Q3 2024 Northeast Bank Earnings Call
Okay.
Operator: Welcome to the Northeast Bank Third Quarter Fiscal Year 2024 Earnings Call. My name is Gigi, and I will be your operator for today's call. This call is being recorded.
Gigi: Welcome to the northeast Bank third quarter fiscal year 2024 earnings call. My name is Gigi and I'll be your operator for today's call. This call is being recorded with US today from the Bank is Rick Wayne President and Chief Executive Officer, Richard Cohen Chief.
Operator: With us today from the bank are Rick Wayne, President and Chief Executive Officer, Richard Cohen, Chief Financial Officer, and Pat Dignan, Executive Vice President and Chief Operating Officer. Yesterday, an investor presentation was uploaded to the bank's website, which we will reference during this morning's call. The presentation can be accessed in the Investor Relations section of northeastbank.com under Events and Presentations. You may find it helpful to download this investor presentation and follow along during the call.
Financial Officer, and Pat Dignan, Executive Vice President and Chief operating Officer.
Gigi: Yesterday, an investor presentation was uploaded to the bank's website, which we will reference in this morning's call. The presentation can be accessed at the Investor Relations section of northeast Bank Dot com under events and presentation.
You may find it helpful to download this investor presentation and follow along during the call also this call will be available for rebroadcast on the website for future use.
Operator: Also, this call will be available for rebroadcast on the website for future use. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. During the question-and-answer session, if you have a question, please press star 1-1 on your touchtone phone.
Gigi: At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session. If you have a question. Please press star one one on your Touchtone phone as a reminder, this conference is being recorded. Please note that this freeze.
Operator: As a reminder, this conference is being recorded. Please note that this presentation contains forward-looking statements about Northeast Bank. Forward-looking statements are based upon the current expectations of Northeast Bank's management and are subject to risks and uncertainties. actual results may differ materially from those discussed in the forward-looking statements. Northeast Bank does not undertake any obligation to update any forward-looking statement.
Gigi: Intuition contains forward looking statements about north East Bank.
Gigi: Forward looking statements are based upon the current expectations of northeast Bank's management and are subject to risks and uncertainties actual results may differ materially from those discussed in the forward looking statements.
Northeast Bank does not undertake any obligation to update any forward looking statements.
Operator: I will now turn the call over to Rick Wayne. Mr. Wayne, you may begin.
Gigi: I will now turn the call over to Rick Wayne Mr. Wayne You may begin.
Richard N. Wayne: Thank you. Good morning, and thank you for joining our investor call. Whitney or Pat Dignan, our Chief Operating Officer, and Richard Cohen, our Chief Financial Officer. This morning, after I have made my comments, Richard will discuss income and expense items, as well as our at the market offering. And Pat will discuss in more detail, our purchased and originated loan activity. After we have all presented, we would be happy to answer any questions.
Richard N. Wayne: Thank you.
Richard N. Wayne: Good morning.
Richard N. Wayne: And thank you for joining our investor.
Cool.
Richard N. Wayne: With me or Pat Dignan.
Patrick Dignan: Our Chief operating officer, and Richard Cohen, our Chief financial.
Patrick Dignan: Financial Officer.
This morning.
Richard N. Wayne:
Richard N. Wayne: After I have my comments, Richard will discuss income and hence.
Richard N. Wayne: Hence items as.
Richard N. Wayne: As well as our at the market offering.
Richard N. Wayne: And Pat will discuss in more detail, our purchased and originated loan activity.
Speaker Change: After we have presented.
Speaker Change: We would be happy to answer any questions I'd like to first turn.
Richard N. Wayne: I'd like to first turn to page three in the investor deck and highlight a few things. First of all, the big picture. We had a net income of $13.9 million, or $1.83 earnings per share. Our ROE was 16.45%. Our ROA was 1.87%, and our NIM was 5.01%. Finally, the tangible book value was, at the end of the quarter, $44.11. First, I want to talk about loans.
Speaker Change: Turning to page three in the Investor deck.
Patrick Dignan: And highlight a few items first of all Big picture, we thought was a very strong quarter.
Patrick Dignan: We had net income of $39 million or $1 83 of earnings per share.
Patrick Dignan: Our our OE was 16.45%.
Patrick Dignan: Our ROA was 187%.
Patrick Dignan: Our NIM was.
Patrick Dignan: Five point or 1%.
Patrick Dignan: Finally, the tangible book value was at the end of the quarter $44 and 11.
Patrick Dignan: Yes.
Speaker Change: Firstly I wanted to talk about loans.
Richard N. Wayne: And as I said, when I'm finished, Pat will fill in a lot more details, but I want to provide an overview: for the quarter we originated $153 million in loans, and there were no purchase loans in the quarter. But with respect to the purchase loans, of course, there is a story behind this, which Pat will explain. It's not bad news. It's good news. But Pat will talk about that.
Speaker Change: And as I said when I am finished patent will fill in a lot more details, but I want to provide an overview.
Speaker Change: For the quarter we originated.
Speaker Change: $153 million.
Speaker Change: Loans.
Speaker Change: And there were no purchase loans in the quarter.
Speaker Change: But with respect to the purchase loans of course there.
Speaker Change: Is the story behind this.
Richard N. Wayne: Rich Pat will explain.
Richard N. Wayne: Bad News is good news, but that will talk about that.
Richard N. Wayne: The purchase volume, I would point out, is typically lower in the first quarter of each calendar year. For FY23, it was twenty-one and a half million dollars. And for, I'm comparing the same quarter. I should be clear on that because we're at June 30th year end. And for the same quarter. The first calendar quarter of 22 was $23.9 million. So both of those are relatively small numbers.
Richard N. Wayne: The purchase volume I would point out is typically lower in the first quarter of each calendar year.
Richard N. Wayne: For FY2023 it was 21 and a half million dollars.
Richard N. Wayne: And for.
Richard N. Wayne: I'm comparing the same quarter I should be clear on that because were at June 30 year end and for the same quarter.
Richard N. Wayne: The first calendar quarter, 2002 was $23 $9 million.
Richard N. Wayne: So both of those are relatively.
Richard N. Wayne: Small numbers.
Richard N. Wayne:
Richard N. Wayne: In part, there's not the same urgency for sellers in the first calendar quarter when there is a lot of activity in the fourth calendar quarter, which was the case for us. I also want to talk about the originated loan book in a little bit more detail. Out of the hundred and fifty million dollars of originations in the quarter, 143 million, or 93%, were in our Lender Finance Program, that is to leverage non-bank lenders in their lending, which we really like that part of our originated portfolio. They're all floating, either tied to SOFR or PRIME.
Richard N. Wayne: Yeah.
Richard N. Wayne: Import there is not.
Richard N. Wayne: The same urgency for sellers in the first calendar quarter.
Richard N. Wayne: There has been a lot of activity in the fourth calendar quarter, which was the case.
Richard N. Wayne: For us.
Richard N. Wayne: I also wanted to talk about the originated loan book and a little bit more detail.
Richard N. Wayne: How does the $153 million of originations.
Richard N. Wayne: The quarter.
Richard N. Wayne: $143 million.
Richard N. Wayne: Or 93% were in our lender finance program that is to leverage non bank lenders in there.
Richard N. Wayne: Inc, which we we really like.
Richard N. Wayne: That part of our originated portfolio.
Richard N. Wayne: They're all floating either kite as sofa or prime most of them have.
Richard N. Wayne: Most of them have... Floors, and the weighted average of that new production, where rates are now, is 9.3%, which is quite strong. [inaudible] The lender finance portfolio, and now I want to talk about our whole portfolio, at March 31 was $532 million of our originated loans, representing a 63% advance rate against our borrower's loan balance and a weighted average loan to value of 44% against the underlying collateral Unknown Speaker, obviously quite strong with a low LTV and a low advance rate.
Richard N. Wayne: Floors.
Richard N. Wayne: And the weighted average of that new production.
Richard N. Wayne: Where rates are now.
Richard N. Wayne: Is nine 3%, which is quite strong.
Richard N. Wayne:
Richard N. Wayne: <unk>.
Richard N. Wayne: The lender finance portfolio, and then I wanted to talk about our whole portfolio.
Richard N. Wayne: At March 31 was $532 million.
Richard N. Wayne: Yes.
Richard N. Wayne: Of our originated loans.
Richard N. Wayne: Representing a 63% advance rate against our borrowers loan balance.
Richard N. Wayne: And our weighted average loan to value of 44% against the underlying collateral.
Richard N. Wayne: Obviously quite strong with low LTV and low advance rate we have.
Richard N. Wayne: We have a, you know, we have the underlying borrower, we have our borrower, all in the collateral, all in the capital stack providing protection for our loans. The I also want to point out something that we don't talk about that often, but it's worth noting is that in our purchase loan business, because we're buying at a discount, generally because of interest rate adjustments and occasionally because of credit adjustments. You know, we have a lot of discounts on our books.
Richard N. Wayne: We have the underlying borrower we have our borrower.
Richard N. Wayne: All in the collateral at all in the capital stack providing protection.
Richard N. Wayne: To our to our loans.
Richard N. Wayne: The.
Richard N. Wayne: I also wanted to point out something that we don't talk about that often but it's worth noting is that in our purchase loan business.
Richard N. Wayne: Because we are buying at a discount.
Richard N. Wayne: Generally because of interest rate adjustments and occasionally because of credit.
Richard N. Wayne: We have 100, and as of March 31, we have 174 million dollars of credible discount on our purchase loan book. Just to remind you of the credible discount we bring into income over the life of the loan. And we have set almost $18 million of allowance on the purchase loans, which to the extent we collect that, which we typically collect a fair amount of, will come into income through the allowance. And so that's, you know, the combined amount of that is about $191 million. $2 million of a credible discount and allowance we have on our balance sheet, which bodes well for us. You know, the other point is this is kind of good and bad.
Richard N. Wayne: Adjustments.
Richard N. Wayne: We have a lot of.
Richard N. Wayne: Discount.
Richard N. Wayne: On our books, we have.
Richard N. Wayne: 100, <unk> at March 31, we have 174 million.
Richard N. Wayne: <unk> million dollars up Accretable discount on our purchased loan book just to remind you accretable discount we bring into income over the life of the loan and we have said almost $18 million.
Richard N. Wayne: Allowance on the purchase loans, which to the extent.
Richard N. Wayne: We collect that which.
Richard N. Wayne: Typically we collect a fair amount of that.
Richard N. Wayne: Will come into income.
Richard N. Wayne: Through the allowance and so.
Richard N. Wayne: The combined about there's about $191 million.
Richard N. Wayne: $2 million.
Richard N. Wayne: Accretable discount and allowance we have in our balance sheet.
Richard N. Wayne: Which bodes well.
Richard N. Wayne: For us.
Richard N. Wayne: The other point is this is kind of good and bad.
Richard N. Wayne: You know, the very nature of our originated loan book, a loan book, and our activity is primarily bridge loans; they have a weighted average life, at least historically, of, you know, 1.6 years, so it's short. The benefits of that kind of lending are, we get very premium pricing for it, because there's not that much competition, you know, for banks doing the kind of land bridge lending that we're doing. That The second benefit is that it pays off. So early in the morning.
Richard N. Wayne: The very nature of our originated loan booking a loan book.
Richard N. Wayne: Our activity is primarily.
Richard N. Wayne: Bridge loans they have.
Richard N. Wayne: A weighted average life at least historically, a 1.6 years. So its short the benefits of that kind of lending or we get very premium pricing for it.
Richard N. Wayne: Not that much competition.
Richard N. Wayne: For banks doing the kind of land bridge lending that we're doing that is very good second benefit is because it pays off so.
Richard N. Wayne: We have freshness to our existing loan book because it's turning and we look at some data on that for fiscal year to date. So for nine months, we originated a total of two hundred and eighty five million dollars of loans, and we had $297 million of paydowns. So that means a lot of that portfolio is, you know, paying off, and we're replacing it with loans that have just been underwritten more recently.
Richard N. Wayne: Early.
Richard N. Wayne: A freshness to our existing loan book because it's.
Richard N. Wayne: It's turning.
Richard N. Wayne: And at the <unk>.
Speaker Change: I have some data on that.
Speaker Change: Fiscal year to date, so for nine months, we originated a total of $285 million of loans.
Speaker Change: And we had $297 million.
Speaker Change: Paydowns.
Richard N. Wayne: So that means a lot of that portfolio is paying off and we're replacing it with.
Richard N. Wayne: Ones that have just been underwritten.
Richard N. Wayne: More recently.
Richard N. Wayne: I would point out that, you know, normally our originated long book grows in this case since the beginning of the year is decreased as I. As you can see from the 285 million of originations versus 297 million of paydowns, that is not what we expect to happen longer term. And Pat will talk about the originated loan activity to amplify that point. Finally, before I turn it over to Richard,
Richard N. Wayne: I would point out that normally are.
Richard N. Wayne: Originated loan book grows in this case since beginning of the year is that.
Richard N. Wayne: Decrease.
Richard N. Wayne: As I.
Richard N. Wayne: As you can see from the $2 $85 million of originations versus 297 millions of Paydowns that is not what we expect to happen longer term and Pat will talk about the originated loan activity too.
Patrick Dignan: Amplify that point.
Patrick Dignan: Alright.
Patrick Dignan: Finally, before I turn it over to Richard.
Richard N. Wayne: I want to talk about asset quality, are not performing loans in the quarter decreased from 118 basis points. You know, it's 105 basis point, and the allowance to gross loans has decreased from 1.06% to 0.98%, the charge off in the quarter, were a total of 25 basis, 20 basis points, excuse me, but 15 basis points of that was just CECL related when CECL was adopted, we under the CECL rules, we needed to gross up some of our, our purchased loans, and then have an allowance for the amount that we grossed it up.
Patrick Dignan: I wanted to talk about asset quality.
Patrick Dignan: Our nonperforming loans in the quarter decreased from 118 basis points.
Richard N. Wayne: 105 basis points.
Richard N. Wayne: And the.
Richard N. Wayne: Allowance to gross loans has decreased from one six percentage 0.98%.
Richard N. Wayne: The charge offs.
Richard N. Wayne: The quarter.
Patrick Dignan: Were a total of 25 basis by 20 basis points excuse me, but 15 basis points of that was just seasonal related when <unk> is adopted we under the <unk> rules, we needed that grows up.
Patrick Dignan: Some of our.
Patrick Dignan: Our purchase loans.
Patrick Dignan: And then have an allowance for the amount that we grow set up so for example.
Richard N. Wayne: So, for example, you know, if we bought a loan that was, say, a $50,000 loan, but we didn't pay anything for it in the pool bid pre-CECIL, we would have carried that at zero. Post-CECIL, we show the loan at $50,000 with a $50,000 allowance. So, with respect to 15 basis points of the charge-offs. They are, in my example, attributable to the growth of the loan when the allowance was set up. So the charge-offs, as you would normally think of it against our principle, were five basis points. And I think with that, Richard.
Patrick Dignan: If we bought alone.
Patrick Dignan: It was say a fifth.
Patrick Dignan: <unk> $50 loan, but we didn't pay anything for it in the pool bid increases. So we would have carry that at zero post sale. So we showed a low at 50000 with a 50000 dollar allowance.
Patrick Dignan: So with respect to 15 basis points of the charge offs.
Patrick Dignan: And My example.
Richard N. Wayne: Attributable to the.
Richard N. Wayne: The gross up of the lull in the allowance was set up so.
Richard N. Wayne: Net charge offs.
Richard N. Wayne: As you would normally think of it against our principal.
Richard N. Wayne: It was five basis points.
Richard N. Wayne: <unk>.
Richard N. Wayne: And I think with that.
Richard N. Wayne: Richard.
Richard N. Wayne: Thank you very much, Rick. We're going to run through a few items, as Rick mentioned, the net interest income, the cost of funds, the non-interest expense, and a discussion about the ATM offering. From a net interest income perspective, the bank generated $36.5 million of NII in the third quarter. That $36.5 million included $1.2 million of transactional income. In other words, if you exclude that transactional income, the base NII was $33.5 million, and that is higher than we've seen in historic quarters.
Richard N. Wayne: Great. Thank you very much Rick we're going to run through a few items as Rick mentioned, the net interest income the cost of funds the noninterest expense and discussion about the ATM offering.
Richard N. Wayne: From a net interest income perspective, the bank generated in the third quarter $36 $5 million of NII.
Richard N. Wayne: At $36 5 million included $1 $2 million of transactional income.
Richard N. Wayne: In other words, if you exclude that transactional income.
Richard N. Wayne: NII was $35 3 million and that is higher than we've seen in historic quarters.
Richard N. Wayne: The key reason for the NII was the larger balances that generated that yield. The yield on the purchase book was 8.7 percent, and on the originated book was 10.1 percent, giving us a weighted average yield on national lending of 9.22 percent.
Richard N. Wayne: The key reason for the NII was the larger balances that generated that yield the yield on the purchased book was eight 7% on the origination.
Richard N. Wayne: <unk> book was 10, 1%, giving us a weighted average yield on national lending of nine 2%.
Richard N. Wayne: If we then take a look at the cost of funds, which then generated the net interest margin that you heard Rick speak about being 5.01%. The cost of funds was 4.23% on a weighted average basis, which is up 15 basis points compared to the second quarter. And you can refer to slide 15 if you want to get a sense of that. We had a change in the mix of deposits in the bank in the third quarter; we had an increase in our term funding and a corresponding decrease in FHLB borrowing. Let me break that down for you quickly.
Richard N. Wayne: If we then take a look at the cost of funds, which then generates the net interest margin that you heard Rick speak about <unk>, 5.01%. The cost of funds was 42, 3% on a weighted average basis.
Richard N. Wayne: That is up 15 basis points compared to the second quarter and you can refer to slide 15, if you wanted to get a sense of that.
Richard N. Wayne: We had a change in the mix of deposits in the bank in the third quarter.
<unk> had an increase in our term funding and a corresponding decrease in FH Lv borrowing.
Richard N. Wayne: Let me break that down quickly.
Richard N. Wayne: Our brokered certificates of deposit, the BCDs, were up $132 million, whereas the FHLB borrowing was down by $96 million. That was a deliberate effort by us to increase our off-balance sheet capacity. Turning now to non-interest expense. The non-interest expense for the quarter was $16.4 million. There are two key components to that.
Richard N. Wayne: Brokered certificates of deposit the BCBS.
Richard N. Wayne: $132 million.
Richard N. Wayne: Whereas the FH Lv borrowing was down by $96 million that was a deliberate efforts by us to increase our.
Richard N. Wayne: Off balance sheet capacity.
Richard N. Wayne: Turning now to non interest expense the non interest expense for the quarter was $16 $4 million.
Richard N. Wayne: There are two key components to that the key change that was.
Richard N. Wayne: The key change that you'll notice is there was a one point zero five million dollar accrual for incentive compensation. That was a true up because of our expectation for the annual total. And we accrued three quarters of the total annual expense. Ordinarily, we take that true up in the fourth quarter.
Richard N. Wayne: But you will notice is there was a $1.0 million to $5 million accrual for the incentive compensation.
Richard N. Wayne: That was a true up.
Richard N. Wayne: <unk> of our expectation on the annual total and we accrued three quarters of the total annual expense ordinarily, we take that true up in the fourth quarter.
Richard N. Wayne: If you strip out that $1.05 million, you're left with a non-interest expense of $15.4 million, which is the comparable non-interest expense in comparison with prior years. Turning now to the ATM offering, you'll recall that that is the bank selling shares in order to raise capital in the market. For the quarter, the bank sold 180,000 shares. That generated proceeds per share of $52.34, and the total dollar proceeds from the ATM in the third quarter were $9.4 million.
Richard N. Wayne: If you strip out that $1.0 million to $5 million, you're left with noninterest expense of $15 4 million.
Richard N. Wayne: Which is the comparable noninterest expense in comparison with prior years.
Richard N. Wayne: Turning now to the ATM offering you'll recall that that is the bank selling shares in order to raise capital in the markets for.
Richard N. Wayne: For the quarter. The bank sold 180000 shares that generated proceeds per share of $52 34, and the total dollar proceeds from the ATM in the third quarter was $9 $4 million.
Richard N. Wayne: The impact of that on our tangible book value was 31 cents per.
Richard N. Wayne: The impact of that on our tangible book value was $0.31 per share. The reason for the ATM is that we believe there are significant opportunities to both originate and acquire loans. Given the current level of activity in the markets, those sorts of transactions are typically lumpy, as has been mentioned before, and we see the ATM as one of the tools we have available to us to enable us to achieve our business objectives. I'll now turn the floor over to Pat Dignan.
Richard N. Wayne: Sure.
Richard N. Wayne: The reason for the ATM is that we believe there are significant opportunities to both the originated and acquired loans given the current level of activity in the markets.
Patrick Dignan: Those sort of transactions are typically lumpy as has been mentioned before and we see the ATM is one of the tools, we have available to us to enable us to achieve our business objectives.
Speaker Change: I'll now turn over to test Cigna.
Patrick Dignan: Thanks Richard.
Patrick Dignan: Despite no loan purchases last quarter, there's really nothing unusual about the quarter. As Rick pointed out, the first calendar quarter is generally slow on the purchase side, as most sellers are really not focused on the balance sheet, repositioning that earlier in the year. Having said that, we did review several opportunities that are rolling into this quarter, and we have confidence that there will be meaningful volume in the fourth quarter, and we're confident that if you look at the entire fiscal year, we'll have a very strong year for purchase loans overall.
Patrick Dignan: Despite no no loan purchases last quarter, there's really nothing unusual about the quarter as Rick pointed out in the first calendar quarter is generally.
Cigna: Slow on the purchase side is both sellers are really not focused on balance sheet repositioning that earlier in the year having.
Cigna: Having said that we did review several opportunities.
Patrick Dignan: That are rolling into this quarter.
Cigna: We have confidence.
Patrick Dignan: There'll be meaningful volume in the fourth quarter.
Cigna: And we're confident that if you look at the entire fiscal year that will have a very strong.
Patrick Dignan: Year purchase volumes overall.
Patrick Dignan: Moreover, if interest rates remain at these levels, we expect purchase loan opportunities will increase in the second half of this year. On the originated side, the past two quarters were slower than normal due to less transaction volume generally, mostly due to large disagreements on value, and also because of high interest rates. There's also a more conservative posture on our part, especially around capital.
Patrick Dignan: Moreover, if interest rates remain at these levels, we expect purchase loan opportunities will increase in the second half of this year.
Patrick Dignan: On the originated side the past two quarters were slower than normal due to less transaction volume generally.
Patrick Dignan: Mostly due to large disagreements on value.
Cigna: Also because of our interest rates.
Patrick Dignan: There is also a more.
Patrick Dignan: Conservative posture on our part, especially around cap rates.
Patrick Dignan: Transaction volume appears to have picked up as evidenced by increased volume in CMBS, most likely due to growing confidence in the market. There's a lot of new capital in the lender finance space, creating increased competition. The silver lining through this is that there is an increase in the need for bank leverage. Of our total originated volume this quarter, 90% was in the lender finance space, and the vast majority of this volume will continue to grow into the next quarter.
Cigna: Transaction volume appears to have picked up as evidenced by increased volume and see MBS.
Cigna: Most likely due to growing confidence in the market.
Patrick Dignan: A lot of new capital in the.
Patrick Dignan: Lender finance space.
Great and increased competition.
Patrick Dignan: The silver lining through this is that there is.
Patrick Dignan: An increase in the niche bank leverage.
Patrick Dignan: Of our total originated volume this quarter.
Patrick Dignan: 90% was in the lender finance space <unk>.
Patrick Dignan: The vast majority of this volume.
Patrick Dignan: We will continue to grow into the next quarter.
Operator: Thank you, Pat. Thank you, Richard. Now we will turn it over to you for any questions that you might have.
Patrick Dignan: Alright.
Speaker Change: Thank you Pat Thank you Richard.
Speaker Change: Now, we will turn it over to you.
Speaker Change: For any questions that you might have.
Operator: Thank you. We will now begin the question and answer session. If you have a question, please press star 11 on your touchtone phone. If you wish to be removed from the queue, please press star 11. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star 11 on your touchtone phone. Our first question comes from the line of Alex Twerdahl from Piper Sandler.
Speaker Change: Thank you we will now begin the question and answer session. If you have a question. Please press star one to one on your Touchtone phone if you wish to be removed from the queue. Please press star one one.
Operator: You are using a speakerphone you may need to pick up the handset first before pressing the numbers. Once again, if you have a question. Please press star one one on your Touchtone phone.
Alexander Roberts Huxley Twerdahl: Our first question comes from the line of Alex <unk> from Piper Sandler.
Alexander Roberts Huxley Twerdahl: Hey, good morning, all.
Alexander Roberts Huxley Twerdahl: First, you know, Pat or Rick, on that last point you were making about the need for bank leverage, and I think you said something about it as it related to pickup and CMBSs. Can you just go into that and explain exactly what you mean by the additional need for bank leverage there?
Alexander Roberts Huxley Twerdahl: Good morning, Alex.
Alexander Roberts Huxley Twerdahl: First.
Alexander Roberts Huxley Twerdahl: Pat or Rick on that last point that you were making on.
Alexander Roberts Huxley Twerdahl: The need for bank leverage and I think you said something about as it related to a pickup in CMV assets can you just go into that and explain exactly what you mean by by the additional need for bank leverage there.
Patrick Dignan: Well, there's just been a lot of capital being raised by non-bank lenders to get into the real estate space, coupled with just fewer transactions overall. Those non-bank lenders need to be very, very competitive on rates, and so leverage helps them do that. And so it's been good for us.
Patrick Dignan: Well, it's just been a lot of capital being raised by non bank lenders to get into the <unk>.
Patrick Dignan: Real estate space.
Patrick Dignan: Coupled with just fewer and fewer transactions overall, those non bank lenders need to be.
Patrick Dignan: Very very competitive on rate and so leverage helps them do that and so.
Patrick Dignan: That's been good for us.
Alexander Roberts Huxley Twerdahl: All right, thank you for spelling that out for us. So on the, I guess, just starting on the originated activity this quarter, and I guess as I look at the yields, the yields overall were over 10%. I think, Rick, you mentioned the weighted average production was 9.3. So is there something in there, some acceleration of interest that pushed those yields higher this quarter?
Speaker Change: Alright, thank you for for spell that out for us.
Richard N. Wayne: Well, I gave the number for the 9.3 was for what we booked in the quarter. The overall number of the 10% is for our whole portfolio. So we have some loans that are, you know, we have some loans that are higher.
Richard N. Wayne: So on the I guess, just starting on the on the originated activity this quarter.
Richard N. Wayne: As I look at the yields the yields overall were over 10% I think Rick you mentioned the.
Richard N. Wayne: The weighted average production was nine three so is there something in there some acceleration of interest that pushed those yields higher this quarter.
Richard N. Wayne: I gave the number for the nine three was for what we booked in the quarter.
Richard N. Wayne: The.
Richard N. Wayne: Overall number.
Speaker Change: Let me just get that.
Richard N. Wayne: 10%.
Richard N. Wayne: Is.
Richard N. Wayne: That includes our whole portfolio. So we have some loans that are.
Richard N. Wayne: And for this quarter's production, you know, we didn't have any transaction acceleration of any of that as we have. So if you look at the slide in the book, number 22. Alex, in the original column, this is now our whole portfolio. So you can see that the regularly scheduled interest and accretion on the whole book is 966. And so this is really back of the envelope math if we have this this quarter we did 153 million at 933, you know, the 931. The other part of the legacy portfolio coming into the quarter was probably more like 970 or 980 because it was more of the portfolio and the rate was higher.
Speaker Change: Yes, so we have some loans that are higher and this quarter's production we didn't have any transaction.
Richard N. Wayne: Acceleration of any of that as we have so if you look at.
Richard N. Wayne: On the slide in the book number.
Richard N. Wayne: 22, Alex and the originated Collyn. This is now our whole portfolio. So you can see that the regularly scheduled interest and accretion.
Richard N. Wayne: On the whole book is $9 66, and so.
Richard N. Wayne: This is really back of the envelope math, if we have.
Richard N. Wayne: This quarter, we did $153 million at $9 33.
Richard N. Wayne: 981, rather.
Richard N. Wayne: The other part of the legacy portfolio coming into the quarter was probably more like nine 7% year 980, because it was more of the portfolio and the rate was higher but what we didn't have.
Richard N. Wayne: But what we didn't have, for the number I quoted, was any accelerated accretion because we just booked it. And you can see that for the whole portfolio, there was 43 basis points, which took the 966 to 1009. For all the others that are listening, that's a lot of numbers I threw out. I think if you look at page 22 of our slide deck, that'll be clear for you, hopefully.
Richard N. Wayne: The number I quoted was any accelerated accretion because we just booked it.
Richard N. Wayne: Can see that for the whole portfolio, there was 43 basis points, which took the $9 66.
Richard N. Wayne: The 10 online for all the others that are listening thats a lot of numbers I threw out I think if you look at page 22 of our slide deck that will that will be clearer for you hopefully.
Alexander Roberts Huxley Twerdahl: Okay, appreciate that. And then, you know, you talked about, you alluded to some opportunities out there for loan purchases in the coming quarters. Could you just remind us sort of where your appetite is in terms of loan sizes, loan pool sizes? You know, both in terms of capital and capital constraints, and then also just in terms of just the sort of the capacity of your current workforce to be able to manage through some of that stuff.
Speaker Change: Okay I appreciate that.
Alexander Roberts Huxley Twerdahl: And then when you.
Alexander Roberts Huxley Twerdahl: Talk to you alluded to some of the opportunities out there for loan purchases.
Alexander Roberts Huxley Twerdahl: In the coming quarters could you just remind us.
Alexander Roberts Huxley Twerdahl: Sort of what your appetite is in terms of loan sizes loan pool sizes.
Alexander Roberts Huxley Twerdahl: Both in terms of and then maybe kind of overall purchase capacity both in terms of capital and capital constraints and then also just in terms of just the sort of the capacity with your current workforce to be able to manage through some of that stuff I know thats a several part question but.
Alexander Roberts Huxley Twerdahl: I know that's a several-part question. But, but, you know, I think there's been a lot more conversation about some big pools being potentially sold in the near term. And so we just want to be able to make sure we're lining up what your appetite is with what other people are talking about as well.
Alexander Roberts Huxley Twerdahl: I think.
Alexander Roberts Huxley Twerdahl: There's been a lot more conversation about some big pools being potentially sold in the near term and so I just want to be able to make sure. We're lining up what your appetite is with what other people are talking about as well.
Richard N. Wayne: So my next comments will be on the numbers will be rounded. I don't have those exactly in front of me, although we do have them.
Speaker Change: So my next comments will be.
Richard N. Wayne: And the numbers will be rounded.
Richard N. Wayne: Have those exactly in front of me, although we have them, but now we have about.
Richard N. Wayne: But we have about five hundred and fifty or six hundred million dollars of loan capacity now if we were to leverage our capital, you know, to a level that we are comfortable with, and Matt, of course, gets increased as we if we were to sell stock under our market or the ATM offering that we have out there. And, of course, also increased by earnings every quarter as well. And so we don't have a lot of room to, you know, without raising a lot more capital outside of the ATM, for example, just kind of where we are to put a lot more purchase loans on our balance sheet.
Richard N. Wayne: 550 or $600 million of.
Richard N. Wayne: The loan capacity now if we were to.
Richard N. Wayne: Leverage our capital.
Richard N. Wayne: To a level that we're comfortable with.
Richard N. Wayne: And that of course gets.
Richard N. Wayne: Increased as we.
Richard N. Wayne: If we were to sell the stock.
Richard N. Wayne: Under our.
Richard N. Wayne: At the market.
Richard N. Wayne: Or the ATM offering that we have out there and of course.
Richard N. Wayne: Also increased by earnings every quarter as well.
Richard N. Wayne: So we're not so we have a lot of room to.
Richard N. Wayne: <unk>.
Richard N. Wayne: Without raising a lot more capital.
Richard N. Wayne: Outside of the ATM for example, just kind of where we are.
Richard N. Wayne: To put a lot more purchase loans are on our balance sheet.
Richard N. Wayne: In terms of what we like, we're not sort of limited particularly by pool size, subject to what I just described as our overall current limit, our overall loan capacity. But when we look at loan pools, it's more we look at them, you know, loan by loan. And we have both a legal lending limit in terms of the size of the loan under the main law of 20 percent of total capital, but we never get that close.
Richard N. Wayne: In terms of what we like we're not sort of we're not limited, particularly by.
Richard N. Wayne: Pool size subject to what I just described as our overall current limit our overall loan capacity.
Richard N. Wayne: When we look at loan pools, it's more we look at loan by loan and.
Richard N. Wayne: We have both a legal lending limit in terms of the size of the loan under main law of 20% of total capital, but we never get that close but with our house limit.
Richard N. Wayne: But, you know, our house limit is more like 10% of that number, but our sweet spot on purchase loans or anywhere if it's a big sweet spot, call it one million to... call it 10 or 12 million. Occasionally, we have a larger one. And sometimes we have smaller ones.
Richard N. Wayne: <unk> is more like 10% of that number, but but our sweet spot on purchase loans are anywhere if it's a big sweet spot ill call. It.
Richard N. Wayne: $1 million.
Richard N. Wayne: Call, It 10 or $12 million occasionally we have a larger one and sometimes we have smaller ones and we have a slide in the book on page seven that makes the point. This is for all of our lending that shows that only 17% of our.
Richard N. Wayne: And we have a slide in the book on page seven that makes the point now that this is for all of our lending. It shows that only 17% of our loan book is loans that are $15 million or more. And so I mean, 83% of our loan book is less than $15 million, and only 8 million, or 8%, are between 10 and 15. So I'll say it another way; 75% of our loan book are loans that are less than $10 million, with a big chunk between two and six and under too.
Richard N. Wayne: Our loan book are loans that are $15 million or more.
Richard N. Wayne: So I mean, 83% of our loan book.
Richard N. Wayne: Is.
Richard N. Wayne: Less than $15 million and only $8 million.
Richard N. Wayne: Our 8% is between 10 and 15, so I'll say it another way 75% of our loan book are loans that are less than $10 million.
Richard N. Wayne: A big chunk between two and six and in under two in terms of the kind of loans that we look at.
Richard N. Wayne: In terms of the kind of loans that we look at, you know, we're looking for performing loans. We're looking for loans that are, you know, generating sufficient cashflow. You know, we have a preference for loans that are in liquid markets so that if we ever have to take back the collateral, which is rare, that there's a market for those. We generally stay away from, and way away from, construction loans or land loans or development loans or the things where there's historically been a lot of risk for those.
Richard N. Wayne: We're looking for performing loans.
Richard N. Wayne: We're looking for loans that are.
Richard N. Wayne: We are generating sufficient cash flow.
Richard N. Wayne: We have.
Richard N. Wayne: Our preference for loans that are in liquid markets.
Richard N. Wayne: So that if we ever have to take back the collateral which is rare that.
Richard N. Wayne: There is a market for those we generally stay away from.
Richard N. Wayne: And way away from construction loans are land loans are development loans are the things, where there has historically been a lot of risk for that.
Richard N. Wayne: You know, our portfolio is, while we're in 44 states, and we keep track of that, but don't ask which states are not in place, but we do keep track of it. You know, our biggest concentrations are in New York, followed by California. California, followed by Florida and New Jersey.
Richard N. Wayne: Portfolio is.
Richard N. Wayne: While we're in 44 states and we keep track of that but don't ask what states were not in place, but we do keep track of it.
Richard N. Wayne: Our biggest concentrations in New York, followed by Khalaf.
Richard N. Wayne: California, followed by Florida, and New Jersey, but then were around and a lot of other.
Richard N. Wayne: But then we're around in a lot of other States. And we also do on purchase loans. We, you know, we get whatever the interest rate and the structure of the loan is when we acquire it. That's a lot of information for your question. I hope it was relevant information. I've given you all that.
Richard N. Wayne: States and we also know on purchased loans, we would get whatever the interest rate and the structure of the loan is when we acquire it.
Richard N. Wayne: So what your question is, and you didn't ask exactly about this, but I want to just amplify a little bit Pat's comment about no volume in Q3. But, you know, there were transactions we were knee deep into that have rolled into Q4. So we're expecting, of course, with the caveat, it's not done till it's done. We would expect meaningful.
Richard N. Wayne: That's a lot of information on your question I hope it was relevant information.
Richard N. Wayne: Given you all that the way you are what your question is and you didn't.
Richard N. Wayne: Yes, exactly about this but I wanted to just amplify a little bit Pat's comment about no volume in Q3.
Richard N. Wayne: Right.
Richard N. Wayne: There were transactions, we're knee deep into that rolled into Q4. So we're expecting of course with the caveat is not done until it's done we would expect meaningful.
Richard N. Wayne: Volume in.
Richard N. Wayne: Our fourth fiscal quarter or the one that we are currently in.
Patrick Dignan: The last part of your question was on staffing, and I just had a comment that
Richard N. Wayne: Last part of your question was around staffing and others.
Patrick Dignan: Matt.
Patrick Dignan: Were fully staffed on the on the lending side.
Patrick Dignan: And have capacity to absorb absorb more volume if we can find it.
Patrick Dignan: There is a lot of operational leverage in that. Thank you, Pat, for pointing that out.
Patrick Dignan: Operational leverage on that thank you Pat for pointing that out.
Patrick Dignan: Yeah, that was I mean, that was I guess if there was another billion plus purchase, like we saw a couple of years ago, you know, if that would be absorbable by the current staff, and it sounds like the answer is, probably.
Patrick Dignan: Yes.
Patrick Dignan: I guess, if there was another 1 billion plus purchase like we saw a couple of years ago.
Patrick Dignan: That would be.
Patrick Dignan: Absorbable in the current staff and it sounds like the answer is it's probably.
Richard N. Wayne: That's not probably. It's yes, you know, subject to adding maybe one or two people. But, you know, I don't want to have any. First of all, I'm not suggesting it at all. I'm just responding to your million dollar question, billion dollar question. You know, as Pat said, we have a lot, we have a lot, we have a lot of people here already, and maybe some, and more entry-level folks to help with part of it.
Speaker Change: That's probably it.
Richard N. Wayne: Yes.
Richard N. Wayne: Subject to adding maybe one or two people but.
Richard N. Wayne: I don't want to have any.
Richard N. Wayne: First of all I'm not suggesting it all just responding to your 1 million dollar question 1 billion dollar question.
Richard N. Wayne: That.
Richard N. Wayne: As Pat said, we have a lot we have a lot we have a lot we have a lot of people here already and maybe some.
Richard N. Wayne: And more entry level folks to help us part of it but there's a lot of operating leverage.
Richard N. Wayne: But now there's a lot of operating leverage. And you can do the arithmetic. I don't want to say anything about that, Alex, but what it would mean to put a billion dollars of loans on the books with moderate non-interest expense increases.
Richard N. Wayne: This is what I was going to say you can do the arithmetic I don't want to say anything about that Alex, but what that would mean to put a $1 billion of loans on the book.
Richard N. Wayne: With moderate.
Richard N. Wayne: Non interest expense increases.
Alexander Roberts Huxley Twerdahl: Yeah, understood. You know, back to the comments on the ATM and the, you know, I think the commonest of significant opportunities is the ATM and the amount that you raise. Was that kind of a specific amount, you know, in order to kind of be able to just sort of have that capital on hand? Or is that more testing the market to see how quickly you could bring in new customers should you need them? Or maybe just a little bit more on the thought process around utilizing that channel and the timing that you use it?
Speaker Change: Yes understood.
Alexander Roberts Huxley Twerdahl: Back to the comments on the ATM and the.
Alexander Roberts Huxley Twerdahl: I think the communist significant opportunities.
Alexander Roberts Huxley Twerdahl: Is is the ATM and the amount that you raised was that kind of a specific amount.
Alexander Roberts Huxley Twerdahl: In order to kind of be able to just sort of have that capital on hand or is that more testing the market to see how quickly you can bring it and should you need it or maybe just a little bit more on the thought process around <unk>.
Alexander Roberts Huxley Twerdahl: Utilizing that channel and the timing to use it.
Richard N. Wayne: Alex, I can speak to that. So there was no specific target. What we were trying to do was to utilize the ATM at sensible volumes over a sensible period of time. So we didn't set out to deliver a very specific target or to achieve a very specific price. It's a long-term program; we use it when the opportunities seem appropriate to us.
Speaker Change: And if I can speak to that.
Richard N. Wayne: There was no specific targets, what we were trying to do was to utilize the ATM.
Speaker Change: At sensible volumes over a sensible period of time, so we didn't step out to.
Richard N. Wayne: To deliver a very specific targets or to achieve a very specific price.
Richard N. Wayne: The long term program utilize it when the opportunities seem appropriate to us.
Richard N. Wayne: Alex, just going back to the, you know, kind of the hypothetical you had suggested, if there were a billion dollar portfolio and our capacity is currently 600 million before we, you know, we earn money each quarter, you know, and we wanted to do that, that would require us to go out after the AT building up the our capital slowly with the ATM to go out and raise capital for that transaction, which we would prefer not to do, you know, in a, you know, you know, with any urgency around it, as opposed to, you know, gradually building up our, our capital, our view is that we will utilize that capital, I'm not saying we're going to utilize it this quarter or next quarter. But we think it's, you know, when we're stock prices today, seems like a reasonable idea to do it in moderate amounts.
Richard N. Wayne: Yes.
Richard N. Wayne: Alex just going back to the.
Richard N. Wayne: Kind of a hypothetical use suggests that if there were $1 billion portfolio on our capacity is currently $600 million before we.
Richard N. Wayne: Earn money each quarter.
Richard N. Wayne: And we wanted to do that that would require us to go out after the building up the our capital slowly with the ATM to go out and raise capital for that transaction.
Richard N. Wayne: Which we would prefer not to do.
Richard N. Wayne: And Ah.
Richard N. Wayne: Yes.
Richard N. Wayne: With any urgency around it as opposed to gradually building up our.
Richard N. Wayne: Our capital our view is that.
Richard N. Wayne: We will utilize that capital im not saying were going to utilize it this quarter or next quarter.
Richard N. Wayne: But we think it's.
Richard N. Wayne: Where our stock prices today.
Richard N. Wayne: It seems like a reasonable idea to do it in moderate amounts we were approved for $50 million and last quarter.
Alexander Roberts Huxley Twerdahl: You know, we were approved for 50 million. And, you know, last quarter, we purchased how much Richard 9.4 minutes, nine, we used 9.4 million of it. And I want to say we had about 9 million before that. So we have about 32 million left. So we're doing it, you know, doing it moderately. I should point out, I'm not saying we're going to spend it, you know, sell stock this quarter. It really depends on a host of factors. But that was our thinking for the
Alexander Roberts Huxley Twerdahl: We we purchased.
Alexander Roberts Huxley Twerdahl: A much richer $9 4 million $99 $4 million of it in.
Alexander Roberts Huxley Twerdahl: I want to say, we had about 9 million before that so we have about $32 million left so we're doing it.
Alexander Roberts Huxley Twerdahl: Doing a moderately.
Alexander Roberts Huxley Twerdahl: I should point out I'm, not saying, we're going to spend it.
Alexander Roberts Huxley Twerdahl: <unk> stock this quarter really it depends on a host of factors, but that was our thinking for.
Alexander Roberts Huxley Twerdahl: And the last quarter.
Richard N. Wayne: Yeah, understood. And then going on to expenses, and Richard, you mentioned about 1.05, I think you said true up in, in accruals, it normally would happen in the fourth fiscal quarter. So should we expect, you know, going forward to see a more, I guess, maybe like a steadier level of expenses? Normally, we see that, that fourth fiscal quarter, like that, pretty decent increase in salaries, and then it kind of takes that back down in the first fiscal quarter. Is that not going to happen this year?
Speaker Change: Yes understood.
Richard N. Wayne: Then going onto expenses and Richard you mentioned about 1.05, I think you said true ups in an accrual that normally would happen in the fourth fiscal quarter.
Richard N. Wayne: So should we expect going forward to see a more I guess, maybe like a steadier level of expenses normally we see that that.
Richard N. Wayne: <unk> fourth fiscal quarter.
Richard N. Wayne: That pretty decent increase in salaries and then it kind of tick back down in the first fiscal quarter is that not going to happen this year.
Richard N. Wayne: But I think that we will have, you know, in the fourth quarter there will still be money that we accrue. We accrue money for incentive comp all year round. It's just as we get later into the quarters, we take a look at how well the bank is doing. And whether we think when we look at, you know, those that are going to get incentive comp, which incidentally, you know, we pay bonuses to everyone in the bank, you know, some more and maybe much more than others.
Richard N. Wayne: Well I think we will have.
Richard N. Wayne: The fourth quarter, there will be.
Richard N. Wayne: There will be.
Richard N. Wayne: Still money that we accrue we accrue money for our incentive comp all year round.
Richard N. Wayne: As we get later into the quarters, we take a look at how well the bank is doing.
Richard N. Wayne: Whether we think when we look at those that are going to get incentive comp, which incidentally.
Richard N. Wayne: We pay bonuses to everyone in the bank.
Richard N. Wayne: Some more and maybe much more than others, but as we get closer to the end of the year. So we're looking at what we thought we needed.
Richard N. Wayne: But as we get closer to the end of the year, so we were looking at what we thought we needed, you know, in March, so that's nine months into the quarter. So we added to it for this quarter, you know. I would expect that there would be no guarantees on this, but it would not be we're not going to have the true open in the fourth quarter, nearly as large as we had in the prior quarter.
Richard N. Wayne: In March so that's nine months into the quarter. So we added to it for this quarter.
Richard N. Wayne: I would expect that.
Richard N. Wayne: No guarantees on this but it would not be we're not going to have the true up in the fourth quarter.
Richard N. Wayne: Nearly as large as we've had in <unk>.
Richard N. Wayne: Prior quarters.
Richard N. Wayne: So let me just try and put some numbers in to make sense of all that for you. You know, normally, if you take out a million dollars, the non-interest expense is 15.4 million. Right. So, you know, that's the number that we had, I think, in the preceding two quarters, more or less the same number. That's kind of our run rate currently before we put in more money for incentive comp. But we don't really know how much we need until we move further along the year.
Richard N. Wayne: So let me just try and put some numbers to make sense of all that for you. So normally if you take out the $1 million. The noninterest expense is $15 4 million.
Richard N. Wayne: Alright so.
Richard N. Wayne: That's the number that we had I think in the preceding two quarters more or less same number that's kind of our run rate <unk>.
Richard N. Wayne: Currently before we put in more money for incentive comp, but we don't know really how much we need until we move further along the year.
Richard N. Wayne: I was wrong; I'm looking at the chart now. It was 15.7 in the last quarter and 15.4 this quarter, and it was 15.4 in our first fiscal quarter. So I would think about that as a number, and then, you know, we'll see what the fourth quarter looks like, but we just thought it made sense, you know, to true up, you know, a meaningful portion of it in the third quarter.
Richard N. Wayne: I'm looking at the chart, it's $15 seven in the last quarter and $15 for this quarter and it was $15 four in our first fiscal quarter.
Richard N. Wayne: So I would think about that as a number.
Richard N. Wayne: And then.
Richard N. Wayne: We will see what the fourth quarter it looks like what we just thought it made sense.
Richard N. Wayne: The true up a meaningful portion of it in the third quarter.
Alexander Roberts Huxley Twerdahl: Yeah, okay, that makes sense. And then just my final question for you, the SBA business, seems like it's got the engine starting to rev up again, seeing a nice growth rate and originations and sales volume there. Can you just talk a little bit more about expectations and outlook and thoughts around that segment?
Speaker Change: Yes, Okay that makes sense and then just final question for me the SBA business as it seems like it's got the engine starting to Rev up again, and a nice growth rate in originations and sales volume. There can you just talk a little bit more about expectations and outlook and thoughts around.
Alexander Roberts Huxley Twerdahl: Around that segment.
Richard N. Wayne: Well, you're right that it's revved up. We did about 30 million in origination in the March 31 quarter.
Alexander Roberts Huxley Twerdahl: But you are right that it's ramped up.
Richard N. Wayne: We did about $30 million of.
Richard N. Wayne: Originations.
Richard N. Wayne: And as of March 31.
Richard N. Wayne: And as you know, of course, this has been a very slow build. You know, we started this about two and a half years ago. And at the time I said, which I will repeat, I don't want to set expectations high on this. You know, I've But it is, it's building, and we would expect it to continue to build. But I don't really want to, But, you know, is there any, I'm sorry to do this to you, Alex. I know you'd like a better number than this. It's probably reasonable to assume that the path that we're on now will continue and how much more it will be. Yeah, we'll see. Sorry about that. It is unclear.
Speaker Change: Quarter and as you know of course this has been a very slow built.
Richard N. Wayne: It is about two five years ago.
Richard N. Wayne: And at the time, I said, which I will repeat I don't want to set expectations high on this.
Richard N. Wayne: Sure.
Richard N. Wayne: <unk>.
Richard N. Wayne: But it is it's building.
Richard N. Wayne: Building.
Richard N. Wayne: And we would expect that we'll continue to build.
Speaker Change: But I don't want to really.
Richard N. Wayne: But as I said any.
Richard N. Wayne: I'm sorry to do this the Alex I know you would like a better number than that.
Speaker Change: Yes. It is.
Richard N. Wayne: Reasonable to assume that the path that we're on now will continue.
Speaker Change: And how much more it will be.
Richard N. Wayne: We will see.
Speaker Change: Sorry about that.
Speaker Change: Unclear answer no exercises.
Alexander Roberts Huxley Twerdahl: [inaudible] It's been a line that's been all over the place over the last, you know, five or ten years, so I'm not going to hold you to anything, but we will include it in our model. That's all my questions for now. Appreciate the time, and I'll get back in the queue.
Richard N. Wayne: It's been a line that's been all over the place over the last five or 10 years, So I'm not going to hold you to anything but we will include in our model.
Alexander Roberts Huxley Twerdahl: That's that's all my questions for now appreciate the time and I will get back in the queue.
Operator: Thank you, Alex.
Speaker Change: Thank you Alex.
Operator: If you have a question, please press star 1 1 on your touch-tone phone. If you wish to be removed from the queue, please press star 1 1. We have no further questions at this time. Now, I will turn the call over to Rick Wayne for closing remarks.
Alex: Thank you.
Richard N. Wayne: You have a question. Please press star one one on your Touchtone phone, if you wish to be removed from the queue. Please press star one one.
Richard N. Wayne: We have no further questions at this time.
Operator: Now I will turn the call over to Rick Wayne for closing remarks.
Richard N. Wayne: Thank you. Thank all of you who took part in the call. And thank all of you who will listen to the call after this, which you can find on our website. And we will, we will talk again in July.
Richard N. Wayne: Thank you.
Richard N. Wayne: Thank all of you on the call.
Richard N. Wayne: And thank all of you who will listen to the call. After this which you can find this on our website.
Richard N. Wayne: We will we will.
Richard N. Wayne: We'll talk again.
Richard N. Wayne: In July thank.
Richard N. Wayne: Thank you all.
Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.
Richard N. Wayne: Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.
Operator: Okay.
Operator: [music].
Operator: Okay.
Operator: Yes.
Operator: Okay.