind of an entry product to a brand new customer.
Speaker Change: So that we can Bryan began working order and all of that.
Speaker Change: Deposit and.
Speaker Change: Other services.
Speaker Change: Got it.
Speaker Change: That's all I had I appreciate the color.
Speaker Change: Thank you.
Speaker Change: That appears we have no further questions at this time.
Speaker Change: I will now turn the program back over to our presenters for any additional or closing remarks.
Speaker Change: Well I just wanted to say thanks again for your support of colony Bancorp. We appreciate you all being on the call today and look forward to speaking with you again soon thank you.
Speaker Change: This does conclude today's program. Thank you for your participation you may disconnect at any time.
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