Glacier Bancorp Inc (GBCI) 2023 Q2 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Glacier Bancorp Second Quarter Earnings Conference Call.

(Operator Instructions)

Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Randy Chesler, President and CEO of Glacier Bancorp. Please go ahead.

All right. Thank you, Kevin, and good morning, and thank you for joining us today. With me here in Kalispell this morning is Ron Copher, our Chief Financial Officer; Don Chery, our Chief Administrative Officer; Angela Dose, our Chief Accounting Officer; Byron Pollan, our Treasurer; and Tom Dolan, our Chief Credit Administrator. I'd like to point out that the discussion today is subject to the same forward-looking considerations found on Page 12 of our press release, and we encourage you to review this section.

We remain very optimistic about the long-term position of the company despite the lingering headwinds impacting the banking industry today. The 8 Western states in which we have a presence are among the strongest economies in the U.S. We have ample liquidity, a high-quality loan portfolio, a proven banking model and M&A expertise that is well positioned to take advantage of the market when conditions are right.

Four of our 8 Western states, Idaho, Montana, Arizona and Utah were in the top 10 states for the highest net in migration according to Street.com's analysis of Census Bureau data. All of our 8 Western states were in the top half of the country for highest net in migration, and we are once again recognized by Forbes as one of the best banks in the U.S.

Some business highlights for the quarter include: total deposits and retail purchase agreements of $21.3 billion at quarter end, increased $25.5 million or 12 basis points during the current quarter. This momentum continues into the third quarter with deposits continuing to grow. Interest income of $247 million in the current quarter, increased $15.5 million or 7% over the prior quarter interest income of $232 million. Interest income in the current quarter increased $47.7 million or 24% over the prior year second quarter.

Net income was $55 million for the current quarter -- I'm sorry, net income was $55 million for the current quarter, a decrease of $6.2 million or 10% from the prior quarter net income of $61.2 million. Total noninterest expense of $131 million for the current quarter, decreased $4.4 million or 3% over the prior quarter and increased $1.1 million or 1% over the prior year second quarter. Noninterest income for the current quarter totaled $29.1 million, which was an increase of $1.2 million or 4% over the prior quarter, which was primarily driven by an increase in service charges and the gain on sale of residential loans.

The loan portfolio of $15.9 billion, increased $436 million or 11% annualized during the current quarter. The loan yield for the current quarter was 5.12% that increased 10 basis points compared to the prior quarter, increased 60 basis points from the prior year second quarter. New loan production yields for the quarter were 7.37%, up 41 basis points from the last quarter.

And credit quality continued to perform at near record levels. Nonperforming assets as a percentage of subsidiary assets was 12 basis points in the current and prior quarter, compared to 16 basis points in the prior year second quarter. Net charge-offs as a percentage of total loans were 3 basis points. We completely paid off $335 million of higher cost borrowings at the Federal Home Loan Bank. Stockholder equity of $2.927 billion, increased $83.2 million or 3% during the first 6 months of the current year.

Tangible book value per common share of $17.16 (sic) [$17.18] at the current quarter and increased 2 basis points from the prior quarter. The company's liquidity position remains strong with solid core deposit, customer relationships, excess cash, debt securities and access to diversified borrowing sources. The company has available liquidity of over $15 billion, including cash, borrowing capacity from the Federal Home Loan Bank and Federal Reserve facilities, unpledged securities, brokered deposits and other sources. The company declared a $0.33 per share dividend in the quarter, and the company has declared 153 consecutive quarterly dividends and has increased the dividend 49 times.

So we are very pleased to see the growth in deposits and repurchase agreements this quarter. Our 17 bank divisions clearly demonstrated the effectiveness of our unique business model by leveraging their local customer relationships to grow deposits. Our focus has been primarily to maintain and grow deposits with existing business and retail customers by offering attractive rate options. Most of this outreach was done strategically by leveraging the technology of our marketing platform.

We also kept our focus on opening new core relationship accounts, totaling a net add for the quarter of over 4,000 net new retail and business accounts with over $260 million in new deposits. And we have continued to reinforce the importance of asking for a strong deposit relationship with all commercial and residential loans. More than 80% of the loan customers in the quarter maintained deposits with us.

The Federal Reserve's historic rate increases have changed the deposit mindset for many customers. Our through-the-cycle beta at the end of the quarter for core deposits was 10%. And while the beta will continue to increase until the Fed stops raising rates, we still expect to significantly outperform the industry beta.

Our NIM continued to show signs of pressure from the increase in cost of deposits and funding. And we expect the rate of decline in the net interest margin to moderate going forward given the forecast for interest rates and the resulting impact on deposits. In addition, our higher loan yields on new production and renewing loans will continue to generate interest income growth.

Once again, loan growth was strong across all of our divisions. Most of the commercial loan growth in the quarter was due to construction draws on previously approved loans.

A majority of the construction projects are residential housing related either multifamily or new residential. And we are very confident in the ongoing viability of the underlying projects, the borrower's ability to meet the loan requirements and the vibrant markets in which they are located.

Our capital levels are strong and growing with an estimated CET1 increasing 13 basis points from the prior quarter to 12.47%. We believe this level of capital is more than (inaudible) basis points greater than the average of 21 peer banks listed in our proxy. We remain confident in the dynamic Western markets we serve and our unique business model to continue to deliver strong results. Thank you to the Glacier team for delivering another strong performance this quarter.

So Kevin, that ends my formal remarks, and I would now like you to open the line for any questions that our analysts may have.

(Operator Instructions)

Our first question comes from Jeff Rulis with D.A. Davidson.

Question -- I guess first, I wanted to ask about the timing of when the FHLB advances were paid off throughout the quarter. It looks like the average rate at 5.33%, you've got about a -- you're trading nearly 100 basis points cheaper on the BTFP. But trying to get a sense for when that was pushed off the balance sheet?

Sure. Well, we were happy to pay that down and Byron watched that carefully, Byron, do you want to provide the timing for that pay down?

Yes. I want to say, Jeff, that was in June. So that was the timing of the FHLB payment.

Got it. Okay. So presumably, you haven't seen a full quarter of that trade and I guess that would be baked into, Randy, your commentary about margin continue to be pressured, but at a declining rate. Is that fair?

Yes, that's fair. That's correct.

Okay. What was the spot rate, interest-bearing deposit costs at quarter end? And how did that compare to the end of March?

Yes, Jeff, this is Byron. The spot rate at the end of June for interest-bearing deposits was 1.27%. Looking back at March -- March 31, spot rate for interest-bearing deposits was 70 basis points. So 57 basis point increase March 31 to June 30.

Got it. Okay. And maybe if I could hop to the expense line, clearly pulling a lever there to offset some of the top line pressure. Wanted to see if there's anything -- kind of onetime in that $130 million and change level and maybe just expectations for the back half of -- do we grow off that base? Or any commentary on costs?

Yes, Jeff, this is Ron. I appreciate the question. Nothing really onetime in that $130.6 million and I just want to shout out to the divisions, the corporate department doing a great job, very mindful of hiring and we had a reduction in our FTE between Q1 and Q2 of 20 but more importantly, over the year, we had a reduction of 70 year-over-year in the FTE. So appreciate their focus on that.

The guide is, I'm going to take us from $132 million to $134 million for Q3. Simple reason, there is persistent inflationary cost pressures even though I think we do a very good job managing the vendors, we're still seeing pressure that I think will show up certainly in the third quarter and probably continuing into the fourth. So pretty confident in that.

Ron, just to clarify, that was $132 million to $134 million range for Q3?

Correct.

Okay. And presumably kind of within that ballpark in Q4?

Yes, right now.

Okay, okay, fair enough. And maybe just a last one for me on the beta. Randy, you mentioned that, I guess, any update to both the kind of terminal beta expectation on total beta or interest-bearing beta or both?

Yes. I think we've spent a lot of time looking at that because of some of the changes in the Fed, and there's been a lot of activity there. So Byron, maybe you can walk that through the current thinking on that.

Sure. Yes, Jeff, last quarter, when we reiterated the 15% through-the-cycle beta on total deposits, we noted at the time it was a good estimate, but really dependent on what the Fed does. If you go back to where we were in April, the market was looking for Fed cuts in the back half of the year. And now we're looking for 1, maybe 2 more hikes in the back half of '23.

So if you look at market expectations for year and Fed funds, it's now 100 basis points higher today than it was in April. So clearly, that has had an impact on our deposit pricing outlook. So given the rate environment, we do need to adjust our deposit beta assumption. We're now using 25% as our through the beta -- through-the-cycle beta for total deposit cost.

Our next question comes from Matthew Clark with Piper Sandler.

Maybe just a little more on the NIM. Do you happen to have the average NIM in the month of June?

Let me take a look. So for June, we can give you that.

Yes, month of June, the NIM was 2.67%.

Okay. And then just on expenses, I think in prior quarters, you talked about doing a lot more with less than the need for having a lot of open vacancies on -- in terms of your workforce. I guess has something changed? I know the environment has obviously changed a little bit. But can you just maybe update us on your thoughts on kind of the resources you have internally and whether or not that's still the case, whether or not you need more?

Yes. And Ron may have a little extra color. So yes, we're still seeing some of that dynamic play out. So in the first quarter, certainly, we had less hiring than expected. And every quarter, now we do a bit of a bottoms-up approach, where we go back out and see if the open positions are needed. So some of what's going on is some of the new technology that we've talked about, so a new commercial loan origination processing system, a new account opening platform, new construction management platform have all -- people are getting used to that. And I think as they begin to see some of the efficiencies we're starting to see that. So we saw a pretty good size adjustment in the first quarter. Ron, do you want to comment on what we're seeing now?

Yes, it just continues to see -- just expand a little bit further on what Randy was saying. So the pilot division had great success. That's the beauty of our model. We don't have to force it down all 17 divisions. And so it's really accelerated as people are seeing the benefits, and they're not staffing to the old model, they're staffing to the technology improvement.

Okay. Great. And then last one for me, kind of a 2-part question. Can you give us a sense for criticized classified trends in 2Q versus 1Q? I didn't see anything in the release. And then any update on office CRE. I think it's about 10% of your book and whether or not you guys have done a deep dive in kind of what you're seeing there as well?

Yes. Criticized classified, we've never really talk -- disclose that just because there's a lot of subjectivity. Tom can give you a little color, though, I think it's very positive and certainly, commercial real estate office, we can give you maybe step back and give you the context that we look at when we think about that and where we feel that's going. And obviously, we feel good about it given kind of our markets and how we're positioned. But Tom, do you want to comment on that?

Yes. Matthew, on criticized classified what I'll say is it's continuing to trend in a positive direction. So we continue to see migration towards the less risk side of the loan portfolio, which we're certainly happy to see that. We're currently near record lows just like we see on the NPA side.

And then on the office, obviously, our portfolio in the office book really matches the footprint. Office located in [a lot of boots and jeans] communities, just like that where our divisions are located.

So compared to some other portfolios and certainly a lot of the press around the office real estate, that doesn't really match our portfolio. The average loan size is $680,000. It's split about 50-50 owner, non-owner. And in terms of performance, especially on the adverse nonperforming side, it's outperforming the rest of the portfolio. So it's really a different office segment to what we're seeing pressure in the markets, very limited exposure to metropolitan areas and almost zero exposure to central business districts, no high rises. There's not a single office loan in the portfolio above $20 million. So it's really a collection of small single-story kind of split between owner and non-owner office.

Our next question comes from David Feaster with Raymond James.

Maybe just going back to the funding side, I'd be curious if you could elaborate maybe on some of the trends that you saw throughout the quarter. Just kind of looking at the numbers, it looks like the majority of the NIB outflows happened maybe a bit earlier in the quarter. Just curious how flows were on NIB balances throughout the quarter, whether they stabilize -- some of the key drivers of that? Was it taxes? Was it more outflows from the failures and whether you've seen kind of NIB balances stabilize early into 3Q and -- late in the quarter ended and early 3Q? And just ultimately kind of how -- whether that plays into the stabilization in deposit costs as well.

Yes. So let me take a shot at some of that and then Byron will probably have some more comments. We did see the outflow decelerate throughout the quarter. And so -- and you have lot of things happening here with tax payments and some other things going on. Over 60% of those balances stay with us. So even though they leave one category, they move to another. So we're retaining those within the company. But there is -- given what's going on with the Federal Reserve and now the consciousness around rates, that's obviously changed a fair amount of that dynamic.

Around 80% of those are tied to operating accounts. And so there -- we're actually starting to see as the tourist season kicks in, some of those accounts then start to replenish. So I kind of feel like the biggest move there has occurred, and we'll probably still see some continued outflow, but just not at the same rate that we did in this quarter. Byron, do you want to cover anything here or add anything?

Yes. David, you're exactly right. Noninterest-bearing outflow has happened early in the quarter. And by the time we got to June, we did see some outflow but very, very modest. I'm looking at the noninterest-bearing outflow in June was only $31 million. And that has carried forward into July, still seeing just a tiny bit of outflow, but very, very modest. So did see some strong trends throughout the quarter in terms of stabilizing deposit balances and really encouraging signs that our strong seasonal summertime dynamics are gaining traction here as well. And so I think that's having a big impact on our outlook for third quarter deposit.

And the deposit costs kind of have a similar trajectory again mostly front-end weighted and kind of a stabilization in May to June? Is that a fair characterization?

I do think deposit costs -- probably, the increase in deposit costs was closer to the back half of the quarter than the front half of the quarter, related to some special pricing that we had and other initiatives in place.

Okay. And then maybe just touching on the deposit growth side. I mean it's great to hear you talk about 4,000 new accounts growing. I'm just curious where you're seeing success attracting clients? Obviously, you talked about some of the seasonality. But just curious maybe some of the deposit growth initiatives that you have in place to drive core deposits and ultimately kind of how that plays into the deposit growth going forward and when we can start paying down some of the borrowings and those higher-cost wholesale deposits? When do you think you can start doing that because that ultimately plays in kind of to the NIM trajectory going forward.

Yes. Let me take the first part of that, and then, Byron, if you want to take your thoughts around the pay down. A couple of things, David. Number one, we're very happy that the bulk of this is -- bulk of the growth is existing customers. And so we've always had very good relationships, we had a decade of being very passive about look -- reaching for deposits. That's all changed. And so -- the team has really done an excellent job, leveraging what we already have, which is the relationship with the customer to pull that in.

We include repos as part of when we include deposits, we just view that very much as a secured deposit, and so when you look at total deposits from our perspective, deposits and repurchase agreements, we were up. And we did use a fair amount of technology with our marketing platform that really allows us to target within the portfolio of the customers that we think are good candidates to make an offer to in terms of increased rate and being careful not to cannibalize a very, very solid foundation of stable sticky deposits.

The core -- the new accounts, I mean, that's something we've done for decades. It's our continual focus on bringing new accounts into the bank with a very attractive low barrier product for both business and retail free, it works very well. And with the in-migration numbers that I kind of touched on at the beginning, we're still now at a lesser rate, but we're still opening a lot of new accounts from people from California, Texas and other markets.

That's part of that 4,000 net new accounts we opened. And we are -- have an increased emphasis now on bringing deposits with those new accounts. That's the $260 million in new deposits.

Last thing I'll say, I'll hand it over to Byron to kind of touch on the thoughts around the paying down the debt is -- the lending team has done an excellent job with all the -- with every commercial loan and residential loan really asking for the deposit relationship along with that. So when we took a look this quarter, more than 80% of the loans made, we had a deposit relationship with the customer. So that's really the kind of a 3-pronged strategy that we'll continue to pursue. That's worked very well for us, and we feel like that strategy will be -- continue to be very, very effective. Byron, do you want to touch on the pay down thoughts?

Sure. Yes, David, I do think that we're going to have an opportunity this quarter to chip away at our wholesale brokered deposit balance. We've, of course, already paid off our FHLB borrowings, so made much progress there as we can. But to the extent that we're able to see some of these early signs in July, the seasonal trends and the good flows that we've seen so far month-to-date in July. If those are able to stick and continue through the rest of the summer as we expect they will, that will give us some flexibility to pay down some of our brokered CD balances.

Okay. That's helpful. And then maybe last one for me. Just touching on the growth side. It sounds like the majority of the CRE growth was construction, and you guys had kind of alluded to that before. I'm just curious maybe the pulse of your clients at this point, how is demand exclusive of those construction fundings in the pipeline? And where are new loan yields? And just what's your thoughts on growth going forward in your appetite for credit?

Yes. This is Tom. I can touch on that. So overall demand, certainly, we're not seeing the same level of top line volume given the higher rates and the fact that we're more selective in our credit appetite. I mean we've always been selective for decades and very conservative, probably more so even now. So as Randy mentioned, a lot of the growth in the first quarter and the second quarter was due to fewer draws on existing construction loans.

I would expect it to decelerate in the next couple of quarters. We'll probably see a little bit of slowing in Q3, further slowing in Q4 as tailwinds from those construction draws start to abate, and those projects are finished, they're rolled into firm. And then, of course, as I mentioned, with the lower top-end volume, we'll probably see overall net loan growth start to slow in the late half of this year and certainly in the '24.

Our next question comes from Andrew Terrell with Stephens.

Maybe just for Byron, really quick. Do you have the spot costs on the customer repurchase agreements at the end of June for this quarter?

Yes. Spot costs for repo accounts, June 30 was $299.

Okay. And then just trying to wade through the last of the margin here. I hear, yes, the level of compression, at least sequentially should slow from here. I guess would you still anticipate margin compression in the third quarter versus the June margin of 2.67%.

From what we're looking, it's going to be pretty close. I think it's going to be pretty close to 2.67% that June number should from what we're looking at on our full quarter expectation for the third quarter, it should be pretty close to that same level.

Okay. Got it. And then just the -- I think you guys mentioned $230 million of new client deposit growth earlier in the call. Can you just talk about what the incremental funding or deposit cost is related to that $230 million or just more broadly how the incremental deposit cost compares to new loan production yields that I think are in the low 7s?

A lot of the -- a portion of the growth, as you can tell from the balance sheet is coming from our CD portfolio. And I want to say the average rate of our new issue CDs in the second quarter was between -- well, something close to like 4.70% is -- 4.75% is what I want to say that the new rate was.

The other thing I'd say is a good portion of those balances are just in the transaction accounts, so now savings and the spot rates on those are under 50 basis points.

Got it. Understood. And maybe for Ron, on the operating expense line this quarter, specifically the comp and employee benefits, was there any material change in the deferred origination costs this quarter that might have helped bring that expense -- the comp line down? And if so, can you quantify?

No. It's very, very little impact from that because we grew loans in the first quarter and the second, there wasn't any appreciable difference in that growth rate that would have an impact -- any degree on the deferred compensation side of it.

Understood. And then maybe one last one for me, if I could sneak it in. Just it looks like the dividend payout ratio was kind of approaching 70% this quarter, and it sounds like there will be a little more margin compression. I just maybe wanted to get a sense for the comfortability with the dividend [or is] that today?

Yes, I think we're very comfortable with it. We've got very strong capital. It's an important part of the strategy. We think the margin compression over the longer term is a shorter-term problem that will ride itself in '24. So we're very comfortable at those levels.

Our next question comes from Brandon King with Truist.

So all the NIM commentary is helpful. But from an NII perspective and -- with the [assumption] of maybe one to two more Fed rate hikes in the back half of this year, when do you think NII could stabilize going forward? And also maybe assuming next year, Fed funds are stable.

Yes. One of the things that I would point you to is the Fed. I think once it becomes clear that the Fed is done, that's when you'll see our margin and NII stabilize. And so I think it's really dependent on how far they go. Is it one more hike? Is it two? How long do they -- is it an extended pause, higher for longer. These are all considerations that are going to have an impact on our margin in NII.

And do you think there's a quarter or two lag after a pause to restabilization? Or do you think it will be pretty immediate?

We could see a little lag. There could be a quarter's worth of lag in that before we start to see stabilization. So I think that's a fair way to think about it.

Okay. And then with loan repricing, average loan yields were up 10 basis points sequentially, and I know you have a lot of fixed rate and adjustable rate repricing coming online. But is that a good kind of 10 basis points a quarter? Do you think is that a good trajectory as far as what you could see from a benefit from loan yield repricing?

Yes, Brandon, it's Ron. I think we'll do better than the 10 basis points. What weighed on that this quarter was the construction draws. Yes, we're getting higher rates, but some of those loans were made first, second quarter last year. And so they're still advancing, but yes, I expect better than 10 basis points.

Okay. And then just lastly, there was a decent uptick in service charges. Wondering if there's anything onetime in nature driving that? Just more context around it.

No. That's a function of usage and seasonality. So no, that's typically what we see in this -- starting in the second quarter, a little bit of a pickup.

Okay. And that's a good base to go off going forward, correct?

I think so. Yes.

Our next question comes from Kelly Motta with KBW.

I apologize about beating a dead horse about deposits and margin, but if I could, I'm going to do it. Would it come -- I appreciate all the color, Ron about and Byron about the deposit beta. But when it comes to your commentary about deposit betas, just wondering what that assumes as far as DDAs as a percentage of total deposits? Obviously, there's been a lot of focus on that lately with runoff across the industry.

Yes. I think we will continue to see a little bit of runoff in the noninterest-bearing. As we said, that pace is going to, we think, materially slow. But I think we'll maintain a concentration greater than 30% of noninterest-bearing total deposits.

Got it. And then again, I really appreciate the June margin at about 2.67% and the commentary around kind of the outlook there. Just trying to get a sense, is that kind of assuming you get 1 or 2 more rate hikes? Is that a good estimate of where margin drops based on kind of just putting together everything? Or is there still more pressure off of that 2.67% to go? I know there's a lot of moving parts of the FHLB pay down that happened during the month, but I'm not sure it is fully reflected in that 2.67%.

Yes, look, in terms of our -- the rate outlook that we're using to model and make some estimates around forward-looking margins. We do have two more hikes in there. And so I think the third quarter will be influenced by one more hike. The fourth quarter would be influenced by potentially a second hike, and that's just an estimate that we're using in our own model.

Okay. So under that, would you anticipate additional pressure and kind of where -- we're assuming that's a trajectory that rates follow, do you have an idea of that level and the timing of when margin would trough?

That does put additional pressure on our fourth quarter margin relative to the third quarter, where a trough would probably be first or second quarter of next year, assuming that two hikes and they're done.

Got it. And then -- so that seems to imply that there could be some relief thereafter should the Fed be done, the kind of rounding up the margin question for me there. Do you have a sense of where margin could exit 2024 and under -- under that sort of set of assumptions given what you're seeing on the funding side as well as the repricing of your own [hires?]

Yes, Kelly, sorry, we haven't looked that far out, but we'll have to dig into that and get back to you on that expectation.

Got it. Got it. And I guess, finally, last one for me. I know you mentioned the brokered funding that you put on during the quarter and mentioned that there might be some opportunity to pay some of that down this upcoming quarter depending on if you get the seasonal inflows, can you just kind of remind us the cadence of when that brokered funding matures and how we should expect either the, I guess, the roll off of that as we get through the next year or two?

Yes. Most of that will mature within the quarter. Most of the issuance was 1, 2, 3 months when it was done. We did dabble a little bit of 6-month maturities. But I would say the lion's share of the $475 million will mature within the third quarter and give us an opportunity to evaluate do we roll it or do we allow some runoff to happen based on where we are at that point in the quarter with core deposit growth. I think the core deposit flows will determine how much we let on.

Next question comes from Tim Coffey with Janney Montgomery Scott.

Randy, I had a question about kind of asset levels. By the end of this year, if we look back at total assets on a year-over-year basis, would it -- is it more likely to be flat to slightly up or flat to slightly down?

Total assets?

Yes. Just the size of the balance sheet.

Yes. No, it should be slightly up given our loan growth and expectations on deposits.

Okay. And then can you remind me again what the cash flow is coming off the securities portfolio?

Yes. Interest and principal right now is about $300 million a quarter.

Okay. So no big change from the previous quarter.

No.

And then on the construction loans that you're doing, a lot of housing stuff in there. Is there any read-through to your mortgage origination and sale business line?

Is there any -- what was the question?

Is there any read through to the mortgage business?

Do you mean a connection between construction loan and then ultimate residential mortgage?

Yes, there's more supply on market. Are you seeing more volume in the mortgage business?

So yes, we were up this quarter. So you saw the gain on mortgages increase. So we had more locks this quarter than the prior quarter. We're happy to see that. That is leveling off, and it's really supply driven. There's just not enough housing that -- new construction is a big part of what we see people moving into now, there's just not a lot of resale of existing homes because the people are hanging on to their low fixed rate that they have. So that's what we see happening now. So our expectation on that gain is probably to stay right in that range, maybe be a little softness to it depending on the supply.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Randy for any closing remarks.

All right. Thank you, Kevin. And I just want to thank everybody for dialing in today. A lot going on in the industry. So I appreciate you taking the time. Have a great Friday and a great weekend. Thank you.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.