Good day, and welcome to the Third Quarter 2018 Byline Bancorp Earnings Conference Call and Webcast. [Operator Instructions] Please note, today's event is being recorded. And with that, I'd like to turn the conference over to Ms. Allyson Pooley with Financial Profiles. Please go ahead.

Thank you, Brian, and good morning to everyone, and thank you for joining us today for the Byline Bancorp Third Quarter 2018 Earnings Call. We will be using a slide presentation as part of our discussion this morning. Please visit the Events and Presentations page of Byline's Investor Relations website for access to the presentation. Before we begin, I would like to remind you this conference call contains forward-looking statements with respect to the future performance and financial condition of Byline Bancorp that involves risks and uncertainties. Various factors could cause actual results to be materially different from future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the website. The company disclaims any obligation to update any forward-looking statements made during the call. Management may refer to non-GAAP measures, which are intended to supplement, but not substitute, the most directly comparable GAAP measure. The press release, also available on the website, contains the financial and other quantitative information to be discussed today as well as the reconciliation of the GAAP to non-GAAP measures. And with that, I'll turn the call over to Alberto.

Thank you, Allyson. Good morning, and thank you for participating in our third quarter earnings call. Joining me today are Lindsay Corby, our CFO; and Tim Hadro, our Chief Credit Officer. As is our practice, I'll begin by providing you with an overview of our performance and key highlights for the quarter, then pass the call over to Lindsay, who will cover our financial results in more detail. Following that, I will discuss our acquisition of Oak Park River Forest Bankshares, and then we'll open the call for questions. I would like to start the call by thanking our customers for their business and our employees for their hard work. We were certainly busy this quarter and our results would not be possible without the effort put forth by our employees, covering those who originate business and take care of customers on a daily basis to those working hard on our integration project. We're pleased to report that our performance for the third quarter was strong and reflects the continued execution of our strategy encompassing organic growth, improvements in our operating performance and executing on M&A transactions that are consistent with our criteria. Net income came in at $14.5 million or $0.39 per diluted share, which included certain merger-related and core system conversion expenses impacting our earnings by about $0.01 this quarter. Our earnings for the quarter represent the highest level of earnings since becoming a public company last year and show the progress we've made towards reaching our profitability targets. On an adjusted basis, pretax pre-provision ROA was 2.17% in the quarter, an increase from 191 basis points last quarter and 159 basis points from a year ago. ROA came in at 120 basis points and ROTCE was 13.81%. These results reflect the positive impact of the First Evanston…

Thank you, Alberto. Good morning, everyone. I will start on Slide 4, with a review of our loan and lease portfolio. Our total loans and leases held for investment were $3.46 billion at September 30, a net increase of $107 million from the end of the prior quarter. Our originated loan portfolio increased approximately $261 million net. This increase was offset by a decline of $154 million in our acquired portfolio. As Alberto mentioned, our payoffs were higher in the third quarter, with approximately $98 million in payoff compared to $53 million in the prior quarter. Moving on to deposits on Slide 5. Our total deposits increased $96 million to $3.74 billion at September 30. We saw the strongest growth in our interest-bearing checking, money market and time deposits. This was offset by an $18 million decline in noninterest-bearing demand deposits, which was attributed to our outflows from commercial customers whose balances fluctuated from quarter-to-quarter. Quarter-to-date average and quarter-end noninterest-bearing deposits were steady at $1.2 billion. Moving to Slide 6, I'll discuss our net interest income and margin. Our net interest income increased by $13.5 million due to the full quarter impact of First Evanston as well as the organic loan growth generated during the quarter. Yields and earning assets expanded 40 basis points from 509 basis points to 549 basis points, which was moderately muted by a 12-basis point increase in our cost of deposits, driving the 30 basis point increase in our net interest margin from 4.43% to 4.73%. The expansion in the yields on earning assets and conversely, the increase in the cost of deposits, was primarily due to the full quarter impact of First Evanston. Organic loan growth generated in the quarter also contributed to expanded earning asset yields. We saw slight increase in the average…

Thank you, Lindsay. We are very excited about the news we shared with you last week regarding the signing of a definitive agreement with Community Bank of Oak Park River Forest Bankshares. Moving to Slide 11, Community Bank has $325 million in assets and serves 2 attractive markets west of the city of Chicago in Oak Park and River Forest. It is the only community bank operating in these markets, which has helped it to build an attractive customer base with a high-quality core deposit franchise. We've not had a presence in Oak Park and River Forest with this level of scale, and we're very excited to enter these markets and partner with the Community Bank team, which we've known and have had a relationship with for a long time. We believe the transaction is an attractive one for our shareholders. We're adding $293 million in high-quality deposits, with 29% in DDAs, in a market that is complementary to our footprint. We get to partner with a terrific group of people and are able to execute it at very attractive financial terms. Moving on to Slide 12. Here you have an overview of the bank and how it fits well within the rest of the Byline franchise. If move over to Slide 13, you have additional detail on the deposit base and the performance of those deposits since the start of the current rate cycle. And in Slide 14, you have a snapshot of the pro forma impact for their loans and deposits when you combine them with ours. Wrapping up on Slide 15, the total consideration at the date of announcement was $42 million, which represents 1.6x Community Bank's tangible common equity, and more importantly, a 6.1% core deposit premium. We expect the cost saves to be approximately 40% of Community Bank's expense base, with 50% of the cost savings phased in during the first year and 100% in year 2. The closing of the transaction is anticipated for the second quarter of 2019. In summary, we're very excited to continue to execute our M&A strategy and further leverage the capital raise in our IPO. Given the size, location and quality of the bank we're acquiring, we view this as a low-risk transaction. But it's a bank that fits very well with our culture and one that can add meaningful value to our franchise. We look forward to welcoming the Community Bank customers, colleagues and new shareholders to Byline. With that, operator, we can open the call for questions.

[Operator Instructions] And today's first question will be from Ebrahim Poonawala with Bank of America Merrill Lynch.

So I guess, just first, if we could talk about, Lindsay, outlook on the margin, both from a core basis, if you can talk to where deposit costs are relative to the promotions you guys are running, and give us some visibility around how to think about accretion income going forward?

So I'll start, EB, in regards to the NIM, and then I'll follow up with deposit cost and then -- and here with accretion. But on core NIM, I really think it's going to be pretty consistent to what you're seeing. Last quarter, we thought it'd be about flat and we were pretty close. We were down 3 basis points. So I think our guidance there is pretty consistent, EB, with what we've been stating. In terms of the deposit cost, what we've been seeing, obviously, you saw a 12 basis point movement in our NIM this quarter, and we are seeing the bulk of the pressure on our NIM coming from the CDs. And so we are seeing competition out in the market regarding the CD promotions that everybody is advertising and the competition remains fierce within the Chicago market. In terms of accretion and our outlook there, I will say that I do believe this quarter was high. We did see some nice acceleration, mainly coming from the First Evanston transaction, this was the first quarter that you really saw the full impact on our margin, with that $8 million number. I think that's the peak and it will be coming down from there. So in terms of scheduled accretion, it's always one thing versus what actually ends up happening. So as much as I'd love to say that I'm going to be precise here, EB, it tends to move. So in terms of scheduled accretion, I'd say for next quarter, it will come down, say, around somewhere in the $5 million range and then keep stair-stepping from there. But again, it moves, EB, and it's never perfect, because if we have payoffs or some noise in there, it can tend to fluctuate.

Okay, that was helpful. And then just switching to loan growth. You mentioned, I guess, some derisking of the balance sheet. Can you talk about just the environment, either on the C&I and CRE side from one, you've mentioned some of the nonbank competitors when you think about credit structures, pricing and within that environment, your ability to grow loan balances organically, like what's the growth rate we should think about?

Sure. So I think, EB, I would say our pipelines are healthy. It's just a function of credit, demand for credit, I would say, is generally good, but supply is probably even slightly better in the sense that there is active competition for high-quality credit. On the C&I side, what we're seeing, primarily from other banks, is just competition on price. We haven't really seen -- there's always something, call it around the edges, as far as structure is concerned. But bank competition has been pretty disciplined on structure, less disciplined, I would say, or more willing to compete, I would say, on the basis of price. To my comments earlier regarding nonbank competition, we are seeing more and more, particularly in our Sponsor business and our CRE business, nonbank lenders becoming -- coming in and really competing on the basis of terms. And largely, not just covenants but advance rates. Much more aggressive advance rate, particularly on the CRE side and just leverage levels on our Sponsor business. To your question as to how does that impact our outlook going forward, I think look, it's -- we're going to be selective. We're definitely not going to chase and compete on the basis of trying to do deals that don't make sense or we consider them irrational from a structure standpoint. So we're very willing to pass or let that business go. And I think what I would say there, EB, is, we're likely to see, or I would expect to see some of that in what Lindsay was saying regarding the choppiness of payoff activity over the next quarter and probably heading into 2019. That being said, I would say, generally speaking, kind of mid-single digit, kind of 5% to 8%, 6% to 8% or so in terms of loan growth seems appropriate.

Got it. And if I can ask one final. So obviously, you guys announced the deal. As you think about, it feels like deposit pricing pressure is picking up for all banks. Is that changing sort of a sense of urgency when you talk to potential sellers around your ability to do deals, and should we expect the possibility of you doing multiple deals at the same time? If you could talk to that.

Well, I think -- you bring up a good point and I think if you look at the example of Community Bank and the transaction that we just announced, obviously, a high-quality deposit base, we feel is good about the quality of that franchise in terms of their deposits, as we did with First Evanston. So that's, first and foremost, that's the first thing we would look at is how does that deposit base look like, what's the composition? What's the customer base like and how does that fit within our franchise? To your second question or to the second point to your question, I think it's fair. Our view is, is you can never have enough deposits and certainly, we want to have strategies in place to grow our deposits organically. Lindsay talked about the campaigns. Lindsay talked about the other -- the competition in the market, and we'll certainly continue to play and continue to do business in the environment. That said, the second part of that organic strategy is really more the relationship-based approach and trying to originate high-quality deposits from typically, our commercial customers and smaller -- small business customers and that continues. With all that said, we obviously compare the cost of raising deposits and doing all of that against the cost of being able to acquire deposits from -- as part of an M&A transaction. And I would say, EB, that's certainly a viable strategy, and I think this was -- the transaction that you just saw was probably -- is probably representative of that.

Next question will be from Nathan Race with Piper Jaffray.

Lindsay, just want to start on expenses. Obviously, you got the full quarter impact from some of the branch consolidations that you guys did earlier in the year and I think the overall number came down relative to what we were thinking last quarter. And I understand it's kind of tough to predict the back half run rate, just given everything you guys had going on last quarter. And obviously, the lower OREO expenses, or the gain in the quarter, helped as well. So just curious how you're kind of thinking about the operating expense run rate into 4Q and 1Q as well?

Thanks, Nate. Yes, that's a great question. In terms of our run rate, I think it was relatively clean from a run rate standpoint. You pointed out OREO and I would say that's one area that was not a true run rate. We did have some OREO sales, we sold about 6 properties during the quarter, and that did result in a net gain, so you see that coming through. So once you normalize that, it's a pretty fair run rate, I think, in terms of the go forward. We will have some expenses flowing through in relation to the acquisition that we just announced, and we will have some conversion-related expenses coming through there as well. But on a core run rate, I think that's a pretty fair estimate there.

Okay, great. And then as we kind of think about the provision from here. Can you kind of just help us understand, the $2 million that you had for the acquired nonimpaired loans in the quarter, is that just a function of the acquired loans renewing and you guys moving those loans into your originated bucket? I guess, I'm just trying to think about what we should expected the provision...

You're spot on. Yes, you're spot on, that's exactly what's going on. So as those loans come out, they do go into the originated. If they're refinancing, that's where they're going.

Okay, so kind of fair to expect the provision to remain somewhere between $5 million and $6 million going forward?

It's a function of loan growth at the end of the day. So again, if we're seeing the loan growth like we did, yes, I'd say that would probably be -- would be a fair estimate. But again, it's just -- it's all -- provision is a function of loan growth and credit quality, at the end of the day, so.

Okay, got it. And then, Alberto, thinking about the transaction in Evanston, just curious if you can give us an update in terms of customer retention, both on the commercial and retail side and just kind of how things are tracking in that geography?

Sure. So far very good, Nate. So in that end, I mean, it's been very good. I think the reception has been very good, we remain very active and very involved. It certainly, and this goes without saying, it certainly helps when your team, your customer-facing team, hasn't changed, lenders and your bankers are focused on serving customers and doing business as opposed to worrying about converting systems with their customers and all of that. So in that regard, I think that has been very, very positive.

Okay, got it. And if I could just sneak one last one in on fees. Wealth management brokerage, that was a new business for you guys, to some extent, with the Evanston transaction. So just curious, Alberto, if you have any updated thoughts on just how you're thinking about that business across the broader franchise?

Well, good question, Nate. And I think it was a capability that we certainly did not have. It was something that if you want to be in, if you -- there's always opportunity, particularly when you have a commercial banking business, in terms of being able to provide wealth management services to the entrepreneurs and business owners that you do business with on the commercial side. And that certainly was a hole in our toolkit, so to speak, that now we have a capability and we have an experienced team there. So that's something that I think would be our intent that we want to capitalize on that and grow that over time.

Today's next question will be from Andrew Liesch with Sandler O'Neill.

Just looking at the expense base further out, I mean, when you get the -- this convert over to First Evanston's system early next year, is there a chance for some more cost savings ahead?

Some more cost savings ahead of...?

You've already reduced the expense base pretty nicely here this quarter, and I mean, I appreciate the comment that this is the run rate, but once you convert to their system, are there more cost saves that you could generate before, I guess, before the next deals come on?

So I think we're pretty consistent in terms of what we've already disclosed with cost savings. We're always looking for opportunities, Andrew, don't get me wrong. We have a good eye on expenses and we're doing our best to manage those expenses. Like I said, you will have conversion expenses and some merger expenses related to training coming through there. So it's going to be a continued focus for us, and we'll continue to work through it. But right now, I think what we've previously disclosed is still fair and consistent.

And if I could add to what Lindsay just said, Andrew, I still think that our guidance regarding kind of like our long-term, longer-term objectives in terms of where we want to operate the bank from an efficiency standpoint and what our targets are, we remain consistent in that. Some of the savings, as we talked about and we have discussed in previous calls, for example, when we consolidated some branches, I think we talked about the fact that we wanted to utilize that to reinvest back into the business and that's still our intent. So just keep that in mind in the sense that our longer-term objectives in terms of profitability and where we want to run the bank, those have not changed.

Yes, and just remember, in terms of 2019, you do have the seasonality. I'd say our largest expense is salaries and benefits, so make sure from a tax standpoint, you're factoring that in, in terms of how you're looking at things. Because you do have an increase in taxes in the beginning of the year.

Okay. And then just on the gain on sale business. I know it can be quite volatile, but I guess, where does this business sit this quarter? What have originations been like? What are you seeing as far as premiums so far?

In terms of the gain on sale, it was lower, obviously, and it was just due to timing, in our view. The pipeline, as Alberto mentioned, is strong and we do believe that going into the fourth quarter, we remain in a good position to have that gain on sale normalize out to what we've seen historically. And then in terms of premiums, I did say in my comments we are seeing some pressure on the premiums. So it's consistent industry-wide and those have come in, I'd say, about 100 basis points or so.

Next question will be from Michael Perito with KBW.

A few more questions. I mean, most of mine have been asked. But a couple -- a high-level question for you, Alberto. I mean, as we look at the quarter, the results were pretty solid, but obviously, some of the -- the accretable yield mainly of 74 basis points, that will come down. But as we look out to '19 and '20, the Oak Park deal will give you a little bit of a refill there, but presumably, that number will continue to come down. And I look at the return profile in the third quarter and it was solid, and I'm just curious how you guys are thinking about it over there as to maintain that earnings profile while you kind of have to battle the headwind of that accretable yield coming down over the next couple of years?

Yes, and I think 2 things. We're seeing with First Evanston, which was a little different than, call it, the accretion experience that we've had with our, call it, the legacy book of accretable yield, so to speak, in that what you saw was -- I think there was a question earlier from Nate, in the sense that to a degree that we're moving assets that were acquired but not impaired and those assets are refinancing and we're doing more business with those customers, and those assets are moving, clearly, we're recognizing accretable yield quicker in that regard than we were with, call it, our legacy book. That said, our legacy book is still there. So there will still be some degree of accretion that will be, call it, more slower is our expectation. So this thing is not, it looks like it's going to go away very, very quickly. I think as Lindsay said in her comments, some of it will go relatively quickly when it means we're moving assets from acquired to more of our standard cost accounting book. But there will still be some level of accretion there that will be more slower. And I think as we've said in previous calls, that probably will be there until we implement CECL out in the 2020 time frame. So just keep that in mind. But your point is well taken, and I think this goes back to, I think, the question, one of the questions that Andrew was asking regarding expenses and how do we want to run the company. And I would just reiterate kind of what our guidance has been in terms of where we want to run the company from an efficiency standpoint and what our longer-term profitability targets are. So those still -- we're still very committed and focused on those targets, but it's -- just keep that in mind, because to a degree that we have declines in revenue coming from lower accretion and obviously, there will be some offset of that in terms of the growth in the book and so forth, but we're very, very focused on maintaining that cost to revenue ratio at a level that's right at or below the targets that we've set forth. So that's how I would kind of give you guidance on that, Mike.

Helpful, Alberto. And I guess, in that light, I mean, as I think about capital deployment, as I'm sure you guys are starting to budget for next year and beyond. Capital levels are still very healthy, obviously, you guys have demonstrated that there is M&A opportunity to take advantage of, but the reality is, at the size range and with your currency, I mean, they're not totally levering your excess capital. And with the new growth outlook in the more 6% to 8% range, it seems like that level of growth, too, will be kind of challenging in terms of levering capital. So I mean, are other deployment strategies starting to be thrown around at the board level at this point? Obviously, the bank group as a whole has had a tough month here. I mean, do share repurchases come in? I know you guys are still fairly recent from the IPO, but as those levels continue to build and the ability to lever through M&A and organic growth alone gets more challenging, I mean, are conversations starting to broaden around that subject?

I think our board always, at the board level, it's a conversation that is not, I would say, cyclical or seasonal. It's a conversation that we have that's predicated on the basis of where we are, what we think the outlook are, what we think the opportunities are going to be and the likelihood on us being able to execute those opportunities. So I'm very, very confident that with respect to that, Mike, those are things that the board takes very seriously and I have -- I think as outlook evolves, I think those are things that obviously get attention and get discussed regularly.

But I guess more specifically, do you guys anticipate any near-term kind of changes or thoughts around that? I mean, I understand it's probably limited what you can say, but just trying to get a sense, because I was kind of factoring in everything we discussed today, it just seems like capital levels are actually probably going build, and I know there's M&A out there, but just trying to get a sense if this is something that could be discussed and thought of next year? Or do you still feel there's enough organic and M&A out there where it's longer term than that?

Yes, Mike, unfortunately, I can't comment on and give you that type of guidance, but I will say that capital management and managing our capital is something that the board takes -- they take that -- our board takes that responsibility very seriously and I think we're -- those considerations, this is not a discussion that, again, is not something that we put off and on and it comes back and it goes on. It's an ongoing conversation based on the opportunity set and the growth that we anticipate in the business and I think I'd just leave it at that.

Okay, understood. And then just one last quick question for Lindsay. Just as we look out to next year, any initial thoughts here with your tax rate? It's moved around a little bit this year. I'm just curious if you can provide any guidance on what you're thinking that could look like in 2019?

Yes, nothing's changed right now, Mike. I think we gave the guidance originally at the 27% to 29% and we still feel comfortable on that range right now.

[Operator Instructions] And the next question will be from Brian Martin with FIG Partners.

Just one question, going back to the expenses, Lindsay, I guess just on the previous question. Just the percentage of expense savings already realized on First Evanston? Because the conversion is not done yet. I guess, can you give us an idea of where you're at as far as what you've realized?

Correct, correct. Yes, I think it's hard to give you an exact number, but when you look at the run rate, we think we're about halfway when you look at the run rate. So again, it's not perfect science and it's hard to really quantify, because their numbers are now completely integrated into ours. So it's hard to give you an exact percentage, Brian, but I think about half there.

Okay. And the full savings should be seen by in the second quarter numbers, is that fair to think about, with the conversion first quarter?

Brian, can you repeat the question? Sorry, there is some construction going on below us.

Yes, no problem. Yes, I was going to say, does the full run rate of the savings should be seen in the second quarter next year?

In the -- I would say in the latter half, Brian. I apologize for the background noise. In the latter half of the year, so starting third and fourth quarter.

Okay, perfect. And then just the other things, the accretion, Lindsay, the breakdown between First Evanston and legacy, can you give any parameters around that, where that was? I mean, was the legacy pretty consistent where it had been running and the differential is First Evanston or any thought on how to think about that?

So the legacy, Brian, if you look back at Q1, it was about $2 million in terms of net accretion and legacy is pretty consistent. And I think you saw that over our first year of being public that, that legacy piece continued to plod along and slowly come down over time, but is more consistent. But I'd say if you use that as your bogey and back into, kind of, what First Evanston is, I think that's a pretty fair way to do it.

Okay, all right. And then just going back to the capital question. With the Oak Park deal announced, can you guys just characterize the opportunities in the market today? Just is, has there been a pickup in deals being shown out there? Or is it pretty much the same as it's been? I mean, I know you guys are interested and would look at doing other deals opportunistically, but just the pace of opportunities in the market today, has there been any change in what you guys are seeing?

I think it's been -- so I'll answer it this way, Brian, I think up until the Oak Park transaction, I think conversations had been, conversations and talk regarding M&A, had been pretty consistent, frankly. More recently, and this is I would say nothing more than, it's probably nothing more than just due to the fact that there's -- the recency of a transaction and an announcement, but usually, you do see an uptick in calls when you announce something, because whether it be bankers or whether it be people that you know reaching out and inquiring to see if you have any interest in a particular opportunity or talk about a particular opportunity. But I would not characterize that as unusual. And I would expect that to subside here as time passes. That said, I think the environment remains consistent in terms of activity and discussions. So I would say about the same.

Okay. And I guess it seems, Alberto, maybe I'm reading it wrong, that maybe you're, you guys sounds a little bit -- maybe it's wrong and you can clarify -- just a little bit more conservative on or cautious on loan growth. I guess it sounds like in the release, you guys talked about the payoffs being up a little bit this quarter and then you're also being selective in what you looking at, but you've put up a very strong quarter. But kind of the guide seems as though it's more mid-single digit. So just trying to kind of reconcile, is it -- am I missing something there? Or just the growth this quarter was -- maybe it was just a particularly strong quarter and -- but you did talk about the payoffs being up, albeit lower than they were a year ago. So just kind of trying to put that together. Any thoughts you have would be helpful.

Sure. Well, I mean, I think if you look at the last 2 quarters, those were 2 very good quarters. The second quarter was a very, very good quarter in terms of loan growth and certainly, I would say the third quarter as well. If you look at gross origination activity, I think it was healthy. I think as we've discussed in the past, the variable that's hard to predict tends to be payoff activity, unexpected payoff activity. I think -- so I would just start with that. The second piece is, I think the last quarter, we guided more or less to a range and I think the numbers I used were 6% to 8%. And I think that's consistent with our views at this point in time. I think the -- maybe the comment that we made regarding just the competitive nature of the market and what we're seeing from a pricing standpoint, as well as a structure standpoint, I think that just highlights the fact that we are selective. We're not going to chase transactions down and take on structures that from a credit standpoint, we don't feel comfortable with. And therefore, we may be willing to pass or let some of those transactions go, and that may result in payoffs. I don't have anything specific. It's just a view that when the market gets competitive this way, from the standpoint of both pricing and credit, I just think that it's important for us to remain disciplined and not do transactions that either don't compensate us properly for the risk that we take or from a structure standpoint, we're taking undue risk. So I think that's essentially what we meant with the comments.

Okay, that's helpful. And just the last one, if I can sneak in. Just, you guys -- Lindsay, you talked about the premiums coming down on the government-guaranteed stuff a little bit, I guess, is your expectation, it sounds like volumes in the pipelines are good, that even if the premiums stay a bit lower, that you can still grow that business in '19?

Absolutely. Absolutely, correct, no doubt. It's a great business, it is higher-risk, higher-return business. And we have a great team of people there that are continuing to execute on our plans.

To add to what Lindsay said, we're committed to the business for the long term. We have a great team. We have a dedicated team that's focused on the government-guaranteed lending business and there are cycles. And premiums have been exceptionally good for a long period of time. We saw a slight decrease in premiums. That said, it's still a very attractive business. But I'm just trying to give you guys some color in terms of how we think about this business. To the degree that premiums were to decline to levels where perhaps it makes more sense for us to use our balance sheet and keep loans and portfolios, opposed to selling the guaranteed portion, we will look to do that. I don't think we're at that point yet, particularly for longer-term loans. But if at some point premiums get down to levels where it makes economic sense for us to retain them on the balance sheet, because we can earn more from the carry of those loans for the projected period of time that they are going to be on the books for, then that's something that we will do. So maybe that gives you some color longer term in terms of how we think about that business.

At this time, this will conclude today's question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

I think we've covered it. So I would like to thank you, once again, for participating in the call this morning, and we look forward to talking to you next quarter. Thank you.

The conference has now concluded. We want to thank you for attending today's presentation. At this time, you may now disconnect.