Community Financial System Inc (CBU) 2012 Q4 法說會逐字稿

Welcome to the Community Bank System fourth-quarter and year-end 2012 earnings conference call.

Please note that this presentation contains forward-looking statements within the provisions of the Private Securities Litigation Reform Act of 1995 that are based on current expectations, estimates, and projections about the industry, markets, and economic environment in which the Company operates. Such statements involve risks and uncertainties that could cause actual results to differ materially from the results discussed in these statements. These risks are detailed in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission.

Today's call presenters are Mark Tryniski, President and Chief Executive Officer, and Scott Kingsley, Executive Vice President and Chief Financial Officer. Gentlemen, you may begin.

Thank you, Erin. Good morning, everyone, and thank you all for joining our fourth-quarter conference call.

Operating results for the fourth quarter were solid and in line with our expectations, and also included the $0.04 per share impact of a litigation settlement related to the processing of retail debit card items and its impact on overdraft fees.

We had considerable affirmative defenses to the claims; however, the settlement we were able to achieve was, in our judgment, a superior outcome for shareholders when measured against the cost and, more importantly, the staff resources required for litigation.

Scott will comment further on fourth-quarter results.

Full-year 2012 was a very productive year for the Company. Excluding acquisition and litigation costs, earnings per share of $2.08 compares well to $2.10 reported in the prior year when considering the $0.21 per share impact of the lower net interest margin.

As we said at the end of 2011, our challenge for 2012 would be to overcome that declining net interest margin through a growing balance sheet, tight expense management, and higher noninterest income, and that is what we accomplished.

For the year, organic loan growth was over $200 million, or 7%, with record levels of mortgage and auto originations. We acquired 19 branch offices from HSBC and First Niagara, representing $800 million of deposits. We improved our efficiency ratio from 57.6% to 57.4% and we increased banking fees 9%, benefits administration revenues 14%, and wealth management revenues 20%.

Beyond the operating results, we were very pleased in 2012 to increase our cash dividend for the 20th consecutive year and, despite the consistent increases over long periods of time, reflects a payout ratio of just over 50%. Our Board also approved in December a stock repurchase program of 2 million shares, which will continue to give us capital management flexibility to optimize returns to shareholders.

Looking ahead to 2013, we do expect the margin to decline further at a pace that will challenge us to continue to grow loans, grow noninterest revenues, maintain an efficient expense structure, and manage our capital well for the benefit of shareholders. We were able to accomplish that in 2012 and that remains our task into 2013. Scott?

Thank you, Mark, and good morning, everyone.

As Mark mentioned, our operating performance for the fourth-quarter and full-year 2012 remained very favorable. Our fourth-quarter reported earnings of $0.47 per share included a $0.01 per share of acquisition expenses, as well as a $0.04 per share charge related to the litigation settlement Mark discussed and a $0.01 per share of incremental legal and professional costs associated with the settlement.

As a reminder, we completed the acquisition and conversion of 16 former HSBC branches in July and three First Niagara branches in September. So the fourth quarter was the first quarter where the various operating attributes of the transactions were fully reflected.

Also, as a reminder, we did raise the necessary capital to support the branch acquisition in January of last year, which did negatively impact EPS for the first half of 2012. We felt strongly that it was important to eliminate any potential market uncertainty relative to our ability to timely capitalize the deal. We believe the successful execution of the common stock offering in January validated that decision, despite the $0.01 per month EPS dilution that it entailed.

I'll first discuss some balance sheet items. Average earning assets of $6.69 billion for the fourth quarter were up modestly from this year's third quarter, and included an increase in average loans of $126 million, offset by a $187 million decline in average investments and cash equivalents.

Ending loans were up $395 million from year-end 2011 and included increases in all portfolios from solid organic growth, as well as those acquired in the branch purchases. Outstandings in our business lending portfolio remained consistent with the third quarter as contractual and other unscheduled principal reductions continued to offset new loan generation. Asset-quality results in this portfolio continue to be stable and favorable to peers with net charge-offs of under 30 basis points over the last nine quarters.

Our total consumer real estate portfolios of $1.81 billion, comprised of $1.45 billion of consumer mortgages and $364 million of home equity instruments, were up $50 million from September from the continuation of solid organic generation.

Consistent with the fourth quarter of 2011 and the first three quarters of this year, we continue to retain in portfolio most of our mortgage production in the fourth quarter and were able to productively add to our outstandings at blended yields of approximately 4.1%. Asset-quality results continue to be very favorable in these portfolios with total net charge-offs over the last nine quarters of $2.4 million, or seven basis points of loss.

Our consumer indirect portfolio of $648 million was up $5 million, or just under 1% from the end of the third quarter, consistent with [equal] expectations and still improving demand characteristics. Used car valuations were the largest majority of our lending as concentrated continue to be stable and favorable. Net charge-offs for the last nine quarters were $4.0 million, or 31 basis points, which we consider exceptional.

With our continued bias towards A and B paper grades and the very competitive market conditions in this asset class, yields have trended lower over the last several quarters. Although we have continued to report very favorable net charge-off results, we have experienced an upward trend in nonperforming loans since the third quarter of 2011, comprised of both legacy and acquired loans, and ended the fourth quarter of 2012 at $29.1 million, or 0.75% of total loans. Of that total, $13.9 million, or 48%, are business lending related and $15.0 million, or 52%, were consumer real estate products.

Our reserves for loan losses represent 1.21% of our legacy loans and 1.11% of total outstandings, and, based on 2012 results, represent 5.1 years of annual net charge-offs.

As of year-end, fair value-based loan marks related to the $320 million of outstanding balances acquired in the Wilber transaction approximated $14.2 million, or 4.4%, of the remaining acquired balances, which are not reflected in the allowance for loan losses.

In addition, the net fair value loan loss related to the $143 million of outstanding balances acquired in the third-quarter branch transaction were $1.9 million, or 1.3% of remaining balances.

As of December 31, our investment portfolio stood at just over $2.8 billion and was comprised of $547 million of US agency and agency-backed mortgage obligations, or 19% of the total; $728 million of municipal bonds, or 26%; and $1.46 billion of US Treasury securities, or 52% of the total. The remaining 3% was in corporate and other debt securities, including our holdings of the pool trust preferred instruments, which continue to fully perform.

The weighted average life to maturity of the portfolio is approximately 6.5 years with an effective duration of 5.1 years, and reflects our late first-quarter 2012 decision to pre-invest approximately $600 million of our then existing and expected liquidity in US Treasury securities with a blended yield of 2.3%.

Net unrealized gains in our $2.1 billion available-for-sale portfolio were $131 million at the end of December. In addition, there was approximately $65 million of unrealized gains in our $700 million health and maturity portfolio. Expected maturities and other cash flows off our investment portfolio in 2013 are approximately $275 million.

Average deposits in the fourth quarter of $5.64 billion were $167 million above the third quarter of 2012 and $836 million, or 17%, above the fourth quarter of last year, and included the completed branch acquisitions.

Core deposits, or everything other than CDs for us, now represent 82% of total deposits, a very stable and favorable funding mix. Total fourth-quarter deposit funding costs were just 27 basis points.

Our capital levels in 2012 continued to be strong and included approximately $55 million of net proceeds from the previously mentioned January of 2012 common stock offering to support the branch acquisitions. The Tier 1 leverage ratio stood at 8.40% at year-end and tangible equity to net tangible assets was 7.62%, a 50 basis-point increase from December 2011.

As a reminder, we did also issue an additional 3.4 million shares of common stock, or $82 million of equity, in conjunction with the Wilber acquisition in April 2011, which still has meaningful impact on year-over-year comparisons.

Shifting now to the income statement, our reported net interest margin for the fourth quarter was 3.83%, down 23 basis points from the fourth quarter of last year and included the effects of the completed branch acquisitions. Fourth-quarter net interest margin included our semiannual dividend from the Federal Reserve, as well as certain loan fees, which combined added four basis points to the margin.

Proactive management of deposit funding costs continued to have a positive effect on margin results, but have not been able to fully offset declining asset yields. Despite the lower margin results for the quarter, net interest income was up 8.8% from the fourth quarter of last year, reflective of our larger earning asset base.

Fourth-quarter noninterest income was up 17.1% from last year's fourth quarter. The Company's employee benefits administration and consulting businesses posted a 19% increase in revenues, primarily from the CAI benefits acquisition completed in December 2011.

Our wealth management group generated a 22% improvement from last year, and included solid organic growth in trust and asset management services.

Compared to last year's fourth quarter, the Company generated a $1.6 million increase in deposit service fees, or 14.3%, as the addition of new and acquired deposit relationships and solid growth in the debit card-related revenue more than offset the continuing trend of lower utilization of overdraft protection programs.

Net mortgage banking revenues of just $161,000 in the quarter were almost entirely from servicing fees, reflective of the decision to continue to hold most of our current mortgage originations in portfolio. For comparative purposes, the third quarter, other banking services included our annual dividends from certain group life and disability insurance programs and added approximately $0.01 per share to last quarter's results.

Excluding acquisition expense and litigation settlement charges, fourth-quarter operating expenses of $53.9 million, or $6.2 million, or 13% above the fourth quarter of 2011, and reflected the additional operating costs associated with the CAI acquisition completed in late 2011 and the branch acquisitions completed in the third quarter of 2012.

On a linked-quarter basis, core operating expenses increased $2.6 million and reflected a full quarter of expenses from the acquired branches, one additional day of payroll, and an incremental $0.5 million of legal and professional fees related to the litigation settlement.

Our effective tax rate in 2012 was 29.2% versus 29.4% last year, reflective of similar levels of proportional income from both fully taxable and nontaxable sources.

As Mark mentioned, similar to what we faced in early 2012, we do expect the margin to decline further in 2013 as cash flows from our higher-rate assets are replaced with generally lower-rate instruments. With that said, we much prefer our starting point to that of many of our peers.

I'll now turn it back over to Erin to open the line for questions.

(Operator Instructions). David Darst.

Just big-picture perspective, Mark. At the end of your comments, you highlighted the compression in the margin. Considering the branch acquisition, the liquidity that you brought on, your ROA looks like, on a core basis, it's going to be down about 10 basis points going into next year. Your ROTE is kind of tracking to something maybe below 15 and you're closer to 17 kind of pre the acquisition. What levers are you thinking about and how do you think you can maintain your profitability in this environment?

Well, I think as we were able to do in 2012, David, we overcame a significant decline in the margin. If you do the math, there's about $0.20 a share by growing revenues and managing expense structure well, and I think that is going to be the task for 2013 yet again.

So there's no -- I think the reference to capital that I made was just if you consider the level of Tier 1 capital that we have right now going into 2013 of [840] something, that we expect to continue to grow quarter over quarter, and that excludes, as you know, the impact of the securities -- the unrealized securities gain that gives us a capacity and flexibility to continue to either grow the balance sheet or to use other utilizations for that capital, such as a stock buyback or other, maybe, restructuring of the balance sheet, which is something that we've considered doing as well.

We have a lot of options available to us in that respect. So I think we have a lot of opportunities, and it's going to be -- we always -- we grind it out. We grow the revenues. We manage the expenses. We make what we believe are high-value acquisitions to try to grow our earnings over time, grow our dividend over time, and deliver what we think is a superior return to our shareholders in a way that is actually a lower risk profile than many others.

Yes, certainly, yes, you have done it. So prioritizing between a stock buyback and a balance-sheet restructuring, can you give us any insight as to what we might see materialize?

Well, David, I think it's -- as you know, we are not prognosticators at the long end of the yield curve.

So with that in mind, you know, we think we have some elements on our balance sheet at certain points in the interest rate cycle would make logical sense to potentially shrink the balance sheet. We don't need to be in a hurry with those. We do think that they would be capital additive to us and give us enhanced flexibility, should we decide to do that, but that's not what we're focused on on a day-to-day basis, David. Honestly, that's a mathematical or an economic value calculation that's easy for us to update on a continual basis.

To Mark's point, we're more focused on how we grow the balance sheet, how do we enhance some of the revenue sources that we're used to improving, and again, how do we manage the cost structure within an environment that suggests long-term interest rates will remain low for an extended period of time.

Okay. Scott, could you give us an outlook for maybe expense run rate for the first and second quarter of 2013, and was there anything in the other line item that we should consider or take out of the run rate?

Sure, David. Good question, and I think that's a fair question.

I think that for the most part, the fourth quarter was relatively indicative of what we would see going forward. That being said, there was about $0.5 million of legal and professional costs that did reside in other in the fourth quarter, related to the litigation settlement. It was the first quarter that we got a full-quarter impact of the HSBC, First Niagara folks in play.

We kept our marketing expenses at higher levels than we usually do for the fourth quarter because we're trying to make sure that the brand has good knowledge in some of those new marketplaces. And we thought it was an excellent time, quite frankly, to continue to enhance our share in certain of those markets.

As is pretty standard at the end of the year, David, you have some adjustment to some of your benefit accruals, you know, with -- I'll give you an example. With interest rates so low, in fairness, pension costs go up. With discount rates so low, anything you're associated with pension and retirement plan benefits, the expenses tend to go up a little bit.

With that said, David, I think our expectation is a 2.5% or so increase in core base salary costs going into next year, kind of a core mirror change for our folks. And from there, certain line items will get to be managed at zero base increases; others will probably have natural inflationary tickup. We'll get at some maintenance things associated with some of the branches we acquired, but I don't think that those will actually move the needle much early in the year.

Just a reminder, and you know this, David, we are more expensive in the first quarter. We are in places that today, minus something degrees, so the first-quarter utilities and maintenance costs tend to be more expensive than any other quarter of the year. And that's at the same time with having an expectation that some of your retail-related debit card fees and overdraft utilization programs are less used in the first quarter, but that's not inconsistent with our historical trend.

Okay, all right. Great, thank you.

Damon DelMonte.

You guys referenced the roughly $130 million of unrealized gains in your AFS portfolio. Would you consider trying to monetize some of that to help support earnings during 2013?

Damon, I think what we've talked about there, is there a logical piece of that portfolio -- certainly not all of it -- is there a logical piece that would make sense to do a balance-sheet restructuring with certain debt obligations that we have on the other side, so where we would have a modest to neutral capital impact and a modest to neutral net interest income impact going forward, post some kind of a restructuring?

That's really the only thing today that's of meaningful interest to us. To your point, monetizing some of those gains, we don't need the impact in capital. Honestly, we don't need the pickup in realized gains for capital-related purposes. So I think that's lower on our list of priorities.

I would say, too, I think we don't ever think about kind of managing operating results by leaking in securities gains. I think there are times where we will make decisions to sell securities for ALCO purposes or restructuring purposes, but I think the idea of harvesting some of those gains just to support current-period earnings is not consistent with our thinking around creating long-term value for shareholders.

Okay, fair enough.

And then, just with respect to the overall portfolio, I think you said the weighted average life was around 6.5 years; the duration was 5.1 years. Could you just kind of remind us your philosophy with the securities portfolio, because I think if you look across the industry, a 5.1-year duration is probably on the longer end of the spectrum. I guess, how do you guys get comfortable with a duration of that level?

Well, David, the investment securities are only 40% of our earning assets, and so the investment portfolio at our institution has been managed on a full integrated ALCO perspective for years.

So we have the luxury of knowing that our long-term funding base is incredibly stable and we've been able to actually grow that base over the last several years. Also knowing, at the same time, that we have other classes of assets on the balance sheet that have very quick and very fast cash flows attached to them. Just use the indirect auto portfolio as an example. You know, a $650 million portfolio probably has contractual cash flows of $250 million to $275 million in one year.

So it's a holistic approach to that, and that kind of goes back to your initial question that Mark answered, which is we're not trying to look at the ability of the portfolio itself to generate outsized earnings results. It would have to be there for the purposes of a balanced ALCO management.

Yes, I think there's two important points. One is the securities portfolio is about ALCO in managing the interest rate risk, first and foremost. I think that we shouldn't lose sight of that fact. I think that's an important point to reiterate.

The other thing, I guess I would say, the second point that I think is also relevant, we're asset sensitive. We remain asset sensitive. Despite the fact, as Scott said, it's 40% of our earning assets and it's got a 5-plus year average life, we are asset sensitive.

So in our view, we're reasonably well positioned for the eventual rise in interest rates. Who knows when that's going to happen? It may be next year or it may be five years or longer. As Scott said, we can't be predicting that. We manage interest rate risk on a five-year time horizon, and right now we remain asset sensitive and would be supportive of a rising rate environment.

Okay, all right. That's helpful. Thank you. I guess you've mentioned that margin is going to come under pressure, so I guess our starting point would be probably 3.79% when you take out the impacts this quarter that you highlighted. Is that correct?

I think that's fair, and Damon, I think we are in the -- again, not being the prognosticator of the long end of the curve -- four to five basis points a quarter, which is kind of the trend we have gone through for the last several quarters of potential erosion, and it's really -- it's the replacement of higher -- above average or above peer level asset yields.

At the same point in time, we've got a little bit of ways to go on the funding side, not a long ways to go. We're closing in on absolute zero relative to funding costs, and we just think that the pressure on the asset side again in 2013 will be a little quicker than the pressure on the liability side.

And then, just lastly, on average earning assets, the outlook for the year on that. How do you see the growth in loans shaping up this year? Do you think a mid single-digit rate is doable?

We would hope so. The mortgage pipeline remains reasonably strong. We've seen rebounds in some areas on the commercial side. Much of the commercial decline in 2012 was related to the Wilber portfolio that was acquired, some of which were nonperforming and some of which were.

We expect that to moderate substantially in 2012. We had exceptionally good performance in certain regions of the markets of the Company in 2012 in commercial, so we're looking for an improved performance in commercial in 2012.

And the auto business, we expect, will continue to be very strong. It was up 15% in 2012, and I don't think it's impossible that we get to another double digit in that business performance in 2013. So I think we are looking for another decent year in 2013 in terms of loan growth.

Great. That's all that I had for now. Thank you.

John Moran.

Just real quick, Scott, I think you said $275 million is scheduled to roll off of the securities book. Did I catch that number right?

You did, John, exactly.

Okay, then, and then just in terms of kind of redeploying there, you guys are skewing at the moment well toward kind of US treasuries. Any sort of thoughts in terms of maybe extending on the muni portion or shifting more into agency, or should we expect the portfolio to kind of look very similar going forward?

John, I think you should suggest that it will look similar going forward. We certainly have an acumen in municipal securities' selection, and we'll continue to have that and suspect that that continues to be a well-balanced portion of the portfolio.

We could see ourselves in certain fixed-agency bullet security. We do not see ourselves as an agency of [yet] buyer in the near term, and John, that kind of goes back to that decision we said before where let's portfolio some of our own assets at a 4% at par, as opposed to being a buyer at 108 in the MBS side where maybe your effective yield is 2 and maybe your effective yield is zero, if you've got the premium amortization wrong.

So I see that, to your point, the balance characteristics will probably go there. I think we'd like to think that we could be market opportunistic with our capital structure, so if there are certain times where there's risk on activities, through some of the uncertainty from a political standpoint, we're prepared to invest a little bit early, if that opportunity comes up. That being said, if we find ourselves with average cash equivalents of $100 million to $200 million during the year, that could be the outcome as well.

I wouldn't expect any significant change in the composition or profile or even the size of the investment portfolio, and would hope and expect that the cash flows, the majority, anyway, will be reinvested in the loan portfolio over 2013.

Makes sense, makes sense. And then, I don't know if you happen to have handy, how much is scheduled to kind of come off of the loan book this year?

John, it's -- we can talk about that off-line, if you'd like. It's clearly a mixed bag because of the nature of our portfolios.

And I will say this. One has to look at its assumptions because 2011 and 2012, because of the interest-rate environment, had a lot more unscheduled payments in multiple portfolios than I think most people would've been forecasting on a longer-term basis. Have we reached a point where interest rates are now so low where that goes back to historical norms? That's in some of our assumptions as well, but we can off-line, if you'd like. I could sort of give you my perspective by portfolio.

Sure, yes, yes. That would be helpful. Then, it sounds like, on the sort of core commercial side of things, demand drivers are okay, but not great. You guys are kind of running in place there in terms of being able to put on originations that sort of offset whatever is coming back at you. Any sort of sense of demand picking up a little bit in the footprint?

I think by region, in the northern region we were off a little bit in 2012. In the south region, which is kind of owning out to Syracuse all the way through the western part of -- southwestern part of New York, what we call the southern region, we were actually up quite a bit, almost double digits, so it was very good in that market. And then, Pennsylvania, we were off a bit.

I mean, the demand has been a little bit sporadic in terms of the region, which it has historically been in our footprint, but I think we expect that the south region, again, will be strong in 2013; that the north region, we hope, will pick up a bit; and we've already seen things start to improve in northeast Pennsylvania.

The other thing, John, just remind you, different than a lot of our peers, our proportional amount of commercial real estate is much smaller than most of our peers, and so when you have a large just straight C&I portfolio and you have very modest line utilization characteristics for a couple of years, it does get difficult to continue to grow the portfolio.

I think we're also optimistic that there'll be some more line utilization from some of our operating customers in 2013, people that, quite frankly, have very nice-looking balance sheets right now and have ample cash.

I think the other opportunity we have in 2013 is the acquired branches. As you know, we acquired $800 million of deposits, but only $150 million or so in loans, so we think we have an opportunity in those branch markets as well to improve on the loan growth performance.

Sure, sure, that makes sense. And then, the last one for me, Wilber in the -- done for a while now, in the rear view. The branches kind of closed and everything kind of buttoned up. What's the outlook on M&A? Obviously, you guys have been pretty active, and any sort of increased chatter? Is there more kind of going on?

I don't know if there's any increased kind of level of chatter or opportunities that were seeing, John.

We continue to be active in identifying specific opportunities that we believe would be of high value to the organization and to our shareholders and continue to pursue those actively.

Great. Thanks very much for taking my questions.

Jake Civiello.

So even with the anticipated [dentist] margin contraction in 2013, would you expect to continue to grow FTE betters to income as you did throughout last year?

Jake, I think in terms of on a quarter-by-quarter basis, a little bit more of a challenge in 2013 because we knew where the asset growth, whether it be investment securities or loans, was coming from with the branch acquisitions in 2012.

So right now, really, we have nothing that we've announced or appears imminent, so I think it's back to the old-fashioned organic growth and put it on.

That being said, to Mark's point, we have some liftoff relative to some of these markets that we are a new participant in or an enhanced participant in, that we don't think we've certainly fully leveraged our ability to grow in some of those marketplaces. It's attacked a little bit harder than it was in 2012, Jake, in terms of known sources, it probably is, but that's not dissimilar to past operating years.

Okay. And then, just one other question I had was, is the -- on the noninterest income side, is there any seasonality in the fourth-quarter results in terms of the deposit service fees or the benefits planned administration fees?

Actually, on the benefits planned administration side, historically the first quarter is actually the strongest quarter because, quite frankly, the world has its actuaries fully deployed in that quarter, so nothing that was really fourth-quarter related there.

On the deposit service fee side, the only other thing I would sort of caution for modeling purposes, the first quarter tends to be lower than the second, third, and fourth. I think customer utilization of retail products is pretty uniform in the second, third, and fourth quarter, but just given our marketplaces, less in the first.

Okay, great. Thank you.

[Ann Lofty]. (Technical difficulty)

Damon DelMonte.

I just had a quick follow-up for you, regarding the provision expense. The last three quarters of 2012, you guys were north of $2 million per quarter. The last two quarters, you were almost $2.6 million, $2.7 million. How should we think about the provision as we look into 2013?

You know, Damon, it's a good question. Our perspective has been to remain a conservative provider, so in other words, the optics of keeping reserve coverage levels similar to the characteristics that have been out there for a handful of years.

So covering charge-offs and/or providing reserves for new loan growth, we think, is an important attribute of our historical perspective and our historical practice. That being said, not to be lost on anybody, but when you have a portfolio that's growing on the consumer real estate side, where we've had such small levels of historical losses and you're flat on the commercial side, you do get a proportional change relative to the components of necessary reserves.

So on a going-forward basis, does that create an opportunity for us for lower providing? Probably a modest one, David. And as you know, with our numbers being so small, anything moves the needle, so if you go from a $2 million charge-off quarter to a $2.5 million, you've the number by 25%.

So I think it's important for our investors and I think it's important for our stakeholders to understand, we believe it's appropriate to provide for inherent losses throughout the cycle, so we are certainly not managing our reserves to enhance our operating EPS outcome.

And your charge-offs for 2012 were around, I think, 22 basis points for the year. How do you think that shapes up to what you would expect for 2013? Is that fair? Would you just like to be consistent year over year?

I think so, David. I think, you know, the numbers have ranged from 10 to 12 basis points in 2005-2006 cycle through to the 24, 27 quote through the destressed part of the cycle, so I just think our portfolios and the nature of the markets that we're in are stable performers. And in terms of what you said to me, Scott, your charge-offs are going to be 22 basis points for 2013 today, we would book it. No question.

Okay, fair enough. That's all that I had. Thanks a lot, guys.

At this time, I have no other questions in queue, sir.

Very good. Thank you, Erin. Thank you all for joining our call and we will chat again next quarter.

Thank you.

That concludes today's conference. Thank you for your participation. You may now disconnect.