Q3 2024 Triumph Financial Inc Earnings Call

Speaker Change: Good morning, it's 930 in Dallas, so let's get started. It's like to open by thanking you for your interest in triumph, and for joining us this morning to discuss our third quarter results. We appreciate it.

Speaker Change: with Aaron, let's get to business.

Aaron: Letter Last evening discussed the quarters results and provided more color on the products we have introduced and are introducing to the market which we believe will create long-term shareholder value. We are excited about those opportunities, particularly where we can help America's truckers get immediate access to working capital and allow partners to leverage our transportation technology investments.

Speaker Change: That quarterly shareholder letter published last evening and our quarterly results will form the basis of our call today. However, before we get started, I would like to remind you that this conversation may include forward-looking statements.

Speaker Change: The statements are subject to risks and uncertainties that could cause actual and anticipated results to differ. The company undertakes no obligation to publicly revise any forward-looking statements.

Speaker Change: For details, please refer to the Safe Harbor Statement in our Sherholder Letter published last evening. All comments made during today's call are subject to that Safe Harbor Statement. With that, I'd like to turn the call over to Aaron for a kick-off and welcome us to Q&A. Aaron. Thank you Luke, and welcome everyone to the call.

Aaron: Before I give a few opening thoughts, I want to welcome Kim Fisk to the table. Kim has worked in our factory business for 12 years and currently serves as its chief operating officer.

Aaron: We gave Kim the morning off so investors could hear from Kim, and having worked alongside Kim as long as I have, I can assure you that she is worth hearing from.

Aaron: The letter we filed last night covers lots of topics.

Aaron: Among them is the acknowledgment that freight continues to be tough right now. There's no getting around. I see nothing upon which to hang a reasonable hope of a turnaround in the short term.

Aaron: In the long term, however, I know that it will turn around.

Aaron: Notwithstanding the market, there are many things to celebrate. C.A. Travinson has gone live with Triampay on the network, and we are in a pilot launch of FAS and Load Pay with C.A. Travinson.

Aaron: We are also demonstrating the ability to leverage models built with artificial intelligence and machine learning to purchase invoices in our factoring business without human intervention. And not only that, but then attaching that to the ability to fund.

Aaron: At a time, when every other bank in America would be closed. To my knowledge, there's no one else in the industry who can do that currently.

Aaron: So we do not and will not sit back and pout about a tough break market.

Aaron: We have been planning our work and doing it for years and we will continue to work that plan. And I'm as convinced as I've ever been that the rewards of that plan are unfolding right in front of us. We look forward to hearing your questions so let's get started.

Speaker Change: We will now go to the Q&A. If you have connected via Zoom and would like to ask a question, please use the Raysand feature at the bottom of your Zoom window, or if you've dialed in, please press star 9. Once called upon, please feel free to unmute and ask your question.

Speaker Change: Our first question will come from Joe Gantronus. Joe, please go ahead.

Joe Gantronus: Good morning, David, take my question.

Joe Gantronus: Morning Jim. I appreciate the details in the shareholder letter about load pay and the total dressable market.

Joe Gantronus: But the other part is the conditions that the independent owner operator base says shrunk as they either let the industry or move to work for a larger carrier. To be expected to continue with say the Amazon effect, you'll permanently remove and small business, or do you think the independent truck driver base will either save like the recover. If it's a ladder, what gives you confidence that'll occur?

Joe Gantronus: I guess what I'm just trying to get is a possible set the curb to press spot rate, but represent the new normal and effectively eliminate the independent driver.

Speaker Change: 10 months ago first.

Speaker Change: Yeah, sure. Thanks Joe for the question. You know, I've been in the background industry for about 20 years and you know the cyclical business. I don't see a time when the small carrier will ever leave the market today. They might be parking their trucks and leasing on to some of our larger carriers, but I don't ever see them leaving the market. I think the market will change and they'll come back and be independent again. [inaudible]

Speaker Change: Yeah, and I agree, when Tim and I were talking this morning, there's a slide deck from 10 years ago, just internally, we were doing a business plan in our factoring business and we were in it asked the question about the demise of the small trucker because at that time the risk was the ELD mandate and I've just done this long enough to know. Thank you very much.

Speaker Change: The small trucker is not going away forever and if you think about it the way the market is constructed

Speaker Change: It wouldn't work if it did. If you look at these large straight brokers and the hundreds of millions, if not billions of dollars, they have invested in technology. The reason they made those investments, the reason those have worked is because it allowed technology to level the playing field to give access to loads. [inaudible]

Speaker Change: Two small truckers, so that small truckers didn't have to try to invest to compete with larger fleets. And so that whole ecosystem depends on the small trucker, so we are in a trough of the longest cycle we've been in since the regulation. That trough will switch and when the spot market.

Speaker Change: Begins to offer greater rewards than these carriers would make, working for someone else. They will return to the spot market and we will start the cycle over again.

Speaker Change: I appreciate that, I bet I could have one more here.

Speaker Change: You know, with CS Robinson's ten and a half billion volumes coming online earlier than expected for you. Can you give us a sense for how much annualized payment volume is currently contracted to come online through T.P. as well as the expected cadence?

Speaker Change: and then it seems that you continue to add brokers to your network while not having the same success in adding factory clients.

Speaker Change: Given this dynamic, I would think that a new factory time would have enough network volume to immediately reduce overhead on day one of joining the network. Then you also talk about the onboarded pipeline for factory companies.

Speaker Change: Thank you.

Speaker Change: Great question, Joe. You said one more, but you asked, too, but that's all right, we're going ahead.

Robin: You take the stage, Robin? Okay, I'll take the stage, Robin, this is a question for us. Thank you, Joe. So, we are certainly excited about the onboarding of C. Robinson and its volumes to the payments network. As I told you all last quarter, we're very excited about the status of our pipeline and how healthy it is. I'm even with the announcement of C. Robinson. I'm starting to do their onboarding process this quarter, which they just this week started with production volumes. Thank you.

Robin: We still remain very positive about the health of our pipeline so it continues to be strong as strong as it has never been, which is really excited for us.

Robin: To give you exact numbers of what we would be able to tell you would be added in this quarter. I can't do that. But that's simply because as we've talked before, just how the ramps happen and how volume scales on it. You can expect though that the majority of C.A. Robinson's proper volume will be on our platform.

Robin: Indive Q4, into Q1, as a...

Robin: Measurement there. Yeah. And of course, the question that I know that follows that one is if that's true, I think you'll start to see the revenue from this strategic relationship with CH Robinson show up in the second half of 2025. I mean, they'll be incremental revenue along the way, but we're talking about making real money for investors and real money for CH Robinson, frankly, I think that's back half.

Speaker Change: So, you asked the question about factory. So, let's talk about that.

Speaker Change: The, I think we've spent.

Speaker Change: Too much time, frankly.

Speaker Change: Talking about creating, you know, how to invite the factors into our network and us being concerned about the fact that we own the factoring company and was advocating issue. And I mean, that's a margin. Look, it is. I'm sure it is.

Speaker Change: But I think really if we get down to what really drives these decisions, it's the fact that the factory industry has many of them used a legacy product, for their factor management software, and that product, I will say it, is not innovative.

Speaker Change: So they've been forced to be innovative on their own. They've built a tremendous amount of technology that sits on top of the legacy solutions they use.

Speaker Change: and they've been successful doing that.

Speaker Change: Well, along comes Triumph and we build a ground up system and then we build Triumph pay.

Speaker Change: and it's a little bit, you know, and I've lived it, frankly, it's the innovator's dilemma. In the short term, it is probably more profitable, better for the bottom line to do the things you've done, the way you've always done that.

Speaker Change: Over the long run!

Speaker Change: It is absolutely clear that grabbing information, like I wrote about it in the letter, on exceptions to invoices, having that information day one versus day 30 is a better outcome. There no one could dispute that.

Speaker Change: It's are you willing to stomach the pain?

Speaker Change: It takes to make the changes to be successful in the long term and that's hard.

Speaker Change: That's really hard. I mean, I don't think that factoring companies run their businesses from a rocking chair. That's not how they think.

Speaker Change: and they're being innovative, but we're asking them to redo everything about the way they do business. And so I'm empathetic to that.

Speaker Change: But what we know and what you're going to see is people start using our factory as a service platform.

Speaker Change: is the ability to have connectivity into the source of truth, which is the broker's transportation management system, and to have all the features, including the ability to make instant decisions without human intervention, you can't beat that, like it's just a superior technology and integration experience. And so I think there are going to be new entrance coming into the factoring industry. Gary Tenner, Gary Tenner, Gary Tenner,

Speaker Change: and...

Speaker Change: All of them would be my expectation. We'll use our offerings because you couldn't recreate the scale we have. So it's not a much about what the factoring industry is now and how many network factors there are. It's also about where the factoring industry is going. And because of what I see there, I am convinced that one quarter drop in network transactions is just noise and it is not a signal that over the long term and it may even turn next quarter.

Speaker Change: Additional volume will move through the network and...

Speaker Change: therefore network transactions and specifically revenue from network transactions will go up. So I hope that answers the question, the third question you asked Joe.

Speaker Change: and I appreciate it, thank you.

Speaker Change: Our next question will come from Matthew Olney, a Steven Matthew, go ahead.

Matthew Olney: Hey, thanks. Good morning. I guess similar to the lines of the previous questions, we've talked about Triumph pay and the step up of potentially monetization of that business in 2025 with the caveat that it would depend upon the health of the overall freight markets. And based on your commentary and the letter, it sounds like you remain both of the cautious on the freight markets. So with that in mind, any a bit of thoughts about the monetization that platform in 2025.

Speaker Change: Good question. No, you got to take care of my daughter. So that's a good question. You know, we do remain, you know.

Speaker Change: Cautious about the freight market and where is that and an empathetic to our clients and the positions that they're in and so we will make decisions about how we price customers and an increased price in the customers with that in mind.

Speaker Change: B-revenue for...

Speaker Change: for our portfolio in Triumph Pay and have increased it over 30%.

Speaker Change: Year Over Year. And so while we are cautious, while we are empathetic, we are providing value to our clients through additional features and opportunities to serve them that allow us to continue to grow our revenue associated with those services. Yeah, Melissa, take the words that you said I'm better than me. I mean, I think we are monetizing it. 30% the revenue growth period, the period in the face of the longest. Great recession in history, I think that's doing it. I mean, yeah, I get it. We all, we've got some lofty long term goals out there, but it is happening and that's why I said in the opening.

Speaker Change: I think that this freight recession masks what you're seeing unfold right in front of you.

Speaker Change: We will eclipse over 50% of touching all of brokered freight. Nobody's ever been close to that before.

Speaker Change: We are EBITDA margin positive, notwithstanding a freight recession that's causing many companies to go bankrupt and it's also important to note.

Speaker Change: I think that a bank investor may not think this way, but the technology investors who follow us.

Speaker Change: There is a hierarchy of the revenue that comes in to try and pay, and it starts with first of all fee, right? Because fees are not capital intensive and they're more scalable. And then secondly, float because there's no associated credit risk with flow. And then finally, financing, which we, you know, will generate and do generate through quick pays and the other things we do with our partners, fee revenue growth, which you would think would be the hardest thing to grow. [inaudible]

Speaker Change: in the face of a freight recession has grown. So, it's not overnight, it's not parabolic, it's not linear. But I think we are monetizing it, and if the market turns, returns to normal.

Speaker Change: I mean, this would all look a lot better. We're out running the treadmill, but the treadmill is running against us. If the treadmill just went to neutral.

Speaker Change: Okay, I'll step back, thank you guys.

Speaker Change: Thank you, Matt.

Speaker Change: Here's our next question. We'll come from Gary Tender of DA Davidson. Gary, please go ahead and ask the question.

Gary Tender: Thanks, Good Morning everybody. Morning, Morning, that's going to follow up on the on the low pay color that you've given previously, you know, the kind of expectation of an on the gross gross revenue per owner operator or count is pretty specific, but I just want to know, I guess.

Gary Tender: You know what?

Gary Tender: of the 200,000 owner operators that you think are active in those, you know, in the country today.

Gary Tender: Can you give us any kind of...

Gary Tender: Ballpark or range of how many you may have an existing relationship with through the factory business or otherwise.

Gary Tender: and...

Gary Tender: You know, what are the offsets in terms of kind of the cost versus the McRose revenue expectation?

Speaker Change: Yeah, so let's talk about the marketing channels because I think that's a really a suit question. I wrote about that in the letter, I think a lot of syntax work, worry so much about their product they forget about distribution. So what is our natural distribution for load pay? Well, the first place you would go is the 8,500 factory clients we have.

Speaker Change: Alright, if you want to get paid two day or free.

Speaker Change: The news looked at and so that is rolling out as we see.

Speaker Change: The second place you would go is the 20,000 plus select carriers who have claimed their profile inside the Triumph Pay Network. They don't factor with Triumph. They don't factor with anyone, but they're taking quick pays from Triumph Pay enabled brokers. That's 20,000 plus carriers we will go there. The third place we would go is our channel market partner relationship. CA Travinson is the first. There are some other names coming behind that. If you think about the largest brokers and how many carriers they touch.

Speaker Change: You get to...

Speaker Change: Way more than 50% more like 80% of the industry is touched by these parties. So the distribution methods we have, I mean, I don't want to be presumptuous, but it's really hard to compete.

Speaker Change: With all the different ways we would touch the carriers that are out there that you'll see us roll out through 2020-25.

Speaker Change: Regarding the unit level economics, if we're going to go from talking about gross revenues and net margin, that's a little hard, because there are 65 truckers today, maybe 66, I don't know, maybe we signed up someone else overnight, like live this moment, that's going to jump dramatically when we see you next quarter and I would hope every quarter thereafter.

Speaker Change: We're having to make some assumptions and so the best I can do for you is give you the assumptions like how we think about them. The first thing I could say is the vast majority of the revenue that constitutes that $750 ball mark is coming from interchange to you.

Speaker Change: and so how you arrive at that conclusion of what...

Speaker Change: What that's going to be is just you have to make some assumptions about how much of the fin.

Speaker Change: Wil that trucker may on the embedded debit card that's tied to the load pay relationship. I don't know yet. We don't know yet.

Speaker Change: It would not be prudent to tell you what 66 carriers have done other than to tell you we would rightfully be conservative when we give you an estimate.

Speaker Change: and we want to incentivize them to spin on that card. For the second piece is the float and to know the float you need to know what the feds are going to do and you need to know what the decay rate is for the balances in those cards and we just don't have enough...

Speaker Change: History to be able to speak to that.

Speaker Change: on the expense side of the equation.

Speaker Change: We are carrying the expenses of Lode Bay right now.

Speaker Change: I mean, that lives here right now. Some of it's capitalized from the operating expense. This is not. We need to go out and hire a bunch of people. Let me sure there'll be incremental marketing spin and and as that expense lives here now. So whatever revenue comes in.

Speaker Change: Much of that will drop to the bottom line and that's what's exciting and there's other things that can be done with a low if we get our virtual wallet into your hand there are many other things that can be done we don't want to speak to that right now because it's a little early but it doesn't just stop. [inaudible]

Speaker Change: Wyse.

Speaker Change: Interchange fees and float. We have some other ideas. So I hope that helps Gary talk about the distribution and talk about the monetization.

Speaker Change: Thank you, and you noted in your sugar letter that there was a loss of a factor. You kind of talked about decisions made by factors in a tough environment, so did that factor go at a business, did they consolidate with somebody else or did they just with their relationship off the network? What's the best kind of color there?

Speaker Change: At the same time, they simply just move their relationship off the network.

Speaker Change: Thank you.

Speaker Change: Next question, we'll come from Timothy Slyther from KBW Timothy, please go ahead.

Timothy Slyther: Hey, good morning. Thank you for taking my question.

Timothy Slyther: I have a quick follow-up on that last one.

Timothy Slyther: was trying to spectrum business at all, a primary reason for that factor of leaving the network. And do you guys have what network-convolume growth would have been excluding that impact?

Speaker Change: You take the second one, I'll take the first one. What would network volumes have been excluding that impact? I think it would have gone up. It was gone up a couple percentage points over the course of that quarter, just as other volume had ran to the first of the 5.7 Ebbler that was percent reduction. So you're looking at likely a 10 to 11 percent swing.

Speaker Change: So, network volumes on the whole butt for that customer went up because the network continues to grow.

Speaker Change: Again, I would never be so presumptuous as to say why someone left, but I would be presumptuous not to say, they didn't leave because we have a factoring business, they knew that. Like we've done that for 15 years, that's been around for a long time and we've never told the market and we'll never tell the market that we're leaving the factoring business.

Speaker Change: We're not. We think we're part of an ecosystem that adds value and there's room for lots of people, and we intend to be valuable and frankly, and I think this is important. I think that the factoring industry is not a finite...

Speaker Change: Hi, it has grown, since I've been in the industry since Ken's been in the industry, the percentage of customers who are factored has grown and that's because factoring companies are so much more and so much better than payday owners.

Speaker Change: We enable...

Speaker Change: Fulking companies to aggregate their purchasing power to save value with vendors with whom they spend money and we save them more money there than they pay us for immediate access to their fund.

Speaker Change: And so much like the freight brokers have created technology that's allowed small truckers to have the access to capacity that you would have in a larger fleet. The factoring industry has aggregated the purchasing power and instant access to working capital that small truckers need to compete. And so, I think the factoring industry, especially with things like load pay coming on board, is going to grow.

Speaker Change: and that's great for all of us. We want the pie to grow. I think this customer, they left for their own reasons.

Speaker Change: and that's one customer out of 63 and I think we have 37 network factors.

Speaker Change: I would focus less, I mean, sure, focus, you can choose what to focus on. It's less about one customer, it's more about our network transactions increasing. We're talking about one quarter here.

Speaker Change: I would, I would, I feel confident you can hold me accountable on this, that network transactions will continue to grow, Q4 and throughout all of 2025, with CH Robinson's volume coming on and others behind it.

Speaker Change: The idea of the network and the transactions associated with it are going to absolutely grow.

Speaker Change: Okay, great, yeah, to make sense when we appreciate the color and Aaron, you talked about this a little bit in your letter.

Speaker Change: And I know you might be limited about what you can share due to competitive reasons, but can you kind of help us understand what exactly you're offering and the next genauted that enhances the value proposition and maybe more importantly, how successful has that been and ungating legacy clients to upgrade before their current contract is up and can you provide any kind of parameters on what the pricing differences.

Speaker Change: But they do next genautics or some like your seat.

Speaker Change: All right. Yep.

Speaker Change: All you. Alright, got it. So, great questions and I'm glad that you asked it because I wanted to be able to talk about this pretty exciting for our entire team and the work they put into this.

Speaker Change: So we get a lot of requests from our clients about how we can help serve their business far as you guys know a few years ago, we acquired Hubtrans who had a top of the line audit solution already in the market, through that acquisition and incremental improvements that we've made with that team and that product over the years, we've been able to create more value.

Speaker Change: Next gen audit is just taking that product to the next level, and being able to respond to what our customers have been asking for in different aspects of their business and handling the transaction. So a couple of the things I'd like to highlight that are important to take away here, is that we're able to do POD and billiability and validation. We're able to help with the index and not just extraction but delivering fully index and validated invoices into either the audit product or into their own proprietary system that they're using.

Speaker Change: So that they can make immediate decisions and change their processes to auto-approved and auto-submit for payment, those invoices as they come through.

Speaker Change: We've been able to speed up the time it takes for a broker to get the POD and documentation from a carrier and have seen an early test cases that we're working through right now, two to three day DSO improvement for those brokers and being able to get those invoices and those PODs built out to their customers that helped improve their ability to collect. And so these are just a few of the innovations that come with it and the technology enhancements, the accuracy rates obviously using machine learning and AI, you know, if we have that embedded and different.

Speaker Change: Processes and parts of the system, we just continue to innovate, train the system, learn more and more from our customers every day, and deliver new features that bring them more value. In terms of the pricing difference, again I go back to our customers had different pricing, depending on when they onboarded, whether they onboarded through tram pays, maturity, lifecycle or with hub tram. And so we charge them based on the value that we're able to provide them and what makes sense for for both parties. And so we'll continue to do that.

Speaker Change: Many of the contracts that you see with next gen audit, our are existing clients who are upgrading early and allowing us to charge higher rates and that's where you're seeing a lot of F.E. revenue and come growing year over year is through the ability to leverage those feature sets to upgrade our clients' new solutions.

Speaker Change: Let's great, thank you for listening.

Speaker Change: Our next question will come from Hal Ghosts from Be Riley, Hal. Please ask your question.

Speaker Change: Great, I got two questions, I think you hear me? The first one is on low pay, it's the current revenue model only interchange or what you venture into other, you know, dollar advances that if you have a checking account with a trucker, you're going to have to be able to cash flow analysis on them. You're going to need to see the frequency of deposits.

Speaker Change: If they have throughout their daily transaction, there are other fintechs out that are doing small dollar advances, you know, two to three weeks. Can you, is that something you're considering? And then the second question is, on the bank he's died of deposit franchise, what they have a terrific quarter with their lot of.

Speaker Change: Increased into positive and quite a few of them that were not interested in being in which it's a good stop. So I'd like you to comment on that, thanks.

Speaker Change: So I'll do low pay and then we could talk about...

Speaker Change: You know what we're doing because I do think people a 1.57% cost of funds should be celebrated, right? And we don't talk enough about the bank, but on the first one, how? I mean you've hit the nail in the head. Look.

Speaker Change: If you control or have that customer relationship, and let me just point out one thing, and then I'm going to answer it specifically.

Speaker Change: I hope you and everyone who's read the letter, watching us, understands the power of instant decision. Okay, instant decision applies to factored carriers only. We will offer load pay to any carrier and someday we will offer load pay to enterprise carriers I suspect. But let's just stick with that just for a second because I think it's important to understand.

Speaker Change: Incident decision means just what it says. We've built a model that ingests data.

Speaker Change: and can make an instant decision without human intervention on whether or not we would purchase this invoice.

Speaker Change: Right? And that's never been done before. I mean, generally you're touching it, people are touching it. I can't speak to whatever factoring company does, but I know at-scale instant decisions, making decisions in less than 30 seconds. And we're doing that based upon giant data sets.

Speaker Change: We know what that account debtor has done before. We know what the prior invoices that come from that carrier look like. We know all these factors in our own proprietary wrist model that we built through the school of hard knocks that can I, Tim, others, have seen all the different ways in which you can get hurt.

Speaker Change: But if you make an instant decision on a Saturday.

Speaker Change: and you don't fund until Monday or Tuesday. That's like winning a race and then after you win the race, them telling you that they're going to mail you their trophy and your winnings. You lose that instant gratification. Like what was the value in making an instant decision if you can't fund me instantly?

Speaker Change: It's the power of load pay and the reason I think adoption will be so strong, because we're offering it to other factors as well, right? It's not Brandon with Triumph's name on it.

Speaker Change: is the ability to get money instantly sort of this Amazon, what Amazon has created for us, this expectation that we get what we order right when we want it and it doesn't matter, the rules of nine to five don't apply.

Speaker Change: So now the money sits in the load pit account, it gets there in that example I gave you in the shareholder letter, in less than a minute on a Saturday of a holiday weekend, never been done before.

Speaker Change: So, once the money's there,

Speaker Change: Of course, we would want that car to spin money on the embedded debit card. That's great. We get interchange fees. You've already alluded that. Of course, we would generate the float.

Speaker Change: He's a decided to use push to debit and move that money to another account. There's a fee associated with that, that's great, but you alluded to something, I mean, one of the things that freight brokers have not enjoyed doing, and factoring companies have solved the little bit of this problem for them, and this is over the last decade, is...

Speaker Change: Advancing a percentage of the line hall, that's what we call it, what the carriers getting paid. Advancing a percentage of the line hall, so that that carrier can buy fuel before they pick up the load. Call it a fuel advance, whatever you want to call it, that has historically been rife with fraud.

Speaker Change: It's just their risk because the load hasn't been moved yet.

Speaker Change: If you have all the data we have, and you have a low pay account in someone's hands, the ability to do an advance, whether the broker does it.

Speaker Change: Whether we do it, I mean, you know, all this can be negotiated with our partners, but to be able to do an advance into that account and have the data we have, which tells us frankly far more about the veracity of that carrier than a FICO score ever would.

Speaker Change: Then now you've got an advanced product embedded in that solution, which now that's, of course, left hand side of the balance she revenue, but it's still very, very profitable and so you should expect that and several other things are in the future feature sets that we intend to roll out for load pay and I would expect most of that gets rolled out in 2025.

Speaker Change: Thank you. Oh yeah wait, oh yeah for that bait.

Speaker Change: Okay, yeah, so it pertains to the positives. I'll make a couple of points related to not interfering deposits and then one point related to our interfering deposits.

Speaker Change: When you look at the growth in the non-interprearing deposits, they're really too components. The biggest component of this quarter was the continued growth in our mortgage warehouse service in deposits.

Speaker Change: and so that's very valuable business to us because it comes to us and allows us to sell fun in the mortgage warehouse, it costs lower than wholesale funding.

Speaker Change: with that said.

Speaker Change: They're not free, so while they're not not infrasparing, they do result in rebates on loans within the mortgage warehouse.

Speaker Change: And so there is some cost those. It's just less than wholesale funding costs. We don't have high dependence on wholesale funding. This allows us to lessen that even more.

Speaker Change: So that's good for us, but it's not completely free. The other component is what we see happening within the broader community bank. And we saw the decline and deposits that every bank experience coming out of the pandemic occur, then we stabilized and now we're beginning to grow again. We're pretty excited about that.

Operator: Thank you all for joining us. Have a great day.