Live Oak Bancshares, Inc.
Q2 2021 Earnings Call Transcript

Published: 22 Jul 2021

[Operator:]

Good day and thank you for standing-by. Welcome to the Second Quarter 2021 Live Oak Bancshares Earnings Conference Call. At this time all participant lines are in listen-only mode. After the presentation there will be a question-and-answer session. . I'd now like to hand the conference over to Greg Seward, General Counsel Live Oak Bancshares. Please go ahead.

[Greg Seward:]

Thank you and good morning, everyone. Welcome to Live Oak second quarter 2021 earnings conference call. We're webcasting live over the internet and this call is being recorded. To access the call over the internet and review the presentation materials and commentary that we will reference on the call. Please visit our website at investor.liveoakbank.com and go to today's call on our event call calendar for supporting materials. Our second quarter earnings release is also available on our website.

[Chip Mahan:]

Thanks, Greg and good morning to all. As you stare at the last six quarter results allow me to review today's agenda. It has proven to be our best quarter ever. And what a way for Brett Caines to go out with the bank. Brett it's been 13 short years since I found you in a chemical plant on the Cape Fear River wearing a hard hat and safety glasses. It goes without saying that it's been an honor to serve with you. In our next call, we will explain Brett's next new and exciting role in our company. And yes to all who know how this works. Today's preserve in each quarterly preserve is all Brett Huntley and I just show up. Brett thanks again for all your fine work these last 24 quarters as a public company. And now back to the best quarter ever. Highlights are a $44 million gain in the value of Greenlight shares brought on by this cash sale of $15 million causing a remark of our carrying value. It is important to note that we took $4 million to the $15 million in cash gains and gave it to our folks once again excluding the Senior Management Team. You will recall that we were distributed $7.5 million to our folks at the end of PPP 1.0 given the long hours they spent helping American small business get through this clunky process. This $44 million one-time non-operating gain is a nice addition to Tier 1 capital. Secondly, originations reached an all time high of $1.1 billion while credit quality continues to improve. Third, as the accountants and PPP make the unpacking of our financials more difficult. We're proud to announce the dramatic increase in pre-tax pre-provision earnings as the operating leverage in our business kicks in. Lastly, Neil Underwood will discuss Live Oak venture investments, as well as a canopy update. Before we turn things over to Huntley for a deep dive.

[Steve Smits:]

Well Chip as I mentioned last quarter, I've been expecting to see reserves trending towards pre-COVID period levels as a percentage of loans. This is proving to be the case and I still expect to see this trend continue. I believe this because first, we continue to see improvements in the financial condition of some of our most impacted businesses, which is evidenced by favorable trends in the servicing status ratings. Secondly, we've also noticed that many of our most impacted borrowers were actually able to build cash reserves during the pandemic and that's a result of the government stimulus and grant programs. Thirdly, through our servicing efforts, we've started to receive encouraging reports as these businesses reopened and as you say, folks are getting back to work. Finally, improving unemployment forecasts will of course, influence our allowance as well. So for all these reasons, I still feel that the allowance will continue to trend towards pre-pandemic levels.

[Chip Mahan:]

Steve, other banks reporting are discussing subsidies and deferrals. How are they doing?

[Steve Smits:]

As of June 30, we only have 17 loans on payment deferral 15 of those are due to COVID related stress. In addition, as of June 13% of our loans received some level of SBA subsidy payments support for their June payment most of this will burn away over the next few months. So in summary, as of the end of June 87% of our borrowers are back to making regular payments. And past due is continued to be at an all time low for us, which is very encouraging.

[Chip Mahan:]

Steve is folks are headed back to work it appears that our watchlist loans, classified assets and non-accruals are trending down thoughts?

[Steve Smits:]

Well, I must caution that businesses may not be completely out of the woods yet and we need to be prepared for potential surprises. I am encouraged by the recent trends that we're seeing within non-COVID impacted verticals, we're actually seeing an uptick in upgrades especially within our Death our Healthcare Investment Advisory and our Death Care Industries. And since the first of the year, we've also seen slightly downward trends in classified assets and non-accruals of course, we continue to focus a good bit of our attention towards servicing but alpha-1 will remain cautiously optimistic that these trends are going to continue.

[Chip Mahan:]

Thanks, Steve, let's move to Slide 6. Relative to the last 12 months/the pandemic, I believe this slide tells it all. On the left you see losses on the right income. On the left, we took $14 million and COVID related charge-offs of which $10 million was a self-inflicted wound relative to the sale of $15 million a hotel discount. True COVID losses of businesses that went down were $4 million noted under that, so for a total of $14 million. On the right you see income government assistance accounted for $2.3 billion in PPP loans and $80 million in fees plus $8 million in net interest income. So far COVID related activities have resulted in a non-dilutive capital raise. Moving on to Slide 7. I have noticed that many reporting banks are having challenges growing their loan book and names are struggling as well not for us. Excluding PPP, we run the loan portfolio almost 37% compounded annually over the last 10 quarters. Moving to Slide 8, in the last 11 quarters of 14 quarters we originated roughly $400 million to $600 million in loans. In Q3 and Q4 of last year we did almost a $1 billion and somewhat surprisingly this quarter we originated $1.1 billion. I get that the investments were going well and happy to put almost $50 million in Tier 1 capital on the balance sheet from Greenlight with loan growth well, may . So let's examine what is going on here with more granularity. Let's go to Slide 9. What we have here is a graphic depiction of the second quarter of 2019, second quarter of 2020 second quarter of 2021 of our legacy verticals that is those started between 2008 and 2017 compared to our more recent verticals started in ‘18 to present. While legacy verticals have been proven a bit lumpy. The newbies have grown quite nicely producing $600 million in this quarter alone. Again, we operate in 32 Industries nationwide. Moving on to Slide 10. This slide provides more data on product types. The percentages of loans have remained remarkably similar as production has increased dramatically. Again, government guaranteed loans were made about half of our loan book. And we remain confident that originations for 2021 should be in the $3.3 billion to $3.5 billion range. Slide 11 is interesting. Highlights of this slide of newer verticals yield $426 million in production with an interesting mix of products. On the left, the orange bioenergy and community facilities are almost exclusively government guaranteed USDA loans. In the middle green, you have 18 general lenders in 16 cities which are almost all SBA loans.

[Neil Underwood:]

Thanks, Chip. This next slide represents most of our direct investments at the holding company. I think this quarter is around pretty much it's really important to note that the entire portfolio continues to thrive. Each of these companies solves a major problem in financial services. The footer really summarizes the opportunity where we've invested $26 million at very early stages, and the implied value today is $182 million. We expect these companies that continue to raise growth capital at elevated valuations. For all your models out there we know this is a really difficult thing to forecast but as you can see, this quarter is real and it's tangible. Perhaps more important than the economics is Live Oak Bank’s adoption of these technologies for the next generation cloud based tech stack allows us to build best-in-class FinTech life products. Let's move on to the next slide with a quick CANAPI update. As you know, successor to Live Oak ventures and as a reminder, we closed out $650 million at the end of last year and 44 banks the ABA and the ICBA. We've been operating for about 18 months and as you can see, we've been very, very busy. Thesis is working and can be continues to win leads on strategic deals. All these sort of companies offer services that really help banks, much like Live Oak ventures our bank benefits by as many best-in-class technology. We've either already implemented or in the process of implementing companies such as Built, Alloy, Neuro MX Finxact, Notarize and Orum.

[Huntley Garriott:]

Thanks, Neil. Thanks, Chip. Pretty remarkable quarter across the board, we'll start on Page 16 and we'll get to the financial results in a minute. But we first wanted to highlight just the consistency of our strategy. We've shown in this slide for a while, and we tweak the key messages that always remained kind of anchored on the same topics. And the other thing we want to do is just take a minute to recognize the tireless effort of all of our folks to execute this, since PPP, we have been running flat out across every aspect of the company and it's really showing up in these results. So taking care of our customers has always been you kind of vital to our D&A and we continue to do that even as our customer base has grown dramatically. We mentioned the COVID 6 verticals that we've been concerned about and watching. We visited in person over half of those customers. And just remarkable to see sort of their positive response to that and an overall sort of strength of that portfolio. Customer outreach continues to differentiate across all of our markets both in terms of sales and in terms of our portfolio. You just never been more important to take care of our team as it is today and we continue to stay laser focused on that. As we've grown, we've continued to invest in them. Chip mentioned the bonus that we paid in this quarter. We've also focused on supporting them with flexible hybrid work models and incremental resources. We've also invested more heavily and giving back to our community with an exciting equity investment in a FinTech company called Philanthropi designed to help democratize donor advised funds. And we've developed new models of impact investing and driving inclusive small business. Our mission to be America's small business bank continues and our relentless quest to define the bank of the future reaches an important upcoming milestone with our deposit conversion fast approaching. If we flip to 17, extraordinary balance sheet growth this quarter both linked-quarter and year-over-year as the PPP loans run-off our stated balance sheet remained roughly flat but our core loan growth 10% linked-quarter and over 40% from a year ago. Through our retained earnings and success in our FinTech investing, we've been able to grow our capital base to support this as well.

[Operator:]

Our first question comes from Steven Alexopoulos with JP Morgan.

[Steven Alexopoulos:]

Hey, good morning, everyone.

[Chip Mahan:]

Good morning Steve.

[Steven Alexopoulos:]

I wanted to start so one of the key questions is obviously Chip around the origination growth. What was it about this quarter specifically, when I looked at the new verticals and how much they really popped up? What was it about this quarter that caused such strong origination growth?

[Chip Mahan:]

I think it's just comprehensive, I don't know. It's just everywhere as we said, the top of the call geographies, different verticals, the general lenders, the 18 general lenders are now going to be probably a top 8 SBA lending group by themselves in the country. So we're just beginning to hit on also. Even Steve may have some to add.

[Steve Smits:]

Yes, I'll agree with that. On the SBA side, clearly the enhancements have driven activity and were in the right places. And that's across our verticals, that's across the generalists. And so that business just feels like it is it is really flattering. And then the renewable energy space, there's just a ton of tailwinds in that space and infrastructure build, we've seen a handful of slightly larger deals there. So that was nice -- some nice wins there, timing of a couple deals we've been working on for a while hit and then across the specialty finance, the sponsor, finance, these are just we're finding really, really great businesses in the right places.

[Chip Mahan:]

Also the large deals, I spent so much time on the road this quarter calling on customers with the sponsor group and the senior lending group, these are much, much larger deals and we're looking at companies with significant balance sheet so it's across the board Steve.

[Steven Alexopoulos:]

Okay. So, when we look at the guidance, right to $3.3 billion to $3.5 billion of originations for this year, that implies I guess, 758 50 somewhere in that range, right each quarter, is that just being conservative or do you really expect to step down It could be fairly material from where we were this quarter?

[Chip Mahan:]

Well, we seek not to disappoint Steve. The 90% things coming-off Steve Smits, I mean, that's going to affect it a little bit usually, Q4 is a pretty good quarter for us. But I would say that we are highly confident that we will be in that range.

[Steven Alexopoulos:]

Okay. Then, thanks. And then finally. So, when we bake everything in the cake, right, there's so many things going on in a quarter, we have PPP still coming-off, you have the SBA enhancements coming-off, you have all these new verticals, total loan growth, period end was down a little bit with the PPP run-off, how should we think about total loan growth for the rest of this year? Thanks.

[Chip Mahan:]

Well, I think you got to take the PPP, we don't really pay any attention to that. That's why we try to focus almost all day every day internally on pre-tax pre-provision earnings on how we operate the business. Others may have something to say on that.

[Steve Smits:]

Yes, in terms of I agree with Chip. The core loan growth, ex-PPP, we grew that from $5 billion to $5.5 billion Q1 to Q2. I think it will be hard to maintain that pace. Although there are variables as you know, pre-payment speeds have ticked up a little bit in the last quarter. And we expected that from where we were historically really low level through the pandemic timing of deals that we have that have been in construction to fully fund, how that affects the balance sheet. And then what loans we end up selling. So all of those go into the mix. I think the balance sheet growth will continue to be quite strong, a little less than what you've seen, maybe in the Q2, but still really strong.

[Steven Alexopoulos:]

Great, thanks for taking my questions.

[Chip Mahan:]

Thanks Steve.

[Operator:]

Our next question comes from Jennifer Demba with Truist.

[Jennifer Demba:]

Thank you. Good morning, great quarter.

[Chip Mahan:]

Good morning Demba.

[Jennifer Demba:]

So that coordination topic everything played on all cylinders. What is the pipeline for future lender or hires or any verticals of this?

[Chip Mahan:]

Jennifer, we can understand you.

[Steve Smits:]

I think, Jennifer, you were talking about new hires, right. It was your little scratchy on the phone. Is that right?

[Jennifer Demba:]

Can you hear better now? Is that better?

[Steve Smits:]

Little bit.

[Chip Mahan:]

Not much.

[Jennifer Demba:]

Okay. All right, hold on one second here. How is that?

[Steve Smits:]

It’s good.

[Chip Mahan:]

Somewhat better.

[Jennifer Demba:]

Okay. Okay. You're hitting on all cylinders? What is the pipeline for new hires and new verticals?

[Steve Smits:]

Yes, so we believe that we have a pretty attractive platform right now. We continue to see opportunities to hire great talent. And we now continue to sort of evaluate that. And so finding those great people who have experience in SBA primarily, we continue to think we've gotten great opportunity. In terms of new verticals, we continue to look at a few here and there, they'll be kind of tuck-in ones if from that perspective, no real major splash in the infrastructure space, in renewables, we still see adjacencies there. And then in the sponsor lending that we're doing, we're broadening that just like the generalist and SBA broaden that aperture of the industry who look at so to the sponsor, lending group as well. So we broaden out of the specific industries a bit as we go into some of those more horizontal businesses that we're into.

[Jennifer Demba:]

Okay. And the loan loss reserve, you think it could go down further? Could you just talk about how well you think it could go? I know, it's hard, based on the loan losses of methodology to kind of make that kind of statement. But….

[Steve Smits:]

Jennifer, again, really hard to hear you. Something the question was about loan loss reserves and maybe provision is that right?

[Jennifer Demba:]

Yes. So how loud do you think that -- how loud do you think that loan losses that could go?

[Steve Smits:]

Okay, Jennifer, this is Steve Smits. I'll take a stab at that because you are correct. As I mentioned earlier on in the call, I continue to believe that is trending back towards the pre-provision which is interesting, because remind ourselves that we went over to seesaw at the first of the year, which is a challenging time to do that. So our -- when you look historically, we were running under a different model. So there's someone known there. And we are getting very close as a percentage of our net flows, I always look at the percentage of our unguaranteed to get a feel for where we're actually reserving against. And we are getting close to where we were before the world changed second quarter of 2020. So how long will it go? Hard to say, because there isn't longevity to the seasonal model and how that reacts. I will say that the reserving that we put in place against unknown stress associated with COVID, businesses being forced to shut down or curtail or pull back. And as expected, that is starting to burn away as and what the nice line behind that is, it's burning away, because the businesses are actually showing very positive signs of health. We're not going to spike the in the five yard line at all, we are constantly reminded that there could be another shoe to drop, we're watching very, very closely, we know that their balance sheets are strong, that has a lot to do with the Federal programs. And we've got to see if that has some legs to continue. So again, Jennifer, I think -- I feel very comfortable that we're returning to a normal portfolio and feel very comfortable that historically we've always reserved at a very appropriate level. So I do think that it may chop down a little bit as a percentage, I think we're, about 2.5% of net loans take like to look at it that feels comfortable to me and that might give back a little bit.

[Chip Mahan:]

That’s right.

[Jennifer Demba:]

Thank you.

[Operator:]

Our next question comes from Michael Perito with KBW.

[Michael Perito:]

Hey, good morning.

[Chip Mahan:]

Good morning Mike.

[Michael Perito:]

Few questions from me. One, just on the OpEx side. I think, probably you mentioned kind of a $52 million adjusted run rate for the quarter. Just curious if you have any additional commentary about how we could -- we should think about that near-term here I mean, my guess is that there's some upward pressure just given the growth you guys are having, but just wanting to see if that's kind of fair. And if there's any other kind of one-off items in the back half of the year that you expect could have an impact on the cost side whether it’s I think have run their course or anything else that we should be mindful off?

[Chip Mahan:]

That's good question. I'll bounce over to Brett for any his crystal ball as well. I mean, our headcount growth, probably in the 15% range. And so obviously, salaries and benefits is a pretty decent size of the line item. So that growth, we think will continue just our visibility around franchise growth. The rest of the line items, though, I think are relatively range bound not sort of saying anything unusual kind of popping up or down out of that. But Brett would add --

[Brett Caines:]

Yes, probably the one thing I would agree with everything probably said, nothing going forward the day that we know but that's kind of the point of that chart as it pulls out those things that aren't routine. And like you said, the market price our issues, those have exhausted themselves. But the one thing I would add to that and I think this is really important part of our growth story, which we reported today. As in the past we didn't shy away from investing in or hiring when we saw new opportunities. And a lot of ways those past expenses are what led to our $1.1 billion of originations reported today. So I think there are potentially opportunities where we will continue to invest and make decisions like that that'll pay-off in the future. So that definitely will impact non-interest expense. But other than those kinds of initiatives, it's pretty steady the .

[Chip Mahan:]

Yes, let me let me support that too just a wee bit, right. So you know, our guiding principle is to treat every customer like the only customer in the bank. And for the past nine months or so that that's been hard. I mean, we did a this quarter, and the pipe is about the same. We've hired about 100 people so far this year, and we're going to continue to stay the course of trying to keep treat every customer like the only customer of the bank. We will continue to have opportunities to hire other folks that are experienced SBA lenders as we become a bit more of a nationwide platform in that regard on top of increasing verticals. So -- that's all I got to say on that.

[Michael Perito:]

So helpful, thank you. And then maybe sticking with you just for a second on the margin. It seems like if I'm looking at Slide 26, there's a comment that there a lot of the -- well, maybe not a lot, but there was maybe a bit of loan production that was towards the end of the quarter and some of the liquidity deployment didn't really manifest in the second quarter NIM, that you guys experience. Just curious if you can maybe take that step further. I mean, is it fair to think that that NIM can maybe bounce back barring something really unpredictable happening on the PPP side in the third quarter and kind of get back up towards where you were in the first quarter or are there other dynamics that we should be considering?

[Steve Smits:]

Yes, well, I guess first of all, I say on that -- on the slide, you're referencing Slide 26. I would say focus on the 3.46 to 3.63 trend, just kind of excluding the impact of PPP on Q1 and Q2 and then on the right hand side of that chart liquidity at 22.2%. That is probably a little bit higher than where we will run as normal ops, just had some things going on in Q2, as part of our liquidity planning that that was just there, but probably somewhere sub 20 is probably would be more normal operation for liquidity percent and yes that's deployed and some of that excess liquidity runs-off. You could see, a pop or maybe not pop isn't the right word, but continued trend on that adjusted liquidity under the green 3.63. But we….

[Michael Perito:]

Yes, I could you say differently, the trend of the green line moving upward, there's still some potential more leverage there. I think you guys have said in the past that the core NIM could go to the high 3s, is that still generally a principle that that's still solid?

[Steve Smits:]

Yes, I think that's correct. North of 3.5 you know 3.75, but it's 3.5 to 4 range or high 3s, as we said.

[Michael Perito:]

Got it. And then just last from me. I appreciate all the color on the call thus far given but just on the SBA gain on sale. Just curious if you guys have any -- from the first few weeks, third quarter here, have had those margins kind of remained elevated or is there any other kind of market dynamics at play that that you guys think could give that higher margin some length here as we move into the back half of the year or is a better base case to-date that there's maybe some normalization there? I'm just curious what you guys think.

[Chip Mahan:]

Yes, I'll start and Brett can clean up, market remains really strong, obviously a ton of liquidity everywhere, and kind of a start for assets. If you think about the SBA enhancements, there's about a 55 basis point guarantee fee that is waived right now. And that's a direct passthrough to the loan buyer. And so if the duration of the asset is four plus years, that's a couple points on that gain on sale, that will continue to enjoy until those enhancements run out. Unclear if all of that gets given back just how competitive the bidding market is right now, and we'll say, but we don't see anything that would suggest that that would change as we look at it. Pre-payment speeds have ticked up a little bit, but are crazy. Other than that enhancement will be the big driver of the market at once it starts to roll-off.

[Michael Perito:]

Helpful. I should probably know this, but do you guys know is there a duration that which that enhancement is good through at this point is that been communicated or….

[Chip Mahan:]

So the program…

[Michael Perito:]

We're waiting to see.

[Chip Mahan:]

The waiver is -- through September 30, subject to availability of funds. So we'll say it'll be no later than 9/30 it will be exhausted.

[Neil Underwood:]

Well, and the 90% is in the infrastructure bill that is being kicked around, but certainly don't even think about spiking that ball.

[Michael Perito:]

All right, thanks guys. Thank you for taking all my questions. As always, I appreciate it.

[Steve Smits:]

You bet.

[Operator:]

Our next question comes from Chris Donat with Piper Sandler.

[Chris Donat:]

Good morning, thanks. Thanks for taking my question. Just Chip on that -- we did last time about spiking that ball on the infrastructure bill. I don't want you to handicap the prospects of that bill, but it's an extension of the waiver is something that Congress is considering is that fair to say?

[Chip Mahan:]

Yes, I talked with our government relations person the other day and believe me, none of that's in our projections.

[Chris Donat:]

Fair enough. I just wanted to see if that's an in the realm of possible outcomes. I know you've answered a bunch of questions around expenses. But I just want to double check one thing, because I've heard anecdotes from some FinTech companies about some more elevated expenses around hiring new employees, but with the people that you're going out and hiring, I imagine you're competing more with banks for like SBA expertise, is that a fair assessment of what you're seeing in the hiring market as you're growing your loans originations?

[Steve Smits:]

Yes, we’re – yes look, we're hiring across the board. But specifically, the majority of the growth is in the lending side. And that's lenders, underwriters, closers. And to that competitive it. I think all labor markets are competitive right now. And but we're really in the market with the banks on that front, we are active in the technology space as well. And there is clearly some pressure around that less of a percentage of our overall hiring than the banking side as we sit here right now.

[Chris Donat:]

Okay and then just for me one last question on competition, thinking about your new deposit platform? And is there a way to characterize where you think you stand competitively with banks on one hand and then with companies like square on the other with square making more of a push into they're already there in small business lending and small business payments? But getting more involved in small business checking, is that something you are watching or deeply concerned about or not so much?

[Steve Smits:]

Yes, watching very closely, right, and the market continues to evolve, I think we look at both sides as very viable competitors that we are working towards. And I think what we believe we can do is sort of be the best of both. And so the understanding of the client base, if you think about veterinarians, you think about pharmacists, you think about these industries, we've been in for a decade or more knowing that customer and what we can provide if this technology platform is what we have designed to be will be flexible enough that we can create bespoke solutions for industries and these industries that we serve with capital and that we know an awful lot about and that's a slightly different model maybe then square which obviously has a tremendous breadth among small businesses and what they're trying to do with more of that small balance loan and then moving that into savings and checking, but they're very, very worthy competitor no doubt.

[Chip Mahan:]

Chris. So we have not talked on today's call much at all about core conversions. But you haven't been in the banking business for a long time know and understand that a core conversion is something like a heart transplant and brain surgery at the same time. But that said, Neil, relative to our tech stack, as it emerges past tech core conversion to 14 separate vendors, the tech stack that you referred earlier in the call and certainly our call this week with one financial, which has a similar tech stack in the Neuro Bank along the lines of Chris's comments, you may just want to comment on how you see all of that playing out.

[Neil Underwood:]

Yes, Chris I think that from our view fintechs are actually setting the standard in terms of beautiful onboarding customer journeys for onboarding. And so to do that they built purpose built cores a lot of R&D budgets, hundreds of millions of dollars of R&D budgets. We set down a path in 2016 to incubate what is today Finxact. And, the best testimonial to that is when we looked at putting PPP loans on a core last year literally it was six days to build the integration. And we set up a brand new product on a core and so we believe -- we talked about convergence where fintechs are going to have to become more like banks over time from a licensing cost to fund perspective, you're seeing that with square IoT is seeing that with radius and lending club borrow, I mean, the list goes on banks at the same time we're going to have to implement these new technology stacks so they can build best-in-class products. And we just see that convergence continuing. We think we're in a really unique spot as a bank because you know, this conversion represents us completely getting off one of the old and now focusing on this next gen core and this is -- this has been a build a conversion now the fun begins now we can actually build new innovative products for our small business customers and that's super exciting.

[Chris Donat:]

Okay, sorry. Like I said, that was the last one that wasn't entirely accurate, just on the notion -- sorry about that. On the notion of building new products and I think someone needs the word bespoke is that that's really the vision, right? You have the customer relationships, and you're not trying to build something that's self service for small business. You're trying to verify you're trying to build something that empowers your lenders and other people within Live Oak to do new things for their customers not so much for the customers to just go out and do it themselves. Is that reasonable?

[Steve Smits:]

I think convergence is the right word, Chris, that, we have lived in a world with bankers who know our customers really well, a lot of human interaction, high touch for a high value add larger product. There's a lot of products and services that customers want to self service. We need to provide those we need to offer those digitally in a beautiful user experience. But be able to help them when they want to do something more value add that they need somebody and to seamlessly integrate that again back to we're in a pretty interesting position where the capabilities to deliver the technology to self service when they want to and the experience and the knowledge in the industry is in the verticals and in banking to deliver that touch to and that's really where we're headed.

[Chris Donat:]

Got it. Thanks very much.

[Operator:]

I'm showing no further questions in queue at this time. I'd like to turn the call back to Chip Mahan for closing remarks.

[Chip Mahan:]

See you next quarter folks. Thanks for dialing in.

[Operator:]

This concludes today's conference call. Thank you for participating. You may now disconnect.