Beacon Financial Corp (BBT) 2012 Q2 法說會逐字稿

Good morning and welcome to the Berkshire Hills Bancorp second-quarter 2012 earnings release. Please note this event is being recorded. It would now like to turn the conference over to David Gonci, investor relations officer. Please go ahead.

Good morning and welcome to America's Most Exciting Bank. And thank you all for joining this discussion of 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 will include forward-looking statements and actual results could differ materially from those statements, including statements regarding our pending acquisition of Beacon Federal Bancorp. For a discussion of related factors, please see our earnings release and our most recent SEC report on Forms 10-K and 10-Q as well as documents filed with the SEC related to the Beacon transaction as described in our earnings release.

Now I will turn the call over to Mike Daley, President and CEO.

Thank you, Dave. Good morning everyone. Welcome to our second quarter conference call. With me this morning is Kevin Riley, our CFO, and other members of our management team.

We released our second-quarter earnings last night and we produced $0.47 in core earnings per share. That is a 34% increase over last year's second quarter results, and it matches our prior guidance and the consensus estimate.

Now, this marks the 10th consecutive quarter of increasing core EPS and our 10th consecutive quarter of achieving or exceeding our core EPS guidance. Over this period we have nearly doubled our core EPS, which equates to an annualized growth rate in excess of 30%.

We have also more than doubled our core return on equity, which is now [over] 7%, which is -- I'm not where we want to be, but it is better. When you include the amortization of intangibles, we are generating tangible equity capital at a $2.12 annualized core rate. That is about a 14% return on tangible equity.

Our core EPS run rate is up at a 14% annualized rate since the start of the year. And we have guided to the same 14% growth rate for the full year, based on our target of a $0.50 run rate by year-end.

The Beacon acquisition is targeted to produce another $0.22 in core EPS next year, so that alone represents the continuation of double-digit core EPS growth and profitability improvement, including a targeted 9% return on equity. Still not where we want to be, but again, better.

With respect to the second quarter we posted a 16% increase in revenue compared to the prior quarter, and this outpaced the 14% increase in core non-interest expense. That 16% increase in revenue represents nice gains in market share and it includes a 25% increase in non-interest income. Now that is an important number to us as we build our fee income sources to diversify our revenue stream, and of course, improve our wallet share.

Our first priority, as I've stated many times, is always on organic growth in targeted business lines, and during the quarter we had a 9% annualized growth in commercial loans. This growth was primarily in commercial business loans, where we have been expanding our presence with new lending teams and offices and branches. And we're having good success with these teams in these markets, and we're going to continue to build our commercial lending strength in the new markets we have entered, including Hartford and Syracuse.

Our emphasis on business loans, including asset-based lending, it's diversifying the portfolio and it is producing more relationship oriented accounts. And this, by the way, contributing to our deposit and fee income growth.

And I would also add, while we have been successful in taking market share, the latest Fed-based book report released last week shows that New England remains among the stronger regions in the country, and the momentum is really building for the development of next-generation computer chip technology in Albany. This region is becoming a world hub for nanotechnology. So we're encouraged that our markets also continue to provide opportunity for sound new business growth as well.

I will discuss our Greenpark expansion shortly, but it is worth noting that our higher mortgage business volume contributed nicely to the growth of our mortgage portfolio. We've recently expanded our consumer lending management team, so I think you're going to see some strengthening in our retail penetration as well.

If you include the retail and small business lending, our total organic loan growth was at a double-digit annualized pace in the second-quarter and the first half of the year, and I should point out that our mortgage business continues to be a primarily oriented towards mortgage banking and secondary mortgage market sales. So we do remain asset sensitive in our interest rate risk profile so that our earnings will benefit when rates do rise.

Our organic deposit results were also solid in the second quarter. We had 5% annualized growth of non-maturity accounts and 9% for the first half of the year. These are relationship products and these are the ones we focus on.

In New York we opened up new branches in Colonie and North Greenbush. We also relocated our Delmar office, so you can see we are continuing to invest in the branch network as well.

We did allow some higher-cost maturing time accounts to roll off the books and we used some pretty low-cost overnight borrowings to fund the growth in the loan portfolio and loans held for sale.

We're keeping a close eye on our pricing and funds mix and we did succeed in lowering our cost of funds by 7 basis points during the quarter. This obviously supported our net interest margin, and Kevin is going to give you a little more color on that shortly, including some purchase accounting impacts.

So let me turn to non-interest income which, as I said, was up 25% over the prior quarter. The big increase here was in loan fee income related to our new Greenpark operations. Our business volume in the first few months of operations actually exceeded our expectations. We operate our Greenpark decision from 8 lending offices in Eastern Mass. And we're the process of introducing other consumer banking and insurance products to this market as well.

Meanwhile, our deposit growth produced double-digit annualized growth in deposit-related fees. Our annualized wealth management new business development also exceeded 10%. And as we predicted, insurance income was up, reflecting higher business volume and finally some improved industry pricing conditions. So, we're seeing strong and growing business trends from all of our major business lines, and every quarter we're seeing good and better results from the cross sales and referrals from our teams.

As you know, on April 20 we completed the acquisition of CBT, the Connecticut Bank and Trust Company. This was on time and it was on plan. We're moving along well with our integration activities. These will include 35% cost saves to be achieved by year-end. And we are introducing a broader product set to the CBT market, and we're moving forward with some exciting initiatives to build our brand there.

We're also integrating our Hartford and Springfield teams, and that is really consistent with the size of this combined region as the second-largest economic area in New England. So as I said, I'm excited about the organic growth potential that we are pursuing in this region.

In summary, our strong topline growth is giving us confidence that we can continue to grow our market share and really become a primary regional provider in the center of New England and New York, and I think this is what builds franchise value. The topline growth also is the key driver for the positive operating leverage that we have been posting quarter over quarter as we take advantage of scale and infrastructure to improve profitability. And you can see that in the ongoing improvement in our core quarter return on assets, which has increased sequentially in 2011 in 2012.

Now we're at 94 basis points, and I can assure you we have our sights set on achieving and exceeding 100 basis points in the near future. Now this improvement, along with a more efficient use of our capital, has increased our core return on equity as I said to over 7%. And we're targeting the 9% level based on the completion of these current initiatives.

Now we know that is good progress, but again, our sights are set on delivering even better numbers in the future.

Now I will have more to say about our capital utilization shortly, but I want to pause for a minute, ask Kevin to provide some more color on the quarter's results and also give us some guidance for the third quarter. Kevin?

Thanks, Mike and good morning, everyone. For the second quarter we reported $0.47 in core earnings per share. This was up from the prior quarter results of $0.45.

This quarter's results include the impact of our latest two acquisitions, CBT and Greenpark, which were with us for most of the quarter. As we have mentioned in the past, we expect these operations to have benefit to us of about $0.01 per share per quarter. For this quarter, results benefited from both organic growth and our earnings from our new operations.

Our GAAP earnings per share for the quarter were $0.37 and this included about $0.10 a share in non-core charges which were mostly associated with the CBT acquisition. At the start of the year we gave guidance that we expected these non-core charges to be around $6 million after-tax for the year, and with most of these expenses behind us, we are now still below that figure.

We expect the third quarter to be relatively free of these non-core items and the fourth quarter to have some charges as they relate to our newest acquisition of Beacon. We will provide some color on these when we provide guidance for the fourth quarter.

For the quarter we also added about 965,000 shares to our outstanding share count, which now stands at a little bit over 22 million.

Now let's look at the balance sheet. As Mike has mentioned, we had strong organic loan growth in the second quarter. Promotion, which is our primary focus, grew at an organic rate of 9% for the quarter with our emphasis being placed on our C&I loan generation. When we look at our commercial loan pipeline, we feel confident that we can maintain this pace throughout the second half of the year.

As for residential mortgages, we booked a higher than normal rate to the balance sheet for the first six months. In order to control this growth, we continue to utilize secondary market sales for our new fixed rate mortgage production. As we have stated in the past, it is our goal to maintain our asset sensitivity and we're doing that.

As we look forward we anticipate our organic growth in mortgages for the second half of the year to be in the mid-single digit range. For total loans for the remainder of the year, we're expecting high single digits. And again, for our deposits, our organic growth for the first six months has been in the mid-single digits and we're expecting the same for the rest of the year.

Moving to the income statement, our net interest income for the second quarter was a little over $35 million, and this was a little bit better than our previous guidance. There were two items that contributed to this positive variance -- loan growth that was higher than we expected and a higher than expected net interest margin, which came in at about 3.70%. As we have stated previously, we expect our margin run rate to be around 3.60% to 3.65% and we still agree with this level for the third quarter.

As Mike mentioned earlier, we lowered our cost of funds by 7 basis points to help maintain this level. The additional 5 to 6 basis points that brought us to this level was released purchase discounts on an acquired loan that prepaid. So as we've seen in the past several quarters, our margin is subject to volatility due to pre-payment of acquired loans from bank mergers which carry a fair value mark.

The recognition of these marks can move the margin higher or lower from our expected range. In the second quarter these pre-payments increased our margins. So again, we expect the margin to be in the low 3.60% range for the third quarter and we're forecasting our net interest income to be around $35.5 million.

Non-interest income for the second quarter was $12.3 million. It was in the range of our prior guidance. This quarter's level of noninterest income presented a 25% increase over the first quarter results. Most of this increase came in loan fees, and most of that increase came from our newly acquired mortgage operations, Greenpark.

The mortgage rates being at all-time lows, their first two months with us exceed our expectations. As Mike has mentioned we continue to expect growth in all major categories of non-interest income, so we're expecting our noninterest income to come in around $13 million for the third quarter. This will be taken into account a full quarter of CBT and Greenpark and the ongoing organic growth.

These projected revenues for the third quarter represent close to a double-digit annualized increase from that of the second quarter.

Our second quarter loan loss provision was $2.3 million and was in the range of our prior guidance and previous quarter results. Our loan performance metrics remain favorable and have improved from the start of the year. Over the past few quarters our provision has exceeded our charge-offs as we continue to provide coverage for new loan growth and our acquired portfolios. But for the third quarter, we are projecting our provision to be $2 million to $2.5 million.

Our second-quarter core non-interest expense came in at $30 million, which was in line with our previous guidance. The increase in expense this quarter included the core operating costs of our new acquisitions, CBT and Greenpark. The increase in expense we managed through our zero-based budgeting methodology we use for all acquisitions and (inaudible) are experienced in achieving agreed-upon expense levels.

At this time, we are well on our way in achieving or exceeding our 35% cost savings targeted for our CBT acquisition. This great work can be reflected in our core efficiency ratio, which came in at 59% for the quarter.

For the third quarter, we expect our core noninterest expense level to be basically unchanged to that of the second, even when including a full quarter of operations from CBT and Greenpark and our continued spend on branch expansion and infrastructure development in order to support future growth of our franchise.

In the third quarter we are also looking forward to our core system conversion, which has been a big undertaking for our teams. This conversion will give us an efficient and scalable technology for many years to come, and will provide many new opportunities to continue to improve our profitability as we gain experience on the new platform and as we apply our Six Sigma discipline to engineer new processes as we grow into this technology.

Our second quarter core tax rate came in at 32%, and this is due to the impact of our growth. With higher earnings, we expect the rate to be around this level for the third quarter.

To summarize, we're projecting the third-quarter core earnings to be around $11 million, with an earnings per share of approximately $0.49. This projected growth in earnings will keep us on track to accomplish the 14% run rate growth that Mike has commented on.

Our guidance for the third quarter also reflects our continued progress toward more positive operating leverage with a nearly double-digit projected annualized revenue growth and our projected expenses being relatively flat.

We have the market opportunity to continue to grow revenues and our team is focused on delivering these revenues. With the earnings growth and the positive operating leverage, we believe we will deliver value to our investors. With that, I will turn the call back over to Mike.

Thanks, Kevin. You know we've been experiencing some power outage here on and off, so we will try and get through this. Hopefully we won't have any issues. If we do, we will have to make other arrangements.

As Kevin has indicated, we are targeting $0.49 in core EPS in the third quarter. This does keep us on the 14% pace growth in core EPS that we're targeting for the year.

We do appreciate the fact that the analyst consensus for our second quarter was in line with our guidance. We are hopeful that our guidance will continue to provide an important benchmark for third-party estimates of our earnings. We continue to experience strong asset performance, with favorable levels of nonperforming assets and charge-off.

And I think it's important to note that with the amount of loans we have acquired in the past 18 months, a significant amount of our portfolio has already been conservatively marked. So I think it is important to view our capital and our loan loss allowance in this light.

Also, our strong deposit growth continues to support solid liquidity. So when we look at the totality of our operating results and our balance sheet metrics, it really does show strong underpinnings of our financial position and the ability to support future revenue growth.

I would also note that our tangible book value per share increased by 3% over the past 12 months, while we paid out around a 3% dividend yield and we grew our core EPS run rate by 34%. And remember, this was done while absorbing the impacts of the legacy and CBT mergers and the Greenpark operations.

Now this has been an ongoing theme of our M&A disciplines, that a tangible book value dilution would be reasonable within the framework of the deal's pro forma earnings accretion, and would be quickly absorbed with the overall growth rate of our tangible equity from operations. Now we maintained this theme with the announcement of the Beacon merger at the end of May. This merger has numerous operating benefits for our franchise, which we described in the deal presentation.

With our Rome acquisition last year, it gives us a solid market position to build our Central New York region and expand into the Syracuse market, and we expect to complete this acquisition before the end of the year. And as I mentioned earlier, the pro forma core EPS accretion from this merger is $0.22 and $0.30 in tangible book value creation. So we're targeting about a four-year payback on the tangible equity payback before revenue enhancements.

And also, as you know, we do plan to issue subordinated debt to reorganize our capital structure as part of the Beacon transaction. Now, this is going to rebalance our overall capital structure to be more competitive with our peers' cost of capital. And it takes advantage of not only attractive market interest rates, but also the tax-deductibility of the interest on the debt.

Now we have been considering options to rebalance our capital for some time, and this transaction was a perfect opportunity to combine this capital adjustment with an operating transaction, because that is what produces the maximum benefits for our shareholders. I would also add it keeps down our issuance of new equity at a time when we and all of our analysts expect a price [appreciation], so it does maximize the value retention by our current or holders.

So, let me summarize by pointing out how our second-quarter results and our current initiatives support the key themes that we've been discussing this morning. Strong topline expansion, built on a foundation of organic growth. Consistent, sustainable, double-digit core EPS growth driven by positive operating leverage. Improving core profitability as demonstrated by our improving return on assets and return on equity. Strong internal generation of tangible equity to support dividends and investment for further franchise growth. Market share and wallet share growth as we diversify our revenue and enhance our franchise value in what we think are attractive markets. And solid financial condition and controls to maintain a favorable risk profile along with the solid return metrics.

With our CBT acquisition, we reached 22 million shares outstanding and we expect to be around 25 million shares after the Beacon acquisition. So, we're gaining more visibility with the investment community as our market cap climbs above the $0.5 billion mark. And I have had a lot of recent conversations with many of our investors who have affirmed their support for our strategies for delivering growth and value.

So I want to thank all our employees for their hard work in delivering these results for all of our constituents, and commit to all of you that our Company is fully engaged in pursuing the opportunities in front of us to build on these successes. And I want to assure you that we are going to keep our focus on delivering the right results for our shareholders.

Now, this completes my prepared remarks and I now invite the operator to open the lines to questions.

(Operator Instructions) Mike Shafir, Sterne Agee.

I have a couple of questions on kind of how we should be thinking about the margin post the Beacon Federal deal. Their margin is quite a bit lower than yours, and I'm just wondering if you guys are seeing in the potential accretable yield enhancements there. And how should we kind of think about coming off the second half of the year guidance of 3.60% to 3.65%? Where do you think that can kind of map out in 2013 or into 2013?

Kevin, we will obviously mark that before we do it, but why don't you explain how that works.

Yes, Mike, we pro forma when we're looking at it on the basis of the marks at the time we did due diligence that we'd come out of this acquisition with a little bit over a 3.60% run rate. But as you know, the marks aren't final until we do (inaudible) the interest rate environment we are at. So, we are anticipating ride around that 3.60% level unless something dramatically happens.

Okay. And just you guys have done a great job growing loans clearly as a function of some of the hires. But maybe you could just kind of speak to where is a lot of the growth coming from outside of taking market share, and why you feel that your strategy has been more successful than some of the anemic growth we've seen in other places?

I don't know that it has been more successful. There's people out there that are doing the same thing we're doing. I think there is business to be had.

As I said before, we are talking about a generation of banks that did an awful lot of acquisitions back 10, 12 years ago. They garnered on awful lot of market share and those banks are the big banks. They are now owned out of the country in most cases, so there is a lot of portfolio in a lot of these areas where we are doing business that I think are vulnerable. And I think if you can put the right people into these markets, you have a very good chance of garnering some business and I don't think it's going to go away tomorrow.

I'm going to ask Pat to make a couple of comments about it, but I would add this. The markets we're operating in right now are not distressed markets. As I said, Albany has -- that whole region and regions around it have opportunity there for growth for some time. And when you look at some of the Central and Eastern Mass. business that we're doing, it is not all taking market share. I actually think the Northern Connecticut market has some pop to it as well. But, Pat, can you add to that a little bit?

Sure, Mike. Mike, I would say three things. Continuity, consistency and creativity is kind of what really attracts market share today. We have continuity of people in our core markets who have done a good job of holding market share in our traditional markets like Berkshire County and Vermont and Springfield. We have good growth markets, Central Mass. being our newer one, which has done very, very well for us.

ABL has done tremendous for us and ABL is a whole footprint. So it's not just doing New England. It's New York. We have always had good there, and I think Mike referenced just the Albany market and some of the vibrancy.

So you take the continuity of people, consistency of delivery -- we are not a bureaucratic organization. We have very good credit disciplines. But I think we are quick to market and to give people a quick yes or quick no, and I think people really appreciate that in today's world especially having gone through a difficult period of time.

And then underneath the creativity is -- we listen to our customers and we react, and I think you don't get that from some of the bigger institutions. But I think those are kind of the three winning principles we've kind of built the commercial business on. And it kind of goes to our insurance and our wealth businesses, too, because those are add-on fee businesses to that core customer base.

And you know, don't mistake that brand and culture doesn't matter. It does matter. And either on the deposit side or the insurance side or wealth management side or the commercial loan side, building a brand and a culture in an organization where every single person is pointing in the same direction, they are all charged up, they all have energy -- I think makes a difference. Did I answer the question, Mike?

Absolutely, thanks a lot guys.

Damon DelMonte, KBW.

Kevin, I was just wondering if you could circle back on some of the guidance you provided, as always very helpful, very detailed. What was the outlook again for the net interest income level?

Net interest income I think was $35.5 million.

Okay. And did you say the tax rate is expected to go up to about 32%?

That's correct.

Okay. And could you just recap what caused this to increase from the previous level?

Just more earnings and stuff, and less tax advantaged items has caused it to go up.

Okay. And then my other question is regarding the merger charges you took this past quarter. Is there something in there that maybe wasn't tax-deductible or something that led to a higher tax rate on that?

Yes. We had a little bit that was not tax-deductible that was disallowed. And we also had an excess reserve that was created when we did look back at our deferred tax assets from prior years. So we [relieved that] to now it's about $500,000, so there was a couple of things that were kind of non-core that pulled through that bumped up that rate.

I think that is all I had for now. If I come up with anything else I will get back in the queue. Thank you very much.

Theodore Kovaleff, Horwitz & Associates.

I was wondering -- and I realize I may be a little bit previous -- your last two acquisitions have been in two disparate areas. And I'm wondering whether these were more opportunistic or your sweet spot is quite dispersed.

That's a good question. You know, our sweet spot -- we have outlined a strategy for some time. We outlined Northern Connecticut as being a very -- of a lot of interest to us. We felt as though Northern Connecticut was adjacent to the triangle Worcester, Springfield, the Pioneer Valley, so we had been looking in that area for some time.

And last year, when we did the Rome deal, we really made some comments at that point that we felt as though the Rome, Utica, Syracuse, Rochester market was an area where we thought we could do some business and that we would be looking at other opportunities in that area. So we kind of forecasted some time ago that these are some areas that we have some interest in.

And I'd also add, we do some pretty detailed analysis here to determine what areas of New England -- there is vulnerability in the market place, where the largest areas of concentration for business is. And in many cases, if they are areas where we think some of the larger banks have larger stakes, and there is room there from a demographic standpoint and an analytical standpoint, we will pinpoint that as strategic areas for us.

So, I'd say both of those acquisitions came after some real strategic thought and they fit very well with the overall Company's footprint.

Okay, and just if I may try to pin you down a little bit further, has your sweet spot expanded or contracted subsequent to those?

I don't think it has done either. Our focus is to drive organic business in the areas we are in. We think we've got a good footprint right now. We think we've got a lot of running room and opportunities.

When they come up, we look at them. And if they make sense from a profitability standpoint and from an overall value standpoint, then we have some interest. But at this point, I would say that our efforts haven't changed. Our efforts are to drive business in the areas we are in.

Okay, great. Thanks very much.

Collyn Gilbert, Stifel Nicolaus.

Just a question on the borrowings that you put on this quarter; first, what was the structure and terms of those?

A lot of the borrowings were short-term borrowings. But again, we're looking out to the future for interest rates to move, so we did put on some forward starting swaps in this low rate environment to hedge ourselves against rising rates in the future.

Okay. So, the strategy behind replacing the CDs that rolled off with borrowings, is it just the cost benefit that you saw? Or is there more to it? And do we -- should we see more of that strategy going forward?

Actually, the CDs rolled off; deposits grew in total. So, really, the CDs rolled off and they went into more of a money market accounts and stuff. The extra borrowings are [more] to fund the additional growth in the balance sheet over what our deposits could fund for the quarter.

I do think that anytime we have excess deposits using overnight funds to support loan growth is our best strategy, because our deposit and loan growth can be lumpy from month to month.

Okay, I guess that was my question. I'm anticipating that the loan growth is going to continue to outpace the deposit growth. So then -- just, yes, trying to reconcile the benefit of doing borrowings versus maybe pricing a CD bucket such that you can sort of keep that deposit customer versus the borrowing. But then I didn't know if the borrowing gave you a longer-term duration to help with the interest rate risk, so just trying to think through that balance sheet strategy.

Yes, so the borrowing does give us a longer duration.

Right. And we have had little trouble increasing deposits when we want. And, Sean, you can comment on that. But it seems to me we are not at this point concerned about our loan growth outstripping our deposit growth in any meaningful way.

Absolutely. From time to time, as interest rates change, customers will pursue those higher rates. With the CDs that ran off, we felt they were less relationship-based product. The folks that have those strong relationships, those core accounts with us, we do maintain those CDs.

The CD is purely priced. And with customers just looking for rate, we will have runoff from time to time. So we feel very comfortable.

We've shown deposit growth over the last couple of years. We feel comfortable with our de novo market that we can drive deposit growth, aggressively if need be, so we're just maintaining a prudent approach right now in this low cost environment.

Okay, that is helpful. And then just thinking about the loan growth mix on the asset side, the residential mortgage has been a big driver. You sort of see yourselves pursuing that more just as an opportunistic approach given where we are in the market? Or how do you sort of see that composition evolving over time, given the focus seems to be much more building the commercial side of the business?

I think we will see that probably change a little bit in the second half of the year. We've got a pretty sizable pipeline of commercial loans that is closing, and so I think we will probably get look at that quarter to quarter. And I don't think there is any question that our commercial loan outstandings will continue to outpace what we put on for residential over time.

Okay, okay, helpful. And just one final question on BFED, I think they were issued a regulatory action recently. Does that affect either the cost or timing at all of the deal, or have any implications to you guys?

Well, you know, we are in our S-4 registration period, so we are really precluded from saying anything. But I'm going to tell you, we are planning on closing this and we are planning on closing it on time in the fourth quarter.

Great, that was all I had. Thanks.

Mark Fitzgibbon, Sandler O'Neill.

I wanted to just touch base on your insurance business a little bit. You've done some restructuring a few quarters back on it. I guess I'm curious how that is going. And I know it is a seasonable business, but what sort of annual premium volume growth are you looking for in that business? And also, are additional acquisitions in the cards for that line?

Yes, sure. Yes and yes. Sean?

Sure. Starting with acquisitions, we will use the same approach we use when looking at a bank acquisition, that it's meeting the financial objectives of the overall bank from a return perspective and a payback perspective. So, very much open to that in the appropriate markets as we diversify our product set and in new markets.

From a growth perspective, we targeted for the year about 6% to 7% growth on the core revenues. We are on target with that. And if we do see some softening in the market, we could outpace that.

So we are on the cusp of starting to see some of those changes in the marketplace which could drive that core 6%, 7% revenue growth up over time.

Great, thank you.

All right, Mark. Thanks.

This concludes our question and answer session. I would like to turn the conference back over to Michael Daly for any closing remarks.

Well, thank you. And thank you all for joining us, and of course we look forward to speaking to all of you again in October to discuss our third-quarter results.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.