Enterprise Financial Services Corp (EFSC) 2014 Q3 法說會逐字稿

Good day and welcome to the Enterprise Financial Services Corp earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Peter Benoist. Please go ahead, sir.

Thank you, Stephanie, and good afternoon, everyone, and thank you for joining our Q3 earnings call.

I'd like to remind all listeners that during this call, we will be making forward-looking statements. Actual results may differ materially from results contemplated in our forward statements. As a result of various important factors including those described in our 2013 annual report on Form 10-K and in subsequent filings with the SEC.

Forward-looking statements speak only as of today, Thursday, October 23, 2014, and the Company undertakes no obligation to update them in light of new information or future events. I'd also like to remind you that you can find a copy of our third quarter press release, which includes reconciliations of non-GAAP financial measures referred to in our conference call in the Investor Relations section of our website.

We are pleased with the overall results for the company for this quarter with reported earnings of $0.41 per fully diluted share compared to $0.36 in the prior quarter. More importantly, our continual focus on core performance, none of the accounting effects of the covered book showed strong results again as core pretax earnings increased 39% over the prior quarter and are up 5% year-over-year and now represent 87% of reported earnings for the quarter.

Performance drivers during the quarter included continued strong loan growth. Total new loans and advances were $350 million in the quarter, consistent with production levels in the prior quarter. C&I loans, commercial and industrial loans, were up 13% annualized during the quarter and 16% on a year-over-year basis. Total portfolio loans increased at an 8% annualized rate and have increased 9% from the year-ago period.

We were encouraged to see an uptick in line utilization this quarter and very early signs of core loan yield stabilization as well. All of our specialized credit areas performed well in the quarter and loan growth momentum continued to build in our Kansas City and Phoenix markets.

Asset quality showed continued improvement from already favorable levels. Reductions in nonperforming loans and other real estate owned resulted in nonperforming assets of just 64 basis points of total assets at quarter-end. We recorded recoveries on a net basis in the quarter and net chargeoffs year-to-date amounted to just 6 basis points.

Provision expense in the quarter was nominal as we continue to provide primarily for loan growth. On the expense side of the business, we noted in the release, the effect of efficiency-related initiatives taken during the quarter, which resulted in a modest increase in non-fund expenses. These initiatives are expected to generate approximately $2 million in annualized savings, and we are also looking (inaudible) at initiatives that will continue to drive greater productivity and efficiency, going forward.

We expect our non-fund expense run rate to come in at the lower end of our guidance.

Finally, I've asked Keene Turner to give you some additional color on the expected performance of our purchase credit impaired portfolio as a result of further analysis of both historical performance and current trends. We think the additional information will allow you to better understand management's expectations regarding the earnings impact of the covered book in future periods.

Before I turn it over to Keene, though, I want Scott Goodman to comment further on loan growth characteristics during the quarter as well as our view on the markets and activity levels, in general. Scott?

Thank you, Peter. During the third quarter we experienced the continued trend of strong new loan activity with originations up solidly from the second quarter in both the C&I and commercial real estate sectors.

A large portion of the net growth in the quarter was in the C&I portfolio, most notably from the niche lines of business. Our consumer and residential real estate sectors also contributed to the growth, and while new loan activity was solid for commercial real estate, the portfolio in this sector was flat for the quarter, as a number of larger real estate loans paid off due to sale of properties, project completions, permanent market refinancing, and continued competitive pressures in this sector.

As I mentioned, our niche lines of business had a favorable quarter with all sectors growing at low to moderate double-digit growth rates. Enterprise value lending, our senior debt offering to private equity for M&A transactions, grew nicely, and it seems to be gaining some momentum compared to the first half of 2014.

The activity in the M&A space for lower middle market companies is robust, and we're starting to see some creep in higher multiple and leverage. However, our strategy to choose disciplined investors has enabled us to maintain sound asset quality in this book. As we expand our EVL strategy within the Midwest region outside of our current footprint, we are developing new private equity relationships and our opportunity pipeline is growing nicely in the sector.

Insurance premium finance ex credit lending and asset-based lending all showed double-digit annualized growth as well. These [mid-checkers] now combined to represent, roughly, 25% of our total loan book. On a market level, all regions posted loan growth for the period.

Kansas City, in particular, had a strong quarter with annualized growth of 16%. Activity in Kansas City was spread across C&I, commercial real estate, and private banking. Steady calling and traction from our talent acquisitions in 2013 is starting to produce results. Commercial real estate payoff levels, which hindered growth earlier in the year declined materially in the quarter. Origination activity included a large new health care relationship, financing capital expansion needs in several existing clients, and several mid-size commercial real estate projects.

Origination activity in St. Louis was solid and increasing compared to the second quarter. Net growth was positive but somewhat muted by the aforementioned commercial real estate payoffs. Activity was generally strongest in the C&I category in St. Louis with several large new C&I relationships. Additional loan volume related to niche activities from EVL and insurance premium finance. Combined with some tax credit-related loan activity associated with the new market tax credit allocation, which was awarded to us earlier in 2014.

Arizona's growth for the quarter was primarily commercial real estate focused. As the market continues to rebound, our team is leveraging its experience and knowledge to selectively target proven investors where we can provide financing on a relationship basis. Activity this quarter includes both new client wins as well as expansion of existing commercial real estate relationships.

Pipelines for the fourth quarter are expected to continue many of the trends described in the third quarter. Improved traction in the Kansas City market and a seasonal uptick in M&A activity, both from our Kansas City and our St. Louis enterprise value lending teams represent some of the larger opportunities. We've also begun marketing that EVL capability in Arizona with developing interest.

Competition remains intense in all of our markets. Commercial real estate continues to garner the most competitive emphasis with continued aggressive underwriting and pricings. Large banks are moving down market for the fundings, and the real estate sector is also a more comfortable space for the smaller banks that are using all levels more aggressively Non-bank secondary markets are also open and borrowers are selectively using this as a means to lock up long-term fixed rates.

Relative to pricing, fixed rates bear little semblance to the equivalent floating rate spreads with 50 to 75 basis point discounts in the three- to five-year terms for fixed rates.

Despite increased competition in the C&I space, we're still generally able to hold the pricing premiums that I have described in prior quarters with our existing clients as well as the specialty areas such as tax credit and EVL generating an additional premium of 50 to 100 basis points over typical C&I loans.

Relative fee income, deposit service charges continue to grow nicely, mainly associated with increasing treasury management revenue. Our elevated emphasis on managing standard and consistent sales processes, which emphasizes cross-sell opportunities for all three lines of business is gaining traction. Early success here has been most evident in the treasury management, as our relationship managers work closely with the treasury product specialists on every new C&I deal as well as scheduled annual relationship reviews with existing clients.

We did collect a significant fee in the quarter of, roughly, $900,000 representing a success fee, which related to a loan structured to bridge the sale of a large parcel of real estate.

Non-performing loans declined for the quarter, and there are several modest additions in the quarter, all of which were all on our radar, and we believe are well secured. Asset quality trends remain positive, and our outlook does not point to any trends that would cause major concern.

Now I'd like to hand it over to our CFO, Keene Turner, for a financial review.

Thank you, Scott. We reported $0.41 of earnings per diluted common share for the current quarter, which resulted in a return on average asset slightly above 1% and a return on average equity of 7.6%.

During the third quarter, our financial performance continued to reflect the progress we are making by executing on our strategy, particularly as it relates to the performance of the core bank. Core pretax income totaled $10.9 million, which was a $3 million, or 39% increase, when compared to the linked quarter.

There were several moving pieces to the increase, and I want to highlight the items driving the growth. Peter and Scott discussed the loan growth we experienced, and we're pleased with the $158 million of net loan growth during 2014. The 10% annualized growth rate has reflected gains in market share, and we expect to target a similar level of growth, on average, to continue for the remainder of 2014 and beyond.

Our loan growth over the last five quarters has resulted in measurable improvement in the run rate of core net interest income. Additionally, net interest margin held up well, as yields on portfolio loans experienced less compression than in prior quarters, and credit results continue to be favorable as we experience net recoveries during the third quarter.

Fee income was stable during the quarter, however, a success fee on a transaction that we expect to be nonrecurring improved core earnings by approximately $0.03 per diluted common share.

Also, reported expenses for the quarter were slightly higher than the linked quarter at $21 million, however, the reported amounts included a $1 million expense for FDIC clawback, which I will discuss in further detail later; and $200,000 of severance-related expenses. Without these items, expenses would have been below $20 million for the quarter and reflect progress we've made improving our core efficiency.

Overall, core earnings per share for the quarter increased 31% compared to the linked quarter at $0.34 per common share, which is comparable to $0.26 per common share for the second quarter, as it excludes the previously discussed success fees and severance.

Net interest income on a core basis was $25.3 million, an increase of $700,000 from the prior quarter. Net interest income grew at a 3.5% annualized rate, adjusting for prepayment fees and day count. And net interest margin remains stable at 3.41%.

The normal net interest margin headwind we experienced on the contractual cash flows on purchased credit-impaired loans that are included when we present core net interest margin, were more than offset by 2 basis points of prepayment fees we collected during the quarter and another 2 basis points from the reclassification of non-interest-earning cash.

Additionally, we were encouraged that the yield on portfolio loans held relatively stable at 4.22% compared to 4.23% in the second quarter, and we were able to achieve a corresponding reduction in the cost of our liabilities.

Our loan growth, has translated to measurable net interest income growth over a short period of time. If you compare the current quarter run rate to that of the first quarter this year, our net interest income per day has increased by nearly $7,000. That may not seem significant, but it's approximately $0.08 per diluted share on an annual basis.

The growth in net interest income was achieved in the context of managing our balance sheet to preserve the mix of variable rate loans, maintain an increase the proportion of C&I loans to portfolio loans, and maintain our modestly asset-sensitive interest rate risk position. We do this because we believe our strategy will enhance shareholder value, over time, and isn't appropriate for the current interest rate environment.

Additionally, our credit performance evidences that our loan portfolio is comprised of relationships that we believe will help us maintain an already favorable credit risk profile. In that regard, asset quality trends on portfolio loans also continue to support growth in our core profitability.

Net recoveries for the third quarter totaled $300,000 and lowered the year-to-date annualized net chargeoff rate to 6 basis points of average loans. The continued favorable net chargeoff experience combined with low levels of nonperforming loans and assets, contributed to minimal provision and credit costs during the question. Provision for loan losses on portfolio loans were less than $100,000 for the quarter compared to $1.3 million in the linked quarter.

Nonperforming loans and assets both remained at relatively low levels at 0.79% of portfolio loans, and 0.64% of total assets, respectively. And the allowance for loan losses coverage of nonperforming portfolio loans at September 30th improved to 158%.

Also note the balance of other real estate-owned from portfolio loans declined to $2.2 million at September 30th compared to $10.3 million a year ago.

I touched briefly on fee -- I will touch briefly on fee income expenses in my opening comments. We believe we have stabilized fee income from wealth management, and you heard from Scott that we have made progress in expanding deposit service charges as we continue our efforts to consistently build the income annuity stream for each.

Additionally, fees from our tax credit lines of business, both new market and state tax credit brokerage, will contribute meaningfully on an annual basis but will not be as stable on a quarterly basis consistent with past performance.

Meanwhile, we continue to be laser-focused on opportunities to manage expenses wherever possible. I noted that expenses have been below $20 million with the exclusion of a couple of items for the quarter. This reflects our focus and demonstrates our ability to improve our core efficiency while allowing for opportunities to increase returns and invest in growth where those opportunities exist.

In that regard, we are targeting an expense run rate of $19 million to $21 million for the fourth quarter and beyond. This reflects a $1 million reduction on a quarterly basis and includes the expenses that we have lowered thus far for 2014. It also reflects the additional expense savings we expect to achieve from the net personnel cost saving that resulted from the severance charge I also previously discussed.

I want to conclude the detailed discussion by characterizing the performance of the purchase credit incurred loans, or PCI loans, for the third quarter. The PCI loans contributed $1.7 million to pretax income in the third quarter, which was a $1.3 million decrease from $3 million for the second quarter of 2014. We viewed a lower pretax contribution positively, and I will attempt to further clarify why in a moment.

Net revenues declined to $2.7 million for the quarter from $4.2 million in the previous quarter driven largely by $1.8 million less of accelerated cash flows. The presence of less accelerated cash flows did not surprise me, and we expect this trend to generally continue for the foreseeable future. That does not mean we will not experience accelerations, however, we anticipate levels more consistent with the current quarter than in previous quarters.

As a result, we expect that total interest income to be more consistent, going forward, and therefore track more closely with the wind-down in the loan balances. We expect the average balance of PCI loans to be $103 million for 2014, and approximately 80% of that for 2015, or $83 million.

The accretion income, excluding accelerations on the PCI portfolio for the quarter trended consistently with the underlying balances as the loan yield remained approximately 13%. As for the remainder of the line items that materially affected pretax net revenue, they improved slightly during the quarter due to generally improving credit quality.

There was a provision benefit, or reversal, of $1.9 million but also a $1 million expense reported for additional FDIC clawback liability. The clawback expense was the result of our actual and projected losses tracking below the level estimated by the FDIC at the time of acquisition.

We also continued to write down the indemnification asset on an accelerated basis as the IA decreased another $3.5 million to $22 million at September 30th.

With that being said, the level of writedown declined slightly in the quarter consistent with our previous statements and ongoing expectations that we expect the level of amortizations will continue to decline.

In previous periods we have provided color around performance and expectations, going forward, but today I am going to share with you more specific expectations as to what we estimate the color will translate to for financial performance for PCI loans.

The net balance of PCI loans was $98 million at September 30th, which is comprised of $208 million of contractual cash flows net of $73 million of non-accretable difference and $37 million of accretable difference. We expect the fourth quarter pretax contribution of PCI loans to be approximately 80% of that in the third quarter. And for 2015, we expect a total pretax contribution to be approximately 90% of the 2014 level, or $6 million to $8 million.

Despite the balances declining 80% on average, we expect the accelerated writeoff of [the IA] will buoy the net contribution to our results as we expect the writeoff of the IA will decline in future periods.

Additionally, these estimates do not reflect any expectation for acceleration, and they also reflect that we will utilize the current level of non-accretable difference to absorb inherent credit losses. Given our previous results, demonstrate our credit estimates that tended to be conservative, we feel comfortable that the recorded value of PCI loans and that there could be potential for a portion of our non-accretable difference to result in additional income.

We have experienced some of that in the current quarter with the provisional benefit that was reported. I hope my comments provide an additional layer of color as to the performance of the PCI portfolio for both current and foreseeable future. I will continue to clarify my guidance and comments, going forward, as we will certainly experience some change in our assumptions from additional information and, more importantly, from actual performance of the underlying loans.

Clearly, we continue to focus on maximizing the value of the PCI loan book for our shareholders, but our principal focus remains on improving the level and contribution of core earnings for when the contribution of PCI loans dissipates in several years.

During the last few quarters, we have demonstrated our ability to increase core contribution by growing loans, translating that growth into consistent gains and core net interest income, and modest expense improvement resulting from implementation of expense controls.

Continued favorable credit performance and asset-sensitive interest rate risk profiles and sufficient capital to fund our asset growth, sets the table for us to deliver increasing long-term shareholder return. Our focus remains taking care of the balance sheet while making consistent progress on returns, particularly within the core bank.

In all, we view the third quarter as a success for those reasons. We believe it is confirmation that our strategies have begun to deliver results, and we will work to continue this progress and maintain improvement in our financial performance.

Thank you for joining us today, and at this time we will open the line for any questions.

Thank you. (Operator Instructions) Chris McGratty, KBW.

Hey, Peter, do you guys generate quite a bit of capital organically? And given, kind of, the volatility of earnings, you guys are creating capital from the purchase of (inaudible) book fairly quickly, yet your stock did, kind of, 125 (inaudible). How do you guys feel about a buyback at some point to get the stock a little bit higher? And can you talk to us about, maybe, expectations for, maybe, a dividend?

Yes, it's a good question. It's a topic, I think, from the Board's perspective, that we'll have some discussion on. I think our current view right now is the focus was on generating capital in terms of capital deployment. We've talked a lot about M&A, vis-a-vis a primary opportunity. I don't have any new comments as it relates to our position on M&A relative to updates beyond what I said last quarter.

In that context, obviously, our currency in terms of where it's currently trading gives us some pause from an M&A perspective in terms of timing, but we still look at it as a primary opportunity to deploy capital.

But beyond that, to the extent that those opportunities don't come to the fore, I think it's accurate to say that the Board will have some discussion around your two questions.

All right, fair enough, thanks. Keene, on the earning assets, how should we be thinking about the securities book on a dollar basis? Talking large, but should we be thinking earning asset growth kind of trailed loan growth as you kind of remix?

Yes, I think some of that will have to do with where deposit levels go. I think right now it's going to trail it a little bit, but I'd say over the next few quarters, you'll see us, maybe, reinvesting a little bit more. But for right now, I think we'll expect it to kind of trend down in the near term and then we'll have to maintain a level for 2015 as we fund more assets and loan growth.

Great. Just one last one, and then I'll hop out. Interest rate sensitivity is obviously a hot topic. You guys are asset-sensitive, as you described. Can you talk about the proportion of your C&I book that's currently with floors?

It's a pretty small proportion. I think it's less than 20%. We would still benefit, when you look at our asset sensitivity with rates up just modestly. So I think that really helps us. That is a pretty small proportion. We've seen a lot of competition drive the floors out of most of our deals.

Jeff Rulis, D.A. Davidson.

Thanks, good afternoon. It seems like the operating expense guidance range has lowered, over time, now in the 19 to 21 a quarter. I guess, has something structural changed in allowing that to be lowered?

Jeff, this is Peter. No, I wouldn't say anything structural has changed. I think I've indicated in prior quarters that we sort of view our discipline around expenses as a process not an event. A structural change would be an event. We just continue to be very focused on looking for opportunities to drive greater efficiencies. You're seeing the results of that now in terms of the numbers, and in that context, that's why we're revising our guidance down.

I think we feel pretty good about our efforts, to date. We've indicated in our comments that we continue to focus on the cost side of the business. What we're intending not to do, though, is impair our revenue momentum or our growth momentum, which we feel very good about right now. So in that context, we'll continue to focus on the cost side. Some of that relating to application of technology in ways that perhaps we haven't done as consistently or as thoroughly as we do now, which, again, is an efficiency move but, again, designed to also -- to enhance the revenue side of the equation not just the cost side of the business.

Right. And not to belabor this too much, but I guess if the -- if you're at the low end of that range, does that mean growth opportunities haven't necessarily transpired? And then if you're at the high end, it's that you've, I guess, acted upon some opportunities that you do see. Would that correlation be correct?

I don't know that I follow your thinking there.

Well, if it took the low end -- in other words, if growth doesn't play out as you foresee, we'd see lower expenses. But if you're seeing greater opportunities and room for investment, it might be at the high end. Or is that just simply not growth-dependent. It's just a range that you feel comfortable operating in?

Yes -- maybe dividing the two. We'll continue to invest in growth opportunities, and in that regard, a lot of that I think does relate to some of the comments we've made from a recruiting and a hiring perspective, particularly while in both the wealth business and the commercial banking business.

In that context, you've seen, sort of, the results of some of that over the last few quarters given loan growth. We've seen that now really play through in Kansas City. Scott has commented on that in past quarters we're beginning to see origination activity and funding activity in Arizona as a result of investments in talent out there.

So we've never changed our position in that regard in terms of investing for growth from an HR perspective. Where we tend to focus more in terms of the cost side of the business is on what I call the back end of the business where we can drive greater operating efficiencies by looking at processes that we can, hopefully, apply technology to and, over time, take labor out of. That wouldn't necessarily impair growth.

To your point, if we saw growth rates slowing or the opportunity to continue to grow diminish, I suspect we'd look at the cost side of the business just the same way we're looking at it right now.

Great, thanks. And maybe just a quick housekeeping -- the tax rate, bounce around but in the same range, I guess that mid-34 is still a good number to use, going forward?

Yes, we think that's a good rate.

(Operator Instructions) Andrew Leisch with Sandler O'Neill.

I'm curious -- was there much of a contribution from the mortgage banking business this quarter?

We saw a little bit of revenue from it, but that kind of net contribution was relatively muted.

Daniel Cardenas, Raymond James.

Could you give us some guidance as to what loan-to-deposit ratio you would be comfortable operating at?

Well, I think right now, you know, we're getting to the 95% to 100%. I think we're looking at moving it down from there from 100%. So that would -- being that on a short-term basis, we wouldn't let it move up or down within a range depending on what our expectations are for particular deposit levels or fundings. Typically, we see some elevated deposit levels at the end of the year, and I think this year is no exception to that. So right now we'd probably be at our highest loan-to-deposit ratio, and we expect that to come down over the next several quarters and then maybe move back up in the next year.

So we're certainly focused on deposit gathering and deposit generation, and the reason I think you've seen some deposit levels or loan-to-deposit move the way you have is we are -- we have tried to fund the liability side as efficiently and cheaply as possible, and it's driven that ratio up just slightly for us. But we have the ability to manage that down if we need to.

Okay. And then, is there any particular market that shows, perhaps, greater promise than others in terms of deposit gathering?

Dan, this is Scott. I can handle that one. I think our base of C&I business really gives us some good flexibility to continue to grow deposits. We've got a strong treasury management team in Kansas City and in St. Louis, and the intent is to use them proactively to go after deposit-only type relationships. But I think both Kansas City and St. Louis have promise there in terms of deposit development.

And are you seeing a pickup in competition from any of your markets on the deposit side?

I wouldn't say, necessarily, that we've seen more intense competition. I think there are several smaller banks that tend to be a little more focused on it, but I haven't seen anything from a competitive standpoint.

Brian Martin, FIG Partners.

Maybe can you talk a little bit about the loan yield stabilizing, and is that kind of consistent across all the markets? Is there, I guess, do you feel like we've kind of reached the bottom here on the loan yield compression, or are you holding your own?

Brian, this is Keene. I'm not sure we've seen the bottom, but we've certainly seen a much greater stabilization. I'd say when you look at rates coming on, we see that rate holding up much more generally, I think. Our volume has been pretty stable kind of by market and by type. So we haven't seen a real big repositioning of the balance sheet like we did over the last few quarters, kind of, from 6 to variable. So that's helped us a little bit in that regard.

And then there's still going to be a little bit of, kind of, net yield compression from some higher rates still coming off but as you pointed out, it does look better, and we are seeing a little bit of light there. We will continue to get a little bit of yield and net interest margin compression as it varies by quarter depending on how some of that activity plays out over the course of the next year. But we certainly feel a lot better about it sitting here today than we did early in the year.

Okay. Well, can you just talk a little bit about -- we talked about these expense initiatives you guys have done. Maybe, kind of, what specifically you've kind of taken on, and then the guidance range, whatever the 19 to 21-ish, does that include or exclude the impact of the FDIC clawback potentially?

Well, I would say that the guidance range is exclusive of any FDIC clawback. That includes any operating costs for that book but not necessarily any clawback. And I don't think we currently anticipate any additional clawback. If we did, we would have reported it.

So from that perspective -- and also, too, I would just point out, I know we've got a lot of focus here on the lower expense run rate. By and large, if you look back a year, we've improved credit costs, and we've improved legal costs along -- associated with reduced levels of REO and classified loans, et cetera.

So a fair amount of that reduction to the lower end of our $20 million to $22 million run rate is really just from, I think, improved position and cleanliness of the balance sheet and then a little bit of the rest of it is just in some modest areas of efficiency improvement that we've been able to drive out of the business and challenge ourselves on. So I think that there really isn't a big model shift there or anything like that. And we look at it a little bit differently, maybe, in terms of it's an opportunity for us to redeploy if we do have an investment opportunity in any talent or customer-facing folks.

Yes, I guess, and just to that point, I mean, are there other areas you're reinvesting in currently, or has it been more just the former at this point?

Can you clarify your question, Brian? I'm not sure I gathered that.

You're investing in the business to grow the business. You've talked about, kind of, the savings in expense, the kind of cuts you've made, but anything that you're currently investing with, would it be new initiatives or anything to grow the business. Were you seeing opportunities?

Well, Brian, this is Scott. I think talent certainly is the area. I mentioned we're starting to see some traction in Kansas City from the talent we've added there. We continue to have our eyes open in all of our markets. We did, in fact, add an additional experienced C&I lender recently and another one in Kansas City that had experience with UNB in a bank called Intrust.

So we're opportunistic there where we can pick up some talent that can add. We'd have our eyes opened if there were team opportunities as well, so, but those are ongoing discussions.

We have no further questions in queue at this time. (Operator Instructions).

I'd just wrap up by -- this is Peter Benoist saying that we feel great about our momentum. At this point we're sort of heading into 2015, I think, with a great position in all of our markets. We expect, as we've indicated relative to loan growth, that double digit loan growth will continue, so we feel very good about where we are, and we look forward to meeting with you again at the end of the year, and thank you for joining the call. Thanks very much.

This concludes our conference. Thank you for your participation.