Q2 2025 Northeast Bank Earnings Call
Okay.
Welcome to the northeast Bank second quarter fiscal year 2025 earnings call.
Judy: My name is Judy and I will be your operator for todays call.
This call is being recorded.
Speaker Change: With us today from the Bank is Rick Wayne, President and Chief Executive Officer, Richard Culley, Chief Financial Officer, and Pat Dignan Executive.
Pat Dignan: Executive Vice President and Chief operating Officer.
Pat Dignan: Prior to the call an investor presentation was up places to the bank's website, which we will reference in this morning's call.
Pat Dignan: The presentation can be accessed at the Investor Relations section of North East Red Dot com under events and presentations.
Pat Dignan: 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.
Pat Dignan: 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.
Pat Dignan: As a reminder, the conference is being recorded.
Pat Dignan: Please note that this presentation contains forward looking statements about northeast bank.
Pat Dignan: Looking statements are based upon the current expectations.
Pat Dignan: Of course, these banks management.
Pat Dignan: And are subject to risks and uncertainties.
Speaker Change: Actual results may differ materially from those discussed in the forward looking statements North East Bank does not undertake any obligation to update any forward looking statements I will now turn the call over to Rick Wayne Mr. Wang you may begin.
Rick Wang: Thank you very much and good morning to all of you.
Rick Wang: Listening on this call.
Rick Wang: I'm going to start.
Rick Wang: Going over some of the fifth.
Rick Wang: Financial highlights another important matters during the.
Rick Wang: Quarter.
Speaker Change: Following my comments Richard Cohen, our CFO will then spend some time going over certain.
Hum important financial matters and following.
Speaker Change: Richard its presentation Pat Dignan.
Speaker Change: Who is our chief operating officer, and importantly, our Chief Credit Officer.
Speaker Change: Discuss the loan activity in our various.
Speaker Change: Well.
Speaker Change: Wines, including purchases and originations from our National lending group and also SBA activity and following all of that we would be happy to.
Speaker Change: The answer any.
Speaker Change: Of your questions.
Speaker Change: Let me just start off by saying, we think it was a really great quarter.
Speaker Change: You will hear in some of the math.
Speaker Change: Matters I highlight on the financial highlights, which page one of the investor deck that.
Speaker Change: There were many records broken and this quarter.
Speaker Change: And so with that let me see.
Speaker Change: Again to point out that we had $361 million.
Well by them.
Speaker Change: Which included.
Speaker Change:
Speaker Change: $14 million invested an approximately $15 million.
Speaker Change: P D on purchased loans.
And Pat will comment on the.
Speaker Change: The lumpiness.
Speaker Change: Purchase activity.
Speaker Change: We think so.
Speaker Change: We should look at that on an annual basis much more than quarter to quarter now you'll hear of a record on originations we originated $246 million in there.
Speaker Change: Quarter.
Speaker Change: And again pedal provide some commentary about what the what.
Speaker Change: What the pipeline looks like.
Speaker Change: Well for us.
Speaker Change: We also.
Speaker Change: And at another record and SBA.
Speaker Change: Origination activity.
Speaker Change: We originated 100.
Speaker Change: $3 million.
Speaker Change: SBA loans.
Speaker Change: Of which 64.5 million were sold should point out that that was not necessarily the production in the quarter some of it related to originations in the prior quarter.
Speaker Change: But those loans sold generated a gain of five $6 million.
Speaker Change: I want to also point out that our.
Speaker Change: Net income of $22 $4 million.
Speaker Change: Was a record quarter for earnings.
Speaker Change: Excluding the third quarter of fiscal 'twenty one.
Speaker Change: We had significant.
Speaker Change: Income from the sale of Triple P loans, so if you exclude that.
$22 4 million was a record another record is our base net interest income.
Speaker Change: Which was $45 $6 million for the quarter.
Speaker Change:
Another record as I mentioned.
Speaker Change: Tangible book value.
Speaker Change: For the quarter increased by $4.49 or a 9% since September 30 that is since the linked quarter.
Speaker Change: Of which it was broken.
Speaker Change: Broken down.
Speaker Change: Two hours with 74 cents.
Speaker Change: From basic earnings plus the benefit of <unk>.
Speaker Change: <unk> sales, which were sold at.
Speaker Change: At a price higher than tangible.
Speaker Change: Book value, which increased.
Speaker Change: The tangible book value on a per share basis by $1 75.
Speaker Change: If we go back and we look to the increase in tangible book value.
Speaker Change: From June 30, which is our fiscal year end or six months.
Speaker Change: From the 12 31 quarter tangible book value increased by $5.95.
Speaker Change: Or.
Speaker Change: 13%.
Speaker Change: Over the six month period.
Speaker Change: I guess again also a combination of.
Speaker Change:
Speaker Change: Earnings per share.
Speaker Change: Which for that time period, the six months was $4 96, and also the benefit of.
Speaker Change:
Speaker Change: Selling stock.
Speaker Change: Yes.
Speaker Change: And at the end of the quarter Richard will talk about this much more.
Speaker Change: Capacity based on our capital.
Speaker Change: <unk> was $856 million.
Speaker Change: At the end of December or as they say a lot of dry powder. So I'm not sure that's a good metaphor anymore, but.
Speaker Change: $856 million of lung capacity I want to spend a few minutes talking about <unk>.
Speaker Change: Asset quality, which of course is near and Dear to.
Speaker Change: Our hearts.
Speaker Change: I'd say, our those at the bank and you our investors.
Speaker Change: Yeah.
Speaker Change: We had if he is on page seven I'm looking at some information there.
I'm not going to go through each of the four slides I'd point out that.
Speaker Change: The ratio of nonperforming assets to assets and nonperforming loans to loans have declined.
Speaker Change: From the linked quarter.
Speaker Change: Nonperforming loans to total loans.
Speaker Change: 84 basis points down from 106 basis points.
And to the.
Speaker Change: Chart to the right of that on the same page.
Speaker Change: Classified commercial loans have declined from $31 1 million.
Speaker Change: <unk> six point.
Speaker Change: $6 million.
Speaker Change: That is one point I wanted to make if we go on to page eight.
Speaker Change: You can see that.
Speaker Change: Nonperforming assets declined.
Decline from $37 million.
Speaker Change: 231.
Speaker Change: Million.
Speaker Change: Rounding there were 6% a reduction of about $6 million or roughly 16% largely due to the payoff of two <unk>.
Speaker Change: <unk> totaling five point <unk>.
Speaker Change: $7 million.
Speaker Change: And then I wanted to go.
Speaker Change: So page 12.
Speaker Change: And pointed out that.
Speaker Change:
Speaker Change: We take a look at the weighted average.
Seasoning of our loan portfolio.
Speaker Change: This is on our purchased portfolio is $5 2 million.
Speaker Change: Our family of $5 2 million years, that's a long time.
Speaker Change: Five two years.
Speaker Change: And you can see we've now added one more calm to what you have seen previously.
Speaker Change: We divide up the years we've.
Speaker Change: We've added a breakdown we used to be just everything from 2019.
Speaker Change: Yes, we break that down into 2019 2021.
And then 2022 and later and you can see that only 17% of our purchased loan book was originated 2022 or later.
Speaker Change: And 83%.
Speaker Change: It was.
Speaker Change: Previous to 2021, and you can see it broken up by the <unk>.
Speaker Change: Columns.
Richard: And with that I would ask Richard to.
Rick Wang: Again, thank you Richard Thanks, very much Rick so I am going to speak about two principle themes I'm going to speak about interest rates as well as the bank's growth capacity.
Richard: As far as interest rates are concerned.
Rick Wang: We have mentioned on previous calls that we monitor our interest rate risk.
Rick Wang: If it to remain relatively neutral if rates were to increase or decrease.
Rick Wang: What has happened is we have been slightly positively.
Rick Wang: <unk> benefited from the fact that rates have decreased.
Rick Wang: In particular as Youll see on slide 15.
Rick Wang: The average cost of deposits for the second quarter was $4 one 5%.
Rick Wang: Contrast that with for three 4% in the prior quarter in other words, the average cost decreased 19 basis points quarter on quarter.
Rick Wang: I think is worth pointing out is that the spot cost of funding at 12 31 is 389% that sale is down a further 26 basis points.
Rick Wang: We have noted in the past and continue to see that as a liabilities reprice. They do so with the delay, but we are relatively well matched in a rates down environment.
Rick Wang: We've seen that play through in our interest rates and our net interest margin.
Rick Wang: Turning now to the two key aspects that go in.
Rick Wang: Label the bank too.
Rick Wang: Grow responsibly should the opportunity arise to add quality assets at favorable rates those two factors, our liquidity and capital.
Rick Wang: Let me start with liquidity.
Rick Wang: Our liquidity position improved.
Rick Wang: Which in turn enables scope for growth as of December 31, 2020 for our on balance sheet liquidity with $430 million, that's an increase compared to $379 million as at September <unk>.
Rick Wang: Importantly, our off balance sheet capacity sits at over $1 billion and that is up very significantly and in turn helps in the event that we have an opportunity to add loans whether through purchase origination.
Rick Wang: Turning now to the second piece, which is capital.
Rick Wang: Our leverage ratio.
Rick Wang: At 11, 2% for the quarter and our total capital ratio.
Rick Wang: 13, 9% as at the end of the quarter.
Rick Wang: This was a healthy level of capital, which enables us to gross significantly, particularly in light of the fact that at the end of September we had a significant increase.
Rick Wang: <unk> loan portfolio.
Rick Wang: The material purchases that took place at that date.
Speaker Change: The reason for the healthy capital notwithstanding the significant growth in the book arises as Rick had said before from both the ATM.
Rick Wang: At the money offering as well as our retained earnings.
Rick Wang: Thinking about that in particular, we have been approved for a further $75 million of ATM of which $69 million remains to be utilized as and when the opportunity.
Rick Wang: It comes forth.
Rick Wang: From a loan capacity perspective.
Rick Wang: Rick has already mentioned the $856 million and that capacity increases as we retained earnings and continue to grow.
Rick Wang: In summary should the opportunities present themselves, we're comfortable that liquidity as well as our capital will enable us.
Speaker Change: Let me turn it over now to Pat Dignan. Thanks.
Pat Dignan: Thanks Richard.
Pat Dignan: As Rick pointed out this was a good quarter for us with record volume in both our SBA and origination verticals for purchase loans, we bought 70 loans in three transactions with gross balances of $14 8 million and at a purchase price of $14 million or <unk> 91.
Pat Dignan: The weighted average loan to value of these loans was around 55% at our purchase price and were mostly small balance with a variety of collateral collateral types and located in 25 states.
Pat Dignan: Yes.
Pat Dignan: Although purchase loan volumes were below average this quarter.
Rick Wang: It really should be looked at it annually as Rick pointed out and it's not indicative of a diminished appetite on our part or have a slowing market on.
Rick Wang: On the contrary, we saw a lot of purchase loan volume this quarter, including several sizable portfolios in our strike zone, most of which were either pulled or delayed by the sellers.
Rick Wang: There were a couple of larger clean multifamily portfolios that did trade, but it very skinny yields and to groups with securitization exits.
Rick Wang: We'll see whether this represents a shift in market pricing for larger pools or one off for just the right deal at just the right time.
Rick Wang: In any event there is a lot of volume out there we remain optimistic for 2025 will be a good year for loan purchases.
Rick Wang: Unlike loan purchasing loan originations is less lumpy.
Rick Wang: And SBA lending, we closed just over $100 million of loans this quarter up from $82 million in the previous quarter.
Rick Wang: This includes 917 loans with an average size of 110000.
Rick Wang: And weighted average interest rates of 10, 85%.
Rick Wang: Slide 14 illustrates the growth in this business over the past few quarters and you may note here that loan sales remained roughly flat since last quarter. Despite a significant increase in loan volume.
Rick Wang: That's because we had $35 million of loan sales at the end of December that were held for sale.
Rick Wang: Should normalize over time.
Rick Wang: <unk>, our lending service provider continues to refine its marketing and technology efforts and we believe that the current level of lending are sustainable going forward.
Rick Wang: A level that puts us near the top of SBA lenders nationally, we're very excited to see this business taking off and look forward to continued growth.
Rick Wang: And our National real estate lending program, we closed $246 million for the quarter. These included 28 loans with an average balance of $8 2 million collateral types, including multifamily hospitality retail and industrial and generally located in New York, California and Florida.
Rick Wang: At origination the weighted average LTV for these loans was just over 50% in average rates were approximately eight 5%.
Rick Wang: Of particular note is the net growth of the originated portfolio as we've discussed in the past its a bit of a treadmill, given our higher rates and shorter loan terms and we've grown the originated portfolio by over 10% in the past year due to both an increase in loan volume as well as a proactive effort by our asset managers to repaying maturing loans looking.
Rick Wang: Looking forward, we're continuing to see a lot of confidence in our markets from both real estate investors and lenders and our loan pipeline is showing no indication of stall.
Rick: Thank you Rick.
Speaker Change: Thank you Richard Thank you.
Rick Wang: And now.
Rick Wang: We would be happy to entertain any questions.
Rick Wang: And any of you might have.
Rick Wang: Thank you we will now begin the question and answer session. If you have a question. Please press star one on your Touchtone phone if you wish to be removed from the queue. Please press star. One again, if you are using speaker phone you may need to pick up the handset first before pressing.
Rick Wang: The numbers once again, if you have a question. Please press star one one on your touch tone phone.
Rick Wang: Mark Fitzgibbon of Piper Sandler is online with a question. Your line is now open.
Mark Fitzgibbon: Hey, guys good morning.
Speaker Change: Good morning, Mark.
Speaker Change: Couple of questions, maybe starting with you Richard.
Pat Dignan: It looks like Youre, letting cash balances build a bit and I can only assume that that's to fund.
Pat Dignan: Loan purchases and maybe the first half of the year. How do you think that will impact the net interest margin and say the early part of 2025 and what other factors should we be thinking about as we model the margin.
Speaker Change: So I can answer part of that Mark. Thanks for the question as far as cash balances are concerned we watch that very closely because we clearly don't want to sit with excess cash, but it's important that we sit with sufficient cash on the balance sheet to.
Pat Dignan: To make sure that we are we are liquid.
Pat Dignan: So it's not so much that we're trying to accumulate excess cash but to manage it.
Pat Dignan: To an appropriate level in terms of the net interest margin the cash balance should not.
Pat Dignan: Yes.
Pat Dignan: As much of a drain on that because that of course is primarily driven by a how the liabilities repriced and the composition of those liabilities as well as whether we whether we fund longer term shortage shortage.
Pat Dignan: And how much of that is variable versus fixed.
Pat Dignan: On the on the income side of that.
Pat Dignan: On the asset perspective, there clearly is a difference in the mix of the portfolio as we for example purchased lumpy books or put on originated loans and they've got a different interest rate profiles.
Pat Dignan: I think the summary of what I'm answering for you is we don't think there is a direct link between cash and the likely path of net interest margin. It will be driven by other factors, which are of course, the composition of the assets and liabilities cash.
Pat Dignan: Casting being held at appropriate levels.
Pat Dignan: Add one thing to that.
Pat Dignan: Normally we run around 8% is our target.
Cash and short term investments and it's not always at 8% sometimes.
Pat Dignan: Typically at the quarter end, where we have.
Pat Dignan: The transactions that we are going to believe theyre going to close at the end of the quarter and sometimes they rollover into the next quarter.
Pat Dignan: I'd say that.
Pat Dignan: The answer is a normally at 8%.
Pat Dignan: We were a little bit higher than that if most likely has to do with transactions anticipated at close.
Pat Dignan: But we generally run right around 8%.
Pat Dignan: Okay of which we've done for a very long time, so that would be consistent.
Pat Dignan: The NIM is determined.
Pat Dignan: Weighting of the 8%.
Pat Dignan: Okay.
Pat Dignan: And then secondly.
Pat Dignan: Honestly had very strong volume in the SBA business.
Pat Dignan: And I know that might bump, Brian a little bit from quarter to quarter, but I was curious how youre thinking about your volumes going forward how much.
Pat Dignan: Sure.
Pat Dignan: Youre willing to grow that business, how much volume are you willing to sort of take on.
Pat Dignan: Well.
Pat Dignan: Subject to the forward looking statement, which I won't bore you by reading again.
Pat Dignan: We're very optimistic about that business.
Pat Dignan: There's a slide in here that shows that the volume.
Pat Dignan: Going back.
Pat Dignan: Five quarters on there.
Pat Dignan: We were $100 million this quarter.
Pat Dignan: I don't have it over $88 million last quarter to $82 million last quarter and then it was much lower in the preceding quarters.
Pat Dignan: The pipeline as we can.
Pat Dignan: Kind of refer to as the top of the funnel for what we're looking at with <unk> is very large.
Pat Dignan: Pat mentioned that their technology is continues to improve.
Pat Dignan: And so we think there is lots of opportunity there as to how much we want to hold I would point out that from a cap use of capital perspective.
Pat Dignan: It's really self sustaining because we generate more gain when.
Pat Dignan: When we sell off loans only required to.
Speaker Change: One of the.
Speaker Change: 18, or 20% that we retain I'd say 18 or 20% because some loans have an 85% guarantee if theyre under 150000, then over that 75% so.
Speaker Change: About 18% that were holding on.
Speaker Change: <unk>.
Speaker Change: And we're holding on to those loans.
Speaker Change: With.
Speaker Change: A good a good deal generally at prime $2 75.
Speaker Change: Which is good and we reserve roughly 3%.
Speaker Change: On the <unk>.
Speaker Change: Guaranteed portion that we hold.
Speaker Change: And there's lots of data from the SBA on these kinds of loans as to what you might expect for losses in the future we're actually.
Speaker Change: We're running better than that because our credit box is tighter.
Speaker Change: With the SBA would permit under their credit scoring.
Speaker Change: Requirements for smaller balance loans long winded way of saying we would we.
Speaker Change: We expect the business is going to grow we're happy too.
Speaker Change: Hold more of the UN guaranteed portion on our balance sheet and we think this will continue to be a meaningful revenue stream for us.
Speaker Change: Okay.
Speaker Change: Great and then I.
Speaker Change: I guess I was curious what caused the large uptick in FDIC costs this quarter what drove that.
Speaker Change: Primarily balance sheet size balance sheet growth.
Speaker Change: Okay.
Speaker Change: Super.
Mark Fitzgibbon: And then Richard would you be able to share with us the average price on the 280000 shares that you issued this quarter.
Speaker Change: Yes.
Speaker Change: We're just having a look at us and second we have handlers with us they are providing us.
Speaker Change: Okay.
Speaker Change: 90, 836 is the average price 90 836.
Speaker Change: Okay.
Speaker Change: The highlight age mark with the deck.
Speaker Change: Got it.
Speaker Change: And then last question.
Can you help us think about the outlook for expenses I know to some degree it depends upon how successful you are with loan purchases and pools et cetera, but.
Speaker Change: Any any.
Speaker Change: Help there would be much appreciate it.
Speaker Change: This quarter.
Speaker Change: It was what page is that on that was about 19 million bucks for the quarter.
Speaker Change: Which is competitive.
Speaker Change: Get the exact number so I think.
Thank you I have it now so.
Speaker Change: From memory not bad it was $19 1 million this quarter and the two preceding quarters were the last 117 $717 one.
Speaker Change: And then prior to that they were in the sixteens.
Speaker Change: Hi.
Yes.
Speaker Change: It has to be a range on this because.
Speaker Change: This reflects this extra comp and hiring more people.
Speaker Change: I think somewhere between 18% to $19 million would probably be.
Speaker Change: Good range based on what we know now.
Speaker Change: Super Thank you great quarter.
Speaker Change: Thank you very much thank you mark.
Speaker Change: <unk>.
Speaker Change: Damon Delmonte from <unk>.
Speaker Change: <unk> W is online with a question your line is open.
Speaker Change: Hey, good morning, everyone hope, you're all doing well today.
Speaker Change: Just to follow up with any expense.
Speaker Change: Great and just to follow up on the expense commentary.
Speaker Change: The higher FDIC cost I think Richard noted were basically do like the larger balance sheet. So should we kind of expect that kind of run rate going forward just given the growth this quarter and then continued growth.
Or do you feel like this is a kind of an aberration in this quarter.
Speaker Change: No.
Speaker Change: It's roughly in the right side it may come down a slight amount.
Speaker Change: Okay great.
And then.
Speaker Change: Can you just maybe talk a little bit about your your thoughts on the opportunities for the larger loan purchases with the market in construction that we've seen and we've talked about in the past kind of do you feel.
Speaker Change: That you are kind of in the negotiating stages for some increased activity here in the upcoming quarter or do you think it kind of dragged out for a little bit longer into the latter part of this calendar year.
Speaker Change: It's hard to say.
Speaker Change: Where can I have another one here at the bank had been in this business a very long time and all I can say is that there.
Speaker Change: The number of.
Speaker Change: Of pools that are available that have been that are out there.
Speaker Change: Is a lot.
Speaker Change: There seems to be a lot of M&A activity a lot of the larger institutions are looking to reposition their balance sheet.
Speaker Change: For whatever reason last quarter. There was a lot we looked at a lot and there is just a bunch of them. It just they decided not to sell it.
Speaker Change: Thank you have a time, whether it's due to pricing or are their own logistics, but.
Speaker Change: We're all I can say is we're looking at a lot we're very optimistic.
Speaker Change: Given the volume that's out there, but it's hard to say whether or not.
Speaker Change: What the competition or pricing will be when it comes to.
Speaker Change: Good day, we make a bid.
Speaker Change: Just want to amplify a little bit on Pat's comments, one is yes.
Speaker Change: David I am sure and others Mark others, you must see this there's a lot of talk of M&A activity out there.
Speaker Change: <unk> activity.
Speaker Change: As a.
Speaker Change: Typically generates opportunities too.
Speaker Change: Purchased loans, secondly, and Pat mentioned that and secondly.
Speaker Change: There's been a lot of.
Speaker Change: Equity being raised for banks, which is kind of a new phenomenon with the increased interest by investors in and bank stocks and think some of the banks that are doing that are using it as an opportunity.
Speaker Change: <unk>.
Speaker Change: <unk> repositioned their balance sheet, including.
Speaker Change: Yes.
Speaker Change: Selling commercial real estate and some loans in some cases.
Speaker Change: And so we're seeing that but I think we have to answer to your question with some humility.
Speaker Change: Cause.
Speaker Change: We expect there's going to be a lot of light and that's our expectation.
Speaker Change: Also expected win rate after cover there would be a great opportunity to buy loans as well and there wasn't.
Speaker Change: The commercial real estate loan market held up pretty well.
Speaker Change: I think one of the things that.
Speaker Change: <unk>.
Speaker Change: Is really important to understand about our opportunities is that when there are opportunities to buy it put a lot of volume on our balance sheet.
Speaker Change: In single transactions as you can do with the purchased loan business reminding you that we bought $1 billion in December of 2002, and roughly $800 million.
Speaker Change: In September of late September.
Speaker Change: Four.
Speaker Change: It's a cyclical business it usually doesn't last forever and such great volume.
Speaker Change: But we're also building a large.
Speaker Change: Commercial real estate loan origination business.
Speaker Change: Good rates low ltvs.
Speaker Change: Yeah.
Speaker Change: And good asset quality. So it's really important to understand in our business is not slow solely loan purchasing and in fact, if we went back I don't know a couple of years before December of 'twenty two.
Speaker Change: Our loan activity was more like 75% originations.
Speaker Change: Originations in 'twenty five purchases so.
Speaker Change: We're going to take advantage of the opportunities wherever we find them.
Speaker Change: Got it great appreciate that color and then just lastly.
Speaker Change: Given the national scope of the.
Speaker Change: The loan portfolios.
Speaker Change: Do you guys have any exposure to California in light of the.
Speaker Change: The massive amount of wildfires that are out there.
Pat Dignan: As such a great question and we have such a great answer Pat.
We have.
Pat Dignan: Around $1 billion of real estate in and around that area and we've looked at every single loan we had and not a single not a single one of them damaged.
Pat Dignan: And all of them we have insurance.
Pat Dignan: <unk> been damaged.
Pat Dignan: And that's because if you look at where the fires were in.
Pat Dignan: Mostly residential areas and also mostly on <unk>.
Pat Dignan: Sides of hills in canyons, where where the brittle vegetation caught fire so quickly and a lot of the real estate. We have is in the more urban.
Pat Dignan: Urban areas of Los Angeles, So Fortunately, we fared very well in this tragedy.
Pat Dignan: It's also.
Pat Dignan: Along with flooding in Florida, and other places is on our on our list of <unk>.
Pat Dignan: Concerns as we look at new opportunities.
Pat Dignan: The one thing on the prior question Damon So we're not unique it's way all banks do this of course, when we make loans are buying loans.
Pat Dignan: <unk>.
Speaker Change: Our borrowers are required to have.
Pat Dignan: Insurance for that casualty.
Pat Dignan: And we track all of that and in the event that something slipped through the cracks we have a mortgage impairment policy that gives the bank insurance protection for any of our borrowers don't have.
Fire insurance for example, so it's a horrible tragedy of course, but as Pat said.
Pat Dignan: We haven't had those probably were fortunate very fortunate, but something happened we have insurance covering all of that.
Speaker Change: Got it okay.
Pat Dignan: Hear that.
Pat Dignan: Okay.
Pat Dignan: That's all that I had for now thank you very much for taking my questions.
Pat Dignan: Thank you Damon.
Speaker Change: Thank you we have no further questions at this time now I will turn the call over to Rick Wayne for closing remarks.
Pat Dignan: Yes.
Pat Dignan: Thank you for that thank you.
Speaker Change: For those of you who have listened and those that you will who will say when they go to our website to.
Pat Dignan: Review this.
Pat Dignan: And appreciate your good questions Mark and Damian.
Pat Dignan: And we always say this we like to present as much.
Pat Dignan: And as helpful information as we can.
Pat Dignan: Sure.
Pat Dignan: Investor deck, we've gotten complimented on frequently for the all.
Pat Dignan: While the transparency we provide.
Pat Dignan: If there is something that you think would be helpful to you and other investors, let us know and.
Pat Dignan: If we agree and we can <unk>.
Pat Dignan: Include that we will and on that note.
Pat Dignan: Wish all of you a good weekend. Thank you.
Pat Dignan: Thank you ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.
Pat Dignan: Goodbye.
Pat Dignan: Okay.
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