Independent Bank Corp (Michigan) (IBCP) 2014 Q4 法說會逐字稿

Good day and welcome to the Independent Bank Corporation fourth-quarter 2014 earnings conference call and webcast. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Brad Kessel, President and CEO. Please go ahead.

Thanks, Emily. Good morning. Thank you for joining Independent Bank Corporation's conference call and webcast to discuss the Company's 2014 fourth-quarter and full-year results. I am Brad Kessel, President and CEO of Independent Bank; and joining me is Rob Shuster, Executive Vice President and Chief Financial Officer.

Before we begin today's call, it is my responsibility to direct you to the cautionary note regarding forward-looking statements. This is slide 2 in our presentation. If anyone does not already have a copy of the press release issued by Independent today, you can access it at our company's website, www.IndependentBank.com. The agenda for today's call will include prepared remarks followed by a question-and-answer session, and then closing remarks.

Beginning with the financial summary slide, page 4, we are reporting for the fourth quarter of 2014 net income of $3.9 million or $0.17 per diluted share. For the 12 months ended December 31, 2014, the Company is reporting net income applicable to common stock of $18 million or $0.77 per diluted share, compared to $82.1 million or $3.55 per diluted share in the prior-year period. Recall the full-year 2013 results include an income tax benefit of $54.9 million associated with the reversal of substantially all of the Company's deferred tax asset valuation allowance in the second quarter of 2013.

Turning to the 2014 fourth-quarter financial highlights slide, page 5, we were particularly pleased with this quarter's results as it relates to a number of areas. First, our growth in commercial loan balances which grew at 11.1% annualized rate in the fourth quarter of 2014.

Secondly, we continue to see progress in improving asset quality, with nonperforming assets down 19.4% since September 30, 2014, and loan net charge-offs down by 66% compared to the fourth quarter of 2013.

Third, we reduced noninterest expenses by $2.1 million or 8.3% on a year-over-year basis.

Finally, we also repurchased and retired $5 million of trust preferred securities issued by IBC Finance IV, which produced a $500,000 gain and will result in annual interest expense savings of approximately $100,000.

Turning to the 2014 annual financial highlights slide, page 6, I am pleased with our $2.6 million or 11.5% increase in income before taxes. Much of the improvement in operating results for 2014 was the result of a $14.2 million or 13.6% decrease in total noninterest expenses. Very significant to our future growth prospects is the fact in 2014, net loans grew by $35.4 million or 2.6%.

This is the first year of annual net loan growth for the bank since 2007. Our company continued its success in improving asset quality with a $14.5 million or a 40.1% decrease in nonperforming assets, and $4.8 million or 59.8% decline in net charge-offs.

Our associates were also successful this past year, continuing to focus on deposit gathering, and these efforts yielded a $39.5 million or 2.1% increase in total deposits. Our 2014 results resulted in a 7.8% increase in tangible book value per share.

Our footprint shown on the core banking markets slide, page 7, includes significant market presence and opportunity to gain market share in attractive Michigan markets. For the fourth quarter of 2014, Michigan market conditions continue to improve as compared to the same period one year ago, evidenced by a reduced unemployment rate, net job growth, and appreciation in real estate values. Commercial occupancy rates continued to improve for industrial, retail, and office space.

The table at the bottom of this slide provides a snapshot of our loan balances by market for the quarter ended December 31, 2014, in comparison to one year ago. As you can see, our West region has shown the largest dollar growth, followed very closely by our Southeast region.

On January 21, 2015, our Board of Directors approved a branch consolidation plan, whereby six offices will be closed and the customers will be reassigned to six other nearby locations. This decision was difficult in that we recognize it impacts our customers, our employees, and the community as a whole.

The branches being consolidated are shown on slide 8 of our presentation. The consolidation generally creates a pro forma resulting branch with $50 million in deposits or more. This increases the average branch size on a pro forma basis for our entire network to just under $30 million per branch, which is up from $19.7 million per branch just three years earlier. We made this decision recognizing our Company's higher than peer efficiency ratio and lower than peer average deposits per branch.

It is part of a larger ongoing effort to improve the overall earnings performance of Independent Bank. The decision to close particular branches was made in consideration of many factors, including the profitability and size of each branch, the customer usage patterns of each branch, the proximity to our other branch locations, and the historical growth trends and potential growth of the branch and the market.

We estimate the economic impact in aggregate to result in an annual reduction in noninterest expenses of $1.6 million. We have also estimated a potential annual loss of revenue due to customer attrition of $300,000 to $400,000, as well as one-time expenses of $300,000 relating to severance and other costs. Our team is working to complete the branch consolidations by April 30, 2015.

Post-execution of this consolidation plan, Independent Bank will have a branch network of 64 locations. At this time, we do not have definitive plans to close any other locations. Each of our locations and its customer base is a valuable asset to our franchise, and we continue to work on an ongoing basis to realize the optimal potential of each location.

Moving to the deposit franchise slide, page 9, we have $1.92 billion in total deposits at December 31, 2014. As indicated on this slide, $1.53 billion or 79% of our total deposits are transaction accounts. For the fourth quarter of 2014, our cost of deposits declined 2 basis points from the prior quarter and 5 basis points for the full year.

Our loan composition, yield, and lending highlights are shown on slide 10. Total loans grew for the third consecutive quarter to $1.43 billion as of December 31, 2014. Our commercial team continued to lead the way, with net growth of $18.9 million for the quarter and $55.7 million or 8.8% for the year.

The commercial team is targeting businesses with $1 million to $50 million in annual sales. This past year, approximately 50% of our new commitments were in the C&I segment and 50% were in commercial real estate. Relative to our markets, our East region had 46% of our new commitments, followed by 33% from the West region and 21% from the Central region.

The new commitments continue to be very granular, as is our whole portfolio. In 2014, 79 credits of $500,000 or more in size aggregated to $148 million or 70% of our total new commitments.

Our consumer direct and indirect channels also reported net growth of $14.3 million or 7.5% for the year. In addition, we originated $265.5 million of residential mortgages and sold $223.5 million, generating $5.6 million in net gains.

I would now like to turn the presentation over to Rob Shuster to share a few comments on our financials, credit quality, and management's outlook. Rob?

Thanks, Brad, and good morning, everyone. I am starting at page 11 of our presentation. Our net interest income totaled $18.1 million during the fourth quarter of 2014, a decrease of $1.3 million from the year-ago period, and a decrease of about $100,000 on a linked quarter basis.

Our tax equivalent net interest margin was 3.56% during the fourth quarter, compared to 3.96% from the year-ago period and 3.61% from the third quarter of 2014. The decrease in the net interest margin is primarily due to the prolonged low interest rate environment that has resulted in declining average yields on our loan portfolio.

Average interest-earning assets were $2.03 billion in the fourth quarter of 2014, compared to $1.96 billion in the year-ago quarter and $2.02 billion in the third quarter of 2014.

Page 12 contains a more detailed analysis of the linked-quarter decline in net interest income. This decline was primarily due to decreases in interest and fees on loans and interest on tax exempt securities that was partially offset by an increase in interest on taxable securities and a decrease in interest expense. The decrease in interest and fees on loans was primarily due to the decline in average balance of payment plan receivables, as well as decreases in the yields on commercial loans, mortgage loans, and consumer installment loans that were not fully offset by growth in average balances.

The decrease in interest on tax-exempt securities was primarily due to $88,000 in accelerated premium amortization on a municipal bond that was called. This reduced our overall net interest margin by 2 basis points in the fourth quarter. We will comment more specifically on our outlook for net interest income for 2015 later in the presentation.

Moving on to page 13, noninterest income totaled $9.2 million in the fourth quarter of 2014, as compared to $10.9 million in the year-ago quarter and $10.5 million in the third quarter of 2014.

The most significant change was the decrease in mortgage loan servicing, as the fourth quarter of 2014 included a $1 million impairment charge on capitalized mortgage servicing rights. This compares to recoveries of previously recorded impairment charges of about $700,000 in the fourth quarter of 2013, and $500,000 in the third quarter of 2014.

As Brad mentioned, the fourth quarter of 2014 also included a $500,000 gain on the extinguishment of debt. We expect this transaction will also reduce our annual interest expense by $143,000.

As we previously have discussed, we did sign a new debit card brand agreement in January 2014. The fourth quarter of 2014 was the first full quarter with our entire debit card base converted to MasterCard.

As detailed on page 14, our noninterest expense totaled $22.9 million in the fourth quarter of 2014, as compared to $25 million in the year-ago quarter. For all of 2014, noninterest expense totaled $90 million, a $14.2 million or 13.6% decline from 2013.

Many expense categories were lower in 2014, primarily reflecting our cost-reduction initiatives. In particular, full-year credit-related expenses declined by $10.5 million. We also provide details on this slide for the changes in compensation and benefits, both for the quarter and for the full year.

Investment securities available for sale increased by approximately $70.7 million since the beginning of 2014, primarily reflecting the deployment of overnight funds that were held at the Federal Reserve Bank, as well as funds provided from the year-to-date increase in deposits.

Page 15 provides an overview of our investments at December 31, 2014. 46% of the portfolio is variable rate, and much of the fixed-rate portion of the portfolio was in maturities of five years or less. The estimated average duration of the portfolio is about 1.9 years.

Page 16 provides data on nonperforming loans, other real estate, nonperforming assets, and early-stage delinquencies. We made significant further progress on improving asset quality during 2014. Nonperforming assets declined by 40% during 2014, and were down to 0.96% of total assets at year-end. In addition, total 30- to 89-day delinquencies fell to $8.7 million or 0.6% of portfolio loans at December 31, 2014.

Moving on to page 17, we recorded a credit provision for loan losses of $1.1 million in the fourth quarter of 2014, compared to a credit provision of $800,000 in the year-ago quarter. For the full year we recorded a credit provision for loan losses of $3.1 million compared to a credit provision of $4 million in 2013.

Loan net charge-offs declined by nearly 60% in 2014. The allowance for loan losses totaled $26 million or 1.84% of portfolio loans at year-end 2014.

Page 18 provide some additional asset quality data, including information on new loan defaults and on classified assets, which declined by approximately $17 million during 2014.

Page 19 provides information on our TDR portfolio that totaled $110.2 million at year-end 2014, a decline of 11.3% since the end of 2013. This portfolio continues to perform very well, with nearly 91% of these loans being current at year-end 2014.

On page 20 we provide a summary of our actual 2014 performance as compared to our original outlook. On an overall basis, we believe our performance was in line with our original outlook. Challenges on revenue, particularly with net interest income, were offset with reductions in noninterest expenses and a strong performance on asset quality, which reduced credit costs.

On page 21, we summarize our outlook for 2015. We expect mid-single-digit percentage growth in loans, led by growth in commercial loans and consumer installment loans. For seasonal reasons, we expect much of this growth to occur in the last three quarters of 2015.

We expect a low single-digit increase in net interest income in 2015. We expect this growth to begin to occur in the second quarter of 2015, as pressure on the net interest margin abates, allowing the forecasted loan growth to translate into an increase in net interest income. This forecast assumes a modest 0.25% increase in the federal funds rate, and mid- to long-term interest rates up slightly by the end of 2013.

Longer-term, we remain well-positioned to benefit from rising interest rates. We expect steady to slightly improving asset quality metrics. The performance of the TDR portfolio where we have a significant amount of allocated specific reserves, as well as loan net charge-offs, loan defaults volumes and our watch credit levels, will be the primary factors impacting our 2015 provision level.

Moving on to noninterest income, we anticipate a quarterly range of $9.5 million to $10 million in 2015, with a total for the year being similar to 2014. The potential wildcard is mortgage loan servicing income, with additional possible impairment charges on capitalized mortgage servicing rights, depending on quarter-end mortgage loan interest rates.

We expect noninterest expenses to be in a quarterly range of $21 million to $22 million. And for the full year, we forecast a low to mid single-digit percentage decline as compared to 2014 for total noninterest expenses. The reduction in these expenses is expected to be concentrated in the last three quarters of the year.

Finally, we expect income taxes to equal 31% to 32% of pretax income during 2015, with the primary permanent differences being interest income on tax-exempt securities and earnings on our bank-owned life insurance.

That concludes my prepared remarks. I would now like to turn the call back over to Brad.

Thanks, Rob. 2014 was a solid year for our Company with $18 million in net income and many accomplishments, as outlined in my earlier remarks. However, our management team recognizes we need to continue to grow revenue and improve our overall earnings as we work toward a performance of 1% return on assets.

Our target or roadmap to this level of performance is built on improving net interest income to $19.5 million, noninterest income of $10 million or better, and noninterest expense of $21 million or less.

As we look ahead, we will continue to execute on strategies and initiatives to increase long-term shareholder total return. These strategies include the following: revenue growth through asset migration from a lower-yielding securities portfolio to a higher-yielding loan portfolio. This strategy includes originations of high quality, high credit quality, diverse mix by segment, diverse by geography, and a very granular makeup of credits.

Secondly, we will continue to focus on and invest our resources in higher growth Michigan markets. Third, we will continue to leverage our low-cost core deposit base, which will at some point provide greater upside in a rising rate environment.

Fourth, we will continue to improve the bank's efficiency ratio, primarily through revenue increases, but also continuing to aggressively attack our cost structure.

Finally, the fifth strategy to increase long-term shareholder total return is through prudent management of our capital.

As it relates to our capital, our near-term target for tangible common equity is 10.5%, and longer term the target is near 9.5%. Our plan is to retain capital for organic loan growth and return capital through a consistent dividend payout plan and share repurchase plan.

The Company announced a $0.06 cash dividend on January 21 to shareholders of record on February 6, and payable February 17, 2015. The Company also announced today a share repurchase plan. Under the terms of the share repurchase plan, the Company is authorized to buy back up to 5% of its outstanding common stock.

The repurchase plan is authorized to last through December 31, 2015, and we intend to accomplish the repurchases through open market transactions. The timing and amount of any share repurchases will depend on several factors, including approval, our return of capital request from the bank regulators, security law restrictions, other regulatory requirements, the trading price of our common stock, potential alternative uses for our capital, and the Company's financial performance.

We believe sound execution on these strategies will generate solid total shareholder returns over the long run. At this point, we would like to open up the call for questions.

(Operator Instructions) Matthew Forgotson, Sandler O'Neill.

Good morning, gentlemen. Just on expenses, are there any one-time expenses in the fourth-quarter number? I'm just trying to understand how you step down from this $22.9 million level to the $21 million, $22 million range you're guiding across 2015.

Yes, well, a couple of items. One is if you look linked-quarter, I've got some detail on it on the noninterest expense slide, which is page 14. We did have a step-up in comp and benefits of $700,000 up. That is largely due to when we hit certain targets.

We do an estimate of the end of each quarter of where we think we will end up at year-end and we, in particular on the NPA side, moved quite a bit ahead of where we were projecting in those earlier quarters. So in a sense, that skewed some of that expense into the fourth quarter, which really should have been, had we known exactly where we were going to end up up for the year, that would've been spread out amongst the first three quarters more ratably. So that would be one piece of it.

Another piece would be, I'd say, occupancy expense was skewed higher, probably about $100,000. We had a record snowfall -- not that this can't occur at some other time -- but we had a record snowfall here in November, which really pushed up our snow removal costs. So those would be a couple.

If you look on a full-year basis, comp and benefits declined, including performance-based compensation. So we think between -- so between sort of that skewing of a few of those expenses into the fourth quarter, as well as a host of other initiatives on other expense fronts, that we can move down into that range that we indicated in the 2014 -- or 2015 guidance.

Okay. So now transitioning to the share repurchase, first can you tell us pro forma for the return of capital how much cash are you going to have at the holding company?

Yes. We currently have about $17.5 million of cash at the holding company, and we intend to file a request with our regulators of at least $15 million but potentially higher, maybe as much as $18.5 million to $20 million. So we would expect to have a bit north of $36 million of cash at the parent company.

We certainly think that would provide sufficient funds for our 5% share repurchase and still leave north of $20 million of cash at the parent company, even taking into account the share repurchases which is about three years of operating expenses, dividend payments at the $0.06 per quarter, and interest payments on the $34.5 million of TruPS we have remaining. So we still feel we will be in very good shape in terms of cash levels at the parent.

Okay, and then --.

Matt, one other thing, too, is -- and you are aware of it -- but the negative retained earnings at the bank in state laws that don't allow a bank to pay a dividend if it has negative retained earnings is what causes us to have to go through these requests for return of capital.

The bank's negative retained earnings had improved to negative $31 million at the end of 2014, and we hope certainly sometime within 2016 to be in a position where we would just the able to normally dividend up earnings and not have to go through this regulatory request cycle.

Just to follow up on that, can you give us a sense of your current appetite for the shares? Should we expect you to burn through this authorization by December 31, 2015? And related to that, kind of what earnback thresholds would a repurchase need to clear in your mind?

Well, I would say a couple things. One is our hope is that we could accomplish this through the course of 2015. Of course, it's going to depend on opportunities and all the things that Brad articulated. But I think our view is a repayment timeframe of two to three years is -- certainly has some appeal to us.

Then lastly, and then I will hop out; you mentioned kind of running towards a 1% ROA. I guess two specific questions there. First, kind of what is your provisioning assumption within that target return? And then secondly, how quickly you think you could get there.

Well, the provisioning assumption would be somewhere around 20 basis points, so that would be somewhere in the $3 million to $4 million range. And again, the roadmap, as Brad articulated, was $19.5 million in net interest income. If you look the last half of 2013, we were still at those levels.

So we think the key is just that continued build in loan growth that is certainly not going to happen in a quarter or two, but just consistently building toward that. If we get a boost in interest rates, that helps us know a lot more than just slugging it out with loan growth in this current environment.

The noninterest income, Brad had said $10 million or better. Our goal is to be on the better side, more toward that $10.5 million with improvement in mortgage banking revenues and continued growth in interchange income. And then on the expense side, $21 million or better, but more on the better side.

And I think if you put all of that in the mix with the numbers, you end up in that $8.5 million pretax, which gets you right around -- on a 31% to 32% effective tax rate gets you right into that 1% ROA range. So that is kind of the thought process in terms of the provisioning level.

Okay, and in terms of timing.

Time frame, I think working consistently toward building toward that in 2015, and hopefully getting closer to those numbers by the end of 2015.

Brad, I don't know if you wanted to add anything.

I think that's pretty good, Rob. I would say probably the margin is in the latter part of 2015, I think, we are going to push hard on the expense side to get after the first quarter some time. And really the noninterest income piece, that really is hard to call, but we are not that far off from it right now.

Thank you.

Damon DelMonte, KBW.

Good morning, guys. How are you? This first question is to kind of go back to the margin. Could you just talk a little bit again about your assumptions as far as the Fed's actions and potential rate moves in 2015? Did you say you are basically assuming only a 25 basis point increase during this year of 2015?

Yes, that's correct. So our model has really just 0.25% rate increase that occurs in September of 2015, and that's it for the course of the year. And then just a smaller move-up in intermediate to longer-term rates. So just a very little bit of flattening in the curve because we don't have the longer-term rates moving up quite as much now.

I think you are aware and everyone is aware that longer-term rates have actually trended down a fair amount early this year. So we would expect to see that retrace, and then longer-term rates ending the year up a little bit from where they ended 2014.

So we are not anticipating a lot of movement in interest rates. Most of the growth in the margin comes from really the pressure sort of abating, which we saw a little bit of this quarter, so that the loan growth in that rotation that Brad mentioned out of lower-yielding securities and into higher-yielding loans yields increases in net interest income.

Okay, so would you expect a similar amount of compression in each of the next two quarters as we saw from fourth to first? I'm sorry, from third to fourth quarter in 2014?

I think we feel it should really by the second quarter be flattened out. We have seen most of the pressure coming from just the differential of where the current loan yields are versus where new credits are coming in, but we just really feel like that sort of abates by the second quarter.

Okay. Then just with regard to the holding company cash level, you had said -- I missed a couple of the details here -- you said there's $17 million of cash at the holding company. And then did you say you're upstreaming another $18 million to get to that $35 million, $36 million dollar level?

Yes, our goal would be to upstream roughly $18.5 million, and that would take you to about $36 million of cash for the current.

Would that be during the course of the year, or you are saying right now you are going to --?

No. Our intention is, as we say in the release, is to file a request with the State of Michigan before the end of this month, and then we hope to be able to process a return of capital before the end of the first quarter.

Got you, okay. That's helpful. Then I think you kind of touched on this, but your outlook for the provision expense, I know you had for the year a negative reversal of provision. Can you give a little more guidance on how you are looking at that in 2015?

Well, if you look at our slide there, you'll note that that's one of the areas where we don't give a numeric guidance. And it really just reflects that it's so difficult to project and predict that. You know, I guess I would say this; if everything was sort of back to normal, we wouldn't think that a 20 basis point type provision level on average loans would be all that unusual, given where kind of our normal level of charge-offs are coming out.

But offsetting that, we have a lot of specific reserves on the TDR portfolio which continues to be performing very well and continues to be paying down. So we could have releases of reserves from that area. And then in combination if new loan defaults are low and if we continue to see good recoveries, that could still lead to some releases of the allowance. That roughly 1.85%, we are still a bit above where we see the peer group averages.

So I still think there is possibly room there, although you know it's not going to be there forever. So the timeframe for that probably is starting to get to the end of a one-year maybe cycle before you really get back to sort of normalized provisioning levels. But those are kind of the factors that could influence 2015.

Okay, do you have a long-term target for your loan loss reserve level?

No, because it really just depends on working through our model, and it depends on what's going on with all of the different factors that influence the size of the loan portfolio, the composition, the level of charge-offs and recoveries. So no, we don't -- there's no target. We just -- it is really dictated by the performance of the portfolio.

Okay, that's all that I had for now. Thank you.

(Operator Instructions) Rick D'Auteuil, Columbia Management.

Good morning. So just a couple of questions. So it sounds like the plan is contingent on -- more contingent on revenue growth and somewhat contingent on the expense reductions. The expense reductions are, I guess, more in your control.

Is there a plan B to address more expense reductions if the revenue growth doesn't come through as planned?

Yes, Rick, I think we continue to turn over every rock and look for every opportunity. And we have a lot of conversations internally that, hey, if rates stay lull like this for an extended period of time, there needs to be further reductions on the cost side. So we have those discussions.

We think there is a plan B. I would say there's things in the works as we speak that continuing to look at departments, staffing levels, process flow. One of the big things that we have been working on for some time, a year ago we re-signed our core processing contract with FIS. And as part of that effort, there was quite a bit of technology purchases that we made whereby we would garner significant improvements in workflow and process flow.

We are still in the process of executing or implementing those changes. And it is really hard to put your finger on how much of today's effort is going to fall by the wayside, but I do feel there is a material opportunity still in our workflow.

Thanks. It seems to me like even your short-term, near-term, midterm targets, are still sub peer on the efficiency ratio. Would you agree with that or --?

Well, longer-term we would like to be at 65% or better. And I think if you look at our balance sheet make-up, we have a lower than peer loan to deposit ratio, lower loan to asset -- earning and asset ratio. So really yes, there's opportunity to improve on the cost side, but we think there's tremendous upside on the revenue side by essentially moving out of securities earning 1.5% to loans at 4% or 4.25% or better.

Is that contingent on hiring more bankers or just getting more from the ones you have?

I think it's getting more from the ones we have. I think we have a very good infrastructure in place today without adding more to provide the revenue lift. One of the things, I think if you look at our numbers quarter over quarter over quarter, it took us a while to get the loan generation efforts going.

We probably started that effort in 2012, and you look back at early 2014, we were still lagging our peers a little bit. I think we caught up with them by midyear. And here you can see into the fourth quarter real strong, particularly on the commercial side, we have essentially 22 lenders.

We do have our feelers out. We may add a couple of junior lenders in terms of looking for long-run, long-term growth, but bottom line I think we have an infrastructure in place today that it's really leveraging that infrastructure.

Just an observation. Over the last 12 months -- I won't say your market but the State of Michigan -- has seen a decent amount of consolidation. And I just wanted to get your thoughts on that. And I assume as these returns improve, it makes you more attractive down the road. But just curious what your thoughts are on the Michigan consolidation that we've seen.

Sure. So a couple of comments, Rick. Number one, I think that from a competitive standpoint, consolidations create opportunities for us. It creates opportunities to acquire new customers, it creates opportunities to enhance our talent base.

So I think that's the first thing, and we have been successful on both those fronts the last couple of years, and it really varies by market depending who's doing what. So that's number one.

Number two is that when we look at the consolidations, the other -- we look at ourselves in each of our markets really trying to compete with looking at who is all competing in the market. And is it us and another community bank or two, and then the big banks? Is it us and just the big banks and so on?

So sometimes this consolidation just takes out somebody that we are running head to head with consistently. So that works to our advantage.

I would say number three, the multiples on several of the deals have been very, very attractive. And I think when we look at ourself internally, at some point some of those multiples would maybe be very enticing for our board, our shareholder base.

The challenge with that, I think, is that I think the performance of our institution probably still has some room to improve to capture that higher multiple, and that is what we are working on. If this Company ultimately does need to sell, we would rather sell on strength than on weakness. So I guess those are a couple of comments.

Rob, I don't know if you have anything to add.

Nope, I completely agree.

I appreciate that. Thank you very much.

This concludes our question-and-answer session. I would like to turn the conference back over to Brad Kessel for any closing remarks.

Okay, Emily, thank you very much. I would like to thank everybody that did tune in for today's call. Thank you for your interest in our company, and we wish everyone a great day. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.