Q3 2024 The Bank of NT Butterfield & Son Ltd Earnings Call
Good morning, My name is sovereign and I will be your conference operator for today.
At this time I would like to welcome everyone to the third quarter 'twenty to 'twenty four earnings call for the bank of N T. Butterfield <unk> son limited.
I would now like to turn the call over to new oil fields, but.
Speaker Change: He was head of Investor Relations.
Speaker Change: Please go ahead. Thank you operator, good morning, everyone and thank you for joining US today, we will be reviewing Butterfield third quarter 2024 financial results.
Noah Fields: On the call I'm joined by Michael Collins, Butterfield, Chairman and Chief Executive Officer, Craig Bridgewater Group, Chief Financial Officer, and Michael Schrum, President and group Chief Risk Officer.
Speaker Change: Following their prepared remarks, we will open the call up for a question and answer session.
Speaker Change: Yesterday afternoon, we issued a press release announcing our third quarter 2024 results. The press release and financial statements along with a slide presentation that we will refer to during our remarks on this call are available on the Investor Relations section of our website at Www Dot Butterfield group Dot com.
Speaker Change: Before I turn the call over to Michael Collins, I would like to remind everyone that today's discussion will refer to certain non-GAAP measures, which we believe are important in evaluating the company's performance or.
Speaker Change: A reconciliation of these measures to U S. GAAP. Please refer to the earnings press release and slide presentation.
Speaker Change: Today's call and associated materials may also contain certain forward looking statements, which are subject to risks uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements.
Speaker Change: Additional information regarding these risks can be found in our SEC filings I will now turn the call over to Michael calls.
Michael: Thank you.
Michael: Thanks to everyone joining the call today, Butterfield third quarter operational performance and profitability continued to be strong.
<unk> success is a result of our client focused products and services, our solid balance sheet, a focus on efficiency capital management and an experienced management team.
Michael: In addition, our island based deposit funding and diversified revenue streams continue to be resilient.
Michael: Butterfield is a market leader for banking and private trust in Bermuda, and Cayman Islands, with an expanding mass affluent banking private trust offerings in the channel Islands.
Michael: We also provide specialised financial services in the Bahamas, Switzerland, Singapore, and the United Kingdom, where we provide high end mortgage lending in prime Central London.
I will now turn to the third quarter highlights on page four Butterfield.
BARDA field reported strong financial results in the third quarter with net income of $52 $7 million.
Michael: Core net income of $52 $8 million.
Michael: We reported core earnings per share of $1.16.
Michael: With a core return on average tangible common equity of 22, 5% in the third quarter.
Michael: The net interest margin was 261% in the third quarter, a decrease of three basis points from the prior quarter.
Michael: With the cost of deposits driving two basis point to 191 basis points from the prior quarter.
Michael: The net interest margin was marginally lower than the prior quarter due to smaller deposit cost increases, which outpaced asset repricing slightly.
Michael: The board has again approved a quarterly cash dividend <unk> 44 per share.
Michael: We also continued to repurchase shares during the quarter purchasing a total of 1 million shares at an average price of $37 per share.
Michael: I will now turn the call over to Craig for details on the third quarter.
Craig Bridgewater: Thank you Michael and good morning.
Craig Bridgewater: On slide six we provide a summary of net interest income and net interest margin.
Craig Bridgewater: The third quarter, we reported increased net interest income before provision for credit losses of $88 $1 million.
Craig Bridgewater: During the quarter net interest income benefited from increased average interest, earning assets, partially offset by elevated deposit costs and a decline in treasury yields due to monetary policy easing.
Craig Bridgewater: Net interest margin was three basis points lower at $2 six 1% in the third quarter of 2024.
Craig Bridgewater: Customers continued to yield seeking activity, resulting in some continued mix shift to term deposits and therefore, a modest increase in the cost of deposits.
Craig Bridgewater: The yield on Treasury assets was lower as market interest rates declined over the quarter, while investment yields increased as we continue to invest the proceeds from maturities and some excess liquidity into higher yielding assets.
Craig Bridgewater: Average interest, earning assets in the third quarter of $13 4 billion with subsequent six sequentially higher by $114 million or <unk>, 9% than the prior quarter driven by increased average deposits, which were higher primarily due to the FX translation of a stronger British pound.
Craig Bridgewater: Treasury yields were 12 basis points lower at $4 six 6%, while average investment yields were nine basis points higher at 239%.
Craig Bridgewater: During the quarter the bank continued to reinvest into a mix of U S Agency MBS securities at medium term U S treasuries.
Craig Bridgewater: Average investment balances increased by $66 6 million to $5 to $4 billion compared to the prior quarter as we continue to deploy excess liquidity.
Craig Bridgewater: Slide seven provides a summary of noninterest income, which totaled $56 million in mothers a modest increase pressures the prior quarter, primarily due to increased card volume and loan prepayment fees as well as higher income from asset management.
Craig Bridgewater: Noninterest income continues to be a stable and capital efficient source of revenue through the cycle with a fee income ratio of 39, 2% in this quarter.
Craig Bridgewater: On slide eight we present core noninterest expenses total core noninterest expenses were $88 6 million, a one 8% decrease compared to $19 3 million in the prior quarter as we anticipated.
Craig Bridgewater: The decrease is primarily due to lower professional services costs.
Craig Bridgewater: Core noninterest expenses were within our quarterly expectations and we continue to estimate a similar a similar level of core expenses for the remainder of 2024.
As we communicated during the cold last quarter, our expense run rate includes incremental increases over last year due to the amortization and servicing of our new cloud based it investments and core banking system and branch upgrades as well as the cost of our new colleague servicing the quiet book of Trust assets.
Craig Bridgewater: We are also continuing to benefit from the group wide cost restructure announced in third quarter of 2023.
Speaker Change: I will now turn the call over to Michael Schrum to review the balance sheet.
Michael Schrum: Thank you Craig Slide nine shows the Butterfield <unk> balance sheet remains liquid and conservatively positioned.
Michael Schrum: Period end deposit balances increased to $12 7 billion from $12 5 billion in the prior quarter end.
Michael Schrum: And $12 billion at the end of 2023.
Michael Schrum: This continues to demonstrate the diversified nature of Butterfields markets and deposit base.
Michael Schrum: As mentioned previously and as can be seen from this quarter average versus period end deposit levels.
Michael Schrum: It can be a significant deposit movements from quarter to quarter.
Michael Schrum: Due to large the large trust and fund clients managing their normal commercial flows.
Michael Schrum: In addition, this quarter the strength of the pound versus the dollar contributed to an elevated period end balance sheet.
Michael Schrum: Butterfield slowest density of 33, 2% continues to reflect the regulatory capital efficiency of the balance sheet.
Michael Schrum: On Slide 10, we show that Butterfield continues to have a strong overall asset quality with low credit risk in the investment portfolio.
Michael Schrum: Which is 100% comprised of double AA or higher rated U S government guaranteed agency securities.
Michael Schrum: But it feels loan asset quality continues to be adequate.
Michael Schrum: We remain well collateralized and continue to work closely with clients to help them meet their obligations.
Michael Schrum: The net charge off rate of three basis points and non accrual loans of one 9% of gross loans remained slow along with an allowance for credit losses coverage ratio of 0.6%.
Michael Schrum: As discussed last quarter, we do expect that pass through and accruing loans will continue to be somewhat elevated over the next few quarters due to a sizable legacy hospitality facility in Bermuda working through a receivership and sale process, which we expect to conclude late this year.
Michael Schrum: Yeah.
Michael Schrum: As a reminder, butterfields loan portfolio continues to include 69%, a full recourse residential mortgages of which 80% have loan to values below 70%.
Michael Schrum:
Michael Schrum: On slide 11, we present, the average cash and securities balances with a summary of interest rate sensitivity.
Michael Schrum: Asset sensitivity increased slightly in the third quarter. After recent monetary policy easing.
Michael Schrum: While the duration remained stable.
Michael Schrum: We continue to expect improvement with additional burn down of OCI over the next 12 to 24 months.
Michael Schrum: Net unrealized losses in the portfolio are included in OCI.
Michael Schrum: $117 $1 million at the end of the third quarter, an improvement of $59 $7 million or 34% over the prior quarter.
Michael Schrum: Slide 12 summarizes regulatory leverage capital levels.
Michael Schrum: Butterfield capital levels continues to be conservatively above regulatory requirements.
Michael Schrum: We also continue to see tangible book value per share accretion and during this quarter, we saw an increase of nine 3% to $21.90.
Michael Schrum: As market interest rates declined and unrealized losses improved.
Speaker Change: I will now turn the call back to Michael Collins.
Michael Collins: Thank you Michael.
Michael Collins: We continue to believe we are located in the best in class offshore financial jurisdictions with opportunities to selectively grow through M&A and organic business development, our balance sheet and liquidity levels are well suited for our business and regulatory needs.
Michael Collins: Our capital efficient fee businesses provide leading products and services and our tailored to meet the needs of our island base clientele.
Michael Collins: We continue to focus on enhancing efficiency and expect to strategically manage expenses as interest rates decline.
Capital management has been an important tool for us as we continue to generate significant earnings which can support the cash dividends and organic growth finance potential acquisitions and repurchased common shares.
Michael Collins: We remain well positioned to profitably grow at least the needs of all stakeholders.
Michael Collins: Supporting value for shareholders. Thank you and with that we'd be happy to take your questions operator.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question you May press Star then one on your telephone keypad.
Speaker Change: If youre using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If I had any time your question has been addressed and you would like to withdraw your question. Please.
Speaker Change: Yes, Scott.
Speaker Change: At this time, we will pass momentarily to assemble our roster.
Speaker Change: Our first question.
Speaker Change: David Feaster from Raymond James Please go ahead.
Hey, good morning, everybody.
Speaker Change: Good morning, David David I wanted to start on the deposit side we've.
David Feaster: We've talked in the past about these transitory deposits that you had been expecting to move out I'm curious, where we are in that.
Speaker Change: And you know me deposit balances have held up much better than we expected obviously currency was a tailwind, but you know again the deposit balances have been much stronger than we had expected just kind of curious.
Speaker Change: Where are we on those transitory deposits in and where you're having success driving core deposit growth. Obviously the channel Islands has been a.
Speaker Change: Pretty strong, but just kind of curious what you're seeing on that front.
Speaker Change: Yes, Hi, David it's correct, so I'll start out.
Speaker Change: I think you're still kind of have those deposits that we consider at risk of leaving the bank.
Speaker Change: That has kind of taken a bit longer to leave particularly that one particular facility that we had a customer that we had.
Speaker Change: That's in liquidation.
Speaker Change: See what ships so that's gonna be steel scope to leave at some point.
Speaker Change: But I think what we saw over the quarter, we actually saw quite a bit of movement in deposit balances over the quarter.
Speaker Change: <unk> kind of period end balances to what the average as you can see there is a quite a quite a bit of a difference so.
So we did kind of dipped down close to kind of the high end of our range at quarter end, we had some kind of some funds going on that have since been deployed by those those customers.
Speaker Change: So we do have some customers that are activating their assets as well.
Speaker Change: Go along so.
Speaker Change: A good example, where as you know we have a startup company that didn't came in that had some capital that came in.
Speaker Change: That came in on our balance sheet and then subsequent has been deployed in order to to fund the operations of that startup company.
Speaker Change: So we continue to see.
Kind of deposits kind of float in and out and to be activated by clients over time, but having said that we still do have some deposits that we are tracking and we do it we do expect to leave it at some point.
Speaker Change: Okay. So so some of these deposits you you wouldn't expect much in the way of you know maybe we see the balance sheet actually shrink from where are kind of remained relatively steady quarter over quarter. I'm just kind of curious how you think about how do you think about that with those deposits has fallen out.
Speaker Change: Yes, yes.
Speaker Change: The expectation, we think that I think I think the guidance that we gave is still still about it.
Speaker Change: Depending on what those costs.
Speaker Change: I guess just to answer your question from earlier in regards to kind of deposit gathering activity, particularly internal audits.
Speaker Change: They are having.
Some successes there.
Speaker Change: So you can see deposits have increased although a bit of that or much of that is also attributable to the strengthening of the British pound as well.
Speaker Change: China turnaround in segment, but having said that beyond the underlying volumes are increasing and the pipeline that they have there is increasing as well and so we are seeing some success in that market.
Speaker Change: Okay.
Speaker Change: Okay. That's great and then you know you touched on credit a bit you know we have seen some credit migration I'm just kind of curious what you're hearing and seeing from your mortgage borrowers and the health of the.
Speaker Change: Housing market in your jurisdictions and.
Speaker Change: And the strategy for work out for these borrowers I know you have.
Speaker Change: We've done a decent amount move into fixed rate, but is down rates kind of solve this issue for a lot of these folks and and you know this is kind of the worst it's going to get you know what it will 50 to 100 basis points cut start, giving some of these guys repreve in and improve the credit quality and for them.
Speaker Change: Hello.
Michael Schrum: Yes, Thanks, David It's Michael scrum, so yeah, I mean, you're right I mean, I think what we're seeing across all of our lending markets as the pipeline remains solid.
Speaker Change: And do you expect some additional lending opportunities.
Speaker Change: Rates start to moderate so that's more around a front park rear.
Speaker Change: We remain consistently conservative in terms of our underwriting standards across all the markets.
Speaker Change: In terms of the back book or their their credit aging in migration as you mentioned, that's kind of coming from the existing book.
Particularly in Bermuda as we mentioned, we continue working through our legacy hospitality facility.
Speaker Change: Well, we expect that to conclude with a sale this quarter and that would result in a full repayment to the bank.
Speaker Change: And then in our Prime Central London, Betsy Park, a we've had a couple of sort of sizable facilities, which were expected to be repaid following either refinancing or sale of the property.
Speaker Change: And some of these are delayed a little bit.
Speaker Change: And we continue to work with the borrowers and remain.
Speaker Change: Really well collateralized in all cases, because the underwriting in London is.
Speaker Change: 665, LTV and there's sort of three to five year facilities.
Speaker Change: So there's some good plans in place there I think overall, we expect this to be more of a timing issue.
Speaker Change: And there remains some uncertainty around with changes being proposed by the new U K government and the upcoming budget here on the 30th October.
Speaker Change: So I think summarizing we continue to expect sort of some pass through too.
Speaker Change: To be somewhat elevated this quarter again, but I'm sort of normalize into 2025.
Speaker Change: And David I would just in terms of in terms of valuations are you know property.
Speaker Change: <unk> did all three island I think it's fair to say for different reasons. All three elements have do you have.
Speaker Change: Jurisdictions do have housing shortages.
Speaker Change: There's not enough supply a lot of delayed demand a bermuda reinsurance is still going well.
Speaker Change: So a lot of ex Pats running houses so house prices are pretty steady climbing back caymans population has increased to 80 788000.
Speaker Change: So they're running hard just to keep the condo stock up to be able to provide accommodations for people. So that that is happening well in Guernsey and Jersey, it's always been a tough housing market. So islands, all have limited supply of land and if you have sort of booming industries in all three jurisdictions. It holds valuations up so were.
Speaker Change: Very comfortable where our ltvs are.
Speaker Change: That's great.
Speaker Change: David is correct.
Speaker Change: Just wanted to touch on one thing and kind of you kind of alluded to is around just this customers.
Speaker Change: Potentially in any financial difficulties. So we're not again, we're not seeing any kind of.
Speaker Change: Huge increases in customers were under financial difficulty.
Speaker Change: I mean, if you look at the financials, you would see kind of does that elevated balance, but that's a particular facility.
Speaker Change: That is currently being worked out.
Speaker Change: We don't expect to have a lowest thereby overall kind of financial difficulty as we kind of talked about in previous calls.
Speaker Change: Hasn't been kind of how it hasnt increased significantly as one would expect given the high interest rate environment.
Speaker Change: But I guess to your point there is no customers, we will be happy to see rates coming down and is going to provide some relief, but again, we're not seeing that systemically coming through our book.
Speaker Change: That's great.
Speaker Change: And then maybe just last one I wanted to touch on pretty solid.
Speaker Change: And the trust business, you know with AUR and AUC up pretty pretty solid.
Speaker Change: Curious what you're seeing there.
Speaker Change: You know where you haven't success and just kind of how you think about the trust line as we look forward.
Speaker Change: Yeah sure I think it's it's a multi jurisdictional business that focuses on mobile wealth around the world. So globally wealthy families and whenever there is a strike anywhere in the world or whenever there is political.
Speaker Change: Political dissidents and different different locations I think people start to plan and manage their assets.
Speaker Change: A lot of what we're proud of that as Harriss, Singapore has gone in terms of the credit Suisse acquisition, It's really bedded down very quickly Michael scrum and I were just out there meeting with the team and intermediaries and and trust clients.
Speaker Change: It's a very settled we're a top five trust company in Singapore, now and you know, we're making decent money for that for the first time there. So I think we chose the right jurisdiction that we also.
Speaker Change: Our trust clients in Hong Kong, but you know clearly Singapore is the place to actually have the company.
Speaker Change: Today, So that's going very well I think that will that part of the business will continue to drive the global growth of our trust operation.
Speaker Change: Okay, great. Thanks, everybody.
Speaker Change: Thanks.
Speaker Change: Thank you.
Speaker Change: The next question comes from.
Speaker Change: Next from Goldman Sachs. Please go ahead.
Speaker Change: Hey, guys I. Appreciate you taking the question just a question on kind of deposit costs and margin dynamics. It seems like getting pretty close to a peak here in deposit costs were relatively stable sequentially. So just how are you kind of thinking about the flow through sort of whatever is left of backlog term deposit repricing versus pricing actions you guys expect.
Speaker Change: Take over the next couple of quarters and just how do you think about the trajectory of overall deposit costs from here. Thanks.
Speaker Change: Alright, Thanks, Bill good morning.
Speaker Change: As you pointed out we've actually seen a slowdown in the increase of.
Speaker Change: The cost of deposits. So you can see that it kind of moves two basis points over the last quarter.
Speaker Change: So that's it.
Speaker Change: It's good to actually see that slowing down.
And we have been very focused on the appropriate cost of course being a pricing of deposits as well we will realize over the last quarter. So we did do a kind of a market review. We always we are continuously looking at the market kind of what we're paying what our competition is paying and making sure. We're in the right.
Speaker Change: <unk> Park when it comes to your pricing of deposits. So we actually did a review prior to the cut in the fed funds rate.
Speaker Change: Immediately after the fed funds rate, we also incorporated that into our pricing as well. So overall, we're kind of seeing a decrease in pricing of deposits. Obviously, we'll kind of look at individual relationships.
Speaker Change: If it needs enhanced pricing, but overall.
Speaker Change: It probably is a published rates.
Speaker Change: So it's coming down and that's been quite effective it's been well received I think you know as we kind of get into the kind of a downward cycle.
Speaker Change: We will be kind of changing their expectations around the yield you're expecting on deposits.
Speaker Change: And we will be following along with that as well so.
Speaker Change: We're seeing some some some good results coming from that and we would expect it to continue to be on a downward trajectory trajectory.
Speaker Change: Got it well, it's Michael Scrubber, just on I mean, if you put that together with the asset repricing. We don't have very much in terms of the fixed to floating re pricing coming up in the next sort of three to four quarters here.
Speaker Change: A few.
Speaker Change: New facilities.
Speaker Change: I expected to reprice, but generally speaking there's going to be a lag in loan asset repricing from fixed to either new fixed or floating.
Speaker Change: Which is obviously very accretive to NIM.
Speaker Change: The investment assets are trending up in terms of margin that we're getting on those and yield to maturity.
Speaker Change:
Speaker Change: So if you put it altogether, we're still asset sensitive a little bit elevated this quarter because of the large cash inflows on the on our balance sheet.
Speaker Change: But we will expect some NIM compression if we get a down 100 over the next year.
Speaker Change: Right.
Speaker Change: That's that's part of the business cycle, I guess and we will.
Speaker Change: We will drive our.
Speaker Change: I'll focus on expenses and very much focused on.
Speaker Change: Healing the back book on the credit side too to.
Speaker Change: To make sure we balance that out.
Speaker Change: Got it.
Speaker Change: And then just a question on capital allocation.
Speaker Change: <unk> ratio is continuing to kind of tick up over time.
Speaker Change: You mentioned the burned out of a sci, which should be I hope for their tenants. So just what how are you guys kind of thinking about the potential to get more aggressive on capital return and just maybe if you could touch on the M&A environment right now.
Speaker Change: Are you thinking it's appropriate to keep more dry powder in the near term or would you look to get kind of more aggressive and deploying the capital base. Thanks. Appreciate you taking the questions today.
Speaker Change: Sure. Thanks, So I think obviously we.
Speaker Change: In terms of sequence dividends first and then acquisitions and then if we can't find good acquisitions. Then obviously you see us today buying back a lot of stock. So we bought back a million this quarter and depending on price and valuation will continue to buy back shares. We we have gone through an extensive process.
Speaker Change: With a potential trust acquisition, but at the end it came down to reward comfortable with one of their particular jurisdictions from a risk appetite perspective. So.
Speaker Change: We did quite a bit of work there.
Speaker Change: And we're continuing to having constructive conversations across the board as I said with the credit Suisse acquisition, you know, obviously, we're getting more and more inbound inquiries are because we're again one of the few buyers in the market today. So that will continue nothing immediate on the horizon. So that's that's why you're seeing his buyback shares, but maybe Michael can add to it.
Yes, I mean, as Michael said, we havent it Hasnt really changed I know I know, we're sort of at the high end of our range on the TCE under leveraged capital, obviously deposits have been flowing in and off the balance sheet here.
Speaker Change: We're not expecting a lot of capital consumption from organic growth or credit migration and so we're in a fortunate position here.
We do have a little bit of excess obviously.
Speaker Change: Our combined payout ratio is kind of up there with the with the cash dividend and share buyback.
Speaker Change: That's been a very helpful tool during this during this quarter.
Speaker Change: And if we do get sizable trust acquisition, we expect that we would be able to funded with excess capital at the moment.
Speaker Change: So that's a positive and there are some.
Speaker Change: Targets out there that we've been pursuing for quite a while.
So it's kind of a wait and see nothing to report at the moment, but good.
Good dialogue going on.
Speaker Change: Got it all very helpful. I appreciate you taking the questions today.
Thanks Bill.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: The next question comes from Tim <unk> from <unk>. Please go ahead.
Speaker Change: Hey, good morning. Thank you guys for taking my question.
Speaker Change: Hey, good morning, Tim.
Tim: I have a quick follow up on kind of your last comments on potential acquisitions are there any jurisdiction that you.
Tim: You have your eye on places like to expand into.
Tim: And are there any of your current jurisdictions, where you see a lot of room for you to grow and maybe would want to expand your assets there given acquisition.
Speaker Change: Sure I mean, obviously, we've been in offshore banking, a long time and so we have very strong views about the differentiation between offshore jurisdictions. So.
Speaker Change: We're very comfortable.
Speaker Change: Banking and Bermuda Cayman and.
Speaker Change: And guarantee in Jersey.
Speaker Change: I would doubt you would see us go beyond that footprint, because we need to know the markets that that were banking and they're all very different and we know if we were to be interested in Singapore and it was a banking marker we couldnt compete in that market. There. The banks are excellent. So so I think we're in those four jurisdictions in banking and I think on the trust side. We're also very key.
Speaker Change: Paul.
In Bermuda, Cayman, Bahamas guarantee potentially Jersey.
Speaker Change: Geneva, certainly Singapore. So those are those are the markets will continue to focus on as I said wed like to continue to grow trust in Singapore.
Speaker Change: We are quite big in Bermuda already we could there is room for expansion and trusting came in in the channel Islands. So we'll keep focused on that but.
Just to differentiate between other jurisdictions.
Speaker Change: Not interested in jurisdictions like a <unk> and that sort of stuff, where we know where we're good and these are all English common law jurisdictions that go to the Privy Council, which is why they exist and.
Speaker Change: The legal framework that we understand and are comfortable with so I would say expansion on the trust side, Singapore and hopefully in the channel Islands.
Speaker Change: Okay, great that makes sense and.
Speaker Change: For your expense outlook.
Youre projecting expenses to be pretty pretty similar to Q4 as they were in Q3.
Speaker Change: The outlook for 2020, and what are sort of.
Speaker Change: The investment needs.
Speaker Change: To invest doctor.
Speaker Change: Good amount of investment in the.
Speaker Change: First half of this year.
Speaker Change: Yes, Hi, Hi, Tim It's correct. So yeah, you're right I think we're expecting expenses to come in kind of at similar levels as we saw this quarter.
Speaker Change: Having said that we still see like everybody else, we still see some headwinds when it comes to inflation inflation in those kind of services as well as salaries as well.
Speaker Change: So we're working hard to to monitor that and continuing continuing our strategy around making sure. We have the right people and the right jurisdictions and if it's not client facing putting.
Speaker Change: Putting it into our service centers.
Speaker Change: So we will continue to monitor that but.
Speaker Change: I can see us having.
Speaker Change: Utah kind of pressures on expenses as well and.
Speaker Change: And if we roll forward into 2025, I don't see that changing.
Speaker Change: We're actually going through our annual operating planning process at the moment.
Speaker Change: So let me have our Q4 call we can give some more guidance around that and where that's coming out.
Speaker Change: But if we're putting it together, but if I had to look at it kind of a big picture is going to still be around kind of inflation around salaries.
Speaker Change: Making further investments into our technology.
Speaker Change: Capabilities.
Speaker Change: Yes.
Speaker Change: As you noted that you've kind of invested significantly into technology.
Speaker Change: Kind of court, new core banking system et cetera, now we are talking internally about how do we leverage that there's those that meet that new software.
Speaker Change: To be able to give a better client experience. So that's what we'd be making our investments.
Speaker Change: And then.
Speaker Change: We've talked about it before the momentum much of this is now a software service as opposed to on Prem.
Speaker Change: So it just kind of seen the geography of where these expenses of lending. So there is not no longer amortization period of seven to 10 years now we're looking at note on a regular basis five year kind of service contracts, which changes things a bit so that's going to be another headwind coming through this holiday to treat these expenses from a P&L perspective.
Speaker Change: But we're going to make those investments to enhance the client experience enhance efficiency and also kind of have people working in the right jurisdictions when it comes to servicing our clients.
Speaker Change: Okay got it that's great color. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Ladies and gentlemen that concludes our question and answer session I would now like to turn the conference back over to the management for any closing remarks.
Speaker Change: Thank you very much and thanks to everyone for dialing in today, we look forward to speaking with you again next quarter and hope everyone has a great day.
Speaker Change: Thank you.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.