FB Financial Corp
NYSE:FBK
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FB Financial Corp
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Good morning, and welcome to FB Financial Corporation's First Quarter 2019 Earnings Conference Call. Hosting the call today from FB Financial is Chris Holmes, President and Chief Executive Officer. He is joined by James Gordon, Chief Financial Officer, and Wib Evans, President of FB Ventures, who will be available during the question-and-answer session.
Please note, FB Financial's earnings release, supplemental financial information, and this morning's presentation are available on the Investor Relations page at the company's Web site at www.firstbankonline.com and the SEC Web site at www.sec.gov. Today's call is being recorded and will be available for replay on FB Financial's Web site approximately an hour after the conclusion of the call. At this time, all participants have been placed in a listen-only mode. The call will be open for questions after the presentation.
During this presentation, FB Financial may make comments which constitute forward-looking statements under the federal security laws. All forward-looking statements are subject to risks and uncertainties and the other facts may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned to not put undue reliance on such forward-looking statements. A more detailed description of these and other risks is contained in FB Financial's periodic and current reports filed with the SEC, including FB Financial's most recent Form 10-K.
Except as required by law, FB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation whether as a result of new information future events or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures to comparable GAAP measures is available in the FB Financial's earnings release, supplemental financial information, and this morning's presentation which are available on the Investor Relations page of the company's Web site at www.firstbankonline.com and on the SEC's Web site at www.sec.gov.
I would now like to turn the presentation over to Chris Holmes, FB Financial's President and CEO.
Thank you, Ally, and good morning, and thanks for joining us on this call to review our results for the first quarter of 2019. We appreciate your interest in FB Financial. On today's call, I'll review the highlights of our first quarter, and then I'll turn the call over to James Gordon, our Chief Financial Officer, who will provide additional analysis on our financial results, followed by your question.
[Technical difficulty] by our team with several key accomplishments this quarter, delivering excellent financial results, integrating our branch acquisition, making some hard decisions in mortgage, but most of all, serving our customers in the FirstBank way. Our associates are the core strength, and will continue to deliver strong returns for our shareholders over the course of time. And for the third straight year, we were included on the list of the Best Performing Community Banks in the U.S. between $3 billion and $10 billion assets by S&P Global Market Intelligence, coming in at number 23, and the only Tennessee bank making the list.
This quarter, we delivered exceptional growth in profitability driven by strong fundamental performance, seasonal growth in deposits, and increased yields on earning assets. This performance delivered an adjusted return on average assets of 1.63% and adjusted return on tangible common equity of 15.7%, and an adjusted EPS of $0.66 a share. The four themes for the quarter that I want to highlight on the call, first, our continued balance between growth and margin, our mortgage realignment, our credit quality, and fourth, our capital management.
In addition, I'll give you an update on the recently closed branch transaction and integration. First, covering our balance sheet growth and margin, we delivered solid loan growth with a 13.2% annualized growth over the fourth quarter, slightly over our long-term target of 10% to 12%. We continue to see strong demand across our footprint, particularly in our metropolitan markets, and this quarter's loan growth was driven by our Nashville and Memphis markets. As we get later in the credit cycle we're being cautious with our growth, but we feel good about our markets and the credits that we are taking on, and we will not turn away demand from long-term customers that have demonstrated their credit worthiness over time.
Customer deposit growth was a robust 16.5% annualized for the first quarter. This number was enhanced by seasonal increases in public funds deposits of approximately $40 million and mortgage escrow deposits of approximately $17 million. Backing out those numbers, we would have delivered customer deposit growth of around 10.8%. We continue to focus our frontline on gathering deposits and hope to see continued improvement on that front over the coming quarters as the first of our maturities are from last year's deposit campaign come in.
Our net interest margin excluding the impact of accretion in non-accrual collections increased to 4.44% this quarter. That was above our guidance of 4.25% to 4.35% for the quarter. At the core of our margin, we largely offset our increased cost of total deposits with corresponding increase in contractual yields on loans, and then saw some additional lift from loans held for sale and loans fees. We continue to believe that our prior margin range of $415 to $430 for the last three quarters of 2019 is still a good target given the impact of the branch acquisition, current rate forecast, and anticipated movements in our balance sheet.
Our total mortgage operations, including our retail footprint had a $700,000 adjusted pretax contribution for the quarter as compared to a $1.8 million loss in the fourth quarter. Earlier in April, we also announced our intent to sell our third-party origination and corresponding origination channels. Historically, these have been the most volatile and been the most relied on interest rate in -- in the interest environment for the productivity.
So, while we are giving up some upside from our mortgage operations with volumes are booming, we believe that we have reduced the downside and hope to have more predictable replicable results coming from our retail and consumer direct channels going forward. Exiting the wholesale channels was a difficult decision for us. And we are losing the teammates that have produced strong results for FirstBank in the past.
We are grateful to their contributions and we will miss working with them every day. However, we have come to the belief that this is the best decision for our company and its future. Moving to credit, our metrics continue to reflect a benign credit environment and are very strong for the first quarter. We don't have signs in our portfolio of deteriorating credit. We are seeing continued strong employment and job growth, high confidence amongst business owners and good loan demand in our markets.
Speaking briefly on our returns which are highly connected to value creation for shareholders in our eyes, we expect to see our return on tangible common equity moving to the mid to high teens over the remainder of 2019, following the leveraging of our capital with the branch acquisition. We also continued our current dividend of $0.08 per share, and we revised our stock repurchase program of -- amortization to be $25 million in 2019 and $25 million in 2020.
Moving to an update on our branch transaction, we closed on April 5th, and converted that weekend. Everything is moving about as smoothly as can be expected with the conversion. And I want to thank our conversion team and our new team members for all of their work in making sure that we are effectively delivery quality service to our customers. To date, we have experienced minimal deposit runoff in line with our expectations and have received very positive feedback from our folks in the field.
We closed four branches in the transaction and are relatively in line with our financial assumptions from the date of the transaction announcement. We will continue to update you over the coming quarters of combined operations but so far so good. We are extremely excited about the quality associates and the customers that we have added and the scale that this acquisition provides us in East Tennessee and North Georgia.
So, to summarize, we delivered a fundamentally strong quarter with an assist by some seasonal movements. Through divestiture of our wholesale mortgage channels and the addition of 10 branches from the Atlantic Capital acquisition, we believe the company continues on a great path for the remainder of 2019 and beyond.
With that overview, I want to turn the call over to James to review our financial results in detail.
Thanks, Chris, and good morning everyone. Our adjusted diluted earnings per share were $0.66 for the first quarter of 2019. Our results from this quarter reflect the competitive deposit landscape in mortgage environment that we have been experiencing, offset by growth, overall expense control, increased yields particularly on loan fees and loans held for sale in a benign credit environment.
Slide four illustrates the underlying fundamental trends of the company's profitability and demonstrates the consistent performance that we are delivering. Our increase in adjusted return on average assets over the years as well as our performance this quarter serve to demonstrate the strength, the durability of our core franchises earning power. The sustained level of profitability has been driven by balanced loan growth, a margin that remains one of the highest among our peers, expense control and fundamentally sound credit quality.
Slide five presents the fundamental elements of our net interest margin specifically loan yields and fees as well as deposit cost trends. As Chris mentioned, we were above our target range this quarter mostly due to increased yield on our loan sale for sale of loan fee income. We believe that those will both normalize in the coming quarters with an additional five to 10 basis points decline in margin related to the branch transaction. We continue to anticipate being in the 415 to 430 NIM range for the remainder of 2019.
For some detail, the approximately $385 million of loans that we brought in with the branches had a contractual yield of approximately 4.65% while the approximately $598 million of deposits had a cost of approximately 1.03%. So far we've not been renewing wholesale funds and higher cost public funds CDs that have interest cost in the 225 to 230 range utilizing the excess liquidity from the branch transaction. We anticipate having some excess interest bearing cash during the second quarter to provide additional liquidity as we gain a better understanding of the acquired deposits and how they react to the ownership change in the current market forces.
Swapping the wholesale funds for lower customer funds, also gives us greater control over funding costs as we position ourselves for the first of our maturities from last year's third quarter CD campaign coming due in the second quarter. We continue to feel good about the relative strength of our margin. We're managing our overall cost of funds with the excess funding from the branch transaction and focusing our customer-facing associates on gathering deposits. We expect to see any additional organic growth to come at a modest cost in the near term assuming a flat rate environment for the remainder of 2019.
Now moving to slide six, and as Chris mentioned previously, we produced another quarter of solid loan growth. Our objective remains consistent, profitable and relationship driven growth not merely focusing on hitting a quarterly target especially given our higher funding costs. We also stayed comfortably within the regulatory thresholds on construction and development and CRE concentration ratios. But we'll see our CMB concentration increase back towards 100% of risk based capital next quarter with the capital utilized in the branch transaction.
Overall, we saw a lift in loan pricing this quarter similar to our increase in deposit calls mostly due to the impact of December's rate hike on our variable rate loans. In the absence of rate hikes, we would expect the yield on our Pre-Atlantic Capital portfolio to stay relatively flat for the second quarter and the remainder of 2019 and overall yield to initially decrease as we had on the $385 million in acquired loans at 4.65%.
Moving to slide seven, our customer deposits were $4.2 billion up 16.5% on an annualized basis from the fourth quarter of 2018. We had a good -- we had good growth this quarter that included seasonal increases of $40.4 million of public bonds and $16.7 million in escrow deposits. We can while we can continue to see deposit costs moved up this quarter, we have an opportunity to re-price the maturing promotional rate CDs over the balance of 2019 with approximately $143 million maturing in the third quarter with a rate of approximately 2.55%.
Next and turning to slide eight in the first quarter, our total mortgage operations added adjusted pre-tax contribution of $700,000 and our retail footprint is included. For the quarter, our adjusted total mortgage contribution was approximately 2.7% of the company adjusted pre-tax income, which is down from 8% in the first quarter of 2018. Our interest rate like commitment volume was up slightly over the fourth quarter at $1.3 billion and down from $2.1 billion in the first quarter of 2018.
Competitive pricing pressures continue to weigh on both volumes and margins. We believe the sale of our TPO and Correspondent channels were a result, and then a reduction of approximately 45% of our volume compared to prior periods, with our health reductions and given that those channels have the lowest margins, we have not changed our goal of slightly exceeding 2018's full-year performance of $5 million of pretax contribution from total mortgage, which will largely come from contributions produced in the second and third quarters, while likely being slightly above breakeven in the fourth quarter. Including this quarter's $1.1 million in restructuring charges, we expect up to $2.5 million in one-time expenses related to the divestiture over the first-half of 2019.
Now, looking at slide nine, we expect our Banking segment non-interest expenses, and excluding mortgage-related expenses, to continue to grow in the mid single-digit range, reflective of growth and additional investments in revenue producers and technology. Excluding our mortgage retail footprint, bank level core non-interest expenses increased approximately $600,000 or 1.8% in the first quarter. Additionally, the branch deal would add approximately $2.5 million to $3 million of quarterly non-interest expenses, not including CDI amortization related to the deal.
Beginning this quarter, we have changed the presentation of our efficiency ratio to no longer exclude the net change in the fair value of our MSRs from the calculation. So, prior period ratios are slightly different for the core total and operating segment than previously reported. Our effective tax rate was 23.4% for the first quarter, primarily benefiting from equity awards investing during the quarter. For 2019, we continue to expect our effective tax rate to be in the 25% range, but lower than Q3 and Q4 due to projected equity compensation investing.
As shown on slide 10, our asset quality remains sound and provides a strong foundation for a company. Non-performing assets to assets came down a bit of the quarter, and the whole of our loan portfolio remains in solid shape. We had lower than expected provision expense this quarter on the back of that sound credit quality, but we would expect those costs to come up slightly over the remainder of the year, closer to the level that we experienced in the fourth quarter of 2018, and net charge-offs increased slightly.
Since the first quarter after our IPO, our tangible book value per share, as shown in slide 11, has increased by $6.17 or 53.4% to $17.73 driven by our strong financial results and the accretive Clayton Bank's merger. Our capital remains strong this quarter, enabling the branch transaction without raising additional capital. With the closing of the transaction, we expect to use $45 million to $50 million in capital related to intangibles created and deal charges which we expect to drive our total risk-based capital ratio down by approximately 200 basis points. We expect our TCE ratio to settle in the 8% to 9% range immediately following the acquisition. With that level of earnings we expect that we can build that back over the course of 2019.
Now, with that overview, I want to turn the call back over to Chris for closing comments, and then we'll open the call for your questions.
Thank you, James. Once again, we appreciate your interest and investment in FB Financial.
Operator, that completes my remarks for this morning's call, and we'd now like to open it up for questions.
Thank you. [Operator Instructions] We'll take our first question from Catherine Mealor from KBW. Please go ahead.
Thanks. Good morning.
Morning, Catherine.
Wanted to start on mortgage, I know you gave guidance that your bottom line guidance for mortgage really hasn't changed despite the sale of the wholesale piece. So can you help us just on the expense side of it, how much of expense reductions that we could see on the mortgage side this year after that sale?
Yes, Catherine, this is Wib. And so both these third-party channels are obviously not our heaviest expense, but they're also our lowest margins. I won't give you an exact number on that, but our expense range would be somewhere in the 15% to 19% range of our total expenses on a run rate. And on the revenue side would be probably in the 18% to 22% range.
Okay. And maybe another way to ask it is there a different way to think about what the mortgage efficiency ratio should look like once these pieces are backed out, or has not changed…
Yes, we don't know exactly what that's going to like. I would tell you that it's going to come down. Our efficiency ratio has been a bit, as you know, higher than what we would like. And so I would think that that number is going to be down in that 89% to 90% range.
Okay, that's helpful, thank you. And then on the share buyback, Chris, you mentioned that you were kind of splitting the buyback between this year and next year. As we think about how active you may in the half that you're thinking for 2019, is that price sensitive or are you comfortable now that ACBI is closed and past that acquisition that you'll be active in the market pretty soon after earnings or does that depend on where the price goes?
Yes, it's price sensitive. It is price sensitive. And if you'll remember when we announced the buyback we hadn't announced the branch transaction yet. And so the reason for those, diving the 50 into 25 and 1925 and to 20 -- we, again, we used some excess capital, so we didn't raise any capital when we announced the branch transaction. And so that's the reason for the split, and then it will be price sensitive, so we may or may not be in the market just depending on what the price is.
Okay. That's helpful, great. Thank you. I'll jump out. Congrats on a great quarter.
Thanks, Catherine.
We'll take our next question from Peter Ruiz from Sandler O'Neill. Please go ahead.
Yes, thanks. Congrats on the nice quarter, guys.
Thank you, Peter.
Just wanted to maybe follow-up on the buyback, I guess how are you guys thinking about the $25 million this year relative to maybe what the opportunities and discussions are looking like on the M&A front. I feel like maybe previous commentary kind of leaned towards maybe continuing to pursue other capital deployment opportunities. So are you kind of seeing maybe the discussion shift a little bit so that maybe the buybacks are a little bit more attractive or any puts and takes there?
Yes, as we think about opportunities for capital buyback is not our -- or necessarily our highest and best use, just like we deployed it when we make the branch acquisition, we'll continue to look for ways to get the highest return. And so we'll continue to look on the M&A front, that's a relatively active market especially in smaller banks. That being said, you've seen us be patient and disciplined on that front. You'll continue to see us be patient and disciplined on that front. And so we're not looking to run out, and we're kind of waiting for opportunities to come to us. But that's certainly generally a higher -- a better use.
That being said, we're going to have to buyback there, we'll be able to deploy it, especially if we felt that our stock price was not appropriately reflected in the marketplace, it gives us a tool there to utilize the capital appropriately. So that's really the way that we look at it.
And then maybe on the loan growth, just -- obviously continue to surpass that longer-term guidance. And I know you're not necessarily looking for a quarterly target, but are you kind of seeing any changes on the paydown front, have paydowns eased? What's the competition looking like in your markets right now?
Yes, good question. And actually you did hit on something -- we actually had some relatively significant paydowns in the quarter, and had some fees related to that from some early payoffs. I think that's not unique to us. I think that's going on in the marketplace, but again we continue to have strong demand across the footprint. We're fortunate to be in -- most people know national is a great market. And so there continues to be strong demand in national, but there is also -- we are in another great markets, and so, one of the things we have been really pleased with over the last couple of years is how the other markets have really become real contributors on growth in both loans and deposits.
And so, that's something that if you kind of look at our timeline and look at our balances over the last several years -- last three or four years, you have seen that that really be a change in the makeup of our company. So we are getting demand from all around. And so, I think I may have made this statement last quarter. I have certainly made it before, that's a fairly comfortable and controlled growth rate for us. And so, we anticipate keeping it in that range. Again it could be just like this quarter. It could be a little above. It could be a little below. But demand continues to be strong. And, we continue to be able to absorb the pay offs and continue in that 10% to 12%, in this case 13% range. And so, we think that that's -- we are still comfortable with that.
Great. Thanks so much.
Thanks, Peter.
Thanks, Peter.
We will take our next question Alex Lau from JP Morgan. Please go ahead.
Good morning.
Good morning, Alex.
Hi, so I wanted to touch on the deposits. So now that the Fed is on hold with rate hikes, are you seeing any easing on deposit pricing competition in your markets?
Yes, actually it's not as stressed as it was. It has eased somewhat from say third and fourth quarters. We still see some -- I predict there're one-off rate promotions and hear about some rates out there that just don't make any sense to us, but I would say just in general if you are talking about our markets, we have seen it. We have seen the competition moderates as I think particularly the outlook, if you now look at the outlook for the rest of the year it looks like the projections are not more rate hikes and some project maybe a cut even later in the year or sometime next year. So, I think as folks will gather in the future, we have seen competition become less intense.
Great. Thanks for that.
Thanks Alex.
Thanks, Alex.
[Operator Instructions] And we will take our next question from Jennifer Demba from SunTrust. Please go ahead.
Hey guys, it's actually Steve on for Jennifer.
Good morning, Steve.
Good morning Steve. I love Jennifer's voice change.
No worries. You guys mentioned being a little more cautious with the growth here. What does that entail? It doesn't seem to be affecting kind of your loan growth numbers. Where there any certain segments you don't want to lend to? Or, is it more based on kind of the borrower customer relationship?
Yes, a little of both. Projected borrower customer relationship, we see some things where you would have -- some things maybe you would have done that you -- in certain times, but when you look at and you think, boy, the economy could be slower in 2020 or 2021. It maybe you either don't do or you do in a smaller way. You do focus on your longtime good customers if you want to make sure you have capacity.
We have got a lot of longtime really strong customers that we have done business with for decades. And you want to make sure that you've got capacity to serve them would be a couple of adjustments. And then other one would be maybe on -- would be on particular segments. There are some things that tend to be a little more sensitive to the cycle in some areas that you would -- where you would begin to be a little more selective. And so, all the typical things, constructions, multifamily, you know, some other pieces of our balance sheet where we got some specific customers that may have a specific niche, but you know from history that that niche is going to be a little more sensitive to the cycle that you also maybe -- that you maybe looking at, and introducing your exposure or beginning to limit your exposure. I wouldn't say -- I wouldn't really say anything, are we reducing our step to exposure, but maybe limiting it moving forward.
And I think the other [indiscernible] is really not so much for the credit, but as the funding side of it, given what incremental cost of funding -- you know, where it's today relative to loan yields on an overall basis are relatively flat particularly where the curve is positioned. We're being a little bit cautious on the growth, and what pressure that to put on there within range. I think there is plenty of activity to do more of that -- you need to balance it against the credit and the funding side of our balance sheet.
Perfect, thanks. And then, of course I have to ask you, but any thoughts on seesaw implementation here, any thoughts on kind of day one in backyard, or I know it's a tough one to put numbers on so far…
You, Steve come on man, you can ask…
We are just open, Congress will intervene. That's our strategy. Only kidding, obviously it will be an impact I think some of the moving parts of that we're still -- we're beginning, and the score will begin actually able to run parallel. We'll start to have a better feel of that by the end of the third quarter. So I think we'll be in line with most people in the community bank. I think the -- our allowance methodology was closer in some respects with a five year look back, which is probably within our average loan maturity or average loan life. So while it will have some impact, it will -- we think it will be in line with others, but not -- it shouldn't be out, and of course the other piece is the doubling up our impact of acquired non-PCI loans. That has a little bit of the doubling impact all of that. That portfolio right now continues to come down over the course of the year before implementation. So we'll see how that rolls through, because we continue rolling those maturities into the allowance each quarter to take care of that.
So, I think the hard part to predict is what it does to the provisioning going forward. The initial adoption I think is going to be within reason that the ability to manage the provision, post-adoption is probably the most concerning part about it depending on how your portfolio moves in a particular quarter or period, and how that could drive the produce.
Okay. Thanks, guys.
Thanks, Steve.
Thanks.
[Operator Instructions] We'll take our next question from Daniel Cardenas from Raymond James. Please go ahead.
Good morning, guys.
Good morning, Daniel.
Just a couple questions in terms of dollar amount, I mean what was the impact on paydowns in Q1, and then as I think as it relates maybe can you help what impact it had on the margin as I'm trying to work down to a core margin for you guys?
So I would say we don't track every paydown, but I would say there were three or four larger ones that were probably in that 30-plus million dollars in the aggregate that contributed. If you look at loan fees, there -- and contributed quarter-over-quarter about nine basis points. So probably half of that growth was from some of those paydown fees.
Great.
But we expect the overall, the loan fees to come back in as I said in my comments, to the levels that we were experiencing in 2018 on average. They were a little bit lower in the fourth quarter. So until we do it quarter-to-quarter and we do track gross and net growth and net payoffs, but we had -- as James said, approximately three -- actually three that were -- in the aggregate were in the 30 million range.
Good. And then you credit metrics are good very manageable, but maybe some color on watch list trends, what that looks like perhaps on a linked quarter basis as well as the year-over-year basis, and if there's anything out there that's causing you concern right now?
Yes. So, our watch list actually continues to be stable. And so, when we look at our – the internal metrics that aren't publicized, they all actually continue to be quite stable. If you remember back in the fourth quarter, we had one loan that was just over 5 million that were non-accrual, still on non-accrual. So that number jumped up some related to one loan. Other than that, the numbers continues to perform fairly well. And that -- and by the way, that loan is better than it was, and so, the underlying metrics from classifieds to watch list to past dues actually continue to be good.
We worry about, and you've seen in the market, we worry about a one-off coming up, you can always be -- I always say that, you can always be subject to some one-off, and we worry about that, but frankly, when we look at metrics and we try to highlight things that are going to be problems, we're not seeing cause for alarm. You hear us -- hopefully you hear us, I mean as we say -- I said earlier in my comments, we're closer to the end of the cycle, we don't know where that's coming, we're on guard for that, and so, we're watching, we're trying to be really diligent there and watching all of those metrics. And other than a one-off here or one-off there like we had in the fourth quarter, we're seeing continued strength.
Yes, and basically every one of the categories from fourth quarter to first quarter were down around $5 million, whether PCI classified as watch, past dues I think we're in the lowest level I think they have been in two-plus years since we acquired the Clayton Bank. So, everything is on a very positive basis now that's -- it's a moment-by-moment deal on some of those, but nothing out of the ordinary, but they are all down and only up slightly year-over-year, so…
Okay, good. And then, last question from me, then I'll step back. On your pro forma TCU ratio of kind of that 8% to 9%, is that at the lower end of your comfort range, or would you be willing to take that number down lower if you found the right transaction?
Yes, that is our comfort range. If we had the right transaction we may go below that for some limited period of time, and then bring it back. As you see given just your return numbers, we generate capital fairly quickly, and so, for the right transaction it wouldn't bother us to take it down from there, but on a steady stake basis, we would like to see it in that range.
All right, good. Congrats on a good quarter, guys.
Thanks, Daniel.
We'll take our next question from Tyler Stafford from Stephens Incorporated. Please go ahead.
Hey, good morning, guys.
Good morning, Tyler. How are you doing?
Good. Hey, I apologize I just hopped on; so I apologize if you guys discussed this already. Can you just talk about given the TPO and the Correspondent channel exit, what you'd expect from a kind of new blended gain on sale margin going forward, and then any expense offset that we should be thinking about as a result of the exit of those two channels?
Wib will answer that…
Yes. So Tyler, here is what we would be thinking, obviously those are our two lowest margin channels, and so, the data [ph] that we have given previously on our consumer direct and our retail channels would hold up as we go forward and once we get these transactions closed. And so, those numbers range up in the 350 range, 325 to say 350 on the retail front, and probably -- I would call it 150 to 180 probably on the consumer direct front. And so, as we look at a blended number, our consumer direct generates a little bit more volume as does our retail group, and we're still looking at somewhere north of 3 billion in total production on annualized basis going forward out of those two channels.
Okay, got it. Thanks for that. And then just -- I guess -- did you guys discuss already the expense offsets, I mean is that…
Yes, we did, and…
Okay.
And we are looking on expense side somewhere in the -- call it 15% to 18% range of our total expenses, and on the revenue front 18% to 22%.
Okay, I will hop out. Thanks, guys.
All right. Thanks, Tyler.
And we have no further questions. I would now like to turn the call back to Chris Holmes for any additional remarks.
Okay, thank you very much. We appreciate everybody joining us for the call, and again, we appreciate your interest in the company, and we look forward to continued success for all of us. Everybody have a great day. Thanks. Bye.
Thanks.
And that concludes today's conference. Thank you for your participation. You may now disconnect.