Civista Bancshares, Inc.
Q4 2020 Earnings Call Transcript

Published: 5 Feb 2021

[Company Representatives:]

Dennis Shaffer - President, Chief Executive Officer Rich Dutton - Senior Vice President, Chief Operating Officer Chuck Parcher - Senior Vice President, Chief Lending Officer Paul Stark - Chief Credit Officer

[Operator:]

Good day, and welcome to the Civista Bancshares Fourth Quarter and Year-End 2020 Earnings Conference Call. All participants will be in listen-only mode. . Please note, today’s event is being recorded. I would now like to turn the conference over to Dennis Shaffer, President and CEO. Please go ahead, sir.

[Dennis Shaffer:]

Good afternoon. This is Dennis Shaffer, President and CEO of Civista Bancshares, and I would like to thank you for joining us for our fourth quarter and full-year 2020 earnings call.

[Operator:]

Thank you. We will now begin the question-and-answer session. Today’s first question comes from Michael Schiavone with KBW. Please go ahead.

[Michael Schiavone:]

Hi, good afternoon. Thanks for taking my questions.

[Dennis Shaffer:]

Hey, Michael.

[Chuck Parcher:]

Hello, Mike.

[Michael Schiavone:]

So you guys still have the majority of your April share repurchase authorization outstanding. I think you said $11.5 million and you were pretty active during 2020, which is a pretty challenging year. So is there any reason we shouldn't expect that strong pace of buy back to continue in 2021?

[Dennis Shaffer:]

Yes, I think, we view that as a great way to deploy our capital, as long as our earnings remain strong and I think we've got a pretty good comfort level with our credit quality. I think we’ll continue to – you'll continue to see some activity there with our share repurchases.

[Michael Schiavone:]

Okay, thanks. And then on the NIM, can you tell us how much pressure you’re still seeing, still experiencing on the loan yields at this point? And then on the funding side if there's any – if there's still any opportunity to keep driving those rates down. Just overall trying to get an idea of where the core NIM might go from here, excluding PPP?

[Dennis Shaffer:]

Okay, yes we've done a pretty good job of protecting the margin. I’ll have Chuck Parcher, our Chief Lending Officer, comment on the pressure on the loan yield. Rich Dutton can comment on maybe on the deposit side. So Rich or Chuck, do you want to talk a little bit about…

[Chuck Parcher:]

Sure. Yes, we’re still seeing quite a bit of pressure, Mike, especially in some of the larger markets, the hotter markets, Columbus being one of them, really competitive down there on deal flow, so we're seeing that pressure. We’re seeing a little bit of pressure where people are going a little bit longer on the balance sheet as well. So we’re continuing to evaluate that. But if it comes down between growth and holding margin, we’re trying to hold margin more so today than we are trying to excel growth in that perspective.

[Rich Dutton:]

Mike, this is Rich. And on the funding side, I mean, we say it every quarter, it's just going to be hard to eke out more basis points on the funding side and it seems like every quarter we find a way to do it. I’d have a hard time telling you that we’re going to drop the funding costs much more than basis points again in the next quarter. I mean, I think we're kind of at that point where we're going to be, and there is going to be some compression. But again, I think we saw the compression really in the second quarter last year on our margin and kind of held our own what notwithstanding all the noise of the PPP and the amortization of those fees through there. And we’ve kind of settled into a range where I think that 3, kind of 7, 4 range if you kind of normalize it for PPP is kind of where we’re at and where we expect to be. I mean it might drift down from there, but it's not going to be anything significant, I don't think.

[Michael Schiavone:]

Thanks. That's really helpful and that’s all I have. Happy Friday guys.

[Dennis Shaffer:]

Okay. Thanks, Michael.

[Chuck Parcher:]

Thanks.

[Operator:]

And our next question today comes from Terry McEvoy with Stephens. Please go ahead.

[Terry McEvoy:]

Hey guys, how are you today?

[A - Dennis Shaffer:]

[Terry McEvoy:]

Hello. I guess when I think about the reserve build in the fourth quarter and then something in the text kind of caught my eye where you said, you've yet to see any specific loan losses. Are you kind of suggesting to the reserve build in the comments that the charge-offs will likely trend higher a little bit from here and maybe what are your thoughts on full-year net charge offs?

[Dennis Shaffer:]

Yes, I’ll let Paul Stark, our Chief Credit Officer comment. I don't think we're implying that charge offs will be any higher. I think, the reserve build, ours has been kind of a slow build throughout the year. There's a couple of things that happened. Initially, when the pandemic broke, that second quarter there were businesses that were completely shutdown. They had no revenue, unemployment was rising, we adjusted our qualitative factors in our reserve to account for that. We go into the third quarter, in the beginning of the third quarter deferral was rising. So you've got higher deferrals. So again, we adjust our qualitative factors kind of to account for that, and then this last quarter, we feel we've got a really good handle on our book of business, deferrals are hovering right around that 4% range or so, and - but risk rate changes, so we’ve had a number of risk rate changes. So we’ve had to adjust the qualitative factors as we've gone, but we still see zero delinquency in our book. I mean, there's very little delinquency, so we don't see, I don't think much credit loss coming. I’ll let Paul add some color around that.

[Paul Stark:]

Well, you’ve covered most of it, but I think it's difficult to tell what's going to happen as we get through this. I mean, obviously, this pandemic has extended out this temporary period and so there’s still a number of hotels which is our biggest segment of the portfolio that we're working with, that business travel and leisure travel should pick up, but it's not going to pick up as fast as people originally thought. And so right now, we feel pretty good about their ability to sustain these payments as we help modify some of these interest-only payments. But in the bank, some may actually fall. But right now, I think we've identified everything we can and we’ll continue to work on this on a month-to-month basis.

[Dennis Shaffer:]

And I think our deferral percentage, too, Terry, it was at a high point of 24%, a little above 24%, right around 4%. You've got just a little bit and I think that's related to some of the seasonal businesses we have within our footprint. For instance, in our headquarters market here, we do some –we have Cedar Point. There’s - all the islands, Lake Erie Islands and stuff, and there are some seasonal businesses there that I think we just extended out deferrals for, so.

[Paul Stark:]

You got to keep in mind that the first round we deferred over $400 million, the second round about $125 million and by the end of the month, by the end of the quarter, that’s the $52 million you’ve seen that were still in effect at quarter-end. So in reality, we’re looking longer-term now as this is extended, and so that number’s higher. It’s actually a reduction from the second quarter deferral program, the second round of deferral program I should say.

[Terry McEvoy:]

That's some great color. Thank you. And then just as my follow-up, a question on expenses. A fair amount of – as I look at the text here, there was some lower marketing, lower travel and just COVID positively impacted expense trends. With the underlying assumption that things slowly returned to normal, could you just talk about what that means for expenses in 2021 and then the digital tool that was mentioned in terms of rolling out in the second quarter, will that have an impact on expenses as well?

[Rich Dutton:]

Yes, Terry, this is Rich, and you're right. I mean, the COVID and how fast the vaccine gets distributed and how the economy reacts to that is the big question. And so I think we're probably looking at a number of things kind of returning back to normal, and you're right, it's going to be travel, it's going to be education, it’s going to be marketing, but how fast that happens, we’re not sure, so I still haven't answered your question. Q2, which is the biggest part of our digital transformation is something that we did kick off in a big way during the fourth quarter. That's going to be about $200,000 of expense per quarter and we're not going to roll that out until probably sometime mid to late second quarter, and certainly any additional revenue that we enjoy from that transformation is not going to happen instantaneously, it's going to build, but certainly we're looking at $200,000 of additional expense related to that third quarter. That's probably the biggest thing going forward. I think our insurance expense on the healthcare side; we saw a decent increase there. I mean everybody saw it and like ours is probably less than most. But I think COVID has kind of taken a toll on the way the insurance guys are looking at that, and they came back with some pretty decent increases, like we’re expecting probably about a $350,000 per quarter increase in our healthcare for next year. Those are probably the two biggest things going forward that I do know.

[Dennis Shaffer:]

Yes, we're taking a hard look I think Terry at expenses. I mean we identified a few things I think that you know moving forward that we'll be able to reduce expenses on, but we are making substantial investments into our digital technology and into technology that improves the overall customer experience. As Rich alluded to, you know you bear some of that expense and you don't recognize some of the revenue or even the cost savings until later on. One of the other projects besides the digital that we have going on was an upgrade in just all of our customer communications that we're sending out to our customers, and that's really upgrading that and it's going to allow us also to electronically deliver statements, invoices, so that you know we’ll eventually pick up – post – we'll be able to reduce postage expense, we’ll be able to reduce paper expense. You know there's little things that will pick up with the digital technology that we talked about on the income side. You know we’ll recognize some of that revenue in the latter half of the year, starting in the latter half of the year, because hopefully we add more accounts with that and we pick up more service charge income and our cards are you know loaded on to the digital wallet and we pick up more interchange income and stuff. So we're going to continue and invest back in, so that's why in my comments I said we're probably go to be a low 60% efficiency shop, because there are things we need to do to get us to that next level, so it does require investing back into the company.

[Terry McEvoy:]

Thank you very much and hope you all have a nice weekend.

[A - Dennis Shaffer:]

You too, thanks.

[Operator:]

And our next question today comes from Nick Cucharale with Piper Sandler. Please go ahead.

[Nick Cucharale:]

Good afternoon, gentlemen. Hope you're doing well.

[Dennis Shaffer:]

Hey Nick.

[Chuck Parcher:]

Hi Nick.

[Nick Cucharale:]

With the tax business jumping into full gear in the first quarter, can you just share with us your expectations for that business and how it compares to prior years?

[Chuck Parcher:]

Nick, it's going to be exactly – their expectations are exactly what we did last year. And if you recall, I mean we’ve got contracts in place and I would expect that it would be spot on to what we did last year.

[Nick Cucharale:]

Okay, terrific. And then within the mortgage banking business you had a big gap up and a gain in sale margin compared to the third quarter. Was this mostly a function of mix?

[Paul Stark:]

No, I don't think it was a function of mix, because I’m looking at our mix and it looks pretty consistent all year long Nick. It’s just, we had quite a bit of volume built up through the summer. You know our refinance business, you know we got lagged up to about a 90 day lag as far from origination close. A lot of that stuff is built up over time that we got done in the fourth quarter as we could do to pick that up. So we are – with our pricing we were getting a little bit more on the refi’s and on a purchase and we did increase our pricing a little bit. Going into the third and fourth quarters it would have been beneficial in the fourth quarter, so that’s a little bit of the gain on sale increase as well.

[Dennis Shaffer:]

Yes, we were able to substantially increase the pricing you know and that's why I think we were at 336 basis points or something. You know if you were to look at us 12 or 18 months ago, we were at 220 basis points or so. So I think we did a really nice job there. We you know fairly increased what they were charging and we were able to kind of pass that on and still really see no dip in volume and pipelines remained very strong.

[Nick Cucharale:]

Okay, that's great news, okay. So even in spite of a strong loan growth and are purchasing 5% of the stock in 2020, you know your total risk based capital level was largely unchanged from the end of 2019. So I heard your commentary on incremental repurchase. Can you refresh us on your capital priorities and how you’re thinking about an ideal level of capital?

[Dennis Shaffer:]

Yes, I mean we've always said you know we’d like to keep that capital ratio somewhere in the 9% to 9.5% range, maybe as we you know in the midst of a pandemic you like to keep a little bit more, but you know our thoughts well haven't changed too much on that. As long as our earnings remained as strong as they are and our capital position remains as healthy as it is, and we feel comfortable with our credit quality, I think you know we'll deploy capital through the repurchase program. We think that's a great way to do that. We’ll continue we think – we’ll continue to remain committed to that dividend. I think we need to do that with the earnings that we’re recognizing now, and then I think we continue to look at M&A opportunities. You know some of that in finding the right partners. I think we're taking a little bit more proactive approach to that and reaching out, but for us I don't want to do a deal just to do a deal. It's got to make sense for this organization, it's got to make sense for our shareholders and it's got to make sense, it's got to be a cultural fit, because deals – a lot of deals that are a cultural fit, they just work, so. But those are kind of how we look at deploying our capital.

[Nick Cucharale:]

Thanks for taking my question.

[Dennis Shaffer:]

Good Nick.

[Operator:]

And our next question today comes from Russell Gunther with D.A. Davidson. Please go ahead.

[Russell Gunther:]

Hey, good afternoon guys.

[Dennis Shaffer:]

Hey Russell!

[Chuck Parcher:]

Hi Russell!

[Russell Gunther:]

I was hoping to follow-up on the core margin commentary, that low 370x PPP. Can you spend a little more time on the glide path and how you expect that to progress over 2021 and what the drivers are? You know I understand the funding is largely played out, but whether it’s you know earning asset remix and timing and I think some more clarity would be helpful, because that 370 is well above where the consensus is coming in to the quarter.

[Dennis Shaffer:]

Well, I mean that's what we did, right. If we reported 369 for the quarter and we said that you know the PPP put a 5 basis points drag on that. So I guess normalized if you will, and I guess there's a lot of PPP noise and there will be for the rest of the year, but 374 is kind of where we came in at. I think like Chuck said, the pressure's going to be how well we do and our lenders do. Put loans on the books at a reasonable rate. And as far as glide path, I mean again I said you know basis points. I mean it’s not going to be – again, if you look at the last year Russell, we had a pretty significant contraction during Q2 and then kind of I want say leveled off, but it certainly was much more muted in terms of the compression that we had in the margin from the second to third and then from third to four and I think that’s kind of – I guess if you're looking for an indication of a glide path, that would kind of be where I’d guide you to it. If we – I guess if I go through that same math, I guess we had about 10 basis point contraction from Q3 to Q4. Maybe that's a reasonable thing to look at going forward, but it won’t be – I wouldn’t be surprised if it was more than that, how about that?

[Chuck Parcher:]

Diligent year. I was going to say – Russell, this is Chuck. We’ve been pretty diligent about it in this low rate environment, you know building some floors in so that we can keep that, you know hold the margin a little bit. Like I said before, we are looking at going a little longer on the right deal, not all deals to pick up a little bit more, few more basis points on margins. They wanted to really sell the balance sheet short and long term, but we’ve got some opportunity with its widening of the 10 year compared to the five to actually pick up, you know some basic points that we feel are valuable. So we are looking at it every day, but we feel pretty confident that we can maintain the loan margin pretty well.

[Russell Gunther:]

That's very helpful guys. Certainly a better result and it sounds sustainable, so I appreciate the color there. On the loan growth side of things, you know I understand the uncertainty in your prepared remarks, but maybe just talk a little bit about what your organic growth expectations are? What you’d expect to drive that both from a mix and geographic contribution.

[Dennis Shaffer:]

I would tell you we're still targeting that mid-single digit loan growth piece Russell. I feel like we may be a little soft in the first quarter. We know we've got a few large projects that will pay off and we also have already seen the effects of every time we do one of these rounds of PPP, as that money comes in, it rolls out and pays down our commercial lines of credit. So we are already seeing some reduction in our commercial lines here in January and early February. So I think we’ll see a little pressure from the growth perspective first quarter, but longer term as I look at our pipeline, our pipeline today was bigger than it was at this time last year. So no, it’s got a little bit different mix to it. I would tell you it’s a little bit more construction, which also means that we’ll more of that growth towards the mid to back half as those things start to get built as compared to no up-front. But we still feel confident in the markets we are. We had a great year last year, on the CCC, Great Cleveland, Greater Columbus, Greater Cincinnati where we had really nice strong loan growth across all those markets and we don’t see that diminishing here, any time in the near future.

[Russell Gunther:]

That’s great, very helpful. And just one kind of follow-up, Are you able to share kind of the mix of your loan portfolio and how that breaks down within your more urban metro markets versus rural? What that contribution is from a commercial initiative?

[Dennis Shaffer:]

I don’t have that number right in front of me Russell. We can probably get back to you on that, but I would tell you that it’s – I’m trying to eyeball just by looking at a couple of numbers here, but we're probably any more – this is shooting off the hip, about 70% metro as compared to the world.

[Russell Gunther:]

That’s in terms of balance.

[Chuck Parcher:]

It’s in terms of balance. Yes, that confirms the number of customers. Obviously the number of customers in our world legacy markets are number wise bigger, but obviously the loan volumes, the loan outstanding numbers are much bigger in the metro region.

[Dennis Shaffer:]

Russell, we don't have it in front of us, but if you look at our investor deck, towards the front of that where we've got that kind of map, I believe we got a summary of loans by region and that kind of shows you which ones are rural and which ones are more urban. But we’ll be better prepared the next time you ask us that question.

[Russell Gunther:]

I appreciate it guys, thanks for pointing me in the right direction as well. That’s it from me. Take care, thanks.

[Dennis Shaffer:]

Thank you.

[Operator:]

And our next today comes from Joe Plevelich with Boenning & Scattergood. Please go ahead.

[Joe Plevelich:]

Good afternoon, everyone. How is everybody?

[Dennis Shaffer:]

Good, hi Joe.

[Joe Plevelich:]

A couple of quick question; one, you commented about the 60%, low 50’s efficiency ratio. But I mean, with such a strong fourth quarter, a lot of good stuff happening, but it seems like if you're still doing a pretty good job of killing expenses with NIM being a little bit better than people thought and at least mortgage banking remaining strong in the first half of the year, is there a chance we could see actually a five hand of the efficiency ratio here for the full year in 2021.

[Chuck Parcher:]

Well, they’ll go up to see. I mean a lot of that depends on how quickly you know things return to normal, because of the expenses I think that Rich talked about, you know travel and entertainment and things like that that were virtually nothing. How quickly do they return and stuff? So there is a chance, because if mortgage banking stays as strong as it was, we anticipate maybe that that falls off, some in the second half of the year, but right now the pipelines are very healthy. So you know I think there's always a chance, but some of its so – some of that’s kind of depends on what happens with the pandemic and when things return to normal. Same with, we are saving on business promo and things like that, because you know people aren’t hosting events and stuff, and so there's a lot of expense savings I think that we are related to the pandemic.

[Joe Plevelich:]

Can you talk about how – how robust mortgage banking is. Any specific color on what the first quarter, first half might look like relative to the fourth quarter or it just seems like things came in so strongly in the fourth quarter. Just trying to get a sense directionally and absolutely kind of where the next couple of quarters my check out.

[Dennis Shaffer:]

You know our pipeline is really good still Joe, so it’s going to be hard to replicate the fourth quarter obviously. But I would think the first quarter, and especially into the second quarter, it’s just a matter of how fast can we process the loans to get them through the pipeline. So I would say it’s going to remain very strong, first and probably second quarter as well. After we get past that, then as you know we’ll see where rates are going to go.

[Joe Plevelich:]

Alright, thanks. Then the other two I had, one just on the deferrals. You talked about how there is some seasonality and what not impacting the fourth quarter flows. I mean any kind of directional thoughts on what deferrals might look like at say the end of March here and any concerns that you have seen a new surge in requests rather kind of activity there.

[Paul Stark:]

Hi, it’s Paul. It’s hard to tell right now; I don't anticipate any spike-up. I think we – there’s a steady process of working with customers and as things change, you know in terms of when they think revenues are going to start to return, hotels being a great example of that. Restaurants where the restrictions are eased, things like that. Then you know these guys are actually very cooperative and that's what we look for and they want to start paying us as quickly as we can, so most of our deferrals are actually just the principal type deferrals, very few P&I deferrals. So you know I guess I would see this thing as pretty steady and some will be return to payments and we'll probably have to differ some others. So it really gets down to what the individual business cycle is and what type of relief they need. But so far we have not seen any defaults and we have not really seen anything that we think is going to evolve into a charge off at this point. So we are encouraged by that, we are encouraged by the fact that we think unemployment is expected to improve over the next quarter or so, again, we'll take it month-to-month.

[Dennis Shaffer:]

I would add that you know the one nice thing of – back when we were originating hotel loans, we were very diligent about understanding the sponsors and as we are going through this process and the meetings we have, most of our sponsors have a wherewithal to make those payments you know when called upon or tapped on the shoulder. So we feel good about the sponsors behind almost our entire hotel book.

[Joe Plevelich:]

Great, thank you.

[Operator:]

And the next question today comes from Bryce Rowe at Hovde. Please go ahead.

[Bryce Rowe:]

Thanks, good afternoon.

[Dennis Shaffer:]

Good afternoon Bryce.

[Chuck Parcher:]

Hi Bryce.

[Bryce Rowe:]

Hi, just one more question on the hotel book before I move on to another question or two. What is the weighted average LTV within that portfolio currently?

[Chuck Parcher:]

You know within the – I don't have that in front of me. We are talking about 20 loans. Typically I would give you a range, it’s probably between the 58% and 65% loan to value. You know it varies based on the situation. But most of them are the major flags and as Chuck indicated really good, not only capacity, but willingness to support the loans.

[Dennis Shaffer:]

And we’ve taken a number of those hotel loans through that SBA 504 program. So you know that you’re generally start out at like a 65% loan-to-value, no a 50% loan-to-value, because they put in – you know they take 35% and the borrower has to put in 15%. So we've got a number of them at that level as well.

[Bryce Rowe:]

Okay, that's helpful. I wanted to ask about the deposit side of things and obviously you've had some really nice growth in 2020. Curious on kind of the deposit mix and where you might see opportunities to potentially continue to lower cost there. I mean you look in the average balance sheet schedule within the release and it looks like the time deposits are still you know carrying out 1.5% type of cost. So just you know, maybe you could talk through the retention level of CD customers, what's maturing and what the current rate is for those maturing or for this maturing CD's.

[Dennis Shaffer:]

Well that's where the opportunity is, would be in that CD bucket. I think in our Alcoa working group, we identified that we may be able to get about, four or five basis points more eke out of that. Some of those rates as you said are one and a quarter, one and a half, still most of those were written for 18 months terms. So they'll be coming due sometime over the next six months or so. Current rates are down clearly around 40 basis points. Surprisingly we keep a good number of those CD customers. They are just loyal customers that the bank has and we still keep some of those. So I’m looking at our rate sheet today, our 18 months special is 40 basis points, and we had a 13 months special out there or 13 month – yes, 13 month we had 30 basis points. So those rates have dropped substantially, so there is room for improvement there. As far as the growth in those accounts, most of them have been core accounts, and as we alluded to $173 million in the business deposit growth, $85 million in personal checking accounts, and the nice thing about that is we – some of that non-interest income growth within our treasury management services and that’s just recurring income that we are going to get every year. So you know we have very little reliance on CD's, so - and I think we're going to continue with the same strategy that we will add as many core accounts as we can, because that's where we got opportunity on the non-interest income side, in terms of interchange fees, in terms of service charges and we think that's very valuable. That's why we've been able to push up over the last three or four years, our non-interest income.

[Bryce Rowe:]

Got it, okay. I wanted to ask about PPP2 here. You noted $55 million give or take of approvals so far. Just, how are you thinking about, maybe relative to PPP1 that was $260 million give or take. Do you think that you know the PPP2 originations will approximate half of what you did PPP1 or could it be less than that?

[Dennis Shaffer:]

Well, I think we’re probably going to be at half. If you look at even where we are today, I think I looked at some numbers right before we came in, I think we're at about 1035 loans and PPP1 we 2,300, a little over 2,300. So we are getting pretty close to that half level, and we are tracking them on a fee basis and everything. So we are right about that mark and that surprises me. I thought when this rolled out, I think Paul will echo this and Chuck echoed the same though, but you know that maybe we would do half of that volume. It looks like we're going to probably do maybe a little bit better than that.

[Chuck Parcher:]

Well, the volume in number of loans, but in terms of actual outstanding the average size of the loans have dropped this round. It’s part of because the SBA put restrictions on the maximum amount, and we really are trying to emphasize smaller borrowers, so plus there is lot of labor to go through this. They didn’t do anything to simplify it for us, but by and large I think those numbers are correct. I would – it started to taper off a little bit in terms of demand too. So we’ll see how this all plays out, because it is definitely more slow moving than we thought it was going to be.

[Bryce Rowe:]

Okay, last one for me Dennis. You had some commentary around M&A and wanting to possibility deploy capital into some M&A that might make sense. Just – I was wondering if you had, you know some conversations with potential partners, very informal conversations. But I think you know just maybe talk about the type of chatter you might be hearing these days as we started to kind of come out of this COVID period and as bank stock valuations have gone home over the last few months.

[Dennis Shaffer:]

I think that’s part of my daily chores, is to proactively reach out. I mean we’ve identified some potential who we think would be very good partners. I would tell you that I think that obviously people would realize the challenges that lie ahead. I think much more so today than it did even 12 months ago. Some of my conversations with some of my counterparts at other banks, they recognize that when PPP income goes away, when mortgage activity returns to a more normal level, particularly in this low rate environment there's still be substantial pressure on margin and I think it'll be very difficult for some of these banks to make money. So given that, I think they realized that. So we’ve had some – you know I’ve had some pretty decent conversations with people in regards to what the future might look like. We try to share our vision. We think, we’d be a great fit for quite a few of these community banks, very – in Ohio there's 130 banks that are under $500 million in asset size. We think we would be great partners for those organizations as opposed to somebody that maybe at $5 billion in assets or $6 billion or $7 billion in assets. Because I think, we’ll be a little bit more sensitive to their needs, because I think it's going to work for both banks and it's going to work for the shareholders, it’s going to work for the community, it’s going to work for the employees, it’s got to be that cultural fit and I think we’ll be the ideal partner. There's not only opportunity just in Ohio. I think Eastern Indiana, you know we've had some conversations with banks in Indiana and we've you know Southern Michigan, Northern Kentucky, those are all I think possibilities for us.

[Bryce Rowe:]

That’s great color. Thank you. You all have a good weekend!

[Dennis Shaffer:]

You too. Thank you.

[Operator:]

And this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Shaffer for any final remarks.

[Dennis Shaffer:]

Thank you. In closing I just want to thank everyone for listening and thank those who participated in the call and asked questions. Again, we are extremely, extremely pleased with the results of our fourth quarter and for the entire year. 2021 I think will undoubtedly be another year full of challenges for us, but we look forward to meeting those challenge and to talking to you again in a few months to share our first quarter results. So thank you for your time today.

[Operator:]

Thank you, sir. Thank you for attending today's conference call. You may now disconnect your lines and have a wonderful day!