Q2 2019 Earnings Call
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Good morning, everyone and welcome to the National Bank Holdings Corporation, 2019 second quarter earnings call.
My name is Simon and I will be your conference operator today.
At this time all participants are in a listen only mode. We will conduct a question and answer session. Following the prepared remarks.
As a reminder, this conference is being recorded for replay purposes.
I would like to remind you that this conference call will contain forward looking statements, including statements regarding the company's loans and loan growth deposits strategic capital potential income streams gross margin taxes and non interest expense.
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 US 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.
It is now my pleasure to turn the call over and introduce National Bank Holdings Corporation's Chairman, President and CEO Mr., Tim Laney.
Thanks, Simon good morning, and thank you for joining National Bank Holdings second quarter 2019 earnings call I have with me, our Chief Financial Officer oldest Burkins and Rick Newfield, our chief risk Management Officer.
We're pleased to report another record quarter of earnings on the back of strong, earning asset growth and solid transaction deposit growth.
It is noteworthy that our noninterest bearing deposits grew at an annualized rate of 17.2% during the quarter.
Our focus on earning a full banking relationships of our clients is paying dividends.
Our markets continue to perform better than the national averages on virtually every measure and our teams continue to capture our fair share of the growth.
Before turning the call over to all this I'll point out that our team delivered a record level of fee income during the quarter and that our annualized net charge offs on originated and acquired loans were only two basis points all this.
Thank you Tim and good morning.
As you saw in yesterday's release, we reported record quarterly net income of $20.3 million in record earnings per diluted share of 64 cents for the second quarter.
This is an increase of $1.4 million or 7.2% on a linked quarter basis, and a 15.8% increase over the second quarter of 2018.
This quarter's financial results were driven by 10.7% annualized growth in our earning assets, reflecting the steady progress on our loan and deposit growth as well as a strong quarter from our residential mortgage group.
In my following comments I will give a more detailed update on the results for the quarter and an update on our guidance for the rest of the year.
Led by the led by a strong commercial loan growth of 18.5% annualized total originated and acquired loans outstanding grew a solid 8.3% annualized this quarter.
New loan originations were $290.5 million for the quarter and our year to date loan balances have grown 12.4% annualized.
For the first six months of 2018, we saw strong commercial loan demand, 68.5% of 2000 Nineteens loan production wasn't commercial loans.
This has been driven by a growing demand for working capital and other on other investment activity from businesses within our footprint.
Our pipeline remains strong and the local economies continue to perform better than a national averages.
Based on this momentum we believe we will achieve a 10% originated and acquired loan balance growth for the full year 2018.
This is on track with the guidance, we shared last quarter.
On the other side of the balance sheet, we continue to be pleased with the growth of our core relationship deposits.
Average non interest bearing deposit balances grew 17.2% annualized on a linked quarter basis.
And our non interest bearing deposits now represent 24.9% of total deposits.
Our total average transaction deposits grew 7.7% annualized.
And we expect this momentum to carry into the second half of 2018.
As such we are reaffirming our guidance for average transaction deposit growth in the mid single digits for full year 2018 with time deposits staying relatively flat.
The second quarter's transaction deposit cost was just 40 basis points, coupled with a new loaded new loan originations that came on at 5.2% during the second quarter.
We delivered solid net interest income growth.
Our linked quarter taxable equivalent net interest income increased $1.4 million or 10.6% annualized in spite of declining market rates throughout the quarter.
Fully taxable equivalent net interest margin for the quarter was 4%.
If the fed follows through with a widely expected interest rate cut at the end of July we will experience a slight decrease in our net interest margin.
As such I will break our longstanding tradition of not incorporating any fed rate moves into our guidance.
Assuming a 25 basis point fed funds target rate cut in July we expect our fully taxable equivalent net interest margin to be in the mid three ninetys for the remainder of 2019.
Earning assets should end the year at around $5.4 billion were at the upper end of our previous guidance.
With regard to credit once again this quarter annualized net charge offs very low two basis points.
In fact, the only blemish on on otherwise clean quarter for credit is a $2.4 million specific reserve. We took in a loan that came over with the peoples Bank acquisition.
Unfortunately, the loan deteriorated post acquisition and before we could move it out of the bank.
Our team is working to resolve this growth.
For the second half of 2019, we are expecting a VR expecting that provision expense to be in the range of $5 million to $6 million.
During the second quarter, we also realized record non interest income of $20.7 million, which was $3.6 million higher than the first quarter of 2019.
Our combined service charges and bank card fees grew a solid 7.2% linked quarter.
This was driven by both the success of our team's growing core banking relationships and seasonal activity.
The gain on sale of residential mortgages increased $3.5 million linked quarter.
Driven by seasonal growth in home purchase activity, which we had expected as well as pickup in the refinancing activity due to lower rates.
In a decreasing rate environment, we typically expect some level of earnings pickup that comps the comps from our residential mortgage production activity to act as a hedge to the rate impact on our net interest income and I'm glad it has proven to be to be the case already.
Looking ahead, we project our total non interest income for the second half of 2019 to be in the $34 million to $36 million range for the third quarter being seasonally higher than the fourth.
Effectively this increases our full year non interest income guidance by almost $2 million.
Regarding expenses, our second quarters, non interest expense totaled $46.5 million and increased $2.1 million from the prior quarter.
The linked quarter increase was entirely driven by the increase in the total compensation line more specifically the increase was largely largely driven by residential mortgage commission expense.
As we can have consistently demonstrated drilling during prior quarters and years, we continuously focus on expense efficiencies and expect to achieve total core expenses in the $91 million to $92 million range for the second half of 2019.
Additionally.
On a year to year to date basis, we have incurred a net $1.2 million in Oreo and problem asset workout expense.
Which as we discussed during last last earnings call, we expect to recover but Oreo gains later this year.
The effective tax rate for the quarter was 13.6% and included $1.3 million benefit related to stock compensation activity.
Excluding this the effective tax rate for the quarter was 19.4%.
For the rest of 2019, we expect the effective tax rate to be in the previously guided 18.5% to 19.5% range.
Finally, as it relates to capital we finished the quarter with a 10.6% tier one leverage capital ratio.
And the tangible book value per share increased to $19.83 driven by our record earnings.
Tim that concludes my comments. Thank you all is well needless to say we are very pleased with our first six months of performance during 2019.
And more important we feel good about our momentum as we enter the third quarter, our intense focus on earning the full relationship of our clients is producing strong results. Looking ahead. We believe we can continue to increase our return on tangible common equity, while growing a safe and secure balance sheet to be clear. We think there is a lot to like about where we're headed and on that point Simon we are ready to open the call for questions.
Thank you ladies and gentlemen at this time, if you would like to ask a question.
Please press Star then the number one on your telephone keypad.
If you would like to withdraw your question. Please press the pound key.
We'll pause for just a moment to compile the Cuban a roster.
And your first question comes from the line of Jeff Rulis with da Davidson Go ahead. Your line is open.
Morning, guys.
Good morning.
Jeff's associate actually on for him.
Hundreds buyer seller and.
You know have you guys just had any discussion.
As far as what you're hearing internally or market shot or just just kind of read.
Well.
Certainly the pace at which we are building a building capital is a good problem to have I guess, one would say.
And.
Like a broken record it's important to point out that we continue to embrace optionality.
We like the idea of of and the fact that we are in multiple discussions with a lot of potential partners and.
We'll see where some of that takes us, but as you've seen in the past.
We're pretty slow and methodical when it comes to.
Creating the kind of opportunity like you saw us create with the peoples acquisition.
I don't know all this is or anything else you would add.
Yes.
Great. Thanks, and then you know just kind of you know when we werent talking them.
Above industry average you know expanding it platform Wyatt.
Potentially and.
With that we're a were salaries up due to higher mortgage production.
It's kind of.
Washington's together right I'll I'll I'll take the I'll take the first.
Question, and then maybe tossed the so the comp expense or commission expense to all this.
We're going to be very focused on not letting the mortgage business growth.
More than call it 15% of our revenue were sensitive to taking on that kind of.
Just to be Frank mortgage banking multiple.
What we like about what we're doing is that it's focusing on serving clients in the markets, where we do business.
We all also like what we're seeing because in some ways and all this you may want to speak to this we can on this view the refinance revenue that we're seeing right now with rates low as a hedge against.
Pressure that might put on other parts of the balance sheet. So I like that diversification. All this as it relates to the commission expense I think thats pretty straightforward, but I'll toss it to you.
Just to finish them stuff, we are looking at this as a hedge as rates move the rate environment software down to what's happening to our asset sensitivity of the balance sheet.
And to Tim's point to in the past over the last year, our production was 80% purchase based and only 20% of the refinancing this quarter that ticked up to 70 525 potentially moving into third quarter more closer to 30, 30% of the refinancing so that business for the financing is picking up as debate that the rates have fallen and acting as you can see this quarter.
As a.
An offset to what potentially could happen with a LIBOR rates going down.
On the expense side.
I will say the majority.
$1.8 million of the $2.1 million increase in our.
Non interest expense was driven to commission and incentive based on the related to commission and incentives.
Awesome.
Alright, and then kind of just one last one a broad picture here I mean, how are you guys I'm feeling about you know the credit profile and.
Yes, just broadly in the industry.
Sure well certainly watching a number of these.
Second quarter or reading a number of these second quarter releases from institutions given us reason just to.
Visit again particular sectors like agriculture.
I'll I'll remind everyone. We're not a big commercial real estate of player. We're now down in fact, weve talked about being under or right at a 100% of capital on commercial real estate versus that threshold of 300%, we actually shrank here in the first half of the year I think Rick what do we 95, where 95% of risk based cap money not here kind of risk based capital Rick can speak later, if anyone's interested.
On areas like agriculture, but we feel good about that I'll remind you that on energy, we exited that space dismantled our team several years ago, We've guide.
Very small tail of business there that Rick can speak to that we feel good about.
So.
Yeah, It's veldt to me, while I guess a lot of folks have talked about kind of just one off industry issues that it felt for the first time like we were hearing.
About some more systemic kind of cracks.
Which just gives us cause to look that much harder at our stress testing to make sure. We're in a position to take advantage of a down economic down turn should that happen.
But but again, maybe we can get into some more details in some of those spaces with Rick later.
Awesome. Thank you so much guys.
Alright, thank you.
Your next question comes from the line of Gordon Mcguire with Stephens, Inc. Your line is open.
Hi, good morning.
Oh, maybe starting on the NIM Aldous with the July you said mid three ninetys for the rest of this year. So was it pretty fair to think about if we're assuming more than one cut this year, it's about five basis points per 25.
Let's say five to seven basis points upper 25.
Got it and just dig in kind of the mechanics of that I appreciate that you've been reducing asset sensitivity, but I was wondering if you could provide an update as far as your variable fixed mix, what kind of loan repricing durations, we're looking at.
And maybe any colors on color on floors, you could give.
Yeah we've.
We've been adding fixed rate assets and actually if you look at our other non interest and non interest income fee line item. This quarter was lighter because we.
Stayed away from the swap opportunities and adding a letting our bankers have fixed rate loans instead of a variable rate loans being socks, and real time in our mind and remind everyone. When we're talking about fixed kind of the T.I.. It's it's a three to five year fixed rate loans, obviously, we don't do 10 or 15 year fixed rate loans on balance sheet.
The.
In terms of the book right now its approximately 40, 849% our Oh, the bulk is linked to either live or hand or prime.
Most of it is linked to the LIBOR floor. So we started seeing some of that.
Rate impact in the second quarter. If you look at one month LIBOR that compressed on average basis six basis points versus first quarter, which pleases me to look out earning asset yields actually expanding four basis points, even with that headwind. So we are very happy with our teams being able to add as I mentioned the opening remarks are you a loans came out of 5.2% still accretive to the to the existing originated book So that's working in our favor.
And I think thats the.
Okay anything on floors, you can give us or what should we think about that 48% to 49% being pretty about it right. You know the floors that is interesting because you keep keep on adding floors, but floors as rates are moving up around it and at the rate environment, though is much lower than this one so the next 25 or 50 basis points. It really is not going to be.
The floor floor levels will not benefit for us.
So it is you know unless we really find ourselves next year and a much lower rate environment, we can do that but a visit the floor discussion.
Got it okay, maybe switching to the deposit side.
CD costs are up only 15 basis points. This quarter I was wondering if you could give any color on what you're what.
What deposits the repricing at from a cost perspective, and then maybe the cost of what might be maturing at this point just trying to think about.
Hilda increases they're not it's a very good great question. So our weighted average CD cost in the second quarter came on came on let's say around 1.5%.
The reason for the increase.
And CD.
Book Outstanding cost of funds was because there was rolling off was at lower left the lower levels that we will continue to take place here in in a third quarter stuff, that's coming off it will be in low ones.
So the unless we see dramatic shift here and CD rates on a marginal basis, we will continue seeing some drift up in CD costs.
In the third quarter and that should stabilize and going into fourth quarter all else equal obviously.
Got it that's all I had thank you yes. Thank you gord.
Your next question comes from the line of Chris Mcgratty with KBW. Your line is open.
Hi, This is actually Kelly motta on for Chris How's It going I Kelly well. Thank you.
Great.
My first couple of questions have to do about then next to the balance sheet and your loan to deposit ratio is now up to 92% versus about 80% year over year. I'm wondering if you have a target of where you'd like to be here and hi, how you're thinking about that funding next thanks.
Yeah, I think we we still and we've said this before but we are very comfortable letting those mix shift.
To mid Ninetys, so call. It 95 give or take we certainly don't want to become a wholesale funded bank. So going beyond hundred is something that we will look to avoid and crank up and think differently about how to grow deposits, but midnight easily I feel very comfortable funding this balance sheet with the in the markets to be we'd be operate and.
Kelly this is in some ways ties back to Gordon previous question as well on Cds I want to emphasize that we feel we believe that's a lever we can easily pull if we wanted to grow deposits you know our real focus obviously is on core relationship accounts core operating accounts driving low cost deposits. That's once again, a more kind of methodical approach to growing the business.
But we we really haven't had to pull that lever on interest bearing deposits to grow and that still available to us and the good news is with the feds moves and kind of the understanding of rates coming down bond market coming down we're seeing clients expectations lower on those interest earning deposits. All just didn't touch on it but we have been able to successfully began to bring down rates and a number of those deposit interest.
Deposit, earning instruments that will serve us well over time. So that's just a little more color as it relates to managing that loan to deposit mix.
Great and then with the Securities those are those are down is.
Well to about 18% of average earning assets how should we be thinking about where this trough just.
With managing liquidity I know, it's a good question as we model liquidity, we I expect that we will start reinvesting the investment portfolio next year.
And Bill target, what you know the way the model the liquidity and the minimum on balance sheet available sort of liquid assets to be model.
Well needed about that that ratio to be around 15% to the toll losses.
15%, Okay. All right. Thank you and then.
Switching gears just.
Wondering what you're modeling for Accretable yields for the remainder of the year and how we should be thinking about in 2020 with the input maintained of diesel.
Yeah for the rest of the year the accretable yield from three Tenthirty both will be between.
Call it five and a half to $6 million from that book.
We finished the quarter right around $60 million I expect that book be knocked down in loan low fortys there are.
US several larger credits that we expect cash flow to come out of that book.
Going into the next year. The then see of a c. So most of these loans are almost entirely all the remaining loans outperforming so we will blending in our overall loan book in its going to continue to accrete effective yield.
Ongoing going forward basis.
Okay, and then one last housekeeping item, if I could be affect the tax rate that is on a fully taxable equivalent basis is that correct.
Right.
All right great. Thank you.
Thank you Kelly.
Your next question comes from the line of Tim O'brien with Sandler Oneill Partners. Your line is open.
Hi, Good morning, guys, Hey, good morning.
Hi, Tim can you talk a little bit about the.
About the lending environment.
Hearing from other sources.
Our discussion about intensity.
Competition being higher or more fierce now across the board.
And are you seeing that in your markets.
It doesn't seem to affect your origination business much but.
What are you sensing is going on in the market out there right now and is it.
Second your business on the margin will light you know as all this shared earlier, we actually we're very pleased with the kind of.
Yields the kind of pricing, we were seen and our.
Commercial and business banking or small business banking space.
Not only in the <unk>.
Second quarter, but through the first half of the year I think we generate that from operating and very strong markets. As you know we've had in fact some of our competitors are.
The way I'm to be acquired away here in the last year, so that doesn't hurt.
But I would say what's really important is when we look at our core markets for them for the most part we have rational competitors, both as it relates to pricing and credit or risk management. So you know I I think.
In some respects.
We.
We benefit from market Tailwinds, and we continue to benefit from just.
The growing momentum of the experience of our banking team seeking full relationships and having some success there.
I don't know it Tim if you had like Rick Rick is here to speak to maybe any of the specific industries again, we've seen some some issues pop with other institutions with agriculture and of course energy, but you know would that be helpful tend to have rich yeah, that'd be great love to hear that and particularly with regard to how it affects your markets any other potential risk to the local economies you operate in.
Yes, Hey, Tim Good morning. This is Rick Hi, Rick Let me start with that high level and maybe to further some of Tim's comments. When we talk about you know the markets. It's also the diversification of the economy and as you know from day, one we've been very disciplined around our concentrations. So that we maintain that diversification. So we don't have an outsized impact of a particular sector softens and maybe to give you a little more color on on and certainly an area that has seen some stress over the last several years. So obviously the last nine months or so there have been a number of.
Issues that some banks have reported that would be agriculture, we refer to it as food and agribusiness.
Well as we've had a team in place for a number of years that specializes in this area and more than three years ago, We began selectively exiting row crop producers and cattle operators that were concentrated and are weekly capital on us to be preemptive.
Our team has been focused on larger diversified and lower leverage operators and particularly those that are downstream from production I'm sorry from growing in production.
I'll also point out over the last 12 months, we've incurred virtually no net charge offs in agriculture, only about $80000. So just as an example of a sector that we've been selectively exiting certain certain types of risk and be very thoughtful about our exposure and maybe just one more point about how we look at concentrations.
The total food and agribusiness is $241 million or about 5.6% of total loans.
And then on a space like energy, we're fortunate to Colorado is radically diversified its economy away from energy. So we really even in the last dramatic downturn weve concerned ourselves with the derivative impact in that kind of that secondary tertiary impact and didn't really see it and then Rick you may want to speak to you know the.
Again, we dismantled our energy team several years ago, you may even want to talk about what we have specifically remaining there I mean, we havent originated any new energy business I believe in well over four years. So again to your point, Tim We just exited we do not what we do we do have about $43 million remaining and we have one residual problem loan that were working to resolve well under $1 million and the rest of that portfolio is stable and performing well and I'd expect to continue to reduce that Ics and its decline how much you're going to think 12 million year to date, EPS pretty meaningful percentage as a run down mode.
Other industries, I mean real estate look.
I guess I am Larry because I I tend to believe that that's a space that at this point in the cycle arguably could be seen as a as overvalued across the board.
I've heard people speculate as much as 20% kind of across all sectors. So you know I'm happy that we're very selective that it's not an area that we're looking to grow again, only 95% of risk based capital.
It just comes back to the simple idea of not having all of our eggs in one basket.
Thanks for the color guys I appreciate it.
Tim Hey, Thank you for the questions.
Your next question comes from the line of Nathan race with Piper Jaffrey. Your line is open.
I know I can good morning, it's Bob on front end up doing.
Well good morning.
I just wanted to touch on.
You guys kind of talked about the lending segment, but I want to talk more about geography could you guys kind of get some color around where you saw growth this quarter and where you're may be excited about.
In the second half 19 into 2020 right right.
Well.
Well, it's hard to single out a particular market because we're at a point, where all of our markets and our teams in those markets are performing well.
We we.
We certainly are benefiting here in Colorado, Our Texas team has come on strong in Dallas and Austin, We are really pleased with our new his team in Salt Lake City and ER.
And in Kansas City, and that broader Overland Park market, we look we see increasing momentum and we're just look at it so.
We clearly benefit from being in a set of strong markets across the board.
In terms of of looking ahead to the remainder of this year I hope what you heard all to say maybe I'll reemphasize. It is that you know.
Where we're in a position of not only reaffirming our guidance at the beginning of the year, but suggesting that we think we've got a very good shot at beating that guidance.
And that's based on.
Revenue growth and expense management when it comes right down to it so.
I would say.
It's a combination of.
Being in Great markets, and then the maturation of our teams working our relationship banking approach to capturing and retaining business I don't know.
All this or Rick anything you would add agree with what you said exactly yeah.
Bob does that help or yeah, no that's definitely starting to what the one question. We Didnt answers you asked about next year and.
I'm I'm I'm, a man I'm, just not ready to get that far out over my skis, but I appreciate the question.
No its just fine.
And then one more one more from me.
Regarding that credit that you took.
$2.4 million reserve on can you give us any more color around how big that relationship is and what industry. It is then.
Sure. Bob This is Rick So I mean, let me start just to be clear and maybe out of alluded to this we don't see any systemic issues. We see this as a one off.
It's a seeing eye loans that came over with the peoples acquisition with exposure now to your specific question around 10 million our desire would have been to get this loan off the books before it deteriorated.
One thing that maybe some of your colleagues or kind of parts on the phone know the good news is we have a special assets team that has a terrific track record of working through acquired and other problem loans was solid recoveries.
Yeah I'll just.
Jump in here in a mine that want to be acquired peoples.
Peoples bank of the timing Mark that book at $9.8 million.
This loan was accruing and performing loan at that time. So there was nothing specific allocated to this loan but as of end of this quarter, we had $6.8 million, so that mark still remaining and still yet to be accrued through our financials and the.
View that as basically a protection against this loan and anything else that may come up.
And maybe all this just one other point on that is that when I look at the rest of the acquired People's loans and those upfront remarks, we've worked through problems at better than the original expectations again back to your point about cover a good point.
Awesome. Thank you ill step back yes, you bet. Thank you Bob I appreciate the question.
Your next question comes from the line of Gordon Mcguire with Stephens, Inc. Your line is open.
Hi, Thanks for taking another question.
Ill just the the fee income guidance for the back half of the year. It was 34 to 36 did I get that correctly is there.
So.
That seems a little bit light to me.
Running year to date it seems like.
I'm just if you match, we did the year to date, you should be getting 75, and a half million is there something that I'm missing.
Hey, guys. This I'm laughing this is Tim I'm laughing because I've said the same thing to my team.
[laughter].
Look at so couple of things one is.
We are starting quite well off in mortgage production and gains on sale here in July how long that lost its hard to predict so we tried to be realistic relatively looking how year ended last year in the fourth quarter I keep hearing that were tempered.
[laughter].
The other component to be not counting that we did benefit than the first half of the year, we not counting on those swap fees in the second half a year and that that does add up and that is real a million dollars or so I mean, the swap fees with that back to repositioning balance sheet that throttling back but look at at this point Gordon I think your question is insightful not only are we seeing as we march into the third quarter better than expected.
Fee income coming out of residential banking. We're also seeing continued pick up in our fee income out of our consumer bank in general and so.
I guess, if if there's.
Temperance sets its.
Being somewhat concerned about just the general volatility in the market and where the economy is going but my goodness based on.
Based on what I'm seeing at least third quarter to date.
I.
I'm I'm feeling pretty good about our ability to.
To beat that number.
Now all this is cringing I wish you could see.
But.
I'll leave it at that.
Okay. So there wasn't anything unusual this quarter in the mortgage like unusual pricing or anything that we have no no no. It's all volume driven a pickup.
Great. Thank you.
Yeah. Thanks for the question.
Your next question comes from the line of Tim Obrien with Sandler Oneill Partners. Your line is open.
Hey, one follow on just you guys mentioned, adding or in a lot lower swap fees. This quarter, so how much and traditional fixed income loans to that.
Add to the portfolio in the quarter.
Yes, it just the CR piece $41 million, an hour and I don't know if I would characterize it this in the past in quarters before year last year, we were adding about 65% to 70% of new loan that originations would have been in variable rate.
Loans.
Yeah. This quarter. It was around 50 55 50 to 55 was very you know the dollar amount top of mind the incremental dollar amount. We can follow back up with you to be about $150 million mm 150 or 15.
Hundred 50 arrived we had about $290 million loan production this quarter half of that was specs half of its variable awesome. Thanks for the color I appreciate it.
You bet.
[noise].
I am showing we have no further questions at this time I will now turn the call back to Mr. Laney for his closing remarks.
Before I close I think I'll just add one other follow up by Kelly I just wanted to make sure that I answered. Your question right in terms of the tax a tax equivalent.
<unk> effective tax rate guidance. So what we guide to is tax expense line item.
That does that excludes the tax equivalent adjustments. So its a tax income tax expense line item divided by income tax before sort of income before tax income taxes. So.
It excludes the tactical and I just want to make sure that make make sure that I I answered that question properly.
Thank you all this and I appreciate that.
As I said before we really are pleased with our first six months of performance. During this year equally important we really feel good about our momentum as we move into the second half of the year and we really do believe that there is a lot to like about where we're headed so thank you for your interest.
And have a good day.
Thanks.
And this concludes today's conference call. If you would like to listen to the telephone replay of this call. It will be available beginning in approximately two hours and will run through August six 2019 by dialing 8558592, 056, or 4045373, 406 and referencing the conference I'd 7492 to one seven.
The earnings release, and an online replay of this call will also be available on the company's website on the Investor Relations page.
Thank you very much and have a great day you may now disconnect.