Atlantic Union Bankshares Corp (AUB) 2014 Q4 法說會逐字稿

Good morning. My name is Laurel and I'll be your conference operator today. At this time I would like to welcome everyone to the Union Bankshares fourth quarter and 2014 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

(Operator Instructions)

I will now turn the call over to Mr. Bill Cimino, Vice President of Corporate Communications. Please go ahead, sir.

Thank you Laurel and good morning everyone. I have Union President and CEO, Billy Beale, and Executive Vice President and CFO, Rob Gorman, with me today. Also joining us for the question-and-answer period are Elizabeth Bentley, EVP and Chief Retail Officer; Dave Bilko, EVP and Chief Risk Officer; and Jeff Farrar, EVP of Wealth Management, Insurance, and Mortgage. Please note that today's earnings release is available to download on our investor website, investors.bankatunion.com.

Before I turn the call over to Billy, I would like to remind everyone that we will make forward-looking statements on today's call, which are subject to risks and uncertainties. A full discussion of the Company's risk factors are included in our SEC filings. At the end of the call we will take questions from the research analyst community. And now I will turn the call over to Billy Beale.

Thank you, Bill. Good morning, everyone. Thank you for joining us on this call this morning.

As I reflect on 2014, let me start this by saying that I'm proud of the work done by our teammates, the stellar integration, which was a massive undertaking for our team, has been a success. Union is now the largest community bank headquartered in Virginia, but that is an outcome of the merger, not the goal. Even though we're larger, we're remaining true to our core community banking values and remain focused on prudent commercial and consumer loan and deposit growth through customer retention and developing new client relationships. The goal of the merger is to deliver improved financial performance resulting in better returns for our shareholders over the long-term.

In our last quarterly call, we noted several areas on which we were focused, including loan growth and aggressively disposing of our OREO properties. Regarding loans, in our last call we indicated that we believed that September would represent the low point in loan balance. As you will recall, we were down about $100 million from year end at that point, and this belief was driven by the fact that we had hired several new loan officers and portfolio managers during Q2 2014 and Q3 2014 to replace the former StellarOne lenders and that our lending team was starting to assert itself in the market. That prediction certainly proved to be the case as loan balances grew by $175 million for the quarter or 13.5% on an annualized basis.

Also of note is we are now achieving one of the benefits from the StellarOne acquisition. More doors are opening for larger sized lending opportunities across the Commonwealth. We are now able to compete for business from customers who would have been too large for Union prior to the acquisition. Our new lending power is a differentiator between Union and the other community banks in our market and represents a unique opportunity for us compared to other Virginia banks. Total loans for the year grew 1.3% with the fourth quarter loan growth more than making up for the negative loan growth in the second and third quarters. Noncontractual paydowns and payoffs were lower than in the third quarter, but still above second-quarter levels so the growth came primarily from increased production rather than lower paydowns.

One additional note on the loan book, as you can see from the averages, a number of the loans came on later in the quarter, so while we incurred the full loan loss provision for these loans, we did not get a full quarter's worth of interest income benefit. Regarding OREO, as we noted in the last call, we projected progress would be made in the fourth quarter to reduce OREO balances, including our former bank branches. For the quarter, we sold [$11.4] million worth of OREO and recorded a net gain on those sales of $1.2 million. We feel confident that we will see continued reductions in the OREO book in 2015 as a result of additional sales of foreclosed properties and merger related bank premises.

Let me update you on a couple of other items. Net charge-offs increased from the prior quarter, but for the full year we're $5.6 million, which is a six-year low and charge-offs for the year were 10 basis points, so it is hard to be disappointed in those results over the year, even though we had a higher event in the fourth quarter.

In the third quarter we mentioned some frauds that caused us to put some loans on nonperforming assets. Those frauds, which were either against the bank or investors and the resulting personal bankruptcies drove some of the larger charge-offs in the fourth quarter. Overall asset quality has improved significantly, particularly with the reduction of nonperforming assets and lower past-due loans. We believe that there is nothing systemic about the net charge-offs increase in the fourth quarter and I would encourage those on the call to look at the trend lines over time rather than the lumpiness of the quarter as we expect net charge-offs and provision levels to remain relatively stable going forward with potential quarterly volatility driven by changes in individual credits.

The same would apply to loans 90 days past due and nonaccruing, which drew some attention during the third quarter 2014 call. You will see that those are down from $16 million to $10 million. That actually represented $13 million worth of loans moving off and another $6 million worth of new loans moving on and three staying. I would also suggest to you that the new consumer financial protection mortgage foreclosure rules will result in 90 days in still accruing numbers increasing for all banks that hold portfolio mortgages. One thing I'd point out about that particular line item, that represents a little over 200 loans, so it's -- as you can see, it's a lot of small credits.

We continue to repurchase stock during the quarter. When we announced the $65 million share buyback program in early 2014, we expected about $40 million in 2014 and $25 million in 2015. We have now purchased $55 million to date and have $10 million remaining for 2015. Management from the Board of Directors will continue to evaluate all capital management options as the current repurchase program winds down, as the deployment of our capital for the enhancement of long-term shareholder value remains one of our highest priorities. We are now eight months past the systems integration of StellarOne and our value proposition is resonating with consumers as we saw strong net new household growth of more than 5% in our legacy markets for 2014 and merger related attrition from retail customers slowed as the year progressed.

Overall customer attrition was well below our projections, and we have recently seen net household growth in former StellarOne markets. We're continuing to build the Union brand in the Western part of Virginia and expect those efforts to differentiate Union from our competitors in these markets. In December, we named Rick Webster as our Regional President for Southwest Virginia. His deep roots in the community, strong leadership, strategic and mentoring skills, will be an asset as we seek to grow our market share in those areas.

To summarize, we had solid core earnings in the fourth quarter driven by the community bank segment. Loan production has increased as our lending team began to assert itself in our markets. And 2014 was a transformative and successful year for Union. And we will continue to build upon that to deliver top tier financial performance to our shareholders. And I thank you for your attention, and with this, I'm going to kick it over to Rob Gorman.

Thank you, Billy, and good morning, everyone. Thanks for joining us today. I'm going to update you on the balance sheet and our results of operations for the quarter. First, turning to the income statement, operating earnings for the fourth quarter were $15.6 million or $0.34 per share, down slightly from $16 million or $0.35 per share in the third quarter. As you recall, operating earnings exclude the impact of merger related costs which were $563,000 on an after-tax basis in the quarter. For the full year, operating earnings were $66.3 million or $1.44 per share, up from $36.5 million in 2013 as a result of the StellarOne transaction.

On a GAAP basis, which includes the impact of merger related costs, net income was $15.1 million for the quarter or $0.33 per share versus $14.9 million or $0.33 per share in the third quarter. For the full year, GAAP net income was $52.6 million or $1.14 per share. The community bank segment's operating results were $16.5 million or $0.36 per share in the fourth quarter and $69.8 million or $1.52 per share for the full year, while the mortgage segment reported a net loss of $889,000 or $0.02 per share in the current quarter and recorded a net loss of $3.5 million or $0.08 per share for the year.

Regarding profitability ratios, the operating return on tangible common equity decreased to 9.51% from 9.82% in the prior quarter and was 10.91% for the year. The operating return on assets was 86 basis points in the fourth quarter, down 2 basis points from the prior quarter. For the year, the operating return on assets was 91 basis points, up slightly from the prior year. The Company's operating efficiency ratio declined to 64.8% from 69.8% in the third quarter, and for the year was 67.3%, down from 69.1% in 2013. The community bank segment's operating efficiency ratio was 62.1%, down from 67.5% in the prior quarter. And for the full year, the community bank segment's operating efficiency ratio was 64.4%.

But we know here that we continue to target an operating ROA above 1.1%, return on tangible common equity of above 13% and an efficiency ratio below 60%, and remain confident that as we generate more consistent loan growth and return the mortgage segment to profitability, that we will meet these targets. Tax equivalent and net interest income was $65.1 million for the quarter, down $1.5 million from the third quarter. The fourth quarter reported net interest margin declined by 10 basis points to 4.01% compared to 4.11% in the previous quarter. Accretion of purchase accounting adjustments for loans, CDs, and borrowings, related to the StellarOne acquisition added 13 basis points to the core net interest margin during the fourth quarter, and that was down 6 basis points from the 19 basis point impact in the third quarter or lower by approximately $1 million quarter to quarter. This decline was a result of lower levels of loan and CD accretion during the quarter.

For your reference, actual and remaining estimated net accretion impacts are reflected in the table included in our earnings release. As you can see, we estimate that net accretion will decline by approximately $6 million or about 8 basis points in 2015 from 2014 net accretion levels of $10 million.

The core net interest margin, which does not include the impact of acquisition account accretion, was 3.88% in the fourth quarter, which was a decline of 4 basis points from the prior quarter and in line with our expectations. The core margin decline was driven by lower earning asset yields of 5 basis points in the fourth quarter, which was partially offset by a 1 basis point decline in the cost of funds. The core loan portfolio yield fell 5 bips to 4.62% in the quarter while the average investment portfolio yield declined 5 basis points as well, to 3.08%. As noted in our earnings release, we continue to expect that the core net interest margin will decline modestly over the next several quarters as declines in earning asset yields are projected to outpace decreases in interest bearing liability rates over the next four quarters.

The provision for loan losses was $4.5 million in the fourth quarter, an increase of $2.7 million from $1.8 million in the third quarter and up from $1.2 million in the same period a year ago. For the quarter, net charge-offs were $4.2 million or 31 basis points, up approximately $3.1 million from the prior quarter but down $1 million from the prior year. The quarterly increase in provision was driven by loan growth and the increase in net charge-offs. For the full-year, net charge-offs were a modest $5.6 million or 10 basis points, which was down from $10.8 million in the prior year.

Turning to noninterest income, noninterest income in the fourth quarter was $14.9 million, which is down $1.4 million from the prior quarter, driven by lower security gains of approximately $750,000 and lower mortgage gains of $815,000, which was related to lower origination levels, which at $155 million for the quarter, were down approximately 13% from third-quarter production levels. Fourth-quarter operating noninterest expenses excluding mortgage costs were $51.8 million, a $6 million decrease from the third quarter, primarily due to the OREO evaluation charge taken in the third quarter.

Noninterest expenses for the mortgage segment declined 5.8% or $224,000 to $3.7 million, primarily related to declines in salaries and occupancy expense, partially offset by approximately $250,000 of nonrecurring costs incurred in the fourth quarter, which was related to severance and lease terminations as a result of Management's continued efforts to streamline the mortgage segment's processes and cost structure to return it to profitability. On that note, although significant progress has been made in transforming the mortgage segment's operating model during 2014, we do not expect the mortgage business to return to profitability in the current quarter due to the seasonally low production levels expected in the first quarter. I also want to remind you that pretax merger costs totaled $821,000 during the quarter and we do not expect to have any material expense associated with the merger going forward.

Now turning over to the balance sheet, total assets stood at $7.4 billion at December 31, an increase of $165 million from third-quarter levels. The quarterly increase in assets was driven by loan growth as Billy noted. Loans net of unearned income were $5.3 billion at quarter end, up $175 million or 13.5% annualized, while the fourth quarter average loans increased by $24.1 million or 1.9% annualized from the third quarter. Total loans for the year grew 1.3% with the fourth quarter loan growth more than making up for the negative loan growth experienced in the second and third quarters. As Billy noted, fourth quarter loan production increases as our new lenders got up to speed and we saw a slight reduction in noncontractual paydowns.

Looking ahead, we are budgeting for mid-single digit loan growth for 2015. At the end of the year, total deposits were $5.6 billion, flat with the prior quarter. Quarter four average deposits increased about $40 million or 2.8% annualized versus the prior quarter. CD runoff partially offset by seasonal increases in public funds drove that change.

Now turning over to the asset quality metrics, nonperforming assets totaled $47 million, comprised of $19 million in nonaccruing loans and $28 million in OREO balances at December 31. Nonperforming assets as a percentage of total outstanding loans declined 73 basis points from the prior year and 23 basis points from the prior quarter to 89 basis points at year-end. Nonaccrual loan balances declined by 5% in the fourth quarter, while OREO balances declined 26% driven by the sale of foreclosed and merger related properties totaling $11.4 million. As Billy noted, these properties were sold at a net gain of $1.2 million.

The allowance for loan losses increased $275,000 from September 30 to $32.4 billion at December 31. The allowance is a percentage of the total loan portfolio, adjusted for purchase accounting, was 1.08% at the end of the year, down 4 basis points from September 30 and down 2 basis points from the same quarter last year. The nonaccrual loan coverage ratio improved to 168% at December 31, up from 158% at the end of the third quarter and up from 136% coverage at June 30. Company's capital ratios continue to be considered well capitalized for regulatory purposes. The Company's estimated ratio of total capital to risk weighted assets was 13.39%, and the tier 1 capital ratio was 12.77% at December 31. Our tangible common equity to tangible assets ratio at quarter end is 9.28%. That was down 14 basis points from September 30 levels and up 34 basis points from 8.94% from the same period last year.

Our excess capital at year end amounts to approximately $90 million with excess being defined as balances above an 8% tangible common equity ratio. As Billy noted, as of January 23, approximately 2.2 million common shares have been repurchased at an average price of $24.65 per share, leaving approximately $10 million remaining under the Company's two year, $65 million repurchase program. We will continue to evaluate capital management options as the current repurchase program winds down, as Billy has mentioned.

So to summarize, 2014 was a year of significant progress and transformation for Union as a result of the StellarOne transaction. We successfully integrated StellarOne into Union, achieved the cost-saving targets we set, and are now well-positioned to generate the sustainable growth we envisioned the combined banking franchise would produce as the largest community banking institution headquartered in Virginia. As a result, Union remains as committed as ever to delivering top tier financial performance and building long-term value for our shareholders. And with that, I'll turn it back over to Bill Cimino to open it up for questions from our analyst.

Thank you, Rob, and thank you, Billy. Laurel, we are ready for the first questioner.

(Operator Instructions) Catherine Mealor, KBW.

How should we think about provisioning moving forward? Now you're at a [reserve to 1] ratio of, I guess,108 excluding the acquired loans and it feels like we might be at a bottom when it comes to reserve release, and provision will really just be provisioning for loan growth and matching net charge-off moving forward. Is that an imperfect way to think about or do you think you still have a little bit more room for reserve release this year?

This is Rob. I would suggest that your point is right on. If we stabilize at this level, and think about it as provisioning for net charge-offs and loan growth going forward at about this level.

That's helpful. Bill, you talked a little bit about how you're able to look at larger credits now that you've got StellarOne in the fold and loan growth was a really nice improvement this quarter. So I don't know if some of that was what drove it. Can you talk generally about the size of credits that you now consider versus your comfort level before the merger and maybe how pricing is different on these size of credits?

Our in-house limit premerger was $25 million. Our in-house limit postmerger is $60 million. We did book -- have booked some credits and exposures this year that are above $40 million, including one in the fourth quarter, so we are looking at those. They are very competitive in the pricing of those, the pricing all sort of gets merged into -- we're running at about, what, 4.3, Rob, in the fourth quarter.

I think we had shared, Catherine, to add some context, that we had taken some steps in the third and fourth quarter to change our pricing model to allow us to be a little more competitive, basically dropping the end result by about 25 basis points on commercial loans. That was attractive, and I think has helped drive some of the loan volume. The other-- on some of these larger credits, some of them have some bank qualified tax exempt pieces to them, and so that also can be attractive to us as well.

William Wallace, Raymond James.

Follow up to your last comment, Billy, you mentioned some favorable tax, et cetera. What's a good tax rate to use for 2015?

I would suggest about 27% is the normalized rate going forward. As you can see, in the prior year, 2014, was lower than that but that was due to the impacts of merger related costs lowering pretax income and having our tax-exempt levels as a higher percentage of total pre-taxed income, so going forward I would say about 27%.

So last quarter you guys talked about getting more aggressive on the REO, you sold $11.4 million in the fourth quarter with a nice gain. Was that $11.4 million, was that a lot, was that multiple credits, was that a couple larger credits? What was sort of the composition of those sales?

There were a large number of credits involved in that. There were double-digit-- or close to double-digit former bank branches were involved in that, and then there were high single-digit number of loans or former loans that we had foreclosed on.

So it was pretty granular.

Yes.

My last question is on mortgage. I didn't ask about it last quarter. Rob, in your commentary you mentioned you'd expect -- you wouldn't hit break even in the Q1 just due to seasonality. Maybe let's talk about 2015. What's your expectation for contribution to the bottom line out of that segment?

Let me turn it over to Jeff Farrar, who runs that business and get it right from him, and then I'll add comments if there are other questions.

What I would say is that-- as you're all aware we've been going through a pretty major restructure this year with the mortgage company and I think we've got the major building blocks in place to see a turn here on profitability in 2015. The resulting Company post reconstruction will have significantly less in the way of fixed costs. I think it'll be more scalable, sustainable, we'll have less volatility in earnings based on market conditions because of that.

We've carved out a significant amount of fixed charges during the course of 2014. You go back and look at operating expenses, Q1 to Q4, we're running over $1 million less. We've reduced a number of FTE in conjunction with that.

We're just about done with centralizing the fulfillment process and getting that to a place where we can feel confident that we can go out and hire strong LOs that can feel good about getting the wedges through the door. So I'm optimistic, I really am, that this is the year that we can turn this from a profitability standpoint.

The other thing I'll mention is we're getting ready to roll out a portfolio of mortgage strategies that I think everybody's excited about, and we're within 60 days of taking apps on that. I think that's also going to help improve the optics around profitability for the mortgage company on a go-forward.

And then lastly I'm real happy and excited about the core team that's left. We've had a lot of folks leave. We did lose some large producers on the LO side, that was somewhat directly related to some long-term challenges on fulfillment and was exacerbated by the system conversion and consolidation of StellarOne, or integration of StellarOne, but when I look at what we have left, I like the platform. I like -- I just like the team, and I think we can build from this now and really start focusing on the topline revenue growth going forward.

Is your expectation, the way the business stands now, that the first and fourth quarters would be lost quarters but the second and third quarters would be profitable, or do you think that you could turn Q1 and Q4 into breakeven quarters?

I think that -- I'm not sure that I'm following you, but I think what we are hopeful of is that once we get past Q1 and we start seeing some pickup in volumes, that we will begin to see a sustainable breakeven to profitability picture on a go forward basis. So we're looking at, particularly in the second half of the year, we're looking at quarter to quarter profitability.

Second quarter, I think some things need to work for us. We saw the little bit of noise with some of the transitional decisions that have been made, but feeling pretty confident about second half profitability.

Okay. Thanks.

Laurie Hunsicker, Compass Point.

A couple of questions, just to go back to where Catherine was asking, regarding loan loss provision. Can you just take us through a little bit -- I guess how the breakdown related this quarter to fraud both in terms of provision and in terms of charge-off, and just even how it -- how your charge-off category actually broke. If you have any detail on that, i.e. what's commercial, what's real estate, what's consumer.

Let me back up. I think in the third quarter we mentioned that we had a fraud that was disclosed that (inaudible) in a credit that Union had an exposure, StellarOne had an exposure, and this was a real estate developer investor that had gotten money, if you will, from individual investors around Virginia to provide equity in his projects, and then it came to light that he basically had oversubscribed those investments.

There were some unsecured exposure that we wrote off in the third quarter, we put the loan on nonaccrual, and put a reserve for it, and as we worked through this fourth quarter and started foreclosure, these properties were allowed to be taken into bankruptcy which further complicated things, and so fourth quarter we took some charge-off, part of which was previously reserved and Rob's looking for the details, but I don't think we got the whole granular piece of the $3 million or so that was --

Yes, I think--

--done in December but it would be over half that. And there were some other [multiple speakers]--

Just to clarify, of the $4.2 million, then roughly half of it was fraud related or higher?

No. I think it was probably a little less than $2 million, maybe $1.5 million or so, but then we had some other charge-offs that were collateral dependent where collateral declined and we took partial charge-offs on those as we do every quarter, we look at our collateral dependent loans to make sure we have enough collateral there. To the extent we don't, we take partial charge-offs on those.

And then I would say the remaining is kind of (inaudible), credit card, some mortgage related charge-offs as well, which have been fairly constant quarter to quarter.

I mean, certainly your overall credit picture looks great. Certainly it really continued to improve this quarter too. But the swing in provisions, just to your comment earlier that you expect net charge-off to remain stable, are you talking stable relative to December and-- let's strip out the fraud so it wasn't $4.2 million of charge-offs. It was $2 million of charge-offs, so that is still a substantially higher rate than where we were, and so when we think about charge-offs plus growth, are we starting with the round numbers, you know $2 million per quarter, give or take [multiple speakers]?

We think about it as-- call it about 15 basis points or so and then any additional provision related to loan growth on top of that. So it might be a little higher on a provision as a base point for the quarter.

And if you look at our -- we have a lumpy -- as Billy said, we call it lumpy quarters. In the first quarter, we had net recoveries, and in the fourth quarter, we had obviously net charge-offs, but if you take it across quarters, it's probably -- we probably had a low-level in 2014, but I would suggest 15 basis points going forward is probably good.

And then just go back to the REO book here for one second, if we are looking at how your REO breaks out, you're at $28 million, you've got $5 million of this real estate investment. This is all shuttered branches?

It's shuttered branches and there's some operational premises that we're in the process of disposing of, so it's not just branches.

And the goal is most of that comes off this year?

That's correct, yes.

Well, that's the goal. Some of it will be difficult properties to move.

Yes. But we're actively marketing all of those properties and the goal is to move those off by the end of the year.

And then last question, actually this is a question just to follow up on Wally's question, Jeff, this is for you. Can you just give us an update -- and I'm sorry if I somehow missed this, but just a breakdown of originations, what was construction and what was core? And then just given your cost-cutting initiatives, where we are with respect to what constitutes a core breakeven, and I think it had been running about $160 million or $170 million your projected core, is that still a good number or has that number now come down?

We have -- let me run through the numbers first. For the quarter, we had core volume of $129 million. Construction volume of $26 million. We were down $11.9 million quarter to quarter on core. We were down $10.9 million on construction.

So, if we think about the 2015 and what it's going to take, the mix of core is going to change a little bit now because we've got a portfolio component embedded in that. So that will change the profitability dynamic a little bit from a breakeven perspective. So it's a little harder to say because of that.

What I am -- what I would say is that if you look at the volumes this year, we're not anticipating a significant change in volumes in 2015, meaning that we think we can kind of backfill what was lost in terms of LOs in the second half of the year. Profitability, we are anticipating to be more in a breakeven type result. So as I think about it, if you look at volumes for 2014, and say, okay, we think we can pretty much do the same thing in 2015 and breakeven, that will give you a sense of what we think that monthly run rate is.

David West, Davenport & Company.

You characterize your expectations for this year's loan growth as mid-single digit. Do you expect that, I guess, to be -- most of your growth has been C & I, commercial real estate construction. Are those the areas you still expect to drive long growth in the coming year?

Yes. I don't think the mix is going to change. We've seen a nice increase, as well, on the consumer side, relatively speaking, which for us would be primarily indirect lending of auto, marine, and individual home-improvement loans. We also buy some of those indirect, but the mix is going to continue to be on C & I and commercial real estate.

I will add David, as Jeff mentioned, we now have a mortgage portfolio product that will go throughout the year. We've been running off more than just-- StellarOne had a fairly robust mortgage portfolio that's been running off, and as Jeff mentioned, we are introducing a portfolio product. That's going to help-- you'll see some growth coming out of that that you didn't see this year.

Is that a fixed product?

It's a combination of both fixed and nonproduct.

And then I guess the only other one left, you gave us a little flavor on your actions in the third quarter regarding some of the larger foreclosed properties, and you mentioned you had a commercial lot here in Richmond and then some larger rural properties in Fluvanna, Orange, and King William counties, were there any movements in those properties in the quarter?

No. As I'm looking back on that, no. We've got -- there are some under contract, but we have nothing on those larger ones that we had mentioned earlier.

We will note that we do have a contract on the King Carter golf course property but that's not expected to close until later in the first half of the year.

On the golf course portion, not the residential development piece. The one we have in King William, the good news there is that now we have finally worked through our processes with the county and are able to put an entry road into that subdivision that we own, we do have a builder that has taken down building permits and will start construction. We think that will lead to more lot sales and eventually can get us out of that property, so there should be some forward movement on that one probably the second half of 2015.

Bryce Rowe, Robert W Baird.

Rob, just real quickly, trying to get a feel for a good run rate from an operating expense perspective. I'm calculating just under $52 million of operating expenses for the fourth quarter. Any feel for a good operating expense run rate going forward here?

We're projecting 51.5 million to 52 million is probably a good run rate going forward.

There are no further questions. I turn the call back to the presenters.

Thank you, Laurel, and thank you everybody for calling today and as a reminder, a replay of this call will be available on our investor website later this afternoon. Thank you.

This concludes today's conference call. You may now disconnect.