Q3 2025 National Bank Holdings Corp Earnings Call
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Speaker #3: Good morning , everyone , and welcome to the National Bank Holdings Corporation . 2025 Third Quarter Earnings Call . My name is Shelly , and I will be your conference operator for today .
Shelly: Good morning, everyone, and welcome to the National Bank Holdings Corporation 2025 third quarter earnings call. My name is Shelly, and I will be your conference operator for today. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded for replay purposes. I will now turn the call over to Emily Gooden, Chief Accounting Officer and Director of Investor Relations. Please go ahead.
Speaker #3: At this time , all participants are in a listen only mode . As a reminder , this conference is being recorded for replay purposes .
Speaker #3: I will now turn the call over to Emily Gooden, Chief Accounting Officer and Director of Investor Relations. Please go ahead.
Speaker #4: Thank you . Shelly , and good morning . We will begin today's call with prepared remarks , followed by a question and answer session .
Nicole Van Denabeele: Thank you, Shelly, and good morning. We will begin today's call with prepared remarks followed by a question and answer session. I would like to remind you that this conference call will contain forward-looking statements, including but not limited to statements regarding the company's strategy, loans, deposits, capital, net interest income, non-interest income, margins, allowance, taxes, and non-interest expense. Actual results could differ materially from those discussed today. These forward-looking statements are subject to risk, uncertainties, and other factors, which are disclosed in more detail in the company's most recent filings with the U.S. Securities and Exchange Commission. These statements speak only as of the date of this call, and National Bank Holdings Corporation undertakes no obligation to update or revise these statements. In addition, the call today will reference certain non-GAAP measures, which National Bank Holdings Corporation believes provide useful information for investors.
Speaker #4: I would like to remind you that this conference call will contain forward looking statements , including , but not limited to , statements regarding the company's strategy , loans , deposits , capital , net interest income , non-interest income margins , allowance , taxes and non-interest expense .
Speaker #4: Actual results could differ materially from those discussed today. These forward-looking statements are subject to risks, uncertainties, and other factors which are disclosed in more detail in the company's most recent filings with the U.S. Securities and Exchange Commission.
Speaker #4: These statements speak only as of the date of this call, and National Bank Holdings Corporation undertakes no obligation to update or revise these statements.
Speaker #4: In addition , the call today will reference certain non-GAAP measures which National Bank Holdings Corporation believes provides useful information for investors . Reconciliations of these non-GAAP financial measures to the GAAP measures are provided in the news release posted on the Investor Relations section of WWE National Bank Holdings Corp .
Nicole Van Denabeele: Reconciliations of these non-GAAP financial measures to the GAAP measures are provided in the news release posted on the Investor Relations section of www.nationalbankholdings.com. It is now my pleasure to turn the call over and introduce National Bank Holdings Corporation's Chairman and CEO, Mr. Tim Laney.
Speaker #4: It is now my pleasure to turn the call over and introduce National Bank Holdings Corp Chairman and CEO, Mr. Tim Laney.
Speaker #5: Thank you . Emily . That's one of the more enthusiastic readouts of disclaimers I've heard in a while . That was great . So thank you .
Tim Laney: Thank you, Emily. That's one of the more enthusiastic readouts of disclaimers I've heard in a while. That was great. Thank you. Good morning, all, and thanks for joining us as we discuss National Bank Holdings Corporation's third quarter earnings results. I'm joined by our President, Aldis Birkans, as well as our Chief Financial Officer, Nicole Denabeele. We're pleased to have delivered $0.96 of earnings per diluted share and a return on tangible common equity of 14.72%. It should be noted that this return was achieved while maintaining a high level of capital. We were able to deliver these results despite continued headwinds related to a heavy volume of payoffs coming primarily out of our CRE portfolio. Having said this, I'm proud of our team's new loan production during the quarter, and the quality of the new relationships is very strong.
Speaker #5: Good morning all , and thanks for joining us . As we discussed , National Bank Holdings third quarter earnings results . I'm joined by our president , Aldis Birkans , as well as our chief Financial Officer , Nicole Vandenabeele .
Speaker #5: We're pleased to have delivered $0.96 of earnings per diluted share and a return on tangible common equity of 14.72%. It should be noted that this return was achieved while maintaining a high level of capital.
Speaker #5: We were able to deliver these results despite continued headwinds related to a heavy volume of payoffs coming primarily out of our CRE portfolio .
Speaker #5: Now , having said this , I'm proud of our team's new loan production during the quarter and the quality of the new relationships is very strong .
Speaker #5: We're pleased to announce our merger with Vista Bancshares , or to have announced our merger with Vista Bancshares during the quarter . I'll have to say , the more we learn about the quality of our new teammates , the more excited we become about future possibilities .
Tim Laney: We're pleased to announce our merger with Vista Bankshares or to have announced our merger with Vista Bankshares during the quarter. I have to say, the more we learn about the quality of our new teammates, the more excited we become about future possibilities. We believe we're set up for a nice fourth quarter. New relationship activity is strong. Credit quality trends continue to be positive. We have additional productivity initiatives in the work, and we believe we have some very positive possibilities for 2Unify. On that note, I'll turn the call over to Nicole to cover the quarter in greater detail. Nicole?
Speaker #5: And we believe we're set up for a nice fourth quarter . New relationship activity is strong . Credit quality trends continue to be positive .
Speaker #5: We have additional productivity initiatives in the work , and we believe we have some very positive possibilities for to unify . So on that note , I'll turn the call over to Nicole to cover the quarter in greater detail .
Speaker #5: Nicole .
Speaker #6: Thank you . Tim , and good morning . During today's call , I will cover the financial results for the third quarter , as well as touch on our guidance for the remainder of the year , which does not include any future interest rate policy changes by the fed .
Nicole Van Denabeele: Thank you, Tim, and good morning. During today's call, I will cover the financial results for the third quarter, as well as touch on our guidance for the remainder of the year, which does not include any future interest rate policy changes by the Federal Reserve. For the third quarter, we reported net income of $35.3 million or $0.92 of earnings per diluted share. We recently announced our planned merger with Vista Bankshares, and we remain on track to close in the first quarter. In conjunction with the acquisition work, we incurred approximately $1.7 million in deal-related expenses during the quarter. Excluding the acquisition expenses, adjusted net income increased 30% annualized over the prior quarter to $36.6 million or $0.96 of earnings per diluted share.
Speaker #6: For the third quarter , we reported net income of $35.3 million , or $0.92 , of earnings per diluted share . We recently announced our planned merger with Vista Bank , and we remain on track to close in the first quarter .
Speaker #6: In conjunction with the acquisition work , we incurred approximately $1.7 million in deal related expenses during the quarter . Excluding the acquisition expenses .
Speaker #6: Adjusted net income increased 30% annualized over the prior quarter to $36.6 million , or $0.96 of earnings per diluted share . This resulted in a strong adjusted return on average , tangible assets of 1.6% and an adjusted return on average , tangible common equity of 14.7% on an elevated equity base .
Nicole Van Denabeele: This resulted in a strong adjusted return on average tangible assets of 1.6% and an adjusted return on average tangible common equity of 14.7% on an elevated equity base. During the third quarter, we grew our fully taxable equivalent adjusted pre-provision net revenue by 17.5% annualized over the prior quarter, maintained a top quartile net interest margin, and built additional excess capital. Also during the quarter, our teams generated $421 million of loan fundings, bringing total year-to-date loan fundings to $1 billion. Quarterly loan fundings have increased each quarter of 2023, and our bankers continue to build loan pipelines. Aldis Birkans will touch on the loan paydown headwinds we've been experiencing in his comments. Our disciplined approach to loan and deposit pricing over the last 12 months has resulted in solid margin expansion.
Speaker #6: During the third quarter , we grew our fully taxable equivalent adjusted Pre-provision net revenue by 17.5% annualized over the prior quarter , maintained a top quartile net interest margin and built additional excess capital .
Speaker #6: Also , during the quarter , our teams generated $421 million of loan fundings , bringing total year to date loan fundings to $1 billion .
Speaker #6: Quarterly loan fundings have increased each quarter of 2025 , and our bankers continue to build loan pipeline . All this will touch on the loan paydown headwinds we've been experiencing in his comments .
Speaker #6: Our disciplined approach to loan and deposit pricing over the last 12 months has resulted in solid margin expansion. The fully taxable equivalent net interest margin expanded three basis points during the third quarter.
Nicole Van Denabeele: Fully taxable equivalent net interest margin expanded 3 basis points during the third quarter to 3.98%, which is 11 basis points of margin expansion over the same quarter last year. For the remainder of 2023, we project fully taxable equivalent net interest margin to remain in the mid 3 nines, and as I mentioned earlier, this does not incorporate any future interest rate decisions by the Federal Reserve. Credit quality improved during the quarter with a 20% reduction in non-performing loans, which now stand at just $27 million. Our non-performing loan ratio improved 9 basis points during the quarter to 36 basis points, which is 10 basis points lower than year-end levels. As a result of proactive efforts to resolve problem loans, we realized net recoveries of 5 basis points annualized during the quarter. The allowance to total loans ratio remained consistent at 1.2%.
Speaker #6: To 3.98% , which is 11 basis points of margin expense expansion over the same quarter last year . For the remainder of 2025 , we project fully taxable equivalent net interest margin to remain in the mid three nines .
Speaker #6: And as I mentioned earlier , this does not incorporate any future interest rate decisions by the fed . Credit quality improved during the quarter with a 20% reduction in non-performing loans , which now stand at just $27 million .
Speaker #6: Our non-performing loan ratio improved nine basis points during the quarter to 36 basis points, which is ten basis points lower than year-end levels.
Speaker #6: As a result of proactive efforts to resolve problem loans, we realized net recoveries of five basis points annualized during the quarter. The allowance to total loans ratio remained consistent at 1.2%.
Speaker #6: Additionally , we continue to hold $18 million of marks against our acquired loan portfolio , which adds an additional 24 basis points of loan loss coverage .
Nicole Van Denabeele: Additionally, we continue to hold $18 million of marks against our acquired loan portfolio, which adds an additional 24 basis points of loan loss coverage if applied across the entire loan portfolio. Turning to deposits, total deposits ended the quarter $202 million higher than the prior quarter end, and average deposits held steady at $8.2 billion. Cost of deposits totaled 2.08%, and our total cost of funds was 2.1%. Non-interest income for the third quarter totaled $20.7 million, 21% higher than the second quarter and 13% higher than the third quarter of last year. The quarter benefited from $3.5 million of unrealized gains on partnership investments, as well as higher service charges and mortgage banking income over the prior quarter. For the remainder of 2025, we project our total non-interest income to be in the range of $15 to $17 million.
Speaker #6: If applied across the entire loan portfolio. Turning to deposits, total deposits ended the quarter $202 million higher than the prior quarter end.
Speaker #6: And average deposits held steady at $8.2 billion . Cost of deposits totaled 2.08% , and our total cost of funds was 2.1% . Non-interest income for the third quarter totaled $20.7 million , 21% higher than the second quarter and 13% higher than the third quarter of last year .
Speaker #6: The quarter benefited from $3.5 million in unrealized gains on partnership investments, as well as higher service charges and mortgage banking income over the prior quarter.
Speaker #6: For the remainder of 2025 , we project our total non-interest income to be in the range of 15 to $17 million . We are pleased to have launched two unified during the quarter , and we plan to provide two unified revenue guidance during our next quarterly earnings call .
Nicole Van Denabeele: We are pleased to have launched 2Unify during the quarter, and we plan to provide 2Unify revenue guidance during our next quarterly earnings call. Non-interest expense totaled $67.2 million and included $1.7 million of acquisition expenses and $6.2 million of 2Unify expense. Now that we are live with 2Unify, our linked quarter 2Unify expense increased as expected with the amortization of the associated capitalized development assets. When adjusting for the acquisition expenses and increased 2Unify expense impacting the quarter, we remain on track to deliver the results expected from the expense reduction actions taken during the second quarter. As a result, we project core non-interest expense for the remainder of the year to be in the range of $64 to $66 million before the impact of acquisition-related expenses. We maintain strong levels of liquidity and continue to build excess capital.
Speaker #6: Non-interest expense totaled $67.2 million and included $1.7 million of acquisition expenses and $6.2 million of two unified expense . Now that we are live with , two unify , our linked quarter , to unify expense , increased as expected with the amortization of the associated capitalized development asset when adjusting for the acquisition expenses and increase to unify expense impacting the quarter , we remain on track to deliver the results expected from the expense reduction actions taken during the second quarter .
Speaker #6: As a result, we project core non-interest expense for the remainder of the year to be in the range of $64 million to $66 million before the impact of acquisition-related expenses.
Speaker #6: We maintain strong levels of liquidity and continue to build excess capital . We ended the quarter with a strong TCE ratio of 10.6% .
Nicole Van Denabeele: We ended the quarter with a strong tangible common equity ratio of 10.6%, Tier 1 leverage ratio of 11.5%, and a common equity Tier 1 ratio of 14.7%. We repurchased 240,000 shares during the quarter, totaling $8.9 million, bringing total shares repurchased year-to-date to 359,000 shares. During the third quarter, our tangible book value per share grew 12% annualized to $27.45. With that, I will turn the call over to Aldis.
Speaker #6: The Tier One leverage ratio is 11.5%, and the Common Equity Tier One ratio is 14.7%. We repurchased 240,000 shares during the quarter, totaling $8.9 million, bringing the total shares repurchased year-to-date to 359,000.
Speaker #6: Shares . During the third quarter . Our tangible book value per share grew 12% annualized to $27.45 , with that , I will turn the call over to Aldus .
Speaker #7: Thank you, Nicole, and good morning. Let me start by saying that our preparations for the Vista merger are progressing well and remain on track.
Aldis Birkans: Thank you, Nicole, and good morning. Let me start by saying that our preparations for the Vista merger are progressing well and remain on track. Vista reported strong financial results for the third quarter, which further validates the strategic value of this transaction, and we continue to be very excited about what this partnership will bring to our combined organization. For NBHC this quarter, we saw loan production return to more normalized levels with total loan fundings of $421 million. Fundings were led by commercial banking, particularly in our CNI portfolio, which expanded at an annualized rate of 8.7%. This reflects a healthy rebound in client activity and continued progress in building our relationship-driven commercial franchise. While we are encouraged by this growth, overall loan portfolio outstandings were tempered by continued loan paydowns, particularly in certain CRE categories where stabilized properties have moved to permanent financing.
Speaker #7: Vista reported strong financial results for the third quarter , which further validates the strategic value of this transaction . And we continue to continue to be very excited about what this partnership will bring to our combined organization .
Speaker #7: For this quarter , we saw loan production return to normal to more normalized levels with total loan funding of $421 million . Fundings were led by commercial banking , particularly in our CNI portfolio , which expanded at an annualized rate of 8.7% .
Speaker #7: This reflects a healthy rebound in client activity and continued progress in building our relationship driven commercial franchise . While we are encouraged by this growth , overall loan portfolio Outstandings were tempered by continued loan paydowns , particularly in certain city categories where stabilized properties have moved to permanent financing at quarter end .
Aldis Birkans: At quarter end, our total non-owner-occupied CRE to total risk-based capital ratio stood at a low 132%, reflecting a well-balanced risk profile. On a pro forma basis, incorporating the pending Vista transaction, we expect to remain comfortably below the 200% level. Credit metrics continue to demonstrate a stable loan portfolio with improving trends. Both classified and criticized assets declined during the third quarter. Non-performing assets decreased by another $6.3 million, with the NPA ratio improving by 8 basis points from the prior quarter and by 10 basis points on a year-to-date basis. Overall, we are pleased with the return to normalized loan production, the strength in our CNI portfolio, and the disciplined management of our CRE exposure, all of which position us well for sustainable high-quality growth going forward.
Speaker #7: Our total non-owner occupied CRE to total risk based capital ratio stood at a low 132% , reflecting a well balanced risk profile on pro forma basis .
Speaker #7: Incorporating the pending Vista transaction, we expect to remain comfortably below the 200% level. Credit metrics continue to demonstrate a stable loan portfolio with improving trends, both classified and criticized.
Speaker #7: Assets declined during the third quarter . Non-performing assets decreased by another $6.3 million , with the NPA ratio improving by eight basis points from the prior quarter and by ten basis points on a year to date basis .
Speaker #7: Overall , we are pleased with the return to normalized loan production . The strength in our CNI portfolio and the disciplined management of our CRE exposure .
Speaker #7: All of which position us well for sustainable , high quality growth going forward . A good example of our relationship banking success this quarter was in copper deposits , which grew approximately $200 million from linked quarter spot balance basis with nearly half of that growth coming from non-interest bearing transaction deposits .
Aldis Birkans: A good example of our relationship banking success this quarter was in core deposits, which grew approximately $200 million on a linked quarter spot balance basis, with nearly half of that growth coming from non-interest-bearing transaction deposits. Regarding deposit costs, we expect to see a decrease in the fourth quarter as a result of actions taken in late September following the most recent Federal Reserve rate cut. We are also prepared to take additional measures should the Federal Reserve continue on its rate-cutting path. One final note on deposits. In the fourth quarter, we plan to use the flexibility provided by our core deposits to manage our balance sheet and remain below the $10 billion threshold. Lastly, I'd like to highlight the strong performance from our long-standing fintech partnership investments, which delivered $3.5 million in gains included in this quarter's financials.
Speaker #7: Regarding deposit costs , we expect to see a decrease in the fourth quarter as a result of actions taken in late September following the most recent fed rate cut .
Speaker #7: We are also we also prepared to take additional measures should the fed continue on its rate cutting path . One final note on deposits in the fourth quarter , we plan to use the flexibility provided by our camber deposits to manage our balance sheet in the remain below the $10 billion threshold .
Speaker #7: Lastly , I'd like to highlight the strong performance from our long standing fintech partnership investments , which delivered $3.5 million in gains included in this quarter's financials .
Speaker #7: While these results from these initiatives may not always move in a straight line , we continue to expect positive financial and strategic outcomes over the long term .
Aldis Birkans: While the results from these initiatives may not always move in a straight line, we continue to expect positive financial and strategic outcomes over the long term. Tim, I'll turn it back to you.
Speaker #7: Tim, I'll turn it back to you.
Speaker #5: Thanks , Aldis . Well , we had an active third quarter . We generated $421 million in loan fundings . We had solid deposit growth .
Tim Laney: Thanks, Aldis. We had an active third quarter. We generated $421 million in loan fundings. We had solid deposit growth. We maintained pricing discipline, resulting in a net interest margin of 3.98%. We experienced a decline in classified and criticized assets, accompanied by a nice decrease in non-performing assets. We grew our tangible book value per share 12% annualized during the quarter, and we announced the meaningful acquisition of Vista Bankshares. On that note, Shelly, I would ask you to open up the call for questions.
Speaker #5: We maintained pricing discipline, resulting in a net interest margin of 3.98%. We experienced a decline in classified and criticized assets, accompanied by a decrease in non-performing assets.
Speaker #5: We grew our tangible book value per share 12% annualized during the quarter , and we announced the meaningful acquisition of Vista Bancshares . And on that note , Shelley , I would ask you to open up the call for questions .
Speaker #3: Thank you . If you would like to ask the question , please signal by pressing Star one on your telephone keypad . If you're using a speakerphone , please make sure your mute function is turned off to allow your signal to reach our equipment .
Operator: Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, you can press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll now take your first question coming from the line of Jeff Rulis with DA Davidson.
Speaker #3: Again, you can press Star 1 to ask a question, and we'll pause for just a moment to allow everyone an opportunity to signal for questions.
Speaker #3: And we'll now take your first question coming from the line of Jeff Rulis with D.A. Davidson.
Speaker #8: Thanks . Good morning .
[Analyst 1]: Thanks. Good morning.
Speaker #5: Hey . Good morning .
[Analyst 2]: Hey, good morning.
Speaker #8: Wanted to dig into the margin in a little more detail . The mid 390 guide . You know talking about entering the quarter with some lower deposit costs .
[Analyst 1]: I wanted to dig into the margin in a little more detail. You know, the mid 390 guide, you know, talking about entering the quarter with some lower deposit costs. I just kind of engage with that a little bit more on what looks like rate cuts that are a near certainty, the impact of which, and maybe the push and pull of why at 398 you're kind of pulling it back down, I suppose, absent cuts, but maybe you could touch on the expected impact there.
Speaker #8: Just kind of engage with that a little bit more on on what looks like rate cuts that are near certainty . The impact of which and maybe the push and pull of why .
Speaker #8: At 398 you're kind of pulling it back down . I suppose . Absent cuts , but maybe you could touch on the expected impact there .
Speaker #6: Yes . Good morning Jeff . This is Nicole . I'll mention that the third quarter's margin , it was positively impacted by about half $1 million of interest and fees recovered on the large recovery that we had in the quarter .
Nicole Van Denabeele: Yes. Good morning, Jeff. This is Nicole. I'll mention that the third quarter's margin was positively impacted by about $0.5 million of interest and fees recovered on the large recovery that we had in the quarter. That was about 2 basis points of margin impact. We still feel good, solid, you know, mid three nines margin for the quarter. Looking ahead to the potential for rate cuts in Q4, the very likely outcome of a rate cut next week, our teams have started teeing up actions to take down deposit rates in line with the Federal Reserve. We have a history of being very disciplined both on rates up and rates down cycles of managing our rates on both sides of the balance sheet, and we are prepared to take those actions next week.
Speaker #6: That was about two basis points of margin impact . So we still we still feel good , solid , you know , mid three nines margin for the quarter .
Speaker #6: Looking ahead to the potential for rate cuts in Q4, the very likely outcome of a rate cut next week. Our teams have started teeing up actions to take down deposit rates in line with the Fed.
Speaker #6: We have a history of being very disciplined, both on rates up and rates down, cycles of managing our rates on both sides of the balance sheet, and we are prepared to take those actions next week.
Speaker #6: And we do believe for that rate cut that that deposit actions that we have planned will offset the impact of the repricing on our variable loan portfolio .
Nicole Van Denabeele: We do believe for that rate cut that deposit actions that we have planned will offset the impact of the repricing on our variable loan portfolio.
Speaker #8: Okay , really helpful . I appreciate it . And then on the expense side , can the the to unify step up . Is that can we view that as kind of we'll now be in the run rate .
[Analyst 1]: Okay. Really helpful. I appreciate it. On the expense side, can the 2Unify step up, is that, can we view that as kind of we'll now be in the run rate? Do you see a leg up higher again in coming quarters? I'm just trying to get a little more color on the expense build, if any, regarding that piece before we get kind of the revenue potential visibility in the fourth quarter call.
Speaker #8: Do you see a leg up higher again in coming quarters or just trying to get a little more color on the expense build , if any , regarding that piece before we get kind of the revenue potential visibility in the fourth quarter , call ?
Speaker #6: Yeah . On the on the topic of to you expenses that step up this quarter was expected in line with with launching two unify .
Nicole Van Denabeele: Yeah. On the topic of 2U expenses, that step up this quarter was expected in line with launching 2Unify. We were expecting a step up in depreciation expense of that capitalized development asset. We will continue to invest in marketing for 2Unify, and as we onboard 2Unify clients, there's a component of some variable expense that will come online as well.
Speaker #6: We were expecting a step up in depreciation expense of that capitalized development asset. We will continue to invest in marketing for Two Unify.
Speaker #6: And then as we onboard to unified clients , there's a component of some variable expense that will come online as well .
Speaker #8: I guess if Nicole , if we were to zoom out a little bit and think about 26 overall expenses , I don't want to front run .
[Analyst 1]: I guess, Nicole, if we were to zoom out a little bit and think about 2026 overall expenses, I don't want to front-run, you know, as you pull budgets, but trying to think about an overall with 2Unify included. I know you've had some actions to reduce costs as well. I don't know if you could speak to overall growth of expenses expected in 2026 or just maybe frame up the push and pull of what, from a jump-off point of what you kind of framed up of, call it $65 million core in fourth quarter.
Speaker #8: You know , as you as you pull budgets . But trying to think about an overall with two unify included . You know , I know you've you've had some actions to reduce costs as well .
Speaker #8: I don't know if you could speak to overall growth of expenses expected in 26 or just maybe frame up the push and pull of what from a jump off point of what you kind of framed up of call it 65 million core in fourth quarter ?
Speaker #5: Jeff , this is Tim . We're in the middle of some pretty interesting partnership discussions as it relates to two unify right now .
Tim Laney: Yeah. This is Tim. We're in the middle of some pretty interesting partnership discussions as it relates to 2Unify right now, and we're really not in a position to speak in more detail to what might happen there in 2026. We will maintain our commitment, as Nicole mentioned earlier, to address 2Unify one way or the other in our fourth quarter earnings call. I would tell you, even with a step up in, if everything was status quo, even with a step up in amortization depreciation next year on 2Unify, we will work to keep those expenses relatively flat. That's assuming status quo, and at this point, we just can't speak to any more detail on 2Unify.
Speaker #5: And we're really not in a position to speak in more detail to what might happen there in 26 . We'll we will maintain our commitment as Nicole mentioned earlier , to address two , unify one way or the other in our fourth quarter earnings call .
Speaker #5: I would tell you , even with the step up in if everything was status quo , even with a step up in amortization , depreciation next year , on to unify , we will work to keep those expenses relatively flat .
Speaker #5: But that's assuming status quo and and at this point , we just can't speak to any more detail . On to you .
Speaker #8: Yep . I appreciate the going to take a little time to kind of pull that together . So thanks for the thoughts . I'll step back .
[Analyst 1]: I appreciate the going to take a little time to kind of pull that together. Thanks for the thoughts. I'll step back.
Speaker #5: Thanks , Jeff .
Tim Laney: Thanks, Jeff.
Speaker #3: Your next question is coming from the line of Kelly Malde with KBW.
Operator: Your next question is coming from the line of Kelly Mulda with KBW.
Speaker #9: Hey , good morning . Thanks for the question . Maybe turning back to loan growth . It was nice to see I think you called out a step up in production .
Nicole Van Denabeele: Hey, good morning. Thanks for the question. Maybe turning back to loan growth, it was nice to see. I think you called out a step up in production. I see balances were down. Can you speak to, if any, of the paydowns here? I know in prior quarters you had been managing the book for credit. Was there any kind of puts and pulls related to that? If you could provide an outlook for given what sounds like strength in the pipelines, what the expectations are ahead, what do you expect to reverse this trend now in Q4? Thank you.
Speaker #9: I , I see balances were down . Can you speak to if any of the paydowns here ? I know in prior quarters you had been managing the book for credit .
Speaker #9: Was there any , any kind of puts and pulls related to that ? And if you could provide an outlook for given what sounds like strength in the pipelines , what the expectations are ahead , do you expect to reverse this trend now in Q4 ?
Speaker #9: Thank you .
Speaker #5: Thanks, Kelly. This is Tim. I'll begin and then turn it over to Aldous. I would tell you that the third quarter reduction in volume was not driven by DirecTV.
Tim Laney: Thanks, Kelly. This is Tim. I'll begin and then turn it to Aldis. I would tell you that the third quarter reduction volume was not driven by directive paydowns. We really think we've moved through addressing any risk in the portfolio that we felt we needed to address given the macroeconomic environment. What we've seen in the third quarter was largely heavy volume of payoffs as temporary or construction funding was going to perm with very attractive perm financing by alternative lenders. Quite frankly, we have seen private credit continue to step into the market, lending money on credit terms and at pricing that, you know, I've done this, sort of call it, for decades, and I just don't understand what they're doing because we've just simply seen price and credit term competition from private credit that we're not going to compete with.
Speaker #5: Paydowns . We really think we've moved through addressing any risk in the portfolio that we felt we needed to address , given the macroeconomic environment .
Speaker #5: What we've seen is that the third quarter was largely characterized by a heavy volume of payoffs as temporary or construction funding was transitioning to permanent financing, supported by very attractive permanent financing from alternative lenders.
Speaker #5: And quite frankly , we have seen private credit continue to step into the market , lending money on credit terms and at pricing that , you know , I've done this for .
Speaker #5: Call it for decades. And I just don't understand what they're doing because we've just simply seen price and credit term competition from private credit not going to compete with.
Speaker #5: So , you know , I'll turn it to Aldous to talk about how we believe we're positioned to overcome that because we are feeling very good about our pipeline and where we now stand with our , in particular , CRE portfolio .
Tim Laney: I'll turn it to Aldis to talk about how we believe we're positioned to overcome that because we are feeling very good about our pipeline and where we now stand with our, in particular, CRE portfolio.
Speaker #7: Yeah . Thanks , Tim . I'll just add on the page ten of the investor deck on the loan summary table that actually kind of is visible if you look at our commercial real estate production itself was pretty
Aldis Birkans: Yeah. Thanks, Tim. I'll just add on page 10 of the investor deck, on the loan summary table, it actually kind of is visible. If you look at our commercial real estate production itself, it was pretty healthy this quarter, but embedded, we kind of had, I'll call it, between $100 million, $150 million headwind from those paydowns that Tim was mentioning, and those are on the table above that you can see between our originated and acquired books. Looking at the fourth quarter, our pipelines, just like entering this quarter, look very healthy, very good. We are optimistic that the return to growth is subject to this behavior that we just discussed. Other than that, I'm very optimistic about fourth quarter.
Speaker #7: Healthy this quarter. But we're kind of had, I'll call between $100 million and $150 million headwind from those paydowns that Tim was mentioning.
Speaker #7: And those are on the table above that . You can see on the originated and acquired books . Looking at the fourth quarter , our pipelines , just like entering this quarter , look very healthy , very good .
Speaker #7: We are optimistic that we return to growth . Subject to this behavior that we've just discussed . But other than that , I'm very optimistic about fourth quarter .
Speaker #9: Got it , got it . That's helpful . And then just on the expenses , you know , you you announced the cost save plan last July .
Nicole Van Denabeele: Got it. That's helpful. Just on the expenses, you announced the cost-save plan last July. Wondering, did we get the full benefit of that this quarter? One, and then two, I apologize if I missed it, but how much 2Unify expenses were in Q3 as well as what's baked into that $64 to $66 for Q4?
Speaker #9: Wondering did we get the full benefit of that this quarter . And one and then two I apologize if I missed it , but how much to unify expenses were in Q3 as well as what's baked into that 64 to 66 for Q4 ?
Speaker #6: Yeah , yeah . Good morning . Kelly I'll take that one . We've been closely monitoring our progress on the expense reduction actions that we announced last quarter .
Nicole Van Denabeele: Yeah. Yeah. Good morning, Kelly. I'll take that one. We've been closely monitoring our progress on the expense reduction actions that we announced last quarter, and we are delivering on those commitments. You're right. Q3 was a little noisy. It was impacted by $1.7 million of acquisition expenses, $6.2 million of 2Unify expenses. The third quarter, it was impacted by higher mortgage commissions. We view that as a positive because it was driven by higher mortgage revenues. There was a couple of other timing impacts in the third quarter. We had about a $700,000 fair value adjustment on our deferred comp liability, and we were impacted by the timing of certain occupancy and equipment expenses.
Speaker #6: And we are delivering on those commitments . You're right , Q3 was a little noisy . It was impacted by 1.7 million of acquisition expenses , 6.2 million of to unify expenses .
Speaker #6: In the third quarter, it was impacted by higher mortgage commissions. We view that as a positive because it was driven by higher mortgage revenues.
Speaker #6: And then there was a couple of other timing impacts . In the third quarter , we had about a $700,000 fair value adjustment on our deferred comp liability .
Speaker #6: And then we were impacted by the timing of certain occupancy and equipment expenses.
Speaker #9: Got it. Thanks. I think the last thing was how much to unify is in the Q4 run rate.
Nicole Van Denabeele: Got it. Thanks. I think the last thing was how much 2Unify is in the Q4 run rate?
Speaker #6: Yeah , we in the Q4 run rate , we're expecting to unify expenses somewhere in the range of 7 to 9 million . And that that that does account for some step up in marketing spend and variable costs associated with user increases .
Nicole Van Denabeele: Yeah. We, in the Q4 run rate, were expecting 2Unify expenses somewhere in the range of $7 million to $9 million, and that does account for some step up in marketing spend and variable costs associated with user increases.
Speaker #9: Got it . That's that's that's helpful . Last question for me . You guys announced a really exciting acquisition last month . And it's it's on track to close next quarter .
Nicole Van Denabeele: Got it. That's helpful. Last question for me. You guys announced a really exciting acquisition last month, and it's on track to close next quarter. Wondering if you've found the pace of discussions. Clearly, you're in the market given your announcement. Wondering if you could provide us, Tim, with kind of if you've seen any flurry of inbound on the back of that announcement. Thanks.
Speaker #9: Wondering if you've found the pace of discussions . You know , clearly you're in the market given your announcement wondering if you've could provide us Tim with kind of if you've seen any flurry of inbound on the back of that announcement .
Speaker #9: Thanks , Ellie .
Speaker #5: I think I've slept in my own bed four nights over the last three weeks. There have been a lot of discussions, and we remain focused across our existing footprint.
Tim Laney: Kelly, I think I've slept in my own bed four nights over the last three weeks. There have been a lot of discussions, and we remain focused across our existing footprint. We would love to do more in Texas and build on what John and his team at Vista have built. We are seeing other interesting opportunities that we think could create meaningful market share step-ups in markets that we already do business with. The short answer to your question is, yes, we're very active.
Speaker #5: We would love to do more in Texas and build on what John and his team at Vista have built , and we're seeing other interesting opportunities that we think could create meaningful market share .
Speaker #5: Step ups in markets that we already do business with . So the short answer to your question is , yes , we're very active .
Speaker #9: Great . Thank you . I will step back .
Nicole Van Denabeele: Great. Thank you. I will step back.
Speaker #5: Thank you Kelly .
Tim Laney: Thank you, Kelly.
Speaker #3: Next question is coming from the line of Andrew Terrell with Stephens .
Operator: Next question is coming from the line of Andrew Terrell with Stephens.
Speaker #10: Hey good morning .
[Analyst 1]: Hey, good morning.
Speaker #5: Hey . Good morning .
Tim Laney: Hey, good morning.
Speaker #10: Tim , I want to ask you a question around just to unify . And I also don't want to , you know , front run any any conversation we'll have in January .
[Analyst 1]: Tim, I want to ask a question around just 2Unify, and I also don't want to front-run any conversation we'll have in January. I get that, you know, maybe not too much to share here, but I guess I'm just curious from a big-picture standpoint. You guys have been pretty clear on some of the expense recently associated with that. It sounds like marketing spend could ramp, and then there's also maybe a variable component as you begin onboarding clients from an expense standpoint. I'm just curious, when you look near to medium term, how long do you think it takes to generate positive operating leverage? Do you feel like you have near-term visibility to positive operating leverage in that business?
Speaker #10: And I get that , you know , maybe not too much to share here , but I , I guess I'm just curious from a big picture standpoint , you guys have been pretty , pretty clear on on some of the expense recently associated with that .
Speaker #10: And , you know , it sounds like marketing spend could ramp . And then there's also maybe a variable component as you begin onboarding clients from an expense standpoint .
Speaker #10: I'm just curious, when you look, you know, near to medium term, how long do you think it takes to generate positive operating leverage?
Speaker #10: And do you feel like you have near visibility to positive operating leverage in that business ?
Speaker #5: I applaud you for asking the question, and I'll simply say again, we'll be providing all of that detail on our fourth quarter earnings call.
Tim Laney: I applaud you for asking the question, and I'll simply say again, we'll be providing all of that detail on our fourth quarter earnings call. I think I would also, as I mentioned earlier, repeat that we're literally in the middle of a very important partnership discussion that we believe could have a powerful impact on the way 2Unify moves forward, and it's just inappropriate to be talking about 2Unify anymore this morning.
Speaker #5: I think I would also and I mentioned this earlier , repeat that we're in the in we're literally in the middle of a very important partnership discussion that we believe could have a powerful impact on on the way to unify moves forward .
Speaker #5: And it's just inappropriate to be talking about two unify anymore this morning.
Speaker #10: Understood . I appreciate it . Yeah , I had to had to give it a shot there . Thank you .
[Analyst 1]: Understood. I appreciate it. I had to give it a shot there. Thank you.
Speaker #11: And .
Speaker #5: I .
Speaker #10: Applaud that . I was also , you know , interested just on your discussion around private credit and the competition . You guys are experiencing there .
Tim Laney: I applaud.
[Analyst 1]: I was also interested just on your discussion around private credit and the competition you guys are experiencing there. I'm curious, Tim, if you could share any more specifically around where you're seeing that either geographically, from product type, just any more color on where you're seeing private credit be most competitive?
Speaker #10: And I'm curious , Tim , if you could share any more specifically around where you're seeing that either geographically from , from product type , just any more color on on where you're seeing private credit be .
Speaker #10: Most competitive ?
Speaker #5: Yeah , I mean , really primarily in the commercial real estate sectors and I would I would tell you that's , you know , the vast majority of the action we're seeing there .
Tim Laney: Yeah. I mean, really, primarily in the commercial real estate sectors. I would tell you that's, you know, the vast majority of the action we're seeing there.
Speaker #10: Yep. Okay. And then the last one for me: I saw you guys bought back a little bit of stock this quarter.
[Analyst 1]: Okay. The last one for me, just I saw you guys bought back a little bit of stock this quarter. Your capital is still built very nicely. You'll close Vista, but still have a pretty strong capital position. I know it sounds like interested in future M&A, but any interest in further capital deployment in the buyback?
Speaker #10: Your capital still looks very nice. You'll close Vista but still have a pretty strong capital position. And I know it sounds like you’re interested in future M&A, but any interest in further capital deployment in the buyback?
Speaker #7: Yeah . Andrew , this is all so as you mentioned , we did buy 8 million or so in capital . We still have $3,536 million .
Aldis Birkans: Yeah, Andrew, this is Aldis. As you mentioned, we did buy $8 million or so in capital. We still have $35 million, $36 million authorization left. We'll be optimistic with it in light of the discussions that we're having with potential M&A targets as well. It'd be remiss if I didn't mention the 12% tangible book value growth this quarter that we built on top of that $8 million buyback. We feel very good about our capital build over the last 12 months. It's at very strong excess capital levels, and we are looking at potential strategic options there.
Speaker #7: Authorization left will be opportunistic, with it along the, you know, in light of the discussions that we’re having with potential M&A targets as well.
Speaker #7: But also, you know, it'd be remiss if I didn't mention the 12% tangible book value growth this quarter that we built.
Speaker #7: On top of that , eight . Million dollars buyback . So we feel very good about our capital build over the last 12 months since very strong excess capital levels .
Speaker #7: And we are looking at potential strategic options there .
Speaker #10: A perfect thank you guys for taking the questions .
[Analyst 1]: Perfect. Thank you guys for taking the questions.
Speaker #5: Thank you .
Tim Laney: Thank you.
Speaker #3: And your next question will be coming from the line of Brett Rabatin with Hardie Group .
Operator: Your next question will be coming from the line of Brett Rabbiton with Hovde Group.
Speaker #11: Hey good morning everybody . I won't ask about two . I won't ask about two . Unify . I one wanted to go back just to the payoffs .
[Analyst 1]: Hey, good morning, everybody. I want to ask about 2Unify. Wanted to go back just to the payoffs. I know we've kind of beat that to death here a little bit too, but just wanted to make sure, you know, it sounds like you're expecting better trends in the fourth quarter, you know, private credit aside. Does the shape of the curve on the longer end coming in here, how does that impact maybe the commercial real estate portfolio? Do you have any line of sight into, you know, the CRE book staying or just any thoughts on the yield curve from here relative to that portfolio?
Speaker #11: I know we've kind of beaten that to death here a little bit too, but just wanted to make sure, you know, it sounds like you're expecting better trends in the fourth quarter.
Speaker #11: You know , private credit aside , does the shape of the curve and the longer end coming in here , how does that impact maybe the commercial real estate portfolio and do you have any line of sight into the Cree book stain or what's what's any just any thoughts on the yield curve from here relative to that portfolio .
Speaker #7: Not at this moment . I don't think we've seen I will say I have not heard from our bankers that we've seen a pay down of prepay .
Aldis Birkans: Not at this moment. I don't think we've seen, I'll say, I have not heard from our bankers that we've seen a paydown or prepay, so to say, based on the refinancing opportunities and lower yields. Now, that's not to say that that doesn't come through at some time, but to date, the shape of the yield curve has not impacted our paydown activity.
Speaker #7: So to say , based on the the financing opportunities in lower , lower yields . Now , that's not to say that that doesn't come through at some time , but to date shape of the yield curve has not impacted our pay activity .
Speaker #11: Okay. And then the other question I had was just around the Vista deal. And Tim, it sounds like you've been on the road quite a bit.
[Analyst 1]: Okay. The other question I had was just around the Vista deal. Tim, it sounds like you've been on the road quite a bit. I was hoping to hear, I know one of the aspects of the transaction that you're excited about is treasury management, wealth, and trust. Any thoughts relative to the deal call on fee income and those things specifically?
Speaker #11: Just was hoping to hear I know one of the aspects of the transaction that you're excited about is , is treasury management , wealth , wealth and trust .
Speaker #11: You know , any any thoughts relative to the deal ? Call on on fee income and those things specifically .
Speaker #5: We lost you at the end. You said, "Any thoughts related to what?"
Tim Laney: We lost you at the end. You said any thoughts related to what?
Speaker #11: Oh I'm sorry . Any thoughts related to wealth Treasury management , trusts ? You know , those opportunities for the pro forma franchise ?
[Analyst 1]: I'm sorry. Any thoughts related to wealth, treasury management, trust, you know, those opportunities for the pro forma franchise?
Speaker #5: Well, look, first and foremost, what I'm excited about is the caliber of leadership and the quality of the new teammates coming in from Vista Bancshares.
Tim Laney: First and foremost, what I'm excited about is the caliber of leadership and the quality of the new teammates coming in from Vista Bankshares. I think they've done a remarkable job taking market share in an important market like Dallas, Texas. I don't have any reason to expect that to do anything other than grow. I think the combination of these teams is going to make us incredibly strong, and we're going to be leveraging key talent out of Vista across our entire organization. We've remained committed to taking best practices, whether they come from NBH or Vista, and running with those best practices. We are going to be delivering, frankly, a much broader suite of treasury management capabilities into Texas, into Vista with NBH's arsenal of treasury capabilities. We're super excited about what we can do in the trust and wealth management arena.
Speaker #5: I think they've done a remarkable job taking market share in a in an important market like Dallas , Texas , and and I don't have any reason to expect that to do anything but other other than grow .
Speaker #5: I think the combination of these teams is going to make us incredibly strong, and we're going to be leveraging key talent out of Vista across our entire organization.
Speaker #5: We've remained committed to taking best practices , whether they come from MBA or Vista , and and running with those best practices and and we are going to be delivering a frankly , a , a much broader suite of treasury management capabilities into Texas , into Vista , with , with NB arsenal of of Treasury capabilities .
Speaker #5: We're super excited about what we can do in the trust and wealth management arena. As a practical matter, Vista had been outsourcing that to a third party.
Tim Laney: As a practical matter, Vista had been outsourcing that to a third party. Given what we're able to do with our Wyoming-based trust business in particular, and bringing those opportunities to clients in the state of Texas, just as we're doing around the rest of the franchise, I think can be monumental. I am genuinely that excited about it. I continue to say that what we're able to do in Wyoming for clients who are really concerned about privacy, that are concerned about controlling their trust, etc., is unfortunately one of the better-kept secrets. As we work to get that message out, I think we're going to continue to see exceptional growth there. Now, was there one other? I hit treasury, I hit trust, trust management.
Speaker #5: Given what we're able to do with our Wyoming-based trust business in particular, and bringing those opportunities to clients in the state of Texas, just as we're doing around the rest of the franchise.
Speaker #5: I think it can be monumental. I mean, I am genuinely that excited about it. I continue to say that what we're able to do in Wyoming for clients who are really concerned about privacy, that are concerned about controlling their trust, etc.
Speaker #5: , is unfortunately one of the better kept secrets . But as we work to get that message out , I think , I think we're going to continue to see exceptional growth there .
Speaker #5: Now , was there one other I hit Treasury , I hit trust wealth management and really , I'll say with Vista , they've had they've built a solid private banking business .
[Analyst 1]: Right. No, you've.
Tim Laney: I'll say with Vista, they've built a solid private banking business and again have been outsourcing that trust and wealth management piece. The opportunity to bring that in-house is exciting. Aldis, I'd ask you to comment.
Speaker #5: And again have been outsourcing that trust and wealth management piece . And so for the the opportunity to bring that in-house is is exciting .
Speaker #5: And all of a sudden I'd ask you to comment .
Speaker #7: Just say that we're not waiting until Q1 when we come together to start working on these partnerships. John and I have weekly calls, and we bring our teams together.
Aldis Birkans: I'll just say that we're not waiting until the first quarter when we come together to start working on these partnerships. John and I have weekly calls, and we bring our teams together. To the extent that they're already handing off those opportunities someplace else, we'd rather be there in the fourth quarter already picking up those opportunities. That work is underway, and those synergies should hopefully start showing their benefits here in the fourth quarter.
Speaker #7: And , you know , to the extent that they already are handing off those opportunities someplace else , we'd rather be there in the fourth quarter already picking up those those opportunities .
Speaker #7: So that work is underway and those synergies should be , you know , hopefully start showing they're their their benefits here in fourth quarter .
Speaker #11: Okay, that's all really helpful. Thanks so much, guys.
[Analyst 1]: Okay, that's all really helpful. Thanks so much, guys.
Speaker #5: All right . Thank you .
Tim Laney: All right. Thank you.
Speaker #3: Next question is coming from the line of Kelly Mota with KB.
Operator: Next question is coming from the line of Kelly Mulda with KBW.
Speaker #9: Hey thanks for letting me jump on . I figured kind of while we have you MPH has been great at managing credit . You did have that .
Nicole Van Denabeele: Hey, thanks for letting me jump on. I think you're kind of, while we have you, NBH Bank has been great at managing credit. You did have that, you know, one idiosyncratic loan, I think in Q1, but otherwise, it's been really strong. Tim, Aldis, I'm just wondering, given the focus on NDFI lending, it doesn't look like NBH Bank has much exposure here. Wondering if you have some high-level thoughts as to, you know, potential risks and anything else that you might direct analysts to more carefully watch. Thank you.
Speaker #9: You know, one idiosyncratic loan, I think in one Q, but otherwise it's been really strong. Tim Aldis, I'm just wondering, given the focus on NFI lending, it doesn't look like NBA has much exposure here.
Speaker #9: Wondering if you have some high level thoughts as to , you know , potential risks and any anything else that you might be direct analysts to more carefully watch .
Speaker #9: Thank you .
Speaker #7: Yeah , we really don't have any thoughts because we really don't have much of that . That's well below 1% . So we of total loans .
Aldis Birkans: Yeah. We really don't have any thoughts because we really don't have much of that. It's well below 1% of total loans.
Speaker #5: So maybe that's indicative of our thoughts. Yeah.
Tim Laney: Maybe that's indicative of our fault.
Speaker #7: Yeah. But that's the answer.
Aldis Birkans: Yeah, that's the answer.
Speaker #5: But but in terms of other in terms of other sectors , you know that that I just think we have to continue to be watching closely in , in the ag space .
Tim Laney: In terms of other sectors, I just think we have to continue to be watching closely. In the ag space, it's commodity row crops and the vulnerability there. It's, again, a space we have limited exposure to. I mean, cattle operations are probably at some of the best performance levels in history. On the other hand, commodity exposure, that would be a tough place to be exposed to. We've talked about it before, another space that continues to just face tragic headwinds is transportation. We worked aggressively to reduce the exposure that we were concerned about there and think that that's a, forgive the pun, but a long road back for those truckers. Those would be a couple of areas that, I guess if we were on the investor side, we would be keeping an eye on.
Speaker #5: It's commodity row crops and the vulnerability there . And , you know , it's it's again a space we have limited exposure to .
Speaker #5: But you know , I mean cattle operations are probably at some of the best performance levels in history . On the other hand commodity exposure that would be a tough place to be exposed to .
Speaker #5: We've talked about it before , but another space that continues to face tragic headwinds is transportation . And , you know , we worked aggressively to reduce the exposure that we were concerned about .
Speaker #5: There . And , you know , think that that that's a forgive the pun , but a long road back for those truckers .
Speaker #5: So those those would be a couple of areas that , you know , just we I guess if we were on the investor side , we would be keeping an eye on .
Speaker #9: Got it. Thank you so much.
Nicole Van Denabeele: Got it. Thank you so much.
Speaker #5: You bet . Kelly , thanks for the question .
Tim Laney: You bet, Kelly. Thanks for the question.
Speaker #3: Thank you. I am showing we have no further questions at this time. I will now turn the call back to Mr. G.
Operator: Thank you. I'm showing we have no further questions at this time. I will now turn the call back to Mr. Laney for his closing remarks.
Speaker #3: Laney for his closing remarks .
Speaker #5: Thank you . Shelly , I'll be brief . Just thank you so much for your time and attention this morning . Please feel free to reach out to us if you have any additional questions and we will respond promptly .
Tim Laney: Thank you, Shelly. I'll be brief. Just thank you so much for your time and attention this morning. Please feel free to reach out to us if you have any additional questions, and we will respond promptly. Have a great day.
Speaker #5: Have a great day .
Speaker #3: And this concludes today's conference call . If you would like to listen to the telephone replay of this call , it will be available in approximately 24 hours , and the link will be on the company's website on the Investor Relations page .
Operator: This concludes today's conference call. If you would like to listen to the telephone replay of this call, it will be available in approximately 24 hours, and the link will be on the company's website on the investor relations page. Thank you very much and have a great day. You may now disconnect.