First Merchants Corp (FRMEP) 2016 Q4 法說會逐字稿

Good afternoon, and welcome to the First Merchants Corporation Fourth-Quarter 2016 Earnings Conference Call.

(Operator Instructions)

We will be using user controlled slides for our Webcast today. Slides may be viewed by following the URL instructions noted in the First Merchants news release, dated Thursday, January 26, 2017, or by visiting the First Merchants Corporation shareholder relations website and clicking on the Webcast URL hyperlink. The Corporation may make forward-looking statements about its relative business outlook. These forward-looking statements and all other statements made during this meeting that do not concern historical facts are subject to risks and uncertainties that may materially affect actual results. Specific forward-looking statements include, but are not limited to, any indications regarding the Financial Services industry, the economy and future growth of the balance sheet or Income Statement. Please refer to our Press Releases, Form 10-Qs and 10Ks, concerning factors that could cause actual results to differ materially from any forward-looking statements. Please note this event is being recorded.

I would now like to turn the conference over to Mike Rechin, President and CEO. Please go ahead.

Thank you, Gary.

Welcome to our Earnings Conference Call and Webcast for the Fourth Quarter ending December 31, 2016. Joining me today are Mark Hardwick, our Chief Financial Officer; and John Martin, our Chief Credit Officer.

First Merchants released our earnings in a Press Release approximately 10:45 this morning Eastern Daylight Savings time, and our presentation speaks to material from that release. The directions, as Gary covered, that point to the Webcast were also contained at the back end of the release, and my comments begin on page 4 of slide titled First Merchants 2016 Performance.

And so between this slide on page 4 and the Earnings Release itself, we're going to talk to you about our results both for the Fourth Quarter and all of 2016, and I'll start with the Fourth Quarter comment where we recorded and reported Fourth-Quarter 2016 net income of $22.3 million at 57% increase over the $14.2 million earned in Fourth-Quarter 2015. Earnings per share for the period totaled a record $0.55 per share, an increase of $0.18 or 48.6% over the same period in 2015.

Full year results were impressive as well. Record net income of $81.1 million, a 24% over all of 2015. Earnings per share of $1.98, a 15.1% increase over 2015, the highest in our company's history.

Assets totaled $7.2 billion and grew 6.7% over 2015. We're really pleased at our primary way of building this business through organic loan growth had us grow $446 million in loans, reflecting a 9.5% growth rate. Included in that a 56.5% efficiency rate down more than 4% from the prior year.

Jumping back to the bottom of page 4, a couple other thoughts on the Fourth Quarter that you'll hear more about through the balance of this call. A strong net interest margin actually bumped up a little bit in a core level to 3.90%, 1.26% return on average assets and an efficiency ratio contributing to that overall lower level for the entire year of a low for the year of 52.18%. I think the Company, and I hope you'll pick it up in our remarks, really benefited from a clean series of four consecutive quarters that didn't have any acquisitions in them and allowed for us to move forward and complete several initiatives driving profitability and efficiency. I think you'll enjoy the rest of the remarks. So I think we're going to have Mark cover his material and then move to John; and then at the back end, beyond some forward-looking comments, wanted to speak to the Press Release that we issued yesterday and with a couple other slides relative to Arlington Bank joining us towards the back end of our comments and then time for questions.

Mark?

Thanks, Mike.

My comments will start on slide 6. Total assets on line 8 increased in 2016 by $451 million, or 6.7%, as Mike had previously mentioned, following a 16.1% increase in 2015 and a 7.1% increase in 2014. On line 3, strong organic loan growth, again, at 9.5% is slightly stronger than our 2015, 9% organic growth along with the 11% M&A activity or M&A growth that we had in 2015 resulting from the acquisition of Cooper State Bank in April of 2015 and our Mariana Bank acquisition in December of 2015.

Consistent with the last couple of years' guidance, we're anticipating loan growth in the mid to high single digits again in 2017. The allowance on line 4 and total dollars increased by $4 million to $66 million in 2016 due to loan growth and a decline in loans covered by fair value as they move out of the covered portfolio into the core portfolio. The composition of our $5.1 billion loan portfolio on slide 7 continues to be reflective of a commercial bank, and it continues to produce strong loan yields. The portfolio yield for 2016 totaled 4.58% compared to 2015 yields of 4.45%.

On slide 8, our $1.3 billion bond portfolio continues to be high performing. Our 3.78% yield is slightly better than current investment rate; and despite a meaningful rise in rates, our unrealized gain is still $9.1 million. The strength in our investment portfolio since the last recession helped maintain our net interest margin during a very low and flat rate cycle and has been an earnings driver for First Merchants.

In 2017, investment maturities total $118 million with a yield of $346, and 2018 maturities total $124 million with a yield of $340 million. For the first time in a number of years, our reinvestment rates are higher than our maturity yields. As rates are beginning to rise, the variable nature of our loan portfolio was $2.6 billion repricing daily is resulting in expansion of our loan yields and our net interest margins; and given our commitment to a slightly longer duration bond throughout the cycle, it's pretty satisfying to have our portfolio also contribute to net interest margin expansion in the coming years.

Now on slide 9, our non-maturity deposits on line 1 represent 80% of total deposits up from 77% of total deposits last year and 76% in the prior year, in 2014. For 2016, our organic non-maturity deposit growth totaled $332 million or 8.1%. 9.5% loan growth outpaced deposit growth resulting in increases in broker deposits on line 3 and borrowings on line 4. As previously mentioned, the mix of our deposits on slide 10 continues to improve, and our total 2016 cost of deposits was just 38 basis points.

All regulatory capital ratios on slide 11 are well above regulatory definitions of well capitalized; and our internal targets, we believe the strength of our 9.24% tangible common equity and 14.21% total risk-based capital ratios will continue to provide optimal capital flexibility into the future. The corporation's Net Interest Income on a fully taxable equivalent basis on slide 12 grew by $33 million or 16% during 2016, totaling $240 million. And net interest margin increased by 9 basis points, totaling 389 on a reported basis. The core net interest margin, if you back out all the fair value accretion, increased by 4 basis points during the quarter -- I'm sorry, 4 basis points during the year and totaled 3.69%.

Continuing on slide 12, you can see the chart, our core margin has increased nicely over the past four quarters, and we would expect another 4 to 5 basis points in Q1 based on the Federal Reserve's December rate increase of 25 basis points. Total noninterest income on slide 13 when normalized for a handful of items -- you have to normalize for line three, seven, eight and nine -- increased by $8.4 million or 15.1% during the year. The growth was driven primarily by the acquisition activity that happened in 2015, of which we benefited in 2016 and organic Wealth Management growth.

Noninterest expense on slide 14 totaled $177.3 million for the year, up $2.6 million from the prior year total of $174.8. Given the addition of $580 million in assets acquired in 2015 and a full year of operations included in 2016 totals, we're very pleased by our 1.5% growth rate in expenses.

Now on slide 15, net income totaled $81.1 million on line 8, and EPS grew by $0.26 per share, or 15.1% to $1.98. On slide 16, you'll notice that our trend in both efficiency and earnings per share have excellent trajectories.

It's pretty clear in our research that companies with high single-digit organic growth rates like First Merchants and low efficiency ratios like ours command the highest earnings of tangible price to tangible book value multiples in the banking industry. We're pleased to have delivered on our mission by being the most responsive, knowledgeable, and high-performing bank for our clients, teammates, and our shareholders.

Thanks for your attention, and now John Martin will discuss our loan portfolio composition and related asset quality trends.

Thanks, Mark, and good afternoon.

I'll be updating the trends in the loan portfolio starting on slide 20, review the asset quality summary and reconciliation, discuss the fair value and allowance coverage, and then end with a few thoughts on the portfolio.

So please turn to slide 20. For the Fourth Quarter and full year 2016, we saw continuation of the strong organic loan growth experienced in the third quarter. The growth was driven by commercial and industrial loans, which on line 1, grew by $48 million for the quarter and $138 million for the year. Our construction loan pipeline on line 2 generated $51 million in new loan balances, while total construction loans for the year grew by roughly the same amount. Much of our construction funding is ultimately moved to the secondary market upon stabilization.

So dropping down to line 3, Investment Real Estate loans grew by $8 million for the quarter and $182 million for the year, representing a 16.7% increase over 2015. So total loans on line 11 increased in the quarter by $166 million, or 3.3%, and $446 million, as Mike mentioned, or 9.5% for 2016.

Turning to asset quality on slide 21. Asset quality continued to improve for the quarter with total NPAs and 90-day delinquent loans declining by $6.1 million on line 5, or roughly 12%. We continue to see improvement in demand and velocity for Real Estate, which has lead to a $1.2 million decline in other Real Estate in the quarter and a $8.3 million or 48% decline year over year. Also of note is a reduction in the 90-days past due of $1.5 million from the prior quarter, which with the improvement in ORE, lead to a stronger asset quality for all of 2016.

Then turning to slide 22, which reconciles the quarterly migration of non-performing assets. Line 6, 10, and 13 show the improvement in nonaccrual loans, ORE, and overall non-performing assets for the year. Year-over-year nonaccruals fell by $1.4 million on line 6 with ORE declining $8.3 million on line 10, which drove a $7.7 million improvement in total non-performing assets in 90-days past due on line 13.

Turning to slide 23, I'd turn your attention to the allowance and credit marks on our acquired portfolios, highlighting the far right column is the most recent quarters allowance and fair value position. The allowance on line 1 grew again modestly in the Fourth Quarter, increasing $2.5 million from $63.5 to $66 million. For the quarter, we had net recoveries of $164,000 with $2.4 million in provision expense associated mostly with growth -- the growth in the loan portfolio. With continued improvement in asset quality, I would expect provision expense to follow net charge-offs while increasing incrementally with portfolio growth. Dropping down to line 6, the allowance coverage to nonaccrual loans improved to 220% with the allowance plus fair value adjustments to loans and allowance to loans remaining at 1.28%.

So then to summarize on slide 24, I'd just say that the environment seems to continue to improve with strong loan growth for both the quarter and the year with loans up $446 million, as mentioned before. We were successful in growing the commercial industrial loans as well as CRE and construction loans while remaining within the regulatory concentration guidelines. Asset quality continues to improve with a strong Fourth Quarter lead by a reduction in ORE and a provision expense which exceeded net charge-offs by $3.6 million for the quarter, resulting in allowance coverage of 1.4% of total loans and an allowance plus fair value coverage of 1.95%.

Thanks for your attention, and I'll turn the call back over to Mike Rechin.

Thanks, John.

I'm on page 26. Looking forward slide and kind of functions as a high level roadmap for where we're going to go in 2017, and there should be some consistency in our plans and there is. So if some of our highlights here look familiar, it's because they are identical. Marketplace continues to be healthy. John referenced some economic health. I feel like our marketplace is strong, our clients are doing well, and its been an area of opportunity for us with organic growth being our primary growth engine which starts with our existing clients growing and the bank listening to their needs and offering solutions and then earning new clients by way of service.

So this page should look familiar. The bottom end of the page talks about mergers and acquisition remain a continuing opportunity for us, which kind of bridges me into the next couple of pages. So the following page, page 27, is a picture of our two companies coming together, characterizing the Press Release we put out yesterday, covering the Definitive Agreement between First Merchants Bank and Arlington Bank to come together here midsummer. And so on page 28 and the next couple of pages, some of the details.

On 28, you can see two days ago we signed on the 24th a Definitive Agreement as a really, we think, strategic add-on to our Ohio business which is effectively Columbus. Nearly a 20-year-old Company, $244 million in loans, $305 million in assets, $260 million in deposits, and this is a strong earning company, has been. It's a young company, 19 years old, been a consistent earner with a strong net interest margin of 3.8%. And you can see the return on assets through nine months of this year, 1.35%, and our indications of -- through talking with management is that, that's going to holdup, if not marginally improve when their year-end numbers get submitted. Clean credit, strong earner, great culture, serving their marketplace.

Let's go to 29. A few more highlights from the release. $75.8 million purchase price based on the closing on the 24th. 100% stock consideration now that a fixed exchange ratio of $2.7245, First Merchants share for the Arlington shares. We got the normally noted required approvals down here, some of the key assumptions that make this attractive for us would include the cost savings of 35%, $3.5 million, one-time costs. And so we have the entire financial impact noted on this page, accretive to earnings per share during 2017. Assuming an end of the Second Quarter, early Third Quarter close, it would be a penny accretive in the Fourth-Quarter of this year, but really attractive in our opinion, earn back on tangible book value of three years. Virtually very little impact on capital ratios; and as I mentioned in working with the regulators, look to achieve a mid-year 2017 closing.

On page 30, little bit more information about the rationale; and as I mentioned earlier, nearly two decades of growth and performance out of this company. It's lead by a management team, their CEO, Jim DeRoberts; President, Tom Westfall, really engaged Board, the ability to attract and develop talent has lead this small company to produce big results. I think they are going to be a great fit for us. You can see at the top of the page three banking centers, averaging $80 million in deposits, which really adds some beef to our retail banking operation over in central Ohio. Moves our overall deposit market share position up to 8 from 12th and what we think of, not only between growth rate which is the bullet point on here, but the demographics and the economic foundation of Central Ohio really as strong as any part of the markets that First Merchants serves.

One of the particular strengths of the Arlington Bank is this mortgage origination business, residential mortgages, where they take advantage of the strength of the immediate communities serving that need really thoroughly, really a lock on the production there. I referenced on the page prior the financial attractiveness of it which includes back end of the year Fourth-Quarter 2017 accretion, a really neat, short tangible book value earn back and some cost saves based on the scale that we already have in that marketplace.

Bottom of the page talks about a cultural fit. And if I were to rewrite that, I would talk about it as a cultural add. We've been fortunate that some of the companies that have joined us have been culturally accretive to us, and so the management team that's going to join us from Arlington Bank will make us better. We have a great team over in Ohio. It's lead by Jennifer Griffith. It'll bring in Tom's team. We're very, very excited about it; and as I reflect back about our Ohio business, I think about Commerce National Bank, which was First Merchants' first investment going back to 2003 for a really commercial, heavy bank-for-business orientation that grew on its own.

And then the add in 2015 of Cooper State Bank, which brought a pure retail flavor and some convenience for the business clients that we've earned; and then you add in Arlington Bank right in the heart of this city with three really productive banking centers from a deposit gathering standpoint and an expertise in mortgage that round out an effort on our part that's close to a billion dollar balance sheet. So I think you can tell I'm excited about it. I think it's a low risk add for us. We're really excited to have gotten to know the people over the last several weeks. Look forward to demonstrate our experience in getting these things closed efficiently so that the Customer Service to their clients remain intact, bring them our technology and see if it can't be additive as we've mapped it out to be.

So, Gary, at this point, if you've got folks on the phone, we're happy to take some questions.

(Operator Instructions)

Our first question comes from Kevin Reevey with D.A. Davidson.

Congratulations on a great quarter and a great transaction announcement yesterday.

Thank you very much.

So I just had a couple of housekeeping items with respect to the transaction. As far as the -- how much of the goodwill is -- are you assigning the core deposit and tangible and how are you -- how should we model that as far as we amortize the CDI?

Good question. Here, let me -- it may take me a second to find that in our notes. But our traditional way of doing that is about 150% double declining and we usually do it over typically seven years, and it's $3.6 million that we've added to CDI.

Okay, and then just for modeling purposes, can you tell us what the share count outstanding was for Arlington Bank?

I can tell you the additional shares and then I guess I could back into it are 2,074,783 and so they were at 761,528.

761,528. Great and then my last question and I'll just let somebody else hop on. I know it was Arlington, they have about $10 million of some borrowings. Is there any intention to use actually some of your -- some of their deposits to pay off some of those borrowings, or is it something you haven't really thought about?

In this case, we really didn't model a pay off of borrowings or the reinvestment rate on investments. We didn't feel like it was going to be a real meaningful number to the model so we'll continue to look at it and we'll make the smart decision where we see it but that was not part of the model.

Okay, great. Thank you.

You're welcome, Kevin. Thanks.

The next question comes from Erik Zwick with Stephens Incorporated.

Maybe just first another question on Arlington Bank with regard to the 35% targeted cost saves. Can you just talk about where those will be coming from?

Yes, it's really heavy. Mark might have detail for me in a couple of seconds but it's very heavily in contracts and technology and a little bit -- well, very little from customer-facing folks, because while we already have a sizeable effort in Columbus, the banking centers that they operate are terrifically efficient and profitable and the mortgage line is just a pure augmentation to their - -our revenue opportunity there.

So I think some of the traditional back office areas will provide some, the technology does. It looks to me like we do have one -- there's a map, Erik, on one of the pages that I covered and you can see that while that covers in a smallish map, a large market area, we do have two banking centers that are pretty darn close to one another and given the productivity of the Arlington bank branch and its location, we're likely to consolidate into that one. So we have a little bit of facility savings.

We have facility savings that are -- all just under $1 million and then wages and benefits are definitely the primary item that, if you include all of the benefits, are around a $1.7 million.

Okay and turning to fourth quarter expenses, the salaries and employees' benefits line was lower than I guess I had expected and some nice improvement there. Can you talk about what drove that lower and whether that's a good run rate heading into 2017?

The run rate question is a great one. I was -- I didn't cover it in my notes. I was assuming -- or hoping someone would ask. We think the run rate is more like $43 million. We did have a one-time benefit that was related to a curtailment of a benefit plan and then the reason I didn't highlight it is, we just had so many -- we had a handful of additional expenses that were one-time and so the net benefit for the quarter was really $1.1 million. So a little bit under $0.02 a share, about $.0175 a share.

Then turning the focus to loan growth, looking at the organic growth over the past two years, 9% to 9.5% in 2015 and 2016. Anything, as you look out over the horizon, to change that expectation for 2017?

No, not really. It's a 9.5% is obviously above the 6% to 8% rate that we've talked about on these calls over the past and yet as I think about our 2017 plan, we're back in that kind of 6% to 8% range. We've watched our business really closely for a couple years now and it seems like there's some repeating seasonality that has the first quarter be most mild and then a stronger second half of the year.

So we had a particularly strong last four months of 2016 that kind of drove that number up in a really pleasing way, in the manner that I spoke about earlier, Erik, about utilization, increased needs from our growing clients, along with some earning of market share.

Thanks for taking my questions.

You're welcome. Thanks, Eric.

The next question comes from Damon DelMonte with KBW.

Just to build on Erik's question on loan growth, could you talk a little bit about where are you seeing best opportunities for the growth in 2017?

Sure. Well, so that will be a looking forward basis and I'll just extrapolate what we saw in the second half of 2016, to speak to where I see execution at a high level, coupled with vibrant economics and pipeline, quite frankly. So 2016 was the third year of First Merchants having a business up in what we call the Lake Shore region.

It was the acquisition of Citizens Financial at the end of 2013, so 2016 in that marketplace, we really hit our stride, the leadership execution and so, whereas in periods prior where we got the lions' share of our growth out of the Greater Indianapolis area and the Greater Columbus area, all of a sudden we have a third engine producing results similar to those other two. It's somewhat the balance that we were striving for when we were first drawn up there.

Our headquarters market in Muncie really had a nice year. I mean other than our Lafayette market, which has such a heavy component of agriculture in it, which is soft through the nature of the industry, we got a pretty balanced return but if I had to pick a pleasant surprise for us, it would be the real strength we're getting out of our folks up north in the Lake Shore region.

Okay. So you think that's going to continue to be a key driver of what you're going to see in 2017?

I do. Mike Stuart, our Chief Banking Officer, has similar expectations. For all of our larger markets, we've invested a lot in the people. We feel like we have a brand that now has some identification, and we also have a nice balance of C&I lending, along with investment in real estate. So our resources, I think, are spread well. The go-to-market strategy that we've deployed is pretty common at this point.

I love the way our culture has come together. So we look for -- it's certainly based on -- there's a lot of moving parts now outside of our control so we're focusing on what we can control and it's a positive feel for us.

Okay, great. Then kind of a modeling question here for Mark. When we look at non-interest income, do you think something in the low to mid-$15 million range is a decent quarterly run rate?

This quarter, we've had volatility from, I think, it was zero derivative hedge income in the second quarter through a really meaningful $1.3 million in the third quarter, and then it was only $600,000 in the fourth quarter, and that is - - I think that will be the wild card.

The rest of our fee income line items are fairly predictable and consistent. For the hedge income, it depends on the loan volumes that really fit into that product well. So we've been in the 16.3% to 16.9% range for the last three quarters and that includes all that volatility.

Got you. Okay.

Damon, what was the figure that you offered when you were asking if it would sustain itself at a certain level; what was your number?

Well, I was looking at it on an operating basis. I took out the, call it, $847,000 securities gains so I was at $15.3 million, so I guess I was saying is that a decent baseline to build growth into 2017?

Yes, I do think it is. I was listening to Mark's answer and I was just adjusting my eyes for the calculation that you had made so if you take our $16.1 million less the fourth quarter gains to that $15.3 million, I do think that's a good number to start from and quite frankly, we ought to be on the high end of that.

Okay, that's helpful. Thank you. Then just lastly on the margin, I think Mark, you commented you should see about 4 basis points to 5 basis points in the first quarter because of the rate hike that we had in December. What are you guys expecting for the remainder of 2017 for additional rate hikes?

We didn't build anything into our budget, but obviously, the Fed funds futures market is starting to anticipate another move mid-year, but that's -- well, right now, our plan has only included the rate bump in December of 2016.

Okay, All right. Great. That's all I had. Thanks a lot guys. Appreciate it.

Thank you, Damon.

The next question comes from Brian Martin with FIG Partners.

Just maybe one more question, on just going to M&A for a minute. Obviously, with the transaction, you got put on new tape here without going to Columbus, Mike and then I guess, where do you stand from an M&A standpoint today? I guess my assumption is you're still looking at opportunities and will be -- look to be opportunistic in 2017. I guess maybe just if the answer is yes, maybe just talk about the temperature of conversations today, especially given the change in valuations we've seen here since the election.

Great question, Brian. It seems like an interesting year based on all of the things you just mentioned and I would affirm your comment that would suggest that we would be able to do more. I think about 2015 where we were able to secure two opportunities and not only bring two great management teams, but two successful integrations in a relatively tight time period.

So I know we've proven the ability to do that. Some of your questions, I would call our interest very consistent. So I think on this call, all the way through 2016, we were looking at markets like Columbus. We're very, very pleased to have something as attractive as Arlington show up in this time period in a market we like so much. But Dayton, we like. I know I've talked about Fort Wayne being very attractive.

So most of the State of Indiana, obviously, I think we would do great in, all of central Ohio continues to look attractive. I kind of bucket Dayton in there, add-ons in any of these markets would be attractive, but with the pricing discipline and the earn back expectations that we've expressed in the past and I think we've kind of lived by.

Okay, that's helpful. Maybe just one for Mark on the margin on just the -- remind me Mark, just what is the assets that we price with full Prime and LIBOR. What's the break down there? I think it -- what assets are rate sensitive, if you'll remind me?

We have $2.6 billion that were priced immediately and just looking at it here, I've got -- if you give me a second, I can give you the exact number. I think we are split equally between Prime and LIBOR and we've actually hedged where LIBOR is a little bit higher, so here it is.

We have $1 billion exactly tied to prime and then our LIBOR-based loans are actually $1 billion -- almost $1.5 billion, $1.465 billion. Then the rest are tied to Treasuries that have rolled down the curve into that bucket.

Okay, got you. Okay. And then maybe just one more kind of bigger picture question. Mike, you alluded to not doing much in the way of M&A last year and allowing you to I guess get the bank a bit more profitable, just doing things internally. Are there initiatives that are something you're really focused on in 2017, outside of the M&A which may or may not come? I guess anything specific that you're really focused on, on seeing get accomplished in 2017 as kind of the big picture priorities.

Well, there's none that I would call a signature item but what we found in 2016, Brian, was that there's several projects that just make us faster, better, smarter. Mark referenced the term responsive and knowledge rich. That's what our clients want, so the lines of business have things that, I think, make them better whether it's retail or commercial bank. Our back-office, looking forward to protect our clients, obviously, in all the ways that you need to these days but also to make their lives easier so no, there's no one area.

I know we made a big investment in 2015, the summer of 2015 in our treasury management technology and we haven't taken nearly full advantage of that yet, and we need to get our -- all of our internal people really fluent with it such that our clients can take full advantage of it. So none of them are, really, jump off a page at me but as I saw in 2016, when you knock down six or eight of these projects that you can achieve in a couple months it shows up in the numbers, so we were pleased with it.

Okay good. That's all I had guys. Nice quarter and congrats on the transaction.

Thank you very much.

This concludes our question-and-answer session. I would like to turn the conference back over to Mike Rechin for any closing remarks.

Gary, I have none other than one of gratitude for the folks that took time out to listen to our results for the year. As you can tell, all my colleagues are excited about it and I share that. And we look forward to continuing with some consistency through the next year and look forward to having a call like this at the conclusion of the first quarter. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.