Dime Community Bancshares Inc (DCOM) 2022 Q2 法說會逐字稿

Hello, and welcome to today's Dime Community Bancshares Inc. Second Quarter Earnings Call. My name is Bailey, and I'll be your moderator for today's call. (Operator Instructions)

Before we begin, the company would like to remind you that discussions during this call contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Such statements are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contained in any such statements, including as set forth in today's press release and the company's filings with the U.S. Securities and Exchange Commission, to which we refer you.

During this call, references will be made to non-GAAP financial measures as supplemental measures to review and assess operating performance. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the U.S. GAAP. For information about these non-GAAP measures and for reconciliation to GAAP, please refer to today's earnings release.

I would now like to pass the conference over to our host, Kevin O'Connor, CEO of Dime Community Bank. Kevin, please go ahead.

Thank you, Bailey, and thank you all for joining us this morning for our second quarter earnings call. With me today are Stu Lubow, our President and COO; and Avi Reddy, our CFO.

I'm excited to discuss our second quarter results as they believe they provide a clear illustration of the earnings potential of Dime and the quality of our execution. I'd like to give full credit to each of our 800-plus employees on delivering record growth in loans and earnings, which, excluding onetime items, were in excess of $1 per share.

Capitalizing on the strong loan pipelines we've discussed on prior calls, the loan growth was broad-based across all major categories. Especially pleasing was the growth in business loans, which were up 17% annualized versus the prior quarter to almost $2 billion.

When we began the year, we expected net loan growth of 4% to 6% for 2022. In early June, we revised the guidance to the top end of this range. Given our continued strong pipelines and the traction of our recent hires, we are now comfortable increasing the loan growth guidance again to 6% to 8%. Stu, I'm sure, can provide more color on the current pipeline and the mix in our Q&A section.

Apart from strong loan growth, we continue to execute well on our strategic plan priorities: managing our cost of funds, prioritizing NIM expansion, prudently managing expenses and maintaining solid asset quality. Cost of deposits was up only 5 basis points for the quarter and continues to compare favorably to our local competitors.

But the level of DDA on our balance sheet remains a clear differentiator versus other community banks in our footprint. These are, in fact, up $283 million versus the year ago quarter. The uplift in our loan portfolio rates more than offset the increase in our cost of deposits, contributing to the linked-quarter margin expansion.

Our core efficiency ratio this quarter was 46% and, for the year, we've operated at 48%, again, within our stated goal of operating a sub-50% efficiency ratio, regardless of the prevailing environment. Our asset quality remains strong, with NPAs representing only 30 basis points of total assets.

Like the growth in loans, our loan loss provision for the quarter was fairly immaterial. The provision for growth was largely offset by improvement in the reserves on loans which came on as part of our merger transaction.

Like everyone else, we are vigilantly watching for any signs of deterioration in our local economies and, thus far, we've not seen any meaningful early warning indicators of credit concerns within our portfolio. As you know, we are primarily a secured lender with conservative underwriting standards. Our credit losses have been well below the bank index over multiple cycles.

Underpinning our strong historical credit performance has been our bulletproof multifamily portfolio that has come through every cycle unscathed, including the COVID-induced shutdown of New York City. The LTV on our multifamily portfolio, which represents 30% -- 38% of loans, is approximately 55%. This portfolio will clearly outperform in any recessionary environment. Similarly, the LTV of our Manhattan office portfolio, which represents only $123 million of balances, is only 51%. Again, very well secured and monitored.

Turning to capital. In the month of May, we successfully issued $160 million of sub debt at a rate of 5%. While it was a challenging environment for the capital markets, we were pleased to get our issuance done. We exceptionally used the proceeds to redeem 2 legacy debt instruments.

Similar to the rest of the banking industry, we did see the impact of rising rates on the fair value of our AFS securities portfolio, which contributed to a $27 million decline in AOCI. Despite this, tangible book value per share increased by $0.02 from the prior quarter.

Importantly, our regulatory capital ratios remain strong. Our Tier 1 leverage ratio increased by 6 basis points in the quarter and stands at a healthy 8.71%. As we've said before, our low-risk balance sheet, which performs favorably in stress testing, has provided us the opportunity to be active on the capital return front.

During the second quarter, we increased the pace of our stock buyback and repurchased $22 million worth of stock. In the month of May, our Board authorized a new share repurchase plan, and we continue to be an active purchaser of our stock.

To conclude my prepared remarks, we had a strong quarter, and our year-to-date core return on assets was 1.24%, providing good visibility into the earnings power of our company. As mentioned in our press release, I'd really like to thank our entire employee base for their daily efforts in furthering our goal of being the premier business bank in our footprint.

In this regard, it's especially gratifying to have our CRA rating upgraded by our regulators to an Outstanding designation. This quarter's results make me even more excited to Dime's future. We have a tremendous opportunity in front of us as a pure-play community commercial bank, highly focused on being responsive to our customers' needs.

At this point, I'd like to turn the conference call over to Avi, who will provide some additional color on our quarterly results as well as our expectations for the rest of 2022.

Thank you, Kevin. Our reported net income to common for the second quarter was $36.7 million. Excluding the impact of loss on extinguishment of debt and severance expense, adjusted net income to common would have been $39.3 million or $1.01 per share. The reported NIM and the adjusted NIM for the quarter was 3.29%. The net accretion balance from purchase accounting currently stands at approximately $1.9 million.

While purchase accounting accretion was fairly immaterial this quarter, as mentioned previously, there could be some lingering impact on the income statement in the future depending on pay-off activity on premium and discount loans. We grew spot period-end deposits by approximately $135 million in the second quarter while keeping our cost of deposits relatively well controlled. The average cost of deposits increased by 5 basis points compared to the first quarter.

The spot rate on deposits at quarter end was approximately 24 basis points. While we were pleased that our deposit beta significantly lagged the level of Fed fund increases in the second quarter, given the rapid pace of rate increases, we do expect deposit betas to increase from the low levels seen in the second quarter. Offsetting future increases in deposit costs is the repricing opportunity on our loan portfolio.

As you would expect, given the current interest rate environment, we are proactively managing our loan pricing. The rate on new loans that are on various status of closing is approximately 4.25%, and new additions to the pipeline are in the 4.50% to 4.75% area. This is significantly higher than our existing portfolio rate at June 30 of 3.95%.

Core operating expenses, excluding loss on extinguishment of debt, severance expense and intangible amortization for the second quarter, came in at $48.5 million. Expenses on a year-to-date basis have been in line with our expense guidance for the full year. Noninterest income for the second quarter was approximately $12.1 million.

Included in noninterest income was $2.2 million of BOLI income related to mortality proceeds from a debt claim. As we mentioned on our first quarter earnings call, after a slow start to the year, we were expecting a pickup in fees from our SBA division and from our back-to-back loan swap program in the second quarter, both of which came to fruition.

Moving on to credit quality. Our provision for the quarter was $44,000. Basically, the provision on -- provisioning on the loan growth was offset by improvements in our individually analyzed PCD loans.

As we have mentioned before, a meaningful portion of our reserve is contained within individually analyzed loans as part of our merger-related accounting. The reserve level on these loans improved this quarter as credit quality on this stock portfolio has been better than what we projected at the time of the merger.

When looking at our individual core loan segments, our 1-to-4 family portfolio is reserved at approximately 55 basis points; our multifamily portfolio is reserved at approximately 20 basis points; our CRE portfolio at approximately 50 basis points; and our C&I portfolio at approximately 1%. Assuming no change to the Moody's forecast, these portfolio level results should serve as a guide for future provisioning on net loan growth.

For reference, we used the Moody's June forecast, and our models incorporate both the Moody's baseline scenario as well as the Moody's downside S4 scenario. Our existing allowance for credit losses of 82 basis points is still above the historical pre-pandemic combined levels of the legacy institutions.

During the second quarter, we bought back approximately 717,000 shares at $31.91. We believe share repurchases continue to be attractive given our trading levels, our organic prospects and strong balance sheet that performs favorably under stress testing.

We will continue to manage our balance sheet efficiently. And our tangible equity ratio of 8.02%, including the full impact of AOCI, and 8.55%, excluding the impact of AOCI, is within our comfort zone. As Kevin noted, our Tier 1 leverage is very strong at 8.71%.

Now let's turn over to guidance and targets. We are again increasing our loan growth guidance for calendar year 2022 to approximately 6% to 8%, excluding PPP. This would equate to spot balances at year-end, excluding PPP, of between $9.7 billion and $9.9 billion. We are pleased with our performance at the halfway point of the year and expect to build on the pipeline and the momentum we have created thus far.

As you know well by now, we don't provide quarterly quantitative NIM guidance. We do want to provide you some directional perspective. Based on the current market expectations for rate increases in 2022 and then some rate cuts after, we see the NIM being approximately 3.35% by the middle of 2024.

As Kevin mentioned, NIM prioritization is a firm-wide focus for us. Given the day count convention we use, we expect the NIM to be impacted by a few basis points in the third quarter, and we also expect prepayment fees, which have been contributing approximately 5 basis points to the margin for the first and second quarter of 2022 to start drying up.

In the second quarter, we had a small recapture of interest income from prior nonaccruals, and this is also not expected to continue. In addition, our deposit betas will pick up in the second half of the year. All that being said, as the impact of rate increases work their way through the loan portfolio and we reprice into a higher rate for originations, we expect the margin to get to 3.35% by the middle of 2024.

We are reiterating our full year guidance for core cash noninterest expense, excluding intangible amortization, to be between $197 million and $199 million. This quarter, we had a $2 million benefit to the noninterest income line item from a BOLI claim. Excluding the impact of this, our year-to-date noninterest income would have been $17 million.

As we mentioned previously, the impact of the Durbin Amendment will kick in starting the third quarter of this year. We continue to expect full year noninterest income, excluding the previously mentioned BOLI benefit, to be within our $33 million to $34 million guidance.

Finally, with respect to the tax rate for the remainder of 2022, we expect it to be approximately 28%. With that, I'll turn the call back to the operator for questions.

(Operator Instructions) The first question today comes from the line of Mark Fitzgibbon from Piper Sandler.

Nice quarter. The first question I had, Avi, I missed what you said about the margin being impacted by a few basis points in the third quarter, could you just clarify what that -- why that was?

Yes. No, the overall comment, Mark, on the margin is we don't provide quarterly guidance. But in general, the day count convention that Dime uses, we typically see the Q1 margins being higher, just given the fewer number of days in that quarter. We also just mentioned the prepayment fees, which have been around 5 basis points on the margin for the first half.

Second quarter of this year, we expect that to dry up going forward, just given the fact that payoffs are probably going to slow. We've obviously seen deposit costs be very moderated so far. That being said, at some point, deposit costs are going to go up. Our spot rate was 24 basis points on deposits at June 30.

I mean, that being said, our loan rates were 4.05% at the end of the quarter. Currently, actually, it's a 10 basis points up. So you put all that together on an individual quarter, the margin may be up, may be down. But our real guidance is when you exclude some of these onetime items, we had a little bit of nonaccrual interest recaptured this quarter, which is a couple of basis points as well.

But stripping all that stuff out, the margin is going to expand going forward in the medium term, and we do expect it to get to around 3.35% by the middle of 2024. We're also probably guiding to higher average interest-earning balances, just given the loan growth is higher. So you put that all together, the net interest income guide is definitely higher than what it was last time around.

Got you. And then on the deposit front, it looked like you had kind of a big swing out of money market account balances into savings. Was there a promotion or something that kind of drove that or anything there?

Yes. No, just managing customers via rate. I mean, basically, savings and money market are the same product. I mean with some of the regulations out there on the savings account, you can do an unlimited number of transactions right now. So it's just managing customers in the individual products and just managing our cost of deposits.

As you see, the cost of deposits is only 5 basis points. It's not really significant amount of promotions. We've kind of stayed away from any promotional money markets at this point in time, and it's just getting customers on the right product for us.

Mark, that's really a change into business savings accounts. So -- and we really were managing the individual customer relationships as opposed to changing the base rate on the entire money market portfolio.

Okay. And Stu, what's the loan pipeline size at the end of the quarter?

Right now, it's about $2.7 billion. The yield on that portfolio is 4.64%. The weighted average rate on what's in the pipeline today is about 4.64%.

Okay. And the last question I had is, I think the CRE to risk-based capital ratio is, I think, 534%. How much higher are you comfortable letting that go?

Yes, Mark. I mean, generally, we'd like to be high 400s, low 500s. We're pretty comfortable with where it is right now. Obviously, we've bought back a lot of our stock because we believe it's very cheap. We do see significant growth in our C&I portfolio. Stu can talk a bit about how the pipeline is weighted towards the C&I credits. We're really focused on doing owner-occupied loans.

I mean, that being said, look, our company has a long history of being over 300%. We do a significant amount of stress testing. We get approvals from the Fed every time we do a buyback, and they're very comfortable with our concentration. And it comes down to credit quality at the end of the day, and our credit quality has been pretty pristine through the current cycle and prior cycles.

The next question today comes from the line of Manuel Navas from D.A. Davidson.

Just adding to questions about deposit trends. You had a little bit of a mix shift away from DDA. Anything just to add there? And still -- you're still above peer there, but just kind of any color to add on that shift.

Yes, Manuel, not much of a change. I mean looking at spot balances is pretty hard. And I would really point you to the year-over-year increase in DDA. There's lot of seasonality. We do have some municipal deposits. I mean, we actually grew business deposits by around $150 million on a year-to-date basis. We've seen some minor outflows in consumer overall. But we are trying to be more competitive on rate as rates do go up. So really nothing there to be concerned about.

We do see us growing DDA over time, and all our internal plans are still based on growing DDA. Obviously, as rates keep going up, you have some customers that -- and you've heard this from a lot of our peer banks, looking to take idle cash and putting it into treasuries to some extent. But beyond that, our portfolio is pretty granular, and we feel pretty good with where we are.

Yes. And looking at the loan pipeline. We have about $500 million in C&I business in the pipeline, and about 2/3 of that is new business. So we would expect that deposits would be garnered once those loans are closed and we open the operating accounts. So we feel pretty comfortable that we can continue to enhance and grow our business DDA going forward.

That's helpful. I just...

Manuel, just one other quick -- one other clarification. We do pay out our escrow deposits at the end of the first half of the year and the end of the year. So when you optically look at the end of Q1 versus Q2, it's always going to be lower, just due to the payout of escrow deposits.

That's at the end of 2Q or at the end of 1Q?

The end of 2Q. We pay -- people's real estate taxes get paid in the second quarter, so that comes out of the escrow balances side.

Sure. Perfect. One little clarification on the fee guidance. Did I hear you right that you're including the $2.2 million BOLI debt benefit in the fee guidance for the year?

No.

It's excluding it.

Excluding. Perfect. And then it was nice to see that the SBA fees and swaps bounce back up. Any change to budget there for the year?

No. I think the way we look at those 2 businesses are you've got to look at it over a multi-quarter time horizon. So I mean our annual run rate, if you take the first half there, we feel the SBA business was like in Q1. Our team was very busy with PPP and forgiveness. And so we feel that the SBA, that's a pretty good run rate going forward, $750 million to $1 million, plus or minus. Obviously, premiums have come down a bit in that business, but our team is growing, and we feel very comfortable with that.

And then on the swap product, you look there's a minimum amount of swap fee revenue we'd like to generate every quarter. We like the [sort of] assets that it provides. And so constantly adjusting pricing on that product to get our fee income and our ALM profile to where we need. In the long run, that should be a $4 million to $5 million annual run rate business for us. Obviously, Q1, a couple of transactions slipped over into Q2. But overall, we're pretty happy with our performance in the first half of the year.

The next question today comes from the line of Matthew Breese from Stephens.

I wanted to touch on multifamily. Growth this quarter was stronger than we've seen in quite some time. I'm curious just what happened there. Was it a slowdown in prepay and continued originations? Or did you find the rate characteristics of that product better this quarter? Just some color there and maybe some specific outlook on how that can proceed from here.

I think you answered the question there.

Yes. But just to give you a little bit. So first of all, the multifamily is a bit grossed up because we had about $70 million of construction multifamily go permanent. So those are loans that are already in the book. The construction was completed. They were fully leased up, and they converted to permanent multifamily loans.

The other is, you're right, prepays were down a bit. And we did have a hangover from the first 2 quarters in the first part of the year in terms of the pipeline. Today, total applications in the multifamily portfolio is about $55 million, and the rate is about 4.75%.

So we're really not focusing on that. We priced it up we are basically now looking at multifamily more in terms of servicing our existing relationships in that business, but really not -- because our pipeline is so strong, really not out there in the market chasing product. Although rates have improved dramatically, the current rate in the market is probably in the 4.75% to 5% range.

But we have a significant pipeline in the other categories, particularly C&I and owner-occupied. So it's really kind of a hangover from an existing pipeline, prepayment slowdown and some gross up because we had a transfer of $70 million-odd to -- from a construction portfolio into the permanent portfolio.

Matt, just one other point. If you go back to the time the balance sheets came together, go back to March of 2021, our multifamily book was $3.6 billion then. It's basically $3.6 billion now. So you had a lot of payoffs over time, and we're just back to the same dollar balances at the time of the merger, really.

Got it. Okay. I mean, I was trying to translate what happened this quarter and maybe get a good read on the increased loan growth guidance. Was it due to increased ability to generate multifamily? It sounds like it's more C&I, commercial real estate and more activity there. Is that an accurate read?

Yes, that's correct. Yes.

Correct, yes.

Okay. And then, Avi, you mentioned a couple of times that your expectations, and not unreasonable, is that deposit betas will pick up here at some point. Obviously, your beta cycle to date has been excellent. I'm curious, when you talk about deposit betas accelerating, what does it mean for you? Just given the level of noninterest bearing, it could be better than peers, or would expect it to be. Just curious how you think about it.

Yes. I think -- so the spot rate, Matt, at quarter end was 24 basis points. The rate on deposits today is 27%. So even assuming no change between now and the end of the quarter, we're going to see a double-digit increase in deposit costs for next quarter, all else equal, holding it flat.

I mean, that said, the Fed has raised rates more. I think the one thing we all need to wait and see is, and you probably heard this from some other banks, at some point, deposit costs are going to get into the system. We've lagged so far, and we continue to lag. But based on models and based on what we've seen historically, we're trying to be conservative there.

I think the other piece is our loan growth guidance, right? So we've gone from 4% to 6% to 6% to 6% to 8%. So we see a lot of demand there. And if you're going to grow the balance sheet more on the margins, you're going to have to pay up for some deposits over time.

So I think we're keeping that all in mind. When we initially came out, we said we thought deposit betas would be 20% to 25% this cycle. If you ask us now, it's probably -- 25% is probably our best guess in terms of where we end up. So I think we're going to do better than our local peers for sure. But that said, we're in a competitive market, and we're going to see where we need to be on deposit costs.

Got it. Okay. And then Kevin, I think, in the past, you've talked about longer term, maybe by that 2024 area, you can get to that 1.25% type ROA. Looking at this quarter's results, maybe you get there faster than you initially thought. Maybe some thoughts around your ability to achieve that sustainably in the near term or exceed that profitability target. Just some general thoughts there.

Well, I mean, I think I'll be -- listen, we built up the margin. So the discussion about the margin as that -- how that impacts it, but we still feel comfortable the 1.25% is really where we can sustainably run the organization.

Got it. Okay. And then any update on M&A activity, discussions, willingness to participate in this kind of market?

As you can see what we've accomplished this quarter, the focus really is growing what we have. I think that would be a distraction that would take us away. I mean, I think, people sitting around this table and the employees we have listening on the phone are excited about what we're doing every day and how this company is coming together.

So I think that's going to be the focus. Those are the opportunities in front of us. We keep bringing on some new people to increase the loan portfolio. The systems are getting better. The processes are getting better. I'm excited about what we can do organically.

(Operator Instructions) The next question today comes from Chris O'Connell from KBW.

So just wanted to circle back on the deposit commentary. One is -- I mean, do you guys have a sense of where you think -- or I guess, in your modeling, where deposit betas are going to be over the course of this timing cycle?

Yes, Chris. I think from the start of the cycle, probably (inaudible). I think that being said, a model is a model. It's only as good as the assumptions in there. And I think the pace of increases this quarter has been faster than what anybody thought. I think on the flip side, though, it's really about having DDA, managing that, growing that and then replacing your loan portfolio. So it's not a one-sided equation.

So I think if deposit betas are going to be higher, we're going to see higher loan betas as well over time. So we feel pretty comfortable with the overall NIM getting the 3.35% in a couple of years and managing around that as it relates to deposits and loan growth and loan mix.

Okay. Got it. And for the NIM, on the 3.35%, how does that change even if you [adjusted your] numbers directionally if there's no cutting in the back half of '23?

It doesn't change much because -- I mean, our assumptions are for middle of 2024. And by the time you cut rates, it takes a while for it to go through the system. So not much of a change at that point in time.

Okay. And then just going into -- I think you probably have a pretty good look in this next quarter or so. But as we move into 2023, how are you guys thinking about deposit growth and core customer growth? I know it's underlying growth, it sounds like you feel good about right now. I mean, is there another shift to kind of lock in rates and utilize CDs a little bit more? And how are you thinking about kind of long-term deposit growth, given the tightening conditions?

Yes. I think, for now, we're pretty comfortable with our liquidity position. We're also comfortable taking the loan to deposits between 95% and 100%. Historically, that's been a fine number for us to run our liquidity. In multifamily, it's a pretty fast cash flowing asset in most times. And so we feel comfortable growing loans a bit quicker than deposits in the near to medium term.

I think, at the end of the day, it's about just managing the balance sheet at the lowest cost for the medium term and not damaging the franchise in the near term in terms of the rate setting. So I think it's going to be a function of how quickly we grow loans. And as Stu said, with more C&I business coming online, there's more deposits coming online with that. We have our own issues here at the bank. We're very focused on that. We have multiple different deposit gatherers are just kind of 100% focused on deposits.

So look, I think, at the end of the day, it's keeping -- it's not repricing the base and waiting as long as you can. And hopefully, we don't have to do that. I mean, there are going to be some customers who have -- we have a lot of loan balance and deposit balances that we need to pay up for over time. But I think, over time, we feel pretty good about our liquidity position. We have ample room to borrow if we needed to. We've not tapped that, like you see other banks in our footprint.

So I'd say, overall, it's still about growing DDA. And my earlier comment was we've grown business deposits by $150 million year-to-date, and we need to still keep doing that. The consumer book at our bank, it used to be 40%, 45% of the overall portfolio when we combine both legacy institutions. That's down to probably 33% right now. At some point, that's going to level off. And I think once that levels off, you're going to see some additional growth in the deposit book as business becomes a bigger and bigger part of the overall pie.

Great. That was really helpful. And then last one from me is, just in terms of like credit quality and opportunities that you guys are seeing in the market on the loan side, where are you seeing the most attractive opportunities today? And what categories are you being the most cautious on?

Well, we -- obviously, we're seeing a lot of business from some of our new teams and also our existing teams in the C&I world, obviously, taking business from larger institutions and those that have been through mergers and have experienced disruptions. We're seeing a lot of opportunities there.

Our owner-occupied portfolio is tied into the C&I business as well, has a nice pipeline in place today, and the CRA investment as well. What we are not really involved with is retail and office space. We don't have a big portfolio in that today, and we're really staying away from that. So from a credit standpoint, we're very careful.

Our average LTV on the entire CRE portfolio is 57%. What we're seeing today is not much different from that. We're in the 60% to 65% on new deals. Back in the first quarter, February time frame, we upped our stress testing on our underwriting. We basically increased qualifying rates by 1% over current rates, and we're still doing that, and then stress tested from there.

So we feel pretty comfortable from a credit perspective. And the areas that where many people might be concerned about, maybe office building, Manhattan office, retail, we've stayed away from historically, and we continue to do so.

The next question today is a follow-up question from Manuel Navas from D.A. Davidson.

Just following up on that -- some of the competition commentary. Are you seeing any specific offers in market on deposit rates? Or is this just anticipated deposit rate increases? And also on the loan side, are you seeing pushback on pricing? So kind of speak to both sides on competition a little bit.

Yes. I'll speak on the deposit side. I mean, in general, our competitors have been pretty rational. Some of the larger mergers that have taken place, it's really 2 rational competitors entering our market. So not really seen a lot on the deposit side.

Obviously, there are some customers just looking at the treasury market and taking -- getting a 2.5%, 3% on treasuries. That's a different type of discussion. But from the banks in general, pretty rational.

Yes. And on the loan side, we're really not seeing a lot of pushback. We're winning deals with the rates that -- our RAC rates, and we're looking at that daily, if not weekly. And so the pushback has not been there. Activity has been robust.

So I think everything is pretty rational. And if pricing gets out of whack, we're not following the market down. So we're very disciplined on our pricing.

There are no further questions registered at this time. So I'd like to pass the call back over to Kevin O'Connor for closing remarks.

Well, I just want to thank everybody for your interest in the company, taking the time to participate today. Enjoyed the question and answer and the dialogue back and forth. And everybody, have a great weekend.

This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.