Northeast Bank

Good day and thank you for standing by. Welcome to the Northeast Bank fourth quarter fiscal year 2023 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during a session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker today, Rick Wayne, CEO, please go ahead.

Good morning and thank you all for joining us today. I am Rick Wayne, the chief executive officer of Northeast Bank. And with me on the call are JP LaPointe, our chief financial officer, and Pat Dignan, our chief credit officer and executive vice president. After my comments, JP, Pat, and I will be happy to answer your questions. I'm going to reference in my comments the investor deck that was uploaded last night, starting with slide number three under the heading financial highlights. For the quarter, we purchased $48.8 million of loans with a UPV of $54.3 million. Make a few comments on that volume. Typically, the June 30 quarter is not the busiest in the year. And if you go back and look at all of the quarters from over the last five years, pretty close to the highest amount for that quarter. It was a $19 million increase over the March 31 quarter. And when we take a look at the activity, and so always back up, so that I think is a pretty good number. Absent the large transactions that we had in the fourth calendar quarter of 2022, it's more or less the runway we've been for many years. We did see during the quarter some big transactions that had come to market, and that is generally true. The bid-ask is pretty wide between sellers and buyers, and so it didn't meet our pricing expectations. Therefore, we didn't bid on those. We would expect, based on what we see in the market, that the gap between the bid and the ask will narrow and there'll be more opportunities to take a look at those. We originated $84.2 million in the quarter as well. Our originated loan book, which is, and was therefore, you know, our balances were fairly flat with the link quarter. But over the year, our originated loan book increased $229 million, or 30%, from the balance on June 30, 2022. What we're seeing is, I would say, general comment on the market. While 84 million is a good number, it's less than we have done in the earlier part of the fiscal year. You know, I just think there's less transactions in the marketplace right now. Again, a bid-ask gap in a different context. And, you know, we're also, well, we're always careful, as evidenced by the zero charge-offs to date in our originated loan book. We're being even more selective now as we're looking at potential transactions. Just some base numbers. The ROE was 16.7% for the quarter and 16.5% for the year. ROA was 1.7% for the quarter and 1.9% for the year. Our NIM was up 16 basis points from the linked quarter to 491, and we ended the year with tangible book value of $38.69. So all in all, we think it was an excellent quarter and year. Let me just drill down a little bit on asset quality, which is on slide eight. Delinquencies were only $13.1 million or $52 million. basis points on total loans and non-accrual loans were $15.7 million or 55% excuse me, non-accrual assets were $15.7 million or 55% of total assets, also very good. And you can see on slide nine, there was a movement in the non-performing asset category We had 4.3 million of resolutions, and then we put on an additional 5.5 million. So to the link quarter, it was up about a million dollars, but not meaningful in terms of the size of our balance sheet. And the numbers are solid with a low level of non-performing assets. On the funding side, the average cost of our deposits was up 36 basis points from the previous quarter. I should also point out on deposits, ours are 95% insured between a combination of having deposits under the $250,000 amount and also using Intrify and Reach and Tang with two-way sweeps to insure any of those that are over. So 95% insured, obviously a very good number. And we have seen almost no one-off of the normal course activity in our deposit accounts. On slide 21, the non-interest expense was $16.4 million. in the quarter, which is $2.6 million over the lean quarter. But $2 million of that was incentive comp booked in the fourth quarter, which is what we typically do when we see how the year was. We have, I think, a really instructive set of new slides in the book. You know, when we meet with investors and others, it's almost the first question that comes up is around our portfolio of office loans. And so we have in the slides, which Pat is going to walk through, a lot more color on those slides to help you get a sense as to the quality of those loans. And our plan is to do that over the next quarter or two for all of the major food groups of commercial real estate, including retail and hospitality, multifamily, industrial, et cetera. So you won't just be looking at one number, but you'll be understanding much better the nature of our portfolio. So with that, Pat,

Thanks, Rick. Recently, we've gone through and harvested a lot of data on our real estate portfolio, particularly in the office space, and broke the portfolio down by a number of different factors. We thought that the best way to illustrate the flavor of office collateral that we have was to illustrate by the number of floors. What we typically tell investors is that the vast majority of our office portfolio is comprised of low-rise buildings with local tenants. That is tenants serving a local neighborhood or community as opposed to more traditional office space that is in central business districts or office parks, that sort of thing. And so as you can see from the first table, the vast majority of our office portfolio is in buildings with less than five floors. 189 of the 247 loans are below $1 million with the remainder above and just 10 loans that are higher than $4 million. Four stories, actually. The other question that we get frequently from investors is concerning the maturity of those loans. Many articles recently have talked about the CMBS debt that's maturing over the next year or so, over a trillion dollars, and the potential inability of those loans to refinance. And as you can see from the table on slide 12, About 54% of our office portfolio is maturing in the next three years, but the current interest rates on those loans are such that they could refinance at today's rates. On slide 13, we've illustrated all of the loans secured with office space that are above $3 million or 1% of capital. This comprises most of the dollars. And as you can see from this slide, most loans are, again, low rise. There's geographic diversity, low dollars per square foot, and relatively high occupancy.

Thank you, Pat.

We obviously, of course, would be happy to answer any questions on these office flights or otherwise. But I think, as I say, when we go through the next couple quarters, we'll have this information on all of our different collateral types. And with that, we'd be happy to answer any questions that you have.

As a reminder, to ask a question, please press star 1-1 on your telephone. and wait for a name to be announced. To withdraw your question, please press star 111 again. Please stand by. We compile a Q&A roster. One moment for our first question. Our first question will come from the line of Alex Swerdle from Piper Sandler. Your line is open.

Hey, good morning, guys.

Morning.

Morning, Alex.

First off, Rick, you talked about a larger amount of transaction volume that was coming to market in the second quarter. I'm just curious, is that comprised of several larger transactions, or is there a number of more granular transactions, or maybe just a little bit more on the complexion of actually what's coming to market?

You know what? We saw, and this is by no means everything that comes to market, but we saw, let me just get out the right, $2.5 billion, thank you, of transactions that were in 34 pools, some small. Do you recall what was the largest one? I want to say it was a $900 million pool. It was a $900 million pool, yeah. And one of those, Alex, was a $900 million pool. So there were some very large ones and then there were some smaller ones. But there was a big chunk of those that almost 60% of what I'm describing, you know, the yield, we just weren't there on, you know, the seller's expectation on price. And then there was others that were, you know, we didn't bid on because it was undesirable collateral or we didn't agree with the collateral value. And so we wound up bidding on $165 million of UPP and we wound up winning $54 million. So, you know, just to summarize your question, there were some large ones, there were smaller ones, and we got roughly a third of what we bid on, and there was a lot that we did not bid on because of the seller's pricing expectations. As you mentioned in previous calls, it's a lot of cost and time to do the underwriting that we do on these, and we're not going to get there on price. We don't do all of that work. Not that we're afraid of hard work. We work hard, but using what there's a purpose in. It's a goal that's attainable.

For the ones that look like good collateral that you just weren't there on the price, were those loans, did they actually trade during the quarter, or was the market just not there for them?

Some did not trade, as I understand it. Pat, you want to respond to that?

There was a couple of large pools that had a lot of office, big office component. I think there were some banks trying to unload the office, and once they saw the prices they were receiving, there were no trades.

Got it. And then can you just spend a couple seconds or a couple minutes talking about your appetite and capacity for some of those larger pools? Obviously, you did one in the fourth quarter, a very large one relative to you, but to the extent that there are some larger pools like that $900 million pool or some even in the billion-dollar range, you know, in terms of your ability to actually do some of those deals or your appetite, I guess, you know, maybe talk around what the constraints would be and how you might go about, you know, approaching something that's a little bit larger.

Well, the higher capacity, loan capacity now based on our existing capital is about $450 million. And to point out at the end of, December, so as we entered our third fiscal quarter, it was about $100 million. And that capacity increased through a combination of earnings, and we raised $8 million through our ATM offering. So I think that our capacity to do We have great interest in doing a big transaction. You know, for example, the billion dollars that we bought in the fourth calendar quarter has given us such a base now that just our basic core earnings are up significantly and will be going forward because of that. And we would like to do more. You know, how much more it would require us to, depending on the timing of it, You have your own model, of course, and we don't put those numbers out as to what we're going to earn, but you could take a look at what you project and figure out how much capacity we would have, which would be augmented by loan payoffs. I'm not saying we're going to do this at all, but we could also raise more money through our ATM offering. Fortunately, our stock price is come back very nicely. We're trading at a nice price now. And I would just add on what we're seeing and the stuff we like, which is what we bought in the fourth quarter, we're seeing now is really low LTV. And so we don't want to take any undue credit risk at all. So we like to say we're not in the business of losing principal here. And we're seeing that with low LTV. that are coming to market. So I hope that was helpful enough. But if you have any follow-up on that point, please.

That's good, caller. I guess just my final question on the purchase market. You know, for some of the transactions that are trading during the quarter, is it other banks as the buyer, or are you competing mostly against private equity and other specialty finance companies?

Well, we bought, as I mentioned, we bid on 165 and we bought 55 or 54.3 million. There, Pat, do you want to comment? Do you know who the, what you said?

It's largely banks. There's also one or two funds that competed in our space that have very cheap cost of funding that we often compete with. I know we lost to one of them in one of the bids, but that's largely banks.

Got it. Okay. And then if I'm remembering correctly, this quarter, I guess your first fiscal quarter of 2024, you guys adopt CECL, if I'm not mistaken. Can you maybe give us an update on what the expectations for that could be?

JP?

Yeah, the expectation there, Alex, is the allowance is going to go up significantly. As you see in our presentation on slide slide number here. We have a good amount of credit-related discount, non-accreditable discount, about $23 million of non-accreditable discount on slide 23 at June 30th. Almost all of that will move into the allowance from the discount, so the loan balance will go up and the allowance will go up accordingly. And then we'll probably be somewhere around where we are and what's in there now for the originated portfolio. If you take what we have now and add in most of the non-accreditable discounts, that's approximately where we'll be with our CISO calculation upon adoption.

Okay. JP, just to summarize, you're saying then we don't expect with the adoption of CISO to have any, there won't be any meaningful income statement effect on the adoption. Right, right. Correct? Correct. And for those that are listening that may not be familiar with that, JP was saying that we will, that the allowance, the credit discount that we have, it's a geography decision, will become an allowance. And then the discount on our books relating to interest expense, we will just continue to treat as we have been.

Correct.

Okay.

And does the $23 million, does that get reclassified from capital to the ACL?

No, just from the discount against the loan. So the loans get grossed up. So purchase loans will increase by $23 million, and the allowance will increase by $23 million. No capital impact from that upon adoption.

Okay. And does anything change, you know, with CECL with the purchase model? Just, you know, remind us, you know, in terms of the accounting going forward, I guess, you know, would we see higher levels of provisioning associated with some loan purchases because of that non-accreditable piece?

I can answer that currently and prospectively. So currently, yes, based on how the CECL guidance is written now. When we purchase loans, you would have to provide for an allowance. through the provision for loan losses. However, FASB has a standard that they are finalizing at the end of August that will allow purchasers of purchased financial assets to take some of the discount and move that into the allowance so there is no provision for loan losses. And that can be applied retrospectively. So we figure by the time that is issued, it will have no impact on our financial statements and we won't have to provide the provision for loan losses for purchase credits um unless there is no discount allocated to credit at that purchase okay that's really very helpful um and then sorry one other point alex is there will be a difference going forward also because um Right now, some of that accretion that we see in the total yield related to credit marks upon payoff, that won't go through yield anymore. That will be negative provision for loan losses upon the adoption of CECL. Again, geography on the income statement, but won't be in the yield anymore, but will be in the income statement still.

Okay. Great.

And then going back to expenses, I think you said $2 million of expense, $2 million higher in expenses. So that kind of puts your run rate on expenses in the next quarter back closer to where it was in the first quarter or the first calendar quarter. Is that correct?

Yes, about that. Yep.

Great. That's pretty much all my questions for now. I appreciate you taking them.

Thank you, Alex.

Thank you. And once again, as a reminder, that's star 11 for questions, star 11. One moment while we compile the Q&A roster. I'm not showing any further questions in the queue. I'd like to turn the conference back to Rick Wayne for closing remarks.

Thank you for that, and thank you all for listening. We try and make our the information, the investor deck, as helpful as possible with as much information as we can provide. As always, if you have any thoughts about information, more information that would be helpful, please let us know. And if we can do it, we will. And with that, well, usually I wish you a nice weekend, but it's a little bit early for that. So have a nice day. Thank you all.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day. you Thank you. Thank you. Thank you. We'll be right back. Good day and thank you for standing by. Welcome to the Northeast Bank fourth quarter fiscal year 2023 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during a session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker today, Rick Wayne, CEO. Please go ahead.

Good morning, and thank you all for joining us today. I am Rick Wayne, the Chief Executive Officer of Northeast Bank. And with me on the call are JP LaPointe, our Chief Financial Officer, and Pat Dignan, our Chief Credit Officer and Executive Vice President. After my comments, JP, Pat, and I will be happy to answer your questions. I'm going to reference in my comments the investor deck that was uploaded last night, starting with slide number three under the Heading Financial Highlights. For the quarter, we purchased $48.8 million of loans with a UPV of 54.3 million. Make a few comments on that volume. It's a typically the June 30 quarter is not the busiest in the year. And if you go back and look at all of the quarters from over the last five years, it's pretty close to the highest amount for that quarter. It was a $19 million increase over the March 31 quarter. And when we take a look at the activity, and so always back up, so that I think is a pretty good number. Absent the large transactions that we had in the fourth calendar quarter of 2022, it's more or less the runway we've been for many years. We did see during the quarter some big transactions that had come to market, but, and that is generally true, that the bid ask is pretty wide between sellers and buyers, and so it didn't meet our pricing expectations, and so therefore we didn't bid on those. We would expect, based on what we see in the market, that the gap between the bid and the ask will narrow and there'll be more opportunities to take a look at those. We originated $84.2 million in the quarter as well. Our originated loan book, which is, and was therefore, you know, our balances were fairly flat with the link quarter. But over the year, our originated loan book increased $229 million, or 30%, from the balance on June 30, 2022. What we're seeing is, I would say, general comment on the market. While 84 million is a good number, it's less than we have done in the earlier part of the fiscal year. You know, I just think there's less transactions in the marketplace right now. Again, a bid-ask gap in a different context. And, you know, we're also, well, we're always careful, as evidenced by the zero charge-offs to date in our originated loan book. We're being even more selective now as we're looking at potential transactions. Just some base numbers, the ROE was 16.7% for the quarter and 16.5% for the year. ROA was 1.7% for the quarter and 1.9% for the year. Our NIM was up 16 basis points from the link quarter to 491, and we ended the year with tangible book value of $38.69. So all in all, we think it was an excellent quarter and year. Let me just drill down a little bit on asset quality, which is on slide eight. Coincidences were only $13.1 million or $52 million. basis points on total loans and non-accrual loans were 15.7 million dollars or 55 percent excuse me non-accrual assets for 15.7 million dollars or 55 percent of total assets still also very good and you can see on slide nine um there was a movement in the non-performing asset category We had 4.3 million of resolutions, and then we put on an additional 5.5 million. So to the link quarter, it was up about a million dollars, but not meaningful in terms of the size of our balance sheet. And the numbers are solid with a low level of non-performing assets. On the funding side, the average cost of our deposits was up 36 basis points from the previous quarter. I should also point out on deposits, ours are 95% insured between a combination of having deposits under the $250,000 amount and also using Intrify and Reach and Tang with two-way sweeps to insure any of those that are over. So 95% insured, obviously a very good number. And we have seen almost no one-off of the normal course activity in our deposit accounts. On slide 21, the non-interest expense was $16.4 million. in the quarter, which is $2.6 million over the lean quarter. But $2 million of that was incentive comp booked in the fourth quarter, which is what we typically do when we see how the year was. We have, I think, a really instructive set of new slides in the book. You know, when we meet with investors and others, it's almost the first question that comes up is around our portfolio of office loans. And so we have in the slides, which Pat is going to walk through, a lot more color on those slides to help you get a sense as to the quality of those loans. And our plan is to do that over the next quarter or two for all of the major food groups of commercial real estate, including retail and hospitality, multifamily, industrial, et cetera. So you won't just be looking at one number, but you'll be understanding much better the nature of our portfolio. So with that, Pat,

Thanks, Rick. Recently, we've gone through and harvested a lot of data on our real estate portfolio, particularly in the office space, and broke the portfolio down by a number of different factors. We thought that the best way to illustrate the flavor of office collateral that we have was to illustrate by the number of floors. What we typically tell investors is that the vast majority of our office portfolio is comprised of low-rise buildings with local tenants. That is tenants serving a local neighborhood or community as opposed to more traditional office space that is in central business districts or office parks, that sort of thing. And so as you can see from the first table, the vast majority of our office portfolio is in buildings with less than five floors. 189 of the 247 loans are below a million dollars with the remainder above and just 10 loans that are higher than four. Four stories, actually. The other question that we get frequently from investors is concerning the maturity of those loans. Many articles recently have talked about the CMBS debt that's maturing over the next year or so, over a trillion dollars, and the potential inability of those loans to refinance. And as you can see from the table on slide 12, About 54% of our office portfolio is maturing in the next three years, but the current interest rates on those loans are such that they could refinance at today's rates. On slide 13, we've illustrated all of the loans secured with office space that are above $3 million or 1% of capital. This comprises most of the dollars. And as you can see from this slide, most loans are, again, low rise. There's geographic diversity, low dollars per square foot, and relatively high occupancy.

Thank you, Pat.

We obviously, of course, would be happy to answer any questions on these office slides or otherwise. But I think, as I say, when we go through the next couple quarters, we'll have this information on all of our different collateral types. And with that, we'd be happy to answer any questions that you have.

As a reminder, to ask a question, please press star 1-1 on your telephone. and wait for a name to be announced. To withdraw your question, please press star 111 again. Please stand by. We compile a Q&A roster. One moment for our first question. Our first question will come from the line of Alex Swerdle from Piper Sandler. Your line is open.

Hey, good morning, guys. Good morning. Good morning, Alex.

First off, Rick, you talked about a larger amount of transaction volume that was coming to market in the second quarter. I'm just curious, is that comprised of several larger transactions, or is there a number of more granular transactions, or maybe just a little bit more on the complexion of actually what's coming to market?

You know what? We saw, and this is by no means everything that comes to market, but we saw, let me just get out the right, $2.5 billion, thank you, of transactions that were in 34 pools, some small. Do you recall what was the largest one? I want to say it was a $900 million pool. It was a $900 million pool, yeah. And one of those, Alex, was a $900 million pool. So there were some very large ones, and then there were some smaller ones. But there was a big chunk of those that almost 60% of what I'm describing, you know, the year we just went there on, you know, the seller's expectation on price. And then there was others that were, you know, we didn't bid on. because it was undesirable collateral or we didn't agree with the collateral value. And so we wound up bidding on $165 million of UPP and we wound up winning $54 million. So, you know, just to summarize your question, there were some large ones, there were smaller ones, and we got roughly a third of what we, bid on, and there was a lot that we did not bid on because of the seller's pricing expectations. As you mentioned in previous calls, it's a lot of cost and time to do the underwriting that we do on these, and we're not going to get there on price. We don't do all of that work. Not that we're afraid of hard work. We work hard, but using what there's a purpose in. It's a goal that's attainable.

For the ones that look like good collateral that you just weren't there on the price, were those loans, did they actually trade during the quarter, or was the market just not there for them?

Some did not trade, as I understand it. Pat, you want to respond to that?

There was a couple of large pools that had a lot of office, big office components. I think there were some banks trying to unload the office, and once they saw the prices they were receiving, there were no trades.

Got it. And then can you just spend a couple seconds or a couple minutes talking about your appetite and capacity for some of those larger pools? Obviously, you did one in the fourth quarter, a very large one relative to you, but to the extent that there are some larger pools like that $900 million pool or some even in the billion-dollar range, you know, in terms of your ability to actually do some of those deals or your appetite, I guess, you know, maybe talk around what the constraints would be and how you might go about, you know, approaching something that's a little bit larger.

Well, the higher capacity, loan capacity now based on our existing capital is about $450 million. And to point out at the end of, December, so as we entered our third fiscal quarter, it was about $100 million. And that capacity increased through a combination of earnings, and we raised $8 million through our ATM offering. So I think that our capacity to do We have great interest in doing a big transaction. You know, for example, the billion dollars that we bought in the fourth calendar quarter has given us such a base now that just our basic core earnings are up significantly and will be going forward because of that. And we would like to do more. You know, how much more it would require us to, depending on the timing of it, You have your own model, of course, as to what you put those numbers out as to what we're going to earn, but you could take a look at what you project and figure out how much capacity we would have, which would be augmented by loan payoffs. I'm not saying we're going to do this at all, but we could also raise more money through our ATM offering. Fortunately, our stock price is come back very nicely. We're trading at a nice price now. And I would just add on what we're seeing and the stuff we like, which is what we bought in the fourth quarter, we're seeing now is really low LTV. And so we don't want to take any undue credit risk at all. So we like to say we're not in the business of losing principal here. And we're seeing that with low LTV. that are coming to market. So I hope that was helpful enough. But if you have any follow-up on that point, please.

That's good, caller. I guess just my final question on the purchase market. You know, for some of the transactions that are trading during the quarter, is it other banks as the buyer, or are you competing mostly against private equity and other specialty finance companies?

Well, we bought, as I mentioned, we bid on 165 and we bought 55 or 54.3 million. There, Pat, do you want to comment? Do you know who the, what you said?

It's largely banks. There's also one or two funds that competed in our space that have very cheap cost of funding that we often compete with. I know we lost to one of them in one of the bids, but that's largely banks.

Got it. Okay. And then if I'm remembering correctly, this quarter, I guess your first fiscal quarter of 2024, you guys adopt CECL, if I'm not mistaken. Can you maybe give us an update on what the expectations for that could be?

JP?

Yeah, the expectation there, Alex, is the allowance is going to go up significantly. As you see in our presentation on slide slide number here uh we have a good amount of credit related discount non-accreditable discount about 23 million dollars um of non-accreditable discount on slide 23 at june 30th um almost all of that will move into the allowance um from the discount so the loan balance will go up and the allowance will go up accordingly um and then you know we'll probably be somewhere around where we are and what's in there now for the originated portfolio so If you take what we have now and add in most of the non-accreditable discounts, that's approximately where we'll be with our CISO calculation upon adoption.

Okay. JP, just to summarize, you're saying then we don't expect with the adoption of CISO to have any, there won't be any meaningful income statement effect on the adoption. Right, right. Correct? Correct. And for those that are listening that may not be familiar with that, JP was saying that we will, that the allowance, the credit discount that we have, it's a geography decision, will become an allowance. And then the discount on our books relating to interest expense, we will just continue to treat as we have been.

Correct.

Okay.

And does the $23 million, does that get reclassified from capital to the ACL?

No, just from the discount against the loan. So the loans get grossed up. So purchase loans will increase by $23 million, and the allowance will increase by $23 million. No capital impact from that upon adoption.

OK. And does anything change, you know, with CECL with the purchase model? Just, you know, remind us, you know, in terms of the accounting going forward, I guess, you know, would we see higher levels of provisioning associated with some loan purchases because of that non-accreditable piece?

I can answer that currently and prospectively. So, currently, yes, based on how the CECL guidance is written now. When we purchase loans, you would have to provide for an allowance. through the provision for loan losses. However, FASB has a standard that they are finalizing at the end of August that will allow purchasers of purchased financial assets to take some of the discount and move that into the allowance so there is no provision for loan losses. And that can be applied retrospectively. So we figure by the time that is issued, it will have no impact on our financial statements and we won't have to provide the provision for loan losses for purchase credits um unless there is no discount allocated to credit at that purchase okay that's really very helpful um and then sorry one other point alex is there will be a difference going forward also because um Right now, some of that accretion that we see in the total yield related to credit marks upon payoff, that won't go through yield anymore. That will be negative provision for loan losses upon the adoption of CECL. Again, geography on the income statement, but won't be in the yield anymore, but will be in the income statement still.

Okay. Great.

And then going back to expenses, I think you said $2 million of expense, $2 million higher in expenses. So that kind of puts your run rate on expenses in the next quarter back closer to where it was in the first quarter or the first calendar quarter. Is that correct?

Yes, about that. Yep.

Great. That's pretty much all my questions for now. I appreciate you taking them.

Thank you, Alex.

Thank you. And once again, as a reminder, that's star 11 for questions, star 11. One moment while we compile the Q&A roster. I'm not showing any further questions in the queue. I'd like to turn the conference back to Rick Wayne for closing remarks.

Thank you for that, and thank you all for listening. We try and make our the information, the investor deck, as helpful as possible with as much information as we can provide. As always, if you have any thoughts about information, more information that would be helpful, please let us know. And if we can do it, we will. And with that, well, usually I wish you a nice weekend, but it's a little bit early for that. So have a nice day. Thank you all.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.