Comerica Incorporated (CMA) Earnings Call Transcript & Summary

Great. Up next, we are excited to have Comerica joining us once again. While the rate environment has weighed heavily across many asset-sensitive banks, Comerica has done an excellent job managing costs and its conservative credit culture has shined through during the recent downturn. Here to tell us more about the strategy is Chairman and CEO, Curt Farmer; also joining him is CFO, Jim Herzog; Executive Director of the Commercial Bank, Pete Sefzik; and Chief Credit Officer, Melinda Chausse. Comerica is going to do a short presentation, and then we're going to open it up to Q&A. So with that, I'm going to turn it over to Curt.

Well, good morning, everyone. Thank you, Ryan. It's a pleasure to be with you, as always, even in a virtual format. Before we get started, I'd like to remind you that today's presentation may contain forward-looking statements. I refer you to Slide 2 for our safe harbor statement, which I incorporated in this presentation as well as our filings with the SEC for factors that could cause actual results to differ materially from expectations. Forward-looking statements speak only as of the date of this presentation, and we undertake no obligation to update any forward-looking statement. For those of you who know us well, Slide 3 provides a brief overview. Comerica has a long history, successfully navigating through many economic cycles. Our size enables us to be both nimble and efficient. We are a leading bank for business, complemented by strong retail bank and wealth management capabilities. We have a strong presence in 7 of the top 15 metropolitan areas in the United States, and these markets provide significant growth opportunities. Turning to Slide 4 in Comerica's key strengths, which has driven our success and enhance shareholder value over time. With long-tenured employees who have a deep understanding of the business they serve, we're able to raise expectations of what a bank can be. Our geographic footprint is diverse and we maintain balance among a wide variety of industries and customer segments. We deliver high-quality financial products and have a culture of continuous improvement. Our conservative underwriting standards and strong capital base are assisting us in navigating the current environment. As the landscape rapidly changed this year, our resiliency and ability to leverage our ingenuity and entrepreneurial spirit has been clearly demonstrated. Across the bank, we continue to work diligently to support our customers, providing sound financial advice, credit expertise and digital banking solutions where needed. It is at times like these that you really do build and solidified loyal relationships. Geographic balance outlined on Slide 5 is the key to our long-term growth strategy. Our unique footprint includes 5 of the 10 fastest expanding metropolitan areas in the United States. As far as our outlook for each of these markets, a great deal of uncertainty continues to exist, which makes economic forecasting challenging. However, assuming there is not a shutdown to the magnitude we saw in the spring, we do have the following expectations. The Texas economy is resilient. It is more diverse than people often think. We expect real estate GDP to increase about 4.5% next year as Texas continues to attract businesses and households from across the country. Michigan was a growth leader for the U.S. in the aftermath of the Great Recession. Similarly, we expect to see positive manufacturing conditions throughout 2021, supporting household income and the service sector. We project real estate GDP to grow over 4% in 2021 in Michigan. We continue to expect ongoing expansion of California's economy through 2022 as business conditions normalize. The business mix differs in each of our 3 primary markets. In addition to growth opportunities, the diversity reduces risk and provides important counterbalances for us as economic conditions change. I'll take a moment to provide a few highlights in each of our business lines, starting with the commercial bank on Slide 6. Our expertise and wide array of financial products and services and relentless attention to customer service makes us one of the most trusted names in commercial banking. This is demonstrated by the strong level of customer utilization of our treasury management solutions. And we're seeing many more opportunities due to the investments we've made in CRM tools, marketing analytics and developing and maintaining leading-edge products. This slide provides a few examples of recent and upcoming product innovations. Our card programs are key components of integrated treasury management products and provide customers with the increased efficiency they desire. They also provide a significant portion of our fee income, generating growth of 6% year-over-year. We are the fourth largest issuer of prepaid cards, and we are the exclusive financial intermediary for the U.S. Treasury Direct Express program as well as many states and local governments. These programs have produced strong growth in noninterest deposits. As a leading bank for business, we are focused on providing high-caliber treasury management services to drive a distinguished customer experience and fee income growth. Turning to Slide 7. We have a strong retail banking franchise, which delivers exceptional service to consumers and small businesses. As customer desire to utilize digital channels continues to rise, we've been making significant investments in our online and mobile applications. For consumers, we recently enhanced our online capabilities for deposit accounts as well as loan originations. We're very pleased with our progress, having opened 11,000 depository accounts since April. Also a new online portal for small business deposit accounts is expected early next year. Finally, we are in the piloting stage of a new teller system, which includes better integration with other systems, as well as improved speed and automation. All these improvements enhance the customer and colleague experience. Our wealth management business shown on Slide 8 provides us with the ability to bring private banking, investment management and fiduciary solutions to our business and retail bank customers. Our capabilities include a wide range of planning and investment management products with open architecture. Assets under management totaled $188 billion at September 30. Also, we continue to build our unique Trust Alliance business. We currently partner with 16 third-party broker-dealers and registered investment advisers to provide trust administration and investment monitoring for their clients. Wealth management is an important source of fee generation as we strive to attain a more diversified and balanced revenue stream. Switching gears on Slide 9. We provide our typical mid-quarter update on loans and deposits, which is based on preliminary results through the end of November. Overall, loans are basically playing out as we anticipated and are a little better than industry trends, as indicated in the H8 data. Average loans at a large corporate, middle market and energy are lower on a quarter-over-quarter basis. However, have remained stable for the past couple of months. Mortgage banker continues to climb to new records with strong activity in both refi and home sales and our equity fund services business has started to pick up as well. Overall, customers have been prudently managing working capital and CapEx in this uncertain environment. At the end of November, total commitments and utilization have held steady relative to quarter end. The good news is that our loan pipeline continues to slowly increase. Quarter-to-date average deposits increased over $1 billion, another record, exceeding our expectations. In summary, we expect average loans and deposits for the quarter to remain stable at the current level as we approach year-end. Turning to Slide 10 in net interest income. We estimate there will be no unfavorable impact from rates in the fourth quarter as the effect of lower LIBOR and security yields are expected to be offset by continued careful management of deposit rates and additional loan rate floors. Also, the decline in loan volume in the fourth quarter is expected to be roughly offset by fees related to PPP loan forgiveness as well as actions we took in the third quarter to increase the securities portfolio and reduced wholesale borrowings. Over time, we see opportunities to offset some of the headwinds from the lower rate environment, such as driving loan growth. Also, we expect the majority of PPP loans to be forgiven in the first half of next year, which results in the acceleration of fee amortization. However, the timing and pace of this is uncertain. In addition, we believe there are modest opportunities to further adjust deposit rates and enhance loan pricing by adding floors as long as it remains competitive. Also, while we are waiting to have a better line of sight, there is a possibility of a small reduction in wholesale debt and the option to increase the size of the securities portfolio. On the other hand, in the back half of next year, we expect minor effects from expiring interest rate hedges and the maturity of longer-dated assets, such as our mortgage-backed securities. In summary, the pressure from the decline in rates has diminished, and we remain focused on the things we can control, controlling cost, maintaining our cost -- our credit discipline and developing deep, enduring customer relationships. Slide 11 highlights credit. Our conservative credit culture, diverse portfolio as well as deep expertise has produced superior results. Through the cycle, our net charge-offs have typically been at or below our peer group average. We started this year from a position of strength with very low nonperforming and criticized loans, and our portfolios continued to perform relatively well. We had one of the lowest NPA ratios among our peers in the third quarter. This, combined with our healthy reserve, resulted in us having one of the highest NPA coverage ratios. The pace of the economic recovery is uncertain, and net charge-offs are likely to increase from the low 26 basis points in the third quarter. However, with our credit reserve at about 2% of loans in the third quarter, we believe, we are well positioned to manage through this challenging environment. We are maintaining our strong expense discipline as well as shown on Slide 12. Comerica has a culture that drives continuous efficiency improvement. We have provided a few examples of our ability to manage costs by reducing our workforce and banking centers over the past several years. By leveraging technology, we have increased productivity, and our ratio of loans and deposits per employee is one of the highest among our peers. Also, we have one of the highest ratio of deposits per banking center of our peers, which demonstrates the efficiency of our network. Our expense discipline is well ingrained in our company and is assisting us in navigating this low rate environment as we invest for the future. Turning to Slide 13. Our capital levels are strong. Our CET1 ratio increased to 10.3% in the third quarter, above our target of 10%. Also, our ROE returned to double digits at nearly 11%, and our book value per share grew to nearly $54, the seventh consecutive quarterly increase. As always, our priority is to use our capital to support our customers and drive growth, while providing an attractive return to our shareholders. As you can see, our current dividend yield is very competitive. In closing, Slide 14 reiterates Comerica's key strengths. Over our 170-year history, Comerica has successfully managed through many challenging times. We continue to demonstrate our resiliency and unwavering dedication to provide a high level of customer service as we navigate the COVID pandemic. We're committed to maintaining our strong expense discipline, while investing for the future to ensure we can provide high-caliber products. Our disciplined credit culture and strong capital base continues to serve us well. Deep expertise and experience help us build and solidify long-term relationships, particularly in uncertain times like these. So thank you for your time. And Ryan, now, we'll be happy to take some questions.

Great. And thank you, Curt, very much for the prepared remarks and all the color. Curt, I thought I would start on returns. Return on -- if I go back and look, return on tangible average about 8% during the time frame from 2011 to 2015, the last time we were in an extended period of time of low interest rates, but then you had GEAR Up and interest rates inevitably rose and returns went to about 18% in the 2018, 2019 time frame. So as you sit here today, the market is expecting, once again, low interest rates and is once again looking for 8% returns on tangible equity, and I was wondering, can you maybe just talk about some of the levers that you have to drive returns in a lower rate environment and can we do better this time relative to where we were the last time we saw rates at 0?

Well, a couple of things I would say, Ryan, maybe from a backdrop standpoint, when we saw rates at near 0, that was really coming off of a Great Recession that was triggered by a lot of factors in 2008 and 2009. And heading into the COVID situation, the economy was actually very strong. And we felt like lending demand was pretty strong, and most of our businesses were seeing good activity across the board. And so you have this low rate environment, which was really imposed by, I think, the Federal Reserve being appropriately cautious heading into the COVID situation and trying to make sure that there were some stimulus for sustainability over the course of the last 9 months and going forward for the next several months. Having said all that, coming out of COVID, we actually believe the economy will rebound nicely. I mentioned some of the stats related to a few of our geographies as examples of that. And so while we're not expecting necessarily loan demand to be extremely robust, we do think there'll be some return to some normality in growth once we get beyond COVID, whenever that might be, halfway through next year, et cetera. Then secondly, I would say to you is that we historically have done a very good job in managing credit. I do think the credit cycle is likely to deteriorate some from here. We believe we are appropriately reserved, even though we think we'll see some increase in charge-offs as time goes on depending upon how COVID plays out. But we do believe that we have the opportunity to perform better than many of our peers as it relates to credit on a go-forward basis. And then we've been very focused on the things that we can control. We've done a very good job of bringing down deposit costs while maintaining our deposit base and taking care of our customers. We think we've got a little bit more room there. We've done a very good job of implementing rate floors where it makes sense to do so, and we're going to make sure we're competitive and not do anything that harms customer relationships longer term, but we probably still have some opportunities there as well. And then we're continuing to work on what we can do on the expense front. We are in a very efficient company in general. GEAR Up has helped us a lot there. But we still believe we've got opportunities to continue to manage expenses well on a go-forward basis. So we're looking at headcount and FTEs and real estate and travel and entertainment, discretionary spending, et cetera. But we're going to make sure we do the right things to be relevant to our customers from a technology standpoint longer term and digital is certainly a big part of that. The things we have in flight to take care of our customers and help enable our colleagues are going to stay -- continue to stay sort of front of mind. At some point, this economy will return. I think we'll benefit from that in terms of customer activity. I'm not sure when that will be. But certainly, the geographies that we're in are well positioned to take advantage of that on a go-forward basis.

Curt, maybe just a follow-up on the last point on expenses. You touched on a handful of areas that you could have as potential levers, corporate real estate, branches and the like. Do you feel you have enough levers in the current environment to allow you to, one, make the necessary investments that you want to make in the business, but also hold the very tight hold on expenses, just given the very challenging revenue backdrop that we're all facing.

Well, Ryan, it's always a balancing act, right? And that -- what you described is the priority for our company, and that is to balance the 2. I mean, we want to be positioned to invest in the company and be relevant to our customers from a digital perspective, to invest in product and services, to invest in people where we've got growth opportunity, but we've got to be able to do that and overlay on top of that, really good expense discipline. So said another way is that what we were really focused on is reallocating resources to make sure we can make their appropriate investments for the longer term. And I think we've done a good job of that historically. Peter Sefzik is here in the room with us from the commercial bank. He's done a very good job of reallocating headcount from sort of lower growth geographies and business lines to higher growth opportunities. And we've been able to do that while keeping headcount relatively flat, just to use that as an example. The efficiency we've been able to deploy in the banking center has allowed us to drive down sort of average FTEs in the banking center over time. And so we don't have another sort of big GEAR Up initiative to announce. That did a lot of foundational work for us to position us where we are today as a very efficient company. But we continue to look for opportunities around the edges to manage expenses appropriately while investing for the business for the future. And we think we can do both.

Got it. Hey, Peter.

Hey, Ryan.

So Curt touched on some interesting things in his prepared remarks, noting Texas was expecting 4.5% GDP growth. You're seeing some improvement in pipelines. He highlighted equity fund services as a potential area of growth. Obviously, we're still in an environment where there's lots of uncertainty. And while PPP and further stimulus could suppress loan growth in the near term, again, our economists are expecting 5% plus growth next year. So I was wondering, as you know, we got through a vaccine process and companies return to office, what type of pent-up demand is there for loan growth? And do you see the prospects for accelerating loan growth? And if so, where would you expect them to come from?

Yes, Ryan, I would like to think so. It certainly seems like as we get into next year, Q1 and Q2 are going to continue to be challenged. I think the 5% you mentioned at least with our economist as well, it seems like most of that's in the second half of the year. So I suspect the first quarters will continue to be challenged. That said, we do feel like pipelines are slowly increasing. I do feel like we're kind of back to levels we were 12 or 13 months ago, but it doesn't feel immediate. It feels sort of out there and post-vaccine, like you described. And assuming that all of that plays out, I'd like to think that there's a lot of opportunity for us. And I would think that, that would mostly be in our biggest economies like California, like Texas. And I think in general, it would be in the middle market space, and that's where we're hoping to capitalize on those opportunities. We see disruption, we see opportunities to add new customers, add some talent, and we're taking advantage of that. So that's where we're staying focused. And I would -- I'd be optimistic to think and hope that we do see that pent-up demand. I think that'd be good for -- not just to us, but really the economy in general and be a nice pickup.

You highlighted California as an area and Texas that we could see growth. I guess, as you look across the franchise, are we starting to hear discussions at least about CapEx picking up? And are clients thinking at least at this point about increasing utilization as they look out and while as you had noted, it probably won't happen in quarters 1Q and 2Q. But as we get to that back half of the year, are we, at least, hearing plans in place for that potential acceleration to happen?

The utilization hasn't really picked up. At the end of the third quarter, I was kind of hoping that we were at the bottom, and we'd start to see an increase. I'd say it's sort of stayed there, if you will, so far. So I think as we get into next year, hopefully, we do start to see the utilization pick up. I do think it will be further into the year. I think most of the opportunities are really going to come from some consolidation in a number of industries. There's just going to be people that survive this, and there's going to be customers and prospects that don't. So we're seeing situations of customers kind of wanting to capitalize on the opportunity. I don't know that I would call it CapEx as much as I would call it. I suspect you're going to see a lot of M&A pick up in the next year in the middle market space as a number of folks kind of fall out of this thing and just aren't able to make it to the other side. So that's where I suspect we'll see most of the opportunities.

Got it. Maybe switching to Jim. Net interest income has declined sequentially for a handful of quarters in a row. The outlook seems to be a little bit more upbeat. I was just wondering if outside of the PPP acceleration that you talked about, maybe you can size what you're seeing there? And do you think that we've reached the bottom on net interest income such that we could begin to grow off the levels. And if not, can you maybe just talk about what are some of the drivers and your degree of confidence of when we could get back to that?

Yes. Thanks for the question, Ryan. There are a lot of moving parts and levers in terms of where our net interest income goes going forward. I do think a dominant variable will be loan growth, which we're feeling cautiously optimistic, especially when we get into the second half of next year. Loan growth will certainly be a big factor. PPP, we indicate in the slides will be primarily in the first half of next year. But of course, that's kind of a one-and-done at this point. In terms of rate impact, we do expect just minor impact going forward. Of course, it's 0 this quarter with the great progress we made in deposit pay rates moving from 17 bps to 11 to 12. We won't always get that type of change in deposit pay rates, but there will be a little bit of potential there even as we move through next year depending on how the economy goes. And likewise, the pricing and loan floors, as Curt mentioned, is a possibility throughout next year, help to counter some of the rate movement also. And then finally, we have a couple of smaller levers in terms of continuing to look at our purchase funds and taking that volume down as well as growing the securities book. But there's no real obvious answers there. Those would be marginal improvements to the extent we avail ourselves out in the next year. Having said that, all those pluses will go against just some minor headwinds in terms of longer-dated assets maturing. So a lot of these variables tend to cancel each other out. And I tend to see loan volume is probably the differentiator for us next year, and we'll probably be what drives our increase in net interest income.

You mentioned the securities portfolio. I think last quarter, you added over $2 billion through a combination of treasuries and MBS. And I think you're continuing to invest. Can you maybe just talk about the liquidity deployment strategy from here? How much are you planning on investing? I think you talked about incremental investing of about around 140 basis points. What are yields looking like nowadays and what is the strategy from here?

Yes. We are going to assess that as we go through this last -- hopefully, last couple of months of COVID. As we see the political transition take place over the next couple of months, we're going to know a lot more over the next quarter or so than we do right now. And so we do value the excess liquidity during this time of uncertainty. Having said that, I think it's safe to say there is a certain portion of our liquidity position that is semi permanent for the foreseeable future. The question is what do you do with that? And there aren't really compelling stories and options for what you do with it. But having said that, it is likely that we will avail ourselves of either growing the securities book or perhaps taking purchase funds down over the next quarter or so, but we're going to be cautious in doing so just be sure that this uncertainty is removed and also just to make sure we do so in a responsible way given that there aren't really great options out there right now.

Okay. Maybe switching gears a bit. I think it was Curt, who commented that there's an expectation that charge-offs are going to increase from the 26 basis point level. Melinda, I was hoping maybe you could comment on a couple of things. One, what are your expectations for what's going to be the driver of higher losses? I'm assuming energy is a part of that, maybe you could comment on that. Second, what do we need to see for reserve releases to begin? And when would you expect that to begin to happen?

Yes. Thanks, Ryan. So in terms of kind of the driver of what we -- of losses and what we would expect to see over the next couple of quarters, as Curt mentioned, I mean, I think we are all really pleased with the way the portfolio has responded. We came into this with a degree of strength, a large degree of strength and our customer portfolio has been really, really resilient. PPP, obviously, was a huge cash infusion and has helped many of them get over the first couple of months of the pandemic. The portfolios that I would expect to continue to see some migration and ultimately NPAs which will lead to some losses are those that we've identified as at risk. Social distancing portfolio for us, fortunately, is not a huge component of the portfolio and that is really where the biggest risk, at least in the next quarter or so, given social mitigation strategies in the various regions. When you shut down businesses, there's some obvious significant impacts. Fortunately, we just don't have a lot of exposure to that segment, and it's very, very granular. And we watch that portfolio very closely. Every single month, we are evaluating each of those customers and staying very close to them. So I don't expect to see significant losses at all in the social distancing portfolio and the credit metrics would support that as we've seen so far this quarter. Automotive and leverage are the next 2. Automotive was really impacted at the beginning of the pandemic, but quite frankly has started to rebound. And our supplier customers are actually starting to come out of this and doing reasonably well. We do have elevated criticized assets there, but we haven't seen migration into NPAs. So again, I don't expect outsized losses there. Our leverage portfolio also has elevated criticized assets. But again, we have not seen that next level of migration that would lead you to believe that we have significant amount of losses. I expect that we'll continue to see a little bit of that in the next couple of quarters. And as Curt mentioned, charge-offs were at a low level in the third quarter because we had some really large recovery. I don't expect that to continue in the fourth quarter. And we'll see losses elevated for the next couple of quarters. And then again, vaccine efficacy and distribution happens as I think we are all hopeful of. I can see the second half being reasonably optimistic. And the way CECL works, as you all well know, you build the reserve at the very beginning -- at the beginning of the recession, it's based on the economic forecast, and we don't see anything in the economic forecast as it sits today that would lead you to believe that there would be a need to build additional reserves. And as the charge-offs start to happen, following that, we'll start to see those reserve levels normalize.

Maybe coming back to Curt. One of the things that continues to get a lot of attention is just the whole investments in digital and technology strategies and you've been investing heavily in tech, whether it's TechVision 2020 or Digital 2025. Can you maybe just talk about what the major initiatives you have planned for the next 1 to 2 years are? And do you foresee yourself doing these more in-house or through third-party fintech relationships?

Well, first of all, let me maybe mention, Ryan, that we're really excited about some leadership we've added to our technology area. We have a new Head of Technology and Operations overall, direct report of mine, Megan Crespi, who joined us from Ally and GM and PwC along the way. And just brings a lot of practical experience to us from another strong consumer-based platform in Ally consumer business platform. She's been able to recruit some great talent underneath her. We have a new Chief Investment Officer, Bruce Mitchell, who comes to us with a lot of banking experience; a new Head of Technology for the Commercial Bank, Steven Christopher as well. So we've got some really talented leaders in those businesses to supplement the talent we already had on the ground. And we continue to look for ways to drive innovation. And that would primarily be in areas that we put in either the customer category so to help enable the customer relationship. And that's everything from how we onboard a customer to the bank in any one of our channels, I mentioned the retail digital platform that we've rolled out and the success that we're having there. But then really how we deliver products and services to those clients on a go-forward basis. So that would include loan origination capabilities and just sort of our online lending portal. It includes sort of our new CRM platform across the company. We continue to make investments in treasury management capabilities to really digitally enable the delivery of treasury management solutions to our customers. And at the same time, we've been leveraging technology to help us reduce expenses across the company. So how we utilize technology for simple processes and AI-type capabilities are really important. And we've got -- we've done some good work there, and we've got more opportunities, we think, on a go-forward basis. We've migrated over 50% of our applications to the cloud. We were kind of an early leader there, and that's helping us a lot. And sort of -- an answer to your question, we think we've got a good blend between about 50% of our work being able to be done sort of a proprietary internal perspective and leveraging about 50% of it with third-party vendors, roughly depending upon what we're working on. But increasingly, technology is becoming more ubiquitous. And a lot of the vendors that we work were either able to help us sort of achieve, sort of scale and capabilities that maybe a larger player might have as well. So we think we've got a good blend and a good balance, and we feel really good about the road map we've laid out over the next several years. But as you know, the ball keeps moving. So it's a never-ending process.

So there's obviously been a massive race for scale in the industry. Comerica hasn't done an M&A transaction since Sterling in 2011. I think before that, the last deal was in 2000 in California. So maybe a 2-part question. Can you talk about your degree of interest in M&A. What would the priorities be? And then second, just given the rising demands on midsized banks for investing in technology to drive scale, all the things you just talked about, how do you weigh an organic strategy partnering with smaller banks, partnering with similar size banks or even partnering with larger institutions to drive scale?

Well, I mean, the answer for us is the same today as it was when we were at the conference a year ago. And that is job 1 for us is organic growth. We're in great markets, 7 of the 10 largest MSAs in the United States. And we still have a lot of growth in those existing markets and in the lines of business that we serve. We feel like we're very well positioned. Having said that, we continue to be focused primarily on California and Texas. The number of opportunities in those states is relatively limited. But certainly, if something made sense from a strategic cultural fit for us, we would be interested in taking a look at that. And so day 1 or sort of daily focus on organic growth, but certainly being sort of aware of what the landscape looks like. And I think coming out of COVID, I think, the next 6 months or so, probably opportunities will be limited, but who knows what it looks like in later next year or in the next couple of years. And Sterling is a good example where we were just being opportunistic and something that did really well for us and helped us build out our market in Houston. And then secondly, I'd say on the technology front, we believe, based on the things I said earlier, the work we did around GEAR Up, we rationalized a lot of platforms, we were able to reorient a lot of our spend away from legacy platforms and regulatory and other things and start to free up more spend around customer and colleague enablement. Leveraging third-party helps give us scale. But also remember that today, we generate the majority of our revenue from commercial banking activities, and we are certainly very focused on retail and wealth management. But even in those businesses, we are not as aligned around sort of the mass market retail client, for example. We have higher average balances per household, really more of a kind of emerging affluent, affluent, small businesses, et cetera, in that space. And so a lot of those clients we acquire really through the advice and sort of intellectual capital we deliver. And we certainly need to have technology to ride alongside that. But I think that the orientation for us is a little bit different than many of the players who are really focused much more on mass market and less around sort of that relationship and personal interactions. So we think we can blend the 2 well.

Got it. Well, given that the buzzer is going off here, I think that means we're out of time. Please, on behalf of myself and all the clients. Thank you very much for joining us and look forward to connecting again in January.

Great. Thank you, Ryan. Happy holidays.

You too. Take care.