GNTY (2021 - Q3)

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00:03 Good morning. Welcome to Guaranty Bancshares’ Third Quarter twenty twenty one Earnings Call. My name is Nona Branch, and I will be your operator for today’s call. I want to remind everyone that this call is being recorded. After our prepared remarks, there will be a Q&A session. 00:23 Our host for today's call will be Ty Abston, Chairman and Chief Executive Officer of the company; Cappy Payne, Senior Executive Vice President and Chief Financial Officer; Shalene Jacobson, Executive Vice President and Chief Risk Officer. 00:40 To begin our call, I will now turn it over to our CEO, Ty Abston.

00:47 Thank you, Nona. Good morning, everyone. I too want to welcome you to Guaranty Bancshares third quarter earnings call. As all of you -- or some of you, I'm sure probably read our press release. We had a good quarter. One, we're very proud of. We continue to be very optimistic about the strength we're seeing in the Texas economy and the strength we're seeing in our bank and our footprint and our business model. We are starting to plan for twenty twenty two and have that same confidence as we go into next year and feel like that our state is set up to do really well and our bank in particular with our footprint throughout the state to set up do really well. 01:28 I'll turn it over to Cappy, who is going to kind of go over with some of the highlights, and then we will go through some of the things we want to present to you and do a Q&A at the end. Cappy?

01:37 Thank you, Ty. If you all are joined us by Zoom, you'll see our quarterly highlights on the screen. Let me just -- I'll recap some of the main points both on the balance sheet and the income statement. We did finish Q3 with total assets of two point nine seven billion, slight increase of about thirty five million dollars for the quarter. And then in comparing, where we were a year ago, assets were up about three hundred and six million year-over-year, so that's about eleven point five percent increase. 02:12 Our average cash and cash equivalents which mainly is Fed funds did decline this quarter, approximately fifteen million. Cash continues to remain elevated. We've talked about this in prior quarters and as compared to -- I guess our historic normal levels, it still remains elevated and probably a drag on our NIM, our net interest margin of approximately twenty, twenty two basis points. So, I think that we'll continue to stay elevated for a while and then probably return something closer to our historic levels. 02:52 Gross loans then, a net of PPP and our loans held for sale increased to one hundred and thirty two point eight billion for the quarter, a really nice increase and that's also one hundred and sixty eight point six million dollars year-to-date. So, for three quarters, that's a ten percent increase annualized, that's -- if you annualize all those three quarters about a thirteen percent, fourteen percent increase with really Q3 being a big driver of that with one hundred and thirty three million dollars increase. Shalene, will talk about some of the PPP activity, of course, all this is net of PPP, when you look at the total loan -- loans outstanding. 03:39 Our loan growth -- I think we've talked about this in the earnings release, our loan growth is internally generated. It's coming mainly from our Central Texas market, as well as our Houston MSA and even some of the markets in the DFW are really showing nice increases. But actually, if you look at and we've talked about this in prior quarters, we do break down our markets into four regions and all four of our regions showed an increase in loan balances for Q3. 04:16 We continue to have a strong pipeline and we'll talk a little bit about that. And we did see the payoffs and pay downs, which have been pretty elevated over the last couple of quarters, decreased a little bit in Q3. So that was -- good to show that and part of that net growth that we're talking about. We did have a shift in average earning assets showed an increase in loans obviously with this growth and even an increase in securities during the quarter. And then co-relating decrease in our Fed funds which obviously helped maintain our net interest margin, as well as show and I think we should -- a little bit, but we showed a decrease again in our cost of funds. 05:01 In the security section though, you'll do -- you will see that we moved some of our securities into held for sale -- held to maturity out of available for sale. And that was due really just to capture some of that unrealized gain, just to move for -- I guess, for accounting purposes more than anything, mainly although all those were -- are municipal securities. 05:29 Then on the liability side, our deposit showed another increase for the quarter about thirty million. We're now showing year-to-date increase in deposits just right at two hundred and seventy seven million dollars for the three quarters. About one hundred and ninety five million dollars of that is in non-interest bearing, so that's a good portion of that, the growth is really onboarding new relationship accounts in our DDAs, that's about seventy percent of our growth coming in the DDA non-interest bearing check and account balances and really, we continue to have an elevated balance of those and our total deposit. So year-to-date, they've averaged about thirty six percent of our total deposits that being in our non-interest bearing section. 06:27 Then looking at that capital account. Our shareholders equity was two hundred and ninety seven million dollars at quarter end, that's a growth of about nine point seven million dollars for the quarter, and twenty four point eight million year-to-date. Again, we did not buyback any stock during the quarter and we again paid a zero point two zero dollars dividend to shareholders. So annualized out the dividend is eight zero dollars that's paying out about twenty four percent of our earnings per share and at current stock price, that's about a two point two percent yield. 07:07 And looking at the income statement, we as -- Ty has already mentioned, we had another really good quarter in our earnings. Our net earnings for Q3 were nine point three million dollars that's zero point seventy seven dollars per earnings per basic share or zero point seventy six dollars earnings per share fully diluted. And as compared to linked quarter, net earnings were ten point four million dollars or zero point eighty seven dollars per basic share. 07:37 For Q3 that gets us to a return on average assets of one point two four percent and our return on average equity twelve point four four percent. So, again, this quarter, as I think we've done in the past, I don't know, five or six quarters, we provide some additional tables in our earnings release, so you can see how we highlight our net core earnings which we define in our press release has being our earnings before any credit provision or release, which we've done in the last couple of quarters and before income tax and then also before PPP effects. 08:21 So, our net core earnings for the quarter were nine point seven million dollars that's zero point eighty seven dollars earnings per basic share and that's compared to linked quarter of nine point eight million dollars, which is also zero point eighty one dollars per basic share. Our margin was very steady for the quarter, came in at three point four zero percent for Q3, compared to three point four four percent for Q2. And if you ex-out PPP, which again, we provided a table in the earnings release, our NIM was three point three nine percent for Q3 compared to three point three eight percent for Q2, so really just very steady in the NIM. 09:07 Our loan yields when you ex-out PPP, did decline. They were showing four point seven three percent in Q3 compared to four point eight two percent in Q2. I guess the offset to that or the positive note is the increase in our loan balances is -- loan balance increased obviously, our interest income haven’t come out of Fed funds at earning a much lower yield. 09:36 And, our cost of interest bearing deposits decreased again this quarter. They were thirty three basis points in Q3. That's down four basis points from Q2 and when we add back our add-in or include our non-interest bearing balances, our total cost of deposits was twenty two basis points for Q3 compared to twenty four basis points in Q2. And if you look back a year ago in Q3 of twenty twenty, that figure was forty one basis points. So, we've had a good opportunity to maintain a level of cost of deposits that are appropriate and pretty cost of peer. 10:20 Looking at our non-interest income. We did show an increase in Q3 of four hundred and seventy nine thousand that's eight percent. Biggest part of that driver was a gain on sale of loans, that was up five hundred and fifteen thousand and that was both increase in mortgage volume and SBA activity from the linked quarter. SBA did add about two-thirds of that increase and mortgage was the other third. So mortgage activity, which was significantly higher in twenty twenty is down some about twelve percent year-over-year. So obviously we did project the decrease in mortgage activity and it's been twelve percent is -- I think we had about a fifteen percent decrease projection. So we're in line with that what we thought. 11:16 And our service charge income volume, you'll see and there is really kind of return to a pre-pandemic level and with adding the accounts, the relationships I talked about on our DDA. I think that trend will certainly be maintained and probably increasing from here. 11:33 You'll notice in the release, the detail, our debit card income was less. Actually, our debit card volume did increase during the quarter slightly. But in Q2, we had an extraordinary annual bonus paid from our Visa Mastercard contract of two hundred and fifty thousand. So, it did show a decrease in total income for our Q3 compared to Q2, but that was the reason. 12:02 Then, on our non-interest expenses, they did increase one point six million, with detail in the press release, just under eight hundred thousand that came in salary and benefits. I think we will see an increase in salary or this level increase in salary over the future quarters, no doubt, as pay scales are being adjusted somewhat. We did increase -- we talked about in the press release some of our benefits, health insurance payments due to some higher claims, and we had projected and then also, benefits of payroll tax and [indiscernible] payments related to our [indiscernible] that we paid this quarter that was related to the first half of the year. 12:52 We did make a note in there. We did have a non-recurring transaction of a termination fee on payment of four hundred and thirty four thousand on our two unwind -- two of the two swaps that we had on our trust preferred. This termination fee actually charges about zero point zero three dollars per share to the quarter earnings. And it will save us interest immediately going forward, right at two hundred thousand dollars a year and decreased earnings on those trust preferred or the swaps right those stress preferred for the next two point five years. So I do think our annual expense run rate will be up some probably in the seventy four million dollars. There is seventy five million dollars per year annual expense run rate. 13:43 And then our efficiency ratio showing sixty four percent ex-out PPP is sixty six point five percent. We do maintain our twenty two efficiency ratio goal up right in sixty two percent range. 13:59 So with that, I'll turn it over to Shalene, and she'll talk about COVID response.

14:08 Thanks, Cappy. Thankfully, it appears that COVID and the Delta surge is slowing down quite a bit here in Texas with pure hospitalizations and more and more people getting vaccination statewide, so we're happy to see that. All of our locations are opened and our employees are back in their offices and branches. Although, we have rolled out every network policy for physicians that are conducive to that type of arrangements, so that we can provide certain of our employees with some more flexibility when needed. 14:43 At the end of last quarter, we had seven hospitality loans that remains on an interest only deferral. Because of COVID, all seven of those, who have returned to their contractual payment schedules and our current. We also had a good quarter for loan forgiveness under both PPP round one and two. With PPP round one, there was loans originated back in twenty twenty, we've only got about four million dollars to one hundred and nine borrowers left under that round. 15:16 And then PPP round two, which originated earlier this year, we've got seventy one point four million to six hundred and sixty four borrowers left. So as a percent of total dollars, we've had ninety eight point one percent of PPP around one forgiven, and we've had just under thirty percent PPP round two forgiven so far. 15:40 We have a little over one point eight million dollars in deferred origination income that's left to be recognized. And we think that about half of that will be recognized during the fourth quarter, and then hopefully the remainder in twenty twenty two. 15:55 In terms of PPP success and new customers, several of you have ask some questions about this. And we'll have some information about it in our 10-Q. But we had a little over eight hundred and eighty brand new relationships as a result of PPP. We asked our loan officers to get through those and really try and gauge how many of those eight hundred and eight will result in a more long term thinking relationship and they felt like about half of those or maybe a little less than half will actually have already opened other types of banking relationships or will have the potential to do so in the near future, so we're excited about that, that growth as result of the PPP program as well. 16:44 So now, I will turn it over to Ty to talk about the loan portfolio.

16:49 Thanks, Shalene. So as we've outlined and mentioned our loan portfolio remains strong, the asset quality, the bank remains strong, our non-performing asset ratio is I believe, twelve basis points, which is pretty phenomenal. We continue to have about two-thirds of our loans that have rate floors which has helped us kind of defend the rate. Like all banks, our bank will benefit with more normalized rate environment, which we're expecting to see. But in the interim, we think we've been able to defend our NIM and our yields are pretty well through this cycle. 17:25 Our asset quality not only strong today, but we look at down the road in the future and different parts of the economic credit cycle. And so with that, we continue to maintain strong underwriting discipline. We continue to look at lot of credit opportunities that either we pass on, or we miss because of either pricing and/or structure that we want that have in place. So while we're seeing good growth in all four of our regions, as we've mentioned. We're doing that with continued strong credit underwriting and plan to continue that. 18:05 As Cappy mentioned, while we've had growth in all four of our regions, which we're very proud of and feel optimistic about, the majority of that this quarter was in the Austin Houston regions. The DFW region had good growth. We had some pay downs of debt at region in Q3 that kind of met the number downward was in the strong growth. But in East Texas region, we had growth and I've mentioned in prior quarters, we continue to see a lot of strong growth in East Texas region from companies and individuals that are relocating in some of the smaller markets that they may not have necessarily relocate in prior to COVID. So we remain pretty optimistic about that our state. As I've said is strong. The business environment is strong. We're -- it's a very strong business climate and we continue to see not only current business is doing well, but business is moving into the Texas market from different parts of the country, which is very encouraging. 19:06 Shalene, I think is going to outline a little bit of ACL provision for the quarter.

19:15 Yes. We did have a seven hundred thousand dollar reverse provision during the quarter, which was primarily due to continuing to unwind our COVID specific key factor, which I've mentioned before on prior calls. Although, we're being very cautious and fully unwinding that and the timing of that as we continue to watch the economy now that many of the economic stimulus programs are coming to an end for consumers and small businesses. I want to make sure we are fully reserved for those types of risks. 19:52 And in the third quarter, our allowance for credit losses as a percentage of total loans was one point five five percent and excluding the PPP loans was one point six two percent. So we still have a pretty strong reserve in place that we feel comfortable with going forward. 20:12 So that's all we have in our prepared remarks today. I'll turn it over to Nona for some Q&A.

20:20 Thank you, Shalene. As she stated that it’s time for our Q&A. [Operator Instructions] So our first call today will be from Brad Milsaps with Piper Sandler. And Brad, you should be able to unmute your line.

20:49 Thanks, Nona. Am I coming through?

20:51 Yes, sir.

20:52 All right. Great. Hey, guys. Nice quarter. Just kind of wanted to follow-up on some of the new loan generation. Just kind of curious, where new loans are coming on the books relative to the current book yield?

21:05 Hey Brad, this is Ty. They're coming a little bit lower than the current book yield. I think Shalene probably has exact rates, but within twenty five, thirty basis points, I believe is kind of where we're trying to maintain them. And that's part of what I was saying with kind of underlying discipline, part of that's a credit underwriting discipline but also pricing discipline. And while we're being competitive and aggressive certainly on very strong credits, we're not hitting in the rates that we don't think we'll be come with long term. So we're managing that piece of it as we are also manage to grow the loan book. So they’re – Brad, they're coming in around four four in a quarter, which is very consistent with what the Q2 two numbers were.

21:55 Okay, great. And Cappy, I appreciate the disclosure around the loan floors in the slide deck. Ty, I know you mentioned that, you guys will benefit if we do get a change in the short in the curve, I was curious if you might be able to quantify that a little bit more I would seem, based on where your loan floors are, you might need at least seventy five or one hundred basis points from the fed to see a lot of the book move, but just kind of curious we do get say fifty kind of what you would see the impact of that being on your net interest margin?

22:31 So Brad you're right, it would be seventy five to one hundred before we’d be material. In the fifty basis points, I think we see some improvement just nothing else just the rate sense of side of the balance sheet, but it would be seventy five to hundred to actually see a material improvement. But anything that just toward a more normalize rate environment is a net positive for sure.

22:58 Okay, great. I'll hop back in the queue. Thank you, guys.

23:00 Thanks, Brad.

23:01 Thanks, Brad.

23:09 Okay. Our next call will be from Michael Rose with Raymond James. Michael, you should be able to unmute.

23:17 Great. Can you hear me?

23:19 Yes sir.

23:20 How are you? Hi. Just wanted to delve into this quarter's loan growth that it was really strong, if I look kid of ex PPP, ex warehouse about thirty percent annualized. You guys are running about eleven point five percent year to date. You previously talked about a mid-single digits with the potential for a high-single digit, but based on kind of good pipeline commentary, pay down slowing a little bit. Is there any reason to think that on a go forward base, I know this quarter was boosted a little bit by what appears to be retaining some one to four family mortgages on the books but even ex that really, really solid growth. Any reason to think that low double digit ranges isn't more appropriate as we move into next year? Thanks.

24:04 Yeah, Michael, I think you're saying low double digit is that more appropriate or that's possibly I would still – I would still guide to have single digit possibly lower double digit. I'm remaining cautious with paydowns because they -- probably had lower paydowns this quarter. We're seeing a lot of paydowns just for various reasons in the portfolio. Again, we're also continuing to be pretty cautious and thoughtful our underwriting. So it’s very possible we could end up in the low-double digit, but it's going to be very low-double digit to a high-single digit more than likely be rapid guide. We can't saying would be a good target.

24:56 Okay, that's helpful. And then maybe just go into the securities book. I understand the change from AFS to HCM this quarter. But as we think about just kind of the continued growth in cash, which would likely continue maybe at a slower rate as we move forward. You guys generally feel good about the size of the securities portfolio. I think it's about fifteen point seven percent of earning assets for the quarter. Just any thoughts there just given that yields have moved a little bit higher? Thanks.

25:23 Well, Michael, this is Ty again. As we've been done, we've been buying securities each quarter. I think it's likely you'll see us net up our security portfolio each quarter. We're doing that pretty systematically. We still are maintaining a lot of cash in the balance sheet. But at the same token, we're not willing to stay totally in cash and so we're buying each quarter and kind of, it's either going to be dollar cost averaging or to the good or to the bad. I mean, but that's kind of what we've been doing. The last couple of years has been just kind of buying in the portfolio which quarter, but not moving significant dollars over one time. So we're basically covered to pay down the portfolio and try to net up each quarter as we go along.

26:14 Okay. That's helpful. And maybe just one last one for me just on capital deployment. No buyback again this quarter, you guys are trading around one seven of tangible so pretty acceptable earn back on any sort of buyback. But maybe if you can just talk about your thoughts around the buyback dividend and then maybe potential M&A we saw a larger deal in Texas out here recently? Thanks.

26:38 Yes. So, we continue to look at buyback and analyze that and buyback opportunities on our stock, we have some metrics in place that we've had in place for a few years that we used to kind of monitor that. And certainly as we see advantageous price like we did during the middle of COVID, we're very aggressive in buying back shares. And our dividend stream has been a growing dividend for -- over thirty years, we haven't modeled up continue growing it, that's a big part of our total return story. 27:06 As far as M&A, I mean there are a lot of discussions going on. We're in a lot of discussions. It's hard to say how those kind of pan-out. I think the buyers are being very disciplined and we certainly are, but it's same token there's opportunities too. I think you're seeing banks really come to realize that value scale and/or succession management, the succession challenges they're out there that our -- and technology challenges and those are probably three main themes, I think you're seeing a lot the smaller banks look at and think about as they go forward. And the reality is either banks, four billion dollars with those three main themes are going to have to look at strategic options of either getting bigger or joining a large organization or get comfortable with lower returns more likely. And I think as that realization coming a lot with a lot of boards. You'll see more conversations happen and like I said, we're in those talks a lot of times and having those conversations with banks.

28:12 Great. I'll hop back in the queue. Thanks for taking my questions.

28:15 Thanks, Michael.

28:17 Our next question is from Brady Gailey with KBW. Brady, you can hit star six and then unmute your line.

28:29 Good morning, guys.

28:31 Hi, Brady.

28:33 So I just wanted to start with gain on sale I mean fee income I know you guys mentioned some strength in SBA, but it had a nice step up here in the third quarter to one point seven million dollars. How do you think about what that fee income line should be kind of normalized longer term?

28:56 Well, this Cappy, we did have increased volume in SBA as I talked about, what we're seeing -- happening in SBA is a lot more activity, so opportunity. So, I think that level was probably going to maintain. It's about --I think we did around seven hundred thousand dollars this year and five hundred and thousand dollars this quarter. So I think that we're going to see an increase there. The challenges is in our mortgage activity. We still are trying to give more producers in their different regions on the ground. So, as I said earlier, we projected about a fifteen decrease from our higher volume in twenty twenty. I think a ten percent to fifteen percent decrease is probably what we will project out for -- but we'll end up having for twenty twenty one and in twenty twenty two keeping that relatively flat.

29:55 Okay. All right. That's helpful. And then on expenses, I heard you guys talk about kind of a seventy four million dollars to seventy five million dollars run rate. Were you talking about this year twenty twenty one or is that next year?

30:08 No, that's next year. Yes, looking forward. This year is going be about seventy two to seventy three max, probably so probably seventy two in that range. But what I was talking about was twenty twenty two.

30:22 Okay. And then finally for me, I mean you look at credit quality and it's still pretty clean here. But your reserve is still ex-PPP, it's a little over one point six percent. Over time, assuming credit stays pretty healthy, where do you think that reserve land? It still feels like that's a pretty robust amount, looking at bank that just doesn't have that many problems out? How low, do you like that reserve can go over time?

30:50 Brady, let me speak to that. So, we continue to have factors in our CECL model related to COVID and obviously doing that to try to hold our reserves as long as we can that being said as COVID abates, it becomes a bigger challenge to do that. We're likely going to see some reserve release and possibly in Q4 but certainly in twenty two. The reality is well -- different methodologies, you can grow into your reserve and that's a pretty good strategy, actually. Those CECL, it's truly more mark to market. And so it is much harder to hold that reserve with our asset quality and with the metrics we have. So, very likely, we're going to see more releases in twenty two as we come out of COVID. That's just going to be the reality of how we're going to have to count with CECL.

31:43 Yeah. In our -- adjustment was around one hundred and twenty five basis points. And so, we certainly think that longer term, it'll probably be higher than that, but lower than where it is now.

31:57 Okay. Great. Thanks, guys.

32:00 Thanks, Brady.

32:02 Our next call is with Matt Olney with Stephens. Matt, you should be able to unmute your line.

32:09 Great. Thanks. Good morning, guys.

32:11 Hey, Matt. Good morning.

32:13 Going back to the loan growth in the third quarter, you mentioned a few times that slower payouts and paydowns were a pretty big driver of the third quarter growth. What about overall production levels in the third quarter? Any color on how those compared to the previous quarters?

32:30 They were increased also, Matt. I mean there are -- we had an elevated originations and/or advance on existing lines for the quarter compared to quarter two.

32:46 Okay. Great. And then I think one line item that was strong in third quarter growth was farmland. Any color on the sequential growth there?

32:57 So Matt, this is Ty. So farmland category that is in Texas, I think up most of you know that property that has an ag exemption stays in farmland, even though it's probably, it could be development property long term. And the biggest dollar move there for us was in the Austin MSA, we had different projects that are actually currently ag exempt but more than likely in the plan is probably to be developed. So those that isn't actually traditional farmland, but does has categorized based on ag exemption of the properties.

33:37 So, Ty you are saying those will eventually become construction -- residential construction loans, it sounds like?

33:42 Yes. They will be put into some sort of development project as the long-term plan for the property. Right now, though they're ag exempt in they're in farmland category.

33:56 Okay. Got it. And then Cappy, you mentioned the termination of those swap agreements with respect to the trust preferred and you mentioned there was a savings associated with that we should see. Where we are going to see that over next few quarters? To what line items, I guess?

34:16 It's going to be a decrease in our interest expense Matt, that the swaps that we're talking about, we have about ten million. We have ten million on the books. Five million of those had a swap attached to it that there was unfavorable, so we just decided to unwind it. So that's going to be about a fifty thousand dollars a quarter decrease in interest expense related to that.

34:46 Okay. Got it. And then, I guess lastly on deposit growth, I guess we called off quite a bit in the third quarter compared to the last few quarters. And it sounds like you're still running out some higher cost deposits. Any more color you can give on that? And where the expectations for funding loan growth from here? Do you expect to bring down liquidity levels in the fourth quarter or grow deposits just any color? Thanks.

35:17 Well, I think we will spend some of our liquidity to fund loan growth. But I do anticipate if you go back and look in our history, I do anticipate an increase in deposits in Q4. There's some of that as seasonal deposits that will come in, but traditionally we will increase in Q4. So it all depends on loan growth for Q4, but my projection is that we will use our liquidity to fund it to the most part.

35:52 I'll add some to that Matt. I mean, we still continue to see the main driver of franchise value in the bank is core deposits. So while we obviously like a lot of banks are very flushed with liquidity, we'll use that where we can. We're still very actively growing our deposit core deposit base, mainly as Cappy said earlier in the DDA balance and checking account, and relationships side of the transactions side of bank, but we're still focused on core development company part of our strategy.

36:25 Okay, right. Thank you.

36:27 Thank you, Matt.

36:33 Looks like we have another call. Looks like Brad Milsaps would like to ask another question. Brad?

36:40 Yeah. Thanks, Nona. Just a quick follow-up, Ty, I know you guys are really aggressive hiring on new lenders into last year and into the early part of this year. It seems like every bank in Texas is looking to hire new officers. Can you talk about your appetite, maybe how much capacity those lenders that you brought still have? And then Cappy mentioned you had some wage inflation, kind of what are you seeing in that regard in terms of what it takes to bring in new folks?

37:14 I'll start with that Brad. So, our lending team still has quite a bit of capacity like we mentioned before, we developed some real strength in our lending team during COVID kind of slowed down during COVID. That being said, we're adding to our lending team, especially down the Austin market. We have some traction there and have opportunities to continue to add our lending team down there. We set expectations to our lenders and when they're able to produce that, then it's a win-win, if not then we look at bringing in new lenders. So, the overall environment though, it will say just from standpoint -- the staffing costs. You’re going to see real wage increases in all companies but certainly banks really across world. We've kind of gotten in front of that this last couple of months and look -- and really done a deep dive in our salary and compensation across the board and have made some adjustments, especially in our starting salaries in different markets and so because again, trying to just preemptively get in front of what we're seeing is grow wage pressure going forward. 38:31 Cappy, you want to add anything to that?

38:33 No, I think that's exactly -- you said, well, that's -- that's what we're trying to get ahead of the curve and just keep our staff properly compensated.

38:45 Great. Thank you.

38:47 Thanks, Brad.

38:51 Okay. We have no more questions in the queue. I would like to remind everyone, there will be a recording of this call available by 1:00 P.M. today on our Investor Relations page at gnty.com. Thank you for attending. This concludes our call today.