Earnings Call Transcript - BKU Q3 2022

Operator, Operator

Thank you all for being here, and welcome to the Q3 2022 BankUnited Earnings Call. Currently, all participants are in listen-only mode. Following the presentation, we will have a question-and-answer session. I now turn the call over to your host, Susan Greenfield, Corporate Secretary. You may proceed.

Susan Greenfield, Corporate Secretary

Thank you, Kevin. Good morning, and thank you for joining us today on our third quarter 2022 results conference call. On the call this morning are Raj Singh, our Chairman, President and CEO; Leslie Lunak, our Chief Financial Officer; and Tom Cornish, our Chief Operating Officer. Before we start, I’d like to remind everyone that this call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the company’s current views with respect to, among other things, future events and financial performance. Any forward-looking statements made during this call are based on the historical performance of the company and its subsidiaries, or on the company’s current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by the company that the future plans, estimates or expectations contemplated by the company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including without limitations, those relating to the company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity, including as impacted by external circumstances outside the company’s direct control. The company does not undertake any obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments, or otherwise. A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. Information on these factors can be found in the company’s annual report on Form 10-K for the year ended December 31, 2021, and any subsequent quarterly report on Form 10-Q, or current report on Form 8-K, which are available at the SEC’s website, www.sec.gov. With that, I’d like to turn the call over to Raj.

Rajinder Singh, Chairman, President and CEO

Thank you, Susan. Welcome everyone to our earnings call. Thanks for joining us. And let me start by just highlighting the quarter. Net income came in at $87.9 million or $1.12 per share, a 37% increase in EPS. ROE came in at 13.5%, and we’re very happy with those results. This growth in earnings is really driven by NIM expansion. I’d like to remind everyone that we’re not very asset-sensitive or only slightly asset-sensitive. However, I think we’re writing business at better margins, which is helping. Of course, slight asset-sensitivity is also helping. So our margin expanded by 13 basis points compared to last quarter. This quarter, last quarter we were at 2.63%. And if I remember well, the third quarter of last year, we were at 2.33%, so there's a nice trajectory there. Our core C&I and CRE businesses grew by $444 million this quarter, which was partially offset by declines in mortgage warehouse, which saw a slight decline in Pinnacle and Bridge as well. The mortgage warehouse declined by a little less than $200 million. I think the utilization is now at a historically low level given everything that’s happened in the mortgage origination business. Consistent with similar trends at the Fed tightening, deposits declined by $1.1 billion. Our non-interest DDA declined by $851 million, but NIDDA now stands at 32% of total deposits. I’d like to remind everyone that this journey of building NIDDA has been five years in the making. When we started this journey back in 2017, our DDA balances were just 14% of our total deposits. Even before the pandemic, at the end of 2019, we were only at about 17.5%, and today we’re at 32%. I don’t like seeing these declines happen. We’ll talk a little more and get into the details of where it's coming from. A large part of it, about half of it, is coming from one particular business line, and Tom will shed some more light on that. But despite that, for this year 2022, if you look at the nine-month view, NIDDA is down by $182 million, because in the first part of the year we were growing NIDDA, but this quarter we shrunk. Overall cost of deposits came in at 78 basis points. Again, given how fast the Fed is hiking, you should expect this to keep climbing up. Last quarter, we were at 30 basis points, and now we’re at 78 basis points. Very quickly, the last week of this quarter, we were hit by Hurricane Ian. I’m happy to report that there was no significant damage to our facilities, and our people are all safe. We’re reaching out to our customers who might have been impacted. So far, from the information we've compiled, we don’t expect any material impact on credit. However, we did put $5 million into our provision just in case as the next few days and weeks roll on, we might see a credit hit. Therefore, for that purpose, we did take a $5 million provision included in our numbers. We’re not seeing any systemic credit issues. We’re looking very hard during our walkarounds to find any issues that might be out there because as the economy is slowing, it’s natural to be very cautious. But so far, we really have nothing to report. In fact, classified loans continue to decline. This quarter also saw a healthy decline of $175 million. Excluding the guaranteed portion of our SBA loans, the NPA ratios stood at 32 basis points, which is a small uptick from the prior quarter. Annualized net charge-offs for the nine months, not this quarter as this quarter was very low, but for the nine months stood at 16 basis points compared to 0.9 basis points of net charge-offs for last year. So we’re happy about that credit as well. As you already know, the Board authorized another $150 million buyback in mid-September. We have executed about $11 million of that through the end of the quarter, and we’ll continue to judiciously execute on that as time goes on. So if you take all the buybacks that we’ve done so far through the end of September, the number comes to about $337 million. In terms of an update on the guidance we’ve given you, we expect loan growth for the year to come out at about mid-single-digits, driven again by C&I and CRE. By the way, CRE had a positive quarter, which we haven't said in a long time. It’s not a huge positive, but it is a positive quarter, and we’re very happy about that. C&I will still be the largest driver of growth, with small business and middle-market lending all doing well, and my clients are very healthy. In terms of deposits, this is going to be a challenging environment. I expect both NIDDA and total deposits to come under pressure this coming quarter. And cost of deposits will climb as the Fed keeps tightening. We’re expecting another 75 basis points here in a few days, and then another move in December. So, having said that, the margin overall should still – we’re still positively biased when it comes to margin. Yes, deposit costs will go up, but our yield on assets, loans and securities will also go up. Overall, we still think there is room for margin expansion in the fourth quarter. I usually start by talking about what we're seeing in the economy. My comments will be very similar to what I said last quarter, where we are cautiously optimistic. We’re looking very hard to see if there are any cracks appearing anywhere, but we’re not finding that. We’re talking to our peers, smaller banks, bigger banks, non-banks, trying to see where trouble might emerge but we’re not seeing it yet. That said, we’re not sitting here assuming that everything will be fine; we are taking a view that long-term there will be a significant slowdown. Sometime next year, we just have to be careful. This is not the time to be very brave and aggressive but to be a little cautious. On a scale of 1 to 10 that I described on the call last quarter, we are about the same, around a six in terms of cautiousness and optimism, and we’ll keep revising it as more data comes along. But Florida is doing very well, and we’re thankful the hurricane missed us for the most part. Let me turn it over to Tom to provide more details about deposits.

Thomas Cornish, Chief Operating Officer

Great. Thanks a lot, Raj. So, driving a bit more into the loan numbers, as Raj said, of course, C&I and CRE segments grew by $444 million for the quarter with $375 million coming from C&I and $69 million from CRE. It was the first CRE increase, as Raj said, that we’ve had in quite some time, and we were happy with it. On the C&I side, it’s a continuation of what we’ve seen all year long, which is strong growth in commitments broadly across all industry sectors. If you look at some of the supplemental information that Leslie has provided, and you look at industry by industry, it’s broadly based across six or seven major industries, the largest ones we have exposure to, so we were happy with that growth for the quarter again. In the CRE segment, the largest growth we had was in the industrial area, which is something we have been focusing on to increase our industrial portfolio, seeing $9 million of growth in that area. So we were also pleased with that. C&I commitments grew by 6.6% quarter-over-quarter. We thought it would be just slightly better, but we had a few loan closings delayed at the very end of the quarter in Florida due to the impact of Ian, which pushed into the fourth quarter. On the mortgage warehouse side, as Raj mentioned, it declined by $194 million at pretty historic low utilization rates in response to the macroeconomic environment surrounding the residential real estate business. It’s a cyclical business, we recognize that. We like this business and remain committed to it. Though our overall client base is strong within this group, there’s been no deterioration in the client base, but we can’t outrun the cycle right now in that business. In aggregate, we saw a runoff of $77 million in Pinnacle and Bridge. We continue to struggle to find the right profitability and margin opportunities in that business. Given that we have good core growth in other areas, we’re being selective in those segments to ensure profitability. As we look forward into this quarter, C&I and CRE pipelines look strong, and we’re already seeing good growth in that quarter. Overall, I’m optimistic about core growth in those markets heading into the fourth quarter. From a deposit perspective, as Raj mentioned, total deposits declined by $1.1 billion for the quarter, of which $851 million was with NIDDA. A significant portion of the deposit outflow we saw from commercial was related to businesses in the residential real estate ecosystem. About half of the NIDDA runoff for the quarter was related to clients in the title insurance industry. We’ve made a major investment in this segment over the last few years, and balances can be cyclical as well. However, the positive aspect is that we’ve continued to add new relationships. There’s not much we can do about the decline in activity in the residential market, but the addition of new account business has been very encouraging. Our new account business in the title industry is up 25% this year over last year. Overall, we see very strong new account growth across all areas of the bank. This is also reflected in service charge income, which was up 13% year-over-year and up 2.8% quarter-over-quarter. Given the environment of increased earnings and credit rates, being up in service charges signifies that we’re generating numerous new opportunities for new account business throughout the bank. We saw some decline in the corporate deposit base over the quarter, but that was really episodic with no real relationship losses. It might have been a dividend recap or a large insurance company paying reinsurance costs or other things that were not related to account loss opportunities. All areas where we saw account runoff in the corporate business were reflective of transactions within longstanding accounts, and we have kept those relationships, so we’re not overly concerned about that. For the most part, that’s growing back. We also saw a seasonal decline in municipal deposits for the quarter as we head into the municipal deposit quarter. Overall, the loan-to-deposit ratio ended the quarter at 89%. I will turn it over to Leslie to provide more details about the quarterly results.

Leslie Lunak, Chief Financial Officer

Thanks, Tom. Consistent with the guidance we gave you at the beginning of the quarter, we did see the NIM increase this quarter to 2.76% from 2.63%. The yield on investments increased to 3.12% from 2.12%. The duration of this portfolio is very short, right at 2% as of September 30. Yield on loans increased to 4.11% from 3.59%. Overall, we saw resetting and coupon on variable rate instruments, new production, and new securities purchases at wider spreads and higher rates that drove that increase. Cost of total deposits were 78 basis points for the quarter, up from 30 basis points last quarter. We have added some term in the deposit book intentionally. Time deposits grew by $976 million in the third quarter. We took advantage of the opportunity to lock in some terms in the deposit book in a rising rate environment. Total deposit beta for the year is about 29%, approximately 46% for interest-bearing deposits only, compared to the peak during the last cycle where total deposit beta was about 61%. We continue to expect betas to be lower this cycle, partly due to NIDDA representing a larger portion of the book. I’ll draw your attention to Slide 6 in our deck when you have a chance to view it, where you can see the costs for deposits by category are lower today as of September 30 with a Fed upper bound of 3.25% than they were at December 31, 2019, with a Fed upper bound of 1.75%. Even though we’re still midstream in this hiking cycle, I believe that supports our expectation that betas will be lower this cycle than they were in the last cycle. As Raj mentioned, we do expect NIM expansion in the fourth quarter, probably not quite as much as we saw in Q3. But we anticipate NIM to continue expanding even if we see some additional NIDDA runoff, which we hope doesn’t happen. Nonetheless, we still expect NIM to expand in reserve and the provision. The reserve as a percentage of loans was flat to the prior quarter at 54 basis points, and we’re not seeing any deterioration in credit of notes. As Raj mentioned, the qualitative ACL includes $5 million related to the potential impact of Hurricane Ian. Non-interest income and expenses - I’ll quickly address that. The main reason for the increase in non-interest income compared to the prior quarter was the mark we took on some preferred stock investments in the prior quarter, which did not recur this quarter, so just comparison quarter-over-quarter, that was the main reason for that variance. Increases in non-interest expense were primarily in the compensation and technology lines, as we’ve been guiding to all along while we invest in both people and technology to support our future growth and business strategy. In technology, we’re making investments in digital payments and in certain aspects of our infrastructure, particularly around data and integrations. I will note that back at the beginning of the year, we anticipated an increase in expenses of mid- to high-single-digits. That’s exactly where we’re coming in, and expect that trend to continue. Additionally, in the other non-interest expense line, there’s a $2.3 million charge related to a write-off of a specific technology investment, where we decided to go in a different direction. So that impacted that line item for this quarter. I will turn it back to Raj for closing comments.

Rajinder Singh, Chairman, President and CEO

Thank you, Leslie. I will actually open it up for Q&A. I know it’s a busy day and I appreciate all of you joining us, but let’s get into Q&A.

Operator, Operator

Our first question comes from Ben Gerlinger with Hovde Group. Your line is open.

Ben Gerlinger, Analyst

Hey, good morning, everyone.

Rajinder Singh, Chairman, President and CEO

Hi, Ben.

Leslie Lunak, Chief Financial Officer

Good morning, Ben.

Ben Gerlinger, Analyst

I was curious if we could start on the expense base. I know you just mentioned that there’s a write-down or write-off on one item. But can you think about the base overall, and then you gave pretty solid guidance at the beginning of the year that has held true for that mid-single-digit, upper-single-digit range. When you think about this year relative to potentially next year, are you pulling forward any investment? I know you haven’t provided complete guidance for FY 2023, but do you see the trajectory to be something to expect a similar range for next year? Or are you pulling forward expenses?

Leslie Lunak, Chief Financial Officer

I wouldn’t say we’re pulling forward expenses, but I’m not – I don’t think we’re prepared at this point to give any 2023 guidance. We’re just kicking off our budgeting and business planning process. I think I’m going to hold off on that until our next earnings call because whatever I say, I might independently eat my words in one direction or the other. So, I’m going to hold off on 2023 guidance.

Rajinder Singh, Chairman, President and CEO

We really haven’t reached a consensus, and we’re still discussing how we’re going to plan for next year. So we’ll have a better view in about four to six weeks, and we’ll probably share that only in January with you.

Leslie Lunak, Chief Financial Officer

But I don’t think there’s been any conscious attempt to pull anything forward in answer to that part of your question.

Ben Gerlinger, Analyst

That’s fair. Okay. Well, that’s good. I figured I’d take a shot at it. But, I think about...

Leslie Lunak, Chief Financial Officer

They’re going to indicate an increase.

Ben Gerlinger, Analyst

Yeah. When you think about loans, in general, it’s good to see the CRE rebound; hopefully, that trend continues higher. When you just think broadly, I know that there are initiatives kind of outside the initial footprint. Historically, you guys did in North Florida; now Atlanta. Are you potentially working on something in Texas in the medium term? What do you think about the footprint and mix? Or are there any areas where you’re consciously targeting either from a price perspective? Or do you think there’s a niche that you could actually make some height?

Rajinder Singh, Chairman, President and CEO

I think if – listen, we didn’t talk much about Atlanta, which has been a big focus for us this year. I will give you an update that we have hired all but one open position; there’s only one open position left, which is a junior-level position. However, all the senior people, whether in C&I, CRE, credit underwriting, or treasury services, everyone is in place. We have booked a fair amount of business that we don’t disclose geographically where our numbers break out. But it is exactly on track with what we thought we would achieve. I’m happy with the very early success we’ve had. Dallas, which is a different strategy, is also on track, again, deposit only, not loans. We have been doing some work trying to understand the lending side in Texas and whether it's something we want to engage in and when we want to do that. We don’t have a decision on that yet. We’ve been out to the market and met a lot of participants. We hope to have a view in the next three to six months regarding what we want to pursue, if anything. Also, we’re looking at some other markets that likely will not surprise you; they’re not going to be out in Ohio or the West Coast. It’s going to be somewhere on the Eastern Seaboard markets that we may already be servicing a little bit out of Florida or New York. Those markets will probably be the next step. However, as I said, we are deliberate in taking these steps, and we don’t just jump in. I want to ensure Atlanta is off to a very healthy start before discussing anything else. We might introduce another market sometime next year, but that is what will drive growth beyond, of course, what Florida is doing by itself, which is healthy. Where we’re not seeing growth is in places like Bridge, as Tom discussed. We’re looking for the best places to deploy capital, and wherever we don’t find a good risk-reward, we take away capital and find investments in places where we do see better returns.

Thomas Cornish, Chief Operating Officer

Yeah, I might add from a product perspective, since you asked that. As you look across the Southeast from a CRE viewpoint, it’s clear that the fundamentals are very strong in industrial, which we had a good quarter in industrial. They’re strong in grocery-anchored retail that is predominantly service-oriented, and population shifts in all of the Southeast markets from a multifamily perspective are very strong. So, I think as we look forward in our plans, those are probably the asset segments and categories where we will look to increase our portfolio, and we think in Florida and in other parts of the Southeast. There’s always a question about whether Florida is in the Southeast or not, but we’ll include it for now. We believe all those asset segments are good quality opportunities for growth in the near term in 2023.

Ben Gerlinger, Analyst

Got you. I appreciate all the color. I appreciate everything. Thanks, guys.

Rajinder Singh, Chairman, President and CEO

Thanks, Ben.

Operator, Operator

Our next question comes from Brady Gailey with KBW. Your line is open.

Brady Gailey, Analyst

Hey, thanks. Good morning, guys.

Leslie Lunak, Chief Financial Officer

Good morning, Brady.

Rajinder Singh, Chairman, President and CEO

Hi, Brady.

Brady Gailey, Analyst

There was a significant move in bond yields of 100 basis points in the link-quarter. I know you have a short two-year duration; was there anything onetime in nature impacting that? And how do you think about that going forward? I’m guessing we could continue to see a decent amount of upside there?

Leslie Lunak, Chief Financial Officer

I think you’re right. I don’t know that it’ll be 100 basis points every quarter, but yes, we expect to see that continue to rise. There was nothing unusual that really drove that; it’s purely due to resets on the variable rate portion of the portfolio, which is the majority of the portfolio, along with new purchases at higher spreads.

Brady Gailey, Analyst

Yeah.

Rajinder Singh, Chairman, President and CEO

Spreads are generally operating across the board; anything you’re buying spreads are better. However, it’s not like we’re growing the portfolio drastically; that’s not what is causing the 100 basis point change. Most of that is because it’s a short portfolio, short duration bond portfolio. That’s a significant move, particularly as aggressively as the Fed is moving.

Leslie Lunak, Chief Financial Officer

Yeah.

Brady Gailey, Analyst

All right. That makes sense. And then my next question is regarding buybacks. You’ve been a significant repurchaser of your stock over time. It slowed a little in the third quarter, where you only repurchased about a little under half of 1% of the company. Should we think about the buyback, is Q3 kind of a new run rate, or do you think you’ll be more active like you’ve been historically?

Rajinder Singh, Chairman, President and CEO

I think we ran out of our buyback mid-quarter, if I remember correctly.

Leslie Lunak, Chief Financial Officer

Kind of at the start of the quarter.

Rajinder Singh, Chairman, President and CEO

Then we received another optimization much later in the quarter. The timing of board meetings and such can sometimes affect this. We’re in the markets now, even currently, working under a 10b5-l multiyear plan. We have been executing. We stated we would be even more opportunistic given the volatility in the market. So we’re buyers of our stock, and we have the extra capital to do this. As we keep upgrading capital, we probably will be more active, but we handle it $150 million at a time. So, from mid-September to the end of September, we managed to do about $11 million. That’s a decent pace since the stock was weak at that time. So it’ll depend on where the stock trades, and we will be opportunistic.

Leslie Lunak, Chief Financial Officer

In times when we expect that the market might be volatile, we’re perhaps a little more opportunistic in our approach, and in times where we don’t expect those opportunities to arise.

Brady Gailey, Analyst

Okay. Finally, if you look at your reserve, and if you back out the mortgage warehouse loans, I mean, it’s running at 55 basis points, which relative to peers is kind of thin. But are there adjustments we should make there, like backing out low-risk mortgages? Or are there any adjustments you will make to that ratio to make it higher?

Leslie Lunak, Chief Financial Officer

Yeah, that’s a good question. The mortgage portfolio overall, which is a large segment of the portfolio, carries very low reserves. They’re not zero, but I think they’re disclosed in our slides, around 11 basis points or so; it’s a very low-reserve portfolio. So that's an extremely high credit quality portfolio, with very high FICOs, very low LTVs, and almost no historical charge-offs. Hence, that part of the portfolio carries very low reserves. Pinnacle carries almost no reserve. It's an investment-grade portfolio, and it shouldn’t be zero, but we can’t get away with that, therefore we have to put something on it. I believe even our CRE portfolio's LTVs are so favorable that even in the event of default, it produces very low LGDs. So I do think there are adjustments to consider before making broad comparisons to our reserve levels with other banks.

Rajinder Singh, Chairman, President and CEO

I would suggest that the biggest adjustment to consider is looking at the size of the revenue portfolio. It is quite different compared to other banks, and it is a jumbo portfolio with very high credit quality. A significant part of it is also government-guaranteed, which has zero reserves, impacting the overall numbers. Pinnacle, which is about $1 billion, is another example. The warehouse that is small now.

Leslie Lunak, Chief Financial Officer

So you have to consider what’s in the portfolio when making broad-based comparisons to peer averages. There's no credit card in there, no auto loans, or very little leverage lending. Overall, it’s a portfolio with historically low loan losses, which tend to be more episodic than systemic.

Rajinder Singh, Chairman, President and CEO

Exactly. The best measure might be to consider the size of the loans in comparison to others. Our portfolio has seen a very pristine credit history, and a large part of it is government-backed loans, influencing the overall reserve numbers.

Brady Gailey, Analyst

Okay. Great. Thanks for the color, guys.

Leslie Lunak, Chief Financial Officer

Yeah.

Operator, Operator

Next question comes from Stephen Scouten with Piper Sandler. Your line is open.

Stephen Scouten, Analyst

Thanks. Good morning, everyone.

Leslie Lunak, Chief Financial Officer

Good morning.

Stephen Scouten, Analyst

First, we don’t claim Florida in the Southeast just to note that. One question on securities yields, I know Brady’s question answered most of mine, but can you remind us how much of that portfolio is variable? You mentioned the majority is variable, right? Can you provide a ballpark?

Leslie Lunak, Chief Financial Officer

Yes, somewhere between 65% and 70%.

Stephen Scouten, Analyst

Okay, great. And then on the new loan yield front, I think it was around 4.3% last quarter. Where are you guys seeing the new loan yield this quarter? I’m calculating around like a 35% loan yield beta, give or take. Does that feel like a pretty good projection moving forward based on what you've seen?

Leslie Lunak, Chief Financial Officer

On average for the quarter, the new loan yields were about 5.25%, which started off lower at the beginning of the quarter than by the end given the movement of rates and spreads.

Rajinder Singh, Chairman, President and CEO

I’m not entirely sure how you calculate loan betas, to be honest. That term isn't something I’ve really embraced.

Thomas Cornish, Chief Operating Officer

What I would add is that if you look at the core portfolio today from a C&I and CRE perspective, the vast majority of new originations are floating rate originations. If you looked at our CRE, that’s not different for C&I than it has historically been. However, if you examine the CRE portfolio, four or five years ago, we were taking on more on-balance sheet rate risk with smaller CRE loans. Nowadays, the majority of our loans are either floating or floating while being swapped to fixed rate for the clients. Therefore, our fixed rate exposure on new originations is quite minimal today.

Stephen Scouten, Analyst

Yeah.

Rajinder Singh, Chairman, President and CEO

There’s been substantial effort over the years to change, as described by Tom, this transition to shift from a fixed-rate to a floating-rate shop. This transformation has been a process executed over three to four years, ultimately benefiting us today.

Stephen Scouten, Analyst

At a high level, the bank is vastly different today than it was four years ago. The deposit base is different; there's a run on multifamily, and the loan composition has changed. What would you say, as you look forward, is kind of the biggest differentiator or quality that you have today that will reach you to success moving forward, as you see it?

Rajinder Singh, Chairman, President and CEO

It comes down to the fact that our clients love us. I do not know how to quantify that in a ratio or represent it in financials, but this is what matters more than anything else. Our clients come back to us for repeat business; we don’t lose clients. We may lose them due to price or something trivial like that, but we never lose them. I’ll provide an example. I’m a member of the board for a nonprofit. This group is raising some debt in the market, and obviously, BankUnited won't be participating, but since I am overseeing that process, I am speaking to the incumbent bank. The CFO of this organization conveyed to me that he wished these people were just a little easier to deal with; it would be so much better if we just worked with them. However, they made their lives miserable. Without disclosing the name of the incumbent bankers or who I'm referencing, you would never hear something like that about BankUnited. That’s really our competitive edge. We’re not a universal bank; we can’t do everything for everyone. We serve a few select clients, but when we do, we put in significant effort on their behalf. We are advocates for our clients and build trust over time. That’s our true differentiator—it sounds simple and straightforward, but trust me; it’s not easy to achieve in this business.

Thomas Cornish, Chief Operating Officer

I would link that to say that part of the reason why clients love us is because we have created an organizational culture over the last few years that attracts talented individuals from other organizations who have strong client relationships. They appreciate the culture and entrepreneurial spirit we foster, our drive for innovation, and the core values of our company. Although this is something that cannot be depicted as a ratio, we have transformed our team to maintain this significant advantage.

Rajinder Singh, Chairman, President and CEO

Got it. Very helpful. Thanks for the color. I appreciate it.

Operator, Operator

I’m not showing any further questions at this time. I’d like to turn the call back over to Raj.

Rajinder Singh, Chairman, President and CEO

I know it’s a busy day. Someone mentioned to me this morning that there were 18 banks releasing earnings. I’m not surprised there were a few questions. Both Leslie and I, and even Tom, are available to take any questions if they come up today and tomorrow, whenever. We appreciate you joining us and giving us your time, and we look forward to speaking with you again in 90 days. Thanks, goodbye.

Operator, Operator

Ladies and gentlemen, this concludes today’s presentation. You may now disconnect and have a wonderful day.