Columbia Banking System Inc (COLB) 2008 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Columbia Banking System's first-quarter 2008 earnings conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded.

I would now like to turn the call over to your host, Melanie Dressel, President and Chief Executive Officer of Columbia Banking System.

Thank you, Felicia, and good morning, everyone, and welcome to Columbia's conference call. Thank you for joining us for the first-quarter conference call on short notice. Although we don't typically have a conference call each quarter, we've decided to commence quarterly conference calls for the foreseeable future because of the many questions we're receiving in light of the rapidly changing economic environment.

Joining me on the call today are Gary Schminkey, our Chief Financial Officer; Mark Nelson, Chief Operating Officer' and Andy McDonald, Chief Credit Officer.

Before we begin, I would like to remind you that we will be making some forward-looking statements today which are, of course, subject to economic and other factors. For a full disclosure of the risks and uncertainties associated with forward-looking statements, please refer to our securities filings, and in particular our Form 10-K filed with the SEC for the year 2007.

I'm going to assume that you have all had a chance to read our first-quarter press release. What we would like to accomplish with this conference call is just to provide more clarity to the information provided in the first-quarter press release.

Gary Schminkey will discuss with you the following -- our net interest margin during the first quarter; our core earnings; loan growth; capital liquidity; and securities changes during the quarter. Andy McDonald will provide you with some additional color related to loan mix, credit quality, and the allowance for loan losses. Mark Nelson will then speak with you about what we're seeing in terms of competition for loans and deposits. We will then open the discussion to questions.

To start our conversation, I would like to discuss with you what we're seeing in the economy in the markets in which we do business. Of course, nationwide economic indicators have been faltering and there are concerns about slipping into a recession. Prices for everything, particularly petroleum products and groceries are up, except for housing where foreclosures are up and prices in most areas are down, along with sales.

However, even though gas and grocery prices have increased in our region, we're still doing better than other parts of the country. While the growth in the Seattle-Tacoma metropolitan area has slowed, we continue to exceed the national growth. Recent statistics showed more than twice the national rate of 0.7%.

So we're really feeling thankful that we're headquartered here in Tacoma and operate in the Pacific Northwest with its relatively strong economy. The number of jobs in Washington State is still rising, although it is slower paced than in previous years. Last year, Washington recorded a 1.7% growth in jobs over February of 2007.

Boeing, Microsoft and other tech companies are continuing to hire. Washington still has in-migration, as people move here for well-paying jobs. The Post of Tacoma is having another very good year.

Generally speaking, Oregon is also doing well in employment growth, with virtually all areas well above that of the United States in general.

So why is this area doing better than the country as a whole? Boeing is, of course, a key part of our region's growth as the company continues to hire, and its many vendors and subcontractors are expanding as well.

Washington is the most export-focused state in the union, and not only due to Boeing. Marple's Pacific Northwest Newsletter reported no state exports a higher share of output, more than 2.5 times the national average; and a lot of that goes directly through the Port of Tacoma.

While we face many challenges in the coming months, we are hopeful that the fundamentals here will lessen the impact of a broader national economic slowdown.

One of the biggest wildcards in our estimation is the consumer. Recently, the US Conference Board Consumer Confidence Index was published, showing consumer confidence had dropped 11.9 points during March to 64.5. This was its lowest level since 2003 and well below its long-term average of 98.1. With consumer consumption being responsible for roughly 60% of the growth in the economy, we may be facing a more dramatic slowdown in the economy than was predicted at the end of last year. Then this would impact our area as well.

While there is no doubt that the economy in the nation and the Northwest is softening, we still see strong growth opportunities in all of our Washington and Oregon markets.

At Columbia, we have tried very hard to build our Company the right way. We are much less dependent than others on more volatile funding sources, such as wholesale certificates of deposit. Our strong retail system now includes 55 branches in 10 counties in Washington and Oregon. We rely on our core deposit, checking, savings, and money market accounts, which result from the strong relationships we have with our customers.

We have a diversified loan portfolio as well. In addition to commercial real estate lending and consumer lending, we have a healthy 34% of our loans in commercial business loans, a higher percent than many of our peers. We're carefully monitoring our loan portfolio. We stay in frequent touch with the borrowers and take a proactive approach to any credit problems that may surface.

Of course, our bus is lending money; and as always, we will continue to make prudent loans, taking into account the economic climate and collateral values. In essence we will stay the course with our focus on good, fundamental banking.

Now I would like to turn the call over to Gary.

Thanks, Melanie. Yesterday we announced earnings for the first-quarter 2008 of $11 million or $0.61 per diluted share, compared to net income of $7.3 million or $0.45 per diluted share for the first quarter of 2007.

Columbia certainly faces the same economic pressures and challenges as the rest of the banking industry. Our challenges remain centered on gathering low-cost deposits, maintaining acceptable credit quality, and preserving our net interest margin in light of declining interest rates.

I should mention that the results for the first quarter and for the year reflect the financial consolidation of Mountain Bank Holding Company and Town Center Bancorp, which were both acquired on July 23, 2007. The first-quarter 2007 financial information does not include the results of the two organizations, so comparisons of results between the two years usually requires a more in-depth analysis.

You may have notice that we included a section in the press release for core earnings. To arrive at the core earnings number, we deducted gains on securities sales as we repositioned a small portion of our investment portfolio. We also deducted the gains derived from the recent Visa initial public offering and the related reversal of settled Visa litigation expense which had been accrued in the fourth quarter of 2007. Removing these items produced an operating or core earnings number for the quarter of $0.6 million or $0.48 per diluted share as compared to $7.3 million or $0.45 per diluted share last year at this time.

I would like to begin my discussion with the most visible operating reasons for the increase in core net income quarter-to-quarter -- net interest margin. Declining short-term interest rates have impacted our net interest margin. Core net interest margin for the first quarter was 4.30% as compared to 4.37% one year ago.

Core net interest margin is calculated by normalizing our government agency preferred dividend, adjusting the dividend for the actual number of days of ownership. Despite the 300 basis point decline in short-term rates since September of 2007, including 200 basis points in the first quarter of 2008, our core net interest margin is up one basis point from 4.29% for the fourth quarter of 2007.

As you may recall, over 40% of our loans are tied to the prime rate or other short-term indices. The reduction in interest income was more than offset by repricing our less rate-sensitive core deposits, as well as taking advantage of funding opportunities as we saw a disruption in the wholesale fund market.

Average asset yields have decreased to 6.89% or 27 basis points quarter-over-quarter. Average interest-bearing liabilities have decreased to 3.11% or 42 basis points quarter-over-quarter. We expect the pressure on earnings to continue as competition for low-cost deposits remains intense.

We made the decision to sell our interest rate floors in January of 2008. If you remember, in March of 2006 we purchased interest rate floors with a $200 million notional amount, with strike rates laddered in at prime rates of 7.75% to 7.25%.

We paid roughly $3.1 million for the floors in 2006. In January 2008 we sold the floors for $8.1 million, producing a gain of $6.2 million. The gain will be amortized over the remaining amortization period of the hedge, with $1.7 million of the gain amortized in 2008; $2.6 million in 2009; and $1.7 million in 2010.

Our loans ended the quarter at $2.3 billion, which was an increase of 0.8% or $17.7 million from December 31, 2007. Of the almost $18 million in loan growth, approximately $14 million of the growth came from residential construction, and $18 million was related to commercial business loans.

The increases in these portfolio sectors were tempered by declines in commercial mortgages and commercial construction loans. We continue to report a well-diversified loan portfolio.

The return on average equity for the first quarter of this year was 12.6% compared to 11.52% for the first quarter of 2007. Our core return on average equity was 9.82%.

Removing the effect of our acquisitions, core tangible return on equity was 14.28% for the first quarter 2008 as compared to 13.38% for the same period in 2007.

Our efficiency ratio was 62.36% for the first quarter compared to 63.39% during the same period last year. The efficiency ratio is very much affected by revenue growth as well as expense growth. The investment in the future growth of Columbia has caused the efficiency ratio decline, as has the effect of declining short-term interest rates.

We can't control the interest rate environment, so our best opportunity to improve our efficiency ratio is through expense control. We are not happy with an efficiency ratio above 60% and will work to -- continue to work toward achieving a ratio in the mid 50s while balancing our growth opportunities.

Noninterest expense grew by $3.2 million for the first-quarter 2008 over the same period last year. Compensation costs accounted for roughly $2 million of that total.

While it is difficult to compare period to period due to the 2007 acquisitions, as a percentage of gross revenue core noninterest expense was up slightly at 43.9% of gross revenue, as compared to 43.1% in the first quarter of 2007. FDIC insurance assessments represent over 11% of the increase in other expense.

We continue to closely monitor and control expenses and will undertake many initiatives in 2008 to reduce overall expense growth while maintaining our commitment to customer service and our overall strategic plan.

Our federal income tax expense was 26.1% for the first quarter, about the same as last year. The tax rate is influenced by tax credits, municipal security earnings, and various CRA programs. Going forward, we expect the tax rate to be between 27% to 28% of pretax income.

At this point, I would like to turn the call over to Andy McDonald, our Chief Credit Officer. Andy?

Thanks, Gary. As Melanie and Gary mentioned earlier, the economic conditions in the Pacific Northwest have outpaced that of the nation as a whole. But we have not been immune to the effects which have impacted the national economy. Certainly the issues impacting the capital markets and the resulting contraction in credit availability has made this a much more difficult climate in which to operate.

In addition, the housing market in the Pacific Northwest has certainly weakened since the second quarter of 2007, as demonstrated by the S&P/Case-Shiller housing price index, which shows that the Puget Sound housing market peaked in the late summer months of 2007. This data would indicate that housing values have declined 5.5% since July of 2007.

Certainly, the impacts of the decline in the housing market can be seen in many of our Pacific Northwest competitors. And let me assure you, we are not pleased to see these results, nor do we believe that Columbia Bank will be immune to the same challenges they are facing today.

As a result, the Company made a loan loss provision of $2.1 million for the first quarter of 2008 compared to $1.4 million in the fourth quarter of 2007 and $638,000 in the first quarter of 2007.

This increase in the provision is a reflection of the challenges the current environment presents, and we do not anticipate these challenges to subside in the near future. However, to date we have not seen an elevated rise in past due loans or nonperforming assets related to the for-sale housing segment of our loan portfolio.

Nonperforming loans increased slightly from $14 million at year-end 2007 to $14.4 million at March 31, 2008. The majority of nonperforming assets are centered in four credits, most of which I have discussed previously in prior conference calls.

Our largest nonperforming asset is associated with a lot development loan in Pierce County. This accounts for 32% of our nonperforming assets at March 31, and the balance is essentially unchanged since fiscal year-end 2007.

I am pleased to report, though, that the borrower has now several presales and has just recently obtained financing from another lender for the construction of the homes associated with these presales. Furthermore, the additional collateral we obtained as part of the workout plan is now listed on the market. Given that this is waterfront property on Lake Washington, we expect it will sell relatively quickly. So we are making slow but positive progress on this one.

Our second largest nonperforming asset, which accounts for 16% of our nonperforming assets, is related to a condominium project located in Southwest Washington. At this time, we are in the process of foreclosure; and it is likely this asset will move into the OREO category during the third quarter of 2008. We do have a recent appraisal, though, that indicates we have a loan-to-value of 82%, so we are not anticipating loss at this time.

Our third largest nonperforming asset, which is roughly 14% of this total, is a commercial client which has been negatively impacted by the decline in the for-sale housing market. This client has now obtained financing from another lender, and we are already in the process of transitioning this account to the new lender.

The last nonperforming asset I would like to talk about is an income-producing property along the Oregon coast. This asset accounts for 10% of our nonperforming assets or roughly $1.5 million. During the first quarter, we reduced our balance on this relationship by $400,000 by charging it against our cap reserve. As many of you know, the state of Oregon has a capital access program which, when a loan is originated, the borrower pays an upfront fee which goes into a reserve fund. The state of Oregon then matches the amount of the deposit which goes into the reserve fund as well. Essentially, this helps build a reserve for future loan losses and provides a funding mechanism.

Approximately 45% of the building is now leased, and we have taken an assignment of the rents. The borrower has agreed to sign a judgment for the full amount of the note. That judgment has now been recorded, and we are in the process of foreclosing on our judgment. Based on our current valuation we have an 85% loan-to-value after the charge to the cap reserve.

The rest of our nonperforming assets are comprised of various small loans spread across the entire loan portfolio.

In addition to adding to our reserves, we have also added additional resources to our credit administration and special credits department. We are fortunate to have a very experienced special credits department staffed by bankers with an average of over 12 years in workout. Having this team of experienced professionals allows us to manage our troubled assets, while not distracting our focus on customer service for the balance of the loan portfolio handled by our experienced relationship officers in the field.

Before I turn the call over to Mark Nelson, I know many of you would like some additional information concerning our construction portfolio.

I will start with our 1-to-4-family residential portfolio. This portfolio increased modestly in the first quarter, as we continued to fund construction loans under pre-existing commitments. In addition, as we work with some of our more challenged builders, we have taken additional collateral to mitigate the risk profile or have converted certain loans back to lot loans as their plans have changed.

When we convert these loans back to lot loans, we require the borrower to pay the loans down by putting additional cash equity into the deal, and the commitment to fund vertical construction is terminated. We believe this is prudent, as it reflects the market reality and allows us to reduce our risk profile.

As of March 31, about 48% of the 1-to-4-family residential construction portfolio is in vertical construction compared to 49% at year end. Lots have declined from 16% to 14%.

If you combine the vertical and lots, you'll note an overall decline from 65% to 62% of the 1-to-4 residential construction portfolio, indicating that despite the conversion of some vertical loans back to lot loans, we have seen churn in the portfolio, and sales of single-family homes has picked up as we enter into the spring market.

Acquisition and development loans are up slightly from 25% of the portfolio to 27%. This reflects additional construction activity on the projects we were financing in December of 2007.

Finally land, which accounts for the balance of the portfolio, is up modestly from 10% to 11%.

From a loan-to-value perspective, our average loan-to-value across these segments is as follows. Vertical construction is 75%; lots are 66%; acquisition and development is around 65%; and land is 63%.

We manage this portfolio very closely with monthly reviews for the majority of our builders, and we're constantly evaluating the markets in which we have exposure. Our experienced team of credit administration professionals work closely with the line. Our focus continues to be managing the exposure we have and not expanding our number of builder banking relationships.

Our commercial construction portfolio is divided into three segments -- multifamily, owner-occupied, and income-producing properties.

Multifamily includes our condominium exposure which is down modestly from 22% at year end to 20% as of March 31, 2008.

Owner-occupied construction is the area we have seen growth, increasing from 23% of the portfolio at year end to 31% as of March 31, 2008.

Finally, income-producing properties, which would include retail developments, warehouses, and distribution, represent about 18% of the portfolio as of March 31, 2008. Now I will turn the call over to Mark Nelson.

Thanks, Andy. We are pleased with the positive trend in our deposit growth despite tough competition for low-cost deposits.

While historically we experience a seasonal reduction in business-related balances during the first quarter, our period-end core deposits have regenerated quickly, increasing nearly $11 million since year-end 2007. We attribute this success to both our retail and commercial focus on building relationships and on incentives for deposit generation.

As has been our history, we continue to benefit from our strategy to strengthen and deepen our relationships with our customers, bringing in lower-cost core deposits and making it easier to manage our net interest margin.

We also benefit from having balance in our loan portfolio in which C&I lending remains a major focus and our principal lending activity. For example, in addition to the C&I portfolio, which now represents 34% of our total loans, another 16% of our loan portfolio is for permanent owner-occupied properties related to those same business clients.

In addition, we are benefiting from our past strategy of hiring experienced commercial bankers with solid C&I lending skills and don't now have to retrain or hire new lenders.

Finally, gaining efficiencies throughout the organization continues to be a priority. During the first-quarter 2008, we identified two additional initiatives that will benefit non-interest expense as the year progresses, including our recently announced consolidations of duplicate branches in Fedway and Auburn, and the integration of Bank of Astoria as a DBA.

Now I would like to turn the call back over to Melanie Dressel.

Thanks, Mark. To sum up our discussion this morning, we believe we are in a good position to ride out the economic storm despite the challenges. Our diversified loan portfolio and strong core deposit base are basic to our strategy.

We are well capitalized and have multiple sources of liquidity. We have talented, experienced bankers committed to enhancing and strengthening customer relationships with excellent and measurable service in the right products.

We remain committed to decision-making that will benefit our customers, our employees, and our shareholders. All of us here at Columbia look forward to our 15th anniversary this summer, and we believe we are well positioned for success in the coming year.

This concludes our prepared comments. Before we open the call for your questions, I will remind you that Mark Nelson, Chief Operating Officer; Andy McDonald, Chief Credit Officer; and Gary Schminkey, Chief Financial Officer, are with me to answer your questions. Now, operator, will you please open the call for questions?

(OPERATOR INSTRUCTIONS) Matthew Clark.

Good morning. Can you update us on the medical niche lending team that you guys acquired earlier this year in terms of, I guess, update us on how they're doing in terms of portfolio size and whether or not there has been any additions?

Yes, actually they have been doing very well. We had a budget developed for them which also was the basis for their incentive plan going forward. I'm happy to report through the first quarter, they are substantially ahead of where we anticipated that they would be.

They continue to bring in a lot of great relationships and also deposits related to those relationships. So I would say they have been way more successful than we originally envisioned.

Okay, and the team is the same size, I would assume?

Yes.

Okay. Then in terms of the floor, the gain from the floors in the quarter. I know that it is going to persists for the next few years, which is great. But just -- and I am not 100% sure if that $1.7 million that you anticipate coming into interest income is evenly distributed throughout the year or not. So I was just curious as to how much came in the first quarter here?

This is Gary. It's about $180,000 in the first quarter, and it's not even throughout the year. I can provide that possibly maybe next quarter. Would that help, if you had it by quarter?

Not necessarily, I can follow up with you off-line.

Okay.

Thanks. Then, in terms of the margin, obviously a big surprise. I'm assuming some of that related to the mix of commercial deposits that you guys have. Can you just touch -- give us a sense for where some of those sweep deposits may be being priced and how the retention looks there?

I will comment first, Matt, and then let Mark jump in here. We have just really been managing our deposit pricing very -- we meet every week and review what the competition is doing. We're very sensitive to not being in a position of losing deposits, and I'm just very pleased with what the pricing committee has been able to. Mark, would you like to fill in some more detail?

Well, I mentioned in the earlier discussion that we do tend to see a seasonal movement of business deposits out. A lot of that comes in our sweep product.

We've been able to move that down with the market to the low 2s is about where we pay in that deposit product today. Those numbers are coming back. We continue to grow.

We continue to grow a lot of commercial deposits around our remote deposit capture product. That has been very successful. I would say that is really a core of our business strategy for many of our clients.

Okay, great. Thank you.

Jeff Rulis.

Good morning. The dividend benefit margin, was that FHLB?

No, that was Fannie Mae and Freddie Mac.

Okay, okay. It seemed kind of big. The frequency of that benefit, is that foreseeable?

Yes, it is a constant interest rate as far as the dividend is concerned. What happened in the first quarter is we purchased a security just before the ex-dividend date had settled; and we received the full benefit even though we didn't hold the security for the full quarter.

In the following quarters, of course, we will have an average balance of the security outstanding for the full quarter and the associated dividend.

Okay, thanks. Do you have monthly averages for the margin for the quarter by month?

It is something that we can provide. I don't have them in front of me right now.

Okay. I guess --

On the monthlies.

-- follow up later. And then, just one other thing. On the overall real estate segment, it looks like it's been declining since you closed the Mountain Bank and Town Center deals. Are you sort of allowing some runoff there? Or is it indicative of those markets? If you could just maybe talk about the decline in that segment and overall production versus --?

Andy.

The Mt. Rainier Bank and Town Center Banc did have a larger percentage of their portfolio in the for-sale housing segment. So since we're not looking to expand that segment, that has impacted those portfolios.

However, since year end -- and I can't remember going back prior to that -- their loan portfolios have been relatively stable; so they been able to offset the decline in growth in 1-to-4 sale housing with other loan types.

We did have a number of our commercial construction loans convert to permanent loans. In some cases, those went to other lenders, predominantly life companies.

Thanks.

Aaron Deer.

Hey, good morning, guys. Gary, a question. You mentioned in your comments regarding the funding. Obviously, your deposit costs, you guys did a great job keeping those down.

You also mentioned being able to take advantage of some dislocation with respect to funding. Can you give some more details on that?

Yes, during the first quarter there were some opportunities both at the FHLB of Seattle and two repo markets that provided some very low-cost funding if we were able to lock in for a certain period of time.

Those funds are puttable, and they are puttable back to us. But the theory is that with our proportion of commercial and industrial loans that are tied to prime or some other type of index, when those rates start to move up, and if those deposits do get put back to us or those funds do get put back, that is not a bad thing.

Okay. I guess there was, what, $25 million in the repo fund?

Right.

What kind of rate, then, do you have on that?

I believe that was 1.88%, and that is locked in for a year.

Okay. Andy, on the -- can you maybe give some more color in terms of what you are seeing in terms of credit trends, classifieds, criticized? And what you might expect, given what you're seeing now, in terms of loan losses for the full year?

Well, we generally don't disclose all of the risk categories that the Bank has. We certainly don't give forward guidance on losses for the year. But clearly my comments are meant to indicate that we are seeing credit challenges ahead and that the environment is weakening.

Certainly, I'm much more concerned today as I see what's happening to all of my neighbors, and what that impact may have on the market in general.

Andy, you might talk about your concern for lenders pulling away from the market and the domino effect.

Yes, I mean a lot of these -- for example, a lot of the production builders have credit relationships with a number of financial institutions. In some cases, we are just one financial institution providing credit to these individuals.

While we each finance different projects, it doesn't mean that if one lender becomes extremely concerned because of issues that are happening within their own shop, that they don't -- they end up causing trouble for the builder. That domino effect that happens to all of the other lenders that are supplying credit to that builder because it can cause a liquidity squeeze.

Certainly when I see the numbers of my friend and neighbors, that has heightened my concern on what I call the domino effect.

Okay, that's helpful. I appreciate your comments. Thank you.

I think that it is important for everybody to understand that we've been very fortunate to have our loan portfolio perform fairly well, and we are not covering [the ball].

What we are seeing is that we are being realistic about what we see going on out there in the market, and that has caused us to just be even more diligent in the management of our portfolio.

Andy and his team of credit administrators and special credits officers are just doing a very, very good job of managing the credits. That being said, we can't control the economic environment. We recognize that, and we are just very cautious.

Okay, thank you.

(OPERATOR INSTRUCTIONS) Joe Morford.

Thanks, good morning, everyone. Actually most of my questions have been asked already. Maybe just a couple follow-ups. Gary, just kind of all in with your comments, it sounds like you're kind of looking for the margin to hold relatively stable in here, with perhaps some modest pressure. Is that fair to say?

I would say there would be some modest pressure. I am noticing a little more competition now or rates starting to trend up on the CDs in our market, and I would imagine that core deposits aren't far behind.

On the CD stuff, is that coming from other banks, or more some of the nonbanks, mortgage type companies?

It's coming from both, Joe. I'm noticing more advertisements coming from local banks, but in addition to those that are -- that have been around for nonbanks.

Right, okay. Then, it seemed like perhaps the other income line was up a little more this quarter. Is there anything unusual in that at all? Or is this overall for fees except for the Visa a pretty good level to build off of?

Yes, I don't think there's anything unusual in that other income line, other than to say that I believe we have a swap fee or two in there, and a prepayment penalty possibly for the first quarter.

Right, okay. Great, thanks so much.

Jeff Rulis.

Sorry for the follow-up. I didn't know if you could comment on customers. There's been quite a bit of rumors about the Barclays North developers. I don't know if you have any exposure there or if you can comment.

We had no exposure there.

Okay, great. Thanks.

(OPERATOR INSTRUCTIONS) Sara Hasan.

Hi, guys. Kind of an odd question, but I'm just wondering, are you guys still looking at other acquisition possibilities? I think you are one of the few banks that has some flexibility out there.

You know, we are always talking with other banks that we feel would be good partners with us. We always look at, first of all, it's got to make financial sense for us. It needs to extend our geographic footprint. And the culture has to be compatible.

We've added a fourth factor to that, and that would be, you know, would any kind of an acquisition be a distraction to us because of credit issues or those kinds of things.

So, the answer is, we will continue to develop relationships, and we will see where that goes.

Thank you.

At this time there are no further questions.

Well, once again, I just want to remind everybody that we are going to start having quarterly conference calls. I just don't want anybody to be concerned since we normally do not have conference calls each quarter. We will be sure and get them on your schedule earlier for subsequent quarters.

Thank you, once again, for joining us. We really appreciate your interest.

Ladies and gentlemen, this does conclude today's conference call. At this time, you may disconnect.