Beacon Financial Corp (BBT) 2007 Q2 法說會逐字稿

Greetings, ladies and gentlemen, and welcome to the Berkshire Hills Bancorp second-quarter 2007 earnings conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (OPERATOR INSTRUCTIONS) As a reminder this conference is being recorded.

It is now my pleasure to introduce your host, Dave Gonci. Thank you. You may now begin.

Good morning. Thank you all for joining us. The purpose of this call is to discuss results for the second quarter. Our quarterly press release is available in the investor relations section of our website berkshirebank.com and will be furnished to the SEC.

The following discussion may include forward-looking statements and actual results could differ materially from those statements for reasons which in certain cases we will discuss today. For a detailed discussion of certain other factors which could cause actual results to vary from these forward-looking statements, reference is made to our earnings release, and our most recent annual report on Form 10-K along with our recent filing on Form S4 related to the pending Factory Point acquisition.

Now I'll turn the call over to Mike Daly, President and CEO.

Thank you, Dave. Good morning everyone and welcome to our second-quarter conference call. I'm Mike Daly, President and Chief Executive Officer and with me this morning are John Millet, our interim Chief Financial Officer and other members of our management team. In this morning's call, I will comment on our second-quarter results and John Millet will provide some additional financial detail. I will conclude with further comments on our plans and earnings guidance and then we will be happy to take questions from our callers.

Before I get into the numbers, I'd like to start by mentioning our pending acquisition of Factory Point Bancorp. We announced this merger agreement in May and we're very pleased to be joining forces with the excellent team at Factory Point and adding seven branches in southern Vermont as we move forward to fill out the footprint of our franchise. We have filed our proxy materials and scheduled the shareholder vote for August 28. Subject to approvals, we expect to complete the transaction around the beginning of the fourth quarter and to complete most of the integration by year end.

Turning now to the numbers. We were pleased to report that in the second quarter we increased year-over-year earnings and also met consensus earnings expectations of $0.52 per share. As we noted in the earnings release, we produced 19% growth in revenues and we achieved an 8% increase in earnings from continuing operations.

For the first half of the year, our core earnings per share were up 7% over last year's results, adjusting for the delayed Federal Home Loan Bank dividend last year. We accomplished this while we also opened four new branches in New York absorbed the higher carrying costs. Now this is in line with our annual goal coming into the year to increase core EPS by 7% while moving forward with our franchise investment.

A key goal was to utilize the accretive benefit of our insurance agency purchases to support further investment in growth of the bank's franchise. Our Berkshire Insurance Group is currently on plan to provide the anticipated benefits. We actually accelerated our four planned branch openings this year and we're hard at work to drive traffic to our new locations.

In our earnings release, we reported ongoing progress in all of our major business lines. Steady growth in loans and deposits produced a 4% increase in net interest income. We had strong growth in all of our major fee income categories led of course by a quintupling of insurance revenues. Expenses grew in line with previous quarter trends and with our guidance at the beginning of the year. The after-tax cost for the de novo branch program were equivalent to $0.12 per share for the first half of the year. Now this equates to 10% of our earnings before de novo cost and this shows our very significant investment in franchise expansion.

Now I'd like to take a few minutes and talk about our balance sheet activities during the second quarter. As we reported, we produced 10% annualized linked quarter growth in average commercial loans and 7% annualized growth on the whole portfolio. Our new loan pipeline more than doubled in the quarter and reached a record quarter end level of $127 million. I expect we can continue to generate double-digit annualized commercial loan growth in the second half of the year. And I believe we will be able to maintain or exceed the current annualized pace of total loan growth.

We produced commercial loan growth in all three of our regions in the first half of 2007. We are careful in our loan selection and we follow our disciplines for pricing in loan durations and credit. Nevertheless I feel that we can continue to gain share based on our relationship approach in the market and we continue to see good activity in our markets.

Now turning to deposits. We generated 7% linked quarter annualized growth in our average deposits excluding planned runoff of broker time deposits. I was pleased to see we achieved 18% annualized growth in average demand deposits. Our key focus has been on non-interest-bearing accounts and accounts with good cross-sell potential. So I do think our results so far this year reflect this approach toward this challenging market.

We had anticipated that deposit pricing competition would be tough this year but frankly, time account pricing pressures are worse than we thought and in some cases have really been just uneconomic. As we discussed in our release, we have adjusted our pricing strategies and have seen some recent impact on our time account balances and overall deposit growth, as you might anticipate. Candidly, I'm willing to lower our deposit growth targets to reduce the pricing impact on our net interest margin.

I think it's fair to say we are expecting annualized organic growth in the 3% to 5% range for the rest of the year. But our focus will be on double-digit annualized growth of demand deposits along with growth in core accounts which have a disproportionate benefit compared to time deposits. Over the long run, I think these are better metrics for growth compared to total deposits; also a better measure to stabilize and improve the net interest margin.

I'd also note that one of the benefits of the Factory Point acquisition is the attractive core deposit franchise in southern Vermont and the benefit it will have when we integrate it with our balance sheet. Indeed this is one of the benefits of our regional organization that we can take advantage of the best loan and deposit opportunities in each of our markets.

Turning to fee income, I'm very happy to report that our nearly $9 million in first half insurance revenues are a little ahead of expectations and that our insurance integration is progressing well. Insurance customers who joined us through this acquisition have stayed loyal to our Berkshire Insurance Group. We have a building volume of referrals of existing bank customers and I believe as important, are some good new banking contacts among the insurance customers.

As I've previously mentioned, we have initially focused on commercial insurance referrals which have higher earnings potential and where the benefits of a full financial services relationship are greatest. And we're saying that our size and with our relationship focus, we can deliver new products, extra value to our commercial relationships, and thereby really execute on the kind of insurance and bank synergy that many try for but not all attain.

It was also quite a successful quarter for our other fee income lines of business including a 29% increase in our deposit fees and a 25% increase in our wealth management fees. Our assets under management broke through the $0.5 billion mark increasing at a 27% annualized rate to $544 million at midyear. Our markets provide significant ongoing opportunities to grow this line of business and our team has put together a record of service and performance that has steadily pulled in growth by referrals.

I've spoken quite a bit recently about our initiatives, including our branch openings and our branding campaign so I'll just give a quick update on these programs. We opened our tenth new branch in New York in the second quarter, an office in Glenville, New York. We've opened four branches this year as we said we would, and we actually brought them online earlier than our original expectation. We feel that our 10 capital region branches have given us an established beachhead that we can growth and further expand.

Now the Greater Albany market continues to excite us. A major local news event in the second quarter was the announcement that international Sematech is relocating its headquarters from Austin Texas to New York's Tech Valley. Sematech is an international consortium of the world's leading computer chip manufacturers and this announcement demonstrates the growing presence of New York's Tech Valley in the world technology domain. And as I've said in the past, we feel that the technology growth in eastern New York is going to affect all the markets we serve together with our soon-to-be added southern Vermont market.

Now with developments like this happening around us, it's easy to be excited and that is the theme of our corporate branding and culture. We rolled out our branding statement as America's Most Exciting Bank early this year. This is a long-term process of enhancing customer relationships along with enhancing the focus and rewards for our team of associates. While we don't have specific metrics on this, I can tell you that this theme and the energies of our expanded team and all of our employees are making a difference every day as we move forward in developing our franchise.

Now one area where we don't want excitement of course is in the area of asset quality. There's been entirely too much excitement about this recently as most of you know. We do not operate subprime lending programs and we do not purchase investment securities which are derived from such programs. What we do is lend money to good quality customers in our local markets that we know and we with an experienced group of lenders who follow our credit underwriting and administration disciplines.

Our credit performance continued to be strong in the quarter and there was little in the way of new developments. Our performing delinquent loans decreased a little to 36 basis points compared to total loans and as you know, we have one $6 million nonperforming loan and actually we were encouraged by an improving outlook for that asset that developed during the quarter. We still carry $1 million reserve assigned against this asset and we're comfortable with that.

All other nonperforming assets remain modest at 14 basis points compared to total assets. I think these numbers evidence our discipline. We continue to carefully monitor our markets. There's been some pressure on home prices and reported increase in delinquencies in our markets but these changes have been modest and not comparable to a number of urban and high growth areas where markets have turned decidedly adverse. I've talked about the geographic conservatism of our markets. They are less prone to swings in our view and we feel this continues to be true in the current climate.

There was some publicity about the sale of Pittsfield based GE Plastics to Saudi Basic Industries in the second-quarter. And this $11 billion sale actually brought out higher-than-expected interest. There have been no announcements about local impact. I am, however, involved in the local process and I can tell you that since the sale is complementary to the purchasers' business, we don't currently have any expectations there will be a negative impact and perhaps we will even see a positive impact.

In our earnings release, we commented on the outplacement of some large commercial loan balances, which, frankly we felt we were unable to monitor properly as they grew. So we found partners with full follow asset-based lending operations who were delighted to take on the credits. I view this as pruning that we do in the ordinary course of business.

As a result of this change, we had a lower loan loss provision which reflected the lower risk in the loan portfolio. We previously indicated that we expected the allowance to decline modestly in relation to total loan and that was before this particular decision about the commercial portfolio. You will recall we bolstered our allowance in the third quarter of last year and we indicated that we were comfortable with the reserve between 110 in 115 basis points and we feel we're well reserved for the risks as we currently see them.

Our charge-offs remain modest at 14 basis points annualized in the second quarter. And as you know, our loan management process is to work aggressively to identify any potential problem loans early, work them hard to minimize potential loss, which I think is certainly important in the current environment especially.

I announced last quarter that we had hired Kevin Riley to join us as CFO beginning just a few days from now. However, Kevin has been actively consulting with us since the announcement date and he will be hitting the ground running on his official start date, that I am certain of. I'm very pleased with how he has been interacting with our team and with the disciplines that he brings to our Company. We're initiating a number of incoming expense projects with Kevin's oversight. This is an across the board review of our operations and we're also looking at our balance sheet.

While we've had a lot of good news to share from the first half of the year, I will tell you that competitive pricing margins are clearly an ongoing challenge and this will also affect the length of time it will take to bring our de novo branches to profitability. As we come to midyear, we've concluded that we need to dig in and find additional cost saves and additional income sources to keep our forward momentum going. We expect that within some month's implementation time, we're going to be producing the benefits from this work.

Now this really reflects the work of all of our new executives and the fresh eyes they brought to our operations. It reflects the contributions of our existing senior team along with our Six Sigma greenbelt, really along with our entire workforce. And it is a great example of how important an engaged employee base is when the entire organization chips in to find cost savings and earnings enhancements.

Now I'm going to ask John Millet to review some of the details for the quarter and the rest of the year and then I will come back to talk about how we see all of these initiatives coming together for our future earnings. John?

Thanks, Mike, and good morning everyone. I will review the trends in our major revenue and expense categories and also provide guidance for these items. As Mike mentioned, we recorded good growth of average loans and deposit in the second quarter with 7% increases for both excluding broker deposit runoff. Due to this growth, our net interest income grew by 4% and adjusting for the delayed FHLB dividend last year, the growth was 1%.

Net interest income growth in the quarter was constrained by a 9 basis point decrease in the net interest margin from the linked quarter. The second-quarter margin was 315 basis points. We had anticipated that the margin would decline to 318 basis points in the quarter due to scheduled liability repricings.

Commercial loan market pricing conditions also contributed to the margin decline during the quarter. As Mike has noted, we expect to maintain or increase the pace of loan growth in the second half of the year with a slower rate of deposit growth. We anticipate that commercial loans will continue to provide our highest growth rate. Since these are our highest yielding loan category, we expect that the yield benefit will partially offset the cost impact of a higher reliance on borrowings. We expect that annualized linked quarter net interest income growth will be in the area of 1% to 2% for the next two quarters with some modest further margin compression. We expect the margin to stay at or above 310 basis points through the rest of the year.

I would note that my comments today do not take into account the impact of the pending Factory Point acquisition. This acquisition is expected to impact our fourth-quarter numbers although we are not looking for any operational accretion to EPS in the first few months of the acquisition. However, I would note that Factory Point has a higher net interest margin and therefore we do expect to be reporting a higher margin by the end of the year. We will have more guidance on the impact of the Factory Point acquisition with our third-quarter earnings release.

Moving into non-interest income, the key new element this year is insurance revenues from our acquired insurance agencies. There is a strong seasonal element to these revenues with about 60% of the revenues recorded in the first half of the year. We had strong results in all areas of non-interest income in the second quarter as described in our earnings release.

Looking forward, we are expecting noninterest income exceeding $6.5 million per quarter in the next two quarters. This would give us $28 million or higher in non-interest income for the full year which would be more than $1 million higher than our original expectation.

Our insurance operations are ahead of plan and are contributing to this growth. Additionally, we are adjusting other pricing schedules and fee income products and we are targeting to exceed our original projections in all fee income areas. We are targeting growth in excess of 30% for the full year in fee income excluding insurance revenues.

Mike has commented on the loan loss provision in the second quarter. For the first six months of the year, the provision totaled $850,000. Looking forward, we expect the loan loss provision to be around $500,000 per quarter for the next two quarters. We believe that our net charge-offs may decline from the $1.1 million level in the first half of the year. Here too, we will be looking at the impact of the combined portfolio with Factory Point which has reserved at a higher rate and we will have more information about that with our next quarterly conference call.

Turning to non-interest expense, our second-quarter expense was $15.1 million which was down 2% from the linked quarter and up 30% from the prior year second quarter. As we noted in the earnings release, this increase included $2.1 million related to insurance, and $0.5 million increase related to growth in the de novo branch program which is very similar to the increases that we reported in the first quarter.

Also as in the first quarter, all other core expenses were up about 8% due to the general expansion of the Company which is consistent with our guidance at the start of the year.

As Mike has mentioned, we have a number of expense reduction strategies that are unfolding and our target is to bring core expenses down toward $14 million per quarter. This would amount to about a 7% reduction from the second-quarter run rate and it will require success on a number of fronts that our management team is working on.

The impact of these initiatives will take a number of months to unfold. For the third quarter, we are targeting to reduce non-interest expense to around $14.6 million. We are also planning to hold our effective tax rate around the current 32% level.

This completes my comments. For closing remarks and comments, here is Mike.

Thanks, John. This will be John's last conference call as our interim CFO and Kevin Riley will be participating in these discussions as CFO going forward. John stepped up very ably over the last several months to assist us in the transition to a new CFO and we appreciate his contribution with this and we have some exciting things in mind to keep John busy as he transitions out of this interim role.

Now turning to our earnings perspective, for the first half of the year, we produced EPS of $0.56 in the first quarter and $0.52 in the second quarter. These results have included a seasonal component from insurance operations as we have previously discussed.

For the second quarter, insurance provided about $0.09 in earnings but that contribution will decline to $0.01 or $0.02 for each of the next two quarters. I'm aware that we have a lot to do to offset the impact on our run rates for the second half of the year. I earlier mentioned the numerous income and expense initiatives that we have in process which I think will be worth in the area of $0.10 to $0.15 a share annualized when this work is completed. These initiatives along with our ongoing organic growth will be the basis for near-term earnings enhancements.

Now some of the benefit will emerge in the third quarter and some will take place in the fourth quarter and some will hit next year. At this time, I feel the appropriate guidance for our third-quarter EPS is in the area of $0.50 per share. We're going to need to have a number of things fall into place in order to make this happen but I believe that with the hard work of our entire team we can achieve it. If we get there, I think we will feel pretty good about what we've accomplished.

We came into the year looking to produce at least a 7% increase in our core earnings over last year's results. It's going to take a lot of hard work in the second half of the year in order to produce that increase for the year. By accelerating our branch openings, we have increased our current year cost of the de novo branch program at a time when the spread on new business has been softer than expected.

But there is no doubt in my mind that the near-term impact on earnings is more than offset by the franchise value we're creating in the New York market. Our insurance earnings have provided offsets that have gotten us to mid year without further impact from de novo costs. Now we're taking an additional approach to our operational mechanics as a strategy for the second half of the year by using our Six Sigma processes and reviews to become more efficient.

Meanwhile, we are producing very solid growth in all of our fee income lines and we're working through a record loan pipeline in booking ongoing growth of our loans and deposits. One thing we won't do is short ourselves on the benefits of the growth that we are currently enjoying. So this is the balancing we will be doing as we look to substantially improve our operating leverage and also keep the top-line moving strongly forward. And of course, we will be working aggressively to complete the acquisition and integration of Factory Point Bancorp.

We had a conference call in May to discuss our agreement to acquire Factory Point. This acquisition meets our criteria for strong strategic fit and an attractive return on investment going forward. We expect that all of our profitability measures will improve as a result of this acquisition which is also expected to be accretive to annual earnings per share by about $0.04 beginning next year.

Now for comparison, the annualized impact of our insurance acquisition will be to reduce our profitability as measured by the efficiency ratio since insurance margins are generally lower than banking margins. However, the insurance acquisition has also been accretive and is on track to provide nearly a 15% return on equity in its first year. So I think this shows the balancing that we look at between operating efficiency and return on capital as we evaluate acquisitions and we're very excited about what these two acquisitions do to enhance our franchise value in both ways.

Now that tells you where we're at. I think it's a good a story that shows that we're working on the leverage to grow the earnings of this Company. We felt that it was an appropriate time to increase the quarterly dividend by 7% to $0.15 a share. In addition to growing the Company, we also used our capital to provide a return to shareholders both in dividends and in stock repurchases. We feel this dividend increase will make our stock more attractive to existing and future shareholders.

Now with our pending shareholder meeting to approve the Factory Point acquisition, regulations prohibit us from currently being in the market for our own stock repurchases. The financial sector has softened in the market in recent months and we feel that our stock is a very attractive investment for us and a wise use of our capital. As you know, we have an approved share repurchase program and we expect to take full advantage of stock repurchase opportunities as we go forward.

I will let that conclude my prepared comments and we invite any questions that you may have for us at this time.

(OPERATOR INSTRUCTIONS) Ross Haberman, Haberman Value Fund.

Good morning, gentlemen. How are you? Could you discuss what you are seeing generally in loan demand in western Massachusetts both on the residential as well as the commercial side? And any issues on your 30- to 60-day delinquencies?

Sure. You want me to talk specifically about western Massachusetts, meaning west of Berkshire County?

Yes.

Okay. So the Pioneer Valley, in other words?

Yes.

The Pioneer Valley has probably been the most competitive area for us on the commercial side, frankly. There's an awful lot of capital in that area and so I think from a competitive standpoint, pricing and competition has been pretty fierce. Residentially, I don't think we fall down at all with respect to residential production to the Pioneer Valley. As a matter-of-fact, Pioneer Valley is one of the leading areas for us from a residential standpoint. And thirdly, there is absolutely nothing systemic about any 30- to 60-day delinquencies in our portfolio.

Okay. And if I understand you right, you are seeing much better demand and much better growth over the border and the New York market?

For commercial there is a significant amount of activity. As I said earlier, some of it is based on some of the offshoots of the [nanotech]. I think some of it is based on the fact that there is competition that we're a little bit able to handle. I think it is balanced growth but I think that the opportunities in New York are at this point one of the frontrunners for us on the commercial side.

And just one final question. Will you continue to look to buy other organizations given the overall drop in valuations? Or with this acquisition, you will have to digest this for the year before you really do anything?

I think that we're in a position at this point where we're doing a pretty good job of finding our integration with both the insurance company and with Factory Point. The management and the leadership at Factory Point is incredibly helpful. And so I'm not sure that that would preclude us in the event that there was something about was clearly opportunistic for us based on the pricing that we're seeing today.

Okay thank you. The best of luck.

Thank you.

(OPERATOR INSTRUCTIONS) Mark Fitzgibbon, Sandler O'Neill & Partners.

Good morning, Mike. First question I have for you is deposit service fees were up quite a bit. Did you actually change your fee structure or any on your deposit accounts?

I believe that we did increase some of our deposit fee accounts and that was part of the overall income and expense initiatives that we talked about.

Okay.

Did you want to add something, Dave?

Yes. Also we had introduced additional convenience services in the third quarter of last year and so we are still seeing the annualized impact as we do year-to-year comparisons.

Okay. Second question I have for you is on the loan pipeline of 127 million. Could you give us a guesstimate of what the mix of loans in that pipeline looks like and maybe what is an approximate average yield would be?

(inaudible) Sure. Shep, you are here. You can handle that.

Hi, Mark. We're actually seeing a nice uptick in residential mortgages which as you know carry a relatively modest provision. So that is one plus. And then the other piece is primarily in commercial real estate.

Okay. So would you guesstimate it is roughly 50-50 the mix or 40-40 and sort of 20% other stuff?

I think it is probably more heavily weighted toward commercial.

Okay. Third, I wondered if you could give us an update on that $6 million credit? I think you mentioned in the press release it looks like it is moving in the right direction. Any sense on when that will be resolved?

We're starting to see the realization of some of the collateral that we've been planning to liquidate over time. So that is the first positive sign there. And in addition, the Company has built a substantial backlog of new work while it's operating under bankruptcy laws. So we are seeing both as positive trends.

So you don't think there is much loss content or any loss content in it at this point?

We have a $1 million reserve and we think that is adequate.

Okay. And then the last question I had is I guess I'm curious why did the C&I loan yields drop so much from the linked quarter? I think they were down like 28 basis points. Was it maybe overstated by some fees or something in the prior quarter?

There was a fee on a prepayment in the prior quarter that may have boosted the average yield slightly.

Great, thank you.

Thanks, Mark.

Michael Cohen, SuNOVA Capital.

Hi, I was wondering if you guys could just kind of walk through the progression from this quarter to next in terms of just from a bottom-line perspective and just what is kind of tick and tie the specific items that are going to take things down and take things up. It seems like you guys are going to provision more but you are also expecting more fee income kind of from the core banking business and less revenue. Is it less revenue or less revenue and income from insurance? Can you walk me through that again?

Sure. The seasonality of the insurance certainly dictates that we're going to see less in terms of insurance income in the second half of the year always than we do in the first half of the year. That has a lot to do with the partnership agreements we have with the carriers. They pay those in the first half of the year. So we know going into the second half of this year that increases in fee income in other areas demand deposit growth, core account growth and additional expense reductions, will likely be the strategy that we will need to get our revenues back to where we want them without the seasonal boost of the insurance revenues.

This is John. I will just give you a little color too. On the fee revenue side, as Mike mentioned, we do expect a decline in insurance commissions but we do expect pickups in loan fees as we're selling more of our mortgage production. So as we finish up the quarter at about 6.9 million, we're looking at that to stabilize at a run rate of about 6.5, 6.6 going forward.

Also expect some pickup in the net interest income line as we indicated in the 1% to 2% growth area and a reduction of our operating expenses down into the area $14.6 million which is a reduction from where we ended up at Q2.

Okay. Can you also talk about what went into the logic of under provisioning your actual charge-offs by as much as you did in the quarter? I know you had mentioned that you sold off $23 million of asset-based loans. But I would assume asset based loans tend to have lower reserves to start with and lower charge-offs, no?

No. These are asset-based loans not for instance the asset of a real estate but full followed asset based lending and normally carry a higher provision. And Shep, if you want to add some color to that, please do.

Yes, these are in our C&I book and we're fully provisioned so that eliminating them reduced a portion of the provision in addition a fair amount of our growth during the quarter was on the residential side. So that that is relatively modestly provisioned by comparison. So when you see the net total loans quarter end to quarter end not having grown much, that is obscuring a significant reduction in the C&I risk loans and a comparable increase of much lower risk residential loans.

Okay, that is great. Did you -- were you guys able to derive any benefit, any gain from the sale of the loan balances?

No, (multiple speakers) we sold them at par.

No. And you know we did that because we thought it was the right thing to do from this Company's standpoint at its maturation stage. And there are partners out there that are experienced and well versed in doing full following asset-based lending and we just weren't prepared to go any further at this point. So we view it as a positive move for the Company.

Great, thank you for taking my questions.

Mike Shafir, Sterne, Agee & Leach.

Good morning, guys. I just have a question about the insurance revenues again. I know that the previous quarter you guys said you that you had about $13 million annually. Does that number still work for the annual run rate on the insurance revenue or are you ahead of that pace now?

We are actually seeing stronger revenue growth so we're more in like the $14 million range.

Okay, great. And then my other question is in terms of your loan loss reserves. You said that you were comfortable at the 110 to 115 range previously. So is that the level you are still comfortable at now in terms of going forward even though I guess the provisioning for those loans that you guys sold off has been reduced?

Yes, I think as we look at that, seeing how we shed a significant risk in the C&I portfolio, I think our overall strategy is we would be okay with a reduction beyond the 111 mark, but not significant.

Okay, thanks a lot, guys.

Thank you.

There are no further questions at this time. I'd like to hand the floor back over to Dave Gonci for any closing comments.

This concludes the call. We thank you all for joining us and look forward to speaking with you again at next quarter's conference call.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.