Associated Banc-Corp (ASB) 2017 Q1 法說會逐字稿

Good afternoon, everyone, and welcome to Associated Banc-Corp's First Quarter 2017 Earnings Conference Call. My name is Matt, and I will be your operator today. (Operator Instructions) Copies of the slides that will be referenced during today's call are available on the company's website at investor.associatedbank.com. As a reminder, this conference call is being recorded.

During the course of the discussion today, management may make statements that constitute projections, expectations, beliefs or similar forward-looking statements. Associated's actual results could differ materially from the results anticipated or projected in any such forward-looking statements. Additional detailed information concerning the important factors that could cause Associated's actual results to differ materially from the information discussed today is readily available on the SEC website in the Risk Factors section of Associated's most recent Form 10-K and any subsequent SEC filings. These factors are incorporated herein by reference.

For a reconciliation of the non-GAAP financial measures to the GAAP financial measures mentioned in this conference call, please refer to the slide presentation and to Page 8 of the press release financial tables.

Following today's presentation, instructions will be given for the question-and-answer session.

At this time, I would like to turn the conference to Philip Flynn, President and CEO, for opening remarks. Please go ahead, sir.

Thank you. Welcome to our first quarter earnings call. Joining me today are Chris Niles, Chief Financial Officer; and Jim Simons, our Chief Credit Officer.

Turning to Slide 2. Higher revenues, margin expansion, flat expenses and an improving credit environment contributed to a 30% increase in earnings per share from the year-ago quarter. In Q1, we benefited from higher loan yields and growing fee-based revenues, we had commercial real estate loan growth and an increase in residential mortgages. Quarter-over-quarter, our expenses and provision both decreased. We delivered a double-digit return on average Common Equity Tier 1 for the third consecutive quarter and returned 1/3 of our net income to our shareholders through dividends.

Loan details for the first quarter are highlighted on Slide 3. First quarter average loans grew very modestly from the fourth quarter, reflecting decreased general commercial line utilization and significantly reduced mortgage warehouse activity. Highlighted in green, average residential mortgage loans increased $247 million or 4% from the fourth quarter and $644 million or 11% from the prior year.

During Q4 2016, we began to retain some of our longer-dated production. Given the steepness of the curve we saw in Q4, this made sense to us. We will take measured steps to retain additional longer-dated production through Q2 and potentially spilling over into Q3. Residential mortgages now represent 33% of our average total loan book.

In orange, average CRE loans were up 2% from the fourth quarter and up 12% from the prior year. Commercial real estate line utilization trended higher in the quarter. While on a year-over-year basis, growth has been driven by the multifamily and retail portfolios, for the quarter, we saw increased activity in our industrial and office portfolios. We're mindful of our current CRE exposure and managed within our established concentration limits by actively monitoring our loan pipelines to ensure we're not overly concentrated in any particular asset class.

In blue, average commercial and business loans were down 3% from the fourth quarter, primarily driven by a $200 million decline in mortgage warehouse outstandings. Power and Utilities and REIT loans continued to grow, while we had net paydowns and payoffs in the oil and gas book. While we saw a decrease in our commercial and business outstandings, our line commitments have increased nearly $200 million or 2% from the fourth quarter, and are up almost $800 million or 9% year-over-year. Customer sentiment remains optimistic, but cautious.

Our customer base is likely to benefit from the current administration's economic policies and proposals. We happen to sit in a part of the country that's poised to benefit from a refocus on manufacturing, infrastructure and defense. However, our customers tend to be rational and disciplined about their approach to growth and are unlikely to hire more or borrow more until there's more certainty and clarity.

Overall, we're committed to growing our loans, balancing risk with the appropriate returns. Assuming a stable to improving economy, we anticipate accelerating loan growth over the next 3 quarters and expect to deliver mid- to high single-digit loan growth for the year.

On Slide 4, we highlight our quarterly deposit trends. During the first quarter, we saw seasonal deposit outflows, which contributed to a $277 million decrease in average total deposits from the fourth quarter. And as a reminder, we tend to build deposits during the back half of the year. Our loan-to-deposit ratio remained at 92%, and in line with the past 2 quarters as we continued to optimize our deposit mix.

We strive to maintain our loan-to-deposit ratio at less than 100%, while keeping deposit costs as low as possible. We would expect our loan-to-deposit ratio to tighten up at the end of the second quarter like it has in prior years. We understand our seasonal deposit patterns and we manage our quarter-to-quarter swings. Overall, our deposit sources are balanced and our checking and savings accounts continued to represent 50% of our total deposits.

Turning to Slide 5. Net interest income of $180 million was relatively flat to the fourth quarter and up $8 million from a year ago. We estimate the day count difference from the fourth quarter cost about $2 million. Net interest margin was 2.84% in the first quarter, up 4 basis points from the fourth quarter. Total commercial loan yields were up 16 basis points quarter-over-quarter, reflecting the asset-sensitive profile of our LIBOR-based commercial portfolio. Residential mortgage loan yields also improved 11 basis points from the prior quarter, reflecting the shift in our mortgage retention strategy.

The yield on taxable investment securities improved by 13 basis points for the quarter, primarily reflecting reduced premium amortization, which added $2 million to the investment yield. The cost of interest-bearing deposits increased by 9 basis points from the fourth quarter, and reflects a deposit beta of less than 0.4. We continue to assume there will be additional Fed action this year, and expect to see an improving net interest margin trend.

Turning to Slide 6. First quarter noninterest income was down $12 million from the fourth quarter. As expected, mortgage banking income was down $7 million, and we had $4 million in reduced gains. On a year-over-year basis, we had positive trends in all fee-based categories. Fee-based revenue increased to $67 million from $63 million in the fourth quarter. Insurance commissions were up $4 million from the prior quarter. The increase was largely driven by property and casualty business revenues. As a reminder, our P&C business is seasonal with a first quarter bias, and our employee benefits business, with a second quarter bias.

Mortgage banking was lower quarter-over-quarter, driven by a nearly $200 million decrease in mortgage settlements. Despite the impact in mortgage banking revenues, we are growing net interest income with our mortgage retention strategy.

Capital market fees declined $4 million from the prior quarter due to fewer customer hedging transactions, lower valuation gains and lower loan syndication activity. Capital markets activity was quite strong in the back half of last year, and we also benefited from a positive CBA, with a pickup in rates following the election in Q4. We anticipate some level of lumpiness in our capital market revenues from our swap and syndication businesses.

On a full year basis, we expect fees to be down about $20 million from the prior year. We expect to see lower mortgage banking revenue offset by higher net interest income, and losses related to tax credit investment activity offset by lower tax expense.

Turning to Slide 7. Noninterest expense of $174 million was down $5 million from the fourth quarter and essentially flat to the year-ago quarter. Personnel expense was $104 million, down $3 million from the prior quarter due to $3 million of severance costs incurred in Q4. Collectively, all other expenses decreased $2 million from the fourth quarter.

The first quarter's efficiency ratio was 65% as lower day count and lower gains impacted this ratio. For the full year, we continue to expect our efficiency ratio to improve.

Our expense guidance remains unchanged. We expect expenses to increase 1% from last year.

Our first quarter effective income tax rate of 27% was down from 31% in the year-ago quarter and 30% in Q4, driven by a change in accounting standards related to stock compensation of $3 million. Going forward, these tax effects are expected to be higher in our first quarters, when the majority of the company's restricted stock awards vest.

On another tax-related matter, we received a favorable state franchise tax ruling in Minnesota this week. Subject to a possible appeal of this ruling by the state, after-tax reserves of approximately $2 million could be released in the second quarter in connection with this ruling. This should contribute to our effective tax rate staying under 30% in Q2. And for the year, we continue to expect our effective tax rate to be in the high 20s, primarily due to increased tax credit benefits throughout the remainder of the year.

On Slide 8, we detail our quarterly credit quality trends. Credit trends are positive. For the quarter, we continued to see declining levels of potential problem loans, nonaccrual loans and net charge-offs from both prior quarter and prior year. Our Q1 credit quality metrics include the results from the OCC's most recent Shared National Credit exam. These exams can particularly impact the risk ratings of our REIT, Power and Utilities and oil and gas loans, which are primarily comprised of SNCs. Provision expense was down from both the year ago and sequential quarter. The majority of our charge-offs continue to be from our oil and gas portfolio as we continue to resolve our problem credits.

On Slide 9, we provide some detail on our energy book. Period end oil and gas loans were $625 million, down $43 million from the prior quarter, and down $131 million from the prior year's quarter. This quarter's lower balances were attributable to payments and/or reductions to our problem credits and lower hold amounts on new commitments. We are reducing the amount of our problem loans faster than were able to add new customers or expand existing relationships.

Our oil and gas reserves increased modestly this quarter, reflecting our concern over the continued price volatility being exhibited in the market. During the last 30 days of the quarter, the price of oil both fell and then rose by more than 10%. Since January 1, 2016, when lower hydrocarbon price assumptions became standard, we have funded 15 new credits, $335 million of commitments, which represent about 1/3 of all of our oil and gas commitments currently.

Turning to Slide 10, we'd like to summarize our 2017 outlook. We continue to expect mid- to high single-digit annual average loan growth and to maintain our loan-to-deposit ratio under 100%. We now expect an improving net interest margin trend. Noninterest income is expected to decline by approximately $20 million from 2016, driven by lower mortgage banking revenue and tax credit write-offs. We expect this lower reported noninterest income to be largely offset by improvements in net interest income and lower tax expense. Noninterest expense is expected to be up approximately 1%. We expect continued improvement in our efficiency ratio. We expect to continue to deploy capital through our stated priorities to target a CET1 ratio within the range of 8% to 9.5%.

Finally, our loan loss provision is expected to adjust with changes in risk grade, other indications of credit quality and loan volume.

This outlook reflects a stable to improving economy, includes our expectation of a midyear interest rate increase in 2017. The guidance does not reflect any changes to the regulatory environment or to corporate tax rates. We may adjust our outlook if and when we have more clarity on any one or more of those factors.

And finally, before we open it up to your questions, I'd like to mention our Community Reinvestment Act rating upgrade to Satisfactory from the OCC. This CRA rating covers the period between January 1, 2011, and July 27, 2015. We're pleased with the updated CRA rating and recognize our success is dependent upon strong relationships with the communities we serve.

And with that, we'll turn it over to your questions.

(Operator Instructions) Our first question comes from Scott Siefers from Sandler O'Neill.

Phil, I was hoping you could just expand on the comments you made in your introductory remarks about loan growth accelerating throughout the course of the year. I mean, I get -- definitely get what you said, but it's perhaps a slower start to the year than I might have anticipated. And just given the lingering uncertainty with some policy issues, et cetera, I just want to get a little more color as to where you're getting your confidence about acceleration for the remainder of the year.

Sure. It's a good question. It was a slower quarter than we expected. Mortgage warehouse had a big impact on the quarter. I guess we all expected to see that, and other banks that have been reporting, have been reporting the same thing. So $200 million swing in that item itself is significant. As we think about the rest of the year though, we are retaining mortgage production that we would have sold in the past. We did that in the fourth quarter. That will continue this quarter and into the third quarter, most likely. And frankly, as we sit here today, our loan growth since the end of the first quarter is up more than what we saw during the entire first quarter. So we're actually at a good starting pace right now.

Okay, good. That's helpful. And then, if I can switch gears a little. Chris, maybe if you can talk about the margin and, specifically, deposit beta? So the margin, doesn't seem to be any negative issue there. In fact, it came in better than I would have anticipated. But with that said, the nearly 40% deposit beta has got to be among the higher of the companies that I follow. So just curious where that's coming from. I imagine the network's deposits have a big part to play in that, but any thoughts on just competitive dynamics, what you guys are doing, how you're responding, et cetera?

Sure. So Scott, if you look at Page 6 in our press release, you'll see the tables. We provide the yields and the rates per list of classes. Obviously, there's been no movement in the pure retail sort of savings-type accounts. Where we've seen a little bit of uptick has been in the money market, and our interest-bearing demand products. We expect that, you're right, in part of those balances, of about $13 billion-ish, include about $3.5 billion of network deposits and those have a beta of close to one. So that's, call it, 1/4 of that. So yes, that's a big driver within those. But I would guess and ask you to reflect upon most institutions that I've seen comment or thinking betas of 0.5 make sense, over the cycle. And we're operating at 0.4.

Our next question comes from Jon Arfstrom from RBC Capital Markets.

Just to follow-up on that, Chris. Do you expect a similar type reaction -- this is on the margin on Page 6, do you think the Q2 numbers will look similar to what we saw in Q1 in terms of the impact from the March hike?

I think we'll see continuing push upwards in our money market and interest-bearing demand rates. Clearly, our retail rates aren't moving too much, and I would highlight for you, Jon, further that the total interest-bearing liability costs are moving a little more slowly than that. So we've been able to optimize our funding mix as we've moved through the cycle, and we'll continue to look to ways to optimize that in Q2 as well.

Okay. Okay. That helps. And then, question on oil and gas. Is there a point, Phil, where you think those balances will bottom?

Sure. Yes, I don't know exactly when they're going to bottom, but we're actively out looking at transactions. The market is back in spades, frankly. There's a lot of people looking to refi and do transactions. So yes, I mean, I guess -- if I had to guess, will bottom out in the third quarter-ish, something like that maybe, and probably move up from there.

Okay. Good. And I'm assuming there's a lot of moving parts, but can you guys give us, maybe, a ballpark on what kind of reserve requirements you would have on a new oil and gas loan?

Jim, do you have a feel for that?

Yes. It's probably 10%, 15% -- 10% or so.

All right. And I think the question is on a new oil and gas credit, on the new dollar commitment.

Yes. I mean, we're sitting right now at about 6.5% reserves against the whole book. So it's probably 1.5%-ish, something like that.

Okay. So there's some room there. Okay, good.

Oh sure.

Our next question comes from Michael Young from SunTrust.

I wanted to start on the CRA rating upgrade. Obviously, that was good to see. But just curious how that will impact you going forward. Obviously, you could return to the bank M&A market. So maybe just talk about your interest there by size and geography, update us. And then, also, does that impact anything on the cost-reduction side? Are you able to take out any additional costs related to that on the branch side or otherwise?

Yes. So the second question first, Michael, no, it has absolutely no impact on costs. I mean, we continue many, many programs serving minority and majority and minority communities with subsidized mortgages and the rest. So no cost changes. Certainly, with the satisfactory CRA rating, we are able, if we choose, to pursue whole bank M&A. We've been in dialogue for a long time with a number of different parties. And our priorities, as far as bank M&A, have not changed. I think we've always said that the ideal candidate would be in market where we could gain more efficiencies, and nothing has changed that way. So you're correct though, we can execute at this point if we choose to, and we couldn't while we had the Needs to Improve. Although, we had the Needs to Improve for about 6 months and 3 weeks to be exact.

Got you. And then, maybe moving over to the capital markets business. Obviously, it was a little bit lower seasonally, that's to be expected. But just curious in particular on the sort of multifamily syndication market. Are you seeing any more pressure there? Is it any harder to kind of get those syndications done or pricing concessions, et cetera?

I don't think it's harder to get transactions done. I think transaction volume is starting to slow a bit. If nothing else, we've been operating very rigorously within our own self-imposed caps here. So we're still originating transactions. We'll still syndicate them. Just recognize that there's not really any seasonality to that business, it's just a lumpy business. It depends on when transactions close and when they're being syndicated. The same is true in the swaps business, which are the 2 big drivers of that line item.

Our next question comes from Ken Zerbe from Morgan Stanley.

Just want to talk a little bit more about those deposit betas. Similar to the first question or another question that was asked, like the 40%. Like, I get that most other banks are talking about a 50% deposit beta, but it really is like 50% over the entire cycle. And what we're hearing from a lot of other banks is that their deposit betas are, I'm going to say, 0 or low single digits, but something very, very low, with the expectation that those deposit betas ultimately rise much more meaningfully as the Fed keeps hiking rates. The question for you guys though, if you're 40% today and the norm, if you will, is that deposit betas rise over time, does that imply that your deposit betas go from 40% to something much higher over time?

I guess, I would look at it slightly differently, Ken, which is the $3.5 billion of deposits that we have that are network deposits that essentially have a beta of one, have a beta of one and can't go any higher. So we are fully recognizing the full impact each time, each day, the Fed moves rates on 100% of that book and it can't reprice against us more than that. So there's no delayed or lagged effect on those. It's fully passed through. And I think if you looked at our Page 6, you'd see the savings accounts and time deposits actually have a net negative beta over the last year. So our core retail customer base is like everyone else. It is the component that's within the interest-bearing and money market that's tied to the networks, that's driving the difference. But that's not a risk factor, that's a pay-as-you-go, fully priced in, we're not lagging on that, but we're not ahead of the curve at all dynamic.

Got you. Okay. So it sounds like it's just more of a mix issue that the core savings products sold have an increasing beta just like everyone else, but this is already at a high, I guess the highest beta currently. Okay. No, that makes sense -- go ahead. No, sorry, go ahead, please.

No, that's -- you got it right. Thank you.

Okay. And then, maybe just -- can you just address the issue of the rising energy reserves? I see the dollar amounts are really small, and I see the rest of the portfolio kind of -- the whole energy portfolio shrinking. But the -- is it fair to assume that like the 6.7% reserve ratio, is that -- whatever's still left is just sort of the incremental credit quality of the remaining pieces is just not as good as the entire portfolio because the good stuff is paying off and paying down faster? Is that fair assumption?

No. Actually, they're the contrary. I think that as the quarters have passed, we've gotten more clarity on the few problem loans remaining, where we substantiated and increased a couple of specific reserves. The rest relates to the -- relates to the qualitative portion of the reserve, which is formulaic, and it looks at historical losses, and given the time frames, we are looking at quarters that now have more charge-offs from a historical perspective than the quarters that dropped off. So part of it is just because of our qualitative factors that increase the reserve.

And on top of that, as I mentioned, there's still price volatility. We had a pretty interesting swing downwards of $5, $6, and then it came right back up. So we're still a little leery about running this level of reserves down. I understand that compared to most peer banks, this is a relatively high percentage, although, it is relatively small dollars.

The next question comes from Chris McGratty from KBW.

Chris, if I think I heard you right, the premium am was about $2 million lower in this quarter versus the fourth? Is that the right number, $2 million?

Correct.

And I guess, given the drop in rates, I'm interested if your comments or your guidance for kind of the next couple of quarters or next quarter in particular assumes the potential that this moves the other way or perhaps even more than $2 million?

It could, although I would also note, there was about 2 fewer days in the quarter. So the day count alone will more than offset that.

Okay. How much total premium am do you have in the investment portfolio?

Unamortized premium are you saying or…

Yes.

One second. It won't take me a minute to find it. Wait just a second.

Do you have another question while he's rooting around for that?

Yes. Phil, maybe for you. I think in your prepared remarks, you talked about the shift that's ongoing with the balance sheet, right, moving from gain on sale to portfolio retention. But if I heard you right, you kind of maybe said a little bit of a pause given where rates are and the ability to put new production in. Did I get that right? And maybe, what's the outlook if rates stay low with the strategy? Would you shift back?

Yes. Actually, what we've done is said to ourselves, there's a certain amount of the book that we're willing to take out longer term. And so once that bucket fills, we will discontinue this strategy. So we figure, we'll probably be there, as I said, early in the third quarter, and then, go back to the more normal process that we've had.

Okay. That's helpful.

We just -- for better or worse, we tend to run this place with discipline around how much interest rate risk we have, how much long-dated paper we have. And we made a choice to go ahead and start retaining this 30-year production. As it turned out, the timing was very good. And -- but once we get to a point where we think we have enough of that, we're going to stop.

And total premium amortization, including regular estimated amortization and principal pay-down effects was a little over $7 million for the first quarter. And the change came mostly from principal pay-down effects, comparing Q4 to Q1.

Our next question comes from Terry McEvoy from Stephens.

First question, the mortgage warehouse. Was the period end down to above the average? And did you see a pickup at all later in the quarter as rates fell and application volume picked up? And, Phil, you talked about the total loan growth here in April. Is any of that coming from the mortgage warehouse? Or is there a potential for growth as we enter the spring home season?

We saw the balances decline sequentially through the quarter. So no, there was not a -- there wasn't any pickup.

There wasn't any pick up at the end like we've seen before. But just to give you numbers, in the fourth quarter, the average daily mortgage warehouse outstandings were a little over $500 million. And in the first quarter, that had dropped to about a little over $300 million. So that's the $200 million swing, give or take. And the period end numbers weren't dramatically different.

Okay. And then, I guess, how has higher -- how would higher interest rates impact your view on branch consolidation? You've been so active there, just given the growing value of deposits, rethinking that strategy? And then, in terms of deposit betas and some of those more rural or smaller (inaudible), maybe you'd be closing that branch, my guess is they're lower deposits and less likely to make some changes within those towns and communities.

Terry, I'm not sure I caught the first part of the question. You were kind of cutting in and out. But if the question is how are rates affecting some of our smaller, more rural branches, rising rates are helping them. So we've gone through quite a consolidation of branch locations over the last 4 or 5 years. And we feel like, as we've said, we're in a good place as far as the -- as far as where our locations are in the network today. So if anything, these -- of course, these rising rates are going to help the branch level profitability going forward. And we're seeing that in our community markets and other places.

Our next question is from Emlen Harmon from JMP Securities.

I just want to make sure I understand you correctly on the outlook for an improving NIM. So that outlook for the NIM is improvement from this point forward as opposed to on a year-over-year basis, and how does that change if you don't get that additional -- that action midyear?

Yes. So it's already better in the first quarter. The yield on total loans is already over 3.5. The yield on investment securities, which could come back a little bit for some premium (inaudible), but probably won't move that much is in a reasonable place. And we think we have a reasonable view on our deposit liabilities and our beta, with or without further Fed action. All of that points us to the fact that we feel better that the number from 2.84% will likely, modestly improve. So that's the positive. And if there's more Fed action, it potentially could improve more. Although, as we've talked about, some of our liabilities where we price one for one, but if there's no Fed action, then we'll start to see sort of the lagging benefit on our retail deposits hopefully over time.

Got it. And then, any items in fees or expenses you wouldn't necessarily expect to repeat in the second quarter? And one item I did notice, you mentioned in the press release, but didn't quantify, was some lease termination expense. So maybe that would be one place to start, but any others you have would be helpful too.

Snow plowing was almost $1 million.

Yes. Those melted, though. Yes. I mean, there's always a certain amount of noise along the way. But there actually wasn't a whole lot of noise in these items this quarter. Yes, I mean, we have more, as you know, insurance revenues in the first half of the year than in the back half of the year. But there weren't a lot of unusual items here.

Okay. And the lease termination expense, do you maybe get a little bit of a downtick in the occupancy from that as well?

Right. So there's about $2 million swing in occupancy. Almost $1 million of it was snow plowing and the difference was largely the terminations and related charges.

Yes, and we do that to improve our situation going forward. I mean, the activity in the tax expense item isn't going to repeat because that's really going to be a first quarter event going forward under the new rules. But that said, we have tax credit activity that's going to, as I mentioned in the prepared remarks, keep our tax rate probably in the ZIP Code of where we just saw it in the first quarter.

Our next question comes from Nathan Race from Piper Jaffray.

Question on the securities portfolio. Obviously, it shrank sequentially on an average basis. Just, could you update us on kind of your strategy for reinvesting excess liquidity? Is any update from the capital-efficient manner that you guys were reinvesting last year?

Sure. So as we mentioned, we've got a mortgage retention strategy, where we're holding 30-year loans that we historically have sold as an institution to Fannie and Freddie. And parallel to that, we are not buying as many mortgage-backed securities in our investment portfolio as we have historically bought to make sure we don't sort of extend out the wrong way on an asset liability basis.

But we've remixed the securities portfolio. At this point, largely, that's done. We moved into Ginnie's, as you know, over a period of 2 years. And we're probably, as far as that mix, pretty set right now.

So one thing that perhaps you might notice as well is we moved a little more into held-to-maturity, and we'll continue to evaluate how much held-to-maturity versus available-for-sale we keep as we move through the course of the year.

Got it. And just going back to the acquisition opportunities, outside depository opportunities going forward, are you seeing change in opportunities in terms of insurance or other lines as well?

Yes. We've continued to look for opportunities to expand the insurance brokerage business as well as opportunities in the trusts like in fiduciary areas, and we have a number of conversations going on. I would expect that we probably have some sort of transaction in this calendar year. Maybe more than one, but they are going to be relatively small.

And, in fact, we had a little small one already in the first quarter, which is why you saw a small uptick in the goodwill amounts.

This does conclude the question-and-answer session. I'd like to turn the floor back over to management for any closing comments.

Well, thanks, everybody, for joining us today. Our steady results for the first quarter position us well. We're on track towards a year of growing revenues, improving margin, improved efficiency, and ultimately, expansion of our bottom line. I look forward to talking with you again in July. And if you have any questions in the meantime, as always, give us a call. And thank you for your interest in Associated.

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.