Q1 2025 UMB Financial Corp Earnings Call
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Hello, everyone. Thank.
Thank you for things you wouldn't be financial first quarter 2025 financial results Conference call.
Speaker Change: My name is here and I'll be your moderator for today.
Speaker Change: All lines, we made it during the presentation portion of the call with an opportunity for questions and answers at the end if.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.
Kay Gregory: I would now like to pass the conference over to our House Kay Gregory Investor Relations. Please proceed.
Speaker Change: Yeah.
Speaker Change: Good morning, and welcome to our first quarter 2025 call Mariner Kemper Chairman and CEO.
Speaker Change: Johnson, our CFO will share a few comments about our results.
Speaker Change: Then we will open the call for questions for equity research analysts.
Speaker Change: Jim Rine, President of the holding company and CEO.
Speaker Change: Along with commentary Chief credit officer will be available during the question and answer session.
Speaker Change: Before we begin let me remind you that today's presentation contains forward looking statements, including the discussion of future financial and operating results.
Speaker Change: D J.
Speaker Change: The company expects to realize from our acquisitions as well as other opportunities.
Speaker Change: Forward looking statements in any pro forma metrics are subject to assumptions risks and uncertainties as outlined in our SEC filings and summarized in our presentation on slide 51.
Speaker Change: Actual results may differ from those set forth in forward looking statements, which speak only as of today, we undertake no obligation to update them, except to the extent required by securities laws.
Speaker Change: Presentation materials are available online at Investor Relations Dot Dot com and includes reconciliations of non-GAAP financial metrics all per share metrics are on a diluted share basis.
Speaker Change: Now I'll turn the call over to Mariner Kemper.
Mariner Kemper: Thank you Jay and good morning, everyone 2025 is off to a great start with strong first quarter and of course, the closing of our acquisition of Heartland on January 31.
Mariner Kemper: Through the acquisition, we added just over $14 billion in deposits and more than doubled our branch presence across 13 states. We're on track to realize the cost synergies, we outlined a year ago, when we announced the transaction and plan for systems conversions are well underway at this point equally as important the cultural integration of the two companies is well underway.
Mariner Kemper: And we've been pleased with the positive momentum Ursula bankers.
Mariner Kemper: The speed on your release framework.
Mariner Kemper: There is excitement about the opportunities our capabilities and our greater capacity.
Mariner Kemper: And we are seeing early encouraging activity in the acquired markets.
Mariner Kemper: As we noted a year ago, the primary value proposition of this acquisition and so on.
Mariner Kemper: Cheaper and granular quarter box.
Mariner Kemper: As evident and demonstrated by the improvement in our cost of deposits and net interest margin expansion. This quarter, our operating efficiency ratio improved to 55, 6% and our operating ROA to 114%.
Mariner Kemper: The inclusion of <unk> results for the first two months of the quarter and the impact of the purchase accounting adjustments made for a difficult set of comparisons we reported a solid quarter results.
Mariner Kemper: Our reported earnings this quarter included $62 1 million a day, one provisioning and $54 2 million of merger related and other nonrecurring charges. Excluding these items, our first quarter net operating income available to common shareholders was $158 9 million or $2 58.
For sure.
Mariner Kemper: We are both acquisition related to inorganic growth on both sides of the balance sheet in the quarter.
Mariner Kemper: <unk> increased 27, 8% to $32 3 billion.
Mariner Kemper: Average deposits increased 32, 3% to $53 billion on a linked quarter basis, noting that acos balances were only included for two thirds of the quarter.
Mariner Kemper: On a legacy <unk> basis, we saw an eight 3% linked quarter annualized increase in loan balances again outpacing many peer banks banks that have reported first quarter results. So far are reported as just three 3% median annualized increase in loan balances.
Mariner Kemper: Legacy <unk> average total deposits increased 27, 3% on a linked quarter annualized basis.
Speaker Change: John of our combined loan book as shown on Slide 20, we are very well diversified both in terms of the loan products and geography and are looking forward to further penetration into these new regions across our footprint.
Speaker Change: Quarterly loan activity is on the following slide.
Speaker Change: Total top line loan production exceeded $1 2 billion in the first quarter, while payoffs and Paydowns ticked up slightly.
Speaker Change: Turning to asset quality on page 22, you can see the impact of acquired loans charge offs contributed to legacy <unk> loans were $6 2 million or only 10 basis points of average loans for the quarter.
Speaker Change: In fact, excluding credit cards legacy <unk> once again had net recoveries this quarter.
Speaker Change: For the remainder of 2025, we expect the legacy <unk> loan portfolio to perform in line with our historical trends, while we work to align on the acquired portfolio than <unk> standards nonperforming loans related to legacy <unk> were just eight basis points consistent with prior quarters for reference banks that have reported first quarter.
Speaker Change: Our results so far are reported $8, four 5% media and NPL ratio.
Speaker Change: On slide 24, you'll see the details of our first quarter allowance, which stands at $373 4 million up from $261 7 million at the end of the fourth quarter $62 1 billion of PPD related allowance was established as a part of the acquisition and $62 million of day, one allowance was established for non PC.
Speaker Change: Loans through provision expense.
Speaker Change: Now just a few highlights on our fee income then Ron will provide more detail on our first quarter impact from purchase accounting and other drivers of our results. We have continued fee income growth across our segments. Despite some of the market related variances and other noise.
Speaker Change: Additionally, <unk> helped drive increased service charge and interchange income and the $4 billion of additional private wealth customer assets boosted personal banking trust and securities processing income.
Speaker Change: Credit and debit card purchase volume was $5 4 billion in the first quarter up 18, 6% on a year over year basis, and surpassing 1 billion Mark for the first time.
Speaker Change: This included just over $500 million has been from ACO Elkhart in February and March over the past 10 years legacy <unk> spending volumes grew from $2 3 billion a compound annual growth rate of eight 7%.
Speaker Change: In our institutional businesses assets under administration continue to expand.
Speaker Change: Increased 16% year over year expanded 559 billion within that segment corporate Trust grew 25% over the last 12 months to $48 6 billion. Our teams continue to bring in new business.
Speaker Change: 10 years ago. These assets were just under 11 billion highlighting the accelerated growth we've seen in all areas of corporate Trust.
Speaker Change: We continue to explore new services, such as our CLO trustee and loan administration businesses launched in 2024, we see a strong pipeline ahead of us in this business with many cross sell opportunities with our fund services in other parts of the company.
Speaker Change: Turning to servicing is another fast growing part of our business. There continues to be a lot of M&A. This drop in this space from which we've seen a lot of benefit and.
Speaker Change: And we are seeing more activity related to the democratization of private investor.
Speaker Change: And we serve several clients who are leading in those initiatives.
Speaker Change: There is a lot of opportunity ahead of us in this space.
Speaker Change: Before I turn it over to Rob we've had quite a few conversations around the uncertainty related to tariffs and general economic conditions that have dominated the headlines recently.
Speaker Change: We are closely monitoring the impacts of the evolving tariff situation and engaging regularly with our clients about potential impacts to their business as a bank with a large commercial customer base. We may have a different view than consumer heavy bets.
Speaker Change: It's really too soon to comment we're largely a supply chain lender and most of our clients are telling us. They are currently able to pass on the cost and expect to do this in the short run but of course, the uncertainty increases the longer this goes on.
Speaker Change: As I said before anyone claims to know what's coming is purely speculating we can't predict the next move but our job is to be prepared to stay in touch with our customers and make adjustments as needed to wrap up we're risk managers first.
Speaker Change: In our many years of managing risk together.
System intentional way have demonstrated that we performed well in periods of uncertainty.
Ron: Now I'll turn it over to Ron for more details.
Thanks, Mariner and good morning, everyone. We've added new disclosure slides in our investor presentation that compare purchase accounting adjustments that close to though that the timing of announcements. We've also broken out the various aspects of accretion and amortization that impacted our financial results. As a reminder, these figures represent just the two loved the impact of the.
Ron: Our March 30 for a common equity tier one ratio was in line with our expectations at announcements at 10, 1%.
Ron: You can see that our first quarter results include a $28 6 million in net accretion to net interest income included a $2 $8 billion accelerated benefit from early payoffs of acquired loans. The net benefit to margin from this accretion was approximately 41 basis points core margin benefited approximately.
Ron: Two to three basis points from higher DDA balances.
Mariner Kemper: Our operating expenses reflected a $13 $6 million increase related to the amortization of newly created intangibles as Mariner noted our $86 million provision for the quarter included $62 million in initial provision to establish an allowance for non PCB acquired loans, which have been non-GAAP reporting purposes.
Mariner Kemper: Turning to fee income our reported fee income was $166 2 million was impacted by $5 2 million in mark to market losses on certain equity investments.
Mariner Kemper: <unk> added approximately $17 million in fees for the two months that flows are about $8 million per month.
Mariner Kemper: P. J CNR fees were primarily made up of trust and security processing fees from the wealth assets interchange income from commercial credit and consumer debit volume deposit service fees and other miscellaneous fees and adjustments.
Mariner Kemper: Adjusting to exclude any steel of contribution the $1 $6 million of Goldilocks. We noted on the slide the security loss and 900000 as legal settlements, we estimate core <unk> cost by $154 million from the first quarter compared to an adjusted $1 $58 million in the prior quarter.
Mariner Kemper: The decline reflects fewer days and lower back to back swap income and <unk> fees.
Mariner Kemper: Turning to expenses operating expenses were $335 million for the quarter and included a $15 6 million as the new amortization expenses I referenced earlier.
Mariner Kemper: As Mary noted we are on target to achieve the cost synergies we identified at announcements we estimate that we have achieved $17 million of quarterly run rate savings to date.
Given the earlier than modeled January 31, close date, we now expect to achieve greater than the estimate of 40% of sales in calendar year 2025.
Mariner Kemper: Our effective tax rate of 12, 6% for the first quarter included a $5 million benefit or <unk> <unk> per share from the remeasurement of deferred tax assets due to an increase in forecasted fig marginal tax rate following the acquisition.
Mariner Kemper: With some of those to keep in mind as we look ahead relative to the core margin of 275% and <unk> that excludes all accretion, we expect second quarter margin to range between $2, 75% and 280% future periods contractual net accretion amounts are highlighted on page 12 I will.
Mariner Kemper: And my usual caveat that the trajectory of our margin will depend on the timing of fed moves after the DDA trends at levels of excess liquidity.
Mariner Kemper: As I noted previously HVO contributed approximately $8 million in fee income from us.
Mariner Kemper: We expect our second quarter operating expense to be approximately $375 million inclusive of $25 million in total amortization expenses drivers include merit cycle increases in April and the impact of an extra day in the quarter, partially offset by seasonally lower FICA and other benefits expense. This can also be impacted by.
The timing of marketing or advertising spend.
Mariner Kemper: And finally, we expect the effective tax rate to average between 19 and 20% for the full year 2025 now.
Speaker Change: Now I'll turn it over to the operator for the Q&A session.
Mariner Kemper: Thank you.
Speaker Change: We will now begin the Q&A session.
Speaker Change: As a reminder, if you would like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: If you would like to remove that question press star followed by two.
Speaker Change: If you are using a speakerphone please pick up your handset before asking your question.
Speaker Change: Our first question today comes from Chris Mcgratty with <unk>. Your line is now open.
Chris Mcgratty: Hey, good morning.
Speaker Change: Hey, good morning, Chris Chris.
Speaker Change: Rob maybe a big picture question, if you annualize the fourth quarter earnings roughly you put down like a $10 run rate already before you layer in the cost saves.
Speaker Change: And consensus for next year is a little over 11.
Speaker Change: Interested in your comments on <unk>.
Speaker Change: Bridging that work.
Speaker Change: In particular the.
Speaker Change: Cash balances were very elevated deposit growth is very strong.
Speaker Change: Can you just help us with kind of the near term.
NII trajectory I hear you on the expenses and fees that the NII is a big piece. So thank you.
Chris Mcgratty: Sure Chris.
Chris Mcgratty: We don't give specific earnings guidance, but maybe let me highlight some of the data points that impacted our fourth quarter results and then if I didn't answer your question come back at me.
Chris Mcgratty: So first thing when you look at our first quarter EPS of $2 58, we noted that there was <unk> <unk> benefit from a discrete tax item. So thats a one time thing that will not repeat and as I said in my prepared comments.
Chris Mcgratty: Our effective tax rate for the rest of 'twenty five 'twenty six would be somewhere in the 19% to 20% level right and then the other thing you have to adjust for the first quarter is we had only 65 million weighted average diluted shares outstanding and because of the timing of when heartland closed and the equity forward that we did.
Chris Mcgratty: Forward. Most of you guys have your model right, it's going to be about 76 million shares outstanding.
Chris Mcgratty: Missing in the first quarter results, obviously, I noted a $5 million negative impact from a mark to market. So as you guys do it normally I would have a core adjust that out of the earnings power for the first quarter, that's going to be one more month of Heartlands core earnings.
Chris Mcgratty: We're also going to be one month more of CDI and amortization, which is about $8 million pre tax for the extra month.
Chris Mcgratty: And then that the contract.
Chris Mcgratty: Contract accretion that we have so you look at page 12, we've disclosed what the second quarter number is going to be at about $33 million.
Speaker Change: And then the final piece I would say is one more month of cost saves as I said in my prepared comments on a quarterly run rate basis, we have achieved about $17 million of cost saves, but only two months of that is captured in the first quarter. So that's another month that youre going to get it and then on top of that the growth in number of days impact right. So.
Chris Mcgratty: Look at the first quarter going back to your point about net interest income.
Chris Mcgratty: <unk> per day net interest income now with the combined franchises about four $5 million to $5 million, So thats something thats going to be additive when you look at future quarters.
Chris Mcgratty: So that's a lot of data points out to you, but let me know if I didn't answer any of your questions again, we don't give guidance about 26, it's hard to figure out what's in consensus models because of the noise. So that's why we bumped our usual trend of not providing guidance to give more clarity for you guys. So hopefully that was helpful but I.
Chris Mcgratty: I didn't answer any any part of your question and the only thing I should say on the growth side, just like we have been saying.
Chris Mcgratty: We do expect.
Chris Mcgratty: The coming quarter quarter two.
Chris Mcgratty: Production pipeline as we've given you a look into that.
Chris Mcgratty: Historically that.
Chris Mcgratty: It remains as strong or stronger I know youre hearing different things from other banks, but as you remember our loan growth comes from market share gains not economic activity and the pipeline remains very strong.
Chris Mcgratty: One more data point.
Chris Mcgratty: Page 26, Chris you've seen this chart before on the roll off roll on yields on investment Securities. We got about $1 $8 billion of cash flows coming due in the next 12 months, yielding $3 22, and we are reinvesting if you go into the bond portfolio of 100 to 125 basis points at least higher than that.
Chris Mcgratty: We also have about $3 billion of fixed rate loans that currently yield 475 that again would reprice 200 basis points, assuming no more rate cuts. So those are kind of the underpinnings of what net interest income and net interest margin will look like for the next 12 months.
Speaker Change: Okay. That's helpful. If I could just follow up.
Chris Mcgratty: I guess, one in the four 5% to 5% NII days you could take the round number it's like $4 50 a quarter.
Chris Mcgratty: Is that a jump in that basically youre trying to say that as a jumping off point before the balance sheet continues to grow and then does that include.
Chris Mcgratty: The scheduled accretion on top of it.
Chris Mcgratty: Yes, the 450 sounds about right.
Chris Mcgratty: The accretion you can do the math I mean, you have $3 97 in the first quarter, let me come back to you on that one.
Chris Mcgratty: Okay and I guess my last question if I could is just.
Chris Mcgratty: Our plans on the balance sheet, where your cash position is almost 15% of the balance sheet.
Chris Mcgratty: You've got a ton of flexibility with your loan to deposit ratio, how should we think about.
Chris Mcgratty: What you may or may not do with that balance sheet, earning assets you've got you've got the preferred outstanding that you acquired help us a little bit on that.
Yes, so one of the reasons why we have excess cash or are effective.
Chris Mcgratty: He'll earning $4 33 today is you have got.
Chris Mcgratty: Page 26, we did by about $400 million.
Chris Mcgratty: What we call pre purchases connected with the Heartland acquisition. So we did as much as we could from a capacity standpoint, we're looking at the market Theres still opportunity for us to invest in treasuries or <unk> or even Freddie Fannie.
Chris Mcgratty: So we're still evaluating thats. The reason why we have more cash.
Chris Mcgratty: 331 was some of the bond sales that happen at the as we close the acquisition.
Chris Mcgratty: We do plan to deploy it in the next three to six months.
Chris Mcgratty: Great. Thank you.
Chris Mcgratty: Okay.
Chris Mcgratty: Our next question comes from Chris <unk> with Raymond James Your line is now open.
Chris Mcgratty: Yeah.
Speaker Change: Good morning, everyone.
Chris Mcgratty: Hey, good morning.
Chris Mcgratty: Rob you gave some color on the core NIM core NIM came in in the quarter at 275% I think you said in the second quarter your outlook for the core NIM before the purchase accounting was still at $2 75 to 280.
Speaker Change: What assumptions are you baking into that I would assume adding another month with Ht off that would've been more accretive to that core NIM.
Chris Mcgratty: So just wanted to see.
Chris Mcgratty: Okay.
Chris Mcgratty: Turning to the that 275 to 280 outlook on the core NIM for the second quarter.
Chris Mcgratty: Yes sure.
Chris Mcgratty: The positives are obviously.
Chris Mcgratty: Okay.
Chris Mcgratty: Heartlands cheaper deposits.
Chris Mcgratty:
Chris Mcgratty: Heartland.
Chris Mcgratty: The one month impact of the DDA is going to be another $1 billion one call. It.
Chris Mcgratty: I've noted we also expect.
Chris Mcgratty: Rate cut in mid June.
Chris Mcgratty: The only rate cut that would be kind of in the second quarter and then finally, just some assumption about what will happen to the excess liquidity like I said to Chris's questions. We may deploy some of that excess liquidity, yielding $4 30, and get a different yield on that.
Chris Mcgratty: The only headwind that I can think of is really the number of days right. Because when you go from 90 to 91 day quarter.
Chris Mcgratty: <unk> market capitalization so I.
Chris Mcgratty: I would say, 75% to 280 is our initial estimate of where we end up.
Chris Mcgratty: And obviously that will be impacted by the contract fuel accretion that we have listed on page 12, and then any other early payoffs.
Chris Mcgratty: And the other point that I also made was in the first quarter relative to our expectations. We added two to three basis point benefit from DDS performance.
Chris Mcgratty: So that those are all the different moving parts that dictate what will happen to our NIM.
Chris Mcgratty: Okay.
Chris Mcgratty: Got it got it great. Thanks for that additional color and then switching gears to credit the HTS loss net charge offs in the quarter any common thread amongst these it was was it a few credits was it much more broad than that maybe just a little bit more color on what you guys decided to run through the charge off line from <unk> and the <unk>.
Chris Mcgratty: <unk>.
Chris Mcgratty: Yeah, Thanks, I think the.
Chris Mcgratty: The thing to note about the those charge offs as they were credits identified through from all the way back to diligence and on through.
Chris Mcgratty: Heartland had taken care of some of it and then we.
Chris Mcgratty: Took care of some more of it after we close and.
Chris Mcgratty: As far as I think what you should take from the chart. So theres nothing to note.
Chris Mcgratty: Abnormal about the charge offs other than.
Chris Mcgratty: Just normal course of business as we sort of.
Chris Mcgratty: Continue to clean up what was identified in the watch list in a diligence process.
Chris Mcgratty: What I think is more important to note is the overall.
Chris Mcgratty: Performance, So I think what youll see for the remainder of the year as we expect the overall performance of the combined companies to perform just in line with what we've historically done as a company, which would be 27 basis points or better based on the combined performance of the company and.
Chris Mcgratty: So I guess I'd really point you to that.
Chris Mcgratty: What we expect to be able to do on a combined basis. So right in line. So we're able to do and on top of that.
Chris Mcgratty: As far as credibility and trusting us just look at our trends right just look at what we've been able to do in our deck you can look at our charge off history on page 23, again, we expect to continue to perform the way we always have what we know today.
Chris Mcgratty: Sure.
Chris Mcgratty: And then you think about.
Chris Mcgratty: <unk>.
Chris Mcgratty: Really what we get from Heartland is.
Why.
Chris Mcgratty: Why we're so excited about it which is a bigger chassis and a platform to continue to do what we do very well which is.
Chris Mcgratty: Outside's growth with better than peer average quality. So we continue to expect that as we look forward.
Speaker Change: Excellent great. Thanks for taking my questions I appreciate it gentlemen, thanks Ed.
Speaker Change: The next question comes from Nathan race with Piper Sandler Your line is now open.
Matt: Good morning, Matt.
Speaker Change: Hey.
Speaker Change: Good morning, everybody. This is Adam footwear on for Nate.
Speaker Change: Hey, Adam.
Speaker Change: Just wanted to you.
Speaker Change: Talk about loan growth I appreciate your commentary about how your customers are primarily.
Speaker Change: Along the supply chain and how they are able to pass that cost along to customers right now, but I was just curious just from a growth perspective, how you're thinking about opportunities going forward with heartland and how you think that might.
Speaker Change: Contribute to our growth rate going forward, maybe on a good quarter or annualized basis.
Speaker Change: Yes, so great question Omar I'll circle back around and really do our thesis for doing the deal in the first place which is.
Speaker Change: A fantastic lower costs.
Speaker Change: You're levered deposit base and a much bigger footprint so.
Speaker Change: We more than doubled our branch network and we went into a handful of states with big populations that we have no exposure to I mean, you've seen some of the latest data on California, the GDP of Californias bigger than a lot of our.
Speaker Change: Countries that we are.
Speaker Change: Trade with around the globe.
Speaker Change: We have a significant opportunity when we announced the deal I use a phrase.
Speaker Change: Big engine being dropped onto a big bigger chassis.
Speaker Change: And Thats really.
Speaker Change: What we're getting from Heartland is a lot of great people. So we're seeing really great new early indication just in the first couple of months coming through loan Committee.
Speaker Change: All across the new Heartland footprint of really high quality great deals. We think there was some pent up demand kind of last at the back end of <unk>.
Speaker Change: A few months before we close.
Dragging some closings out so we're seeing a lot of really great.
Speaker Change: Activity pipeline, we've been really impressed with the lenders and bankers.
Speaker Change: We've acquired.
Speaker Change: I sit in on every loan meeting and I've been really impressed with what we're seeing and very excited about that so the indications are really good for what theyre going to add across all those footprints. So again.
Speaker Change: Lower cost under Levered deposits and a much bigger footprint with great people and we're able to.
Speaker Change: You talked about how we dropped in our regional credit officers day, one USDA regional credit officers, so the immediate benefit of that.
Speaker Change: We've got people dropped into this new footprint and we know how we do things can help close deals faster and keep the highest level of quality up so so our regional credit officers will help close deals.
Speaker Change: They will also be able to assess talent and assess assess deals in the <unk> fashion in a way to keep our long term high quality.
Speaker Change: Coupled with our outstanding loan growth, so better than better than.
Speaker Change: Average quality better than peer quality as we've seen on page 23 again in our deck, which is what this team. The leadership that is at the table with me the three of US Tom Jim Mariner and several others. We've been doing this for 30 years together and so you can see how we perform there on 23, you can see what happens on page 44 against the peer.
Speaker Change: Overtime EBIT.
Speaker Change: EBIT if we go into recession, if you look at page 44 in the deck and see how the industry. It appears perform during a recession and you can see how we perform during a recession. So.
Speaker Change: We're super Jazzed about the future.
Speaker Change: <unk> is going to bring to us and what we can bring the heartland.
Speaker Change: We're really really excited about just dropping are dropping our our big engine on that new chassis.
Speaker Change: Okay. That's very helpful commentary and then.
Speaker Change: You touched on it briefly but just.
Speaker Change: Just to get a little bit more specific I was curious if you guys have an idea for now but there has been two months with heartland, but the overall AE based run rate could look like going into the second quarter and then also.
Speaker Change: It's also been briefly mentioned, but it looks like you guys have mainly gotten through selling off.
Speaker Change: The securities from Heartlands book that you wanted to but I was just curious about the appetite.
Speaker Change: For more going forward.
Speaker Change: Yes.
Speaker Change: Cut out maybe if you say average earning assets is that what you asked.
Speaker Change: What was the run rate yes.
Speaker Change: Yes so.
Speaker Change: That's a great question and then I'll ask me to clarify something that I have seen in some early notes. So theres been some comments about the size of the loan portfolio that we acquired from from Heartland at $9 8 billion of the waterfall slide the things I'll remind is nine 8 billion is net of the fair value of the first things. So thats. Another 484 million so add another $500 million on top of.
Speaker Change: And then as we discussed in our pro forma as there was another 500 plus million that got re class from loans to industrial revenue bonds. So that re class. So that's nearly about 1 billion more that should be added to that $9 8 billion right. So to your question Adam I pointed the average earning assets cap.
Speaker Change: So if you look at our expectations.
Speaker Change: And where do you see on a normalized basis, earning assets are between 60 and a half to 61 five.
Speaker Change: And on top of that we'll get any growth on top of that.
Chris Mcgratty: And then Chris I will go back to your question.
Chris Mcgratty: <unk> for the $4 5 million per day does not include the higher and another half a million times 91 days at just 45 will include the PAA.
Chris Mcgratty: Okay.
Chris Mcgratty: Helpful commentary and thank you for answering my questions.
Speaker Change: Thanks, Adam.
Karen short: Our next question comes from Karen short with Barclays. Your line is now open.
Karen short: Hey, good morning, Hey, Derik.
Speaker Change: Good morning.
Speaker Change: Hey, good morning, Congrats on the deal closing.
Speaker Change: When you look at the deposits did heartland do anything sort of pre close to work down their cost of deposits or are there any major steps that you took after close to.
Speaker Change: To readjust their pricing or their their products.
Speaker Change: No Thats just came over right.
Speaker Change: As it was.
Speaker Change: Nothing nothing to note it at all really the only thing they did at the Delevering of some of the brokered Cds that they had so the ramp down and then the only thing Thats part of our conversion efforts. We are doing is making sure that the deposit pricing is aligned between you and it'd be in harvest markets. So no material shifts that way.
Speaker Change: Okay I just wanted to if we look at the okay.
Speaker Change: We just got out of it what we expected which is lower cost deposits for the most part broke.
Speaker Change: One about brokered I mean, we ran our some of our brokers off too so that everybody in the industry. So that's just kind of I think thats underlying everybody really.
Speaker Change: Yes.
Speaker Change: And then when we look at the growth in DDA.
Speaker Change: Any anything you can point to there that that was driving a lot of that success is at higher average balances is it customer acquisition or expanding the offerings into the new the new footprint.
Speaker Change: Yes, it's a combination of all of that for us.
Speaker Change: Up and down volatility that we get with some large clients that are either deploying money in the market. So when you think about corporate trusts are our investor solutions businesses.
Speaker Change: We see some high fluctuations, we did obviously add on more clients as well, but for US the challenge always an internal debate always remains about the levels of dth because of some of the activities of our clients and what's going on with the equity or debt markets.
Speaker Change: I don't think I would add is I think you have to take a longer term look upward us in general.
Speaker Change: I would think of it as multiple quarters or even year over year, not so much linked quarter or month end or quarter end.
Speaker Change: Just because the scale of what we do is so.
Speaker Change: So large institutional businesses.
Speaker Change: So from one quarter to the next or one month to the next there can be some volatility, but overall, it's about client growth over the long run and as the client growth continues in the institutional businesses that baseline of demand deposit growth. So you just have to think about it you have to look past eight months it look past it.
Speaker Change: Quarter to really get a sense for what's happened with <unk>.
Speaker Change: Okay. Thanks for that color and then on the expenses.
Speaker Change: Can you give a little.
Speaker Change: A little update on maybe some of the timing of cost saves that are still to come any big.
Speaker Change: Milestones, we should be we should be looking at for <unk>.
Speaker Change: Layering in those expense saves.
Speaker Change: Yes, the big.
Speaker Change: Points are legal day, one which is all of the $17 million that I talked about that we bought.
Speaker Change: <unk> already the next what typically happens in the fourth quarter that that's true for both onetime costs and cost saves.
Speaker Change: The conversion happens and then additional cost saves both from a people perspective, and a vendor perspective, so the run rate in 2026 early 2026.
Speaker Change: We'll reflect the synergize expense base.
Speaker Change: But you will see another slew of cost saves come in the fourth quarter of this year.
Speaker Change: Just to remind what we said at the announcement was we were going to get 40% of the cost saves and then based on the earlier close compared to what we said when we announced the transaction that we are getting two more months of the safety for calendar year 'twenty five.
Speaker Change: Okay.
Speaker Change: Thanks, Phil I can just sneak one yes.
Speaker Change: I would just say we feel very good about the overall cost saves in the modeling and feel very confident with them.
Speaker Change: Okay.
Speaker Change: And then just.
Speaker Change: A quick one 3%.
Speaker Change: AG related C&I.
Speaker Change: Is there any any impact there from.
Speaker Change: From export tariffs.
Speaker Change: Oh, I'm, sorry, yes, 6% number again, it didnt all of that.
Speaker Change: Just on the.
Speaker Change: It looks like about 3% of C&I is AG related any impact.
Speaker Change: The expected impact there from from tariffs, yes agriculture.
Speaker Change: Gotcha.
Speaker Change: No.
Speaker Change: It's a little too early to have any I think real valuable commentary to this I think as I said in my call.
Speaker Change: I think anybody that's.
Speaker Change: Talking to you constantly about speculating in my opinion, but.
Speaker Change: What I would say in general about most of our clients as we reach out and we assimilate the feedback from all of our officers back to headquarters.
Speaker Change: And do it ourselves.
Speaker Change: The general theme is that.
Speaker Change: They all are telling us that they can pass on the plus at this point.
Speaker Change:
Speaker Change: And then.
Speaker Change: I think that Thats generally the impacts of the large majority of our borrowers through the remainder of this year based on what we know today if it.
Speaker Change: Yes.
Speaker Change: This tariff path, we're on doesn't revert itself.
Speaker Change: One way or another some point this year and at six.
Speaker Change: That uncertainty is going to start to weigh in future.
Speaker Change: Certainly in 2006 and late in 'twenty five.
Speaker Change: It's going to be the consumer as we all know has been field. This first human B doesn't really provide a whole lot on the consumer from a lending perspective, we're pretty insulated from that on a relative comparative basis still a lot of our peers.
Speaker Change: So and we don't have a lot of exposure to consumer discretionary so that would be the other places to see it from a supply chain or a commercial perspective.
Speaker Change: Consumer discretionary and we keep a close eye on our exposure to consumer discretionary and you'll have a lot of that.
Speaker Change: So that's what I would say.
Speaker Change: At this point today, keeping close eye on it talk to our customers a lot again, the profile of <unk> and the customer is.
Speaker Change: <unk> is very strong these are these require us.
Speaker Change: I believe in gravity belief in what goes up must come down. So there is there is retained earnings and cash flow.
Speaker Change: So we just have a better stronger <unk>.
Speaker Change: Seen ups and downs, so they prepare their balance sheet and income statements for exactly what we're staring yet we do best during uncertain times.
Speaker Change: Thanks, a lot.
Speaker Change: Thanks Darren.
Speaker Change: Our next question comes from Timur <unk> with Wells Fargo.
Speaker Change: Your line is now open.
Timur: Good morning, Mark.
Speaker Change: Hi, Hi.
Speaker Change: Good morning, guys.
Speaker Change: Following up on the deposit related question just the gap between end of period and average DDA is it looks like that gap higher this quarter.
Speaker Change: I know this is a common question you've got but just can you give us a sense of.
Speaker Change: Where are those average DDA shake out and how should we think about that gap closing in <unk>.
Speaker Change: So so I'll, let ROM fleet cleanup here, but at the end of the day.
Speaker Change: Quarter end, the actuals and averages can be very different from each other so the end of the quarter yesterday, the number was pretty high.
Speaker Change: <unk>.
Speaker Change: I would say for the first quarter Thats kind of the lumpy nature of the center and stuff that happens for us.
Speaker Change: We've talked a lot about this we think we're going to be.
Speaker Change: In the second quarter, probably flat.
Speaker Change: As we stare at it based on on what we see today, it's really hard again back to the kind of event driven episodic nature of it it's really hard to tell exactly where it will end up but we will end up with a little bit more Portland because of.
Speaker Change: One month less.
Speaker Change: And what happened in the first quarter so.
Speaker Change: We can't really give you.
Speaker Change: Do we tell you, but we don't know for sure but.
Speaker Change: Flat to slightly up based on another month or so.
Speaker Change: Yes, the flat part of the sort of core legacy <unk> basis. So the $13 four that we had in the first quarter average as I said earlier in Meriden alluded to you would add another $1 billion one for the extra month of Heartland at call. It a $3 $5 billion DDA book, So 13, four and another $1 billion plus on top of that.
Speaker Change: Okay. That's great color. Thank you and then Mariner you made a comment in your prepared remarks that you are working to align the acquired portfolio with you MBS standards.
Speaker Change: Just wondering what does that portend from both a credit quality standpoint. It has much of what's been identified already been addressed is there still some cleanup work to do in regards to that comment and then I'm just wondering what that might mean from a loan growth standpoint going forward as to how much of the heartland.
Speaker Change: <unk> underwriting criteria and methodology whenever you whenever you want to call. It has to change to align with you wouldn't be.
Speaker Change: Yeah. That's a great question that comment was really more of a directional big picture question about I talked a moment ago about the profile of the customer and we talk to us.
Speaker Change: <unk>.
Speaker Change: Announced this deal.
Speaker Change: No.
Speaker Change: There was in the diligence process that there were some.
Speaker Change: Credits that we identified and then in general.
Speaker Change: Slightly different way of underwriting it didn't necessarily mean that they were.
Speaker Change: Not good credits they just.
Speaker Change: Were underwritten differently, so really that comment was more about bringing the whole portfolio under kind of the way, we do things policies procedures.
Speaker Change: Have a guarantee on this one.
Speaker Change: Something like that where they wouldn't have had a guarantee on some things such as an example.
Speaker Change: Just just doing it our way is really so it was really more color than that really down in the weeds type comment and.
Speaker Change: So and I made a comment earlier about your so your question about performance overall sure.
Speaker Change: We have identified everything.
Speaker Change: We ran a fence that identified where we think there are challenges are dating all the way back to diligence through through now and.
Speaker Change: Are there a few basis points of loss in there, maybe but what I. What I was trying to tell you earlier on a combined basis based on what we knew about the whole portfolio. We expect to perform like we have been or better in total so that's what I'd say about overall charge offs.
Speaker Change: And.
Speaker Change: So we feel as good as we have about it.
Speaker Change: We're excited.
Speaker Change: Thing about and then you asked about will that change the pipeline the way, we underwrite say absolutely not.
Speaker Change: I had mentioned earlier, we've got two months of activity from them already.
Speaker Change: And.
Speaker Change: There is no difference in the desire to do high quality, great deals were seeing plenty of high quality, great deals coming through the pipeline and they've got talented folks, bringing it to the table. So.
Speaker Change: No expectation for that to do anything other than.
Speaker Change: Be additive to what I said earlier about.
Speaker Change: Taking that big deposit base.
Speaker Change: And deploying it with their people and ours in a more meaningful way, maybe if all these things, but I would say about this whole deal is the only thing that's different about <unk> and then the combined <unk> and Heartland is that we're going to be able to grow.
Speaker Change: Faster more efficiently more profitably.
Speaker Change: And keep the same level of quality as we as we put it on because we've been able to drop our own regional credit officers into the footprint we acquired.
Speaker Change: As I said earlier that will allow us to move quicker, which allows us to grow faster and that will allow us to keep the quality level same as its always had because we've got people that we know of trust on the ground to make that that happened.
And the pipeline remains as I said on a combined basis very strong and.
Speaker Change: We are.
Speaker Change: It's the second quarter pipeline as we've done historically for you guys. We've given you a peak into the next 90 days.
Speaker Change: Pipeline looks as good or better than it did in the first quarter.
Speaker Change: Great and then if I can just one more looking at the accretion expectations and maybe this is a hard question to answer, but we had a little bit of accelerated accretion in <unk> to $2 8 million.
Speaker Change: I'm just wondering as you think about the puts and takes.
Speaker Change: Maybe again aligning heartland with USB versus just maybe slower payoff activity just given some of the broader uncertainty.
Speaker Change: The accelerated accretion may be accelerating as some of those.
Speaker Change: Uh huh.
Speaker Change: Loans that maybe aren't aligned R. R.
Speaker Change: Helped out of the bank, a little bit faster or does the <unk>.
Speaker Change: <unk> weighs down that timeline, and we just get more or less scheduled accretion I guess, Ron how are you thinking about that dynamic.
Speaker Change: Yeah, that's a hard question to answer if you rightfully circuit.
Speaker Change: We gave you on page 12 of the contracts will accretion and other loans pay off our managed out.
Speaker Change: Hi.
Speaker Change: <unk> be a good guide to that accretion number it's so hard to.
Speaker Change: Sitting here, we have no idea at this point, it's hard to predict what's going to happen.
Speaker Change: Great. Thank you for the question.
Speaker Change: Okay.
Speaker Change: Thanks, Steve.
Speaker Change: Our next question comes from Brian Wilson with Morgan Stanley. Your line is now open.
Brian Wilson: Hi, good morning.
Speaker Change: Hey, Brian I was wondering if you could hey, I was wondering if you could update us on your interest rate sensitivity following the acquisition and it looks like on slide 28 of the Jack in the the ramp scenario you view yourself as.
Speaker Change: Liability sensitive in the first year, but more asset sensitive in the second year I was wondering if you could just talk through that.
Speaker Change: Yes.
Speaker Change: 28.
Speaker Change: So for a 100 basis points cut we expect our base net interest income before any balance sheet growth to be slightly up in the.
Speaker Change: The main driver of that.
Speaker Change: I'll use this opportunity to update you guys on where we are with hard index. The tough index, so with the new including the new acquisition in March So 47% of our total deposits are hard indexed and another 18% are self index. So when rates are cut in this 100 basis points scenario as we've talked about before those reprice.
Speaker Change: Immediately.
Speaker Change: And then San Diego, 27%, 28%.
Speaker Change: Non indexed to complete that pie and then what happens in the second year is because of sulfur moments and repricing of loans.
Speaker Change: It has a negative impact in terms of loan yields catching up with what has already happened with deposits right. So that's why we're slightly I guess, 6% I would call that very slightly liability sensitive and then <unk> tends to be the impact of low yields repricing down.
Speaker Change: As you see on the right side, we still have a fairly decent.
Speaker Change: Our variable rate book, which is two thirds of our portfolio.
Speaker Change: That's really helpful. And then for my follow up on the reserve ratio you mentioned the uncertainty in the environment Nobody quite knows how things are kind of play out I was wondering if you could provide some color on what's baked into the reserve ratio today as far as the economic outlook may be unemployment.
Speaker Change: And just where you see that reserve ratio trending over the next few quarters.
Speaker Change: Yes, so we're watching that but so we use it.
Speaker Change: So the methodology, we use Moody's baseline scenario right now its way to 100%. So theres no blend of any other recessionary <unk> III environments, just yet and then as of the April 15th publication of our mid April publication. The Moody's estimates do not factor in that and part of that is at.
Speaker Change: Meredith said earlier, it's just too soon to speculate what's going to happen to GDP or whether we are seeing a calculation of what funds do.
Speaker Change: But our seasonal model.
Speaker Change: You know is predicated on multiples macroeconomic variables <unk> code for our C&I book, we use a combination of GDP growth capacity utilization credit spreads what are the 10 year treasury looked like against Triple B household income. So there's a lot of different variables that go into each different portfolio.
Speaker Change: Based on what we've seen so far in the Moody's baseline.
Speaker Change: At this point, that's not a big demand on provision, but that can change as the variables get tweaked.
Speaker Change: We are on favorably.
Speaker Change: And then the outcome side of it is we don't expect our book to perform any differently because how we underwrite and if you look at the last so if you look at page.
Speaker Change: Okay.
Speaker Change: <unk> 44 in our deck you look at how we performed during those times.
Speaker Change: And.
Speaker Change: Because of how we underwrite because of how we manage credits.
Speaker Change: Even if we have to provision more because of that.
Speaker Change: The longer term impact of <unk>.
Speaker Change: Call it over provisioning against our performance you know how that works out. So we do expect to continue to underwrite perform and manage credits we would always have.
Speaker Change: That's a good point.
Speaker Change: That's helpful. And then just any thoughts on where you see the reserve ratio maybe trend down in the quarters post acquisition.
Yes. So we are one of three right now which is up from 101.
Speaker Change: As we disclosed on day, one legal day, one we provided $124 million against the heartland portfolio under $10 billion.
Speaker Change: I think get together spec.
Speaker Change: Speculative, but I think the provision has to increase based on what pieces go to model.
Speaker Change: We have historically said regardless of the environment, we feel comfortable with the one plus percent ACL coverage ratios. So that's that's where it will be.
Speaker Change: Generally close to where we are right now right. So from where we are now we would expect to do anything more with it and what Moody's would do to us yes.
Speaker Change: Yeah.
Speaker Change: That's really helpful. Thank you for taking my questions.
Speaker Change: Thanks, Brian.
Speaker Change: Thank you all for your questions.
Speaker Change: As a reminder, it is star one to ask a question and start to to remove.
Speaker Change: Our next question today comes from John Armstrong with RBC capital markets. Your line is now open.
Speaker Change: Hey, Thanks, Good morning, John.
Speaker Change: Anything you guys would call out one way or the other noninterest income trends and as part of that can you talk a little bit about the outlook for the card business it looks like <unk>.
Speaker Change: Balances fees interchange were all up.
Speaker Change: Heartland is additive to that.
Speaker Change: Yes, I mean at a high level and then.
Speaker Change: Couple of exist can add to that I'm not sure exactly where you're taking the question, but if you took out the mark to market at market action in the first quarter, we would be.
Speaker Change: Kind of our typical growth mode.
Speaker Change: The profile looks pretty good we're seeing great deal wins really across the board whether it's within the bank.
Speaker Change: With wealth management or it's across our institutional book all of those businesses have deep pipelines. Good profiles teams feel very good about the trajectory. So that's what I'd say high level, just a little color on that Mark to market issue, we had investment at the company level.
Speaker Change: Net.
Speaker Change: It didn't meet the Volcker rules basically so we ended up having to move.
Speaker Change: Move it out and in order to move it out in a timely fashion, we have to take a loss on it. So it wasn't even if it wasn't really an underperforming.
Speaker Change: Investment, we just were forced to get rid of it and therefore.
Speaker Change: When people know you're sick.
Speaker Change: Get rid of something you have to take a loss on it basically so we took the losses. So they wouldn't have wanted to take velocity.
Speaker Change: So thats a one time deal will never see again and.
Speaker Change: And so that's what that was so absent that.
Speaker Change: The business is all really look good on agenda.
Speaker Change: On the car that's obviously.
Speaker Change: Synergy opportunity with feeding with Hartland.
Speaker Change: We will see increased activity at our card sales, specifically consumer late second quarter mid second quarter.
Speaker Change: Which we feel good about the return.
Speaker Change: Legacy Europe, the card portfolio continues to grow rather than a lot of success of our payables programs coupled with.
Speaker Change: Our traditional.
Speaker Change: Similar to commercial business.
Speaker Change: Yes, so we start selling the consumer part in May.
Speaker Change: Into the Heartland book, and then at what pace that worth 40, 40 or so.
Speaker Change: So page 40 in the book shows what's happened.
Speaker Change: Partnered interchange with the addition of the tunnel.
Speaker Change: Heartland I think Portland is about $500 million that's for two months. So yes. This number if we had outlet for their product.
Speaker Change: Three months would have been more like $5 7 billion.
Speaker Change: As I said in my prepared remarks, thats, mostly commercial credit and consumer debit.
Mariner Kemper: So there's opportunities to expand as Mariner said of those capabilities.
Speaker Change: The fee income just.
Speaker Change: You did catch it jogged my prepared comments I said, our <unk> CT legacy only fee income was about $154 million. If you take out the mark to market that Mariner talked about ticked up and you take out the negative quarterly adjustment and then pick up a positive legal settlement and then as I.
Speaker Change: Set in my guidance Heartland will add about eight ish million dollars per month, so add another $24 million and then number of days and then any future growth. So we feel pretty good at this.
Jim Rine: Jim as Mariner said about our fee income trajectory.
Speaker Change: CEB team on the institutional side is really just on fire across the board.
Jim Rine: All sorts of opportunities all across the country.
Jim Rine: There is pent up demand for municipal underwriting infrastructure across the country. So for the corporate Trust business CLO business, which is new to us is on fire.
Jim Rine: They just really across the board and we've talked about the democratization of.
Jim Rine: Alternatives since we're seeing a lot of opportunity with.
Jim Rine: It organizations that are taking advantage of that so it's just really across the board well. It's really also doing really well we've made some really nice changes too.
Jim Rine: The platform.
Jim Rine: And open architecture portals a customer.
Jim Rine: Total and all of that so.
Jim Rine: Really looking.
Jim Rine: We're investing in the customer experience, which is really great and we expect that to bear fruit on that side. So just nothing but great things to say about the fee income project trajectory.
Jim Rine: Okay.
Jim Rine: It's helpful.
Jim Rine: One more for you Mariner I guess.
Speaker Change: How long do you think it takes for you to get Harlan kind of fully integrated and operating in the same manner as you won't be in.
Speaker Change: Related after going through this is bank M&A more interesting to you. It seems like a more favorable regulatory environment you haven't done a lot of bank deals recently is this.
Speaker Change: How long does it take and is it more interesting to you.
Speaker Change: Sure I'll take them in the order you asked.
Speaker Change: So on the on the integration side of sort of how do we become the same company.
Speaker Change: Loans to take us.
Speaker Change: Some really good news there.
Speaker Change: We when we acquired Heartland.
Speaker Change: The senior management team didn't come with it so immediately.
Speaker Change: They are getting one getting one message from you and be a consistent continuous.
Speaker Change: Way of doing business and that's all happened immediately.
Speaker Change: And I talked about the regional credit officers, which is our biggest engine rate on a combined basis as the loan growth coming out of the heartland footprint, so they're getting on the ground.
Speaker Change: Real time feedback approval.
Speaker Change: And and all of that immediately so.
Speaker Change: There's the technical conversion that takes place in October, but as far as that goes culturally selling in and bringing in business and all of that that's immediate we started that we started a media as a matter of fact I should have added this.
Speaker Change: So that we could bring in new important business between now and close or two months ago and close we put a process in place for on the commercial side to align a heartland.
Speaker Change: Associate with the associate to book that business on the <unk> on.
The rail so that those customers wouldn't have to go through to conversion and that has allowed us to really keep the momentum going and.
Speaker Change: And we're excited about that the ability to for that to help US bridge between now and October with all of that great for the business. So I would say.
Speaker Change: That is super on target and kind of almost immediate if you will on the cultural side on sales in the energy side and momentum side.
Speaker Change: The technical sort of.
Speaker Change: Typical conversion side of systems that is what it is and thats happening in October.
Speaker Change: So that's that and then.
Speaker Change: The second question Oh, Yes, M&A. So we're focused 100% on getting all the juice out of what we've just accomplished and making sure. These two teams are humming and rowing together and we get all this thing.
Speaker Change: All out of this that we expect to get out of it and keep the quality and check and all that so we're focused on that 100%.
Speaker Change: No.
Speaker Change: As it relates to the future.
Speaker Change: Myself and others were doing were doing those rounds of golf in the steak dinners and all of that.
Speaker Change: With.
Speaker Change: Our friends at other institutions, so that we keep relationships built these things don't happen overnight.
Speaker Change: We keep that engine alive and those relationships building so that.
Speaker Change: When we do get on the other end of this we are ready to roll and M&A is definitely part of our overall strategy.
Speaker Change: We're focused 100% on getting this thing done done right.
Speaker Change: Okay. Okay.
Speaker Change: Okay. Thank you very much.
Speaker Change: Thanks, Jeff.
Speaker Change: Yeah.
Our next question is a follow up from senior Brasilia with Wells Fargo. Your line is now open.
Speaker Change: Hi, Thanks.
Speaker Change: Hi, Thanks, just one follow up on.
Speaker Change: The capital side, you guys called out a $1 billion buyback authorization in the release I'm just wondering what your appetite is here and.
Speaker Change: What your thoughts are about potentially engaging that from a timing standpoint of magnitude standpoint.
Speaker Change: Sure, Tim where theres nothing exciting to report there we do that every year at the exact same time in the exact same amount typically thats, just really just to give us the flexibility and the availability we have in our plants.
Speaker Change: That's just add its a yearly cycle for the.
Speaker Change: Share repurchase authorization and a three year cycle for our shelf registration that happens like clockwork.
Speaker Change: So nothing to read into it.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you all for your questions.
Speaker Change: There are no other questions in queue. So I'll pass the conference back to the management team for any further or closing remarks.
Mariner Kemper: Yes. This is mariner I just thought I'd wrap up for everybody just to remind you about how excited we are about this I'm super pumped about it I just wanted to have a chance to just say one more time with the thesis.
Mariner Kemper: As for this new bigger combines engine that we have created and mostly what I'd do is have you take a look back to look forward and if you look in our deck. There's a couple of pages starting on page 44, we have a management team that's been together for nearly 30 years and we have a long track record.
Mariner Kemper: Baird.
Mariner Kemper: Starting with 42, I should say, we have a long track record of <unk>.
Mariner Kemper: <unk> outsize growth coupled with through the next few pages coupled with.
Mariner Kemper: Better than peer average are significantly better than peer average quality. So we live in we live in a space, which I call Rarefied Air what are kind of in our space by ourselves, where we outgrow everybody and we keep a better quality doing it and we've been doing it together forever.
Mariner Kemper: And the beauty of this combined company is that we can do that.
Mariner Kemper: More efficiently more profitably as a bigger company that's running more efficiently. So the one knock on us over a long period of time as we haven't done a sufficiently as other people now we're outgrowing and we can do it at the same level of efficiency.
Mariner Kemper: And we have this huge engine, we know how to bring in business and we have this amazing new chassis, new markets, new people new branches, a ton of new less expensive.
Mariner Kemper:
Mariner Kemper: Raw material to go deploy with and we are going to keep doing what we've been doing in an outsized way.
Mariner Kemper: As good quality as we have with a much bigger platform.
Mariner Kemper: And so we're super excited about that we didn't even touch on revenue synergies, we touch briefly on them.
Mariner Kemper: Around credit cards, but right across the board, we have a ton of restaurant revenue synergies to deploy all of our products across this new this new footprint and.
Mariner Kemper: No.
Mariner Kemper: Just ended by sand you have got a team that's been doing it together for 30 years. So we've got credibility doing what we say we're going to do so and look forward to taking this journey with you is as we embark on this over the next many months and years ahead, we're really super jacked about it.
Speaker Change: Thanks for your time, Thanks, Mariner and thanks, everyone for joining US today. If you have follow up questions. You can reach us at 868607106, thanks and have a great day.
Mariner Kemper: Okay.
Mariner Kemper: That will conclude today's conference call.
Mariner Kemper: Thank you all for your participation you may now disconnect your lines.