The Bancorp - Q2 2023

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and welcome to The Bancorp second quarter 2023 earnings conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded today, Friday, July the 28th, 2023. I would now like to turn the conference over to Andres Viroslav. Please go ahead, sir.

Andres Viroslav (Director of Investor Relations)

Thank you, operator. Good morning, and thank you for joining us today for The Bancorp's second quarter 2023 financial results conference call. On the call with me today are Damian Kozlowski, Chief Executive Officer, and Paul Frenkiel, our Chief Financial Officer. This morning's call is being webcast on our website at www.thebancorp.com. There will be a replay of the call available via webcast on our website, beginning at approximately 12:00 P.M. Eastern Time today. The dial-in for the replay is 1-877-674-7070, with a confirmation code of 720317. Before I turn the call over to Damian, I would like to remind everyone that when used in this conference call, the words believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such statements are subject to risks and uncertainties, which could cause actual results, performance, or achievements to differ materially from those anticipated or suggested by such statements. For further discussion of these risks and uncertainties, please see The Bancorp's filings with the SEC. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Bancorp undertakes no obligation to publicly release the results of any revisions to forward-looking statements, which may be made to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events. Now, I'd like to turn the call over to The Bancorp's Chief Executive Officer, Damian Kozlowski. Damian?

Damian Kozlowski (CEO)

Thank you, Andres. Good morning, everyone. The Bancorp made $0.89 a share on 41% revenue growth and 17% expense growth. ROE was 27% and ROA was 2.6%. Core loan growth quarter-over-quarter reflected a reduction of 8% in institutional lending and respective increases of 2% and 4% for our small business, commercial, and real estate bridge lending businesses, which also show 10% and 65% growth year-over-year, respectively. NIM increased to 4.83 from 4.67 quarter-over-quarter and 3.17 year-over-year. gross dollar volume growth in our Fintech Solutions payments business was 15%. Continued strong growth across verticals, with only general purpose reloadable showing a decline. New corporate payment programs continue to show growth significantly above expectations. The Bancorp continues to be well-positioned in the current environment.

Our balance sheet flexibility, lower credit risk, and high level of core insured deposits support continued improvements in profitability, regardless of potential dislocations or weakening economic conditions. While the sharp increase in the Fed Funds rate affected our growth in loans, this impact was mostly felt in our institutional business, which is comprised of our SBLOC and IBLOC variable rate consumer loans. Long-term historical growth trends seem to be normalizing, and pipelines across our businesses are increasing. Our Fintech Solutions business continues to show strength, supported by current programs, the addition of new products, and the implementation of new partners. Due to significant implementation times that can last 18-24 months, we have good visibility on the potential growth in 2024. Our current estimate is that we will have above-trend GDV growth in 2024 of more than 15%.

Key areas of growth are neobanks, healthcare, and new corporate payment programs. In addition, we continue to strengthen our relationships with our key members of our ecosystem and recently signed a long-term extension and expansion of our partnership with Chime. We continue to invest a lot of time and energy across our company in the development of new products and services, especially expansion of fee businesses and the monetization of our core capabilities. As we approach the Reg II Durbin Amendment, restriction our balance sheet size of $10 billion, we believe we can significantly grow the business without needing additional balance sheet above that limit. Lastly, with continued strong business momentum and a favorable balance sheet position, we are confirming our 2023 guidance of $3.60 a share, without the impact of anticipated stock buybacks of approximately $25 million per quarter.

In the third quarter earnings release, we will give both preliminary guidance for 2024 and indications of our buybacks for next year. I now turn the call over to Paul Frenkiel, our CFO, for more color on the second quarter.

Paul Frenkiel (CFO)

Thank you, Damian. As a result of its variable rate loans and securities, The Bancorp continues to benefit from the cumulative impact of Federal Reserve rate increases. That factor was the primary driver in increases in return on assets and equity for Q2 2023, which were respectively 2.6% and 27%, compared to 1.7% and 19% in Q2 2022. These increases reflected a 60% increase in net interest income. In addition to the rate sensitivity of the majority of our lending lines of business, management has structured the balance sheet to benefit from a higher interest rate environment. Accordingly, over a period of years, it has largely allowed its fixed rate investment portfolio to pay down, while limited purchases were focused on variable rate instruments.

Additionally, the rates on the majority of loans adjust more fully than deposits to Federal Reserve rate changes. As a result, in Q2 2023, the yield on interest-earning assets had increased to 7% from 3.6% in Q2 2022, or an increase of 3.4%. The cost of deposits in those respective periods increased by only 2%-2.3%. Those factors were also reflected in the 4.8% NIM in Q2 2023, which represented another increase over prior periods. The provision for credit losses was $361,000 in Q2 2023, compared to a credit of $1.5 million in Q2 2022. Q2 2023 net charge-offs amounted to $938,000.

Prepaid debit and other payment-related accounts are our largest funding source and the primary driver of non-interest income. Total fees and other payments income of $25 million in Q2 2023 increased 10% compared to Q2 2022. Non-interest expense for Q2 2023 was $49.9 million, which was 17% higher than Q2 2022. The majority of the increase resulted from salary expense, which increased 28% and which reflected higher numbers of staff in financial crimes, compliance, and information technology. Staffing increases reflected higher deposit transaction volume and the development of new products. The increase also reflected higher employee incentive and stock compensation expense as a result of a focus on stock ownership.

Book value per share at quarter end increased 19% to $13.74, compared to $11.55 a year earlier, reflecting the impact of retained earnings. Quarterly share repurchases should continue to reduce shares outstanding. I will now turn the call back to Damian.

Damian Kozlowski (CEO)

Thank you, Paul. Operator, could you open the lines for questions?

Operator (participant)

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by number one on your telephone keypad. If your question has been answered and you would like to withdraw from the queue, please press star followed by number two. If you are using a speakerphone, please lift your handset before pressing any keys. One moment, please, for your first question. Your first question will come from Frank Schiraldi at Piper Sandler. Please go ahead.

Frank Schiraldi (Managing Director)

Good morning.

Damian Kozlowski (CEO)

Good morning, Frank.

Frank Schiraldi (Managing Director)

On the, on, on GDV growth, you know, another strong quarter, and I think, Damian, you said that we should expect above 15% going forward. I'm not sure if I heard that right, but if I did, and any more color just in terms of, of, you know, if you could put some, some sort of guardrails around that statement?

Damian Kozlowski (CEO)

I did say that, and I said that for 2024. We have a very good understanding of the projects under implementation and new product expansions. These implementations, we've discussed this before, can take 18-24 months to fully implement into our ecosystem. Looking at that pipeline, we're, we're, we're fairly confident that we'll get, you know, above trend growth for 2024. Above that 15% level, which has been kind of the historic breaking point between slower and, and, kind of the trend line for the last seven years. Which is actually 16%, but about 15% to make it, make it easy.

Frank Schiraldi (Managing Director)

Then in terms of just the new partnerships, new programs, you're signing, is there any pressure on margins there? Just wondering what sort of the take rate is from, you know, 15% GDV or above, in terms of the revenue stream that provides through fee income.

Damian Kozlowski (CEO)

No. No, the, the... It actually, the for the new programs and stuff, it usually is more profitable in the early years because there's minimums and then there's tiers. For our larger clients, yes, they have so much volume that the incremental volume doesn't take a lot of cost, so we do give price breaks on tiers for our larger programs that are growing. We have a lot of new products and services. The relationship that we've had to GDV and fee growth should be maintained over the next couple years, but I can't guarantee that. It, it totally depends on who's growing and when. The outlook on this business is really never been brighter.

It seems that we have, we have a lot of very good business opportunities, a lot in new partnerships, but also the expansion of partnerships across the, all of our verticals. It's, we're in a very good position on the Fintech Solutions business.

Frank Schiraldi (Managing Director)

Okay, great. On the SBLOC contraction balances this quarter, you talked about sort of normalization. Do you expect to see more runoff here? Can you offset that with other, you know, loan sources? What are your thoughts about both total, you know, SBLOC and total loan growth here in the near term?

Damian Kozlowski (CEO)

Okay. They are-- our pipelines are increasing, so we should see less runoff on the institutional side. You know, that was obviously with the historic rise in interest rates, the price-sensitive clients who were borrowing against their securities insurance kind of fell out of the loop. There's been some pricing pressure from industry players that we haven't chased. We do see our pipeline growing, and some competitors have raised their prices. We should have less runoff in the third quarter. That also depends, obviously, of how aggressive the Fed is, too. The other pipelines are fine. They continue to grow those books of business. Remember, we, we have two concerns.

One is those, if we do get paid back on those loans, they go on the Fed Funds, obviously, at 5.25%, which, which we don't get hurt that much on the spread. We're, we're constantly repricing our portfolio as new loans. We do new loans, and, and they run off our sheet, so it doesn't really hurt us. Plus, we're kind of husbanding cash right now on our balance sheet because we are ultimately going to buy bonds to get a lot more fixed-rate securities exposure. We're not very concerned about the runoff of that business. It, it seems to be normalizing, and it doesn't hurt us that much. I think we're in a fantastic position on our balance sheet to be very responsive to the, the current environment.

Frank Schiraldi (Managing Director)

Okay, you know, it, it seems like with the Fed's, you know, commentary and what the market's expecting, we're getting maybe pretty close to the end here in terms of Fed rates. So would we, you know, do you think we expect to see securities purchases the back half of this year? Any sort of size range, you know, you think of when, when putting securities on the books here, what, what we could see in terms of securities asset ratio by year-end? Any thoughts there?

Damian Kozlowski (CEO)

I don't think we're gonna buy securities. This isn't a guarantee. I don't think it's gonna happen to the end of this year. I think you're still gonna have a fairly inverted yield curve, and that's probably going to disinvert next year. I don't think there's securities purchases will happen this year, but I, you know, we're being very nimble on this. We have to pay attention to what's going on in the marketplace. I mean, strange things happen. You saw the 10-year move last year on, on news in Japan. You never know what's gonna happen, and we'll take advantage of those opportunities. I, I would expect them to happen, probably midpoint next year, and our balance sheet is actually smaller than it should be.

If you look at the amount of securities we have versus our peer group in general and banks, we have at least 15% room to add, security. A $1 billion, $1.5 billion we could add pretty easily. Now that we have, such great amount of liquidity on the balance sheet, we'll be able to do that very effectively, without having to borrow into the market or anything. I think we're gonna keep it. We're watch it every second of every day. We are in a fantastic position, obviously, because we had, you know, really anticipated the interest rate increases, and we're slowly moving back up the fixed rate scale.

If you looked at what we did over the last four years, is we went from the mid 30s% to 26% fixed rate assets, and we're already back to 32% fixed rate assets and have taken 11% asset sensitivity off the, off the board, because now we're flexing the balance sheet back to a fixed rate structure with a target of 60% in order to mitigate our deposit beta, which is about that. I, I think we're gonna be very flexible over the next 18 months. I don't think there's going to be a big change in rates, and we're gonna have time to adapt to, you know, change our structure to be much more fixed, to, to mitigate the downside impact if there's rate cuts.

Frank Schiraldi (Managing Director)

Right. Okay, so you're saying 60% fixed. I mean, the, the deposit beta is, like, 40%, right? In terms of the-

Damian Kozlowski (CEO)

Yeah, it would basically wipe out. It would lock in your profitability up and down, by the way.

Frank Schiraldi (Managing Director)

Right

Damian Kozlowski (CEO)

You know, that's why we're wait and see. You know, we could get to 6% on the Fed Funds. That's, that's, you know, what happened, obviously, what happened just yesterday on continuing claims, on durable goods orders, on GDP, were all very big surprises that show that the economy is much more resilient. If you just look at our GDV growth, there's a lot of resiliency in the economy, and we still have an 8%. You know, we're over 8% on the deficit, too, on fiscal spending. There's a lot of stimulus still in the economy also. We're gonna just keep an eye on it, and we're in such a good position that we don't, it's kind of where we were with the bond.

We didn't buy a bond for four years because we're in, we're, we're in a good position on liquidity and deposits, et cetera. We're doing the same thing in this case.

Frank Schiraldi (Managing Director)

Okay. All right, great. Thanks for all the color.

Operator (participant)

Your next question comes from David Feaster at Raymond James. Please go ahead.

David Feaster (Director)

Hey, good morning, everybody.

Damian Kozlowski (CEO)

Good morning, David.

David Feaster (Director)

Maybe just following up on, on one of the questions, or one of the things you, you talked about in your prepared remarks. You talked about, you know, expanding relationships. Obviously, you, you extended and expanded the Chime relationship, and you talked about going deeper with, with the existing partners. Could you expound on that? Where, where, where are you seeing opportunity for expansion there, and what other initiatives do you have in place to continue to deepen relationships?

Damian Kozlowski (CEO)

Generally, I think people have accepted that they got to be broader fintech, especially neobanks, but also other verticals outside of government. You have to expand your product set for profitability. We're in discussions across all of our major clients. That they wanna add services, they wanna add product capabilities. This is something that's happening across the entire franchise. If you take a large a neobank, for example, they're, they're wanting to not just be a debit provider, but they want to build a portfolio of products around their key clients and expand it to credit. That's exactly what we're doing. Where we can support them in doing that, we help them in many cases innovate, but also they may be with another provider today that they want to put into our ecosystem. That's happening.

But also in the obviously, in the credit area, where most of the debit providers wanna build and start to build a both sides of the balance sheet business in order to increase their profitability. we're, you know, with our partners, they're very deep relationships over very long terms. As I just said, we just expanded our relationship with Chime in those areas, and we'll continue to do that. I think that's where there's gonna be a lot. In fact, we're not dealing with very many startups, obviously. There's gonna be a lot less startups because of what's happened in Fintech. The dominant players now who are out there, which many of our clients, are looking to significantly increase their profitability and deepen their relationships with their clients, and we're lockstep with them.

David Feaster (Director)

Okay, that's helpful. Maybe just touching on, on the pipeline of partners that you have. You know, it sounds like you're, you're still continuing to onboard folks at a pretty rapid pace. I'm just curious, you know, has, has the pipeline. I guess, with the, the market dynamics, has the pipeline, have you seen continued increases in the pipeline just as maybe this, this pushes more partners to you? Maybe as you go through these negotiations, I guess, how, how is your pricing power? Are, are you seeing the competitive landscape heat up, and, and maybe you're having to concede more, or just given your dominance in this space and, and your reputation, are, are you able to kinda defend that in these negotiations?

Damian Kozlowski (CEO)

You have to remember, we're fairly a small piece of the pie when you're talking about when we're in negotiations, it's not like we're 50% of their cost structure. You know, and it's something that you can't mess up. You have to be right all the time, and you have to have a profile now, especially with regulatory scrutiny, where they're sure that they're not gonna have a problem on the regulatory issues. You know, that's, that's the main reason. We say no to a lot of smaller business that are going to Banking as a Service providers because they don't have the scale, and they don't have the sophistication. We're only dealing with the large players in the industry.

I think we see almost all the, the large engagements out there and talk to people about them. They're, they're names that you would know. The ones that we don't have, we've been in- probably been in discussions with, and those are potentially some of the programs that will be joining our ecosystem, which we will announce, but we obviously can't do that now. Our pipeline is very consistent with our ideology of only servicing those larger, sophisticated clients that are broadening their product sets. We're doing very little startup or Banking as a Service business, and that really supports, you know, ramping up quickly. Some of- in the past, maybe five, seven years ago, we had much more of that type of business.

Chime, for example, was in its infancy at the time, and that was kind of our portfolio, though we do have healthcare and government cards and everything back then, too. Then we also had a large general purpose reloadable platform, which has gone away across the industry. Now it's converted themselves into the large major players that want product expansion or security in execution or regulatory confidence, where we clearly have an expertise in. All that together has really played into all the investments we're making or have made in building this very unique, very robust, very forward-looking ecosystem for the payments industry, and we're continuing to invest in it. We're focusing on the biggest players with the most sophisticated, complex needs, who wanna really change and grow their client relationships.

David Feaster (Director)

Okay. That's a good color. Then, and then last one, maybe just touching on the expense front and, and to your point on, on the, you know, investments that you've made. I'm just curious how you think about the expense run rate. It sounds like this, you know, the expense run rate may be relatively sticky, just given the new hires. Is that fully reflected in here? How do you think about hiring and investments going forward? Then we talked about last quarter, I think, it, the efficiency ratio maybe dipping below 40%. Is that still in the cards from your perspective as you look forward?

Damian Kozlowski (CEO)

Absolutely. We've built into the cost structure from we knew that we were gonna have significant revenue increases this year because we had to take a position on the yield curve, obviously, and we set the balance sheet purposely to benefit from it. We looked into this year and said, "We're gonna make investments." Our number of people are up about 7%. And we're, we're able we've had very low attrition, and we're able to recruit great people, and we're gonna take advantage. You know, there's a little dislocation, obviously, in the banking industry, so we're taking a little bit of advantage of that to make sure we set the cost structure up for, you know, the next couple of years so that we don't have big increases. All the increases you see are. We're still getting efficiencies on the operating level.

All the increases are people. That's the big determinant in being able to innovate. If you look, year-over-year, we have about, I'd say, $3 million that really aren't run rate expenses. When you see that increase the mid-20s% in employee costs. There's a couple categories there where it's not really like. First of all, we don't have the same origination, so we can't There's about $1 million of capital costs. You could capitalize the costs of origination that aren't in this year, over year, over year. We have about $2 million. Some of it is because of the proportion we pay in cash bonus versus equity is higher this year, and we had some severance. There's about $3 million that really isn't built-in cost structure in this quarter.

When you look year-over-year, you see 17% total, you see mid-20s% in the employee cost. The employee cost is really a little bit less. Having said that, next year, we've built into this, knowing about this, you know, once-in-a-lifetime interest rate increase. We're trying to set ourselves up so that we have everything in place, the people, the project list, and everything, so we know what we're gonna build over the next couple of years, so that our cost structure doesn't rise in the same way that it would during this, you know, historic rise in revenue here.

David Feaster (Director)

Kind of front-running the expenses and investing on the front end and should start seeing the operating leverage maybe start coming next year and really going forward after that.

Damian Kozlowski (CEO)

Yeah, we're just not gonna grow the employee cost that I mean, we've really invested in employees here. Once again, you look at the operating expenses, they haven't gone up. You look on the, you know, other operating expenses, they're flat. I think they're actually down this, this quarter versus last year. It's all the, the real determination of innovation and being able to grow this franchise and really setting ourselves up for the next five years is gonna be not, you know, determined with all the capabilities and platform and architecture we've built, but we have to have the best people in the industry, and we have to pay them well.

We're setting ourselves up to not have to experience the year-over-year increases over the next few years, but to have those people in place to make sure that we can guide the company forward.

David Feaster (Director)

Yeah, that's helpful. Thank you.

Operator (participant)

Ladies and gentlemen, once again, if you would like to ask a question, please press star 1 now. Your next question will come from Michael Perito at KBW. Please go ahead.

Michael Perito (Managing Director)

Hey, guys. Good morning.

Damian Kozlowski (CEO)

Good morning, Mike.

Michael Perito (Managing Director)

Thanks for taking my questions. Appreciate the call this morning. You guys covered a lot of it. Just a couple follow-ups. Just on the as we think about the balance sheet, you know, with the SBLOC loans kind of taking a step down here, and, and, you know, possibly being in this higher-for-longer rate environment, you know, how do you guys think about other areas maybe to add on the loan portfolio side? I mean, are, are we getting closer to maybe, you know, kind of credit products taking up a little bit of that baton and, and starting to represent a portion of the loan portfolio?

Did you guys look at maybe any other kind of lower-risk verticals that are tangible to, to what you guys do because of all the disruption, whether it's like capital call, lines of fund finance, any of that? Just kind of curious how you're thinking about it, if there's maybe room to add another layer or two to the loan portfolio to help you guys kind of hold those balances as, you know, one bucket might move up or down.

Damian Kozlowski (CEO)

It's interesting you brought up capital call because we've done, the people who run the company have done a lot of that in the past and other lives. It's interesting you bring that up. No. We need the room. If you look at, we're very constrained on the balance sheet, and we need to put in fixed rate securities for liquidity and other reasons, right? To lock in-

Michael Perito (Managing Director)

Okay

Damian Kozlowski (CEO)

Profitability over the next 12 months, right? We want to flip from this very variable rate balance sheet to the majority being fixed. We're probably not going to add a traditional vertical, though we have product expansion. We've had some product expansion, institutional and commercial. We're not gonna get out of our box in real estate, most likely, of these transitional loans that we're doing of apartments in red and purple states that are really work force housing. We're not gonna get out of that space in a meaningful way. Where we will put on credit exposure is in credit sponsorship. We don't know how big a part-- I mean, that could be, in five years, 25% or 30% of our entire $10 billion Reg II limit.

That's where a lot of the product development is happening. That's where it's gonna soak up some of the liquidity. Once again, we're, we're in a extremely good liquidity position right now. We're not worried about the runoff and the SBLOC. That's our lowest coupon book, and that goes into Fed funds, and we need a bunch of cash in order to buy fixed-rate assets. We're not, we're not worried about it. You know, we've looked at everything across the board. We understand the credit universe very well, even, you know, the more esoteric areas like leverage finance and everything. We're very familiar what we could do, but I don't think when I talk to investors, that's what they really want us to do.

We have an extremely low risk credit profile, very short duration, very, very low default rates with very high recovery rates. The story here is, is our funding source, our Fintech Solutions business, and how we're gonna manage our business as more of a technology company as we hit $10 billion. That's the, that's the story that's gonna really supersize investor value, plus with our high capital returns, rigorously returning that capital through buybacks over the next five years. That's, that's the formula, that's where we're concentrated, and that's where we think the most value is. We're, we're, we're not a traditional bank. We're not gonna be growing our assets to $50 billion. We're focused on uniqueness and low, low event risk.

I mean, in almost a religious way, we do not want to expose these type of returns to any type of credit risk that we think might have an exogenous shock if we have, you know, a substantial change in economics going forward due to interest rates.

Michael Perito (Managing Director)

No, that, that, that all makes perfect sense, Damian. That was, that was kind of why I mentioned the areas I mentioned. I mean, obviously, I totally agree, you don't wanna add credit noise to, to an otherwise, you know, fairly clean credit story. That, so that makes sense. Maybe a follow-up, and you kind of mentioned it, but just I think to Dave's Feaster's question earlier, you were talking about product expansion and, and, can you maybe get a little bit more specific about the products that you're looking at? Like, are we talking about point-of-sale finance solutions? Are we talking about, like, earned wage access or early wage access? Are we talking about, you know, maybe other like credit card or, or credit builder-type products?

Just, just curious what you guys are working on internally that, that your clients are looking to expand, you know, beyond kind of the debit card solutions that, that you're offering today?

Damian Kozlowski (CEO)

That's exactly right. Those are the categories. You know, things like building people's ability to access the financial system are very important for the client sets of our neobanks especially. They want tools. Those. I think everyone's recognized that the life cycle and being the lead bank in the life cycle, personally of a consumer, is where you wanna be. As they grow their portfolio financially, you wanna be with them and provide them tools. Those are exactly right. Those are the areas where there's need building across the spectrum. I mean, we were the, one of the first, obviously, that did, you know, a couple of days early to get paid. That, that's a The Bancorp innovation with our partners.

The things like overdrafts, being free, and limited, of course, not endless. You know, giving those tools are very important innovations that were, you know, some of those that came with our partnerships from our, from our larger neobank partners. You know, we, we wanna be there for. We, I think we've got a very good meeting of the minds between our partners and us. I mean, we've set ourselves up to try to help more than our the banking and service providers. We're constantly in discussions across the board with our partners around looking at their product frameworks of where they wanna go. That gives us incredible clarity as to what we need to build additionally to help them innovate.

It's all around the- for the neobank, mostly around the consumer, their life cycle of wealth, adding tools that helps them, and that also increases the, our partner's profitability, so it's a win-win. Then on top of that, we have all these other verticals in healthcare and government. There's all these are expanding, and then we have big new wins, like in corporate payments, where it's way above expectations. You know, that's an area where we got into in a big way last year, and it's really exceeded our expectations.

You know, it's, it's very broad-based, it's very focused on what our partners want, and that's why we're investing in order to build the capabilities necessary to translate their ideas into real go-to-market products that are safe and sound, and will add to the profitability of both the client and the business partner over time.

Michael Perito (Managing Director)

Perfect. Thanks, thanks for the call, Damian, appreciate you taking my question.

Damian Kozlowski (CEO)

Thank you.

Operator (participant)

There are no further questions on the phone line, so I will turn the conference back to Damian Kozlowski for any closing remarks.

Damian Kozlowski (CEO)

Thank you, operator. Thank you everyone for joining us today. Appreciate your involvement in our earnings call. Operator, you can disconnect the call.

Operator (participant)

Thank you, sir. Ladies and gentlemen, this does conclude your conference call for this morning. We would like to thank you all for participating and ask that you please disconnect your lines.