Columbia Banking System Inc (COLB) 2015 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Columbia Banking System's fourth-quarter and full-year 2015 earnings conference call.

(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, Nicole. Good afternoon, everyone, and thank you for joining us on today's call to discuss our fourth-quarter and full-year 2015 results, which we released this morning. The release is available on our website, at columbiabank.com.

As we outlined in our earnings release, we achieved record earnings for the year, with net income just under $99 million and diluted earnings per share of $1.71, and we had record new loan production for the year, with just over $1.1 billion in originations. Deposit growth for the year was also a record, at $514 million. In addition, we achieved record earnings for the quarter, with net income of $26.7 million and diluted earnings per share of $0.46. This was the ninth consecutive quarter our bankers have achieved well over $200 million in new loan originations; and in fact, when we look at the top four quarters for new loans in our history, three of them were in 2015.

We realize that our acquisition activities have created noise in our numbers, whether it's a quarter to quarter or year-over-year comparison; however when we remove the noise, we're pleased with the growth momentum we have gained in non-interest income. Service charges and fee income, payment systems income, and trust and investment income have experienced double-digit year-over-year increases. The increase in non-interest income is a combination of organic growth and a well executed integration of Intermountain.

The same can be said for our non-interest expense ratio, which Clint will touch on. It continues to improve through a combination of successfully implementing acquisition cost savings and an improvement in our legacy expense leverage.

Clint Stein, Columbia's Chief Financial Officer, is on the call with me today. He'll begin our call by providing details of our earnings performance. Hadley Robbins, our Chief Operating Officer, will be covering our production areas this afternoon; and Andy McDonald, our Chief Credit Officer, will review our credit quality information. I'll conclude by giving you an update on the economy here in the Pacific Northwest, and we will then be happy to answer your questions.

As always, I need to remind you that we will be making some forward-looking statements today, which are subject to economic and other factors. For a full discussion of risks and uncertainties associated with the forward-looking statements, please refer to our securities filings and, in particular, our Form 10-K filed with the SEC for the year 2014.

At this point, I'd like to turn the call over to Clint to talk about our financial performance.

Good afternoon, everyone. As Melanie mentioned, our fourth quarter earnings were a record. This is the second consecutive quarter that we have reported record net income. However, we did have some noise in our numbers this quarter, so I will take a few moments to highlight their influence on our reported results.

As mentioned in the earnings release, we reversed $3.1 million from a mortgage repurchase reserve. We recognized this liability at the closing of the West Coast Bancorp acquisition to reflect repurchase risk associated with residential mortgages West Coast had previously sold into the secondary market. The current period adjustment to this contingent liability reflects our updated estimate of probable losses. Net of tax, the impact to reported earnings per diluted common share was an increase of just over $0.03.

In addition, we had acquisition expense during the quarter of $1.9 million, expense from FDIC acquired loan accounting of $924,000, and additional occupancy expense of $852,000 related to this disposal of closed branch facilities. These expense items aggregated to $3.6 million, or just over $0.04 per share. So the combination of these four income and expense items resulted in a net reduction to reported earnings per share of roughly $0.01.

Our reported net interest income was essentially flat with the prior quarter, increasing a modest $125,000, to $81.8 million. Interest income on loans was down $884,000 from the prior quarter. Incremental accretion income accounted for $395,000 of the linked quarter decline, with the remaining $489,000 attributed mostly to higher net interest reversals in the current quarter than we experienced in the third quarter.

The decline in loan income was offset by $994,000 in additional securities income, as the average size of the investment portfolio increased $192 million, to 26.9% of interest-earning assets, up from 25.2% in the third quarter. The increase in the securities portfolio was the result of the robust deposit growth we experienced in the second half of the year.

Non-interest income before the change in the FDIC loss-sharing asset was $25.8 million in the current quarter, up from $24.1 million in the prior quarter. The increase was driven by the previously mentioned mortgage repurchase liability adjustment and record interest rate swap income, tempered by declines in volume sensitive line items, such as service charges and other fees, and gain on loan sales, which collectively were down $1.3 million from elevated levels in the prior quarter.

Reported non-interest expense was $66.9 million for the current quarter, an increase of $2.8 million from the third quarter. The increase was largely driven by acquisition expenses, which were $1.4 million higher in the fourth quarter, and the previously mentioned $852,000 of additional occupancy expense associated with the disposal of closed branch facilities.

After removing the effect of acquisition-related expenses, OREO activity, and FDIC clawback liability expense, our non-interest expense run rate for the quarter was $64.2 million. This is a $1 million increase from $63.2 million on the same basis during the third quarter and is primarily attributed to the additional occupancy expense. Excluding these three items, our non-interest expense to average assets ratio declined another 3 basis points, to 2.89% during the fourth quarter.

The full-year 2015 ratio of 2.96% is down 13 basis points from 2014. We're pleased to see this ratio trend downward, even as we continue to make infrastructure investments in areas we believe will further enhance our long-term competitiveness and profitability.

The uptick in occupancy expense this quarter is not the result of a growing expense base, but rather will produce a lower run rate in future periods, as shuttered facilities work their way off our balance sheet. The $1.9 million of acquisition-related expense is broken out as follows, compensation and benefits, $522,000; occupancy, $897,000; advertising, $65,000; legal and professional, $158,000; data processing, $226,000; and other expense of $4,000.

We believe the first quarter of 2016 is the last one that will be significantly impacted by expenses stemming from the Intermountain acquisition. We anticipate that total transaction costs will be $300,000 or $400,000 higher than our announced estimate of $18 million. However, our revised cost savings estimate of $9.7 million compares favorably to our merger model estimate of $8.6 million. So while total transaction costs will be roughly 2% greater than our original estimate, the resulting ongoing cost savings exceeded our goal by $1.1 million, or over 12%.

The operating net interest margin compressed 9 basis points during the quarter, declining to 4.09%. With the shift in asset mix during the quarter, the securities portfolio accounted for 6 basis points of the decline, with the remaining 3 basis points attributed to the loan portfolio.

Now I'll turn the call over to Hadley to discuss our production results.

Thank you, Clint. Total deposits at December 31 were $7.44 billion, an increase of $124 million from $7.3 billion at September 30. About $121 million of this increase was in non-interest bearing DDA. On a full-year basis, total deposits have increased $514 million, or about 7.4%.

At year-end core deposits were $7.13 billion, holding steady at 96% of total deposits. The average rate on interest-bearing deposits was 7 basis points, down from 8 basis points in the previous quarter. The average rate on total deposits remained unchanged for the quarter, at 4 basis points.

Loans were $5.82 billion at December 31, representing a net increase of about $68.5 million over the third quarter. For the year, loans are up $369.7 million, or about 6.7%. The fourth quarter increase was largely driven by continued strong levels of new production in the amount of $272 million. Loan production for full-year 2016, was $1.118 billion, representing a 7.4% increase over 2014, that was production for 2015, sorry.

Line utilization declined slightly, from 52.8% at September 30, 2015 to 52.5% at December 31, largely reflecting that fine and line balances of $20 million for the quarter. While line usage declined for the quarter, on a year-over-year basis line usage increased about $115 million. Assuming historical patterns hold, we're likely to see line utilization drift down in the first quarter of 2016. Line activity in our C&I portfolio typically pulls back at the beginning of the year. In part, this is linked to seasonal patterns of borrowing activity related to a few industries in the portfolio, notably agriculture.

New production was predominantly centered in C&I and commercial real estate and construction loans. Term loans accounted for roughly $183 million of total new production, while new lines represented about $89 million. The mix of new production was fairly granular in terms of size. 20% of new production was over $5 million, 29% in the range of $1 million to $5 million, and 51% was under $1 million. In terms of geography, 59% of new production was generated in Washington, 28% in Oregon, and 13% in Idaho and a few other states.

Following the pattern of new production, net loan growth in the fourth quarter was concentrated in C&I and commercial real estate. C&I loans ended the third quarter at $2.36 billion, up about $8 billion from the previous quarter, and $243 million for the year, or 11.5%. Industry segments with the highest loan growth in the fourth quarter include transportation, public administration, finance and insurance.

Commercial real estate and construction loans ended the fourth quarter at $2.97 billion, up $73 million, and $173 million for the year, or 6.5%. The mix of asset types was well diversified. For the quarter, the largest increases by asset type occurred in office and warehouse.

The ongoing low interest rate environment, combined with competitive market conditions, continue to put downward pressure on loan coupon rates. The average tax adjusted coupon rate for the quarterly new production declined from 4.02% in the third quarter to 3.96% in the fourth quarter, while the average tax adjusted coupon rate for the overall loan portfolio declined from 4.40% to 4.38%.

In closing, the Bank's deal flow remains active and pipeline volumes are comparable to levels seen in recent quarters. That concludes my comments. I'll now turn the call over to Andy.

Thanks, Hadley. Thanks, Hadley. For the quarter, the Company set a provision of $2.3 million. The originated portfolio had a provision of $750,000, the discounted portfolio had a provision of $250,000, and the purchase credit impaired portfolio had a provision of $1.3 million. The provisions were driven by loan growth in the originated portfolio, net charge-offs in the discounted portfolio, and cash flows not meeting expectations in the purchase credit impaired portfolio.

We had net charge-offs of $3.2 million for the quarter, split between the originated portfolio, which had $1.3 million, and the purchase credit impaired portfolio, which had $1.6 million. The discounted portfolios had mixed results, with the West Coast portfolio having $271,000 in recoveries, while the Intermountain portfolio had $532,000 in charge-offs. So when you put it all together for the quarter, net charge-offs amounted to about 22 basis points on an annualized basis.

As of December 31, our allowance to total loans was 1.17%, down from 1.2% at September 30 and 1.28% at year-end 2014. Our allowance to nonperforming loans as of December 31 was 317%, up from 221% this time last year. Key to the improvement in this ratio was the decline of nonperforming loans during the year.

For the quarter, nonperforming assets declined 9%, primarily due to a reduction in OREO. We had a modest increase in non-accruals this past quarter of around $2.3 million. As a result, nonperforming loans to period end loans increased from 33 basis points to 37 basis points.

At quarter end, loans 30 days or more past due and not on non-accrual were about $10 million, or 18 basis points. This is even with last quarter when past dues were around $11 million, or 19 basis points.

With that, I'll turn the call to Melanie.

Thanks, Andy. Economic expansion is continuing its separate trend here in the Pacific Northwest. We're closely watching market conditions and our leading economic indicators in light of concerns about international economic conditions, particularly in China, though. Despite the weaker demand expected from China and Asia overall, the Kiplinger Letter is forecasting that Washington will still rank number six in job growth, Oregon follows close behind at number 8, and Idaho is at number 13.

Seattle, Washington and Portland, Oregon also ranked high in readiness for the future. Dell commissioned economists to rank cities most prepared to prosper and grow in such areas as ability to attract people engaged in and open to lifelong learning that drives innovation, businesses that thrive in collaborative environments, and infrastructure that provides platforms for innovation, among other factors. The results presented at Harvard's Strategic Innovation Summit last fall placed the Northwest's two largest cities in the top 10 out of 25, ranking seventh and ninth, respectively.

According to a recent ranking by Business Insider, Washington has the top ranked state economy in the country, based on seven measures, unemployment rates, GDP per capita, average weekly wages, recent growth in jobs, house prices, and wages. 78% of all new jobs created have been in the private sector.

Washington ports are the closest mainland US ports to Asia. Ships can arrive up two days sooner to key ports, such as Tokyo, and air freight can arrive in Beijing in less than 15 hours. Combined, the ports of Seattle and Tacoma are the third-largest container gateway in North America.

The Northwest Seaport Alliance, the consolidated container operation of the Port of Tacoma and Port of Seattle, reported dramatically improved results for 2015 compared to the prior year. Despite the global slowdown and the early 2015's West Coast labor troubles, year-over-year international container volumes are up 8%.

Oregon's state economist said last month that he expects the state's economy will continue at full throttle for at least another couple of years and is optimistic about the prospects for the 2015 through 2017 biennium. Oregon state's population cracked the $4 million (sic- see presentation page 6 "4 million") mark in 2015, a strong indication that the economy continues to improve and that the state is a very attractive place to work and live. Their 3.1% growth rate in payroll employment was faster than the US rate of 1.9%.

Oregon's unemployment rate dropped to 5.4% in December, from 5.7% in November. This decrease moves the state's rate closer to the national level of 5%. In December 2014, Oregon's unemployment rate was significantly higher, at 6.7%.

Oregon is expected to report well over $20 billion worth of exported goods for 2015. Over 86,000 US jobs are supported by exports from Oregon.

Idaho's economy appears to be fully back in expansion mode, as well. 2015 job growth was 3.3%, well above the national average of 1.9%, and is expected to continue in 2016, with growth of over 2%. The state was named by Forbes as 13th in the nation for states with the fastest job growth.

While agriculture is strong in Idaho, with the state supplying almost one-third of all potatoes on the US market, other industries are growing rapidly, as well. For example, the state is home to one of the largest producers of computer memory in the world. Their top manufacturing product is electrical equipment, specifically computers and computer components. Micron Technology is based in Boise.

Idaho's healthcare industry has seen revenue increase by 46% over the past 10 years and the state is second in the nation for growth in this sector. Tourism brings in $3.4 billion each year and employs more than 26,000 people. Idaho's agriculture sector is not just potatoes, it's actually quite diverse. The state is one of the top producers of cattle and dairy products, and their record-breaking farm cash receipts of $9.7 billion in 2014 was a 16% increase over the prior year and was largely driven by the livestock sector.

You may know that we regularly survey our business customers throughout our market area to better understand their challenges, their opportunities, and their thoughts on their economic environment. Our fourth quarter survey revealed the vast majority of those responding, actually 92%, are confident about the future of their business and they continue to be optimistic about the general business conditions. However, concerns about the economy have risen, particularly among customers in the transportation and services sectors. Government regulations and taxes continue to be the top challenges for most of our customers.

To summarize, the economy in our area continues to perform better than the country as a whole and most economic indicators, and along with our business customers, we're very optimistic about the future of the Pacific Northwest.

Our priorities going forward continue to be growing loans, improving our operating leverage, and effective utilization of capital. We continue to feel very optimistic about our opportunities in the Pacific Northwest, which helps us support our decision to pay another special dividend of $0.20, in addition to a regular dividend of $0.18. Both will be paid on February 24 to shareholders of record as of February 10.

We're pleased to play a special cash dividend for the eighth consecutive quarter. Both dividends, totaling $0.38, constitute a payout ratio of 83% for the quarter and a dividend yield of 5.3%, based on our closing price yesterday.

With that, this concludes our prepared comments this afternoon. And as a reminder, Clint, Andy, and Hadley are with me to answer your questions. And now, Nicole, will you open the call for questions, please?

(Operator Instructions)

Joe Morford.

Thank you. Good afternoon, everyone. Sorry if I missed some of this in your comments, but I was trying to reconcile the strong loan production with a little slower growth in outstandings in the fourth quarter. Was there an increase in pay downs maybe in C&I, or was some of that seasonal?

And then just looking forward, how are you feeling about the pipeline and what that may mean for loan growth in the year ahead? It sounds like borrower confidence isn't really an issue at the moment.

Well, I think that as I mentioned, there was some seasonal pullback in the fourth quarter on our lines of credit, with outstanding usage on those lines declining by $20 million, which creates a headwind which you have to make up, which influences really the net loan growth for the quarter. And we had some pay downs that also occurred. But I don't consider those too far out of the pattern that has happened throughout 2015.

I think the strength of the pipeline, as I mentioned, it's very consistent with what we've seen in the third and fourth quarter, and that I expect that we'll be able to develop activity very similar to what we experienced in the previous quarter, as a consequence of that. And again, there is the continued seasonal pattern that will take place, I believe, in the fourth quarter, if it holds true to the past pattern. In 2015, first-quarter lines dropped about $30 million.

Okay. That's helpful. I guess the other question was just looking, if you talk a little bit about the drivers to the strong deposit growth the past couple of quarters and prospects that may continue. Just trying to get a sense of what we may see with the size of the investment portfolio in the year ahead, whether it will continue to grow or be a source of funding for some of this loan growth.

Deposit growth has been strong. And we've had, really, the strength of deposit growth primarily as a result of building the C&I totals throughout the year. We've also had in this most recent quarter, some new relationships that brought significant new deposits to the bank. And that my expectation is that we'll continue to see deposits increase as we book C&I, in particular.

Okay. Thanks so much.

Thanks, Joe.

Jeff Rulis.

Hello, Jeff. Happy New Year.

Happy New Year to you. Just a question on drilling down a little further on the payoff activity. Do you have that sequentially, what that was in Q3 and Q4?

I'll have to do a little digging through the information I brought with me. If you have other questions, let me dig in.

I'll fire another one.

Jeff, this is Andy, just real quick. Just to add a little more color to Hadley's comments. We did have line utilization decline, like you said. But in the term loan book, we did have a number of multi-family type loans move to the secondary market.

We were able to replace that production with new construction loans and new construction activity, but that was not funded in the quarter. So it counts in our production numbers, but you don't see it in outstanding numbers. So our commitments for the non-revolving lines actually increased, while our utilization in the non-revolving commitments actually declined.

Interesting. Okay. Thank you. And then I guess a question on the margin, I wanted to revisit the model in general. I think historically, you've mentioned the margin has stayed between 4% and 4.25% on a core basis. I guess I hadn't revisited that in a while, and I just wondered, has the platform changed, the interest rate environment different, or is that still the gutters, if you will, to guide us on margin on the core basis?

I'll take that one, Jeff. This is Clint. Actually, what we've said is historically, our margin throughout the 20-plus year history of the Company has been generally between 4.25% and 4.5%. The last couple of years, we've said we're going to test the bottom end of that range, and I think that's kind of where we've been.

And when I look at the operating margin, I guess I don't feel -- while it would be nice to say that it was still 4.18%, like it was in the third quarter, or that it expanded, I guess I don't feel bad about the 9 basis points of compression because of what led, what the drivers were, very strong deposit growth in the second half of the year. We worked really diligently to put that money to work as quickly as we could, which was in the investment portfolio.

So when we look at overnight funds, we kind of minimize the impact of having the money sit, earning 25 basis points, but it did impact the margin, but it helped revenue. All things being equal, the investment portfolio revenue was up nearly $1 million for the quarter.

So we've talked about this in the past amongst ourselves is that while the margin's very important to us and we're very proud of the margin that we have, and even today, as we calculate it at 4.09%, we think it's a still good margin, it's secondary to growing revenue and things that will flow to the bottom line and increase our franchise value through increased deposit growth.

Okay. Thank you.

Thanks, Jeff.

Matthew Clark.

Good afternoon. First one, I guess in terms of the securities purchased in the quarter, just curious what you guys were buying?

Clint?

We're sticking with what we've always done. And during the quarter, it's A or better-rated munis. We're looking at some mortgage-backed CMOs, as long as the structure for the cash flows meets our criteria. We're getting just a little over 2% with the mortgage backeds. And on a tax equivalent basis, we're in the low 3s on the munis.

I think the important thing to note is that the duration of the investment portfolio stayed pretty stable. It's still sub 4%. It's actually 3.7% at year end. But if we do an instantaneous 300 basis point rate shock, duration only extends to 4.1 years. And that's something that's been really important to us.

And I think it gets back to maybe what Joe was getting at, which is redeploying investment cash flows into the loan portfolio. And certainly, something that we would welcome to have happen, and when the time comes, we don't want to have a bunch of unanticipated extension in our cash flows. So does that help with what you're looking at?

Yes. That's great. And then on the non-interest expense run rate, the $65 million in the quarter, obviously that was the write down on the land for sale. But just thinking about that run rate going into the first quarter, whether or not there's any other moving parts we need to think about?

It's a great question. And so I'll take a minute to just clarify the way that we calculate that is we try to have comparability for all of you when we're talking about this ratio, because we're really looking at it over a trend of quarters and years. So we take out acquisition-related expense, we remove any OREO activity, whether it's a net benefit or a net cost.

We figured that those are things that occur over a longer period of time and aren't necessarily reflective of that quarter's individual run rate. And then the FDIC clawback liability is the other piece that we take out of that, and it's because that's really a math exercise and there's nothing we can do. We calculate it each quarter and it is what it is.

So when we take those things out, I come up with $64.2 million for the run rate. On the same basis, we were $63.2 million in the prior quarter. So it's up $1 million. We had $852,000 related to what I'd say are non-recurring occupancy expenses related to branches we've closed over the last three years.

And so I guess looking forward, we were 2.89% on that ratio for the fourth quarter. A year ago, we stated our goal, post Intermountain, for the fourth quarter this year was to be in the low-2.9%s. Now that we're at 2.89%, we certainly would hope that we're not going to go back above 2.9%.

So there's always things from one quarter to the next, as we continue to look at rationalizing our branch network and just things that we want to do that improve our run rate long term. So I think that's why we focus really on the ratio more than the absolute dollar amount, because it gives us an indication of the leverage we're able to achieve if we make an investment, whether it's a technology investment or investment in teams or anything along those lines.

Okay. Great. And then you're going to be crossing $9 billion here shortly. Obviously, still a ways off from $10 billion. But just any update on the M&A front in terms of the opportunities out there and whether or not that's something you feel any pressure to do or not?

We never feel any pressure to do an acquisition just for any other reason other than it makes us a better company on a combined basis. So I don't really see M&A as being driven by going over the $10 billion mark. Certainly, it would be a lot better if we did go over $10 billion to go over it in a meaningful way. But we're going to go over $10 billion whether we do it organically or not. So we're always open to look at potential partners for M&A activity, but we're also very focused on organic growth.

Okay. And then last one, just on the tax rate, in terms of the expectations for this year. On an operating basis, I got 30.5% the last couple of years. I'm not sure if you think that's right or not.

I hesitate. And the only reason I hesitate is because of the uncertainty of legislation around taxes. Oregon has a very onerous proposal going around right now that for us would be a few million dollars, if that thing ever got off the ground. But I think that as it relates to what we know today, for 2016, I think we're going to be right in that same range that we've been the last couple of years. I don't see anything that materially shifts our effective tax rate.

Okay. Thank you.

Thanks, Matt.

Jacque Chimera.

Melanie, good afternoon. I just wanted to see what drove the uptick in merger charges in the quarter? And then a little bit of clarity, I think it was one of the prepared remarks, that current quarter charges would cause future benefits. I'm guessing it has to deal with branch closures that you had mentioned, but I know those have been prior, as well. So just some color on all of that.

Clint?

Sure. No, you're exactly right, Jacque. It's related to, for the quarter, the largest line item that was impacted by acquisition expense was occupancy, at $897,000. That has to do with additional branch consolidations. And that's really what's left when we look into the first quarter, and the expectation that we're going to just nudge right over the top of the $18 million estimate, the vast majority of that's going to hit the occupancy line item.

Okay. So there's all else equal, if I remove the merger charges and then I remove the mark on the other branches during the quarter, occupancy could potentially tick down in 1Q?

I think that's a fair way to look at it. Yes, if you normalize the noise that we had from both through acquisition expense and then just through our regular expense.

Okay. And then my next question, if you could just quantify, I'm assuming there's limited, if any, impact from the rate increase on the deposit books, but just what it means to the loan portfolio?

Yes. We haven't moved our deposit rates at all. In fact, we rounded up to 4 basis points. I think that as we've had various conversations the last quarter or so, we've talked about that our total cost would round down to 4. We were 3.9, so we round up to 4. So we haven't really had the competitive pressure to look at a rate increase.

On the loan side, we saw in December, our coupons on originations in December were up 2 to 3 basis points. But that's a little bit of, I guess that's looking at the portfolio as a whole. But the thing that Hadley will remind me of is we're originating loans, whether it's fixed or prime or LIBOR, and that mix from quarter to quarter.

In this last quarter, we had, I think, the highest amount of LIBOR-based originations that we've had for any quarter in the last several quarters, and those rates tend to be lower anyway. So I would say it's nominal. There is a little bit of a benefit, but it's nominal at this point. And I'm not optimistic, based off of the FOMC's comments yesterday.

That's fair. Okay. That was all I had. Thank you.

Thanks, Jacque.

(Operator Instructions)

Aaron Deer.

Good afternoon, guys. I think Jacque actually just asked one of my last questions. There was one other I have here. I was wondering if, given the pullback in the market, when the Board was discussing the special dividend, if there was any discussion given to possibly doing any share repurchases here, or if that's still just not really a part of the equation?

It's always a conversation in the boardroom. It's just one of the many options that they consider.

Is it a pricing consideration or is there just general opposition by some members, or is there -- I'm just curious what the considerations are behind it?

Well, we're still trading at 2 times book, tangible book. And I haven't had the nerve to look and see what the market did today.

You are up.

Oh, good. And hopefully, everybody else was, too. What's that about high tides? (Laughter)

That was it for me. So everyone, have a great afternoon.

Okay. Thanks, Aaron.

There are no further questions at this time. I'll turn the call back over to the presenters.

Thanks, everyone, for joining us. And we'll talk to you next quarter.

This concludes today's conference call. You may now disconnect.