KeyCorp (KEY) 2003 Q2 法說會逐字稿

Good morning and welcome to the KeyCorp Second Quarter 2003 Earnings results Conference Call.

This call is being recorded.

At this time I would like to turn the call over to the Chairman and Chief Executive Officer, Henry Meyer.

Mr. Meyer, please go ahead sir.

Thank you, operator.

Good morning and welcome to KeyCorp's Second Quarter Earnings Conference Call.

We know that you all are very busy and we appreciate you taking some time to be a part of our discussion.

Joining me today for our presentation is our.

CFO Jeff Weeden, and also available for the Q&A is Lee Irving our Chief Accounting Officer, Kevin Blakely our Chief Risk Officer, and our Treasurer Joe Veda, Vern Patterson and his team are also here.

On slide two you'll see our standard forward-looking disclosure statement.

It covers both our presentation and the Q&A that will follow.

Now, if you'll turn to slide three.

I'll make some general comments on our second quarter results.

As you saw in our press release, Key earned 53 cents per share in the second quarter.

This was a penny above the consensus.

Although we hit the street's number, our results are still not where we would like them to be, and this management team remains committed to improving our performance.

As I look at our results, a few things stand out.

First, Key is extremely well positioned to take advantage of an increase in economic activity, especially as it relates to our market sensitive businesses.

But, that hasn't happened yet.

Commercial loan demand remains weak and the net interest margin, while relatively stable for Key in this quarter, is still likely to come under some pressure as the remainder of 2003 unfolds.

Most of our market sensitive businesses were relatively stable with the first quarter, but again down from the year-ago period with the exception of some gains realized in our venture capital business.

I think it's also important to point out some of the positive developments in the quarter.

At the top of the list is asset quality.

Jeff will discuss our quarterly trends in more detail.

But I would point out that our non-performing loans declined for the third consecutive quarter and net loan charge-offs fell to their lowest level since the first quarter of 2001.

And that continued progress as I mentioned earlier is without the (inaudible) rebounding economy.

Average core deposits grew 12% from the year-ago quarter, and were up an annualized 9% from the first quarter.

And new DDA openings, new DDA openings were up 34% through June 30 compared to the year-ago period.

Obviously free checking continues to play a major role in our ability to attract new customers

We will also continue to grow our speciality (ph) businesses, such as asset management where I hope you all notice that we announced the acquisition of New Bridge Partners.

New Bridge closed in early July and will add almost two billion to our managed assets in the third quarter.

And also will expand our product offerings and allow us to further leverage our distribution capabilities.

Before I turn the call over to Jeff, let me comment on expense management, which remains one of our top priorities.

Through the first six months, expenses were up 1% from the year-ago period.

Included in this year's number are higher employee benefit costs related to the pension expenses, and you will also notice higher spending for marketing and for upgrading our sales management systems.

These are the types of investments that should benefit us in the future.

We will continue to focus on expenses, looking at staffing levels and non-personnel costs.

At the same time, we will continue to invest in our higher return businesses and those activities that will benefit us in the future.

With that, let me turn the call over to Jeff Weeden for a financial review of our quarter.

Jeff.

Thank you, Henry.

I'll be reviewing the next few slides and going through them fairly quickly so that we can get to the Q&A portion of our Conference Call.

Turning to slide four, as Henry mentioned, we earned 53 cents in the second quarter.

Our total revenues increased $52 million from the previous quarter, net interest income was up $15 million, and non-interest income increased $37 million.

Our average core deposits as Henry stated grew during the current quarter and stood 9% higher on an annualized basis from the first quarter and they were up 12% from the same period one year ago.

Asset quality continued to improve with net charge offs and non-performing loans declining during the second quarter.

And our capital ratios remained strong, giving us the flexibility to repurchase three million shares in the second quarter.

Turning to slide five, the company's net interest margin remained relatively stable in the current quarter at 3.85%, compared to 3.86% in the first quarter.

With the flattening of the yield curve in the second quarter, in anticipation of the Fed rate cut in June the company took measures to reduce certain deposit rates to protect the margin while still remaining competitive.

This latest cut by the Fed will continue to put pressure on our net interest margin going forward, as the value of non-interest-bearing liabilities continues to decline and rates for certain other deposit accounts approach zero.

As with the last several quarters that we have reported, our AL simulation continues to show that we remain relatively neutral to changes in interest rates.

As you can see from slide six, average earning assets for the current quarter were up approximately $500 million.

Soft commercial loan demand has continued to put pressure on our ability to expand our earning asset base in the short run.

Slide seven shows the trend in average loans outstanding for the company.

On a positive front, average balances of commercial loans, excluding the exit portfolio, were unchanged in the second quarter compared to the first quarter.

On the consumer side, our non-exit loan portfolio was up an annualized 10% for the quarter, reflecting the continued healthy demand we have experienced in our home equity lending throughout our retail network.

Slide eight shows we are still having success in growing our deposits throughout Key.

As we mentioned earlier, core deposits increased 9% versus the prior quarter and 12% versus the second quarter of last year.

Turning to slide nine, which reviews the changes in non-interest income from the last quarter to the current quarter, non-interest income on a sequential basis increased $37 million.

Investment banking and capital markets increased $19 million.

This was entirely related to the principal investing activities.

Other changes in non-interest income were more modest, with the exception of certain non-yield loan fees, which increased $9 million or 32 % from the prior quarters.

These fees were the result of syndication in agent origination fees in our real estate capital division.

While the financial market conditions improved in the quarter, and provides a degree of optimism for the future, trust and investment management fees remain soft in the second quarter.

As can be seen from the earnings release, trust and investment management fees were down $1 million in the quarter compared to the first quarter.

Included in our first quarter revenues were $5 million related to the 401K record-keeping business that was sold in 2002.

Effective with the first quarter, all remaining 401K record-keeping business has been transferred to other parties.

Therefore, going forward, the 401K record-keeping divestiture will not have an impact on future link quarter comparisons.

On a positive note here, total assets under management increased $2.5 billion during the quarter and stood at $63.3 billion at June 30th.

Of this growth, two billion was the result of market appreciation, and a half a billion dollars resulted from net new sales activity.

On the expense front, on slide 10, our costs increased $31 million in the second quarter.

The increase in personnel costs was attributable to incentive compensation accruals.

In addition we also expended more in the second quarter for marketing and professional fees associated with a number of initiatives taking place in the company to improve revenue and customer service.

Slides 11 through 16 cover information concerning asset quality trends within the company.

On slide 11, you can see what we have experienced continued improvement in our net charge-offs in the quarter.

Net charge-offs declined to 90 basis points in the second quarter, a 14 basis point improvement from the first quarter, and are at their lowest levels in two years.

Slide 12 shows the breakdown in the trend by loan type.

As you can see, the most significant improvement over the last five quarters has come from the commercial portfolio.

While the consumer portfolio has held up during this time period, it also showed improvement in the current quarter.

On slide 13, our allowance to total loans at quarter end stood at 2.22 %, down five basis points from the prior quarter, as we used the last remaining $17 in the non-replenishable reserve in the second quarter.

We are experiencing nice improvement in MPAs in the quarter as can be seen on slide 14.

NTA declined to 1.42 % of loans and other real estate, a reduction of 12 basis points.

While we are still above peer median we're optimistic we should continue to see improvement in our NPA level.

The next slide shows NPL activity for the quarter.

As you can see, loans placed on non-accrual declined materially from the prior quarter's activity.

And net charge offs continued to decline.

For the quarter, NPLs declined $67 million and represented 1.32 % of total loans at period end.

Turning to slide 16, our allowance to NPL coverage improved to 168 % at quarter end.

This is the highest level in over a year.

Looking at slide 17, the company's tangible equity to asset ratio has improved over the last three years and stood at 6.90 % at June 30th.

As I mentioned in my opening remarks, we did repurchase 3 million shares in the current quarter, and as of June 30th we had remaining board authorization to repurchase up to an additional 8.8 million shares.

The company intends to continue to execute share repurchases in the open market in the coming quarters under this authorization.

Now turning to slide 18.

While we are seeing signs of improvement in general market conditions for market sensitive revenue and the commercial loan balances were stable in the second quarter compared to the first quarter, we remain cautious until we have sustained improvement for these lines of business.

As I mentioned earlier, our net interest margin will remain under pressure with the most recent fed cut.

We will continue to focus on our costs, spending where we believe we can have a positive impact on future earnings.

And, overall asset quality trends should continue to be stable to improve for the remainder of the year.

With the above in mind, we are comfortable with the analyst's current consensus EPS outlook for 2003 of $2.13.

That concludes our remarks and I'll turn the call back to the operator to provide instructions for our Q&A portion of our call.

Operator.

Thank you.

A brief reminder, the question and answer session will be conducted electronically today.

Anyone wishing to ask a question may signal us by firmly pressing the star key followed by digit 1.

We'll take as many questions as time permits and we'll proceed in the order you signal us.

As a reminder there may be many callers holding to ask a question at one time.

We appreciate your patience today.

We'll take our first question from John McDonald with UBS.

Good morning.

Good morning, John.

Is there a lag in the pricing at Victory that should help with the asset management fees in the third quarter?

And then also wondering when New Bridge heads next quarter is that accretive to overall EPS in any meaningful way when it hits?

John, with respect to when the fees hit, we should see improvement as we look forward on the trust and investment management fee side of the business.

The improvement in assets under management in the quarter, a number of those particular categories do have quarterly re-pricing on them.

So they would have re-priced as of the end of the quarter for the future quarter.

With respect to New Bridge, it will not have a material impact on our EPS in the coming few quarters.

OK.

And just a question for Kevin, I guess, on the credit quality.

What drove the improvement in the consumer this quarter?

Actually it was somewhat of a mixed bag we had a few areas where the delinquency increased a little bit.

We had a few areas where delinquencies decreased a little bit.

Growth sort of across the board.

Mostly, I guess if you were going to attribute improvement it would be in our direct portfolio, things such as direct home equity, direct auto, things of that nature.

OK.

I guess I was looking at the charge offs coming down from 97-75 is that the direct?

Yes that is in the direct.

OK.

Thanks.

And our next question will come from Roger Rister (ph) with Morgan Stanley.

Yes.

Good morning.

Looking at the changes in the NPLs and the flows, it looks like the pace of the payments slowed down of this quarter at 26 versus sort of 58 and higher numbers.

Is this a new set sort of run rate in term of recoveries or is this just, going to be slower going forward or do you think it might pop back up?

It goes up and down.

It's difficult to predict it.

It all depends on how long an asset has been in the workout portfolio.

Typically we see a larger percentage of pay downs at the end of the year.

But from quarter to quarter it can float up and down.

But on the other hand the loans returned to accrual status, jumped up.

Is this part of the signs of improving quality that you're getting better, you're getting more success in resolving problems?

Yes, the portfolio is quite seasoned now.

It takes anywhere between 18 months and 36 months for workout portfolio to begin to turn around.

We're well into the seasoning mode now.

Actually, one particular area that returned to accrual and we've been talking about it for some time, but healthcare, some of the loans in that area that really took, as we've been saying a lot longer to lease up.

This is in the assisted living.

We just happened to see in this past quarter a number of them, not only reach, but pass that point where they became good loans.

In terms of commercial lending activity, any differences across the regions of the bank in terms of commercial lending activity either in terms of credit quality improving or demand for loans?

As far as credit quality improving, we saw improvement almost across the board all throughout the country.

Some areas picked up a little better than others.

But we saw I have to say we saw overall improvement in nearly all aspects of the portfolio.

And as far as loan growth goes in the commercial side we saw some pickup in the C & I portfolio, total loans, commercial, was down a little bit because of some of the terming out of the commercial real estate that were in the construction phase, they termed out during the quarter, which is also related to the higher non yield related loan fields that we recorded.

OK.

Thank you.

And moving on we'll take our next question from Jennifer Thompson with Putnam Lovell.

I was wondering if you could give us color on increase and other non interest income.

Yes, the increase in, you mean in the other category?

Right.

Yes, I'll go to the other category here for that particular item.

It's spread across several various areas.

There's nothing in there that's any -- any one item that's of significance that would warrant mentioning at this particular point in time.

OK.

No gains or anything that -- this quarter versus last?

There's a little bit of reduction, actually, that's driving it.

And it's really reduction in part of our lease residual on the auto portfolio.

And so we've had the, those leases had come off.

We've had to take some losses on those leases in that exit portfolio.

That is actually trending down, on that one slide you saw the exit portfolio is declining on the consumer side.

We're actually having less loss, so less loss is actually being accretive on the other income.

I'm sorry if I missed this.

Did you mention what the venture capital gains were this quarter?

Yeah, venture capital gains were $22 million.

OK.

Thank you.

And Rodrigo Quintanilla has our next question with Merrill Lynch.

As a follow-up to the previous question, can you give us an outlook, what your outlook might be for the venture capital business, given that other companies have still been reporting losses and you reported gain.

And also with respect to the residual gains in equipment leasing, what would the outlook be there as well?

With respect to the venture capital, venture capital gains are very difficult to forecast, if you will.

We are not -- in our portfolio is not an extremely large portfolio.

So I would say that looking out there, it's very difficult to forecast in any given quarter what is going to happen on the venture capital side.

We don't see a lot of gain or loss either way on that, as we look out into the future at this stage.

With respect to the equipment leasing residuals.

On the equipment leasing residuals, again, on the commercial side, I don't know -- it's been a more positive trend that we've been experiencing on the commercial side of the equation.

On the consumer side, it's going to decline as -- the losses are going to decline just as simply as the portfolio continues to run off in that particular area.

OK.

Thank you very much.

Suffice it to say, this is Henry, we're still losing on every damn car that comes back.

So that situation is clearly being helped by the fact that we made a decision two years ago to get out of that business.

Thank you very much.

We'll take our next question from Mike Holden (ph) from T. Rowe Price.

Actually, it's Michael for Mitch, the question around the guidance for the year.

I'm just kind of curious, what do you all see improving from kind of Q2 levels that allows the earnings prospects in Q3 and Q4 to lift to get to that $2.13, especially since it sounds like Jeff is saying that the VC gains that you posted this quarter are unlikely to repeat.

Well, I think what we're looking for is modest -- we still have good activity that's happening on the consumer side of the bank.

We grew the consumer loan portfolio grew in the current quarter.

The prospects are for us to continue to show positive growth as we look out, with stabilization on the commercial portfolio I think is beneficial and just the activity.

The pipeline has been very active, particularly on the business banking side of the equation which had a lot of activity that's been happening in the business-banking environment in the company.

Our margin that we see is under some pressure, but we were very pleased with how it held up at 385 in the quarter.

And while it may continue to drift down here a little bit, the prior guidance we gave on it was around 380.

And I think we're still in that approximate range, as we look here.

But it will be under some pressure there.

But fee income activity is showing some signs of improvement here.

I think as you look at -- there's fewer cars that are coming off lease at this point in time.

That will help on that particular trend.

We will also look at trust and investment management fee revenue in the sense of New Bridge Partners coming along-- along with other increase in overall asset level under management.

Again we have had success in our distribution channel with selling, new trust and investment management business and of course the market is certainly helped there too with a couple billion dollars of appreciation in the quarter.

Right.

This is Henry.

We've also seen a pickup in activity in our investment-banking group.

While that activity does not ring the cash register, I would remind you that recently announced public deal.

McDonald was the lead banker in the Office Max Boise(ph) cascade announced merger.

That probably isn't going to close until the fourth quarter, but we're out there.

We're involved and we have seen more activity happening.

Hopefully some of that will land in the latter part of 2003.

OK.

Thanks.

And our next question comes from Nancy Bush with NAB Research.

Good morning.

This may be a bit of a difficult question to answer, but first quarter is always your most subdued quarter and then things sort of pick up seasonally from there.

Henry, was there an element of this quarter that was sort of over and beyond?

And I'm excluding the venture capital gain and all that stuff, sort of the normal second quarter seasonality?

In other words, are you seeing some kind of lift in your businesses in your regions?

No, Nancy, the answer to that is no.

We've done now 51, 53 in many years our first quarter is more than two cents weaker than the following quarters, largely because we usually, with market sensitive businesses, have very strong fourth quarters.

Therefore, we run into a dip and then it picks back up.

But as I said in my opening comments, Nancy, I was not terribly pleased with the 53 cents.

While we hit the consensus number, the consensus has been pushing numbers down for every company, because of margin pressures and the lack of economic activity.

I still think there's a lot of opportunity with just a little bit of economic rebound for the strategic positioning we put the company in.

But specifically to your question, there wasn't anything that was knock your socks off or impressing us beyond where I would hope the business would be in the second quarter.

And Tom Bunn's business particularly, kind of any signs of life there that are being generated, not so much by the economy but by the efforts of that group, as sort of rejuvenated efforts of that group?

We saw, and again Jeff alluded to this, but clearly an emphasis that Tom brought to us was to be a bigger participant in syndication business.

We were pleased with the syndication activity that we did in the second quarter.

In fact, we were not unhappy that commercial lending was really relatively flat.

We were down just a little bit on the commercial real estate, but it was because we were able to syndicate the permanent placements.

We had a special program, Nancy, that has been going on, called Lead, with leasing, and it's been tremendously successful in terms of the new business opportunities.

Now, not all of those have been closed.

But, again, that's why we're cautiously optimistic about a little bit more than 53 cents as we look at third and fourth quarter.

Great.

Thanks very much.

And moving on we'll hear next from Casey Embreck (ph) with [inaudible] Partners.

Thanks very much.

Henry, you spoke a little bit about expense management and in the quarter I guess we saw negative operating leverage on both the year-over-year and one quarter basis.

How should we think about that and should that kind of continue into the rest of the year?

Well, we really, and Jeff did touch on this, but we had two areas that really popped up a little bit.

One was marketing.

We're very confident that we've timed those increases to be productive for revenue generation, which ought to be picking up as a result of those marketing activities.

And we had a little bit higher professional fees than we would -- than I would like in any given quarter.

But those again were fees across a number of different areas, not just one or two firms but most of it was aimed at revenue opportunities and a follow-up on some of the expense.

We wouldn't expect to see that kind of delta third quarter over second quarter.

And we're also, Tom Bunn and Bob Jones, in the McDonald Financial Group; we continue to put pressure on the expense side matching the revenue side.

And I am not going to listen to, oh, it's coming and we're building staff.

On the other hand, I would tell you that we have added sales staff, especially in the business banking, in the commercial lending and those new revenue generators are going to be very, very early break evens.

In fact, we had a board meeting yesterday.

And as Tom Bunn was explaining to the board, we've actually got a lot of those new people coming in on a much higher leveraged pay base, fifty/fifty.

So there isn't a huge cost to Key if they don't perform.

And we hope they do perform very well, because clearly the operating platform here is ready to take higher revenue without the same commensurate level of expenses going on.

OK.

That's helpful.

I guess one last question.

You told us kind of before that when the company gives quarterly guidance, they try to build in -- you sort to build in about a nickel of cushion.

The original guidance is $2.15 to $2.20.

Now you're saying you're comfortable with consensus of $2.13.

My question is are you backing off of guidance and kind of what happened to that little cushion?

Just let me correct you from at least my perspective.

I can never remember, nor would I get away without being kicked by five different people, with saying that we have a nickel of cushion.

What we have done in the past is trying to give a range of expectations.

You know, we give those ranges with our best view at the time that we give it.

We did not know that the fed was going to cut rates.

I think universally, at least as I've read, that is putting pressure on everyone's expectations for the remainder of the year.

Our earlier guidance was 215 to 230.

It was a rather wide range, and we had indicated that we'd be at the lower end of that range, 213 is all of two cents below the lower end.

It is where analysts are putting a number and we're just saying we're comfortable with that number.

But I don't and never have said that I'm going to give you a number, but I have a nickel's worth of cushion.

I think we try to give ranges because there are a lot of factors in three months in terms of what can happen to banking that none of the banks have any real control over.

OK.

Thanks very much.

And moving on we'll hear next from Jason Goldberg with Lehman Brothers.

Thank you.

Good morning.

Good morning.

Your tangible (inaudible) to tangible asset ratio has been running in the 670 area in the last several quarters.

In spite of buying back 3 million shares this quarter kind of bumped up to 690.

Do you want to maintain it there?

Do you plan to, bring it down lower particularly with credit improvement?

Well, we have flexibility, I think, with credit improving, to continue to manage our range that we try to manage in has been closer to that 670, 675 range.

I think at the end of the quarter we had a dip in assets at the end of the quarter, and sometimes that can be an anomaly.

So with the total assets down about a billion dollars that had an impact also on that particular ratio at quarter end.

OK.

I guess going forward with the run off portfolio I guess gone, at least a reserve portion, we expect provision to equal charge offs?

Yes, that has, we actually, notwithstanding the run off portfolio, this company has for years matched charge offs with the provision, without some special balance sheet event, which I don't see right now, we would match our provision to the charge offs.

Now, in this low rate environment, we're always looking at ways that we can protect the company against the eventual, although it may be a little while, rise in interest rates.

And if we did something like selling a bunch of loans, we might reassess especially with continued increases in credit quality, whether we were going to do that on an ongoing basis.

That's helpful.

Thanks.

Denis Laplante with KBW has our next question.

Thank you.

Could you clarify the amount of stock options and pension expense in this quarter?

Denis, there's very little stock option expense in the quarter.

There's $8 million of increase year-over-year for the quarter in pension.

How did that compare, and that's comparable to first quarter?

That's comparable to first quarter.

On the run off portfolio, I know you don't want to talk about it anymore, and the reserves are gone.

How much is left from that run off number.

There's approximately 220, $230 million remaining in that commercial run off portfolio.

How much of that is NPA.

$42 million.

$42 million.

So is it your intention to continue to just manage that down rather than through sales.

That is our intention, to continue to manage that particular portfolio.

Obviously any time you have an opportunity to take advantage of a sale, and it looks opportunistic for the company, we would still consider doing that.

So will you use your overall reserves to do that?

In other words, will you let your reserves run down to exit?

No, we will not.

What the non-accruals of 42 have been written down to what we think are very realizable numbers.

If you take that $42 million out of the 200 plus, almost all of what's left is investment grade that are single borrowing, no other relationship.

We announced, Denis, when we set up the run off portfolio, that there were some investment grade assets in there.

Some of those have maturities.

They're very high quality, but until the maturity comes along, there's no way we're going to be able to get out of it.

But any loss that we take will be matched with a provision and will be part of our quarterly number.

There's no more dipping in.

We wanted to be, I wanted to be very, very intellectually pure on the reserves that we set up and they were going to be enough.

They have been enough.

And it's now behind us.

So any losses we take will be showing up in that quarter.

That's great.

And question maybe for Joe Veda on the margin.

You've been able to preserve the margin reasonably well.

Everyone has been under pressure, but you're actually (inaudible) quarter decline in margin was less than most.

Could you talk about your use of off balance sheet?

How much are you getting in swap income in the quarter?

How much did you get in swap income in the quarter?

And what, how are you positioning things differently or how are things positioned now versus expectations?

First of all, let me say I don't have specific numbers related to swap income, but I will speak to the general direction of activities during the quarter.

I'd add, number one, the level of the margin is reflective of our loan and deposit activities.

The stability in the margin reflects how we manage our interest rate positions.

And we have maintained a very disciplined approach and during the quarter, as you can see, that served us very well.

We traditionally run a modest liability sensitive position.

And normal business flows would, real deposition would turn asset sensitive.

We're diligent about how we match up new business flows.

Asset repriceing, liability repriceings, of course those activities took place during the quarter.

And as we were seeing a move to being more assets sensitive, we did add some interest rate swaps, as well as activities in our discretionary portfolio, to move toward a more modest liability sensitive position.

So right now, going into the third quarter, you are slightly liability sensitive?

That's correct.

Thank you.

And next we'll hear from Lori Appelbaum with Goldman Sachs.

My questions have mostly been answered at this point.

But maybe as a follow-up to the last question, if you could talk about the de-leveraging that you did in the balance sheet at the end of the quarter and maybe if that's a strategy you're deploying, in an effort to maintain or preserve the margin and non-mitigate rate risk.

The leveraging you're talking about comes about from activities in our securities portfolio.

Right.

As you know, we are active in the very short trenches, particularly in the CMO market.

To stay current, there were some sales and reinvestments, specifically we're moving out of the higher coupon mortgages that were prepaying quite rapidly, and keeping the portfolio more reflective of current coupons.

Also trying to protect against extension risk going forward.

Within that, you have differences in settlements on your purchases and sales, so that de-leveraging is largely a timing event that occurred at the end of the quarter, with some commitments expected to settle during the month of July.

So that is not a de-leveraging effort that you should expect to continue into the next quarter.

Thank you.

Next is David Pringle with Fulcrum Global Partners

Actually, all my questions have been answered.

Thank you.

And next we'll hear from Steven Warden (ph) with Loomis Sales (ph).

I think all my questions have been answered as well.

Thanks.

All right.

Due to time constraints our last question comes from Jeff Davis with FTN Midwest Research Services.

Let's make it three.

Mine have been covered also.

All right.

Mr. Meyer, I'll turn the conference back over to you.

Thank you.

I applaud the early question askers; because this is the first time I can remember where we've covered almost everything.

But we do appreciate the time and attention, opportunity to discuss these issues with you.

As always, any follow-ups, please don't hesitate to go to Vern and his group.

With that, it's rare that we have our announcement on Friday.

So it's rare that I get to say to everyone, have a wonderful weekend.

And we're signing off.

And that does conclude today's conference.

Again we thank you for your participation.