Premier Financial Corp (OHIO) (PFC) 2023 Q4 法說會逐字稿

Good morning and welcome to the Premier Financial Corp. Fourth quarter 2023 earnings conference call.

All participants will be in listen-only mode.

After today's presentation, there will be an opportunity to ask questions.

To register your question.

Please press star, followed by one on your telephone keypad if you wish to revoke your question.

So one, if I may note this event is being recorded.

I would now like to turn the conference over to.

We'll now start with Permian Financial Corp. Please go ahead.

Thank you.

Good morning, everyone, and thank you for joining us for today's fourth quarter 2023 earnings conference call.

This call is also being webcast and the audio replay will be available at the Premier Financial Corp. website at Premier Bancorp.com. Following our prepared comments on the Company's strategy and performance, we will be available to take your questions.

Before we begin, I'd like to remind you that during the conference call today, including during the question and answer period you may hear forward-looking statements related to future financial results and business operations for Premier Financial Corp., actual results may differ materially from current management forecasts and projections as a result of factors over which the Company has no control information on these risk factors and additional information on forward-looking statements are included in the news release and in the Company's reports on file with the Securities and Exchange Commission.

I'll now turn the call over to Gary for his opening remarks.

Thank you, Paul, and good morning to all for joining us for our release fourth quarter earnings totaled 20.1 million, or $0.56 per share for the quarter.

The results lagged our third quarter performance as anticipated due to lower net interest margin and the seasonal impacts of our residential business as guided at the end of the third quarter.

However, the quarter did also include a couple of unanticipated nonrecurring or timing items that would lift the earnings for the quarter, slightly below our expectations to now run down the particulars first, a quick look at capital.

As you noticed, our earnings combined with the favorable AOCI. movement brings our tangible book value per share to $18.69. And that's a really good strong progression over the last three quarters, which of course, included the big pickup we had on the sale of our insurance operation, put evidence that we've got that we've got more upside there.

And we've made good progress during the year.

Loan growth for the quarter totaled 2.5% on an annualized basis.

And that brings our full loan growth for the year to 4.3%.

And that was in line with the expectations that we had for the year coming off of a 20 plus percent growth year in 22, how we were designed to be a 4% shop this year.

Annualized commercial growth totaled 5.8% higher and for the full year grew 4.2%.

Again, controlled growth was our mantra for 23 our consumer deposits annualized for the quarter grew just shy of 8%.

And when you combine third quarter and fourth quarter figures, our annualized growth for those two quarters was 6.7%, and that's a really strong number for us for non-interest bearing deposits also stabilized, delivering 2% annualized growth over that same period, Q3 and Q4 combined good positive trend for customer deposits over the second half of the year.

Net interest margin did decrease eight basis points from Q4 to q three, and that was a bit more slippage than we provided in guidance on our last call, which was about 4% on our high four basis points on our high end expectation.

We had a very effective new money on deposit and household acquisition program that we initiated early in the quarter and it contributed to the decline.

We have selected targeted markets across the organization for a bit more aggressive deposit gathering activity and it totals less than 10% of our locations.

So we're happy with that particular outcome.

The trade-off was in the margin fee income stories for the quarter.

Our wealth fee income increased 18% versus Q. three.

And it really reflects, as we all saw the strong finish we had in equity and fixed income markets at the end of the year and should carry forward into 24.

Mortgage banking income declined more than the typical seasonal decline anticipated for the quarter.

Significant movement in 10-year treasury yields toward the end of December drove unfavorable valuation adjustments on the MSR asset and on our construction commitment hedges, we benefited from the same volatility when the 10-year was rising in the third quarter.

So it's just one of those lumpy factors in our business.

Expenses are right on the mark, just shy of 38 million for the quarter.

And on the credit front, our nonperforming assets declined 10% for the quarter.

Delinquencies did tick up a bit in auto and residential real estate, but each remains within historical norms.

Net charge-offs for the quarter were driven by a single credit of 70% or so of the total.

And on a full-year basis, net charge-offs still come in at six basis points.

And we're very pleased with that outcome.

Our special mention rating cast a category increased in Q4, and that was driven by a single additional relationship for the year.

That brings three credits to the front that make up the lion's share of the increase in our special mention category.

There's no central theme.

Each is a unique industry.

Each is still accruing and we have good expectations.

Have they represent two C&I clients in one investment in multifamily real estate of the combination of those two created about a five to $0.06 reduction in the quarter relative to the additional provision provision that we set aside for those two items.

Again, credit can be a bit lumpy.

We were very pleased with our full year performance on that front, but worth to mention here in the fourth quarter.

And now I'll turn it over to Paul for some more performance details thinking.

Gary, I'll start with the balance sheet where total deposits increased by 4.4% point-to-point annualized for 4Q, primarily due to customer deposits, which increased 7.7% annualized.

We continued to experience more mix migration during the quarter, including decreases in savings and demand deposits, which were more than offset by increases in our time and money market deposits as customers continued to seek higher yields and the other side, total earning assets increased primarily as a result of commercial loan growth, which was 5.8% annualized for 4Q.

Our loan-to-deposit ratio improved by 50 basis points, and we were able to reduce higher cost wholesale funding by another 90 million from due to the combination of our strong customer deposit growth, but only modest earning asset growth as a result of these balance sheet changes in deposit costs outpacing earning asset yields, we experienced some additional net interest margin compression for 4Q.

Total interest-bearing deposit costs increased 29 basis points to 2.83% for 4Q, which was driven mostly by growth and mix migration, while loan yields increased nine basis points to 5.21%, excluding the impact of PPP and Mark's earning asset yields were 4.85% in December 2023 for an increase of 146 basis points since December 2021.

This represents a cumulative beta of 28%, up from 26% in September compared to the 525 basis point increase in the monthly average effective federal funds rate for the same period, excluding marks, cost of funds were 2.38% in December 2023 for an increase of 217 basis points since December 2021, which represents a cumulative beta of 41%, up from 38% in September.

Next, non-interest income decreased 1.5 to 11.8 million in 4Q, primarily due to mortgage banking income were gains declined 2.1 million from last quarter as a result of lower margins on hedge losses related to the drop in 10-year treasury rates in late 4Q.

This was partially offset by higher security gains, better wealth revenues and increased fully income, which did include 40 53,000 in claims gains expenses of $37.9 million were down $0.2 million or almost 2% annualized on a linked-quarter basis through the combination of successful cost-saving initiatives in the insurance agency sale, we reduced our expense run rate by 11% to 152 million annualized from our original 2023 estimate of $170 million.

We also improved our expense to average assets ratio by 30 basis points to 1.76% compared to the fourth quarter of 2022.

Provision for the fourth quarter was an expense of $1.8 million, comprised of 2.1 million expense for loan and a $0.4 million benefit on a linked-quarter decrease in unfunded commitment.

Provision expense for loans was primarily due to 2.1 million of net charge-offs, which was mostly due to the one commercial credit.

The allowance coverage ratio remained flat at 1.14% of loans, close by mentioning our continued improvements to capital, including book equity, up 24% annualized and tangible equity up 37% annualized from three Q or K E ratio has climbed back north of 8% and our regulatory ratios have further strengthened, including CET. one over 12% and total capital over 14% for these enhanced cements represent a solid foundation as we begin 2024.

That completes my financial review, and I'll turn the call back to Gary.

Thank you, Paul. 2023 has been an important year of change for Premier Bank.

In addition to focusing on the inverted yield curve challenges that were presented to all we successfully divested our insurance agency business and significantly rightsized our residential mortgage business during the year.

When combined with the completion of other significant projects across the organization, Premier is very well positioned to leverage on our anticipated margin and revenue growth going forward.

As Paul mentioned, our expenses per earning asset ratio is 1.76, so one of the best in the industry.

With that in mind, I'll touch on some guidance topic for 24 earning asset growth.

We've posted a range of more percent, continue with our mantra of controlled growth.

So over the next 12 months, loan growth particularly would be two plus percent, with commercial up about 3.5%.

And with lower yielding residential mortgage balances declining customer deposits would grow generally in the same range as our earning asset growth, and we will expect to see a reduction to some degree in our wholesale funding for the year.

On the net interest margin we modeled for three turns from the Fed beginning in May and from a midpoint range of net interest growth would be in the 2%.

That would be midpoint, full year margin for 23 would be similar, would be similar to 23, but trending upward from Q1 forward?

From a provision perspective, the model assumption is 10 basis points for net charge-offs versus the six that we ran this year.

Factors in loan growth and on a triple L, we would expect that unemployment information and so forth would have us moving up our coverage ratio, couple of bps from where we closed out the year from a fee income perspective.

I'll just throw a number out there since there's so much noise in 23.

It's hard to do percentages, but we have 48 million range is the midpoint for fee income for 24 on a normalized basis for insurance and the other factors of change, that's about a 6% plus increase over the prior year as deposit related service fees are modest growth for the year, about 3%.

We have initiated limits on our merchant representing net fees in 24 and getting that behind us doing so creates slightly more modest year-over-year change on consumer fee income.

Our residential mortgage revenue and wealth fees, though are anticipated to be up 8% to 12%.

Expenses run rate wise 100, 60 million recovered.

That's up about 4.5% over our 23rd and fourth quarter 23 run rate high and expenses a bit front-loaded as it is, I think each year for most organizations with a little bit more cost of the falls in compensation wise in Q1 and the seasonality that goes with the first quarter.

So 41 million plus of costs in the first quarter with the rest of that one, 60 spread pretty evenly over the remaining three quarters, the earnings progression from the year.

It looks like a bit of a hockey stick as you leave 23 from a trajectory standpoint, first quarter slightly down with all that typical costs and seasonality pacing and Q's two through four are ever increasing.

So with that, operator, I'd ask that we turn the open lines open for questions.

Thank you.

If you'd like to ask a question, you may do so by pressing star, followed by one on your telephone keypad.

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Michael Patrick Lynch, KBW.

Hi, this is Mike's associate Andrew filling in.

Thanks for taking my questions and we're going to learn more morning I'd love to start on the margin.

I appreciate all the color there with the guide on just maybe a little bit more color kind of what the cadence expectation is there so it kind of sounds like there's room for the margin to maybe bottom here in 1Q and then we'll get some expansion throughout the rest of the year.

And then maybe just some additional color on the drivers there for around the margin.

It sounds like deposit costs obviously came up here in the fourth quarter when you guys were pushing for that additional growth?

And should we expect that dynamic to kind of continue in the first quarter or maybe kind of level out from here?

Yes, that's correct.

You've got the I got it correct there and or so as we exit 23 December, having a little bit higher deposit costs versus the average for the quarter, but we do of our model.

So on that.

We will be bottoming out here in the first quarter as those conditions kind of stabilize and then grow from there, which is the key driver to the earnings trajectory.

That that Gary just mentioned, key drivers for the NIM. at this point will be continued success on the deposit front, both retention and some additional growth to help fund the modest earning asset growth that we have built in for 2024.

And then the Fed actions, as Gary mentioned, we've got three baked into our model.

I kind of mixed quarter for the last three quarters of the year there with May, August, November.

So we need the Fed to hopefully Play Along with that trajectory.

And we've got a lot of plans being finalized and ready to go.

So that as that begins to happen, we can start to recapture costs where possible on the deposit front, money markets and such, especially CDs will start to reprice down with it as well, lower terms on those in terms of locking in on the maturities and things like that.

So So really, we're putting plans in place here to be able to take advantage of rates starting to come our way on the short end there, and that will support the Enpath and ultimately the earnings and our goals for the year.

And then second from me here, maybe just switching to capital for a second.

I believe correct me if I'm wrong.

I think there's around 1.2 million shares left on the authorization.

Can you just kind of give us a little bit of a reminder on thoughts around buybacks here and then maybe alternative uses of capital for 2020 for maybe M&A conversations, anything going on there?

And then I'm also just strictly just for a wrap up here, how when does that authorization expire as well?

(multiple speakers) Andrew we'll get back to you.

Great.

On the actual activity relative to M&A, what I would share is similar, what I would have shared last quarter.

There's a little bit more conversation as we can now see over the horizon and see positive marks coming our way to the portfolios over the next four to eight quarters versus uncertain marks based on the Fed's activity over 23.

Having said that, I really don't think that we will see things in earnest change until the Fed has moved quite a bit and purchase accounting and predictability of capital and other impacts are it helps to have settled down a bit more, but I do feel a little more animal spirits in the marketplace relative to conversation and so forth.

And that would we include ourselves in those conversations.

But I wouldn't say it's a meaningful change from last and we have.

And then I guess a little bit more and earlier questions around the buybacks.

It's always a tool that we have are just there that we look at for us.

It's offered the opportunity to enhance some earnings, the math a little different these days with the new tax rules and that extra excise tax and needing to cover that to make it that move the needle and things like that.

As we've said on past calls, we weren't seeing the numbers hadn't been active on that front.

Mainly, we're focused on building capital and now that some the curve has moved in the right way to help that, at least from a tangible equity perspective, you know that that's something that we will look more at on a go-forward basis, find our spots to possibly execute it.

If it makes sense, we have nothing cooked into the plan.

And that's that's typical with us because we'll take the opportunistic move with it.

When the market's right.

And as Bob mentioned, we've got our capital where we like it right now.

We're running at about mid point versus peer on capital, maybe of those heavy dollar trajectory would say will be on a little bit overcapitalized, if you will, as we go through the year.

So it's the right topic and we'll I'll address those opportunities as they come.

Yes.

Great.

Thank you.

And then just if I can sneak one last one in here.

I believe it was last quarter you guys were talking a little bit about this small business banking platform possibly seeing it in early 2024.

I was just curious if you can provide any update there.

And maybe just kind of a broad overview on what you're looking for with that project throughout the year?

Andrew, we've curtailed the pace of expansion of that business as we finished out the 23 and the first half of 24, just in keeping with the more modest business acquisition mode that we're at, but we are still building the capabilities around the business.

So if you looked at the back room as far as credit capability and underwriting any just because of the small business on that and adding some talent relative to it being in the market in the smaller business space.

And that's still moving forward along with for folks that are in the branch network, the continued development of their understanding and knowledge, but just the pacing if it were to normal years would have been faster, and we've backed away just a little bit in that right now with the commercial book, the larger commercial clients that we're trying to serve are getting the priority relative to our capital and our boy lending going going forward.

Great.

I appreciate all the color, and thanks for taking my questions, guys.

Yes, we will now take our next question from Nick Chandru from his group.

Nick, your line is now open.

Please go ahead.

Morning, everyone.

How are you going to lead extra?

Thank you.

On the loan growth front, it sounds like the expectation is for another moderate year.

Can you just give us some color on the overall lending environment?

Competition is still fierce across your markets in is your anticipation that more for forceful growth returns once the funding landscape normalizes?

I'll start with the fierce competition.

I think that the client base is appropriately moderating their at their expectations for this business out there.

But folks are there's enough uncertainty in the economic environment right now and in the world in general, while their order boards still look healthy capital commitments are in expansion.

Commitments are probably more modest to be shorter than in a normal year.

So it's really a matter of a little bit more modern supply.

Having said that, we've all and over the last year generally reduced our a little bit of our new client prospected and so forth because we wanted to maintain the capital and the deployed dollars that we've put out for existing clients.

And I think I think that's just been more of the it's more of the approach of the competition in the market as well.

So we'll all probably get to a point where we're ready to go back into the market as we are more so than we were in 23.

But each each bank will be a bit different story on that.

The market as a whole, there's business there.

I would say on the investment real estate side, we still see business in multifamily, but it's pretty quiet outside the multifamily space right now.

Our markets, fortunately are not bubble markets, so it's not as if there's a huge absorption issues or anything to be dealt with.

And that's I think we're in an advantage over our peers on the coasts in that regard.

That's great color.

And then just one last one for me.

It sounds like a modest increase on the expense front for the year.

How far along is the Company on the path to $10 billion?

And what are the rough costs you expect to incur on that front in 2024?

Yes, good question.

That come.

We're still early days on that path, and we did start incurring some of those costs last year in 23 but just the beginnings of it.

And we do have in our plans for this year continuing to start to build that as we head towards that Mark, with the modest growth we've got that's still a few years off.

So we're not racing to get those costs in place today.

Obviously, we'll bring it along as the growth in the organic overall organization can support it on that from beginning to end, what we've estimated is that once we get to that point, it will have added about 7 million or so in annual cost to our base.

So we've probably added on an annualized basis, maybe 1 million of that so far, and we'll add some more here in 24 and just keep incrementally building towards that as we add the right talent to be here in develop the programs needed for that $10 billion space always working at our systems and our controls.

And you name it.

So it's an incremental our path there there.

Thank you for taking my questions.

Thanks, Mike.

Christopher Marinac, Janney Montgomery.

Thanks.

Good morning.

Wanted to dive into the increase in criticized assets and just curious on if there's anything driving that.

And if there's a path that those may retreat from here?

So Chris's Good question.

We did have movement in the last quarter as well.

And what I can say is relative to those mostly a while for all three, it's cash flow and versus capital requirements, they're missing a little bit on, say the initial I need one, 20 coverage coming off cash flow wise and they're slipping on that high.

Each has good capital support, good guarantors.

It's just because they are missing on our originally underwritten marks.

We place them into that space.

And I expect them to work out tough accordingly.

I don't think if we looked at the three, I don't think any of them will be in a position in the next six months that we will be changing that movement.

But things do move in and out.

And we just had a couple of larger credits that we're doing some expansion and their expansion has been taking a little bit longer versus the revenue expectations for one of the clients and the others got CapEx adjustments to make so that they can live within the cash flow that they're now generating.

So just the typical adjustments we look at and if you go back a couple of years, the numbers that we're looking at are not that abnormal that's discussed so good for us.

We got so low that the movement was noticeable.

And as I mentioned in the fourth quarter, do you feel that movement when we move a reasonable-sized credit into that space.

We can feel it in our in our provision and so forth, but they also move back to past credits for the most part in support.

And we don't anticipate anything different here?

Three different industries, no commonality and story and whatnot situation.

No, that's very helpful.

And it sounds like the growth in reserves is modest and not really keeping signaling any true change in loss content at the end of the day.

That's our expectation.

And then just to follow follow-up on current deposit pricing, are you still seeing exception pricing out there or has that slowed down?

And again, the progress on money markets that you talked about, it sounds like you have flexibility on pricing to some extent, given the success in Q4.

We do we operate in eight markets and of where the opportunities are different between the markets or markets where we've got three markets where we have extensive market share and that means you've got repricing risk on a pretty good sized book to think about as well.

We've got other markets where we have very normal consumer market share with commercial commercial and building our consumer.

And we can be a little bit more aggressive there as we're trying to build more households and balances in this environment.

So I think to your original question, we still see promotional pricing.

I think until the Fed turns is still the market expectation from a customer standpoint for those that are watching rate better start with the four or five or will be we'll be looking elsewhere.

And until the Fed moves, we really won't see a huge commission on that.

Our commitment is to be very nimble when the change comes, we would not be inclined to be sitting around on a fatter pricing margin.

Our yield thinking perhaps we'll collect additional deposits on the way down, I think in some markets that will be the case.

But for the most part, we will be hedging our wagon to the Fed move and moving as quickly as possible where we see things changing in the market and it's true for us as well.

On the CD front duration, what was 11 or 12 months is now down to eight for seven months and you're starting to see fives and sixes a year ago, we would have said five months won't get the client off the couch.

They'll pick the longer duration.

I can see over the last couple of months, we're all squeezing down to those commitments are going to be more in the six month category so that we don't have so much lag time when the Fed does move on the repricing of that book, but there's still still some pricing pressure in the market with Demandware.

And same thing on the money markets, you know, when we were running the promo that especially geez, we started in the fourth quarter, $22 million home and similar, we had some price guarantees for duration there.

And those have been running off and we haven't been extending those given us that flexibility as for when the time comes to kind of reconnect that we haven't really locked it in for another eight to 12 months or whatever.

But the cases that's an important distinction that we have the majority of our dollars flexible to us to create.

Thanks very much for taking the questions and thanks for all the information this morning.

Yes, as a reminder, to ask a question, please press star followed by one on your telephone keypad.

We will now take our next question from David Long from Raymond James.

David, your line now, listen, please go ahead.

Plenty more to David, just wanted to say yes, we're going to stick with the deposit side of things right now, the you provided an outlook that included three cuts later later this year.

What with that?

What is your expectation for the deposit beta on the downside have question.

We haven't actually grown them and we're still running off of the start.

So I'll have to get back to you for sure on better specific, David, but what I will say Asia, is that the way that the models run in and RELM here is that even while the Fed is frozen right now and the cuts begin, there will still be pressure right now, we're just talking about finding the opportunities and set ourselves up to be able to reprice and in the pockets where we have that opportunity.

But CDs will take a while to still roll our money markets will start moving on those, but we'll be doing it in the broader context of competition, things like that.

So we actually expect that on a year-over-year basis, our deposit costs could be flattish or even up some ticks, but it would be on the right trend in the back half of the year.

There where we're still going to be up for the early part of 25st quarter or even into the second quarter until these cuts started right?

And then we'll take actions and start to bring those down.

But on a year over year basis, it looks like they're still up potentially up.

So we're going to be focused on the trends and to your point of resetting that beta pointing out for the down cycle here to show how much we're recapturing from that perspective?

I know, David, when we looked at 24 versus 23 on margin and then broke it down into the two components.

It was like how can it be?

So similar to remember where we were this time last year rates were running up and running up a lot more.

And that's because that's cooked into our base.

For 23, we have some better margins.

And so it is back to the trajectory that you would see as to where we are as we close out the year and then we climb back at a much slower pace, three turns versus, gosh, how many did we see coming back in the first at 34 months of 24.

So it does kind of neutralize, but it's up on a year-over-year average basis.

But certainly Q3 and Q4, you see material difference on the betas yourselves should the most suggested they, I could say as a further 25 bps movement, we won't see a 25 bit movement, say in every category because I'll take CDs, for example, we still have posted took a 12 month CD last year and it's priced at 3% or something like that.

They'll be looking for even though we're bringing rates down, they've got room to move up a bit.

And so that will so the curve a little and cream off the top relative to that, move it all the more reason why you've got to be ready to move downward because there will still be upward pressure on from certain parts of your book and then add to that, David, when you're looking at the total portfolio, we still have significant dollars at that low end, our savings and checking and management.

Obviously, we we never moved up.

We didn't change our Board rates.

There were some mixed migration, but those piles it didn't go up and that are unlikely to come down in the down cycle.

So really it's focusing on the piles that we priced up and then recapturing that on the way down in the velocity you will it depends on partly the Fed and how quick they move.

And then obviously the competitive environment in order, we feel good about being in a position where the focus will be more so on retention versus acquisition that we've done a good job, especially the second half of 23 kind of building that war chest per se.

And we've got it now is we need to retain that and then reprice the vials on the way down here, I'd say one of the things we learned that we probably knew instinctively, but the year showed us that there's a large quantity, our dollar low quantity of clients that are inelastic on pricing and it's one of those.

And then, of course, are those that aren't and we're using every tool at our disposal to manage the movement to full.

We'll see we'll work with that in elasticity and to our advantage as we go through the year.

No, That's some great color.

So so greatly appreciate appreciate the additional color.

So as a follow-up, then it doesn't sound like if the Fed doesn't move and we stay higher for longer throughout the rest of the year, your NII guide doesn't sound like it changes that much from that 2% for the year.

What if the Fed didn't do anything?

I think we would we would have to come off of that no matter how it's adding beginning with the beyond just the normal repricing and so forth that we'll be doing here in the first four, five months once we took enough turn it's going and it may end of May start picking up in June, another turn in the next quarter.

Another turn late in the fourth quarter kind of not much of an impact there, but so it would be less than what we have in our expectation right now.

Yes, they were still high and you'll see the numbers in our K when that comes out, but we're still in that liability-sensitive position today, not as much as we were on a call it midpoint at 23 there from all the actions we've taken and our success in getting wholesale down and things like that.

But still net-net, we are liability sensitive.

So if they don't come back, if it was flat for all of 24 with Gary's, right, we'd have to come off that and recasted for It shouldn't be a material deviation because we're not as sensitive to it as we were on the left side of the balance sheet, new money going out, the door for loans is still going out with a high seven or mid to mid eight on it.

And we're sort of holding fast on that when things got interesting there in December, clients' expectations close, but perhaps the market would move on that.

But I think we've all held pretty firm that we're going to get paid for the rest of it in the market right now on the loan side.

Thanks for taking my questions, guys.

Appreciate it.

Okay.

Thank you.

We have no further questions registered.

So I will hand back to Gary Small for final remarks.

Well, again, a 23, an interesting year that we'll all remember 24, although certain aspects of it numerically may feel similar.

As I said, we can see over the horizon now we can see the direction of the Fed.

It's not a matter if it's when and the pacing and so forth for us, there is as much to be gained on obviously the recapture of margin coming out of that liability.

Since then there is that will be growth driven and there will be a time when six, 7% growth is back to how we make the needle move over the next four to eight quarters.

I think that's much more margin recapture manager, P's and Q's on the expense side, do smart things on the fee business side, and we run a clean book called from a credit perspective, so when we come out of that cycle of four to eight quarters going forward will be more nimble, be a stronger organization and really well leveraged to grow going forward.

And thanks for all your time this morning.

Appreciate it.

Thank you for your participation.

You may now Connectra line.