Q1 2024 TrustCo Bank Corp NY Earnings Call

Operator: Good day, and welcome to the TrustCo Bank Corp earnings call in webcast. All participants will be in listen only mode.

Good day and welcome to the Trustco Bancorp earnings call and webcast all participants will be in listen only mode should you need assistance. Please signal a conference, especially at least by pressing the star key followed by zero on your telephone keypad.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star followed by one. To withdraw a question, you may press star followed by two.

Today's presentation, there will be opportunity to ask question to ask a question you May press star followed by one to be true a question you may have.

Press Star followed by cheap before proceeding we would like to mention that this presentation may contain forward looking information about Trustco Bank Corp. New York that is intended to be covered covered by the safe Harbor for forward looking statements provided by the private Securities Litigation reform.

Operator: Before proceeding, we would like to mention that this presentation may contain forward-looking information about TrustCo Bank Corp. New York that is intended to be covered by the Safe Harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. However, actual results, performance, or achievement could differ materially from those expressed in or implied by such statements due to various risk uncertainties and other factors. More detailed information about these and other risk factors can be found in our press release that preceded this call and in the risk factors and forward-looking statement sections of our annual report on Form 10-K and as updated by our quarterly report on Form 10-Q.

Sure.

Of 1995.

Actual results.

For four months or achievements could differ materially from those expressed it in or implied by such statements due to various risks uncertainties and factors and other factors.

More detailed information about these and other risk factors can be found in our press release.

That preceded this call and you can go look for injuries click throughs and forward looking statement sections of our annual report on Form 10-K, and as updated by our quarterly report and Form 10-Q.

Operator: The forward-looking statements made in this call are valid only as of the date hereof, and the company disclaims any obligation to update this information to reflect events or developments after the date of this call, except as may be required by applicable law. During today's call, we will discuss certain financial measures derived from our financial statements that are not determined in accordance with U.S. GAAP. The reconciliation of such non-GAAP financial measures to the most comparable GAAP figures is included in our earnings press release, which is available under the investor relations tab or on our website at trustcobank.com.

The forward looking statement made this call are valid only as of the date hereof.

The company disclaims any obligations to update this information to reflect events or developments. After the date of this call except as may be required by applicable law.

During today's call, we will discuss certain financial measures the route but from all of the financial statements that are not determined determined that in accordance with U S. GAAP.

The.

The Asian or such non-GAAP financial measures to the most comparable GAAP figures are included in our earnings press really well.

Which is available under the Investor Relations tab on our website at Trustco Bank Dot com.

Operator: Please also note that today's event is being recorded. A replay of the call will be available for 30 days. 30 days, and an audio webcast will be available for one year, as described in our earnings press release. At this time, I would like to turn the conference over to Mr. Robert J. McCormick, Chairman, President.

Please also note that todays event is being recorded.

A replay of the call will be available for 30 days.

Speaker Change: 30 days and Oh do you want to cast will be available for one year at this club and in our earnings press release at this time I would like to turn the conference over to Mr. Robert J Mccormick.

Robert Joseph McCormick: Thank you. Good morning, everyone, and thank you for joining the call. I'm Rob McCormick, the president of TrustCo Bank. I'm joined today, as I usually am, by Scott Salvador.

Speaker Change: Chairman President and CEO. Please go ahead.

Speaker Change: Thank you good morning, everyone and thank you for joining the call Robert.

Speaker Change: And then at Trustco Bank.

Speaker Change: Joining today as I, usually am by Scot Salvador.

Robert Joseph McCormick: Michael Ozimek, Scott will provide color on lending and credit quality, and Mike will follow my comments. (Inaudible) We ended 2023 in good shape. Our loan portfolio surpassed the $5 billion mark, reaching another all-time high. Our team worked together to retain and grow our customer base, allowing us to lag on some of the deposits. We improved our efficiencies by consolidating a few branch locations, and we maintained a rock-solid credit quality during that year of the challenge. 2024 is off to a good start.

Speaker Change: Michael.

Michael: Oh, right color on lending and credit quality and Mike will follow my comments with the tail in the numbers.

Scot Reynold Salvador: We ended 2023 and good shape, our loan portfolio surpassed the $5 billion Mark reaching another all time high our team worked together to retain and grow our customer base, allowing us to do.

Scot Reynold Salvador: <unk> got some of the deposit rates.

Scot Reynold Salvador: We improved our efficiencies by consolidating a few branch locations.

Scot Reynold Salvador: Maintained a rock solid credit quality during that year, the challenge of our industry.

Scot Reynold Salvador: 'twenty 'twenty four is off to a good start.

Robert Joseph McCormick: The positive trend on total loans continues to reach yet another all-time high. Income was also positive, with net income of $12 million and non-interest income up. Net interest margin went slightly down at $244, and generally held steady throughout the quarter. We saw a solid improvement in our return metric, return on average assets or return on average equity, both up from the previous quarter. Earnings per share increased significantly from the end of 2023, and our book value per share also increased favorably. The efficiency ratio trended favorably down at quarter end.

Scot Reynold Salvador: Positive trend on total loans.

Scot Reynold Salvador: And you did reach yet another all time high.

Scot Reynold Salvador: Income was also positive with net income of $12 million.

Scot Reynold Salvador: Interesting.

Scot Reynold Salvador: Net interest margin was slightly down at $2 44.

Scot Reynold Salvador: Generally held steady throughout the quarter, we saw solid improvement in our return metrics.

Scot Reynold Salvador: Churn on average assets return on average equity both from the previous quarter.

Scot Reynold Salvador: Earnings per share increased significantly from the end of 2023, and our book value per share also.

Scot Reynold Salvador: Efficiency ratio trended favorably down at quarter end.

Robert Joseph McCormick: Exceptional credit quality remains a hallmark of TrustCo Lending. As those who follow us know, we are a portfolio lender, and the quality of loans we originate supports the stability of the company over the life of the law. Both residential and commercial underwriting standards are rigorous.

Scot Reynold Salvador: Acceptable credit quality remains a hallmark of trust lending as those who follow US know we are portfolio lender in the quality loans, we originate supports the ability of the company.

Scot Reynold Salvador: Over the life of the residential and commercial underwriting standards are rigorous and youll separable outcomes nonperforming loans and nonperforming assets remained essentially flat and charge offs again resulted in a net recovery.

Robert Joseph McCormick: [inaudible] non-performing loans and non-performing assets remain essentially flat, and we charge us again resulted in a net recovery. We are pleased to report that our stock repurchase program has been reauthorized, and we may take advantage of strategic purchase opportunities as they arise. Now Mike will give us detail on the numbers, and Scott will give color on the loan portfolio. I hope you'll ask your questions.

Scot Reynold Salvador: We are pleased to report that our stock repurchase program has been reauthorized.

Scot Reynold Salvador: Taking advantage of strategic purchase opportunities as they present themselves.

Scot Reynold Salvador: Now Mike will give us detail the numbers Scot will give color on the loan portfolio.

Speaker Change: We will take your questions.

Michael M. Ozimek: Thank you, Rob, and good morning, everyone. I will now review TrustCo's financial results for the first quarter of 2020. As noted in the press release, the company saw a first-quarter net income of $12.1 million and an increase of 23.13% over the prior quarter, which yielded a return on average assets and average equity of 0.80% and 7.54%, respectively. Capital remains strong. The consolidated equity to assets ratio was 10.51% for the first quarter of 2024 compared to 10.17% for the first quarter. Book value per share at March 31st, 24 was $34.12, up 5.6% compared to $32.31 a year earlier.

Mike: Thank you, Rob and good morning, everyone.

Mike: I will now review trust those financial results for the first quarter of 2024.

Mike: As we noted in the press release the company saw first quarter net income.

Mike: One 1 billion, an increase of $23, one 3% over the prior quarter, which yielded a return on average assets and average equity of eight zero percent and 754% respectively.

Mike: Capital remained strong consolidated equity to assets ratio was $10 five 1% for the first quarter of 2024 compared to $10 one 7% in the first quarter of 2003.

Mike: Value per share at March 31, 24 was $34 12 up five 6% compared to $32.31 a euro.

Michael M. Ozimek: Average loans for the first quarter of 2024 grew 5.2% or $249.4 million to $5 billion from the first quarter of 2023, an all-time high. Loan growth has continued to increase and occurred in all of our loan categories, and leading the charge was the residential real estate portfolio, as usual, which increased 146.6 million or 3.5% in the first quarter of 2024 over the same period in 2023. Average commercial loans increased $38.3 million, or 16%.

Mike: Average loans for the first quarter of 2024 grew five 2% or $249 4 million to $5 billion from the first quarter of 'twenty three an all time high.

Mike: Loan growth has continued to increase and occurred in all of our loan categories, leading the charge with the residential real estate portfolio.

Mike: Which increased $146 6 million or three 5% in the first quarter of 2024.

Mike: Over the same period in 2023.

Mike: Average commercial loans increased $38 3 million or 16%.

Michael M. Ozimek: All my equity lines of credit increased $61.7 million, or 21.2%, and installment loans increased $2.8 million, or 21.1%, over the same period in 2020. For the first quarter of 24, the provision for credit losses was $600,000. Retaining deposits has been a key focus during 2023 and into 2024. Although core deposits were down compared to the prior quarter, whole deposits as of March 31, 2024, increased $4.4 million from the end of 2023 and remain at $5.4 billion. As we move forward, our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product diversity.

Mike: Mercury credit want equity wiser credit increased $61 7 million or 21, 2% and installment loans increased $2 8 million or 21, 1% over the same periods in 2003.

Mike: For the first quarter of 'twenty for the provision for credit losses was 600000.

Mike: Regaining deposits has been a key focus during 2003 and into 2024.

Mike: Although core deposits were down compared to the prior quarter total deposits as of March 31, 2024 increased $4 4 million from the end of 'twenty, three and remain at $5 1 billion.

Mike: As we move forward. Our objective is to continue to offer competitive product offerings of the bank through aggressive marketing and product differentiation.

Michael M. Ozimek: Net interest income was $36.6 million for the first quarter of 2024, a decrease of $10.4 million compared to the same period in 2016. Then its just margin for the first quarter of 2024 was 2.44%, down 77 basis points from the first quarter.

Mike: Net interest income was $36 6 million for the first quarter for a decrease of $10 4 million compared to the same period in 2003.

Mike: Net interest margin for the first quarter of 2024 was two 4% down 77 basis points for the first quarter of 2003.

Michael M. Ozimek: Yield and interest earning assets increased, 3.99%, up 30 basis points from 3.69% in the first quarter of 2020. The cost of interest-ranked liabilities increased to 1.99% in the first quarter of 2024 from 0.63% in the first quarter of 2023. During the first quarter of 2024, we were able to lower the rates offered on time deposits while continuing to retain and grow that product. This should bring down the cost of time deposits over time.

Mike: Yield on interest earning assets increased.

Mike: $3, 99% of <unk>.

Mike: 30 basis points or $3 six 5% first quarter of 2023, the cost of interest rate debt liabilities increased to $1, 99% this quarter of 24 six.

Mike: Six 3% in the first quarter slide 23.

Mike: During the first quarter of 2024, we have been able to lower the rates offered on time deposits, while continuing to retain and grow that volume should bring down the cost of time deposits over time. Thank.

Michael M. Ozimek: The Bank has seen the erosion of margin begin to slow while preparing to decouple from prior quarters, and we are optimistic that we are nearing the bottom of this rate. Our Wealth Management Division continues to be a significant recurring source of non-interest income. They had approximately $1 billion of assets under management as of March 31, 2024. Now on to non-interest expense. Total non-interest expense, net of RRE expense, came in at $24.8 million, down $4 million from the prior quarter. As mentioned, the earnings release decreases primarily as a result of lower salaries, employee benefit costs in the current quarter, and a litigation settlement in the prior quarter.

Mike: <unk> seen the erosion of margin begin to slow with a very good decrease to prior quarters and we are optimistic that we are nearing the bottom of this rate cycle.

Mike: Our wealth management Division continues to be a significant recurring source of noninterest income we had approximately $1 billion of assets under management as of March 31 2000.

Mike: Four.

Mike: Now onto noninterest expense total noninterest expense net of ore expense came in at $24 8 million down $4 million from the prior quarter as mentioned in the earnings release. The decrease was primarily a result of lower salaries and employee benefit costs in the first and the third quarter and a litigation settlement in the fire.

Michael M. Ozimek: Our re-expense net came in at $74,000 for the first quarter as compared to $12,000 in the prior quarter. Given the continued low level of ROE expenses, we're going to continue to hold the anticipated level of expenses not to exceed. All of the other categories of non-interest expense were aligned with our expectations for the quarter.

Mike: Ore expense net came in at $74000 for the first quarter as compared to 12000 in the prior quarter.

Mike: Given the continued low level of ore expenses, we are going to continue to all anticipated level of expenses not to exceed 250000 off the court.

Mike: All of the other categories of noninterest expense were in line with our expectations for the quarter. We would expect 2024 total recurring non interest expense net of already expense to be in the range of $26 nine to $27 $4 million per quarter.

Michael M. Ozimek: We would expect 2024's total recurring non-interest expense, net of orderly expense, to be in the range of $26.9 to $27.4 million per quarter. Now Scott will review the loan portfolio and non-performing loans. Morning, everyone.

Mike: Scott.

Mike: We view the loan portfolio and nonperforming loans.

Scot Reynold Salvador: Thanks, Mike. Total loans grew $206 million, or 4.3% year-over-year in actual numbers, ending the first quarter just over $5 billion. The growth was centered on residential mortgages, which increased by $172 million, with an additional increase of $33 million coming from commercial. During the quarter, loans grew by approximately $2.5 million, and residential loans decreased slightly, and commercial loans increased by $5.5 million.

Scott: Good morning, everyone. Thanks, Mike total loans grew $206 million or four 3% year over year on actual numbers and in the first quarter just over $5 billion to grow.

Scott: We're centered on residential mortgages, which increased by $172 million, an additional increase of 33 million coming from commercial.

Scott: On the quarter loans grew by approximately $20 million as residential loans decreased slightly in commercial loans increased by $5 5 million.

Scot Reynold Salvador: We're pleased to have grown the loan portfolio by over 200 million over the past year and in what has been a challenging environment. First quarter's activity reflects recent trends, with home equity products continuing to boast overall growth. Purchase money market continues with nationwide theme, with interest rates and other market conditions straining volume versus prior year. However, we remain well-positioned in the market and seek to not only capitalize on the increased market activity that develops but are also looking to take increased market share from our competitors. Our advantageous portfolio of products, combined with our ability to create varied promotions and control our own pricing versus the market, puts us in a unique position to do so.

Scott: We're pleased to have grown our loan portfolio by over $200 million over the past year and what has been a challenging environment first.

Scott: First quarter's activity reflects recent trends with home equity products continuing to both overall growth.

Scott: Money market continues with nationwide theme as interest rates and other market conditions.

Restrained volume versus prior years, however, we remain well positioned in the market and seek to not only capitalize on the increased market activity develops but we're also looking to take increased market share from our competitors are advantageous portfolio product combined with our ability to trade very promotions control our own pricing versus the market, which is a new.

Scott: A unique position to do so.

Scot Reynold Salvador: Rates in the market have moved back up in recent weeks, and we currently stand at 6.99% for our base 30-year fixed rate. As stated, we have been keeping our rates sharp for the goal of increasing market share and driving more buy-in as we enter the main selling season. Our committed loan backlog stands roughly equivalent to the end of last quarter, although more recent activity has picked up, however. We have a good amount of loans in the earlier stages of the process. This should translate to increased committed backlog numbers and net portfolio growth as we move forward. As of the call of measure, it's remained good.

Scott: Raising the market had moved back up a bit in recent weeks and we currently stand at $6, 99% for a 30 year fixed rate.

Scott: As stated we have been keeping our rates sharp for the goal of increasing market share and driving more volume as we entered the main selling season.

Our committed backlog has stayed roughly equivalent to the end of last quarter more.

Scott: More recent activity has picked up a level, we have a good amount of loans in the earlier stages of the processing cycle.

Scott: This should translate to increased committed backlog numbers net portfolio growth as we move forward.

Scott: Asset quality measures remained good nonperforming loans were $18 3 million as of quarter end versus $19 $3 million at $3 31 23.

Scot Reynold Salvador: Non-performing loans were $18.3 million as of quarter end, versus $19.2 million at $331.23. Non-performing assets totaled $20.6 million versus $21 million a year ago. Net charge us in the quarter amounted to a $42,000 net recovery. This follows time three consecutive years, stretching back to 2021, when net charge us for the year when we were in a complete recovery position. Our allowance for credit watch to total loans remains essentially flat for the quarter at $0.98. The Coverage Ratio or Allowance for Credit Losses to Non-Proportional Loans stands at 269% as of March, up from 244% a year ago. That's our story, and we're happy to take any questions anyone might have.

Scott: Nonperforming assets totaled $20 6 million versus $21 million a year ago.

Scott: Net charge offs in the quarter amounted to $42000 net recovery. This fall upon three consecutive years stretching back to 2021 and net charge offs for the year, when our Q2 recovery position.

Scott: Our allowance for credit losses to total loans remained essentially flat in the quarter zero, 98%.

Scott: Coverage ratio or allowance for credit losses to nonperforming loans stands at 269% as of March up from 244% a year ago.

Scott: Bob.

That's our story and we're happy to take any questions anyone might have.

Scott: Okay.

Operator: We will now begin the question and answer session. To ask a question, you may press star followed by 1 on your touch-tone phone. If you're using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been answered and you would like to redraw your question, please press star followed by 2. At this time, we will pause momentarily to assemble our hotser. Our first question is from Alex Twerdahl from Piper Sandals.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star followed by one on your Touchtone phone.

Speaker Change: If youre using a speakerphone please pick up your ahead headset.

Speaker Change: As for pricing to Keith if at any time. Your question has been answered and you would like to withdraw. Your question. Please press star followed bite you at this time, we will pause momentarily to assemble our questionnaire.

Speaker Change: Our first question is from Alex <unk> from Piper Sandler.

Operator: Morning, Alex. Good morning, Alex.

Alex: Hey, good morning, guys.

Good morning Al.

Alex: Yes.

Alexander Roberts Huxley Twerdahl: First, Scott, you mentioned that the backlog at the end of the quarter is similar to the end of the year. However, it seems that the second quarter is usually the strongest quarter for loan growth. We've seen that in the last couple of years. Obviously, spring is the home buying season.

Alex: First Scott you mentioned the backlog at the end of the quarter was similar to the end of the year.

Alex: However, it seems that the second quarter is usually the strongest quarter for loan growth. We've seen that the last couple of years, obviously, the spring home buying season is a real thing.

Scot Reynold Salvador: Yeah, I mean, the second quarter, as you said, normally builds upon the first quarter. The first quarter is normally our slowest quarter.

Alex: I mean based on what Youre seeing in the market. Despite the backlog being kind of similar would you expect the second quarter to again show similar growth trends to what we've seen in the last couple of years.

Scot Reynold Salvador: Okay, great. And then can you happen to have handy just the amount of normal amortization that you'd see in the mortgage portfolio in a given quarter?

Alex: Yes.

Alex: Second quarter, you said normally builds upon the first quarter.

Alex: First quarter is normally our slowest quarter of the year for net growth and it is.

Relative obviously to what's going on overall, but we have seen some activity pick up recently.

Scot Reynold Salvador: Uh, you know, it depends, but roughly... $15 to $20 million, probably $17, $18 million if you want to..., throughout a number that's probably not a bad one. They had a number to throw at Alex. Right, Alex, that's about it for a month, about $18 million a month. Yeah, per month. I'm sorry. I said per quarter, not per month.

Alex: Which will translate to increased backlog and there's always a delay obviously between the applications come in and when they hit the bottom line, but we have seen activity starting to pick up which is positive.

Alex: Should see the benefit of that as we start to move forward.

Speaker Change: Okay, Great and then can do you have in hand.

Speaker Change: And it is the amount of normal amortization that you'd see in the mortgage portfolio in a given quarter.

Speaker Change: It depends with roughly.

Scot Reynold Salvador: 18 mil per month. Okay, that's, that's great. And then, you know, if we do see loan growth pick up a little bit in the second quarter, a couple percent, would the expectation be to fund that with, you know, deposit promotions? Or would you fund it with cash on hand? Obviously, you guys have a lot of liquidity to deploy it whenever you decide to.

$15 million to $20 million, probably 17 $18 million, if you want to.

Speaker Change: Throw out a number thats, probably not a bad.

Speaker Change: That number to throw at outlets right now that's about <unk> 18.

Speaker Change: In $1 million from our onsite that per quarter.

Speaker Change: 80 ml per months okay.

Speaker Change: And then if we do see.

Speaker Change: Loan growth pick up a little bit in the second quarter, a couple of percent whats the expectation be that fund that with.

Speaker Change: Deposit promotions or would you funded with cash on hand, obviously, you guys have a lot of liquidity to deploy it.

Speaker Change: Whenever you decide to.

Scot Reynold Salvador: That would be a good problem to have, Alex, a good decision that we would have to make. We could certainly step up and do more promotions and growth deposits that way, or chop up the excess cash we have on the balance sheet.

Speaker Change: Yes that would be a good problem to have a good decision that we've got to make.

Speaker Change: We could certainly step up and do more promotions and growth of deposits that way or travel.

Speaker Change: Excess cash we have on the balance sheet.

Scot Reynold Salvador: Okay. And then, can you just give us a little more color?

Speaker Change: Okay, and then can you just give us a little more color you mentioned that youre lowering the rate on time deposits is that I mean, just.

Scot Reynold Salvador: You mentioned that you're lowering the rate on time deposits. Is that, I mean, just, you know, would that be time deposits as they mature, you're able to actually lower the rate on them, or is a lower rate necessary to maintain that deposit, you know, as it goes into time deposits? I guess, you know, this is another way of saying it that we're close to the peak on time deposit rates, or is there still a little bit more, you know, sort of

Speaker Change: Would that be in time deposits as they mature youre able to actually lower the rate on them or is it a lower rate as necessary to maintain that deposit as it goes into time deposits I guess.

Speaker Change: It is another way of saying it that we're close to the peak on time deposit rates or is there still a little bit more.

Speaker Change: You know sort of push up there is as rates obviously remain.

Scot Reynold Salvador: And not being a smart aleck, but yes, the answer to the question is yes, because we're attempting to price to retain those accounts and maturity, have them roll over, and we're actively working those accounts. Working with our customers to hopefully retain them, and I would say, you know, based on the current rate environment, we probably are close to the peak of time deposits. People are even, even filling out their terms, Alex. Say that one more time.

Speaker Change: Essentially higher for longer.

Speaker Change: Yes, not be to smart Alec but yes. The answer to question is yes, because we are attempting to price to retain those accounts and at maturity.

Speaker Change: Have the rollover and we're actively working those accounts.

Speaker Change: Working with our customers to hopefully retain them and I would say.

Speaker Change: Based on current rate environment, we probably are close to the peak.

Speaker Change: Bob.

Speaker Change: And people are even okay, even near term salads.

Speaker Change: Say that one more time.

Scot Reynold Salvador: People are actually throwing out longer terms on CDs, and customers are beginning to look for appropriate passes. 6-9 months or maybe even a year, if you've looked at anything more than 5-6 months ago. Now customers are asking about a longer pass

Speaker Change: People are actually throwing out longer terms on Cds and customers are beginning to look at them.

Speaker Change: For probably the past.

Six to nine months or maybe even a year you've looked at anything more than five months six months.

Speaker Change: Now customers are asking about longer agreements.

Scot Reynold Salvador: And so is that something that you're willing to offer the longer-term stuff? I know that, you know, in the past, you've kind of highlighted the short nature of that portfolio as being something that potentially could really benefit when rates get cut. Yeah.

Speaker Change: And so is that something that you have been willing to offer the longer term stuff I know that you know in the past you've kind of highlighted the short nature of that portfolio as being something that potentially could really benefit when rates get cut.

Speaker Change: Yes price to price appropriately, we do offer a longer term rate.

Scot Reynold Salvador: Yep, priced appropriately, we do offer a longer term.

Scot Reynold Salvador: Okay. And then can you just give us a little bit more color? Maybe I'm missing the prepared remarks, but salaries and benefits dropped pretty dramatically, you know, caused you to beat that expense guide pretty meaningfully in the first quarter. Can you just talk about sort of how you found that additional savings and what really drove that? Yeah, sure.

Speaker Change: Okay.

Speaker Change: Then can you just give us a little bit more color on it maybe I missed it in the prepared remarks, but salaries and benefits dropped pretty dramatically because you did to beat that expense guide pretty meaningfully in the first quarter can you just talk about sort of how you found that additional savings and what really drove that.

Speaker Change: Yes, sure. So we had about $1 million there at about $600000 related to this point.

Scot Reynold Salvador: Yeah, sure. So we had about a million dollars there, and about $600,000 of it was related to being able to take down some of the incentive COPA rules that we had because of some of the lower production from the prior year. And then also some of the liability-based rewards get revalued at the end of every quarter, and that was about $300,000 or $400,000. So that was also another downward adjustment. So we picked up about $1 million in the first quarter there. That could turn around if the stock price goes up, but that's what drove that.

Speaker Change: Being able to take down some of the incentive comp accruals that we add some of the lower sort of lower production from the prior year and then also so on a liability based awards get revalued at the end of every quarter and that was about three or $400000 right. So that was also another downward adjustment. So we picked up about a $1 million in the first quarter that could turnaround.

Speaker Change: Stock price goes up but that's what drove that.

Speaker Change: Okay.

Scot Reynold Salvador: So those are the kind of things that, you know, you would expect not to recur. So that 26.9 to 27.4, that's where you expect to be in the second, third, and fourth quarter. Right.

Speaker Change: Those are kind of things.

Speaker Change: You would expect not to recur and so that $26 nine to 27, four thats, where you expect to be in the second third and fourth quarter.

Scot Reynold Salvador: Right, and that's a conservative number. I mean, that could be a little high, but correct. I mean, you know, that million dollars will load back into the second quarter.

Speaker Change: Right.

Conservative number I mean, it could be a little high but corrected me that million dollars will load back into the second quarter correct.

Alexander Roberts Huxley Twerdahl: Okay, that's all my questions for now; thanks for taking them.

Speaker Change: Okay.

That's all my questions for now thanks for taking them.

Scot Reynold Salvador: Correct. Yeah, right. I mean, you mentioned the liability-based warrants can go wherever, and then also the performance does drive it.

Speaker Change: Correct, Yeah, I mean, Brian.

Speaker Change: The liability based awards can go wherever and then also the pro.

Alexander Roberts Huxley Twerdahl: Got it. All right. I appreciate you taking the time to answer my questions. Thank you.

Speaker Change: <unk> drive.

Speaker Change: Yes got it.

Speaker Change: Alright, I appreciate you taking my questions.

Speaker Change: Thank you.

Robert Joseph McCormick: We currently have no further questions. This concludes our question and answer session. I would like now to turn the conference back over to Robert J. McCormick for any final remarks.

Speaker Change: We currently have no. Further question. This concludes our question and answer session I would now like to turn the conference back over to Robert J Mccormick for any final remarks.

Robert Joseph McCormick: Thank you for your interest in our company, and have a great day!

Speaker Change: Thank you for your interest in our company and have a great day.

Operator: The conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference call has now concluded. Thank you for attending today's presentation you may now disconnect.