Beacon Financial Corp (BBT) 2009 Q2 法說會逐字稿

Hello and welcome to Berkshire Hills Bancorp second-quarter earnings release conference call. All participants will be in listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. (Operator Instructions). Please note, this conference is being recorded. Now I'd like to turn the conference over to Dave Gonci. Mr. Gonci, please go ahead.

Thank you. Good morning, thank you all for joining this discussion of our second-quarter results. Our news release is available in the Investor Relations section of our website, berkshirebank.com, and will be furnished to the SEC.

Our discussion may include forward-looking statements and actual results could differ materially from those statements. For a discussion of related factors, please see our earnings release and our most recent SEC reports on forms 10-K and 10-Q. Now I'll turn the call over to Mike Daly, President and CEO.

Thank you, Dave; good morning, everyone, welcome to our second-quarter conference call. I'm Mike Daly, President and Chief Executive Officer. With me this morning are other members of our management team.

Our CFO, Kevin Riley, is not with me this morning. Kevin was playing tennis against a much younger opponent this weekend and he hurt his back. I'm sure he'll be pleased that I announced today that we now know that that opponent was his wife. Kevin will be fine in a week or so, but I believe he learned a valuable lesson about domestic athletics. So I'll provide some of the financial details that Kevin normally handles in the call.

And Dave Gonci and [Andres Garzone], our Controller, are here to assist us if there are any financial questions that we need some detail on.

We released our second-quarter financial results yesterday and today I'm going to discuss those results and I'll also talk a little bit about our outlook going forward. At the conclusion of my prepared remarks we'll certainly take questions form from our callers.

Now there was a lot of noise in the quarter for most banks, as you know. We had our fair share of noise due to our TARP repayment and our merger termination and I'm going to discuss those items in a little more detail in just a few minutes. Let me start with the deemed dividend recorded for the TARP repayment. Now this was a nonrecurring, non-cash item, it had no impact on stockholders equity so naturally we have focused on our results before this item.

As we stated in the press release we recorded second-quarter earnings per share of $0.24 before the deemed dividend and before the FDIC special assessment. And I think this would be the best indicator of our true run rate during the quarter. The special assessment amounted to $0.06 a share after tax, so our adjusted EPS after this assessment was $0.18.

Now I've heard from most all of our analysts at this point who've arrived at a similar operating result, so I'm comfortable that we have met or beat consensus with these results. We accomplished this while also dealing with some other changes in the quarter, changes that included -- the permanent increase in FDIC premiums, which was about $0.01 more than we budgeted.

We didn't have time in the quarter to invest the proceeds from our May stock issue and that cost us another $0.01. And as you know, we announced a merger agreement with CNB Financial and then devoted a fair amount of resources towards this partnership which was terminated after a higher offer by a third party. Now despite this we posted strong growth numbers in targeted areas of the balance sheet and increased business development in our fee-based businesses.

We also had several nonrecurring revenue and expense items during the quarter, including fees and expenses related to the termination of the CNB merger which netted to about $750,000 during the quarter. As such we chose to take some other one-time costs totaling about $400,000 primarily related to restructuring in our new integrated services division. We also accelerated some problem asset resolutions including taking a $600,000 charge to accommodate the quick sale of a property. So all in these events generally balanced out during the quarter.

Separate from all the noise in the quarter we operated with a $0.24 underlying run rate. Our insurance revenues are seasonal and so first-quarter results included about $0.06 more in EPS than the second quarter. Our first-quarter EPS was $0.27, so adjusting for seasonality our second-quarter run rate of $0.24 was up about $0.03 from the first-quarter pace.

Having said that, revenue growth was below our expectation, although we did make up for much of that on the expense side. Now this is a constant focus of our attention. We continue to absorb the significant impact of loan refinancings in the current low rate environment and we're naturally being selective on commercial loan originations. Stock market prices continue to be soft; that holds down our wealth management income. And insurance pricing and demand are still somewhat soft as a result of the current environment.

As we noted in our earnings release, our new business activity in most of our business lines picked up in the second quarter and our commercial loan balances grew at a 12% annualized rate. Much of the balance sheet growth in loans and securities was booked near the end of the quarter, so I would expect that we're going to see some benefit from this beginning in the third quarter.

We're also confident that we can sustain the commercial loan originations. I announced last quarter the acquisition of a well regarded commercial group in our New York region. We're beginning to see real benefit from our expansion in the Albany area and I expect that we're going to make additional strides in the coming quarters. We also had continued growth of deposits in the second quarter after an exceptionally strong first quarter.

The earnings release commented on the positive developments in our integrated wealth and management -- wealth management and insurance business lines. We're on pace to generate $100 million or more in new wealth management business this year and that equates to an organic business generation rate of 15% or better. And it has been encouraging to see that the stock market strengthened somewhat in July since our wealth management fees are partially based on stock market prices.

We're also seeing signs that the softening of insurance prices may be bottoming out and that higher premiums may start to emerge in the industry and we're also seeing higher business development volumes in insurance, particularly in the commercial sector.

I also announced last quarter that Dave Farrell joined us to manage the business lines -- these business lines and to bring their integration to the next level. Dave is working with our team not only on integration, but he's also working on some strategic initiatives including revenue enhancements and process efficiencies using Six Sigma because Dave has extensive Six Sigma experience and, as you know, we use that exclusively in the Company.

Now I also want to emphasize that our interest income has been impacted by our interest rate sensitivity strategy. Now this is -- which is to remain asset sensitive and to avoid an access of longer duration fixed rate assets and I'm very focused on this. While short-term rates may remain low for some months, we believe there are risks that long-term rates will move up gradually and ultimately short-term rates will as well.

And we're very protective of our future earnings capacity and we feel it's better to sacrifice some short-term earnings in order to maintain this discipline. And I'd add that we're going to continue to evaluate our posture regularly on this and we are going to look for ways to support the margin within the framework of this overall risk management strategy.

Staying on the subject of risk management, we're pleased with the continuing strong performance of the loan portfolio, non-performing assets were 42 basis points of total assets at midyear, which was down from the start of the year and flat to a year ago. Our year-to-date charge-offs were 48 basis points of loans and have remained within the range of our expectations. We're also pleased that our residential mortgage charge-offs have continued to remain negligible.

We did have a tick-up in delinquencies in the second quarter, but the overall level continues to be well within a moderate range. And as I mentioned earlier, we chose to accept some lower prices on certain problem asset resolutions in the second quarter in light of our nonrecurring income and to keep resolutions moving forward, again, to protect future earnings.

Now in many ways business continues as usual in our New England and New York markets. There is a sense of cautiousness and there were signs of the recession in various ways. But conditions do feel less disruptive than they did just a few short months ago. Nonetheless, as unemployment continues to tick up throughout the country, we remain realistic that problem assets could increase beyond the current modest levels.

And as I've stated before, we intend to approach our environment in a balanced fashion -- we're not going to over react and we're not going to under react. We're going to continue to aggressively assess and manage asset problems if they do develop.

Now let me turn to the quarter's results and our guidance for the third quarter. Our second-quarter net interest margin decreased to 2.91% from the 3.11% in the prior quarter. Now virtually all of this decrease was due to lower asset yields, was offset by a small decrease in deposit costs. The asset yields came down due to mortgage refinancings and the planned runoff of the auto portfolio.

We also carried a lot of liquidity in the quarter with a $74 million average balance of short-term investments with very low yields. Now deposit pricing continues to be near the market floor. We are going to remain disciplined with our deposit and loan pricing. You know we have seen that some unreasonable pricing in our markets.

In the third quarter we expect to see deposits and loans grow at a single-digit rate. We expect to post strong growth in commercial loans and home-equity loans; I think that should help offset the continued reductions in residential mortgages and indirect auto loans. We do expect to benefit from the increase in loans and securities near the end of the second quarter as well as some securities purchased in the third quarter.

We expect time account repricings to help lower our cost of deposits in the third quarter. But I would add, we do have adjustable rate mortgages resetting down based off the one-year treasury rate. So there are going to be a lot of moving pieces here, but I'm confident that we are going to see pickup in net interest income to a little over $17 million next quarter.

Our loan loss provision was $2.2 million in the second quarter, that was a little above our net charge-offs. We do $2.5 million each quarter as an appropriate guidance number on the provision for the rest of the year. Our core non-interest income was $7.2 million in the second quarter. Last year we had seasonal drop of about $1 million in insurance revenues in the third quarter and we expect that we'll see that seasonally repeat.

Total deposit and loan fees were down a little in the second quarter and our loan fees were impacted by a servicing rate charge that we took in the first half and some costs related to our community investment program. I would expect to see some improvement in these fees in the third quarter as well including a rebound to around $400,000 in loan fees. So our guidance for the total non-interest income is about $7.4 million for the third quarter.

Our core non-interest expense for the second quarter was about $18.1 million for the FD -- before the FDIC special assessment. And as I said, we've kept a close focus on expenses in light of the revenue pressures. We do see a couple of small increases going forward and we're estimating that third-quarter non-interest expense will be around $18.4 million and the tax rate will be 23%, that's up from the 21% in the most recent quarter.

We issued a little less than 1.6 million new shares with the common stock offering in May including the over allotment. This increased our diluted share count by about 700,000 shares in the second quarter. And we expect the diluted shares will average around $13.9 million in the third quarter.

Now this all adds up to an estimate of around $0.20 for the third-quarter EPS. This would be an improvement from our current run rate after adjusting for the seasonal insurance revenues. And we do expect to be building towards higher earnings streams. But the specific timing of additional run rate gains just is not something I feel I can give out guidance on today.

It's also possible that we may have situations where we can do the quick sale of problem assets and such situations could cause some bounciness in quarterly results. If we do we will get right out and explain each and every one of those situations if they do occur.

And when we started the year we noted the unusual factors which could affect income in 2009. Margin pressures due to near zero interest rates, soft pricing conditions for fee income, higher FDIC premiums and changes in the loan loss provision and indeed these factors did come to pass. And they will continue to weigh on earnings for the balance of the year. The FDIC has indicated that an additional special assessment is probable in the second half of the year.

With unemployment continuing to rise, containing pressures could keep short-term interest rates near zero for the balance of the year. Nonetheless, we will continue to build our balance sheet and our business volumes and we'll continue the momentum that we saw in the second quarter.

Now there is more discussion of normalized earnings these days; what earnings will be when current conditions improve. Last year we reported EPS of $2.06 when all the factors I mentioned were in a more normal range. And I'm confident that our normalized earnings capacity will be well north of this number when better conditions do return. None of us knows when that will come and we may have to wait longer than we want or expected; but by building on our core business in the meantime we are going to be in a better position to reach new and stronger earnings levels when that occurs.

Now let me just take a moment to address a couple of key news items that we reported on in the second quarter. We were one of 14 banks at midyear that had repaid their TARP preferred stock and repurchased the latest stock warrant. So this means we are completely out of the government financing program. While the TARP program was originally well-intentioned, it did become clear that political factors were clouding its effectiveness and I think the right thing to do was for us to exit the program.

As we noted in our press release, the accounting rules required us to record a $3 million non-cash one-time deep dividend, which had no impact on stockholders equity, so we certainly don't view this as describing any real economic cost to our shareholders. We did have a cost of about $1 million to repurchase the stock warrants and that cost was not recorded to earnings but it did reduce stockholders equity.

Now including this cost and the preferred stock cash dividends the all-in economic cost to us for using the TARP money was equivalent to about 10% annualized cost to capital and we had it outstanding for about half a year. Now bank preferred stock yields were well above this level when we issued the preferred stock and so economically it was a reasonable transaction for us and the government in responding to systemic financial turmoil that gripped our markets late last year.

Clearly the government is quite comfortable with our strong capital levels and management of the Company as we obtained our approvals in a pretty timely fashion, both for the TARP repayment and the warrant repurchase.

In addition to paying off the TARP Capital, we also went to market for a second successful stock offering raising a net of $32 million in May. And this brought our tangible common equity up to a strong 9.2% of tangible assets and that provides us with a strong capital cushion and a healthy basis for supporting future organic growth and growth by acquisition. Now I certainly want to thank those shareholders who participated in this offering.

The other major news of the second quarter of course was the situation involving CNB Financial with whom we entered into a merger agreement early in the second quarter. Now there was a highly unusual hostile offer made following this announcement and indeed two other institutions made escalating offers to acquire CNB. After adjusting our offer once we did make it clear that we had reached the limit of what we thought was a fair price. And we had a good relationship with CNB throughout the process. And we concluded an amicable termination of the agreement near the end of the quarter.

We do a considerable amount of disciplined modeling in our acquisition process and I think we have a good sense of the boundaries of fairness to both sides in an M&A transaction. And we intend to continue these disciplines as we go forward. Now the CNB situation was unusual enough that it received national press and I do feel that the related uncertainty was a bit of a weight on our stock for much of the quarter.

One key benefit for us was the additional focus we put on the Worcester market. This was a subset of our analysis of the Eastern Massachusetts market overall which we see as a comparatively attractive area to invest in and one where our business style and our regional bank position could provide us with attractive business opportunities that are certainly a natural extension of our footprint.

We're going to continue to review opportunities to extend this franchise through acquisition and selective de novo activity and this is going to remain an ongoing area of focus for us. As you know, many of you know, several of our executives have extensive history serving these markets which are currently part of our overall lending area where we do write new business to establish relationships which are seeking alternatives to national bank lending sources.

Now before I turn to invite questions I just want to make a couple closing comments. This is a time of opportunity for us and we're positioning this bank to prosper in the times ahead. The future has become a little clearer and perhaps we've been through the most difficult stretch, although there are surely still some bumps ahead. But I can say this -- our team has energy, our management is focused and our governance is strong and they're all in sync. I'm confident in our ability to grow in New York and other areas around our current markets and I see a big upside for this company. And the pricing levels for our stock have rarely been so attractive.

So we look forward to doing what we can do to provide a strong return to those who are investing in our company. I'll now ask the operator to invite your questions.

(Operator Instructions). Mark Fitzgibbon, Sandler O'Neill.

Good morning, guys, this is actually [Alex Twerdahl]. My first question, just following on those last comments you made, would you say that now with respect to de novo branching the Worcester market is more attractive than the Albany market?

As far as branching goes? I don't know that I'd make that statement. We go through an extensive analysis using S curves and the like to determine how many branches that you need in an area to really make it efficient. So you take a look at a rogue branch versus an area where you've already made some dominating penetration, and I think I would still say that de novo branching in the Albany area is a primary focus for us.

Right. And then with respect to acquisitions, do you think -- are you still focused on the Worcester area as the primary focus? If you had the choice of where to make an acquisition would it be Worcester, Albany, Northern Connecticut?

Well, I think as I said in my script, we look at Worcester as a subset of the Eastern Massachusetts market. So I wouldn't limit our appetite specifically in Massachusetts to Worcester, but certainly in and around the Worcester and in and around the Boston markets are areas that we're very familiar in and I think that's an area we have interest in.

Albany certainly continues to show signs of continued growth, so we're going to continue to make sure that the New York market stays at the forefront. And we're always open to taking a look at opportunities that arise if they're good opportunities in areas in and around the market areas we've described. So I would say in that order.

Great. Okay and last question. Could you just give us a little color on how the loan pipeline was looking at June 30 compared to the March 31 pipeline?

Yes, I'd say it's almost double. Mike Oleksak is here. Would you agree with me, Mike?

Yes.

It's about double what it was?

Double and heavily weighted towards commercial real estate?

Commercial, I'm not sure it's all commercial real estate, Mike, if you want to make a comment on that. But the New York market with our new team there has taken in a variety of different potential loan types, right?

I think it's really split between C&I, your traditional commercial real estate and institutional.

I think one of the things that evidences that, Sean, you're here at this point, but we had a pretty significant increase in our commercial DDAs this past quarter.

Absolutely. We're still very high on the Albany market. The Albany market from a deposit perspective is over $270 million, so that's over an average of $25 million per branch. And I think that growth really helped us recruit an extremely talented commercial team that now can take us to the next level in Albany. So we're very high on the market and the residential mortgage pipeline remains at $80 million, so about consistent with the end of Q1.

Great, thank you.

Great, that's all I have. Thanks a lot, guys.

Damon DelMonte, KBW.

Mike, asset quality continues to remain very, very favorable for you guys. Of your three regions which one gives you the greatest concern right now?

You know, there are no systemic issues in any of our regions. We will find that there's a -- again, to use probably a bad term -- a rogue loan that we'll work out of in any one of the regions. From a dollar standpoint certainly the Western Massachusetts/Central Eastern Massachusetts loans and the New York loans are larger certainly than the Berkshire County and Vermont loans. But there really is no systemic issues in any of those portfolios. I think we will find that we'll work out of a loan here and there across the board. Would you agree with that, Mike?

Yes.

Yes, okay.

And that goes the same for just asset classes as well, right? No major concerns in any one particular asset class?

No, I mean we've stated before we've got a very low percentage of development loans in the portfolio. Obviously we keep our eye on those more so than we do anything else and I really can't think of a concentration or a systemic issue in any one of those areas. Shep, any color to that?

I would agree with you, that probably the greatest risk is in the modest portfolio construction that relates to residential and condo.

Yes and that's (multiple speakers).

And then just one technical question with regard to the tax rate. Did you say 23% for next quarter?

I did.

Okay, that's all I have for now, thank you.

Laurie Hunsicker, Stifel Nicolaus.

Just to follow up on a couple things that Damon hit on. The tax rate of 23%, is that going to be a good go-forward rate as well beyond just third quarter?

Yes, I don't see why it wouldn't be at this point, unless one of the finance guys disagrees with me. If you do, say so.

Laurie, this is Andres Garzone, Controller. I think that the tax rate is going to be somewhere in the range of 23% to 25% going forward after Q3.

Okay, that's great. And then with respect to your loan loss provision, the $2.5 million of quarterly guidance, how much of that approximately relates to C&I and CRE and just any comment maybe -- the charge-offs in the quarter, linked-quarter, the biggest jump obviously was in the C&I category.

Yes, we had a loan that we were carrying for some time that we talked about several quarters back. And based on the fact that we had some resources this quarter we cleaned that up in total; that was a C&I loan and I think that had probably the biggest impact on the difference between where loan charge-offs have been in the past and where they were this quarter. Would you agree with that, Shep?

Yes, that's correct. And the other meaningful loan was a CRE loan that went through a foreclosure process and we took a charge that we previously provisioned.

And we sold that at the auction and, again, we took a little bit steeper discount, but it's gone.

Yes.

And that will be recorded in the third quarter.

Okay. And if you look at that C&I and the CRE from sort of original point of balance, where did they end up getting resolved at, cents on the dollar -- approximately?

$0.25 on the dollar.

For both?

For the C&I. For the CRE it was much higher, it was about $0.75 on the dollar.

$0.75, okay. So when we look at your $2.5 million of quarterly guidance for loan loss provision how much of that is related approximately to C&I and how much is earmarked for CRE?

Shep, why don't you just give Laurie the rundown of what we anticipate using residential, consumer, commercial, commercial real estate?

Yes. As you know, Laurie, our residential and home equity portfolios have performed very well and continue to do so. The consumer losses tend to be in the auto portfolio and have been running about a quarter of the provision. So the other three quarters has been primarily focused on C&I. In the first two quarters -- I'm sorry, commercial.

In the first two quarters it was primarily a construction loan here in Berkshire County that we took some charges on in the second quarter. It was, as we said, a large cleanup of the C&I loan and then a foreclosure that we previously provisioned on a CRE loan.

So I think that's the way it's going to continue to play out. It's going to -- our charge-offs are more likely to be a smaller percentage on CRE where we have strong collateral than C&I, but the portfolio of CRE is much larger than C&I. So, it ends up balancing out about the same.

Okay, that's great. And then, Mike, just kind of a more macro question just to hit on something that was asked earlier with respect to your appetite for acquisitions. You have definitely been out there saying you are looking at deals, obviously you looked at the CFNA deal, you bid on it. You've been a very disciplined acquirer from the standpoint. We really haven't seen much.

Can you talk -- can you remind us a little bit of your threshold in terms of what you like, where you'd like to get something, if you prefer something clean and more bank like, if you would go for something thrift like, and just the asset size target that you're looking at now?

I'll do my best, Laurie. Obviously the parameters change from time to time based on who's interested in doing a deal and who isn't pretty. So let me take them one at a time.

My preference obviously would be to find a partner in regions where we believe we can see some more significant growth, other areas of Central and Eastern Massachusetts, areas in New York and partners who have clean balance sheets. You probably pay a little bit more, but the return on investment I think over time is probably a little greater.

We will look at opportunities, we're on an FDIC preferred list when banks come up and it looks like we may be able to do an FDIC assisted transaction we'll look at them. But one of the things I really don't want us to do is to get into a situation where we're putting a lot of resources and time in cleaning up somebody else's problem. But if the price is right and you can mark it down well enough then it's probably worth taking a look at.

Deals of anywhere from $500 million to $1.5 billion I think are within our appetite range. And certainly dilution to tangible book is a primary concern to us which is why I think we have been disciplined. And we're looking for things that can accrete earnings certainly after just a short period of time.

Okay, great. And then just to go back on the Worcester market, can you just remind us where you stand now? Obviously you don't have the CFNA deal, but is there a point where you would say, okay, I'm going to open half a dozen de novo branches in Worcester, or how do you look at that as we sit today?

You know, I don't know whether or not I could specifically say that we would open up a group of branches in Worcester. I think Worcester is a nice market, I think there are markets in and around Worcester, between Worcester and Boston market that would deserve our attention. So it's a little premature at this point to delineate specifically where we would locate branches for Central and Eastern Massachusetts, but it's an area that we have interest in.

Okay. And I guess just sort of extrapolating, is it safe to assume you would much prefer to do a small bank deal rather than going out and opening half a dozen de novo branches?

Well, I think that's pretty much a focus for us. It's always, I think, better if we can make an acquisition, find some individuals in that area who have certain connections in the area, have intimacy with the area. But if you really want to be in an area like we were, the Albany New York area, and we're not able to do a transaction that has the parameters that we're looking for, we will look to do some de novo branching.

Okay, great. And just one last question with respect to your FDIC comments. If you did do an assisted deal it would be in market or (multiple speakers) enlarging your footprint?

Yes, I think so. I've heard some others discuss doing potential FDIC assisted transactions outside a market. We're not interested at this point in doing that. I think New England and our areas in New York are good markets for us. I think we know the market. So you're unlikely to see us doing an assisted transaction in Florida or Georgia or anywhere else.

Okay, great. Thanks a lot, Mike.

Mike Shafir, Sterne, Agee.

Good morning, guys. A lot of my questions have actually been answered and -- but I was just wondering, obviously you guys are kind of flush with capital now and have done some of the great things in terms of ridding yourself of the government. But as we talk about earnings accretion and some of the guidelines that you think about in terms of the dilution and accretion model, do you think you could give us maybe a little bit of a hint in terms of what is acceptable in terms of the time frame of the accretion of potential percentage of dilution?

It's a real interesting question and it's one that I think would probably pigeonhole me into a place that I don't want to be. I'll give you a general range and I think any time you're looking at 5% or so, 6% of tangible book value dilution you need to see some credible earnings accretion within certainly 12 months.

Okay, thank you for that. And then the other question is, as you view the market obviously you guys have been willing to dip your toe in the water and seek transactions that would grow your earnings potential. Do you feel, in terms of really getting where you need to go, accretive transactions are what's going to have to occur moving forward?

Oh, I think there will be deals for us to participate in and I think we will do some deals. But I also think that we have some running room in the markets that we're in.

I think that when you look at our insurance business and our wealth management business being much larger contributors to the overall bottom line as the insurance market starts to harden from a pricing standpoint, as the stock market starts to move up, the teams that we're putting in place in Vermont and New York -- I think there's running room even without a transaction for us to see significant increase in our overall earnings power.

I'd be remiss if I didn't say that we're interested in doing deals. And we're going to look to do deals, but we're really more focused on doing deals that are right deals because if you look back two years later and you pay too much for something it's very hard to recover.

Well, I think everybody certainly appreciates the discipline that you guys have exhibited so far. And then my final question really has to do with I guess -- there's a lot of institutions in your market that would be considered over capitalized and are coming up probably within the year of being able to be available for sale.

The institutions that you compete with there I guess more probably on the residential side and some on the commercial side. Do you feel that there is enough potential in terms of cost savings with any of those to really get you where you'd want to go in terms of growing your core market as opposed to going to Albany or Worcester or other places?

It's a difficult question to answer and it always comes down to price. I also believe that there are opportunities with some over capitalized banks to do deals where you can pull some of that capital out of a region that's over capitalized and put it to use in areas where there isn't such an over capitalized environment. And I think that's one of the most interesting aspects of doing deals with over capitalized companies in areas where there is significant competition.

Thanks a lot; I really appreciate your time, guys.

My pleasure, Michael. Thank you.

At this time we have no further questions. I'd like to turn the call back over to Mr. Daly.

Great, I want to thank everyone for joining us on the call this morning. I hope everyone enjoys the remaining days of summer and we'll certainly look forward to speaking with all of you again in October.

Thank you. This does conclude today's call. You may now disconnect.