CVB Financial Corp (CVBF) 2014 Q3 法說會逐字稿

Good morning, ladies and gentlemen and welcome to the third quarter 2014 CVB Financial Corporation and its subsidiary Citizens Business Bank earnings conference call. My name is Mike, and I am your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer period.

Please note this event is being recorded. I would now like to turn the conference call over to your host for today's call, Ms. Christina Carrabino. Ms. Carrabino, you may proceed ma'am.

Thank you, Mike and good morning everyone. Thank you for joining us today to review our financial results for the third quarter of 2014. Joining me this morning are Chris Myers, President and Chief Executive Officer and Rich Thomas, Executive Vice President and Chief Financial Officer.

Our comments today will refer to the financial information that was included in the earnings announcement released yesterday. To obtain a copy, please visit our website at www.cvbank.com and click on the Investors tab. Before we get started, let me remind you that today's conference call will include some forward-looking statements.

These forward-looking statements relate to, among other things, current plans, expectations, events and industry trends that may affect the Company's future operating results and financial position. Such statements involve risks and uncertainties and future activities and results may differ materially from these expectations.

The speakers on this call claim the protection of the Safe Harbor provisions contained in the Private Securities Litigation Reform Act of 1995. For a more complete discussion of the risks and uncertainties that may cause actual results to differ materially from our forward-looking statements, please see the Company's annual report on Form 10-K for the year ended December 31, 2013 and, in particular, the information set forth in Item 1A, risk factors therein.

Now I will turn the call over to Chris Myers.

Thank you, Christina. Good morning everyone and thank you for joining us again this quarter. Yesterday, we reported earnings of $24.3 million for the third quarter of 2014 compared with $25.5 million for the second quarter of 2014 and $24.2 million for the third quarter of 2013.

Our third quarter earnings were positively impacted by increased net interest income, driven by both loan income and income from investment securities. Year-over-year 2014 third quarter net interest income was up 13.5% or $7.3 million from 2013 third-quarter results.

Top line income is a big focus for Citizens Business Bank. As such we are centered on growing assets, particularly loans. During the third quarter of 2014, we grew net loans by $85.3 million or about 2.4%, all organic. Earnings per share were $0.23 for the third quarter compared with $0.24 for the second quarter and $0.23 for the year-ago quarter.

Through the first nine months of 2014, we earned $78.4 million compared with $70.3 million for the first nine months of 2013. Diluted earnings per share were $0.74 for the nine-month period ended September 30, 2014 compared with $0.67 for the same period in 2013. The third quarter represented our 150th consecutive quarter of profitability and 100th consecutive quarter of paying a cash dividend to our shareholders.

Excluding the impact of the yield adjustment on covered loans, our taxes exempt net interest margin was 3.53% for the third quarter compared with 3.46% for the second quarter and 3.48% for the year-ago quarter. Improvement in the net interest margin can be partially attributed to growth in loans and reduction in non-performing assets.

At September 30, 2014, we had $3.7 billion in total loans, net of deferred fees and discount on covered loans compared with $3.6 billion in total loans at June 30, 2014. Overall non-covered loans increased by $91.6 million and covered loans decreased by $6.3 million quarter over quarter.

During the third quarter, our commercial real estate loans increased by [$65.1 million], our agribusiness loans increased by $7.6 million and our dairy and livestock loan portfolio increased by $8.1 million. In looking forward, we believe we have strong seasonal growth during the fourth quarter in the dairy and livestock loan portfolio.

As we have previously discussed, our strategic initiative of hiring key new sales associates for residential mortgage, construction and agribusiness lending is gaining traction. We are also now fully staffed in our new San Diego business financial center location and we'll be hosting a grand opening reception for customers, prospects and bank friends in early November. We continue to actively seek other opportunities to expand our geographic footprint and breadth of our product delivery platform.

In terms of loan quality, non-performing assets defined as non-covered, non-accrual loans plus OREO, were $43.3 million for the third quarter of 2014 compared with $50.5 million for the prior quarter. The decrease was due to reductions of $3.7 million in non-performing dairy and livestock and agribusiness loans and $2.8 million in non-performing, single-family mortgage loans. The allowance for loan and lease losses was $59.6 million or 1.67% of total non-covered loans at September 30, 2014 compared with $61 million or 1.75% of non-covered loans at June 30, 2014.

Net charge-offs for the third quarter were $392,000 compared with net charge-offs of $151,000 for the second quarter of 2014. Due to strong net recoveries in the first quarter of 2014, we actually had a net recovery of $447,000 for the nine months ending September 30, 2014. At September 30, 2014, we had loans delinquent 30 to 89 days of $688,000 or 0.02% of total non-covered loans. Classified loans for the third quarter were $147.2 million compared with $156.8 million for the prior quarter. The majority of the decrease was due to the upgrading of previously classified dairy and livestock related credits.

We will have more detailed information on classified loans available in our third quarter Form 10-Q. Moving on to covered loans, covered loans represent loans in which we have lost sharing protection from the FDIC as a result of our acquisition of San Joaquin Bank in October 2009 about five years ago. At September 30, 2014, we had $140.6 million in total covered loans with a carrying value of $132.4 million. At the end of the third quarter, our remaining purchase discount was $8.2 million. Our loss sharing agreement with FDIC recently expired as of October 16, 2014.

Now I would like to discuss deposits. For the third quarter of 2014, our non-interest bearing deposits increased to $3.04 billion compared with $2.96 billion for the prior quarter and $2.54 billion for the same quarter a year ago. This represents a $498.6 million or 19.6% increase year over year, more than half of which was organic.

Non-interest bearing deposits now represent 52.73% of our total deposits. Our total cost of deposits and customer repurchase agreements for the third quarter was 10 basis points compared with 11 basis points for the prior quarter. At September 30, 2014, our total deposits and customer repurchase agreements were $6.29 billion compared with $5.46 billion for the same period a year ago and $6.24 billion at June 30, 2014. Our ongoing objective is to maintain a low cost stable source of funding for our loans and securities. Interest income; interest income for the third quarter totaled $65.3 million compared with $61.2 million for the second quarter of 2014. The $65.3 million for the third quarter included $1.4 million of discount accretion from principal reductions and payoffs as well as the improved credit loss experienced on covered loans. This compares to $1.5 million of discount accretion for the prior quarter.

Total loan income increased $3.4 million or 7.73% from $43.6 million in the second quarter. Total investment income of $17.7 million increased $815,000 or 4.83% from $16.9 million for the second quarter of 2014. Non-interest income was $8 million for third quarter of 2014 compared with $7.1 million for second quarter.

Now expenses, we continue to closely monitor and manage our expenses. Non-interest expense for the third quarter was $32.5 million compared with $31.3 million for the second quarter. Non-interest expense represented 1.75% of average assets for quarter compared with 1.79% for the second quarter. The quarter-over-quarter increase in expenses was partially due to a $640,000 increase in non-recurring expenses related to our acquisition of American Security Bank.

On the year-to-date basis through September 30, 2014, total non-recurring acquisition expenses were $1.9 million. By the end of the third quarter, we have completed the majority of the integration of American Security Bank into Citizens Business Bank. This includes personal decisions, center consolidations and system conversions. Overall costs synergies related to acquisition should be fully realized by the end of 2014.

And one more thing on this. We consolidated another office in October here in the High Desert so that will give us some additional cost savings for the fourth quarter, but will be offset by a little bit of an expense because we will close -- we will have to absorb the lease expense from closing the other office.

Now I'd like to turn the call over to Rich Thomas, our CFO, to discuss our effective tax rate, investment portfolio and overall capital position. Rich?

Thanks, Chris. Good morning everyone. Our effective tax rate was 36.25% for the nine months ended September 30, 2014 compared with 36.5% for the six months ended June 30, 2014. Our effective tax rate varies depending upon tax advantaged income as well as available tax credits.

Now to our investment portfolio. During the third quarter of 2014, we sold an average of approximately $186.4 million in overnight funds to the Federal Reserve and received a yield of approximately 25 basis points on collected balances. We also maintained an average of $28.8 million in short term CDs with other financial institutions, yielding approximately 75 basis points.

At September 30, 2014 investment securities totaled $3.16 billion, up $142.5 million from the second quarter of 2014. Investment securities represented 42.59% of our total assets at quarter-end. At September 30, 2014 we had an unrealized gain of $31.2 million in total investment portfolio compared to an unrealized gain of $41.5 million for the prior quarter. Virtually all of our mortgage-backed securities are issued by Freddie Mac or Fannie Mae, which have the implied guarantee of the U.S. government. We have been strategically reinvesting our cash flow run-off from our investment portfolio, carefully weighing current rates and overall interest rate risks. During third quarter, we purchased $253.8 million in mortgage-backed securities with an average yield of 2.09% and an average duration of approximately four years. We also purchased $7.7 million in municipal securities during the third quarter with an average tax equivalent yield of 3.79%. Prepayment speeds in our investment portfolio have somewhat stabilized and based upon current interest rates we anticipate receiving approximately $30 million in monthly cash flow from our portfolio.

Now turning to our capital position. Our capital ratios are well above regulatory standards and we believe they still remain above our peer group average. Our September 30, 2014 capital ratios will be released soon currently with our quarter-end Form 10-Q.

Shareholders' equity increased $8.5 million to $849.2 million for the third quarter compared with the second quarter. The quarter-over-quarter increase was due to an increase of $24.3 million in net earnings, $727,000 of various stock-based compensation items, this was offset by $10.6 million in cash dividends, and a decrease of $5.9 million in unrealized gain on available for sale investment securities.

I will now turn the call back to Chris for some closing remarks.

Thanks, Rich. Now let's talk about economic conditions. In terms of the diary industry, milk prices are still at elevated levels and should continue to provide profits for the diary industry. According to the California Department of Food and Agriculture, the CDFA, feed costs in California represented 65.4% of total milk production costs for the second quarter of 2014 compared to 65.2% of total milk production costs for the first quarter, but down from 66.9% for the fourth quarter of 2013. According to the data from the U.S. Department of Agriculture, October milk [prices] were approximately $24.19 for 100 pounds of Class 1 milk in October. This was up from $23.63 in September and significantly up from $19.20 in October 2013 the year ago.

High milk prices and moderate commodity prices indicate that dairy farmers should continue to be profitable throughout the remainder of this year and even into early next year. There has been much discussion about the California drought. According to the U.S. Department of Agriculture, California dairy farms still lead the nation in dairy production, turning out about 21% of America's milk supply.

California dairies with a capacity to grow their own roughages for feed stuffs and those located near (inaudible) should fare better if the drought continues according to various economic reports. California's Employment Development Division reported the unemployment rate was 7.4% in August, 2014 compared to 7.9% in July and 8.9% back in August 2013. In June, 2014 California finally surpassed its pre-recession employment peak recovering all of the 1.3 million jobs lost during the downturn.

California's budget continues to heal and the improvement is being felt by previously financially strapped local governments as sales and property tax revenues rise across the state. Tourism continues to drive the state's economy forward with hotel occupancy at 73.4% state wide, 10 percentage points higher than the national average. Home prices in California are forecast to continue on their upward trajectory over the next two years. Although the pace of growth is expected to slow to the 4% to 6% range, a rate more in line with economic growth in the state.

Home sales in California are forecast to rise by double-digit percentages in 2015. The Inland Empire where our bank is headquartered is a bright spot in California's economic recovery. Employment in Inland Empire region continued to expand growing by 2.9% in non-farm jobs from the second quarter of 2013 to the second quarter of 2014.

Economists are forecasting total non-farm employment to grow by approximately 2.5% for 2014. As much the Inland Empire's economy transitions from a recovery to an expansionary cycle, the residential real estate market is a key positive. Median single family home prices rose 16.5% from the second quarter of 2013 to the second quarter of 2014.

In closing, we're pleased with our third-quarter results. We remain focused on achieving quality loan growth and low-cost deposit growth through our same-store sales and de novo initiatives. We also continue to pursue strategic acquisitions to help us increase our market share and California geographic presence.

That concludes today's presentation and now Rich and I will be happy to take any questions that you might have.

(Operator Instructions) Aaron Deer, Sandler O'Neill & Partners.

Good morning, everyone. Unfortunately Aaron had to segue for a second. This is his associate Alex Morris. I just had a quick question for you guys. So it looks like the C&I advances over the past year have been relatively flat. Just wondering if there was -- do you guys have seen any improvement from borrowers or if it's just been a kind of -- just a general lack of demand and then what kind of utilization are you seeing?

You said on commercial and industrial loans, C&I loans?

Yes.

Okay. Yes, it's still a little bit frustrating in the sense that we have put on some good business in the C&I sector, but we're not seeing the borrowings. In fact our utilization rates on our lines of credit are down from where they were a year ago and down from the year before.

But when you contrast that, when you talk to our customers, I mean we had a bunch of customer luncheons, we do one or two of these a month and assemble groups of customers and get feedback from them, how their businesses are doing, they're all pretty optimistic, they're all growing their businesses, their sales are up, I mean not everyone but the vast majority. And so they're pretty optimistic. But they're not growing by 20% a year. They're growing by 10% a year and I think a lot of their cash reserves and their profitability is able to fund that growth. So we're not seeing a lot of utilization on the lines of credit.

But we have a big focus on that and we like that business because it helps us cross sell into a whole myriad of financial products and services and even helps our commercial real estate loan outstandings as many of these business owners own properties, invest in properties and then they have their own or occupied properties along the way too which we love to finance.

Great. Thank you very much. I'll take a step back.

Tim Coffey, FIG Partners.

Hey. Good morning, gentlemen.

Good morning.

Good morning, Tim.

First with regards to the dairy and livestock portfolio, do you see that trend of increasing balances continuing into 4Q?

Well, the fourth quarter we should see a pretty significant increase in our dairy and livestock loans because what's happened is is dairies have been very profitable throughout the year. This is the most profitable year in the dairy business according to several of the dairy farmers I've talked to in the last six, seven years. And so, because of that profit what happens is a lot of the dairy farmers will choose to defer their income into 2015 to reduce their tax burden.

And if they're not going to take any income, they let the income -- they let actually the milk checks go into the cooperative and they don't take the income this year. So what that causes them to do is have to borrow money on our lines of credit to be able to pay their expenses for the remainder of the year and we're already seeing these deferral loans kick in and our dairy and livestock loans are going up. They're even up from the end of the quarter right now by over $10 million from where they were at September 30, 2014. So I think you're going to see some substantial borrowings in the fourth quarter in the dairy and livestock side and it will be a strong deferral year.

Okay. And what about the rest of the portfolio, what kind of a pipeline [I'm looking there]?

I think we had a pretty good third quarter. We grew by 2.4%. All of that was organic. We do have a good pipeline going into the fourth quarter. Obviously it's week by week, month by month, but we feel pretty good about our pipeline and it has come back quite a bit from where it was earlier in the year.

Great. Those are my questions. Thank you.

Thanks.

Doug Johnson, Evercore.

Good morning, guys.

Good morning Doug.

My question relates to the core margin, you had 5, 6 or 7 basis points of expansion this quarter and it looks like it was driven by higher loan yields. I was kind of wondering was there anything unusual maybe on discount accretion size on the deal or a credit recovery and just kind of wondering what your outlook is for the margin going forward?

You're right and what happened is we had a full quarter of American Security Bank loans in there. And American Security Bank loans as a portfolio have a higher yield than Citizens Business Bank loans. So that helped us there. We also saw some of our non-performing loans that dropped as well. And as you see some of these non-performing loans become performing loans that adds to our interest income and helps our margin.

Any sense of how much that helps in terms of basis points?

I don't have an exact number for you, but I think I would say the increase that we look at is attributable to those factors that I just talked about.

Got it. And do the margins hold stable going forward, is that a good way to think about it?

I think, obviously the margin is about income and about expenses as well. And from an expense standpoint, I think we had expected in the third quarter that will not recur as strong as they will in the fourth quarter. I think by the first quarter of 2015 a lot of these expenses will be out of the mix.

But it's a challenging interest rate environment, interest rates remain low. So that will put some headwinds against us on the spread, but I think we're running probably in the range where we were last quarter to this quarter. I think that's probably a good range for us. But I just don't -- we don't predict the future on that.

Okay, great. And just one last quick one, in terms of the -- you mentioned $10 million so far in the dairy and livestock portfolio, what type of seasonality are you expecting if trends hold for the quarter?

I think we could see dairy loans -- dairy and livestock loans -- it's hard to project that, but we do have some feel for it. I think you'll see dairy and livestock loans probably increase quarter over quarter somewhere between $50 million and $100 million and that's just a guess because I don't know what these guys are going to do, but it just feels that way. We are seeing deferral loans requests coming in and it's starting to build.

Okay, great. Thanks for taking my questions. I'll step out.

(Operator Instructions) Julianna Balicka, KBW.

Good morning.

Good morning, Julianna.

Good morning. I have a couple of questions to follow up. One, with the recent movements in yields that we've seen, can you discuss your updated security portfolio management strategies? What kind of purchases do you expect to be making from here on out and what are the yields on the new securities you have purchased quarter to-date et cetera?

Julianna, it's Rich. We continue to look at the market. As you well know, the market for -- the interest rate market has been down for the last couple of weeks. We look for opportunities to enter into the market. But right now with the [tenure of 2022] or somewhere around there and our traditional purchase of mortgage-backs is in the 15-year mortgage-backs, the yield is not very attractive to us. So right now we're sort of holding off in purchases.

We also continue to look for municipal securities. But those that meet our criteria are very difficult to find, because we're looking for bank qualified municipals. So it's very difficult. It's hard to tell where we're going to go for this next quarter as far as dollar volume just because we are not certain of where the interest rate environment is going to go generally.

Julianna, I would add to that two things. First, I think a lot of our excess cash is going to be used up for loan growth in the fourth quarter and some of that will be seasonal loan growth due to the dairy and livestock loans. If they do advance $50 million to $100 million that will eat up a good chunk of it.

And then also we're trying to drive our core growth as well. So we're hoping to have another good quarter on core loan growth as well. So I think those two things are factors. Remember this in the third quarter, we acquired American Security Bank late in the second quarter, in the latter half of the second quarter. So when we did that we basically got $360 million, $370 million in deposits and we got about $240 million in loans. So we got a lot of cash when we did that and we used -- we bought a lot of securities in the third quarter to use up that cash. So we've already accomplished that, if you will. So we won't have that same accomplishment in the fourth quarter. We're hoping to use it. I would like to see every dollar go into loans if possible.

Okay, makes sense. And speaking of dollars into loans, I mean what kind of loan to deposit ratio would you like to get to? And kind of given the trajectory of your loan growth and the strength of your deposit growth, I mean, how long do you think that could take absent any rise in rates?

I would say thousands of years probably, no, we love to be an 80% loan to deposit ratio. I think that's a good core number for us. We're not there now. I think we're somewhere around 66% or something like that. But clearly our objective is to build that up. But we want to do it in a way that we feel comfortable with the loans that we're putting on the books.

And we focused on organic loan growth and we focused on our core lending areas where we feel like we have good subject matter expertise in our geographic markets that we understand. And so, we're sticking to that strategy. We are not deviating from that strategy. If we wanted to get to 80%, we can buy loans. We're looking -- we do look at loan portfolios to buy from time to time, but every time we look at these things, there is something there we don't like about it, that doesn't fit well with us. So we'd rather build it organically.

And in the third quarter if you look at our loan growth, we had a strong loan growth quarter. But we also had a strong non-interest bearing deposit growth quarter. So that's a good problem for us to have. We can fund things at 0% cost to deposits, and I want to build those deposits all day long, even if I have to put some of those into securities.

Okay. So it sounds like you'll just take -- the timing will come with what the market will give you. So if it takes you three years that's fine, and if it takes you two or four that's fine too?

Yes, and think some of this will come. When interest rates rise, I do think that's going to help -- that's going to probably absorb some of those deposits and some of those higher priced deposits or -- may go elsewhere, but we've got good cushion there. So I think our funding is very solid.

And as long as interest rates stay low here, I think it's going to be a challenge to get for us organically to that 80%. But at least we've had a couple of months in a row that we've been able to increase our loan to deposit ratio. So maybe it's only a streak of two months in a row, but I'd like to see it to get three months and then four months and then keep going from there.

That sounds good. And then speaking of deposits into a rising rate environment, I mean you've addressed some of it before, but can you give us some updated thoughts as to outflows if any that you are thinking about or remix between your classes? I mean, you guys have a very sticky deposit base. So how should we think about deposit behavior?

I think it's hard to -- I think we look at that and try to apply as much as science to that as we can. And we've done deposit studies and so forth and so on. But really the market is going to evolve and change and we have to be able to react to that. I think if you said what is the number one core strength of this organization, I would say it's our ability to generate quality deposit growth. That is the number one strength of this company, and we do that through a lot of service, a lot of relationship banking. We have niches in non-profits. So I feel very confident that we will retain a strong deposit base as rates rise, and I think proportionally stronger to a lot of our competition because of our expertise in deposit gathering, our high level of service and then niches we have in government services, non-profits, title/escrow, property management, unions, et cetera. Those are all great depositors for us and those niches help us a lot.

I don't think when rates go up that will stay at 52.7% non-interest bearing deposits. I think that will go down. But if you look at the last 20 years of this Company, we've never been below 35% of our deposits in non-interest bearing and a vast, vast majority of years we've been over 40% non-interest bearing deposits. So we look at that as kind of [pretty popped up] 3% or 4%. We look at that as probably where somewhere from that 52% dropping down to 40%-ish on a non-interest bearing deposits would go.

So if the DDAs drop like that, do you think that your total deposit balances will still stay stable and/or move upwards or will you -- should we think about negative balances?

No, I think we will manage our deposit growth in that respect because I think that -- right now if anything we're suppressing some of our deposit growth based on what potentially we could do in the marketplace. We're really sticking to what we think is core, is sticky and is not going to be as subject to fluctuation when rates rise. I mean, I really feel very strongly that if we wanted to grow deposits year over year by 10%, 15% in the next year if rates stay where they are, I think we do that very easily with still very low cost deposit growth. I just want to make sure the deposits we're bringing in now are going to materially stick with us when rates go back up. So our teams are very focused on that as well.

I would expect that our aggregate deposits would be sufficient to fund the loans like they always have been. I just think the mix would change to a little bit more interest bearing and a little less non-interest bearing just due to people wanting to trace -- the customers wanting to chase yields a little bit.

Okay. That makes sense. And then just switching gears to asset quality, I'll step back now, with the negative provisions, when do you reckon you will start to shift through positive provisions, I guess if ever, and your reserve to loans are down to 1.67% and I know there has been a decrease in classifieds in dairy over time, but kind of thinking out in front of -- about the ongoing drought situation? Kind of where are you pegging where the reserve coverage could come down to if any further?

Yes, we don't really peg that number and there's not -- we really have a pretty sophisticated formula and we look at reserves based on reserves and different loan categories based on performance and we use a rolling 20 quarter, [guess right], rolling 20-quarter analyses and then look at losses going back over the last 20 quarters. That's part of our methodology in the different loan categories. So it goes into a whole formula and through that formula it kind of [sticks out], hey, this is what your reserves should be and then we have to make business decisions around that as well. So there is a lot of factors that go into that.

I think the vast, vast majority of our reserve release is done. I mean, if you look at the past six or seven quarters, we only released $1 million this quarter. I think we have released $5 million or more in the last five or six quarters before that. So I think the reserve release is materially done.

I am hoping that over time we will have to add to our loan -- our reserve because that means we're growing loans. But we still are having improvement and decline in our substandard loans, classified loans and as those things continue to improve that will free up reserves to some extent. And hopefully, we're using those reserves to provide support to our loan growth and then over time we will have to add to our reserves. I agree with you.

Okay. That makes sense.

Thanks.

Thank you.

(Operator Instructions) It looks like we have a follow-up from Julianna Balicka of KBW.

I guess I'm the last one in the queue, apologies. Final question then capital management any updated thoughts as to buyback, special dividends, M&A pipeline lack thereof et cetera? Every analysts save their question.

Yes, our strategy hasn't changed. We certainly want to make sure that we use our earnings to pay a good dividend, a good cash dividend, we just paid our 100th consecutive cash dividend, 100th consecutive quarters in a row. And from there we do have about $7.5 million -- I think $7.6 million in shares available to buyback. There are times during the quarter we're in blackout periods, so we can't buy that stock back and usually that's the last months of the quarter. So if you really -- are last months -- maybe, for instance, I think from about September 15 to maybe three days from now we're in a blackout period, so we can't buy back stock during those periods of time.

And buyback is still something that we're actively looking at, but have provided no plan of -- no direct plan of buyback or any direct guidance on that, but we want to be opportunistic. And you're absolutely right, we want to keep our powder dry for M&A. We are looking at deals here and there, but we've got to make sure they are at the right price and the right strategic fit for us and we just are finishing up acclimating American Security Bank and integrating American Security Bank into Citizens Business Bank and our teams have done a really good job. I'm very proud of the way that they have handled this and they have handled the people issues and the technology issues that we got a really solid team. So I think we did a good job executing this acquisition and our powder is dry and we are out looking. But we're going to make sure we make a good decision and not just make a decision to make a decision to buy someone.

Very good. Well, thank you very much.

Thanks.

Well at this time, we're showing no further questions. We'll go ahead and conclude our question-and-answer session. I would now like to turn the conference back over to Mr. Chris Myers for any closing remarks. Sir?

Sure. Thank you very much for joining us today on our call. We appreciate your interest and always look forward to speaking with you again in our fourth quarter and year-end 2014 earnings conference call in January. In the meantime feel free to call me or Rich Thomas or contact either one of us. Have a great day and thank you very much for joining us on the call. Bye-bye.

And we thank you, sir, and the rest of the management team for your time. The conference call has now concluded. At this time, you may disconnect your lines. Thank you and have a great day everyone.