Hilltop Holdings Inc (HTH) 2013 Q3 法說會逐字稿

Good morning, and welcome to the Hilltop Holdings' third-quarter earnings conference call.

(Operator Instructions)

Please note this event is being recorded. I would now like to turn the conference over to Isabell Novakov. Please go ahead.

Good morning, and welcome to the Hilltop Holdings' quarter 3, 2013 earnings conference call and webcast. This presentation and statements made by representatives of Hilltop Holdings, Inc during the course of this presentation include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please review these forward-looking statements in their entirety.

I would now like to introduce our presenters for this morning's call, Jeremy Ford, CEO of Hilltop Holdings; Alan White, CEO of PlainsCapital Corporation; John Martin, CFO of PlainsCapital Corporation; and Darren Parmenter, CFO of Hilltop Holdings. I'd now like to turn it over to Jeremy Ford.

Thank you Isabel, and good morning.

Turning to Slide 3, [cabinet] income to common stockholders for Hilltop was $38.1 million, or $0.36 diluted earnings per share. Return on average equity improved to 10.9%, up from 7.3% in the second quarter. Return on average assets improved to 1.7%, up from 1.24% in the second quarter. PlainsCapital subsidiaries reported pretax income of $45.7 million while National Lloyds had pre-tax income of $4.3 million for the quarter.

On September 13 Hilltop acquired First National Bank of Edinburg Texas in an FDIC-assisted transaction that added approximately $2.2 billion of assets. Total assets increased to $9.1 billion from $7.4 billion in the second quarter, and total stockholders' equity increased by $34.6 million in the third quarter to $1.2 billion. Hilltop remains well capitalized, with a 14% Tier 1 leverage ratio and a 17% total capital ratio. Of note, our senior exchangeable notes were called in October of 2013. As well, the purchase date valuations for the FNB transaction are considered preliminary, due to the short time period between September 13 and quarter end.

Moving forward to Slide 4. This slide shows link quarter results for Hilltop consolidated. I will touch on items not previously mentioned. Our book value per share of $13 represents a $0.41 increase for the quarter. Our net interest margin of 4.45% represents a 12 basis points increase for the quarter. Our loans rose to $4.4 billion represent a $1.2 billion increase for the quarter, and our deposits of $6.9 billion represent a $2.4 billion increase for the quarter. We had MPA-to-total assets 34 basis points, representing a 9 basis point decline for the quarter.

Moving forward to Slide 5, This slide serves to illustrate the closing balances for First National Bank's transaction. Looking at the table on the top left, Transaction Summary Box. This shows the book value of assets acquired and resulting fair value. From the schedule, we had a cost basis of net assets acquired of $182 million. We had a $45 million payment received from the FDIC at closing for the initial settlement, and we recorded fair value adjustments of a discount on loans and REO of $407 million, and FDIC receivable for future losses of $190 million, and purchase intangibles of $6.4 million. This all resulted in a preliminary bargain purchase gain of $3.3 million.

Moving to the right, top box shows our covered assets and our loss share at closing. We acquired in the transaction $1.7 billion of total loans in REO, of which $1.6 billion, or 97%, are covered by FDIC loss share agreements. These loss share agreements have three tranches. Tranche one provides for maximum losses of $240 million, whereby the FDIC would cover 80% of those losses. Tranche two provides for losses up to $366 million, whereby FDIC would cover none of those losses. Tranche three provides for losses in excess of $366 million, whereby the FDIC would cover 80% of those losses. Hilltop expects the FDIC to cover approximately 50% of the total losses. Should losses exceed our expectations, Hilltop would retain only 20% of any additional losses.

With that, I'd like to hand it over to Darren Parmenter to discuss our consolidated results.

Thank you, Jeremy.

With that, I'd like to refer you to Page 6. NIM expanded by 12 basis points to 4.45% as a result of higher loan and security yields, as well as lower cost of funding. The yield on earning assets of 4.9% was driven by a loan yield of 6%. Cost of interest-bearing liabilities of 54 basis points resulted from an increase in deposits and a decrease in wholesale funding. First National Bank caused an increase in earning assets and allowed Hilltop to reduce wholesale funding at PlainsCapital bank, though the NIM impact was not material in the quarter. For the third quarter 2013, the tax equivalent for Hilltop was 0.9% greater due to purchase accounting. The purchase accounting was accretion from discounted loans of $15.7 million, amortization of premium on acquired securities of $1.2 million, and amortization of premiums on acquired-kind deposits of $800,000.

Moving to Slide 7, non-interest income. Non-interest income was $206 million, down 14% from the second quarter 2013. Revenue from the mortgage settlement declined $37.8 million from the second quarter to $127.4 million in the third quarter, representing 62% of the total non-interest income. Net premiums earned increased to $40 million in the third quarter, representing 19% of the total non-interest income. Financial advisory revenue declined to $22.3 million in the third quarter, representing 11% of the total. Additionally, there was a $3.3 million preliminary pretax bargain purchase gain related to the First National Bank transaction in the quarter.

Moving to Slide 8, non-interest expense. Non-interest expense was $217 million, down 17% from the second quarter. Compensation declined $13.5 million from the second quarter, or 10.2%, to $119.2 million due to lower variable compensation. Loss in LAE declined to $24.6 million in the quarter from $48.2 million in the second quarter. Amortization of identifiable intangibles from purchase accounting was $2.5 million.

Moving to Slide 9, the balance sheet. Mortgage loans held for sale declined $366 million, as origination volume slowed due to increase in interest rates. Non-covered loans held for investment increased 2% from the second quarter. As part of the First National Bank transaction, Hilltop added $1.1 billion of covered loans, $121 million of covered REO, and $190 million FDIC indemnification asset. There was a substantial increase in low-cost deposit funding in the First National Bank transaction, with non-interest-bearing deposits up 88%. We reduced short-term borrowing by $698.5 million. Common equity increased $34.6 million due to earnings. Hilltop parent and PlainsCapital Corporation made a $60 million capital contribution to PlainsCapital Bank in connection with the First National Bank transaction, $35 million of which came from Hilltop Holdings' freely useable cash.

With that, I would like to turn it over to Alan White.

Okay. Thank you, Darren.

Slide 10 shows the PlainsCapital Corporation's Quarter 3, 2013 highlights. As you can see, the Bank had a good quarter. Pretax income at the banking segment grew to $5.6 million from second quarter 2013 to $42.3 third quarter 2013. Currently, we have an excess of $1 billion of unfunded commitments in our loan area. A lot of that exists in C&I credits, which not a whole lot's being drawn. We've got a lot of pay-downs, I think just because of the lack of confidence in what's going in Washington in healthcare and taxes and unemployment. We also have a lot of commitments out on real estate projects that we'll be funding up. So hopefully some of those unfunded commitments will go away.

Our credit quality remains strong. Our MPAs to total consolidated assets declined to 0.34% in quarter three. And our assets increased a couple of billion dollars, primarily due to the acquisition of the First National Bank of Edinburg. At PrimeLending, we have lower volumes, again on sale margins have declined, and so has our revenue. We all know what's going on in the mortgage business with the increase in rates and the move away from refi to the purchase side. Our compensation expenses are down, obviously tied to the mortgage volume origination volume. We continue to right-size our Company. We have reduced our overhead in non-production origination employee headcount by over 10%. We'll continue to look at that.

Our purchase volume, which is very important and we are a purchase-oriented company, has increased to 82% in the third quarter from 67%. That's way above the norm, and that's the position we want to be in as we move forward. And again, I think as confidence can build back in the country, the government can get their act together, and we can see some unemployment rates drop, and we'll see this pick up and we'll be in a good position since we are in a strong purchase position. At First Southwest, they've had a difficult quarter. Rising interest rates and the volatility in fixed income markets reduced the financial advisory fee business and our fixed income sales. Very little refunding was being done, and we continue to position -- stay in a good position for that to turn.

If you will turn to Slide 11, this is the Texas deposit market share. You can see we rank fifth in the market, with 84 branches and a little over $6.9 billion in deposits at 1.24% market share.

Slide 12 gives you a franchise overview. As you are aware, we acquired the First National Bank of Edinburg on September 13. This was major acquisition for us. It basically increased our branches from up to 84 with adding 51 branches. We are now in every major market in the state, which is significant for us. We string all the way from El Paso to Eagle Pass to Laredo to the Valley, where we picked up a significant amount of branches, I think 26 to be exact, up to Corpus and Houston. We acquired banks in Austin, San Antonio which we are molding into the -- consolidating into the operations we had there, and have made a significant difference for us in those markets, and we also picked up one bank in Dallas.

We've established local leadership in these markets. We have regional chairs over each new region, and existing markets have come under the leadership of the current PCB regional chair. I will say that we have added leadership in each of these markets from those markets, either within the bank or we've hired people in those markets do that. We have not brought people in from the outside, which I think attributes to what we want do, is try to be aware of the culture that these communities have and be able to play as a community bank.

Our lending credit and deposit and other significant functions of FNB are now operating within our PCB framework. All the former branches are also being operated under the name of PlainsCapital. We continue to focus now on integration, IT integration, and hopefully have that conversion done on first quarter sometime. I will tell you, the whole transition has been very good. We've had about 85 people from our organization involved. They have done a marvelous job getting their arms around this, welcome the people from the First National Bank, beginning to bring them into our culture of being a community bank, wanting to take care of relationships, wanting to respond to customers, and wanting to participate in the communities. I will say that people have come in with open arms.

They have kind of been operating under a cloud for three years, and it's been a very pleasant experience from their side and our side as we continue to mold this thing together. So I am very pleased with the first couple of months or 45 days of this transaction. I am looking for better things as we move forward, and real opportunities in some of these markets.

As far as our problem assets, they're being worked out by experienced credit professionals. A separate subsidiary is being set up at this time to work those, and we will continue to move along in that direction.

With that, I will turn my part over now to John Martin.

Thank you Alan.

As Alan mentioned a moment ago, the Bank's income before taxes for the third quarter was $42.3 million, which represents a $5.6 million increase over the second quarter of 2013. These results were driven by a strong net interest income. Total loans held for investment increased $1.2 billion from the second quarter, primarily as a result of the FNB transaction. Non-covered loans held for investment are up $57.2 million. Our C&I portfolio of $1.7 billion represents 39% of the portfolio, and real estate loans of $2.2 billion represent 49% of the portfolio. The bank funds a line of credit to PrimeLending, which has a commitment of $1.3 billion, of which $900 million was drawn at September 30. Our leverage ratio of 11.05% and total capital ratio of 13.36%.

Our portfolio consists of loans that are purchase credit impaired and noncredit impaired loans. Purchase credit impaired loan is a loan that has evidence of credit quality deterioration for which it is probable but not all contracted and required payments will be collected. The PCI loans include covered loans, which are loans that are subject to a loss share agreements entered into by the Bank and the FDIC in connection with the FNB transaction. Only loans acquired in the FNB transaction are considered covered. Non-covered loans are loans that are not subject to the FDIC loss share agreement. Substantially all the non covered loans were acquired as part of the PlainsCapital merger.

Purchase credit impaired loans had a total discount of $347 million. $300 million of this discount was related to the covered loans. We expect the FNB acquired loans to be accretive to our NIM and yield of [over] 6%. The unpaid balance of the PCI loans at September 30 was $1.3 billion with a carrying value at the allowance of $919 million, or about 72.4% of the unpaid principle. Non-PIC loans include newly originated loans, acquired loans which are performing, and acquired performing loans which have been renewed. Non-PCI loans include covered loans which are the loans subject to the share agreement. Only loans acquired in the FNB transaction, again, are considered covered. The portfolio balance of the non-PCI loans has a unpaid principle balance of about $3.6 billion, a discount of $78 million, and a after an allowance of carrying value of $3.5 billion.

On Slide 16 you see a breakout, another way to view the loans, which breaks it out by the type of loan. As you can see from the presentation that the covered loans include a number of real estate, making up about 75% of the PCI loans, and 78% of the non-covered PCI loans. On the non-covered side, it's a more equal breakout, with about 42% of the non-covered PCI loans are C&I and on the non-covered non-PCI loans, about 49% are C&I.

For PrimeLending on Page 17, the income before taxes declined, due to low origination volume and gain on sales spread. While the spread was under pressure during the quarter, it held up well. Origination volume of $2.9 billion for quarter three. The purchase volume remained flat, and refinance volume declined by about $500 million. Mortgage loans held for investment decreased by $366 million in Q3 to $1 billion, and pipeline loans decreased from $943 million to $720 million in Q3. As a result of the decline in origination volume, there was a reduction in non-origination employee headcount by approximately 10%, The Q3 compensation expense was not significantly impacted by these reductions, as cost savings were offset by severance pay.

On Slide 18, rising interest rates has impacted the results of First Southwest. The rising rates, combined with the volatility in the market, has affected our fixed income markets and has reduced the sales of fixed income securities to institutional customers. In addition, the rising rates did result in some trading losses on securities held to support those sales. Finally, there was a reduction in financial advisory income. Fair value changes to derivatives in the training portfolio produced net income of $3.2 million and $2 million during the quarter.

With that, I am going to turn it back over to Darren Parmenter.

Thank you, John.

With that, I'd refer to Page 19, National Lloyd's Corporation highlights. Rate and volume increases in homeowners and mobile home products, as well as lower claims volumes and containment of significant losses from the May 2013 storms drove the third quarter pretax income of $4.3 million. Direct premiums written increased 8.8% year over year. Two of the three second quarter storms are now considered catastrophic losses, having exceeded our $8 million reinsurance retention during the third quarter.

With that, I will turn it back over to Isabell Novakov.

This concludes our prepared remarks. We will now begin the question-and-answer portion of the presentation.

(Operator Instructions)

The first question comes from Michael Rose with Raymond James.

Good morning, everyone. How are you?

Good.

Maybe we can start with the mortgage business. I know you had about a 10% reduction in headcount. Can you quantify what the severance expenses were in the quarter? And then it looks like there is going to be additional headcount reductions in the fourth quarter. Can you give some context and color there, and then also what the severance expenses might be?

Hello, Michael, this is Alan. We will continue to right-size our Company as we go forward into the fourth quarter and forward. Of course, traditionally the third quarter and fourth quarter are slower times in the mortgage business, so we'll kind of have to play along with that.

As far as what the severance expense was in the third quarter, John, how much? That's probably a number we don't have. We'll have to get to you. But we do continue to look at that. We do continue to right-size, and adjust for the market, as you well expect.

Okay. Then in terms of the refi volume. Obviously that dropped, as expected. But it seems like the overall volume was perhaps a little bit better than what I was looking for.

The refi volume, obviously, has dropped off. But, as you know, we are a purchase company. We were 67% last year compared to the rest of the country. Now where that puts us is we have jumped up now. I think September was like 85%. So it puts us in a strong purchase position.

But the volumes have dropped off. We are having to fight for more volume. Of course, you are sitting here with the shutdown of the government, which didn't help us any. You got no confidence coming across the country. You've got healthcare, which is a real concern. You've got taxes. You've got people who are really concerned about buying houses at this point, not to mention the unemployment rate. I think what we're facing more here is a confidence problem that we have in a country that's keeping the purchase side down.

Now on the other side of the purchase side, I will tell you where we position. We've added additional loan officers. We added 25 in August and September that have come aboard, and these are seasoned people. Our people are seasoned mortgage people that have a Rolodex full of people. That's why we are so strong in the purchase side. These people that we've acquired are coming from companies that were in the refi business that aren't going to be here in 90 days. Those companies are going to be gone, because they can never make up enough ground to be able to get enough purchase business to cover themselves. We have been able to add people.

That might just feel good too when this thing starts coming back. We are sitting in the right position. Next year, I think the NBA says there is going to be $1.2 trillion in production, which is down from $1.6 trillion. There are going to be less, but there's going to be less people in the marketplace originating loans, because they're not going to survive. We feel good about that, because we're going to be able to get more than our market share because of how we sit as a purchase entity.

I don't know if that helps you or not, but we are glad where we are. We wish the volume was more.

I appreciate that. Then switching gears a little bit. I think you said that you had about $1 billion of unfunded commitments. I assume the majority of that is from Plains and not from FNB?

That's all Plains. It's over $1 billion. It's over $1 billion. That does not include Primes' line, which is about $400 million underfunded at this point.

We've had large paydowns from our C&I people because they just don't have any confidence in the economy. They weren't going to leave the cash there. They paid down. We had to fight that and try to get additional credits on the books. We got them there, if we'd get some confidence back and they can start building, spending money and creating inventories and things like that. We think that will go up.

The other thing that we've have done is we've made some good real estate loans, which are construction loans and stuff. It takes a while to fund those up. So, if you look at our loan growth, it shows to be a little bit above flat, but we don't feel like that that's the way we are. We feel like we've actually grown some. It just hadn't funded.

When you look at us and you compare us to some of these other guys, we do not do oil and gas and we do not do syndicated credits. That makes a difference between us and these other guys. We're not going to compromise our credit principles in trying to stretch to make a deal. We will protect our customers on the pricing side. And let me tell you, the big guys are trying to beat all of us over the head with a stick trying to price things, but we will hang in there with our customers. We're relationship-type people. Most of our customers want do business with us because of that.

Can you just quantify amount of loan production this quarter relative to the paydowns?

I can't. I can go back to year end and tell you that we had some significant paydowns throughout the year, but I can't tell you for third quarter. I can just tell you we've had significant paydowns, that people just had excess cash and they're not willing to stick their neck out there until they know what the world's going go on up in Washington. You can't blame them.

Fair enough. Just one more, if I could. On the $52 million in notes that are still outstanding. Would you expect the majority of that to convert to common shares? Thanks.

It's a function of market price, and we have the option to convert cash for stock. So we look at them on an individual conversion.

Okay. Thanks for taking my questions.

Your next question comes from Brett Rabatin with Stern Agee.

Hi. Good morning. Was hoping to get a little more color around FNB. And then first, around the deposits you picked up, what the plan is with those, and if some of those may run off, and if so, how you plan to fund the balance sheet? And then just also thinking about the loans you did acquire, and the pace of payoffs there, how we should expect that to trend over the next year, in your opinion?

Let me just say, I'll talk about some of this and they can talk about other. The acquisition, and of course the major part of this acquisition is the Rio Grande Valley. There are a significant amount of loans there that are probably not good, and they are going to be put into the subsidiary that we're going to try to resolve and collect. On the other side, as far as the deposits that we have some higher price deposits, we had some, I guess, what do you call --

Existing service.

Existing service deposit we let go. There's an excess liquidity, as you heard Darren talk about we brought in, and we reduced our funding positions to bank, which actually reduced our assets, which is a good thing.

For the most part, we've seen a little runoff but not much. We've seen money come back into the Bank, primarily because they took it out before this happened, and -- but because of the relationships these people had with our employees, they brought it back. So that's been encouraging. We've lost a few employees, but we've also been able to hire a few back that were key employees that left prior to.

So we feel like we're in really good shape. We've really been accepted down there. They were glad it was us and not some big bank, because of our attitude, because we are a community bank, because we do take care of relationships, and because we do [come in and] save the community.

We've been very well accepted down there. I think there is some potential down there, a lot of potential as we go forward. We have been able to put a good team together. We have been able to hire a great guy down there in the Valley. He's lived there 49 years and he is 49 years old. He won't be able to go to work for a while because he has noncompete, but when he does get down there, he will do a really good job. We are excited about that.

We go down, we spend time in the Valley. We rub elbows with the customers, and we've got a good feel. I think there was a real need for us. If you want to look at the economy, if you haven't been down there, you ought to, because I'm going to tell you, the commerce between the United States and Mexico comes across that bridge from Monterey, and there's over 8 million or 10 million people down there. There's 60,000 kids going to colleges down there. That's a pretty amazing, and if you look at the projections, McAllen will be one of the number one job creation towns or cities in the country by 2015.

So there is a lot of positives down there and a lot of good things going on, and we think that we're going to be in a position that the way we do things and the culture that we can create, we're going to be able to take advantage of it. Now, we got to walk the talk, and we know that. I think we're excited and ready do that in those markets.

Corpus is another great market. We've been able go in there and bring in some new blood, and there is some great opportunity. You look around with the Eagle Ford shale, you look around with the ship channel. There is just a lot of good things at Corpus. Then you go on to Houston, that's another whole new market in itself. There is real opportunity in this acquisition. We'll take the bad bank and put it over there and let them clean that up, and then we're going to take the good bank and focus going forward.

That's probably more than you wanted to hear.

No, that was great color, Alan. I appreciate it. The other thing around the just accretion income going forward, can you talk about, I have the numbers for the third quarter, but the pace of that? Does that drop off considerably in the next few quarters? I don't know if you have any preliminary thoughts on the pace of the accretion income.

This is John Martin. With the acquisition of the bank in Edinburg, that we expect accretion to hold up for the next few quarters, anyway.

Okay. Then the other thing I was curious about was just the insurance operations. It was nice to see the positive income this quarter after the -- you had the storms last quarter that impacted insurance. You had higher policy income this quarter. Is the effort to grow the insurance business at this point, or can you talk a little more around what the plans are? I know you have rebranded the two operations. But can you talk a little more about the plans for the insurance operation?

Well, the effort to grow is -- a lot of the growth has been in rates. The effort and our focus is on rate and is on our core products and managing our exposures. I think that a lot of the growth is just because of the hardened market.

Okay. Great. Thanks for the color.

The next question comes from Frank Barlow with KBW.

Good morning guys, and thanks for taking my question. Can you just provide some commentary on loan growth? I don't know if you mentioned this earlier, but what's your pipeline now, and how does that maybe compare to last quarter? Held for investment?

As I was saying, if you look at it, we're fairly flat. We may be up a little bit, but we have put a lot of commitments on the books. I think the pipeline probably that was in the third quarter, started at the fourth quarter about the same. We continue to be very competitive out there.

Frank, it's just going to depend on what confidence level comes from Washington and what goes on between now and the end of the year up there. Even though we live in Texas and we say the economy's great and everything else, the economy's all right, but when you start talking about these borrowers, they're not willing to make the commitments to draw down on those lines or to spend money until they know what's going to happen. I think until that's solved, we are not going to see any significant growth in our loan area.

Again I'll tell you, we don't do oil and gas. That's where a lot of the growth has come from with some of these people. We don't do syndication. Those things may put us a little bit behind. But that's just kind of our policy and our plan. We'll stick with it. I think we'll be able to hold our own loan growth going forward, but I feel that until there is something that breaks with the unemployment, with Washington, and Obamacare, and these things I think we're going to continue to be fairly flat.

Okay. That's great color. Also on the securities yields, they improved more meaningfully than I expected. Can you maybe give some color as to what went on there?

I think the yield, we did pick up some yield as a result of the Edinburg transaction. I think that would represent most of it, and the continued amortization of the premium on those notes -- I mean on the securities.

Then lastly, with the FDIC deal completed this quarter, your TCE fell to about 8.7%. I know you all generate a lot of internal capital over time. Does this recent deal put you on the sidelines in the near term, as far as M&A goes?

We don't believe so, no. We don't feel like we're on the sidelines from the M&A. I think as far as the transaction, as Alan explained, PlainsCapital has done a great job in establishing local leadership and integrating the functions of the bank. We also have this other asset management entity, so we'll handle the problem loans. We feel like the integration's going well, and a lot of the work is in process.

Thanks so much.

Next question comes from Matt Olney with Stephens.

Hello, good morning guys. In the mortgage segment, you mentioned the gain on sale margin has held in pretty well. Is it fair to assume there could be some pressure on that gain on sale margin, given the excess capacity in the industry over the next few quarters?

Matt, that's fair to say. We've been pleased by the way it's held up so far, but we are expecting continued pressure on it.

And I think previously you've talked about becoming, or at least trying to become, more asset sensitive within your balance sheet. Can you talk about where you are in this initiative, and what is the strategy to become more asset sensitive?

I think we did become a little more asset sensitive during the quarter that we're just continuing to work. But we really want to stay as balanced as we possibly can, and that's what our strategy will be.

And Jeremy, I think you mentioned M&A a few minutes ago. Can you talk about where, or talk about the M&A chatter within the Texas markets? Where it is today, and what kind of pricing expectations are out there?

(Technical difficulties) jump in. I don't think much has changed in the last quarter, per se. I mean, the deal we did on Edinburg is a different deal than other things that have been announced. I don't know, Alan, have you heard of anything different?

I think it's out there. I think with all the regulations, they're going to choke these smaller banks. So I think the opportunities are going to be there. We continue to talk to people, and go around shaking hands and visiting with people. So I think the market will get stronger, and it depends on what you have to sell to these people and what they want as to be able to make acquisitions. If we do, we want to find the right place with the right people.

I tell you, they're out there. Time will tell. When we did this deal, and I can recall. It's been a year, and we've made this transaction. I can recall that primarily the reason we did this was, one, to get our shareholders some liquidity, but it was also to get some capital to be able do what we did. Of course, as Jerry and I talked, their main deal was the ability to be able to make acquisitions, and acquisitions like we just made, and our ability to be able to run them.

Well, here it is. This one is the first one. It's a prime example of what exactly what we were trying do. I would just have to say that I don't think we're stopping here. There's even more to come. We're doing what we said we would do.

Thanks, guys.

With no further questions, this concludes our question-and-answer session. I would like to turn the conference back over to Isabell Novakov for any closing remarks.

Thank you for joining us for our conference call and webcast.

Thank you.

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