CVB Financial Corp (CVBF) 2014 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the fourth quarter and year-end 2014 CVB Financial Corp. 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. I would like to turn the presentation over to your host for today's call, 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 fourth quarter and year-end 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.cbbank.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 $104 million for the year ended 2014, the first time in history that we have earned over $100 million in a fiscal year.

This compares to net earnings of $95.6 million for 2013 and $77.3 million for 2012. Diluted earnings per share were $0.98 for 2014. We earned $25.6 million for the fourth quarter of 2014 compared with $24.3 million for the third quarter of 2014 and $25.3 million for the year-ago quarter.

During the fourth quarter of 2014, we grew net loans by $110.8 million, or about 2.99%. Approximately $85 million of this growth was seasonal, as is typical with our dairy and livestock loan portfolio. Most of the seasonal growth in dairy loans was repaid shortly after year end.

Earnings per share were $0.24 for the fourth quarter compared with $0.23 with the third quarter and $0.24 for the year-ago quarter. The fourth quarter represented our 151st consecutive quarter of profitability and 101st consecutive quarter of paying a cash dividend to our shareholders.

The FDIC indemnification of assets, better known as loss sharing resulting from the San Joaquin bank acquisition in 2009 expired on October 16, 2014. The $126.4 million carrying value of these loans was transferred from covered loans to non-covered loans as we no longer have loss sharing indemnification from the FDIC.

If we exclude the yield adjustment on covered loans, our tax exempt net interest margin was 3.50% for the fourth quarter compared with 3.53% for the third quarter and 3.47% for the year-ago quarter. If we include the yield adjustment on formally covered loans, as we will report going forward for future quarters, our tax exempt net interest margin was 3.58% for the fourth quarter of 2014.

During the fourth quarter, our commercial real estate loans increased by $14.4 million, our agribusiness loans increased by $2.3 million, and our dairy and livestock loan portfolio increased by $85.6 million. Dairy and livestock loans typically increase significantly during the fourth quarter, as many dairy owners choose to defer their milk checks into the first quarter of the following year or prepay their feed expenses.

In terms of loan quality, nonperforming assets, defined as nonaccrual loans plus OREO, were $37.8 million for the fourth quarter of 2014 compared with $43.3 million for the prior quarter. The decrease was primarily due to reductions of $1.9 million in nonperforming commercial and industrial loans, $1.4 million in dairy and livestock and agribusiness loans, and $1.1 million in commercial real estate loans. The allowance for loan and lease losses was $59.8 million, or 1.57% of total loans at December 31, 2014, compared with $59.6 million, or 1.67% of non-covered loans at September 30, 2014.

Net recoveries for the fourth quarter were $243,000 compared with net charge-offs of $392,000 for the third quarter of 2014. Net recoveries of -- for 2014 totaled $690,000. This represents the first year of net recoveries since 2006. At December 31, 2014, we had loans delinquent 30 to 89 days of $1.7 million, or 0.04% of total loans.

Classified loans for the fourth quarter were $160.7 million. This included $21.2 million of formally covered loans. Classified loans totaled $147.2 million for the prior quarter. We will have more detailed information on classified loans available in our year-end Form 10-K.

Now I would like to discuss deposits. For the fourth quarter of 2014, our non-interest bearing deposits decreased to $2.87 billion compared with $3.04 billion for the prior quarter. Non-interest bearing deposits were up $303 million from the same quarter a year ago. This represents an 11.8% increase year over year.

Non-interest bearing deposits represent 51.14% of our total deposits. We believe the decrease in quarter-over-quarter non-interest bearing deposits was the result of timing. We experienced a substantial decline in our title and escrow deposits at year end, primarily due to the volume of real estate closings. For the most part these deposits have rebounded to where they were before.

Average non-interest bearing deposits were $2.96 billion for the fourth quarter of 2014 compared with $2.92 billion for the third quarter of 2014. Our total costs of deposits and customer repurchase agreements for the fourth quarter was 11 basis points compared with 10 basis points for the prior quarter.

At December 31, 2014, our total deposits and customer repurchase agreements were $6.17 billion compared with $5.53 billion for the same period a year ago and $6.29 billion at September 30, 2014. Our ongoing objective remains to maintain a low cost stable source of funding for our loans and securities.

Interest income. Interest income for the fourth quarter of 2014 totaled $65.3 million, consistent with the third quarter of 2014. The $65.3 million for the fourth quarter included $1.3 million of discount accretion from principal reductions and payoffs. This compares to $1.4 million of discount accretion for the prior quarter.

Total investment income of $18.3 million increased $575,000, or 3.25% from $17.7 million for the third quarter of 2014. Non-interest income was $9.9 million for the fourth quarter of 2014 compared with $8 million for the third quarter.

Now expenses. We continue to closely monitor and manage our expenses. Non-interest expense for the fourth quarter was $31.3 million compared with $32.5 million for the third quarter. Non-interest expense represented 1.67% of average assets for the quarter compared with 1.75% for the third quarter.

The quarter-over-quarter decrease in expenses was partially due to the cost synergies we achieved related to the acquisition and integration of American Security Bank. Non-interest expense increased by $12.2 million in 2014. The year-over-year increase was partially due to expenses related to the acquisition of American Security Bank. This included nonrecurring acquisition-related costs of $2 million.

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 35.7% for the fourth quarter. The overall tax rate for 2014 was 36.1%.

Now to our investment portfolio. During the fourth quarter of 2014, we sold an average of approximately $100.7 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 $19.9 million in short-term CDs with other financial institutions, yielding approximately 80 basis points.

At December 31, 2014, investment securities totaled $3.14 billion, up $23 million from the third quarter of 2014. Investment securities represented 42.54% of our total assets at quarter end. At December 31, 2014, we had an unrealized gain of $53.6 million in our total investment portfolio compared to an unrealized gain of $31.2 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 US government. We have been strategically reinvesting our cash flow run-offs from our investment portfolio, carefully weighing current rates and overall interest rate risk.

During the fourth quarter, we purchased $59.7 million in mortgage-backed securities, with an average yield of 2.09% and an average duration of approximately four years. We also purchased $6.3 million in municipal securities during the fourth quarter, with an average tax equivalent yield of about 3.82%.

Prepayment speeds in our investment portfolio have been somewhat stabilized and based upon current interest rates, we anticipate receiving approximately $35 million in monthly cash flow from our portfolio. If interest rates remain low, we may see faster prepayment speeds, which could increase our estimated monthly cash flow.

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 December 31, 2014, capital ratios will be released soon, concurrently with our year-end Form 10-K.

Shareholders' equity increased $106.2 million in 2014. The Year-over-year increase was due to $104 million in net earnings of $40.4 million increase in unrealized gain on available for sale investment securities, and $4.2 million of various stock-based compensation items. This was offset by $42.4 million in cash dividends.

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 dairy industry, milk future prices are decreasing and profit margins appear to be narrowing. Notwithstanding, 2014 was a highly profitable year for the dairy industry. According to the California Department of Food and Agriculture, the CDFA, feed costs in California represented 62.2% of total milk production costs for the third quarter of 2014, down from 65.4% of total milk production costs in the second quarter.

Thanks to a reported bumper corn crop for the past two years, dairy farmers saw a significant drop in corn prices. It remains difficult, however, to project the future costs of feed, as feed costs continue to dependent upon many factors, one of which is weather.

Turning to other items related to the California economy, according to various economic reports, California's Employment Development Division reported the unemployment rate was 7.2% in November of 2014 compared with 7.3% in October and 8.4% back in November of 2013.

Virtually every sector in California posted job growth over the past year with solid growth in both lower-wage industries, such as administrative support and leisure, hospitality as well as higher-wage industries, such as information, management and professional, scientific, technical.

Plummeting oil prices, bringing relief at fuel pumps, may soon have the opposite effect on a portion of California's Central Valley economy. Many oil executives are now facing tough decisions about whether to go forward with expensive projects such as new drilling.

While layoffs have been limited so far, economists warn of major workforce reductions if prices fall below and stay below producers' breakeven points. Employment growth is still expected to increase 2.5% over the next year and the unemployment rate is expected to dip to the low 6% range by 2016.

Home prices are forecast to taper to an annual growth rate of 3% to 5% over the next few years. California's chronic undersupply of housing is a major driver of increasing prices.

New residential construction is expected to continue on its upward trend, although the additional stock is not expected to be enough to completely offset demand. California's healthcare industry is headed for job growth, as aging baby boomers, the Affordable Care Act and over three million Californians signing up for health insurance will help boost jobs in healthcare services and social assistance.

In closing, we are very pleased with our 2014 financial results. I would like to thank our employees for their continued hard work and dedication, our customers for their loyalty, our shareholders for their continued support and our Board of Directors for their ongoing guidance. As we move into 2015, we remain focused on quality loan growth, fee income expansion, stronger core deposits and overall operating efficiency.

Our strategic plan is to achieve growth through three means: First, we are determined and focused on increasing our market share, client by client. Second, we seek to accelerate growth through the hiring of new banking teams to expand our footprint. And, third, we remain focused on acquiring community banks in or adjacent to our geographic footprint.

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

Thank you, sir. We will now begin the question-and-answer session.

(Operator Instructions)

The first question we have comes from Julianna Balicka of KBW. Please go ahead.

Good morning.

Morning.

Well, I have several questions. One, kind of given your current pipeline, what kind of loan growth expectations are you thinking about for 2015, just kind of ballpark of where you'd want to hit it? High single digits? Low double digits? Flat?

Okay, on the loan growth side, it's tough to project what we're going to see going forward. A lot of it is dependent on the economy, competition, interest rates, all those different things. As we look forward, certainly we are doing everything we can to grow loans, but in the loans that we want to grow and the type of customers that we want to bring into the bank.

And, so, we've established our target focus on certain types of clients and certain types of business and don't want to get too much outside of our comfort zone in terms of what we're doing, especially in a market that's getting more and more aggressive all the time, both on structure and pricing. So having said all that, we certainly -- I think we're looking at -- our objective would be to try to grow 2% per quarter in loans.

I don't know if we can get there or not. A lot of that's going to be dependent on the economy. The first quarter is our most challenging quarter due to the fact that our seasonal dairy loans are -- they bump up in the fourth quarter and then they come down in the first quarter.

And the fact just seasonally, the first quarter has been the softest loan quarter for over the last few years. However, having said all that, our loan pipeline is significantly stronger than it was a year ago at this time.

Very good. That makes sense. A housekeeping question and then one other follow-up. What were the prepayment fees in 4Q, sorry?

Prepayment fees. That's a great question because we've been anticipating that prepayment fees have been given -- are going to go down quarter over quarter. But with interest rates dropping, they actually went up from the third quarter to the fourth quarter. There was $742,000 in the third quarter and there were $866,000 in the -- for the fourth quarter.

So which -- a lot of these loans have been prepaid over the last few years because of the ongoing low interest rate cycle. But with a dip down in loan interest rates, we've seen actually more refinancings going on.

Now a lot of that stuff we're keeping on our books but some of it, we're seeing some of these properties, we're seeing sold. So even though our loan pipeline is pretty solid, we're seeing some run-offs of loans due to either refinancings, which we hope to keep, or property sales.

Okay.

Generally we lose the loan if that happens -- if that happens.

Right, okay. It makes sense. And then since you brought up energy and oil in your remarks, could you quantify what is CVBF's exposure? Is it energy industry in general?

Well, I mean, in terms of direct exposure, I mean, we have very -- we have a low eight-figure exposure in terms of total loans to companies that are oil or gas or fit in those SIC codes, so to speak. So it's not -- I mean, it's maybe $10 million to $20 million, somewhere in that range. So we're not really concerned about that. We've already gotten and looked at those different companies and are tracking them closely.

Peripherally, as that's going to affect the Central Valley's economy if oil prices stay low for an extended period of time. That could have an effect on other businesses that are not directly in the oil and gas business but related in some fashion. We are watching that carefully. So far we haven't seen anything dramatic but we will see as oil prices continue.

And I will step back, but the follow-up to that, are you seeing any areas where you might see a benefit from the lower oils? I mean, like transportation in the Inland Empire, et cetera. Are there any further close where you see potential for stronger loan growth as a result?

I don't know if we've seen that yet because the oil prices haven't been down for long enough to really get financials and start to see that transportation costs are going -- are down and that's contributing to the greater profitability from some of our transportation companies that we bank and then -- and those related industries, which could be very positive.

But I would also say that the -- as we look at those price -- at oil and gas prices, I think we are pretty well-positioned from a defensive standpoint. I do think consumer spending is going to be bolstered.

We're hearing from our car dealers that we're getting more and more demand for bigger vehicles which is interesting. We don't -- it's like, gas prices go down and now everybody wants to get a big vehicle again. It's interesting.

Okay, interesting. Very good. Well, thank you very much.

The next question we have comes from Aaron Deer, Sandler O'Neill.

Good morning, guys.

Good morning, Aaron.

Just had a quick follow-up question on something you mentioned, Chris, about the structure and pricing getting tougher in the market. Can you maybe give some specifics on what you are seeing other banks do that you guys are seeking to avoid?

Well, I think -- stuff that we -- where we really feel that we get that out of our strike zone is when inappropriately, banks will release guarantees of private business owners on loans. That doesn't mean we don't have loans in the bank that we have -- we don't have a guarantee for, but the vast majority of our loans we do have a personal guarantee for.

But we've seen a little bit of irrationality in that area. So I'd say that's one area where we get stretched. In fact, over the last year we lost a $5 million loan for that very reason. We refused to give up the guarantee and another bank gave up the guarantee. This is on our books. So it came off our books; we lost that customer.

But sometimes we choose not to play it if it's not appropriate. And then I think the other side, sometimes we're seeing on properties in transition, commercial real estate in transition. We're seeing aggressive loan to values on some of that, that we feel -- meaning in transition, it's a property that is -- needs some restructuring, needs some refurbishment, needs some something to change on it.

And we're seeing some aggressive loan to values on that. The mini perm stuff that -- income producing properties, we're able to compete on that pretty well, especially if we have good guarantors behind it.

Okay. That's helpful. And then, I'd -- I know you guys had -- it looks like you guys took down some short-term borrowings in the quarter. Just curious if those have paid down subsequently and how you guys are thinking in general about liquidity, given that you guys have a lot of great core deposits and just kind of given your loan outlook and how you're thinking about using borrowings or alternative funding to fund securities growth versus loan growth.

We were a little surprised that we had borrowings at the end of the year. I think it was $46 million; is that right, Rich?

That's correct, Chris.

$46 million. I think it was just for a day or two that we were borrowing money. One day, the last day of the year, ironically. But that occurred because of -- as I said in the script in our call, that occurred because we saw a lot of year-end real estate closings literally on the last day or two of the year.

And also, remember, our dairy loans are all advanced up on the last day of the year to the -- to where they're going to be. Since then, our normal deposits, the title and escrow deposits that I referred to dropping down are back to their normal levels.

And in turn, our dairy -- a lot of these dairy loans have now been repaid because they've got their milk checks in. So we're now sitting on in excess of well over $100 million in providing overnight money to the Fed; is that right, RIch?

That's correct.

We're well over $100 million right now. So as we look at that and feel there is permanence to that number, we can look at other alternatives, such as do we consider prepaying FHLB debt, which is an option? We haven't made that decision yet.

But there's a large coupon on that, which is 4.52%. The prepayment has gone down quite a bit now that prepayment penalty is below $14 million.

So, and probably going down about -- at the rate of $700,000 a month just because of the duration. It expires in November of 2016. So that's a potential option but really the best option for the deposits is for us to grow loans. That's what we are hopeful we're going to be able to do.

Okay. That's helpful. Thank you, Chris.

The next question we have comes from Matthew Clark of Sterne Agee. Go ahead.

Good morning, Chris and Rich.

Good morning.

Just a follow-up to pricing, can you just talk to whether or not you've seen any change in competitive pricing or within your own shop based on what the curve has done here year to date and I guess, can you talk to the implications for your margin going forward?

Yes, we are seeing more competition on pricing. I think it's interesting because we hadn't done an interest rate swap in probably, well over 20 months and in December, we closed two interest rate swaps.

So as rates go down, we'll probably quit more -- we'll take some of these 10-year fixed rates that we might have put on our books as a fixed rate, whatever that number is, in the high 4%s, maybe 5% on a 10-year basis. Now those loans, we may be swapping.

As we do that, we'll be swapping that and we'll be getting a variable rate, most likely somewhere in the high 2% is on that variable rate for those same loans. So that will affect our pricing but it's also going to affect our -- positively affect our interest rate sensitivity.

We'll draw -- we should be able to drive more fee income to the swaps. So I think the key to us maintaining our margin going forward which is what I think your question relates to, is going to be loan growth and making sure that we continue to keep our funding as -- the costs as low as possible.

Okay. Great. It sounds like the prepaid within your securities portfolio have remained fairly steady. But is that true here in the first quarter? Just trying to think about the risk of higher premium amortization and the lag effect there.

I don't know what's going to happen for the first quarter as far as prepayments. Loan rates are down. We saw a lot of the prepayments in December because I think where people were really driving to close real estate deals, and any deals in December.

It really is busy as we've seen it in terms of transactions going on. So a lot of the prepayment fees that we received on loans were achieved in December, not necessarily October and November. So it's still a little bit of a new phenomenon for us to comment on. Is that aligned with a 10-year treasury that's now below 2%? Is that the reason? Or is it just lot of year-end closings that we saw? I'm not sure yet.

So I do think that in general, prepayment fees will be lower in 2015 than they were in 2014 because I think we've already refinanced a lot of these loans. But we were surprised by the amount of volume of prepayments in the fourth quarter.

Okay. Then, lastly, if I may, just on capital management, your priorities there and just an update on the M&A front?

Absolutely. M&A and we want to certainly maintain our dividend. As our profitability goes up, we consider increasing that dividend over time. M&A is -- I mean, there's a -- I would say also we are very actively recruiting new banking teams and we're seeing some movement there.

So we're excited about that. As you guys are well aware, we formed a new office in San Diego and we recruited another team into the downtown Los Angeles area that we just hired in the last couple of weeks.

And we feel confident that we're going to be hiring a new team or two here very shortly in the first quarter. So that's another deployment. I know it's not directly capital but usually in your first year, that will be a little bit of an expense drain until they can map over some business.

On the other side, I think the M&A, I think with the rates coming down like this, it puts more and more pressure on these smaller banks. It puts more and more pressure on our margins as well. But I think it's more impactful for smaller banks because they don't have the economies of scale that we do.

Got it. Thanks, guys.

The next question we have comes from Gary Tenner, D.A. Davidson.

Thanks, good morning. Just a couple of questions. I guess, first, I was a little confused on the expense commentary. You mentioned that expenses were lower, partially attributable to lower salary and benefit expense.

But it looked like sequentially, that line item was actually higher. So was there something embedded in the salary and benefit line in third quarter or fourth quarter that offsets some savings from the ASB acquisition?

No, quarter over quarter, our expenses were down. But they're certainly elevated year over year. I think the -- a lot of the acquisition-related expenses were pushed through late in the third quarter and some of those carried over into the fourth quarter in terms of creating all of our efficiencies.

But really for 98% of those expenses related to the acquisition of American Security Bank and the ongoing costs that we consider temporary costs are really extract now -- extracted out and we're -- they've been fully integrated, so to speak, and we are ready to roll in 2015. So I think from an expense standpoint, we are pretty well-positioned there.

But also I want to mention expenses in looking forward to 2015. We are investing in new bankers. And that is going to -- so salaries and benefits, I think, will stay somewhat elevated. That's really one of the big changes year over year from 2014 to 2013 was our expenses are up but it's really -- most of it is salary related and the other thing is it's related to technology and just infrastructure related to cybersecurity and all those kinds of things.

Okay. Secondly, on the -- for the San Diego branch, maybe you could just talk about progress there and where your loan fittings have gotten to at this point in that franchise?

(multiple speakers) We haven't announced what their loan totals are at this point, and -- but they're gaining good momentum. I think we've got some really good people there.

We brought on some new clients. I think so far, I would say it's on track. We hope to be able to build that to footings of close to $100 million over the next 12 to 18 months in terms of loans and deposit totals together.

So, I'm sorry, $100 million loan and deposits combined over the next 12 to 18 months.

Yes. I would hope that we're sitting here in June of 2016 and they've got $100 million of between loans and deposits in that office.

Okay. Thanks very much.

It's not going to move the needle for the Company but it's a good -- we're counting on it to be an important long-term market for us.

Okay. Thank you.

(Operator Instructions)

Our next question comes from Julianna Balicka of KBW.

Hi, I have a follow-up. When you're thinking about reserves and on the moving parts around that, how much more reserve leverage do you think you have in terms of supporting earnings versus when do you think you'll start to get some normalization of credit costs?

Well, if you look at our reserve, we reported at 1.57% for the quarter. But what's a little different from previous quarters is that we no longer have loss sharing on our San Joaquin Bank loans. So the actual -- if the actual reserves -- and remember the San Joaquin Bank loans have -- they're accreted. They have accretion that's related to them as well.

So that accretion somewhat is -- the reserve is built into them. If we took out those loans, our reserve is about 1.62% for the fourth quarter. That's what we've been reporting all the way along.

So you saw a little dip down in our reserve, going down to 1.57% from the previous quarter which was, I don't know, 5 or 10 basis points higher, I think. I believe that -- it's interesting. It's a very complicated process to determine our reserve.

We're getting more and more interface with our accountants on this stuff all the time of how to handle this and then all the metrics and information that goes into that. So, it's not straightforward by any means but it's a very involved process.

But all the different factors that go into that could affect our reserve and one of the things that also affects our reserve is that we have a rolling 20 quarter loss -- we look at losses on a rolling 20-quarter basis. So, in 2010, it was the largest year for loan losses for CVB in our history.

So quarter by quarter, in 2015, those losses will roll out of our database and really, inherently create a reason to almost lower our reserves because we don't have that loan loss history. But I think that will be offset by other factors that go into this. So, it's hard to -- I guess I'm not giving you a very good answer but it's hard to project what's going to happen.

But I do think this, that our -- we would -- there will come a time when we're going to need to reserve again. I don't know if I'm going to see that in the next few quarters but I think it's coming somewhere down the line. That will be a good thing because it means we're growing loans.

Got it. Makes sense. Thank you very much.

(Operator Instructions)

Well, at this time, there are no further questions. I would now like to turn the conference back over to Mr. Myers for any closing remarks. Sir?

Well, thank you, everyone, for joining us on our call today. We appreciate your interest and look forward to speaking with you again on our first quarter 2015 earnings conference call in April. In the meantime, feel free to contact me or Rich Thomas if you have any further questions. Have a great day and thank you very much.

We thank you, sir, for your time today and to the rest of the management team. The conference call is now concluded. Again, we thank you all for attending today's presentation. At this time, you may disconnect your lines. Thank you and have a great day, everyone.