Eastern Bankshares, Inc. Q3 FY2024 Earnings Call

Hello, and welcome to the Eastern Bankshares, Inc. Third Quarter 2024 Earnings Conference Call. Today's call will include forward-looking statements that discuss Eastern's future financial performance, outlook, business strategies, and potential opportunities and risks that management anticipates. These forward-looking statements are based on management's current estimates or beliefs and are subject to risks and uncertainties that could cause actual results or the timing of events to differ significantly from what is expressed today. More details about these risks and uncertainties can be found in the earnings press release under the section on forward-looking statements, as well as in the Risk Factors section and other disclosures in the company's regular filings with the Securities and Exchange Commission. Any forward-looking statements made during this call represent management's views and estimates as of today, and the company does not commit to updating these statements based on new information or future developments. The company will also discuss both GAAP and certain non-GAAP financial measures during the call. For a reconciliation of GAAP to non-GAAP financial measures, please refer to the company's earnings press release available at investor.easternbank.com. Please note that this event is being recorded. Thank you. I would now like to turn the call over to Bob Rivers, Executive Chair and Chair of the Board. Please go ahead.

Thank you, Lori, and good morning, everyone. Thanks for joining our third quarter earnings call. With me today is Eastern's CEO, Denis Sheahan; our new CFO, David Rosato; and James Fitzgerald, our former CFO, who is continuing to serve as a senior advisor to our management team and our Board of Directors. The third quarter marked a transformational moment in Eastern's history as we closed on our merger with Cambridge Trust, completed our integration, expanded our leadership team and Board, and look forward to the future as a newly combined more robust organization. This combination represents a powerful step forward in achieving our strategic vision, positioning us as a stronger, more competitive institution and the greater Boston region's leading local full-service bank offering comprehensive personal, commercial and private banking solutions in addition to personalized wealth management offerings. Whereas our larger competitors focus on a wider geography, our commitment is to Eastern Massachusetts and Southern New Hampshire, as well as other areas of New England. This is demonstrated not only by a management team that lives and raises our families here but also by making strategic lending and community investments entirely within the markets we serve. Time and again, we hear from our customers that a point of differentiation is our deep understanding of local markets and communities. Although we have grown larger to have the talent and technology to better serve and compete for our customers' business, we remain at our core a true community bank, understanding that we can only be as strong as our customers, our colleagues, and the communities we serve. As recent evidence of this, Eastern during the past quarter was named the number one SBA lender in Massachusetts for the 16th consecutive year, ranked among the 10 most charitable companies in Massachusetts by the Boston Business Journal for the 13th time, and was recognized as the 2024 Best Place to Work for disability inclusion. And the Eastern Bank Foundation was once again recognized among the top leading women-led organizations in Massachusetts by the Women's Edge. Of course, delivering all of this requires a total team effort from my 2,000 colleagues at Eastern, who, in addition to successfully transitioning our banking and wealth management customers to new systems, also completed a major upgrade of our online and mobile banking platform. It is their incredibly hard work, dedication, and commitment to our customers and each other that makes these results possible in order to deliver greater value for our shareholders and support for our communities. With that, I'll hand it over to Denis, who will discuss the business in more detail before handing it off to David to discuss our financial results.

Thank you, Bob. Please note we have posted a slide presentation on our website, and we encourage you to review the slides, as David and I will reference a number of them in our commentary. I want to reiterate Bob's comments about our colleagues at Eastern. I'm incredibly proud of the work our team has completed during the quarter across our banking, wealth, and operational divisions. With the merger and conversions behind us, we can now focus on realizing the benefits of the merger and the growth opportunity ahead. We are the largest community bank serving the attractive Greater Boston Eastern Massachusetts and New Hampshire markets with the fourth largest deposit market share within the Greater Boston MSA, which includes Southern New Hampshire. Our combined wealth management business, with over $8 billion in assets under management, makes us the largest bank-owned investment adviser in Massachusetts and the 12th largest in the state overall. We are excited to bring a fuller suite of wealth management and banking services to our client base and to the market. I'll spend greater time in the future speaking to why our position is compelling and giving you a greater sense of the capability of our firm, but I know you'd like to understand in detail how we performed on the merger. So let's get into that. I'm sure you can understand there are a number of differences in interest rates, the economy, and otherwise since the merger was announced in September 2023, and this is an important backdrop to the variances from the original merger model guidance. Slide 6 gives an overview. In short, we outperformed the original guidance on deal charges, earnings per share accretion, and cost savings. Importantly, capital in the form of either tangible book value or tangible common equity is significantly better than originally projected due to a combination of a smaller balance sheet and rate changes over the past year. The balance sheet is smaller than projected as we decided to sell the Cambridge Trust Securities portfolio and pay off borrowings, which resulted in an even healthier balance sheet. This decision, along with the lower fair value marks associated with the changes in interest rates since the announcement shown on Slide 7, resulted in lower earnings per share in the quarter as compared to Street estimates. On the credit front, we took a hard look at Cambridge loans, and you will note increased reserves in the commercial real estate category, particularly office, which we feel are appropriate at this stage of the cycle. The company's overall allowance for loan losses was prudently expanded to 1.4% in the quarter. We take an aggressive approach in reserving for potential challenges. As an example, our reserve for total investor office loans represents 8% of loans in that category. So in summary, regarding the merger, client retention has been terrific. We feel good about where we are relative to original expectations. Capital is stronger, and asset quality is well-marked and accounted for. David will provide some detail regarding the outlook for Q4, and I promise to end by saying the financial metrics of Eastern are markedly stronger than pre-merger, resting at the top of balance sheet with very strong capital and liquidity, providing capacity for future earnings growth. And finally, I'm pleased to report that our Board has approved a 9% dividend increase to $0.12 per share.

Thank you, Denis. I’ll begin with the financial review of the Cambridge merger before discussing the full results for the third quarter. The merger was finalized early in the third quarter on July 12. As Denis noted, we are on track to meet the merger-related financial targets announced over a year ago. Following the merger's closing, we updated the Cambridge balance sheet. The final purchase accounting adjustments relative to our initial estimates are highlighted on Slide 7. These adjustments came in as expected, but I will discuss a few key differences. The fair value mark on loans at closing was $250 million, significantly lower than the $413 million estimated a year ago. The credit mark on purchased credit deteriorated (PCD) loans was $56 million at closing. The increase from expectations a year ago was primarily due to office commercial real estate loans, reflecting challenges in that sector. I will provide more details on asset quality later. As Denis mentioned, Eastern sold all of Cambridge’s investments shortly after closing and used the proceeds to eliminate Cambridge's wholesale funding. Therefore, the original securities mark of $172 million will not be recognized as income, equating to $29 million to $34 million annually. On Slide 8, we’ve included a projected timeline for the accretion and amortization of fair value marks affecting future earnings. Most notably, we will recognize the $250 million interest rate mark on loans and a $33 million credit mark on non-PCD loans, totaling $283 million over the life of those loans. We expect this to generate approximately $12 million to $14 million in income per quarter for the next year. Our model for the loan accretion schedule is based on the best available information, though the actual recognized accretion will depend on future loan prepayments, influenced by changes in market interest rates. Should rates decline, we anticipate faster prepayments in certain loan categories, leading to quicker recognition of the associated discount. However, it's crucial to note that while these loans reflect current rate levels, their underlying interest rates are relatively low, meaning rates would need to drop significantly for borrowers to have the incentive to refinance and pay off fixed-rate loans. Therefore, we believe we have strong protection against prepayment risk on these assets, and the income stream should be more predictable. In line with all aspects of this merger, Eastern is dedicated to continuing and enhancing the strong relationships that Cambridge has built with its customers. As legacy Cambridge loans are paid down, reducing accretion income, new loans will be issued at market yields, sustaining interest income. The lower section of slide 8 also presents anticipated amortization of core deposit and wealth intangibles, which will be included in non-interest expenses. We expect these non-cash expenses to be around $7 million per quarter over the coming quarters. Now, let’s review our results for the third quarter, starting on slide 9. We reported a GAAP net loss of $6 million for the quarter due to one-time merger items, primarily a non-PCD loan reserve expense of $40.9 million and $30.5 million in M&A expenses. On an operating basis, net income was $49.7 million or $0.25 per share. This increase in operating earnings was driven by a larger balance sheet and a higher margin, which rose 33 basis points in the quarter to 2.97%. Our wealth revenues more than doubled to $14.9 million in the third quarter. The balance sheet remains robust. Tangible book value per share finished the quarter at $12.17. Our Board approved a $0.01 increase in the quarterly dividend, and we repurchased 836,000 shares of stock at an average price of $15.08, totaling $12.6 million for the quarter. Asset quality continues to remain strong. Although non-performing loans increased to $125 million, this was due to PCD loans that have been cautiously reserved for. I’ll elaborate on asset quality further in my remarks. Transitioning to the income statement for the quarter, slide 10 summarizes both GAAP and operating results and return metrics. Our GAAP loss of $6 million was attributable to merger items, while operating net income of $49.7 million marked a $13 million increase over the prior quarter, up 36%. The quarter experienced notable disruption due to the merger, evident in three areas: the provision for credit losses included $40.9 million reserves for non-PCD Cambridge loans; non-interest income included a $3 million fixed asset write-down classified in other non-interest income; and non-interest expense involved $27.6 million of costs primarily associated with salaries and benefits. For a detailed breakdown of M&A costs during the quarter, please consult slide 33. Our operating tax rate for the quarter was somewhat elevated at 24.6%, and I’ll provide an update on the expected tax rate during my outlook remarks shortly. Turning to the margin on slide 11, it's important to note that we had a partial quarter impact from the merger starting on July 13. For September, our margin on a fully taxable equivalent (FTE) basis was 3.05%. We are encouraged by recent margin growth and believe additional rate cuts by the Fed will have a favorable impact, especially if the yield curve returns to a traditional upward slope. Total non-interest income on slide 12 reached $33.5 million in the third quarter and $32.9 million on an operating basis. In Q2, we had an early deposit termination payment of $7.8 million that affected our results. Wealth management fees grew from $6.7 million to $14.9 million in the third quarter, largely due to increased assets under management from Cambridge and strong market performance. Deposit service charges stood at $8.1 million in the third quarter, an increase of $200,000. Remember, certain deposit service charges were temporarily waived for new Cambridge customers, which resulted in a loss of about $300,000 in income for the quarter. These fees will be reinstated in mid-Q4. Moving to slide 13, total non-interest expense was $159.8 million, with $130.9 million on an operating basis. Two main factors contributed to the increase in operating expenses from the linked quarter. First, salaries and benefits grew by $15.4 million due to integrating new employees from Cambridge. Second, we encountered a $5.7 million rise in amortization expense due to core deposit and wealth management intangibles. As previously highlighted, we captured the majority of merger-related cost savings in our Q3 results. The balance sheet on slide 14 displays our levels of deposits, loans, borrowings, and investments post-merger. The balance sheet is exceptionally strong with total assets of $25.5 billion, a tangible common equity ratio of 10.7%, and a loan-to-deposit ratio in the mid-80s, with essentially no reliance on wholesale funding. We added approximately $3.9 billion in loans and $3.7 billion in deposits from Cambridge. Organic growth during the quarter was slow, with lending levels remaining stable and a seasonal decline in deposits. We are optimistic about our local economy, the current inflection point in the rate cycle, and our growth prospects for 2025. Moving to deposits and loans on slides 15 and 16, key quarter-over-quarter changes relate to the impact of Cambridge, while organic activity has been limited. We added high-quality deposits through the merger, maintaining around 50% of our total deposits in checking accounts, and our overall deposit cost is well-managed at 182 basis points, reflecting the strength of our combined deposit base. In terms of loans, we acquired $2.3 billion in commercial loans and $1.5 billion in residential loans through Cambridge. We are excited about the smooth transition for Cambridge customers and are actively working to welcome and support those who are new to Eastern. Turning to the credit effects of Cambridge on slide 19, the allowance rose from 111 basis points last quarter to 143 basis points this quarter, totaling $253.8 million. This increase included $56 million in day one Cambridge PCD reserves recorded to the allowance and a day two provision for non-PCD loans of $41 million. The legacy Eastern provision was $6 million, consistent with previous quarters, while charge-offs amounted to $5 million. Let’s now closely examine the acquired loans and the credit impact of the Cambridge portfolio starting on slide 20. The combined credit mark on PCD and non-PCD loans was initially estimated at $44 million but was $89 million at closing. The pool of PCD loans expanded over the past year, mainly due to the deterioration of the office market. Increased distressed office property sales over the past year have provided clearer value assessments. According to slide 20, the total unpaid principal balance of PCD loans was $353 million or 9% of total Cambridge loans. We recognized $56 million in reserves for these PCD loans as a gross-up in the allowance that was recorded through goodwill. Slide 22 showcases our office exposure post-merger, which stands at $900 million or 5% of total loans, unchanged from legacy Eastern’s percentage. Criticized and classified investor office loans have risen to $178 million, representing about 20% of total investor office loans. We maintain reserves of $72 million or 8% against the $900 million of investor office loans. In regards to overall asset quality on slide 23, non-performing loans increased to $125 million, or 70 basis points of total loans, driven by the addition of Cambridge PCD loans. Legacy Eastern's non-performing loan levels have remained stable in recent quarters. Net charge-offs were $5.1 million in the quarter, equating to 12 basis points of total loans. We are very comfortable with the allowance of $254 million, providing robust coverage for the loan portfolio. Moving on to our outlook, focused on Q4, we will provide 2025 guidance in January after our annual budget process. For Q4, we anticipate loan balances to remain relatively stable. While we do not expect significant loan growth in Q4, we note a growing pipeline in commercial lending, which is a positive leading indicator for future growth. Deposits typically face seasonal declines late in the year, and we have $185 million in deposits from Century Bank maturing in mid-November. We expect net interest income to be between $175 million to $180 million and net interest margin to fall between 3% and 3.05%. As stated earlier, we anticipate that declines in short-term rates will enhance our margin and net interest income going forward. Approximately 20% of the loan portfolio will be reset based on short-term interest rates. We expect betas on our interest-bearing deposits to be between 40% to 50% as rates decline, including our CD portfolio. Operating non-interest income is projected to be in the range of $33 million to $34 million. Operating non-interest expense is expected to range from $130 million to $132 million, reflecting fully realized cost savings, including about $7 million in intangible amortization. Additionally, we forecast $2 million to $3 million in non-operating M&A expenses in Q4. Lastly, we expect the tax rate to stabilize for the full year within the range of 22% to 23%. That wraps up our comments for the quarter, and we will now open the floor for your questions.

And the first question comes from Mark Fitzgibbon with Piper Sandler. Please go ahead.

Hey guys, good morning and congratulations on the deal. It's rare that we see anybody bring in deal charges below their initial projections. So, great job. I guess my first question, David, to follow up on a couple of points that you made. On loan pipelines, you said they were strong. I wondered if you could share with us the size of the pipeline and the complexion of it.

Sure, Mark. Well, I'll let Denis handle that.

Hi Mark, good morning. So, yes, the commercial loan pipeline is at its third highest level this year. Now admittedly, that's coming off a fairly low level at the end of June, but I'll just give you the two numbers. The end of June, our pipeline was $228 million. It's now $438 million. So, we're optimistic that that will continue to grow heading into the new year and it's certainly better than it was at the end of June.

And Denis, is that mostly commercial real estate? Or is it an even mix of C&I and CRE? What does that look like?

Good mix of commercial real estate, C&I, and community development lending. We are very active in all three businesses. And we're just seeing some early seeds of increased activity, and hopefully will continue into the new year.

Okay. Great.

Mark, please continue.

No, no, please. David, sorry.

I was just going to add that normally, we've been inwardly focused on the completion of the merger and the bringing on of our colleagues. I think the other positive aspect to this is just a sense in the market among customers of the Fed beginning an easing cycle and demand starting to build as well.

Okay. Great. And then I heard your comments in the discussion around purchase accounting adjustments and that Slide 8 was helpful. It sounds like you expect the net interest margin to sort of gradually rise across 2025. Can you help us think about where the margin might be able to get to by the end of the year, assuming we follow the forward curve?

So I would say a couple of things. I would say we're modestly liability sensitive when we think about parallel changes in interest rates. But we are more liability sensitive if the shape of the yield curve becomes normalized or more upward sloping. So which is the much more likely path of interest rates. So instead of specific margins, the way I would think about it is if you had a parallel rate and moves, every 25 basis point move is worth about 1 basis point. But if the short end of the curve falls relative to long rates, every 25 basis points is worth about 4 basis points, almost 4 times as impactful.

Okay. Great. And then I wondered if you could share with us how much of the $85 million increase in nonperforming loans was PCI related versus other stuff that might have come from, say, the Eastern side?

The $85 million increase. So certainly, the biggest component of the increase in nonperformers in the quarter, Mark, were the Cambridge loans, the PCD loans from Cambridge, and most of that was office. I think the vast majority of those loans were office. And I think it's worth sharing with you how the process that our team went through in evaluating those loans but also broadly the investor office category in its entirety. We recognize that the office market has certainly deteriorated in this past year. And knowing that our team did a very thorough review, we reunderwrote all office loans over $5 million through the second and the third quarter. It was a massive effort by our team. Our team is in close contact with our borrowers and have a very good sense of what's happening with each loan. So this again, it's reunderwritten every loan over $5 million. And every quarter, we review each credit to determine if they are appropriately risk-rated and reserved. The result of this, and clearly, with the Cambridge office portfolio, which has seen some deterioration here this year, we established a very strong reserve against those office loans. And as we've mentioned in our comments, overall, we've been 8% reserved against the total investor office book at the end of the quarter. And our reserve, as noted, is 1.4% the quarter. So very strong actions. We believe we have fully accounted for risk in these loans at the end of the quarter.

Great. Thank you.

Your next question comes from the line of Damon DelMonte with KBW. Please go ahead.

Good morning, everyone. Hope everybody is doing well, and thanks for taking my questions here. I guess just regarding expenses, I think you noted you got the majority of the cost saves out. Just looking for a little bit of commentary as we kind of go into 2025. Do you feel like there's additional opportunities to extract some savings from the expense base?

Hi, Damon, it's David.

Hi, David.

The shorter answer is maybe. I qualify my response for two reasons. I have only been here for nearly three months, so I'm still getting to know the organization and have mostly focused on the Cambridge transaction and the related purchase accounting work we just discussed. Additionally, we are just beginning the budget cycle, and neither I nor Denis has gone through one yet. I believe by January, when we discuss the fourth quarter and provide guidance for the full year, we will have much clearer insights, as we will have a better understanding of the organization by then.

Okay. Fair enough. And then with regards to capital, obviously, tangible book value and capital ratios came in stronger just given the change in the marks with the deal closing. Just kind of wondering what your thoughts are on the buyback. I saw you were active this quarter. And then also, do you have any thoughts on potential securities restructuring, just given the greater capital flexibility?

Yes. You can see the numbers. We purchased just under $13 million of stock. During the quarter, we focused more on being price sensitive than volume sensitive. Our execution was about $1 below the VWAP. We do have a lot of excess capital, which we hope will support loan growth and the pipelines that Denis mentioned. However, we can still carry out buybacks. We believe our stock is a very good value, and we are considering whether a securities restructuring makes sense. This is an ongoing discussion in our ALCO committees, and we may or may not proceed, as everyone on the call understands the pros and cons of such transactions. We are actively thinking about it.

I appreciate that information. Lastly, the cash balances at the end of the quarter were higher than last quarter. I'm curious about our outlook on the average earning asset base moving forward. Will the cash remain on the balance sheet? Will there be an outflow of deposits needed to fund that, or will it be reinvested in securities? You're short $3.4 billion of earning assets, so what is a reasonable target for the upcoming quarters? Thank you.

Sure, thanks. Cash increased by $130 million compared to the previous quarter, bringing it to nearly $900 million. While we're considering restructuring securities, our Asset and Liability Committee is also looking into purchasing securities to make use of some of that cash. Our goal is organic loan growth, and while we anticipate flat loan growth in the fourth quarter, we are more optimistic about 2025, although we are just starting our planning for that year. We noted the expected maturity of the legacy Century deposit, which is similar to what occurred in the second quarter. In the second quarter, there was an early termination that resulted in a $7.8 million prepayment penalty. We do not expect that to happen in November as we anticipate it will reach maturity. A portion of that cash will be allocated to fund that deposit, along with some seasonal outflows, but we still maintain a strong cash position that will support loan growth and likely result in some modest additional security purchases.

Got it. Okay. Great. That’s helpful. That’s all that I have for now. Thank you.

Thanks, Damon.

Thanks, Damon.

And your next question comes from the line of Laurie Hunsicker with Seaport Research. Please go ahead.

Great. Hi. Thanks. Good morning. And just to echo Mark's congratulations. Yeah. Wondered though if we could start with office, just some specifics. So the commercial non-accruals that you gave of $105 million, can you just share with us the breakdown of CRE versus C&I versus business banking? And then very specifically, of that $105 million, how much is office non-performers?

So Laurie, we won't provide specific details on non-accruals by category. However, I can share that the increase in PCD loans was mainly in the office segment at Cambridge. As you can understand, given the current environment and the overall decline in the office sector, this category made up the largest portion and had significant reserves allocated to it.

Okay, so you aren't revealing how much you have in office non-performers? Can I assume that your PCD commercial real estate amount, which is $204 million plus whatever the Eastern legacy was, is entirely office?

About one-third of the PCD loans, the $204 million were office, and that's the category that had the most significant reserve against it.

Right. I totally understand that. Just I mean for tracking purposes, I'm just trying to understand what the office non-performers are? Or maybe we can come back to that. So I guess, can you help me think about of your $178 million, the criticized and classified office, how much of that is coming due here in coming quarters? And then just any color on those loans in terms of vacancy rates, how you're thinking about that?

So Laurie, to begin with, we successfully completed this transaction, allowing us to perform all necessary fair value assessments. Since the announcement of the deal, there was one distressed property sale prior to the announcement, and starting from late in the third quarter through the fourth quarter of last year into this year, we have observed an increase in distressed sales. This trend has made it significantly easier to determine values in commercial real estate, particularly in the office sector. We had the advantage of better knowledge during the purchase accounting process compared to when the deal was first announced. Essentially, the office sector did weaken during that timeframe, as did commercial real estate overall, but we are hopefully starting to see signs of stabilization. As mentioned by Denis and myself, we have an 8% total reserve against investor office totaling $900 million, which is a strong reserve. On Page 22, we detail very minimal future maturities, specifically $61 million this quarter and $74 million in the next. Within that $61 million, for instance, there is one non-accrual loan, but it is fully reserved with no additional losses anticipated. The other loans are accruing. For the second quarter of 2025, with $70 million due, we have no concerns about those loans as they are also accruing and no special reserves are needed; we expect them all to be paid off at maturity. Our reserves, which are at 143 basis points, have increased from the last quarter due to the merger, and we are maintaining our reserve levels. Another point to mention is regarding legacy Eastern in Q3, where we had net charge-offs of $5 million against a $6 million reserve. Our credit teams have effectively managed that portfolio throughout this cycle. As a newcomer, participating in my first CECL Committee and allowance committee, I have been very impressed by the teams and the process, which gives me a lot of confidence in our understanding of credit, the market, and our portfolio. As Denis noted, we are re-evaluating all of our commercial loans in Q1 and Q2, which is standard practice here.

I appreciate all the details you have provided; your presentation is incredibly helpful. I have one more question about the office segment. Of the $61 million maturing next quarter, I noted that half of that was from an Eastern credit you received. Could you help us understand the $30 million loan you mentioned is fully reserved? What are the vacancy rates like, and will that loan be extended? How should we approach this?

So it wasn't an $11 million loan, David, right?

Yes. There is an $11 million loan on non-accrual that is fully reserved. To clarify, I did not mean to imply that all the maturities were coming from Cambridge's portfolio; it's primarily from the legacy Eastern portfolio.

Right. Okay. Okay. Your forward guidance and I appreciate that you're going to refresh us in January. Just two things. Number one, your net interest income and margin guide, that does include the accretion schedule you laid out in Slide 8?

Yes.

Okay. Regarding the tax rate, as we look ahead to next year, how should we approach it considering the significant fluctuations? Are we expecting to revert to the 21% that Eastern had previously, or will CATC introduce a higher tax rate? Any guidance you can provide on the tax rate for the upcoming period beyond the fourth quarter would be appreciated.

Yes, I believe next year will be similar to what we've outlined, likely around 22% to 23%. We haven't finalized the budget yet, and taxes after the merger can be somewhat complex. We still have some unresolved tax matters from previous years, which is normal. It takes three years to close each tax year, so there could be some fluctuations in Q4. However, I expect that the range of 20% to 22% to 23% will serve as a run rate for several quarters ahead.

Great. Thanks, David. And then just last question, Denis, to you. Can you help us think a little bit about M&A? You've completed this deal, just how you see M&A in Eastern? Thanks.

So, thanks, Laurie. Our focus is on the integration of the Cambridge merger and even thinking back to Century version, there's a lot of opportunity for us to capitalize on. So our primary focus is going to be on organic growth. But that said, we're all very, very pleased with how the team worked so well on the integration of the Cambridge merger. There's a lot of capability at this firm. And I'm very confident that if an opportunity were to arise, if we got a call about a merger opportunity, that this team would be able to engage on it very, very effectively. But again, our primary focus is organic growth.

Great. Thanks.

Thank you.

There are no further questions at this time. I will now turn the call over to Bob Rivers for closing remarks.

Well, thanks, everyone, for your interest and your questions, and we look forward to sharing more with you during our next earnings call at the end of January. Until then, best wishes for a happy and healthy holiday season.

Thank you. And this concludes today's conference call. Thank you all for participating. You may now disconnect.