Renasant Corp Q4 FY2021 Earnings Call

Good day, and welcome to the Renasant Corporation 2021 Year-End and Fourth Quarter Earnings Conference Call and Webcast. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Kelly Hutcheson with Renasant Corporation. Please go ahead.

Good morning and thank you for joining us for Renasant Corporation's 2021 fourth quarter webcast and conference call. Participating in this call today are members of Renasant's executive management team. Before we begin, please note that many of our comments during this call will be forward-looking statements, which involve risk and uncertainty. There are many factors that could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements. Although business activity in the markets in which we operate increased significantly relative to 2020, the spread of multiple variants during 2021, including the most recent Omicron variant, reminds us that the impact of the pandemic and the federal, state and local measures taken to arrest the virus may remain significant factors impacting our financial condition and operating results for the foreseeable future. Other factors include, but are not limited to, interest rate fluctuation, regulatory changes, portfolio performance and other factors discussed in our recent filings with the Securities and Exchange Commission, including our recently filed earnings release, which has been posted to our corporate site. We undertake no obligation and we specifically disclaim any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time. In addition, some of the financial measures that we may discuss this morning are non-GAAP financial measures. A reconciliation of the non-GAAP measures to the most comparable GAAP measures can be found in our earnings release. And now I will turn the call over to our President and Chief Executive Officer, Mitch Waycaster.

Thank you, Kelly. Good morning. We appreciate you joining the call today. Before Kevin and Jim discuss results for the fourth quarter and our near-term outlook, I want to reflect on 2021 and the opportunities ahead. First, I am so very proud of our team as they persevered through the challenges of the health crisis. I want to thank our team for their extraordinary efforts putting each other and customers first throughout the year. Financially, we produced solid earnings, strengthened capital levels, and ended the year with considerable balance sheet liquidity. Additionally, we published an ESG report in 2021, which documents our efforts in a number of important areas, including diversity and inclusion. We expect to issue a new ESG report in 2022. As we look to the new year, the economic strength of our markets is evident and the outlook for growth is good. Industries that remain hard hit by COVID in early 2021 have largely rebounded and are better positioned. Business activity across the footprint is vibrant, and causes us to be hopeful on improving loan growth. I am optimistic about the coming year and sharing with you the results. I will now turn the call over to Kevin.

Thank you, Mitch. Our fourth quarter earnings were $37 million, or $0.66 per diluted share, compared to $40 million, or $0.71 per diluted share in the third quarter. For the year, we reported $3.12 per diluted share compared to $1.48 in 2020. Forgiveness of our PPP loan portfolio continued to slow this quarter, and was the largest factor contributing to the decline in net interest income quarter-over-quarter. We utilized some of our own balance sheet liquidity to grow our securities portfolio and the additional income generated helped to offset the impact of interest income from PPP. Our insurance and wealth management lines of business experienced seasonal slowdowns in the fourth quarter, but put forth strong results for the full year of 2021. Similarly, a seasonal decline in mortgage volumes coupled with further compression on gain on sale margins resulted in a lower contribution from our mortgage division for the fourth quarter. We continue to make noticeable progress on our expense and efficiency initiatives and are pleased with our recent results. While the fourth quarter benefited from some one-time items, the trajectory of expenses year-over-year or quarter-over-quarter are declining as expected, and we expect the impact of ongoing and new initiatives to reduce non-interest expense for the year 2022 compared to 2021. Our team is adaptive and innovative, which have been key to driving our success. Customer behavior and preferences have evolved quickly over the past two years, and our goal of understanding and meeting the needs of our customers, whether face-to-face or through mobile and digital applications, remains unchanged. Technology and innovation have always been a high priority and will continue to receive a great deal of focus from our team. I will now turn the call over to Jim.

Thank you, Kevin. As we walk through the quarter's results, I will reference slides from the earnings deck. Starting with the balance sheet, assets grew just over $650 million in the quarter with deposits growing by a similar amount on the liability side. Noninterest bearing deposits now represent 34% of total deposits. As Kevin mentioned, we invested some of the excess liquidity in our securities portfolio, increasing the balance just over $250 million from the previous quarter. We also elected to classify approximately 15% of our portfolio as held to maturity and as a result of this classification, we record a credit loss reserve of $32,000. At the end of the quarter, we had approximately $1.9 billion in cash. We anticipate the combination of additional growth in the securities portfolio and loans to reduce this cash position in the coming quarters. Loans, ex-PPP, increased $13 million from Q3 and $150 million year-over-year, which represents over 1.5% loan growth for the year. Q4 was another strong quarter in terms of production, with $820 million in new loan production and $590 million of advances, but the challenges around payoffs that have been present during much of the pandemic did not subside in Q4. Activity in our remaining PPP portfolio was nominal with balances declining $9 million for the quarter. We had $58 million in PPP loans outstanding at quarter end. All of our regulatory capital ratios are in excess of required minimums to be considered well capitalized and reflect the strength of our capital position. During the quarter, the company issued $200 million of 10-year subordinated notes at a fixed rate of 3% for the first five years. The proceeds of this offering replenish capital that we used to redeem $45 million in callable subordinated notes. Related to this, we have called for redemption another $30 million of our subordinated notes, which will occur on March 1st. We also repaid $150 million in long-term FHLB advances and incurred a prepayment penalty charge of $6.1 million. We had a credit provision release of $500,000 and net charge-offs of $5.4 million. The ACL as a percentage of loans, ex-PPP, decreased from 1.71% to 1.65%. We also had a release from our reserve for unfunded commitments of $300,000, which is reflected in other noninterest expense. Credit quality metrics are shown on pages 14 through 16. Pass dues, classified and nonperforming asset measures all remained relatively steady. The uptick in net charge-offs is largely comprised of a single credit that was fully reserved at the time of charge-off. Net interest income declined $1.8 million quarter-over-quarter. Kevin mentioned that our PPP forgiveness slowed this quarter, with PPP interest and fees declining $3 million from Q3. Interest income from our additional securities purchases helped offset the decline in PPP revenue. Our core margin, which excludes purchase accounting accretion and interest recoveries, was down 11 basis points from Q3. After also excluding the impact from PPP, our core margin was down only 4 basis points. The decline in margin is the result of loan pricing pressures and the considerable on-balance sheet liquidity. Our mortgage, wealth management and insurance lines of business all experienced seasonal slowdowns in Q4, but produced strong results for the year. Our treasury solutions and capital markets teams, as well as our SBA team, all outperformed this quarter, and helped offset the decline for mortgage. It is also worth noting that we terminated four cash flow hedges linked to future FHLB borrowings that are no longer expected to occur. The swap terminations resulted in a gain of $4.7 million, which is recorded in noninterest income. Noninterest expenses with exclusions were down approximately $8.6 million for the quarter. A portion of that decline is attributable to the decline in expenses in our mortgage division, as well as some other one-time items. We continue to see the benefits of expense initiatives announced in late 2020 and expect continued realization from other initiatives in 2022. I will now turn the call back over to Mitch.

Thank you, Jim. Remaining committed to the fundamentals of sound banking, with a focus on core deposits, asset quality, capital strength, and improving profitability, are the keys to building shareholder value. I will now turn the call over to the operator for Q&A.

Thank you. We will now begin the question-and-answer session. And the first question comes from Thomas Wendler with Stephens. Please go ahead.

Hi. Good morning, everyone.

Good morning, Tom.

On the earnings release, it says you guys have no current intent to repurchase stock. Is this driven by the company's current valuation? And then can you give us an idea of other pathways the company is finding more attractive for capital deployment?

Good morning, Thomas. This is Jim. So a couple of thoughts on capital management. Of course, it's something that we spend a lot of time thinking about and really what we're doing in that deliberation is thinking about the relative uses or the different uses of capital, which ones produce the best sort of returns on that capital. And stock price is a factor in that. But also another factor of beta, the consideration of what sort of balance sheet growth we might have. And then lastly, I would say, acquisition opportunities. So it's a constant sort of weighing of the pros and cons and merits of each. And right now, we just see the best use for capital being in those other alternatives away from share repurchases, not something we'd roll out, as we get over the course of the year, but at this point, it's not something we envision in the near term.

That's great. Thank you. And then just keeping on with that conversation, in M&A can you give me any sort of color on the asset size, geography or if it'd be a bank or a non-bank where you guys might be focused there?

Good morning, Thomas. This is Mitch. As we explore potential opportunities, we are considering both banks and non-banks, focusing on those in the $1 billion to $5 billion range. However, we wouldn't rule out options below $1 billion if they support our growth in existing markets. Regarding non-banks, we are particularly interested in opportunities that would enhance our current business lines, where we are already seeing success, and I will discuss our production shortly. Additionally, we are looking at new business lines that align with our business model, risk appetite, and the opportunities available across our footprint.

All right, that's great. I'll hop back in the queue. Thank you.

Thank you.

The next question comes from Joseph Yanchunis with Raymond James. Please go ahead.

Hi, there.

Good morning, Joe.

Good morning. I believe in your prepared remarks, you discussed potentially increasing the security portfolio in 2022. And at 18.1% of total assets in the quarter, I was wondering if there is a kind of a cap that you had in your mind on where that could rise to?

Good morning, Joe. This is Jim. I would say there isn't a specific cap that we are considering. We see the portfolio as a source of liquidity, and liquidity isn't an issue for us. However, we understand that circumstances and deposit behavior can shift. Over the next quarter or two, we plan to continue to gradually build the securities portfolio, similar to what we've done in past quarters, and we will reassess as the year progresses. We will look at our loan growth and any changes in deposit behavior as we move forward. For now, I do anticipate some growth in that securities portfolio.

Understood. That's great. I appreciate it. And then I was also hoping to get your thoughts on where you think the NIM will trend from here? And when do you expect for it to bottom out?

I believe some of this was discussed at the end of the third quarter call. We are observing signs of net interest margin stabilizing, and these trends have continued. We are hopeful and expect that by the end of the second quarter, the margin will have stabilized. Additionally, regarding net interest income, which is something we pay close attention to, we see potential for growth in the coming quarters, primarily driven by balance sheet growth and the expectation of margin stabilization. It’s also important to note that part of this expectation includes improved loan growth as we progress through the year. Furthermore, my comments on net interest margin and net interest income do not account for any benefits from rate increases.

Got it. And then kind of on that interest rate sensitivity, do you guys have an update for where things are trending in 4Q or at 12/31 of the impact to NII from rising rates? I believe you guys were at about 8.5% in 3Q.

I would say this. We are updating that data, and when we release the quarterly report, we will publish it. I expect that the 8.5% will likely increase slightly, even without any adjustments or deposit beta. Additionally, it's difficult to make comparisons, but I believe our deposit betas might be higher than some of our competitors, so our sensitivity may be somewhat understated when you consider our interest rate sensitivity position.

Perfect. I really appreciate it. Thanks for taking my questions.

Thank you, Joe.

The next question comes from Jennifer Demba with Truist Securities. Please go ahead.

Thanks. Good morning.

Good morning, Jennifer.

You mentioned that expenses are likely to be down in '22. Just wondered if you could give us a profitable range there and what kind of hiring and investment environment that contemplates?

Hi, Jenny. It’s Kevin. As we look at our expenses and are making guidance about them being lower, looking at a couple of things. If you just look at the annual run rate of what we've done since '20, each of the quarters last year, expenses being down, we know there are headwinds when it comes to hiring or even some wage inflation. But we still think that given where our base is, our efficiency that we've got room to improve. That's why we were comfortable in projecting that guidance be lower. It's going to come from a variety of areas. The largest percentage of our expenses continues to be salaries and employee benefits. We will hire when the right opportunity to hire is there. So we're not going to not make a good hire for fear that it may cause a blip or an uptick in expenses. We'll continue to be opportunistic in the hiring. I would also say that when it comes to other expense line items, whether it's occupancy and equipment or data processing, we expect those to continue to trend down as well. But whether it's going to come from our ongoing initiatives, whether it's branch closures or contract renegotiations, we're going to continue to be very disciplined around all of our line items. As we look out as far as guidance, I would say that our trend line of what you've seen, whether year-over-year or quarter-over-quarter is going to continue to be there, particularly on a year-to-year basis. As we look at Q1, we will have a small uptick in salaries and employee benefits just due to routine merit increases. We mentioned in the call that Q4 was helped a little bit with some adjustments. If you just look at salaries and employee benefits, I think it's down close to $7 million. Those adjustments comprised about $3 million, so there was still an appreciable decrease in our salaries and employee benefits line item. So as we look out, we think that if you take the year-to-date expenses as your baseline and assume a decrease, I think that's going to be in line with where we end up for '22.

Thanks, Kevin.

Thank you, Jennifer.

The next question comes from Brad Milsaps with Piper Sandler. Please go ahead.

Hi. Good morning.

Good morning, Brad.

I hope you guys are doing well. I'd hopped on a little late, but just wanted to follow up on the expense question. Just kind of curious, maybe in terms of total headcount, kind of where you were from quarter-to-quarter, just wanted to get a sense of kind of how much of it was purely related to mortgage and maybe other efforts that you guys are taking in other ways to reduce costs?

Good morning, Brad. Regarding expenses and headcount, we are currently facing challenges due to the pandemic, and we require all available staff, especially in critical areas like branches, wires, or call centers. We need to ensure that we do not overburden our employees while still providing customer service. Our headcount is down about 100 employees year-over-year, but we are still hiring in certain areas. There is considerable fatigue in our workforce, and we are focusing on managing this to avoid further strain on both employees and customers caused by pandemic-related staffing issues. When it comes to expense reduction, we are evaluating all options, including long-term benefits. In Q4, we managed to reduce health and life insurance costs, which may seem surprising given recent healthcare increases. We have adjusted our contractual obligations and reviewed our total benefits package to maximize employee benefits while cutting costs for both the company and the employees. This effort is not about shifting costs to employees but about enhancing benefits and reducing their expenses. We are also looking at salaries and employee benefits, which may involve some reevaluation of headcount and all components of that cost line, including benefits. As for the mortgage division, there has been a decrease in expenses, particularly in salaries and employee benefits, amounting to about $1.5 million to $2 million, primarily due to reductions in commission. We have started observing a return to normal operations in the mortgage sector towards the end of Q2 and Q3, and this trend continues in Q4. The cyclicality we didn't witness in the past two years because of low rates is now returning to mortgage.

Okay, great. Thank you, Kevin. And just maybe as a follow up for Jim, I apologize if I missed this. But do you feel like your sort of legacy loan yields have more or less kind of stabilized here around 385 or so? And secondly, just kind of curious, and I apologize if you mentioned this, but where are you putting on new bonds as you buy them? I think your yield actually was down around 129. Just kind of curious what kind of improvement you think you could see there.

Good morning, Brad. You're right. Core loan yields were slightly down in Q4 compared to Q3, but not significantly, which contributes to our confidence in the direction of the margin. Regarding the securities portfolio, we've been able to invest that money at approximately 50 to 60 basis points higher than in Q3, and we're not extending duration with those investments. Typically, we're maintaining a duration of three and a half to four years for the securities on our books, so we've seen a nice increase from Q3.

Great. Thank you, guys.

Thank you, Brad.

The next question comes from Kevin Fitzsimmons with D.A. Davidson. Please go ahead.

Hi. Good morning, everyone.

Good morning, Kevin.

It seems like payoffs, paydowns have been a real headwind for quite a while and it seems like it's been a little more for you all. And I know that's a tough thing to project. But when you think about what's causing that to happen, and maybe the anticipation of rates going up or potential tax changes, do you guess or do you hope that we may have hit a high point on that headwind, and then maybe some of this strong loan production will start translating into more substantial loan growth? I'm just curious how you feel about that?

Kevin, this is Mitch. You raised an important point in your question. I’ll begin with your last comment and address production first, before moving on to payoffs, particularly regarding what we observed in the fourth quarter as we wrapped up the year. Starting with production, we reached a record this quarter, generating $820 million, which is a 17% increase from $700 million in Q3. Throughout '21, we consistently saw growth in production, demonstrating the strength and capability of our team and the investments Kevin mentioned earlier. However, with this strong production in Q4, we did notice elevated payoffs. One specific area of those payoffs saw a significant rise during the quarter; in the prior quarter, asset sales made up about 46% of these payoffs, but this figure jumped to approximately 60% in the fourth quarter. Many of these sales occurred toward the end of the year as people capitalized on the chance to sell their underlying assets. This trend is largely attributed to current cap rates and market conditions, particularly considering the state of interest rates. If we adjust for the change in asset sales, our net growth this quarter would have been around 7%, given our production levels. I remain hopeful that we are beginning to see some positive shifts in this regard, and I expect these changes to continue moving forward. What excites me is our capacity for production and the diversity we observe in both our geographic reach and the variety of loans we are generating. For instance, the consumer one to four family loans accounted for about 24%, small business commercial made up 15%, and commercial credits over $2.5 million were at another 25%. Additionally, our corporate banking division, which includes larger C&I credits and specialty loans, represented around 36%. Looking at it from either a geographic perspective or by loan type, we are seeing impressive production results. Although there may be some anomalies in payoffs linked to asset sales, we are optimistic that we will see a shift as we move into '22.

Thanks, Mitch. That was really helpful. I have one follow-up question regarding the margin. There have been several inquiries about it, and I'm trying to consider all the various factors at play. Should we understand that while you see stabilization, there may still be headwinds in the first quarter due to the conclusion of the PPP, which means that income will effectively decrease? This might be somewhat counterbalanced by a mix shift as we utilize our cash. As we move towards midyear and stability grows, I would assume that this mix shift will persist. Additionally, we could benefit from rising rates. Overall, it seems that the ideal scenario for margin improvement could unfold, along with moderate deposit growth—not to the extent of an actual decline. This means that while you're building or stabilizing your average earning assets, net interest income could be more influenced by percentage net interest margin than in recent years. I'm interested in your perspective on all of this.

I think you did a great job, Kevin, of summarizing everything. Looking at the new and renewed loan rates or core loan yields, they seem to be moving in a positive direction. The most important factor for us regarding margin is the outlook for loan growth, as that is likely the primary variable. I'm setting aside the possibility of potential rate increases for now. We will definitely continue to adjust our mix and invest some of that excess liquidity into securities, which will be beneficial, especially given the higher rates available. However, as we analyze our models, I would say that loan growth is the significant variable, and our optimism around enhancing net loan growth will be crucial for the margin outlook.

Great. Thanks, Jim.

Thank you, Kevin.

The next question comes from Catherine Mealor with KBW. Please go ahead.

Hi. Good morning. I just have a follow-up question on the margin and just thinking about loan yields and loans repricing. Can you remind us what percentage of your loan portfolio is variable rate, the impact of floors and just how quickly you see that benefit once the rates start to move?

Good morning, Catherine. It's Jim. Approximately 50% of our portfolio is fixed, just slightly below 40% is variable, and about 11% is adjustable. About 75% of those variable rate loans have no floors or are above the floor. As interest rates change, that percentage of 75% tends to increase. With a 50 basis point increase, over 80% of the variable rate loans would be above the floor. Additionally, if we look at our loan production over the past couple of quarters, we've noticed a gradual increase in the percentage of variable rate loans in our production mix. While the increase is not dramatic, it has contributed positively over the last quarter or two.

Great. Okay. Looking back on expenses, can we determine how much of the expense base was related to mortgage this quarter or how much was reduced due to mortgage? As we consider the prospect of mortgage contributing less to revenue next year, how should we analyze the core efficiency ratio in relation to the mortgage efficiency ratio when we put together our model?

Catherine, good morning. This is Kevin. Looking at the mortgage sector, we are witnessing a return to its cyclical nature. Over the year, we still anticipate that our mortgage company will outperform the industry, even though the industry is facing challenges compared to the last two years. If we reflect on 2019 or 2018, we can see that the mortgage sector has become more efficient over the past couple of years. While margins may be lower in the fourth quarter compared to the third quarter, they remain higher than in the fourth quarters of 2019 or 2018. Therefore, there are some positive underlying trends in the mortgage sector. However, it is important to note that mortgage is reverting to a cyclical pattern. Over the last two years, the mortgage sector benefitted from an efficiency ratio that was more favorable, but we are now beginning to see it act as a headwind again. In the fourth quarter, the efficiency ratio for mortgage was around 75%. It usually operates in the high 60s to low 70s, so it is slightly above that range. We expect that the cyclicality will mean that the fourth quarter will likely have a higher efficiency ratio, but we believe that in the second and third quarters of next year, this will improve and will not be as much of a setback. Overall, our corporate goal is to reduce the company’s efficiency ratio below 60 in the short term and continue to enhance it. However, mortgage is likely to continue being a headwind throughout the year and will remain a less efficient business line. Additionally, it’s worth noting that approximately 3 to 5 percentage points of the company’s efficiency ratio is due to some non-bank business lines, such as insurance, mortgage, and wealth management. While these are solid business lines, they tend to be less efficient and will impact the corporate efficiency ratio, while the bank is running more efficiently.

And the 60% corporate efficiency ratio that you're targeting, do you think that's achievable? I know it's probably a higher margin with better rates is part of the ticket there, and of course I'm sure improves loan growth too. But is that something that you see achievable in a year, in two years or how long do you think it takes you to get there?

Yes, if I can control the environment, we could be there in a week or two. However, I don’t think that’s typical. Now, let’s discuss what we lack. If we don’t have rate increases, I believe reaching that target will be a next year event. If we do have rate increases, depending on the timing and the number of increases, we could be scaling to 60% as we head into next year. Again, this assumes rates rise quickly at the start of the year. Regardless of the macro environment, our focus must remain on efficiency and operating expenses. Thus, whether or not we have rate increases, achieving 60% is only a short-term aim. Our longer-term goal is to lower it to the mid 50s. Operating in the mid 50s means that the community bank model functions with an efficiency ratio in the low 50s, which we believe is optimal for a community bank. So those are our long-term objectives. If we experience rate increases, the asset sensitivity Jim referred to and our core funding will come into play. Additionally, we haven’t highlighted the deposit growth we’ve achieved; our noninterest-bearing DDA as a percentage of total deposits is now above 35%. We will continue to focus on fundamentals. As the rate environment potentially stabilizes, whatever that may look like, we anticipate that the value of those deposits and their rate sensitivity will contribute to potentially greater improvements in income when rates eventually rise.

And to be clear, you're talking about a relative efficiency ratio of 60 relative to today's adjusted 64. Is that apples-to-apples?

That's correct.

Okay, great. Super helpful, Kevin. Thank you.

Thank you, Catherine.

The next question is a follow-up from Thomas Wendler from Stephens. Please go ahead.

Hi, guys. Just one final question from me. We're starting to see a lot of banks change their policies around NSF fees. Is that something you've been looking at?

Thomas, it's Kevin. So yes, we have. And not to get historical on you, but may take you back to '09, because we saw at least in '09 the winds or the commentary around NSF fees or service charges around consumer deposits starting to change. And at that time, a large portion of our noninterest income was being driven by those exact line items. And so at that time, we had a long-term initiative to reduce our reliance on them or to lessen the contribution of those to noninterest income. And so we invested in insurance, wealth management, mortgage, all of those that I just talked about how inefficient they were. But they're also very good business lines to be in and are very effective use of capital. And so what we've seen over the last, call it, 10 to 12 years is that our consumer service charges and NSF fees, although the balance sheet has increased threefold, those line items are flat to down, and their contribution to the total company are down. So yes, this is something we've been looking at and talking about. Not only over the last couple of months as we've seen some peers come out with commentary or changes to their model, but we just seen this as something that's building and a headwind that's been growing. I would also add that even steps that we've taken sooner than 10 to 12 years ago to help our customers more effectively manage their accounts, we've taken significant steps along the way to help provide more education and more benefit to the customer so they can effectively manage those service charges. But also we've completely restructured our consumer deposit accounts and simplified the offerings that we have with less. And we have many fewer deposit options. And there's also a variety of options in those that the customer can choose to help tailor to their needs. So I'd just say yes, it's top of mind with NSF fees and service charges. We're evaluating right now how that looks in the future. We don't have any definitive answer yet. But we would also add that over the last couple of years, our customers have acknowledged that they like how we interact with them. We have been named the best bank in several of the markets and several of the states that we operate in. And that is ultimately what drives our decisions, our customer feedback and their satisfaction. So that's going to be our guide. But I would also say it's top of mind and it's something that we've been working on not only the last couple of months, but the last couple of years and almost a decade now around specifically NSF fees and service charges.

Great. Thank you.

Thank you, Thomas.

We have no further questions. So this concludes our question-and-answer session. I'll now turn the conference back over to Mitch Waycaster for any closing remarks.

Thank you, Tom, and to everyone who joined the call. We appreciate your interest in Renasant and look forward to talking again soon. We next plan to participate in the KBW Conference in February. Thank you.

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