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spk02: Good morning, everyone, and welcome to the National Bank Holdings Corporation 2023 First Quarter Earnings Call. My name is Anna, and I will be your conference operator for today. At this time, all participants are in a listen-only mode. We will conduct a question and answer session following the prepared remarks. As a reminder, this conference is being recorded for replay purposes. I would like to remind you that this conference call will contain forward-looking statements including but not limited to statements regarding the company's strategy, loans, deposits, capital, net interest income, non-interest income, margins, allowance, taxes, and non-interest expense. Actual results could differ materially from those discussed today. These forward-looking statements are subject to risks, uncertainties, and other factors. which are disclosed in more detail in the company's most recent filings with the U.S. Securities and Exchange Commission. These statements speak only as of the date of this call, and National Bank Holdings Corporation undertakes no obligation to update or revise these statements. In addition, the call will reference certain non-GAAP measures which National Bank Holdings Corporation believes provides a useful information for investors. Reconciliations of these non-GAAP financial measures to the GAAP measures are provided in the news release posted on the Investor Relations section of www.nationalbankholdings.com. It is now my pleasure to introduce National Bank Holdings Corporation's Chairman, President and CEO, Mr. Tim Laney.
spk05: Thank you, Anna. Good morning and welcome to National Bank Holdings' first quarter 2023 earnings call. I'm joined by Aldous Berkins, our Chief Financial Officer. We delivered record net income during the quarter and a record return on tangible common equity of 20.86%. We maintained a net interest margin of 4.39%, as a result of loan pricing discipline offsetting the rise in cost of deposits. We benefit from a granular and well-diversified deposit base with a cost of funds coming in at 90 basis points. The loan portfolio performed extremely well during the quarter with annualized charge-offs of just one basis point and non-performing loans of just 13 basis points. We continued to build capital during the quarter with CET1 of 11.32%. After the quarter, on April 3rd, we acquired Camber Solutions. Camber diversifies our funding and fee income while giving us the ability to grow FDIC-insured deposits with very little incremental overhead. We look forward to discussing Camber in greater detail during Q&A And now I'll turn the call over to Aldous for more detail on the quarter. Aldous?
spk03: All right. Thank you, Tim, and good morning. As we reported yesterday afternoon, we delivered another strong quarter financial performance while also completing the strategically important acquisition of Canberra. The optionality provided by Canberra will diversify our sources of liquidity with FDIC insured deposits and will provide us with an additional source of fee income. In fact, this acquisition is already contributing nicely to our financials. and we project our loan-to-deposit ratio to be at or below 90% by the end of the second quarter of 2023. Before I summarize our quarter's financial results, I would like to provide a few headlines with regard to our balance sheet. As reported on Q4 call reports, approximately 70% of our deposits are FDS insured. Our deposit balances are granular, and we have no industry, geography, or single relationship concentrations. In fact, The average deposit balance on a full relationship basis is just $53,000 per relationship and $29,000 per account. This is before the incremental granularity benefit from the Canberra acquisition. Approximately 50% of our deposit balances are consumer deposits, which are nicely dispersed throughout our banking center network. For larger deposit relationships, we have been utilizing the ICS reciprocal FDIC SWE program already in place since 2019. As you know, we maintain a high-quality and short-duration loan book for loans with average life longer than five years. We have been using fair value balance sheet hedges. Additionally, approximately 23% of the loan book was marked to market for the higher rate environment in the fourth quarter of 2022 in conjunction with a purchase accounting for our two acquisitions last year. Lastly, we consistently run various stress test scenarios as part of our capital management process. To that end, we ended the first quarter with a CET ratio of 11.3%, and if we were to adjust the CET ratio for the unrealized losses residing in our investment securities book, it still would be a very healthy 9.6%. Now turning to the financial results. For the first quarter, we reported the record net income of $40.3 million, or $1.06 of earnings per diluted share. The first quarter's return on tangible assets was a record 1.8%, and the return on tangible equity was a record 20.9%. We continued to be pleased with the organic loan growth, and our teammates continued focus on building robust new client relationships. During the first quarter, our loan balances grew $124.8 million, or 7% annualized, New loan originations were $394 million, and given the high rate environment, we also experienced a slight slowdown in prepay activity. Having said that, we operate within markets with strong economies that are holding up nicely. Fully tax-equivalent net interest income for the quarter came in at $96.3 million, fairly consistent with the prior quarter despite two fewer calendar days. Net interest margin was 4.39% and remained unchanged from the prior quarter. We continued to benefit from the earning asset yields moving higher, which was aided by the continued Fed funds rate increases in Q1, as well as the loan pricing discipline by our bankers. Our new loan originations during the first quarter were at an average rate of 7.5%, which was clearly accretive to the existing originated loan book yields of mid-fives. The deposit balances during the quarter decreased $291 million on a spot basis, as we experienced deposit outflows due to clients moving towards higher-yielding products. The cost of deposits increased just 25 basis points for the first quarter of 2023. Our total deposit data this rate cycle to date has been less than 10%. Admittedly, and by design, we were slow at raising our deposit product rates. and our belief is that in order to grow core deposit balances for the rest of the year, we will have to become more competitive with our deposit rate offerings. Our projections point to hitting a 4% margin by the third quarter of 2023. This does not assume any future interest rate hikes or cuts by the Fed. In terms of our asset quality, it remains strong. Our non-agrural loan ratio improved another 10 basis points to 0.13%, and our non-performing asset ratio improved to 0.18%. The first quarter's net charge outs were just one basis point annualized. Given the improving credit metrics, provision expense this quarter was $900,000, primarily driven by new loan originations. Total non-interest income for the first quarter was $14.7 million, or a $500,000 increase from the prior quarter. Board banking service charges and bank card income typically have a seasonal slowdown in the first quarter, but when compared to the first quarter of 2022, both line items showed a nice double-digit growth. Non-interest expense for the first quarter totaled $58.3 million, which was lower than the fourth quarter's expense of $60.9 million when adjusted for M&A costs. The decrease in expenses this quarter was primarily due to $2.5 million of non-recurring payroll tax credits realized during the quarter. Looking ahead for the rest of 2023, we see our non-interest expenses trending towards our original four-year guidance of $243 to $247 million. The additional operating expenses related to the Canberra acquisition on a full-year basis are expected to offset the first quarter's payroll tax benefit. And with that, I'll turn it back to you. Great. Thank you, Aldous.
spk05: Well, we're pleased to have delivered a solid performance during the first quarter. We'll continue to remain focused on the management of our capital and liquidity positions and remain highly vigilant with respect to our loan portfolio in light of the current economic environment. On that note, Anna, I would ask you to open up the line for any questions.
spk02: Yes, sir. Thank you. And if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to ask a question. And we'll take our first question from Jeff Rulis with DA Davidson.
spk05: Good morning, Jeff.
spk06: Hi there. This is Clark Crichton for Jeff. Good morning. Maybe if you could just talk quickly on Canberra. You know, great acquisition just in terms of funding. Maybe you could just talk about the pricing of those deposits and how we can estimate total deposits going forward from both a non-interest expense and a deposit expense standpoint.
spk05: Great question. Thanks for asking. Yeah, I think all of a sudden I can tag team on this. I'll begin by saying that my board and I have been focused on Creating options around gathering liquidity for well over the last year You know our view that in light of the feds posture on raising Rates as well as contracting the balance sheet and the rundown and stimulus dollars that the industry was in fact going to see pressure on liquidity which obviously has come to fruition and And we wanted options beyond our traditional banking center network and commercial banking platform to develop those depository relationships. So at its essence, what we're really doing with Canberra Technology is supporting banks of record. To be clear, we are not operating as a bank of record. We operate more in a custodial position, but working with banks of record to support their relationships with embedded finance companies. people have asked, well, what do you mean by embedded finance company? Imagine a company like Credit Karma that opens up checking accounts for their clients, and, of course, they need a bank partner to handle that. When that bank partner, which becomes the bank of record, takes on that relationship, oftentimes the level of deposit's while very granular, the cumulative total of those deposits exceed what that bank can hold from a capital perspective. Those banks of record then look to Canberra to help them distribute those excess balances. There's obviously fee income for the bank of record. Canberra is paid for its services. and a multitude of banks across the country then benefit from the deposits that are distributed to them in the form of brokered deposits. One interesting distinction is that as a custodial bank, we sit in the middle of that process and any balances that we choose to keep on our balance sheet are in fact treated as core deposits versus brokered deposits. Also look at this, while that's the business today, with just a little bit of imagination, you can begin to think about ways that Canberra technology could be used to serve a wide range of other business sectors and interests. and perhaps even provide some interesting solutions for a broader set of, let's say, community banks across the country. So that's how I would describe the business and why we felt it was strategically important. Aldous, do you want to talk a little bit about how we think about the cost of those deposits? And I will say, because I think it's an important part of the business model, when we talk about the cost of the deposits, it's not just... the cost, the embedded cost and what the rate may be on those deposits. The other way to think about it is this is a highly efficient deposit gathering machine. Less than 10 people, really just a handful of people running this technology that today is gathering between a billion five, a billion seven deposits. So when you strip away the cost of your typical branch or banking center network, et cetera, and then begin to compare that historical or traditional cost to something like Canberra, that's where it gets pretty interesting as well. Aldous, I'll throw it to you.
spk03: Yeah, and I'll just say that in terms of the actual cost of deposit in our balance sheet, for obvious competitive reasons, we will not talk about directly what it costs us. I'll tell you that directionally, certainly these deposits are at much lower cost than what our next best wholesale alternative would be, which makes it more attractive certainly for us. We'll continue to embed in forward guidances on a go-forward basis in terms of overall deposit cost movement and the fee income in terms of how the expected fees come through. But we'll, from that perspective, love to live with this for a couple of quarters before we settle in a cadence.
spk05: I'd be remiss if I didn't also point out that we bought this from Stonecastle. Stonecastle could not have been a better partner through this transition. You may or may not know Stonecastle develops platforms like Canberra. This wasn't their first. It won't be their last. And again, we found them just to be a great partner as we work with them, really with first conversations beginning over a year ago. and then working through the early part of the first quarter to reach terms and move this business ahead. So, again, our thanks to the Stone Castle team as well.
spk06: Appreciate that, Collar. Maybe if I could squeeze one more in real quick. Just in terms of the guide that you have, 4% NIM by year end. Now, in terms of a strong Q1 and the addition of this deal, is that still where you're expecting to end the year at?
spk03: Yeah, no, I think in my remarks I said that now I expect that given the conditions in the marketplace and the competitive nature for liquidity that really has been increased here, if you even look at events that took place in March, I do expect that we'll hit the 4% probably sooner than fourth quarter. So what I said was third quarter. Got it. Thank you. of the balance sheet, the competitive nature has changed dramatically since beginning of the first quarter.
spk00: And, Collin, did you have anything further? No, I'm good. Thank you.
spk02: Great. Thank you. We'll now take our next question from Kelly Mata with KBW.
spk01: Hi. Thanks so much for the question. I apologize. I may have missed kind of your phrasing around the opportunity. I know you don't want to give specific numbers until you have a couple quarters under your belt, but I'm just wondering how the dynamics work. What generates the fee opportunity? Is there any possibility you can explain that, or will that be more of a later events.
spk03: We can explain that. We can explain that. So I think in terms of before or after we, whatever the balance, and that's why part of that I would like to stay away from providing more detail in terms of how much. But in terms of dynamics, after us keeping certain amount of deposits for our own balance sheet purposes, there is going to be volume of deposit gathering that is going to be sold in the broken market. what Canberra's technology really does today before we acquired them. That creates fee income, and I'll say that on a total company basis, certainly this was a positive net income business that we acquired, so there's no negative carry that comes along with that. As Tim mentioned, it's extremely efficient operationally, so the operating leverage from here as this business grows and we grow this business is going to be extremely powerful in terms of the operating leverage benefit to the company, just how much we'll settle in the next few quarters.
spk05: And, Kelly, what's interesting is the model is time-tested. I mean, Stone Castle ran this through virtually a zero-rate market. Obviously, the world's changed here in the last couple of quarters, but that operational efficiency made this an effective business model both in a low-rate environment and certainly a high-rate environment, and where there's a demand for liquidity by other banks.
spk01: Got it. That's helpful. With the borrowings, the approximate $600 million of the FHLB advances you took on, I know you you disclosed you you took on a similar amount of deposits from camber should the assumption be that that you pay down the borrowings with the incremental deposit funding that you you got from this acquisition or are you going to continue to operate with that that level of borrowings just trying to better understand the balance sheet dynamics on a go-forward basis yeah great question
spk03: So really, on a spot basis, if you look at, we were at a billion dollars at the quarter end. Now, I'll say, first of all, that to be conservative, as events took place in March, we brought on approximately $300 million of excess cash on balance sheet just to be prudent and safe. So that billion-dollar mark on FHOB on spot basis is called exaggerated by $300 million to what we typically in a normal environment would have. Now, in terms of Canberra, yes, we brought on about $500 million to date and do expect to continue to work the FHLB balance down over the course of this quarter and the rest of the year. And really, to us, it comes down to the most efficient one, secondly, most liquidity prudent way of funding the balance sheet, but directionally, we will look to pay off all of the FHLB borrowings.
spk05: And needless to say, back to your question on profitability, meaningfully less expensive liquidity coming out of Canberra than what you would pay FHLB.
spk01: Okay, that makes a lot of sense. Just looking ahead, you guys have a pretty granular loan portfolio. And I'll really good diversification. Are there any categories that you're watching more closely? Can you provide some color on what your office exposure may be? Any commentary around that would be helpful, given the focus.
spk05: Yeah, why don't we begin with office, which certainly seems to be the subject of the year. We operate with less than 1.5% of office exposure to our total loan book. I think what's equally important to that low level of exposure is we operate with an average loan to value in that office exposure of 48%. So, you know, it's in keeping with our position on all commercial real estate. We still operate with a low level of commercial real estate to total risk-based capital, certainly relative to most other banks of our size. We have retail exposure of right around 2% of total loans. That average loan-to-value runs around 56%. Multifamily, which hasn't really been the subject of much focus, is around 3.8% of total loans with an average loan-to-value of 52%. So those are probably three of the areas categories of real estate that folks may be most focused on. And yes, you're exactly right. I mean, we continue to operate with a very granular portfolio. In fact, our average funded commercial or business banking loan was $1.3 million a year today. and obviously our underwriting, as I suggested in our opening comments, is as vigilant, and we're holding our underwriting standards to double-digit kind of assumptions on interest rates and looking at global cash flow coverage, looking at loan-to-value given rising rates, particularly with real estate impact on values, and We are preparing. We believe it's prudent to be preparing for some kind of faults in the industry, just given where the economy appears to be headed. But I think we're well positioned for it. Hopefully some of those stats help support that view.
spk01: Really helpful. Just one last question, if I could seek in before stepping back. Given the pullback in the market and your shares, can you refresh us on any thoughts on the buyback here?
spk03: Yeah. Well, I'll say that we have about $39 million of authorized, board-authorized buyback capacity. We're certainly watching the market very closely, and it will be opportunistic if it pulls back to the good levels that make sense.
spk01: Understood. Thanks so much for the questions. I'll step back.
spk00: Thank you.
spk02: We'll now take our next question from Andrew Terrell with Stevens.
spk04: Hey, Tim. Hey, Aldis.
spk03: Good morning. Good morning.
spk04: Good morning. Maybe just to start on Canberra, number one, congrats on the acquisition. And I might have just totally missed this, but did you guys disclose the purchase pricing? Can you disclose that?
spk05: We did not. It was, again, a transaction with a private company, Stone Castle, and we mutually agreed that we would not be disclosing the acquisition price. What I can tell you is that if you looked at this conventionally in terms of the deposit premium that might be paid for a bank, this acquisition would be very, very attractive relative to kind of traditional run rates on deposit premiums.
spk04: Okay. Got it. That's helpful. I appreciate it. And then maybe just going back to, I'm trying to understand from a modeling perspective, hold the on-balance sheet or what you can bring on the balance sheet aside and just thinking about this from a non-interest income and expense standpoint, what's What's kind of the efficiency ratio before you start contemplating the balance sheet and spread type impacts here?
spk03: For this business specifically, Andrew?
spk04: Yeah, yeah. For this business specifically, the efficiency ratio, it would come on up.
spk03: That's ridiculous. Yeah, no, it's probably – I mean, it's accretive to our overall efficiency ratio, and we were at 53% this quarter, which, again, is what our – long-term balance sheet management purposes at very good levels. So it's very creative, and to Tim's point of opportunities that we see for this business and opportunity to use this technology, it becomes exponentially so.
spk04: Yeah, understood. Okay. And then I also wanted to maybe appreciate just kind of the embedded growth here. So I think 1.7 billion of deposits under administration. What's that look like over the past couple of years? Like what's the growth rate been for Canberra? And then how do you see growth trending moving forward? Do you feel like you have opportunities to accelerate it? And then the second part of that question is you've brought on 500 million of core funding to date onto your balance sheet. Do you have capacity to bring all 1.7 on if you would like, understanding that there'd be a trade-off there?
spk05: Right. Very good questions. The answer to your first question is that Canberra has some, our experience, very nice, steady growth since its inception. I mean, it clearly is addressing the need in the marketplace and the unique technology that it brings to the table has made it an attractive offering. In terms of growth rates, we haven't actually provided guidance on what we would expect or how we would expect these deposits to grow at this point. I suspect it's something we'll do as we roll into 2024. As Alda said, we really want to continue to live with the business a bit more We see a broad range of expansion opportunities for this technology. I think coming at this with the banking experience we have, we just believe that this capability could be leveraged in amazing ways. And then just one other way to think about the cost dynamic of this business, I mentioned before, it's essentially run by five people today, all right? five people responsible for between a billion and a half to a billion seven in deposits. Imagine in your typical bank how many people across how many traditional brick-and-mortar branches would it take to generate a billion five to a billion seven in deposits?
spk00: Yeah, I bet the number is more than five.
spk03: So back to your original question. Therefore, it is extremely efficient and low efficiency ratio type of business. To answer your question in terms of whether we can bring on the full 1.7, the answer is absolutely yes. We could do that today, tomorrow. Not our intent. But it's not in our intent. And part of that intent or part of that consideration that we want to – so from on-demand liquidity, it's there. Mm-hmm. But certainly there's partners involved that we would not want to upset in living with that, which is why we want to live with the business and make sure that we learn how they've been operating, how the interactions have gone, what the dependence for the partners have been, how quickly, how slowly we, when our balance sheet, when we forecast our balance sheet needs, we can incorporate this in because, again, as we all know, you can do a lot of things, but doing it with, you know, a in a way that upsets partners is not always the best.
spk05: And it's just not the way we're going to operate. Number one, we're going to be focused on providing tremendous service to the banks of record. And then certainly in a tight liquidity environment, what we're not going to do is step in and pull broker deposits away from banks that have been relying on those deposits. And so a part of living with this is seeing how we grow it, determining You know, again, as Aldis said, how do we ensure that we're seriously satisfying both the banks of record and the recipients of these deposits over time?
spk04: Yep, understood. I really appreciate all the color there, guys. If I could sneak one more in. I wanted to ask on just the loan growth. Obviously, it's still pretty strong this quarter and essentially in line with that mid to high single digit kind of expectation you gave us last quarter. But it does feel like growth is really kind of slowing down across the industry. I was curious if you felt there was any need to recast growth expectations. Are you still seeing growth or still seeing new deals coming into the pipeline? Do you still feel good about mid to high single digits? I just wanted to get an update on just overall kind of loan growth thoughts from you guys.
spk03: Yeah, well, we entered the second quarter with still pretty strong pipelines. that all else equal would indicate that we are on track to meeting our previous guidance. Now, having said that, the world has changed quite a bit over the last month. So the unpredictability or maybe the potential probability of recession and the depth of that recession is the vol card or has increased from when we provided the original guidance. But right now the pipelines are strong.
spk05: What I would add is that with all of the concerns around liquidity and loan-to-deposit ratios, we found it interesting that we saw a range of banks from very large to small really pull back on their lending during the quarter. And, you know, to the degree there are opportunities to take market share with attractive targets that we've been interested in for some period of time, that's where we'll be focused.
spk00: Yep.
spk04: Understood. Okay.
spk00: Well, thank you for taking the questions. You bet. Great. Thank you.
spk02: We'll now take our next question from Andrew Leash with Piper Sandler.
spk07: Hey, good morning, guys. You got some of the Camber deal here. Thank you. So just wanted to, the fee income outside of Camber, is this sub $15 million level? Was that a good run rate going forward?
spk03: No, so a couple of things there. Certainly, I'll start with the positive. Mortgage was about half a million on link quarter basis up, which... it was actually right on target where internally our plan and budget was. The service and bank card fees are seasonally low. Actually, for us, it's always the lowest quarter in a year. But as I mentioned in my remarks, they were both up double digits on year-over-year basis. So I do expect that to be improving. And again, just taking the last year's run rates and adding double-digit growth would get you some run rate component there. And then all other non-interest income probably is at cadence where it will be. Again, it's $2.7 million this first quarter. It will benefit from Canberra. The item that I'm hesitating a little bit is that we've seen it's lower what we originally thought It continues to be SBA activity, which, you know, through Rock Canyon Bank acquisition, we were counting on some SBA. And we did both about $400,000 gains in the first quarter. How that evolves, that market seems to be still a bit soft. So those are kind of the guys.
spk07: Okay. Helpful there. And then just, and I recognize you, not comfortable and not ready to give full guidance on Canberra yet. But is the fee rate, I mean, my experience with these businesses, it's based on changes in interest rates. So with rates being higher, it's much more attractive business. But when the Fed cuts rates, the fee rate that you guys get would then trend a bit lower. I mean, is that the right way to think about modeling this going forward?
spk03: Actually, I would keep it consistent regardless. I mean, unless we will go back to absolute zero rate environment, in, you know, call it 200 basis point, 250 range, I don't feel like there's going to be sensitivity to that fee component other than volume, again, how much is on-off versus off-balance sheet.
spk00: Gotcha. Thanks. You've covered all my other questions. Great. Thank you.
spk02: We'll now take our next question from Brett Ravitin with HubBee Group.
spk08: Hey guys, good morning. Wanted to just go back to the margin guidance and just talking about, you know, when I look at your deposit costs versus peers, you've obviously managed the rates really well. And so when I think about the multi-bank platform, this would seem to be an environment where that would certainly be an advantage of being able to maybe have higher rates at one subsidiary bank versus the others. And so just wanted to get some more color all this on, you know, the 4% margin by 3Q. What betas you're assuming for that? And then just, you know, what you're seeing or the ability to manage the funding costs with the different subsidiary banks.
spk03: Yeah. I'll say that in terms of That geographic component, probably that ability to manage differently has abated quite a bit this quarter. There is still a bit of a difference in terms of rural markets versus more urban populated places, depending on the competition. So it really comes down to the competition that clients and I would bank competitors are showing. That's kind of in a competitive place. I do see that the historical beta was very much driven for us, or more so driven, and it's not unique than other banks, by consumer deposits. I do believe that there is a component of consumer population that's been exposed to higher rates and ability to earn higher, and we are seeing that component being more rate sensitive now than really ever in this company's history. So that's the component that's changed in Q1, which is why I'm pulling forward a little bit, hitting the 4% margin guidance. I will say that from the balance perspective, again, approximately 50% of our balances are true transaction deposits, so those are non-interest bearing checking and interest bearing checking. On a spot basis, if you were looked at those two lines combined, you'll see that we are almost flat. So what has happened is a move of those excess balances that were driven through the zero rate environment and maybe pandemic inflows moving out of zero rate into some interest bearing checking rate deposit. And again, that's another changed and really accelerated, I would say, in March. Again, it has nothing to do with safety and soundness of NBH and those discussions. It's more people reading newspapers and looking at headlines and being reactive to higher rate environments.
spk00: Okay. I'll be clear on the question.
spk08: What's the assumption for the beta by the 3Q or 4Q? And then are you doing different promotions at the different subsidiary banks?
spk03: We are. We are. We're doing different promotions and being smart about how we compete. In terms of the beta, directional, cycle-to-date beta is 8.5%. Last time we went through the rate cycle, our all-in deposit beta was 21%. I'll say that our assumption that it is higher beta by the end of this year, and it's not by a couple percentage points. It's probably, you know, I'll say closer to 30%, 35% beta, but, you know, without giving precise number because, again, I will say that we are being reactive to macroeconomic environment conditions that have been changing quite rapidly over the last, literally last 30 days.
spk05: I would also add, just to be clear, that not only do we have the flexibility to price differently across our different bank brands, the reality is we take our approach to pricing down to the market level. There are going to be differences between metropolitan markets. There are going to be differences between smaller community markets. resort markets and and our focus is on being tuned in to where we can be competitive what that inflection rate is and how sensitive we need to be based on those market dynamics okay um that's helpful um and then you know tim you're obviously really excited about this this transaction you know camber would um i'm just trying to think about the future from here you know
spk08: is there a compliance piece that you have to add to your own operation as a function of this? And would this transaction possibly tilt you or interest you in becoming one of the banks that's, you know, got more of a bass feel to it and you're looking at other, maybe potential other products both in lending and deposits?
spk05: Yeah, I mean, look, you know, We're all about managing operational risk, and we have a strong standing with our regulators. We're proud of the work we do on the BSA front, the compliance front, et cetera, and we're certainly not going to jeopardize our standing in that regard. So I would just say we feel very comfortable with the teams that we have in place that we can manage those operational risks and move ahead. I mean, this technology is so interesting in terms of other uses. I mean, just imagine a scenario where, you know, given what's transpired over the last four to eight weeks, being able to take Canberra technology to a state and to a group of community banks and say, look, we're going to help you and your state support your state by keeping deposits in your market and help each other by distributing excess deposits above whatever the FDIC threshold might be. And I think it's a win from a political standpoint for the state. It's a win because it's real and that it's not moving deposits to New York or some other money market center. It's keeping those deposits in that state and it's helping each of those community banks flourish. So that would be just one example that we get excited about in terms of thinking about leveraging this in different ways. And then I'm sure you've thought about this, you know, while we haven't talked about it in this call, we continue to build out to unify. And with what we're learning with this technology, we think it actually will be easily leveraged in and to the way we think about servicing uh deposits in to unify so more to come on that front but hopefully that's helpful yep i appreciate it thanks so much guys you bet you bet thank you thanks thank you and i'm showing we have no further questions at this time i will now turn the call back to mr laney for his closing remarks thank you ann and i'll be brief just thank you for your uh your time and your interest this morning Do not hesitate to follow up with us directly should you have other questions. Wish you all a good day. Thank you.
spk02: And this concludes today's conference call. If you would like to listen to the telephone replay of this call, it will be available in approximately 24 hours, and the link will be on the company's website on the Ambassador Relations page. Thank you very much, and have a great day. You may now disconnect.
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