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Goosehead Insurance, Inc (GSHD) Q1 2021 Earnings Call Transcript

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GSHD earnings call for the period ending March 31, 2021.

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Goosehead Insurance, Inc (GSHD -3.19%)
Q1 2021 Earnings Call
Apr 29, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you for standing by. This is the conference operator. Welcome to the Goosehead Insurance First Quarter 2021 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Dan Farrell, Vice President of Capital Markets, for opening remarks. Please go ahead.

Dan Farrell -- Vice President

Thank you, and good afternoon. With us today are Mark Jones, Chairman and Chief Executive Officer of Goosehead; Michael Colby, President and Chief Operating Officer; and Mark Colby, Chief Financial Officer. By now, everyone should have access to our earnings announcement, which was released prior to this call, which may also be found on our website at ir.gooseheadinsurance.com. Before we begin our formal remarks, I need to remind everyone that part of our discussion today may include forward-looking statements, which are based on the expectations, estimates and projections of management as of today. The forward-looking statements in our discussion are subject to various assumptions, risks, uncertainties and other factors that are difficult to predict, and which could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These statements are not guarantees of future performance and therefore, undue reliance should not be placed upon them. We refer all of you to our recent filings with the SEC for a more detailed discussion of the risks and uncertainties that could impact the future operating results and financial condition of Goosehead Insurance. We disclaim any intentions or obligations to update or revise any forward-looking statements, except to the extent required by applicable law. I would also like to point out that during this call, we will discuss certain financial measures that are not prepared in accordance with GAAP. Management uses these non-GAAP financial measures when planning, monitoring and evaluating our performance.

We consider these non-GAAP financial measures to be useful metrics for management and investors to facilitate operating performance comparisons from period-to-period by excluding potential differences caused by variations in capital structure, tax position, depreciation, amortization and certain other items that we believe are not representative of our core business. For more information regarding our use of non-GAAP financial measures, including reconciliations of these measures to the most comparable GAAP financial measures, we refer you to today's earnings release. In addition, this call is being webcast and archived version will be available shortly after the call ends on the Investor Relations portion of the company's website at www.gooseheadinsurance.com.

With that, I'd like to turn the call over to CEO, Mark Jones.

Mark E. Jones -- Chairman, Director And Chief Executive Officer

Thanks, Dan, and welcome to our first quarter 2021 results call. We had another quarter of accelerating growth. In addition to reviewing our results, I'll provide a summary of building blocks we've recently laid to support continued accelerating growth at Goosehead. I'll also delineate and explain some of the core strategic trade-offs we make as a company. I'll then hand it over to Mike Colby, our Chief Operating Officer, to update you on some of our technology efforts in the quarter. Our CFO, Mark Colby, will then go into greater detail on first quarter results. Let me start with a reminder that our largest shareholder block by far is our management team. Our Goosehead Holdings represent the majority of our individual networks. We think and act like long-term owners because that is what we are. When we make strategic decisions, we do so well informed and in a very real way with our own money. In the first quarter, we delivered accelerating growth and made a number of critical investments that we believe will support ongoing growth acceleration. Let me take a moment to highlight some of these. Premium growth, the leading key indicator of future revenue growth has continued to accelerate year-over-year on a larger base. In Q1 2021, premiums increased 49% compared to 46% for the first quarter of 2020, while policies in force grew 49% compared to 45% for the first quarter of last year. Our premiums in the franchise channel grew 55% for the quarter, providing excellent visibility into strong and accelerating embedded revenue growth as those policies convert to renewal and our commission share jumps to 50% versus the 20% we earn on new business.

Core revenues increased 47% over the prior year period compared to 32% growth for the first quarter of 2020. Our total franchise count at the end of the first quarter was up 61% year-over-year as our franchise sales team becomes increasingly effective, identifying and winning successful franchise candidates for both within and outside the insurance industry. This growth compares favorably to the 45% increase in the first quarter of last year and the 55% growth for the full year 2020. Franchise growth is critical to future premium and revenue growth. While we make the investment in recruiting and training today, premium growth typically takes several years to fully manifest, and revenue growth takes even longer because of the structure of our royalty fee agreements, which is 20% on new business commissions and 50% on renewals. For example, in 2020, total franchises grew 55%, but those growth units contributed only 4% to 2020 royalty fee revenue. Furthermore, 61% of our total franchise base is either in their first year or preparing to go live, giving us an enormous growth platform for many years to come. Also, while our franchise unit count is growing rapidly, the unit productive capacity is also growing as many of our more seasoned franchises are now adding producers, which will be a larger and larger source of growth over time.

The corporate agent team is up 51% from a year ago compared to the 31% growth we saw in Q1 of 2020. Continued growth of this channel is important as efforts in training, mentoring and beta testing of new technology and processes, helps drive the extraordinary growth and improves productivity of the larger franchise channel. Remember, these corporate agents aided by our proprietary technology are 3.8 times more productive than the most productive insurance agents in the United States. Our agents are the best in the business. We continue to invest in expanding our physical footprint in the corporate channel to further support the expansion of our largest growth channel, the franchise network. During the remainder of 2021, we'll be further expanding our corporate footprint with new offices in Denver, San Antonio; Columbus, Ohio; a second Austin, Texas office; and a second Chicago office. In addition to providing support to franchisees, these corporate offices help us scale nationally and enhance college recruiting opportunities in both the short and long term. In addition to the significant and consistent direct investments to sustained growth acceleration in our traditional channels, we've made strong progress, developing our direct-to-consumer quoting platform, which we anticipate releasing in the third quarter of this year.

We believe this platform will fully enhance our omnichannel strategic advantages, particularly as Goosehead will be the only true online choice model in the marketplace. Mike will provide more on the direct trader and other digital progress in his remarks. Our runway in the market is enormous as our 2021 premium base will likely represent less than 0.5% of the $360 billion U.S. personal lines market. To accelerate our path toward industry leadership in the personal line space, we remain maniacally focused on continually improving all drivers of growth, those being recruiting, productivity and retention. Our competitive mode in the marketplace is deep and robust, and our people and proprietary technology are the core of what makes our organization so unique and difficult to replicate. We've now been a public company for three years and many private equity-backed firms and publicly traded insurance brokers look at our growth and success with NV. If our business could be replicated through M&A, it would have happened by now. I believe the only way to create a truly viable competitor to Goosehead is to start from scratch and build the company de novo. Our unique ability to attract extraordinary human capital and 17 years of accumulated experience serving clients, agents and carriers in the personal lines market space have created profound strategic advantages in our business model that are extremely difficult to replicate without the benefit of significant time and capital. And most of the people with the capital aren't willing to devote the necessary time. I truly feel it would take at least a decade to create a competitor that could come close to matching Goosehead's capabilities. All the while, we continue to increase our momentum and expand our already powerful competitive position.

Our success as a public company certainly has helped pave the way for several insurtech IPOs. However, we're unique in that we're a broker, not an underwriter. In fact, many of the recently public insurtechs around our platform as carrier partners. Unlike most of the insurtech world, which are start-ups, operating cash flow negative, we have been operating for 17 years with a proven model, delivering consistent strong revenue and earnings growth. Also, our operating cash flow fully funds our growth strategy. Now a word about margins. Our objective is to maximize total profits over the long term. And we know that the stronger the foundation we build now, the larger and more sustainable our profits will be over time. In the short term, we make investments that will facilitate this. And as a reminder, most of our investments run through the P&L and don't show up on the balance sheet. While we manage the business responsibly, short-term margins are a lower priority than achieving our growth goals. There is natural operating leverage and margin expansion in our business over time, particularly as franchises season and new business converts to renewal in the franchise channel. Long term, we believe that it is not unreasonable to anticipate EBITDA margins north of 40%. But for now, the priority is capturing market share, and we'll make the short-term investments to do so. All of that being said, our annual EBITDA margins approximate the other publicly traded insurance brokers, notwithstanding the fact that our 2020 organic growth rate was 25 times theirs. And by the way, much of their growth investments end up on their balance sheet because they're implemented through acquisitions, which makes our results all the more extraordinary.

I'm extremely excited about the accelerating growth indicators we're seeing in our business. These results are further validation of our unique and powerful business model, focus on the clear advantages of a choice product offering, the value of skilled and professional sales and service agents and the benefit of industry-leading technology that delivers an unmatched experience for our clients. It is important to remember that the premium and revenue growth we're seeing today is largely being driven by investments we made in 2018 and prior. We expect the investments we made in more recent years and the ones we have planned for 2021 to help support high rates of growth for many years to come. Our organization will remain aggressively on offense as we further expand our unique and differentiated platform into the U.S. personal lines market. I want to thank our entire Goosehead team for delivering a fantastic start to the year, which position us extremely well for 2021. Mike?

Michael C. Colby -- President And Chief Operating Officer

Thanks, Mark, and hello to everyone. On past calls, we've discussed our plans to take the proprietary comparative quoting platform we built for agents and pointed toward prospective clients. In the first quarter, we made significant progress on this project. We're beta testing it now and plan to release this technology as well as a complete rebuild of our website in the third quarter. To better understand how this is so completely differentiated, let me walk you through the process of shopping for insurance online today and how our quoting platform delivers an effortless online shopping experience that most importantly is informed by expert agent intelligence and nearly two decades of accumulated experience. When shopping for insurance online today, clients come across several options: one, direct-to-consumer insurance companies; two, lead generators; or three, digital independent agencies. Direct-to-consumer insurance companies are structurally disadvantaged from providing the best experience because they only provide one product option, requiring the client to shop the market for themselves to find the right policy at the best price.

With each insurance company, the consumer completes a lengthy questionnaire, providing the site with their personal information and information about their home and vehicles. This interview process can include upwards of 100 questions, many of which the client will not know how to answer or they will not have easy access to the required information. For example, does their home have a hip or gable roof? What is the distance from their home to the closest fire hydro? What is the VIN number on their vehicle? They want to complete this process with many different insurance companies to determine if they're getting the appropriate coverage of the best price, and there are over 400 home and auto insurance companies in the U.S. The client is then presented with pricing, including various options to increase or decrease the cost, based on coverage additions or subtractions and can continue the process to purchase online. These trade-offs can be very confusing, even overwhelming and getting access to an expert agent is difficult, if offered at all. Other online options include lead generators, digital independent agencies or hybrid of the two. After going through the same lengthy interview process, these sites return only a few pricing options and other options without any pricing indication at all, neither of which allow the clients to easily proceed to purchasing a policy. Many times, what's happening here is the lead generator is gathering information to sell to multiple insurance companies and agencies. At that point, the client will incessantly be solicited to by numerous insurance providers for weeks and on the anniversary of this process indefinitely.

Not a great client experience by any definition. With the digital independent agencies, due to a lack of experience and expertise in the client's local market or because of the bait-and-switch approach pursued by many of our competitors that provide quotes with completely unrealistic prices, driven by discounts which few people qualify for, assuming perfect credit and/or cutting important coverages. The client is disappointed to realize the final purchase price is frequently much higher than the initial pricing estimate. What we've built is a quoting platform that provides an effortless experience for the client at every step of the process. Our site requires simply three data points, a name, data birth and address. With this information, we can automatically populate all of the data on their home and vehicles needed to provide an insurance quote, leveraging integrated external data providers. Whether using a desktop or mobile device, within 60 seconds of providing the required data points, a client is presented with multiple home and auto insurance quotes, which typically vary in pricing by thousands of dollars. You should note that such a wide pricing variance emphasized the importance of a thorough shopping process for the client to get the best value, which only an independent agency can provide. Immediately upon providing initial insurance quotes, we introduced the client to one of our more than 1,700 knowledgeable agents. This is a critical differentiator.

Insurance policies are complex, offering many different coverage options and pricing and the consequences of getting this wrong can be financially catastrophic to the client. Our expert agents review all available options with the client, make important recommendations and ultimately, issue the home and auto insurance policies, a process that takes less than 30 minutes. And because our quoting process is driven by artificial intelligence, informed by expert agent behavior over millions of insurance quotes across the country, we avoid misleading the client with low ball price estimates that lack the appropriate insurance coverage or make inappropriate assumptions in the quoting process. Furthermore, we will never sell our clients' personal data, whether we win their business or not. This platform accomplishes our objective to dramatically simplify the process, provide transparency and prudent advice and deliver an effortless experience for the client, something not available on the market today. We're excited to release this in the third quarter and look forward to providing you all with a demonstration as we get closer to launch. This is an important milestone on our road map to deliver a complete purchase experience, quote to issue, informed by expert agent intelligence, a development effort where we're making encouraging progress.

With that, I'll turn the call over to Mark Colby to provide color on our financial performance.

Mark S. Colby -- Chief Financial Officer

Thank you, Mike, and hello to everyone on the call. For the first quarter of 2021, total written premiums, the leading indicator of our future core and ancillary revenue growth, increased 49% to $319 million. This included franchise premium growth of 55% to $230 million and corporate segment premium growth of 35% to $89 million. This accelerating growth is being driven by continued high retention rates, strong new corporate and franchise agent growth and increasing agent productivity in the franchise channel. The continued shift in our mix of business toward the faster-growing franchise channel imply significant embedded future revenue growth as the new business premiums reliably convert to renewal premiums, at which time our royalty fee increases from 20% to 50% for ongoing renewals for the life of the policy. At quarter end, we had roughly 788,000 policies in force, a 49% increase from one year ago and another indicator of increasing momentum in our business. Revenues were $31.2 million for the quarter, an increase of 53% from the year ago period, while core revenues increased 47% to $26.7 million for the quarter, both growth rates accelerating from the first quarter of last year. Ancillary revenue, which includes contingent commissions, was $2.8 million in the quarter compared to $1.1 million a year ago. I'd like to remind everyone of the cadence of our ancillary revenue from contingent commissions throughout each year under ASC 606.

In the second quarter, we expect to book minimal contingent commissions as we will not have sufficient insight into loss ratios and other drivers of our contingent revenue to meet GAAP thresholds for recognition. The third quarter should have some additional contingent commissions as our profitability with our carriers comes more into focus. The fourth quarter should have the majority of our contingent commissions as our results with the carriers are finalized. Finally, as a reminder, we do not rely on contingencies to fund future growth or operations. The franchise channel generated core revenue of $11.9 million, an increase of 60% from the year ago period. At the end of the first quarter, we had 1,628 total franchises, up 61% from the prior year and 987 operating franchises, up 45% from a year ago, two additional key performance indicators where growth has accelerated. At this time last year, total franchise growth was 45%, and operating franchise growth was 36%. We continue to build on our strategy of national expansion within the franchise channel with non-Texas franchises accounting for 76% of total units compared to 70% a year ago.

And these non-Texas franchises are continuing to grow their productivity in 2021. We have also continued to accelerate our investment in corporate agent hiring and national expansion to facilitate the franchise channel growth and productivity. Corporate sales headcount at the end of the first quarter was 363, an increase of 51% from the year ago quarter and compared to 31% growth in corporate headcount a year ago. As a reminder, the majority of our corporate agents launched in the summer months following college recruiting season and our expanded geographic footprint positions us well to add quality talent for numerous additional universities. Corporate channel core revenues were $14.8 million in the first quarter, an increase of 38% compared to the year ago period as new agents continue to ramp up productivity over their tenure. Total operating expenses for the first quarter of 2021 were $32 million, up 58% from $20.2 million in the prior year period. Compensation and benefits expense was $21.3 million for the quarter, up 58% from one year ago on 56% headcount growth. The increase in compensation and benefits is being driven by our ongoing investments in headcount across the organization, particularly the hiring of corporate sales agents in support of the franchise channel growth, service agents to manage our largest revenue stream renewals, recruiting and onboarding functions to continue our growth trajectory and systems developers to ensure our technology is on the cutting-edge for our clients and internal users. General and administrative expense for the quarter was $9.3 million, an increase of 58% from a year ago with the increase due to an expanding real estate footprint and investments in technology, including our client-facing portal and a number of carrier integration projects.

Total adjusted EBITDA in the quarter was $2.1 million compared to $1.2 million in the prior year period. As Mark mentioned, our goal is to maximize total profit dollars over the long term. For now, that means investing heavily to grow rapidly and to responsibly maximize market share capture in the near term. Recognizing the mechanics of our business model will expand margin over time as new business predictably converts to renewal business, shifting our premium mix more and more to renewal. We continue to make very focused investments just like we did while a private company, but we believe driving growth is more strategically critical to the business than margin expansion at this time as we continue to put distance between us and any potential competitors. That being said, I would like to reiterate Mark's point that we believe there is powerful operating leverage available in our business model with long-term EBITDA margin potential of north of 40%. Our strong revenue and earnings growth has continued to generate high levels of excess cash for the business that will self fund future growth. In the quarter, we generated $7.9 million of operating cash flow, compared to cash used for operations of $1.5 million in the prior year. As of March 31, 2021, the company had cash and cash equivalents of $30.8 million. Additionally, we have an unused line of credit of $19.7 million. The total outstanding term note payable was $78 million as of March 31, 2021. Based on our experience to date, the company is raising its full year 2020 outlook with respect to total written premiums and revenue. Total written premiums placed for 2021 are expected to be between $1.5 billion and $1.56 billion, representing organic growth of 40% from the low end of the range to 45% from the high end of the range.

Prior guidance issued was for organic premium growth between 38% and 44%. Total revenues for 2021 are expected to be between $146 million and $156 million, representing organic growth of 25% on the low end of the range to 33% on the high end of the range. This assumes continued strong growth in core revenue and a return in 2021 to a more normalized level of ancillary revenue following a record year in 2020. Prior guidance issued was for organic revenue growth between 23% and 32%. Our strong first quarter results position us very well to deliver strong revenue and earnings growth for the balance of 2021 and beyond. I want to thank everyone for their time.

And with that, let's open up the lines for questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] The first question comes from Meyer Shields with KBW.

Meyer Shields -- KBW -- Analyst

I had two questions on, I guess, recent Texas or not so recent Texas freeze. I was hoping first that you could walk you through the timing. Like if that impacts contingents, does that impact this year or next year? And the second question is, what you're seeing in response in terms to increased shopping, following what has to have been a huge number of claims?

Mark S. Colby -- Chief Financial Officer

Yes. I guess, first, on contingents, Meyer. This is Mark Colby. It's still really too early to tell. What we do know about the Texas storm is that it was considered a catastrophic event, which helps us with contingencies, but again, it's a little bit too early to tell. As far as the shopping experience for a lot of those clients, I can't really speak. I don't think we've seen like a noticeable uptick in that. I think given our go-to-market strategy of being home closings, not necessarily online shoppers. I think, for us, it was a little muted.

Mark E. Jones -- Chairman, Director And Chief Executive Officer

We've certainly seen heightened claims activity, and it's not the first time we've been through a major event. We've been through many major events in our -- in the course of business. So while that creates a certain level of taxation on the service team, we're well equipped to handle that, well equipped to deliver great experience. I mean, look, our Net Promoter Scores increased over the quarter from the year-end and retention held steady. So there's no indication that we've seen an increase in our clients shopping. The other thing I'll note there, Meyer, is that compared to a couple of years ago, in 2020, in the first quarter of 2021, Texas only makes up roughly 60% of our premium, which is way down from prior year. So as we get more and more diversified throughout the country, that certainly helps the contingencies as well.

Mark S. Colby -- Chief Financial Officer

And they were named catastrophic storms as well.

Mark E. Jones -- Chairman, Director And Chief Executive Officer

Which are typically excluded from contingency calculations.

Meyer Shields -- KBW -- Analyst

Okay. Perfect. No, I appreciate the clarification. One related question. I guess, when you've got that level of activity, does that impact the expenses associated with servicing claims?

Mark E. Jones -- Chairman, Director And Chief Executive Officer

No. No, it doesn't at all. We were able to, especially with our service center in Henderson, Nevada, we have a load balancing capability with our workforce management, and it's just a matter of how we're prioritizing service work. So it does not increase the cost of delivering service.

Michael C. Colby -- President And Chief Operating Officer

The clients seem to feel good about as their net promoter score went up.

Operator

The next question comes from Mark Dwelle with RBC Capital Markets.

Mark Dwelle -- RBC Capital Markets -- Analyst

I guess, in the course of your discussion, I think you made fairly clear that you're prepared to focus on growth, and you're investing heavily in the business at this point is understandable. I guess what I'm trying to get my arms around is, are you messaging that there will not, in fact, be any margin improvement this year that we should think about last year's margin as sort of the foreseeable run rate while you make these investments? Or do you think there's a degree to which there's enough leverage in the business that you can get some both?

Mark E. Jones -- Chairman, Director And Chief Executive Officer

Yes. I think, again, long term, we feel that margins can be over 40%. We don't guide to margins for a reason because we want to keep that flexibility, and again, 2020 was a record year for contingencies. So all that kind of has to keep in mind with how you look at us for 2021 and beyond.

Mark Dwelle -- RBC Capital Markets -- Analyst

Okay. On the direct consumer product that you've been working on, is there any time line related to the rollout of that? Or is that still kind of work in progress?

Michael C. Colby -- President And Chief Operating Officer

Mark, this is Mike. Yes, as we said, it's a 3Q deliverable this year for us. And as I mentioned, we'll be scheduling a broadcasted demonstration of the product before launch. So excited for you all to see the new interface, the technology. There is truly nothing like it on the market. It is a effortless, transparent experience. It's a digital agent experience.

Mark Dwelle -- RBC Capital Markets -- Analyst

Apart from the cost, you've obviously been incurring to build and ramp. Will there be any particular incremental costs in the third quarter such as advertising or anything like that, that will be associated with the launch?

Mark E. Jones -- Chairman, Director And Chief Executive Officer

Yes. I think you're starting to see that already with the hiring of [Indecipherable] as our CMO, and as you mentioned, a lot of the developer time. So we've already started to make those investments. Really, I mean going to the SEO route, things like that, trying to compete with those $1 billion ad budgets is not our plan. Our plan is to be strategic in our investments and to invest in our terms. So we'll have some more detail about that when we release the product.

Mark S. Colby -- Chief Financial Officer

And we do think the market will create new channel opportunities for us, but initially, we look at it as a great tool to augment our existing channels, which is the real estate mortgage focused client acquisitions and customer referrals. We actually think there's a big opportunity to leverage this to make that referral process easier for existing customers who are saying, overwhelmingly, based on our Net Promoter scores that they're willing to refer for end of family members. So we want to take advantage of that, but we consider that low-hanging fruit.

Mark Dwelle -- RBC Capital Markets -- Analyst

Okay. And then related to -- I mean, it sounds like -- I mean, you've continued to expand on the corporate channel. As you listed out the number of new or potential offices, it seems like a somewhat longer list than the last one I recall hearing. Is there is a roadmap in terms of how many kind of corporate offices or corporate hubs that you hope to eventually have? It's a pretty material expansion in the last two years really.

Mark E. Jones -- Chairman, Director And Chief Executive Officer

As we've said in the past, the corporate channel is -- we invest there to drive growth in the franchise channel to drive success with our franchise partners. So where we're strategically placing infrastructure is in markets where we're growing that agent footprint rapidly. We know that agents who are closer in proximity to a corporate facility perform better than agents who are further away. So this is an opportunity for us to put resources out in the regions where we're seeing franchise growth that -- where franchisees can leverage easy access to our corporate team who are performing at the highest level of the game and who have a very defined scope of work to transfer that knowledge, transfer that best practice to the franchise channel.

Operator

[Operator Instructions] Next question comes from Katie Sakys with Autonomous Research.

Katie Sakys -- Autonomous Research -- Analyst

I'm hoping you can provide some additional color for us around franchise productivity. Tenured agents in Texas last year had productivity of about $120,000 of new business, which is impressive, being that it's almost close to the level of corporate agent productivity. However, we've noticed that the tenured corporate agent productivity topped out at around $125,000. Is there some kind of practical ceiling at that $125,000 level? Or do you think the average tenured agent productivity can grow to something even higher?

Mark E. Jones -- Chairman, Director And Chief Executive Officer

Yes. I mean, if you look at agents who are exclusively focused on sales activity, we have not seen a peak in productivity. In fact, our most tenured agent, 14-year corporate agent, has seen productivity increases over the recent years until we moved him into a franchise -- full-time franchise support capacity. So we have not seen the productivity capabilities peak. What you're seeing in the numbers is, again, a deliberate investment. We're making a deliberate trade-off to bring high-caliber talent in the corporate channel and make that talent available in the franchise channel to drive success through training, through lead sales leadership, coaching, mentorship, marketing support. It's very tangible and defined scope of work in a very deliberate investment that we're making. That's -- so when you think about the scope, their franchise support scope growing, you would naturally expect to see that manifest in the productivity numbers. And that's a trade-off that we're very willing to make, and we think it's clearly providing ROI for us when you look at franchise performance.

Katie Sakys -- Autonomous Research -- Analyst

Got you. Got you. My next question is about mortgage originations. What's your best estimate of what your mortgage rate market share in Texas is?

Mark S. Colby -- Chief Financial Officer

I don't believe we disclosed that, do we?

Mark E. Jones -- Chairman, Director And Chief Executive Officer

I think we own, but we can -- I mean -- yes. I think we've said in the past, it's -- in any given year between 13% and 14%, and it's been holding steady at that rate for the past two years.

Mark S. Colby -- Chief Financial Officer

Yes. And not that we haven't been growing in the state of Texas, but the mortgage market is very strong. More importantly, though, nationally, it's less than 3%, I believe, last I checked.

Mark E. Jones -- Chairman, Director And Chief Executive Officer

So big runway.

Mark S. Colby -- Chief Financial Officer

Even in Texas.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Mark Jones, Chief Executive Officer, for any closing remarks.

Mark E. Jones -- Chairman, Director And Chief Executive Officer

We'd like to just thank everyone for their time and interest, and we look forward to continuing to drive accelerating growth.

Operator

[Operator Closing Remarks]

Duration: 40 minutes

Call participants:

Dan Farrell -- Vice President

Mark E. Jones -- Chairman, Director And Chief Executive Officer

Michael C. Colby -- President And Chief Operating Officer

Mark S. Colby -- Chief Financial Officer

Meyer Shields -- KBW -- Analyst

Mark Dwelle -- RBC Capital Markets -- Analyst

Katie Sakys -- Autonomous Research -- Analyst

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