SmartFinancial, Inc. Q2 2026 Earnings Call

I will now hand over to Nathan Strall, Director of Investor Relations, to begin. Please go ahead. Thanks, Erica.

Good morning, everyone, and thank you for joining us for SmartFinancial's second quarter 2026 earnings webcast and conference call. During today's call, we will reference the slides and earnings release available in the investor relations section of our website at smartbank.com. Billy Carroll, our President and Chief Executive Officer, will begin the call, followed by Ron Gorczynski, our Chief Financial Officer, who will provide additional commentary. We will be available after the call to answer your questions. Our comments today include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. Factors that could cause these actual results to differ materially are described in our earnings release and SEC filings, which are available on our website. We undertake no obligation to update any forward-looking statements as a result of new information, future developments, or otherwise, except as required by law.

During today's call, we may reference non-GAAP financial measures related to the company's performance. Reconciliations of these measures to the most directly comparable GAAP measures are included in the appendices to the earnings release and investor presentation filed with the SEC on July 20th, 2026. Now I'll turn it over to Billy Carroll.

Thanks, Nate, and good morning, everyone. Great to be with you, and thank you for joining us today and for your interest in SMBK. As usual, I'll open up our call with some commentary and hand it over to Ron to walk through the numbers in some greater detail. After our prepared comments, we'll open it up with Ron, Nate, Rhett, Miller, and myself available for Q&A. We followed a strong first quarter with an even better second quarter as our team continued to build outstanding organic momentum. The foundation we have worked so hard to build over the past several years is clearly demonstrating its strength as we continue to grow operating leverage. Our team's focus on this execution remains outstanding, and the second quarter of 2026 was yet another clear example of that. Let me jump right into some of our highlights.

First, as I always say, one of the most important metrics to me, we continue to increase the tangible book value of our company, which is now at $28.22 per share, up from $26.86 at year-end. For the quarter, we posted operating earnings of $16.3 million, or $0.96 per diluted share, with total revenue coming in at $55.9 million. We continue to execute with outstanding growth on both sides of the balance sheet, posting 15% annualized growth in loans and 6% annualized growth in core deposits. Our history of strong credit continues with only 23 basis points in Nonperforming Assets, down two basis points from the prior quarter. I'm very pleased with our credit performance and our extremely low level of NPAs. Operating non-interest expenses also came in on target at just under $34 million as we continue to exhibit our expense discipline.

Looking at the first few pages in the deck, you'll see our continuation of some very nice trends. We're building on our return metrics and most importantly, growing total revenue, EPS, and TBV. All of those charts are great graphics to illustrate our execution. A couple of additional high-level comments from me. On growth, our balance sheet expansion continues. We are building a strong foundational sales culture led by our divisional and regional presidents, along with our collaborative credit leadership. The work of these teams has been outstanding, and the energy and hustle they exhibit as they focus on new client acquisition is exciting to see. I continue to believe we are among a select top-class group of top-performing banks when it comes to pure organic growth.

As I stated, we grew our loan book 15% annualized quarter-over-quarter as sales momentum stayed strong and balanced across all of our regions. Our average portfolio yield, including fees and accretion, held up well at 6.07%. Regarding deposits, again, core deposits were up 6% annualized. Even with some expected second quarter seasonality, we continue to drive nice core deposit growth. It's important to note how we're building this bank with core relationships as we have a keen focus on both sides of the balance sheet. A couple of other key highlights noted in the release bullets include crossing the $6 billion in asset mark, another nice milestone for our team as we grow strategically and profitably. As I mentioned, our tangible book value per share grew at 13% annualized for the quarter.

In addition to great numbers, I'm also very proud of our Great Place to Work recertification. It is great to be recognized for the outstanding culture we are building and the tireless work of our associates in these efforts. As you can see, we are gaining operating leverage, also gaining momentum, and we're balancing that with appropriate investment in our franchise. We will keep investing in people, technology, and strategically in facilities, but do so while maintaining positive leverage. We are seeing some nice opportunities right now with the disruption taking place in the Southeast, we want to take advantage of that. The franchise we've built is positioned to effectively compete for business against larger regional players, also nimble enough to flex down when we need to. It's a pretty nice position to be in.

Gaining share and getting deeper in these great markets continues to be our primary focus. All in all, a very nice way to wrap the first half of 2026. I'm going to stop there and hand it over to Ron to dive into some details for us. Ron? Thanks, Billy, and good morning, everyone.

I'll start by highlighting some key deposit results. During the quarter, we continued our momentum in client relationship expansion and new account growth. Non-broker deposits grew to $83 million, while new deposit production costs increased eight basis points to 2.90%. While our deposit growth was strong, loan growth of $165 million exceeded deposit production, resulting in the use of $106 million of short-term broker deposits. Seasonal activity reduced non-interest-bearing deposits to 17% of total deposits, reflecting normal second quarter activity, including cash use for tax payments. We also experienced some portfolio mix shift as clients continued to optimize balances between interest-bearing and non-interest-bearing accounts. Even with these dynamics, interest-bearing deposit costs rose just two basis points to 2.62%, and liquidity remains strong with a loan-to-deposit ratio of 87%.

Looking ahead, we expect competition for deposits to remain elevated, which may continue to pressure funding costs in the near term. Turning to our margin, net interest income was $48.1 million, up $2.2 million from the first quarter, and our net interest margin expanded to 3.52%, compared with 3.48% last quarter. The margin improvement was driven by asset yields outpacing the modest increase in funding costs. Loan yields increased five basis points, assisted by new production coming on above the portfolio yield, continued loan portfolio repricing activity, and higher loan fees from certain loan prepayments. Excluding loan prepayment fees, our normalized net interest margin was 3.48% for the quarter, in line with our expectations. New loan production remained steady with a weighted average yield of 6.40% for the quarter.

Overall, our margin story continues to be about disciplined pricing, good balance sheet management, and the benefit of loan pricing in this rate environment. Looking ahead, we expect continued improvement in asset yields to support modest margin expansion over time. However, near-term deposit cost pressure may reduce third quarter margin by a few basis points, which would result in a forecasted margin in the 3.45% range. Turning to credit, our provision for credit losses was $1.9 million, down from $3.2 million last quarter. After a $392,000 reduction in the liability for unfunded commitments, total provision expense was $1.5 million, primarily from loan growth. As a reminder, the higher provision last quarter was driven by CECL modeling changes that we discussed on our prior earnings call. Our allowance to loans ratio remained stable at 97 basis points, which we believe is appropriate for the portfolio and current environment.

As Billy had mentioned, our asset quality metrics remain strong with non-performing assets of just 0.23% of total assets, while net charge-offs were limited to five basis points. We remain confident in the quality of our loan portfolio and in the discipline our bankers and credit team continue to demonstrate as we grow. Operating non-interest income was stable at $7.9 million for the quarter. Higher mortgage banking income and stronger interchange and debit card fees helped offset lower capital markets revenue. On expenses, operating non-interest expenses increased slightly to $34 million, the low end of our guidance. This increase was primarily driven by salary and benefit expenses, reflecting stronger production-related variable compensation and a full quarter's expense from our annual merit increases. FDIC insurance expense also returned to its normalized run rate. Our operating efficiency ratio remained in the low 60% range.

We do expect some expense growth as we invest in our expanding markets, including some branch facility expansion, but we will continue to manage the broader expense base carefully and remain focused on improving efficiency over time. For the third quarter, we expect non-interest income to be approximately $8 million and non-interest expense is expected to be in the range of $34.5 million-$35 million. Salary and benefit expenses are expected to range from $21 million-$21.5 million, reflecting both stronger production levels and related incentive compensation and additional new hires. As always, incentive-based compensation accruals will move with performance and may vary throughout the year. I'll wrap up with capital. Our capital position remains strong with a consolidated TCE ratio of 8% and total risk-based capital ratio of 12.7%, well above well-capitalized standards.

This position provides flexibility to support growth, maintain balance sheet strength, and continue building long-term shareholder value. With that said, I'll turn it back over to Billy.

Thanks, Ron. As you can tell from Ron's comments, our trends continue to have a nice trajectory. We are successfully executing on the leveraging phase of growth for our company. On return metrics, we've moved through the 1% ROA target and feel good about seeing that 13% plus number on ROE. You've heard me discuss on our last couple of calls our internal four by four challenge of hitting a $4 EPS run rate by the fourth quarter of 2026. Basically hitting $1 per share EPS by Q4 of this year. This quarter has been an excellent step toward reaching this target. We've still got a little bit of work to do as higher funding might pressure margin a bit more than expected, but I really like our chances of accomplishing this goal.

The second half of 2026 will probably look a lot like the first half, with focus on organic growth and increasing share in our markets. Pipelines are very solid, I think we can continue growing at a high single digit plus pace, or possibly a little better. Talent acquisition continues to be a high priority for our company. The current market disruption is opening the door, and over the last few months we've added some great bank talent in Nashville, Tennessee, Huntsville, Alabama, Tallahassee, Florida, and Columbus, Georgia. We're seeing this opportunity throughout our footprint. Speaking of specifically on Columbus, we're thrilled with what that team is doing right out of the gate, and we're not even in our permanent facility yet. We're very bullish on this new market. We will continue to look for these organic growth opportunities and remain very focused on recruiting.

I believe we have a lot to offer talented bankers as we continue to be one of the brightest banking stories in the southeast. Outstanding markets that grow, paired with strong, experienced bankers and a very focused team. To summarize, we've had a very solid first half of 2026, and we're very well-positioned. We are executing, growing revenue, EPS, and book value, while staying prudent on expense growth. We remain optimistic about our ability to add balance sheet growth and still have a nice tailwind coming from rate resets in our loan portfolio over the coming quarters. Credit continues to be very sound. On goal setting, we are executing on this year's four by four initiative, as we have clear line of sight to a $4 plus earnings per share target.

Our future is bright, I appreciate the work of our SmartFinancial, SmartBank team and all the efforts of our associates. I'm very proud of what we have going on here at SMBK. We'll stop there and open it up for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brett Rabatin from StoneX Group. Your line is open. Please go ahead.

Hey, good morning. Good morning, guys.

Hey, Brett. Hey, wanted to start on, obviously really strong balance sheet growth this quarter.

Wanted to start on the deposit side and just if I heard you correctly, Ron, I think you said 2.9% cost of new deposits. Was that the right number? Just wanted to get a little more color around the narrative that everyone's talking about with deposit costs possibly increasing from here, just how you guys see that affecting possibly your growth and what you're seeing in terms of new funding.

Yeah. Ron, you want to start with the spot yield question?

Yeah, Brett. Our production for Q2 was 2.90%. Less brokered. We were always modeling a one to two basis point increase in our cost going forward. I think the lower guidance, possibly lower guidance this quarter is, we did lay in some brokered funding to support our strong loan growth. While brokered funding does carry a higher cost, we view it as a discipline and temporary tool for our funding. For the most part, going forward, we're looking about 1.5 to two basis points per month, at least for Q3. Then we think we'll back that up as we can increase our deposit production and wean off the brokerage side of it.

I'll also add, Brett, like I said, I'll tell you, the deposit, just pure deposit production has really been pretty solid for us. A little bit of a gap. I alluded to it too. We get a little bit of seasonality in Q2. We do think when you look at our trends historically, we make up a lot of that gap in the second half of the year. Yeah, I think we're optimistically hoping we can come in at a pretty good clip as some of that seasonality, then that balance growth picks back up. Yeah, I think you alluded to other comments that you've heard on growth. I think it is. Obviously with rates staying a little bit higher, deposit growth pressure has been probably a little more prevalent than we had originally thought, but it's not anything that we don't feel like we can manage.

As Ron said, margin might just be a little flatter as you look out for the next quarter, Still feel good about our ability to expand that going forward.

Okay. That's helpful. Then just, Billy, you kind of talked about feeling pretty comfortable being a high single digit grower and possibly better, obviously the last two quarters in particular have been a lot stronger than that. Does the pipeline suggest you could continue to have that and maybe you're just being a little cautious with payoffs or lending competition on rate possibly being a factor? Maybe if you could just Yeah give any thoughts on double versus.

Oh, yeah. You're right. single and.

Miller says the same. Yeah. No. Brett, Miller says I sandbag a little bit, but really, we do build. We try to build in some payoffs and pay downs into those modeling assumptions. One of the things we have been really good at is especially a lot of this back book repricing. I think we've built in a little lower percentage of that retention. We're getting a lot of retention in that back book reprice. Teams are doing a really nice job elevating those yields at renewal. We're keeping most of that business. Yeah, rate competition is still tough. Right now we're just looking at pipelines before the call just to kind of refresh our numbers, and we feel good about the pipelines. I'll tell you, and I alluded to it. The sales teams and credit teams, I said that too.

I think a lot of the credit of this goes to our credit team, the collaboration that we're working together and trying to get these deals in and through the pipeline. Feel really good about our ability to keep doing that. Yeah, I still think we could be at that ±10% number, just depending on payoffs and pay downs.

It's all across the markets too, isn't it?

Yeah, it is. Not front red.

Yeah. It's pretty equally balanced across our zones. I'll tell you, all of our markets, all of our teams are executing really well right now.

Okay, great. Nice to see you. Great quarter, guys. Thanks so much.

Thanks, Brett. Thanks, Brett. Your next question comes from the line of Russell Gunther with Stephens.

Your line is open. Please go ahead.

Hey, good morning, gentlemen. Hi, Russell.

I wanted to follow up. Yeah, morning on the margin discussion. Maybe the flip side to Brett's question, just get some help for where directionally you'd expect loan yields to head from here. Level set us in terms of where new production came on in 2Q, kind of where that pipeline yield sits today would be helpful.

Ron, you want to take that?

Good question. We've been consistently in the new production bringing on about the 640 range. We believe that will continue. Basically due to the portfolio churn, we think we should be able to increase our portfolio yields probably three to four basis points quarterly from here on for the next few quarters. Even though Q3 may be flat, we see further expansion as we look into the future. We're in a good spot with our loan book.

That's helpful, Ron, thank you. For my follow-up, guys, appreciate the near term expense outlook. Perhaps kind of more intermediate term as you guys think about balancing franchise investment and talent, which sounds like you've made some great strides in, as well as potentially tech. How should we think about a normalized core expense growth rate for SmartBank with that goal of delivering positive operating leverage?

Ron, do you want to maybe talk a little bit about just kind of expense growth forecast or thoughts over the next few quarters, and I'll add some color to it.

Yeah. For Q3, we did see an uptick. Variable compensation due to our production is always there. We have layered in some new hires and support growth, and we see that incrementally throughout Q3. We do have some seasonality in our expenses, primarily occupancy going through the hot summer months here down in our footprint, and then normal forecasting ebbs and flows due to franchise growth. We're looking to keep our expenses within a $35 million ± range over the next quarter or two. Again, that's all subject to our production-related comp. We watch expenses pretty tightly here, so.

Yeah. I'll just add, Russell, this is something I know Ron and I spend a lot of time talking about it, we communicate it with our team. I think the key to it now is to kind of keep a fairly tight band on that while continuing to make the appropriate investments. Like we said, I think we can do that over the next several quarters as we get a new branch or two in the system, then add a couple of revenue producing hires in some of our zones. Feel really good about our ability to do that. We also have, again, I think Nate put a nice slide in the deck on our repricing.

I do think we've still got some nice tailwind coming second half, especially as you look into Q4 with rate resets on the back book, then into the first part of 2027. We think the revenue side's going to continue to keep pace and allow us to keep that positive leverage going.

That's great, guys. I appreciate all the help. Thanks for taking my question.

Thanks, Russell. Your next question comes from the line of Catherine Mealor with KBW.

Your line is open. Please go ahead.

Thanks. Good morning. Hey, Catherine.

Good morning. Morning, Catherine. I know you spoke to this, but the loan fees that were in loan yields this quarter, can you repeat what that impact was?

Yeah. We had a specific relationship that it was an acquired loan that we had a credit mark embedded in the amount. When it paid off, we accreted that through the income. Isolated, a decent amount. It equated to about $400,000-$500,000 Okay, perfect.

Four basis points. Oh, I'm sorry, four basis points. I apologize. Four basis point.

That's four basis to the NIM or four basis to Colonial?

It was Colonial. Okay, perfect.

The way to think about that is you strip that out, you've got kind of core expansion next quarter. You're kind of stable at this level into next quarter. Is that a fair way to think about it?

Yes. Yeah. Okay, perfect. This is a bigger picture question.

You're well on your way to your $1 EPS target in the fourth quarter. You've hit a 1.1 ROA, and you're at this 13 ROE. You've been such a great story of profitability improvement over the past year and a half, you've hit all these targets. Is the path from here that we're just kind of stable at these profitability levels but with really strong 10% balance sheet growth, or do you see other ways to improve profitability levels over the course of the year?

Yeah. Oh, I think we can continue to improve, especially, Catherine, as you look out into 2027. As we look, it's obviously tougher to forecast, not knowing exactly what rates we're going to do. From our standpoint, over the next four quarters or so, we think we can continue to expand that ROA number up. I think we're going to continue to pick up some EPS growth, continue to move those ROA targets a little bit higher. We feel like as we look ahead and think about already starting to think a little bit about 2027, that we still got some room to move up. As long as the team, as we talked about, hold expenses within a reasonable range and pick up the repricing plus the new growth, we can expand these return targets a little bit here in the near term.

Great. Okay, thank you. Great quarter, guys.

Thank you, Catherine. Thanks. The next question comes from the line of Stephen Scouten with Piper Sandler.

Your line is open. Please go ahead.

Good morning, everyone. Kind of following up a little bit on Catherine's question there. The positive momentum over the last couple of years has been tremendous, and I think you said earlier, Billy, you feel like you're even gaining momentum today. Is there anything out there that would give you pause about something that would maybe derail that momentum? Are you getting to a point where capacity becomes strained at any point? What would kind of stop this positive momentum, if anything?

Stephen, that's a good question. Obviously, something outside of our control being some sort of a macro level event.

That's a gloom and doom question.

I know. Yeah, Stephen, let's get positive. We got to stay positive.

I didn't mean it negatively. No. From my standpoint, I think the biggest thing would be we're hoping to continue to grow margin a little bit.

Ron alluded to it. We've hit it a couple of times here. I think if rates stay up and funding becomes a little more challenging, it may be a little bit heavier fight on NIM. That may hurt us, even though we're positioned very well from an A/L standpoint, very neutral. Obviously, if rates stay up, your funding cost pressures probably something that could nip at us a little bit. I really feel good about the team's ability to keep growing. I talked about the disruption. We've kind of got this thing built right now and really just starting to hit on most of our cylinders. We've still got some gaps that we want to close. Still working on some technology initiatives and things like that.

I don't think any of that would impede us from hitting our growth targets.

Yeah. I think you live in the Southeast like the rest of us, Stephen, and it's just hard to argue that every one of the markets is doing well, the economy's doing good, and our folks are outworking everybody else out there. I just think it's barring some crazy macro event, we're going to continue the progress we're making and excited about it.

Yeah. No, that's a really good answer. I think the idea of just kind of starting to hit on the cylinders, not that you're already firing on all cylinders, is kind of the best conveyance of the continual momentum there. I appreciate that. This question probably gets answered by that statement alone, the stock has been performing so well given your trends. Does M&A start to come back on the table at any point in time, just given the relative strength of your currency now, and maybe accelerate that trajectory even further? Add some cylinders to the engine, if you will?

Yeah. Right now, as we alluded to, we're still very focused on this organic strategy. Obviously, with the valuation lift, it's something that I think we could start to think about a little more as we look into our quarters. Right now, we're pretty well singularly focused right now on this organic strategy. As we get into doing some planning out for '27, obviously something that we would consider. Watch the markets. I think we're always looking to see what's happening out there. Something that we've got, it's a card that we could play now more so than before, especially with valuations, but we still like this organic strategy as 1A.

Yeah, it'd have to be pretty special to make us a lot better, not just bigger.

Yep. Makes a lot of sense. Okay, appreciate it, and congrats again on a great quarter. Great couple of years, obviously. Thanks. Thank you, Steve. Thanks.

Erica, you there? Yes. Your next question comes from the line of Steve Moss with Raymond James.

Your line is open. Please go ahead.

Hey, good morning, guys. Hey, Steve.

Good morning. Maybe just starting here on going back to the margin dynamics here.

I guess maybe first with the securities book, is this as low as you guys think it will go, or could we see a little more runoff in the book given deposit competition here?

I think our book is stabilized. It could drift slightly lower, but we're in a good spot. Basically, your percent of investments on the balance sheet assets, and we use a lot for pledging. We're going to stay within a 10, 12% range of the assets, so not much less. We still have on-balance sheet cash. We're probably $75 million-$100 million heavy with the late quarter brokered entrance. We still can use some balance sheet cash going forward.

Okay, great. Ron, did I hear you correctly? Flattish loan yields for three two, and then just given the back book repricing probably six or seven basis points in the fourth quarter?

Yes. In the fourth quarter, yeah.

Okay. Kind of like a probably close to mid 350s type margin in the fourth quarter.

No. Our base is about 348, so we're probably targeting probably closer to the 350, ±.

Okay. Got you. Great. In terms of just kind of maybe just one more circling back to the loan pipeline here. Good growth across the board, and I hear you guys geographically it's very strong. Going forward, is the pipeline mix more tilted towards C&I, or is it still kind of balanced? Just kind of curious what the pipeline color is there.

Yeah, Steven, we were actually talking about that earlier. Rhett, why don't you give some color on that? I know we talked about geography mix and type composition. You want to give him some color there?

Sure, Steve. If you noticed on the chart in the package, our portfolio continues to just be stable with regard to the mix of the portfolio as a whole, the pipeline really is a good representation of that same trend. We've got good mix of geographies across our footprint, as well as product type. We're really expecting the throughput from the pipeline to kind of keep that same trend going, where it will stay pretty consistent in forward-looking quarters.

Okay, great. Appreciate that there. Just thinking about loan pipeline's good. I know we talked about sandbagging a little bit here earlier. It seems like this mid 3.5% type loan growth linked quarter is sustainable here for the second half.

Yeah, I think so. Yeah, I think we're right there. Again, plus or minus, we always try to hedge a little bit on some pay-downs. When we look at pipelines, Steve, we feel good about where we are. That's the reason we really like this organic strategy. Just keep doing what's working. We're going to keep supporting our teams to help bring those clients on. Yeah, I think we can stay in that 3% plus or minus, maybe three and a half, on a quarter-over-quarter basis.

Okay, great. Last one for me, just curious on what the effective tax rate here you guys are expecting going forward.

Yeah. Yeah. Thanks, Steve. Good question.

Going forward, about 19.5%. Second quarter, we had to do some catch-up from the first quarter. Again, going forward, 19.5%. Right.

You guys made too much money, nice problem to have. Great quarter, guys. Gotta pay the team.

Thanks, Steve. We'll keep working on it, Steve.

Thank you. Your next question comes from Christopher Marinac with Brean Capital.

Your line is open. Please go ahead.

Hey, good morning. Wanted to ask about the reserve level. Is there flexibility given the low charge-offs within your CECL modeling and kind of framework over many years for the reserve to kind of incrementally fall in the future? Would you just assume keep it right where it is?

The CECL model question. That question is so easy, Chris. I'm going to let Ron take that one. Go ahead, Ron. We probably don't see where it's going to go lower.

Again, we've been targeting 97, 98 basis points with our qualitative factors. I think we're very comfortable where it's at, and everyone seems to like that range. Yeah, I don't envision it going lower from here at this point, at least not in the near future.

No, that's great, Ron. I appreciate that. Bill, back to you for a second. As you've had success in markets like Columbus, are you seeing other new entrants in that same market, or are you pretty much alone in your entry there?

I think we have not seen new entrants. We've seen folks flexing into that zone a little bit more down there. Again, it's a good zone. As we've gotten to know that market well over the last year, we're very excited about the team that we have and the opportunities that we have. I think Columbus is probably a lot like several other zones that we're in. These markets that are strong, we're just seeing increased presence and folks trying to recruit and add bankers. I like our chances, I like our teams, and I think we've got a good path ahead in just about all of our zones, really all of our zones. We are really excited about what we've got going on in Columbus.

I agree. That lift out and that team models and fits and mimics a lot of our other markets and culture.

Yeah. It's just been a good fit.

Sounds good. Thank you both. I appreciate you taking our questions this morning.

Thank you, Chris. Thank you.

There are no further questions at this time. I will now turn the call back to Miller Welborn, Chairman of the Board, for closing remarks.

Thanks so much. I appreciate everybody joining us today. Thanks for listening in. Thanks for caring about the franchise we're building, and we hope you have a great day.

This concludes today's call. Thank you for attending.