Mercantile Bank Corp (MBWM) 2007 Q1 法說會逐字稿

Welcome to the Mercantile Bank Corporation first quarter earnings conference call. There will be a question and answer period at the end of the presentation. (OPERATOR INSTRUCTIONS).

Before we begin today's call, I would like to remind everyone that this call may involve certain forward-looking statements, such as projections of revenue, earnings and capital structure, as well as statements on the plans and objectives of the Company or its management; statements on economic performance, and statements regarding the underlying assumptions of the Company's business. The Company's actual results could differ materially from any forward-looking statements made today due to important factors described in the Company's latest Securities and Exchange Commission filings. The Company assumes no obligation to update any forward-looking statements made during this call.

If anyone does not already have a copy of the press release issued by Mercantile today, you can access it at the Company's website, www.mercbank.com.

On the conference today from Mercantile Bank Corporation we have Jerry Johnson, Chairman and Chief Executive Officer; Mike Price, President and Chief Operating Officer; Chuck Christmas, Senior Vice President and Chief Financial Officer; and Bob Kaminski, Executive Vice President.

We will begin the call with management's prepared remarks and then open the call up to questions. At this point I would like to turn the call over to Mr. Johnson.

Good morning, and thank you for joining us. Although the first quarter of 2007 was an extremely challenging one, I believe that the management and staff of Mercantile Bank Corporation continued to demonstrate our ability to manage our Company in a difficult operating environmental. An environment by the way that exists not only in Michigan, but throughout most of the country, certainly throughout the Midwest.

Our challenges for 2007 are primarily the same ones that we faced in 2006 and are in three areas. First, we have ongoing margin pressures brought about by highly competitive pricing on both loans and deposits, as well as being exacerbated by the flat to inverted yield curve. Secondly, growing our balance sheet in an environment that is increasingly competitive as we continue to gain market share at the expense of our competitors who has shown an ongoing and aggressive willingness to compromise on deal structure, as well as undercut Mercantile's pricing on potential new as well as existing credit relationships, oftentimes to absurdly low levels that are unreflective of the proposed transaction's credit risk.

But we have on many occasions chosen to walk from deals where our competitors have compromised on structure to obtain the business. And third, maintaining our historical and traditional asset quality numbers. However our metrics have improved during the quarter. A slight increase in nonperformance since year end continues in our view to be a short-term situation and not an indication of a longer-term trend.

Chuck, Mike and Bob will discuss all of these areas more fully in their prepared remarks. So at this time, I will turn the teleconference over to Chuck.

Thanks Jerry, and good morning everybody. What I would like to do this morning is give you an overview of Mercantile's financial condition and operating results for the first quarter of 2007, highlighting the major financial condition of performance balances and ratios.

Our net income for the first quarter was $4.3 million, a decline of about $600,000, or 13% from the $4.9 million earned in the first quarter of 2006. And our diluted earnings per share in the first quarter of 2007 were $0.53 per share, also a decline of 13% from the $0.61 we earned in the first quarter of 2006. Our decline in net income primarily reflects a decrease of net interest income, which when combined with growth in overhead costs, more than offset a decline in provision expense and an increase in fee income.

While we experienced good earning asset growth over the past twelve months, we expect a decline in the net interest margin more than offset the increase in net interest income associated with the earning asset growth, resulted in a decrease in net interest income when comparing the first quarter of 2007 with the first quarter 2006.

In the first quarter 2007 net interest income totaled $14.5 million, a decline of about $600,000, or 4%, from what was earned in the first quarter of 2006. Our average earning assets during the first quarter of this year totaled $1.95 billion, an increase of about $175 million, or 10%, from average earning assets in the first quarter of last year. Our average total loans during the first quarter of this year totaled $1.74 billion, an increase of about $160 million, or about 91% of average earning asset growth.

As fully expected, with the prime rate holding steady resulting in a relatively flat yield on assets, but a continued cost of funds increases in our CD and Federal Home Loan Bank advance portfolios, our net interest margin continued to decline during the first quarter of 2007 were a total of 3.07%. That is down 12 basis points from where it was in the fourth quarter of last year, and down about 44 basis points from where it was in the first quarter of 2006.

With a market consensus expectation is the Fed will hold the federal fund rate steady for the next three to six months, we expect a further decline in our net interest margin during the second quarter of 2007 before leveling off.

The main issue currently impacting our net interest margin is the repricing of the wholesale funds portfolio, but also be the continued extreme competitive pressures on loans and deposits and the flat to inverted yield curve.

The cost of our wholesale funds portfolio has increased and will continue to do so in the near term, however, not to the degree as it has in the past few years. During the second quarter of 2007 we have approximately $230 million maturing at an average cost of 5.10%. And for the last six months of this year we have approximately $400 million maturing at an average cost of 5.15%. Today CD rates and Federal Home Loan Bank advances on new deals equals about 5.25%, or very similar to the average rate on those funds that will be maturing throughout the remainder of 2007.

Our loan loss provision expense in the first quarter of this year was $1 million, a decrease of about $200,000 or 17% from the first quarter of last year, with that decline primarily being due to the fact that we have had lower loan growth this year when compared to last year's first quarter.

Our non-interest income for the first quarter of this year totaled $1.4 million. That is an increase of $165,000 or 13% over fee income in the first quarter of last year, with increases in virtually all major fee income categories recorded.

Overhead costs totaled $8.7 million in the first quarter of this year, an increase of about $700,000 or about 9% over the first quarter of last year. Of that $700,000 increase about 85% of that is in salaries and benefits. Our FTE has increased from 275 people a year ago to 295 currently. And we also had merit increases and this year a partial bonus accrual during the first quarter.

We ended the quarter with total assets of $2.09 billion. That is an increase of $22 million during the first quarter, with loans up about $3.5 million. As has been the case in the past, there no major changes in our asset composition.

Our funding strategy has also not changed, whereas we continue to grow our local deposits and bridge any funding gap with wholesale funds, that being brokers CDs and Federal Home Loan Bank advances. We continued to have very strong local deposit growth during the first quarter of 2007, with local deposits up $27 million or 17% on annualized basis. Our wholesale funds were up only $9 million from the beginning of the quarter to the end of the quarter.

Our average wholesale funds to average total funds equaled on average during the quarter, 61%, equal to what it was in the fourth quarter of 2006, but down from the 67% that it was in the first quarter last year.

Mercantile remains at a well capitalized position per bank regulatory definition with a total risk-based capital ratio at the end of the first quarter of 11.5%.

That is my prepared remarks. I would be happy to answer any questions in the Q&A session. I will now turn it over to Mike.

Thanks Chuck. Good morning, everybody. As Jerry and Chuck have already mentioned, the first quarter of the year for our bank saw a continuation of the competitive and rate scenarios that have been prevalent now for really about the last three or four quarters especially. As such, our management team we have, we believe anyway, prudently have focused on asset quality, as competitive pressures have caused some banks to drop their underwriting standards as they search for loan volume in this difficult environment.

While Mercantile has always enjoyed very low strong loan and asset growth during its existence, economic and competitive conditions dictate to us that our Company should be very careful with loan growth for the next quarter or two. The first quarter saw loan outstanding stay fairly stagnant, as our efforts to move some weaker credits off our balance sheet were successful, but somewhat mitigated the growth of the loan portfolio. We do continue though to add excellent new customers, a fact that we think will bode very well for us in future quarters as these relationships expand.

As Chuck mentioned, loan charge-offs were down from the fourth quarter, with net charge-offs for the quarter up about $778,000 or 18 basis points in total loans. 2006 charge-offs were 29 basis points of the loan portfolio.

Non-performing assets remain higher than management would like, though certainly well within our peer group averages that we are seeing out there these days.

In summary, there is no question that we are in a difficult rate competitive environment for banks, especially Michigan banks. But focusing on our core competencies and maintaining our standards is particularly important to our organization at this time. While the tendency for some banking organizations appears to be leading them in a different direction, we feel that building relationships within our traditional standards remains our key mission, even if our traditionally robust loan growth takes a back seat for a few quarters.

That is the end of my prepared remarks. And I will be glad to answer any other questions during the Q&A, but at this time I am going to turn it over to Bob Kaminski for a few comments.

Thank you, Mike. I have just a few operational updates. Construction is nearly complete on our new Lansing facility. The opening of this building is scheduled for the middle of May.

In February Mercantile commenced the rollout of our new Internet banking product. And finally, on the January conference call I mentioned some of the success that we have had with our health savings account product. As you recall, toward the end of 2006 we had established a relationship with a major West Michigan employer to provide HSAs to its staff. I am pleased to report continued success in HSA account offerings in this relationship as well as others. We are currently adding about 100 new accounts per month, and have brought in about it $0.5 million in new money to the bank so far in 2007.

That is the end of my remarks. I will now turn it back over to Jerry.

Thank you, Bob. At this time we will be happy to take any questions you might have.

(OPERATOR INSTRUCTIONS). Terry McEvoy, Oppenheimer.

Just looking at the loan growth in the quarter of about $3 million. If I go back in '05 and '06, you were running right around $50 million, $55 million of growth each quarter. And I'm wondering if you could somehow talk about how the soft markets -- how the conscious decision to kind of limit loan growth, and then some of that payoffs that you saw. Could you just give us a sense for how much each three of those factors really limited loan growth in Q1?

This is Mike, I will give it my best shot, and let any of the other gentlemen join in if I miss anything. But I guess the soft market certainly has been with us now for a while and it continues to play a role. The main role is that there just isn't a lot of optimism with a lot of Michigan borrowers at this time with some of the things going on in the state and in the Midwest, so that has been a constant now for a couple of years.

I think some of that payoffs have come as some of our larger customers in the commercial real estate area -- they have done some development. Some of these developments have come to fruition -- they have sold them, and in the normal course of business paid us down. So that combines with the last part, which is deal structure, which has become a real important part of what is going on in the last couple of quarters.

And just quite frankly, there has been too many times now in the last year especially where we have looked at deals, and good credit underwriting indicates that there should be guarantors involved or some other enhancements. And right now we're finding a lot of competitors out there really reaching, in our opinion as to what our credit culture wants to be like, really reaching for those loans, and doing things without guarantees, doing things without those enhancements. And we aren't just -- it's tough enough out there with the economy battling the normal non-performers and past due situations to get into these relationships without the proper enhancement.

I think the first one -- the soft market has been with us for quite a while. We would sure like to see some optimism happen in Michigan. I have got to believe that is going to happen here in the next quarter or two. But the last one has been more prevalent in the last quarter or two, which is we're just seeing a lot of deals that get done that we just don't think warrant those types of terms.

And it looked to be $300,000, $400,000 of recoveries in the first quarter. Was some of that connected to the fourth quarter charge-offs? And if so, do you see some more recoveries going forward?

Yes, they weren't really reflective of fourth quarter charge-offs. They were more reflective of charge-offs that were probably taken earlier in the year. But I would expect, as always, there to be a some level of recovery as we work these through from time to time. Although most of the time when we try to work them pretty hard before we charge them off, so I don't know that I would say I would look for $350,000, $360,000 every quarter in recoveries, but I would expect there will be some level of recoveries going forward.

Just a quick last question for Chuck. When we met a couple of months ago you talked about a normal margin of around 325. And I'm wondering do you still -- is that statement still -- is there still truth in that statement today? And any expectation of when we get back to that margin -- is that even an '08 event in your mind?

I would say, I would just add to that, we are probably somewhere around a 315 to 325 range where I believe is our normalized margin, assuming a normal yield curve, some rational competitive landscape out there. Obviously we are below that now. I think a lot of that -- the fact that we are below that lends itself to certainly the flat to inverted yield curve. Obviously that plays havoc on all of our pricing, but especially the bond portfolio.

And as has already been mentioned a couple of times now, it is just very, very competitive out there, what we are having to pay down, if you will, on the loan rates, and also having to pay up on the deposit rates. I'm not sure when that is going to change, or if it ever going to change -- maybe there is a little bit of a permanent change in the landscape there. I am not sure.

Certainly, as I mentioned, I think our margin is pretty well set to level off here, especially assuming no major changes to the interest rate environment itself. I would believe that as we return to a normal shaped yield curve that that would benefit our margin to some degree. But that by itself I don't believe will get us back up to that range anytime soon. But like I say, I think our margin is going to level off here, and we will just see what happens with those other factors.

[Steven Guyan], Stifel Nicolaus.

Regarding the pricing, if you don't see a significant change in the next quarter or so, at what point do you decide that you are going to step into the market? I don't expect that you are going to compromise on structure, but at what point do you say, you know what, this is the reality of the market as far as pricing and we need to participate again?

Well, I think when we say we are being careful on our loan growth -- this is Mike again -- I think we want everyone to know that we are still being very competitive on the pricing side of things. And we are really not -- sometimes we certainly don't like the pricing we have to compete with -- it's more on the deal structure side that we just draw a line in the sand. We see there is such a voracious appetite for loan volume out there and it's just not there. And we are seeing all around us banks reaching, reaching, reaching. It is also a door opener for fraud to come in because people keep their guard down. They are really looking for loan buying that probably isn't there.

We have seen it -- some of it at our shop on a very small basis. And as we see it, we just think it very prudent to say, you know, if the deal structure isn't what we want we just can't allow our asset quality to take any kind of a hit. But as far as pricing goes, yes, as you know, we are pretty effectively built from an efficiency ratio standpoint, and we can compete on price pretty well. But it is more of the deal structure that we're talking about.

And loan yield, can you give what the number might be from quarter-to-quarter?

This is Chuck. The loan yield has been very, very constant over the last three quarters, especially since the Fed stopped raising rates in June of last year. It has been very, very steady, I think around 7.8%.

You haven't seen much of a shift from fixed rate to variable-rate -- excuse me, to fixed rate from variable-rate loans?

A little bit, but not nothing very notable.

John Rowan, Sidoti and Company.

Chuck, a quick question. Was there any extra employment tax in the first quarter that you (inaudible)?

As far as --?

Like a FICO assessment?

Yes, there would have been nothing out of the ordinary. Certainly as part of many bonus accrual, we would also accrue for the FICO associated with that.

Can you just go over -- I didn't get the CD repricing as far as the --.

Yes, in the second quarter we got $230 million. And this also includes Federal Home Loan Bank advances. $230 million at a cost of 5.10, and in the last six months we got $400 million at an average cost of 515. And I also mentioned that pretty much regardless of term and whether you do a CD or an advance on the fixed rate side, which is what we do, our earning is pretty much right about 5.25%.

So you're not going to see much of a decrease then obviously -- that kind of goes back to the margin levels (indiscernible) in the second half. So you are not really looking for any more price competition weighing on your margins going into the second half of the year -- is that accurate?

I believe that it is accurate with regard to anything certainly significant. But we continue, as I mentioned before, deposit pricing which obviously I am involved in on a day-to-day basis hasn't waned at all. And when I see what has happened on the loan side, as Mike just talked about, it is very, very competitive out there.

So there is going to be some pressures, but certainly when you look at our margin decline a big part of that has just been the timing on the repricing of the CDs versus the increases in assets yield we had when the Fed was raising the prime rate on the loan side of things. And it certainly appears to us in looking at the numbers that repricing here during the second quarter has pretty much ended -- certainly from a material standpoint. So barring no major changes in the interest rate environment, we expect our margin to level off here during this quarter and to be relatively constant as we go forward.

And one last question for Mike. Can you just talk about the -- obviously the increase in other real estate owned -- what property is that (indiscernible) on it?

Yes, I don't think it is any one particular property as much as it is just a combination of some commercial real estate that is out there. It is more commercial than residential. As a matter of fact, I don't think we have any residential to speak of in that category. But it is mainly just some commercial real estate that given some of the economic conditions out there just has not performed and we have had to go through the process. And as you all know that we are fairly family weighted in the commercial real estate business in our loan portfolio. So unlike automobiles that get repossessed and sold pretty quickly, the good news is that the real estate doesn't go anywhere on wheels. The bad news is you have to go through the process of foreclosing it out, and given the redemption period. So it is just the normal in and out activity that we have as we foreclose some of this stuff out.

Jon Arfstrom, RBC Capital Markets.

Mike, I just wanted to follow up a little bit more on the loan growth question. I know you are probably tired of answering these questions, but --.

No, glad to answer any and all.

Just can you give an idea, is there anything that gives you any more optimism for later in the year, or should we expect more of the same over the next couple of quarters in terms of some of the sequential growth numbers?

Well, I would like to think that looking at some of the deals our folks are working on, and we have pretty good opportunity to bring in, that we certainly would have a fair loan growth for the next couple of quarters than we did in the first quarter. But I don't think in all honesty that the old $50 million to $60 million quarters that we were having a year ago, a year and a half ago, that is probably more of an '08 or beyond type of return. Just because of I don't see the Michigan economy turning around that quickly. We see some good things going on out there. But so I would say it, yes, probably better than the first quarter, but certainly not to where we were 18 months ago. And I know that is a big target. But I do see some real good things coming up that we have got real good shots that, and I see less and less of the bigger payoffs that we got hit with a year ago as some of our big customers got some big projects to take care of.

And then do you have the loan production for the quarter in Grand Rapids, Lansing and Ann Arbor?

You know, I don't have -- I meant to bring that, but I did not bring it. But I can give you in general terms the Grand Rapids market net was down a little bit, and the Holland market was about flat. And then we had small gains in both Lansing and Ann Arbor.

Chuck, a question for you in terms of the expenses. Any expense pressure that is out there I think almost every bank expense a jump sequentially and expenses in the first quarter because of some of the FICA issues and merit raises. But is there anything else that is out there that would put any pressure on that line?

You mentioned certainly the FICA is always there in the first quarter. The way we here with our officers or staff is everybody gets reviewed in the fourth quarter, and gets merit pay increases effective the first pay during the first quarter. So we always, as you know, we always have a pretty big jump from the fourth quarter to the first quarter.

But as we look out throughout the remainder of 2007, no expected big increases there with regards to overhead costs. We are doing a couple of upgrade from an operational standpoint that will start to hit in the second quarter, but it is not hugely significant.

A couple of more questions. Jerry, a question for you. Just in general on the bonus accrual numbers, historically I know you guys have always been focused and thought of as a growth bank. And I'm just curious as to what has changed. You touched on it a bit in the proxy, but how do you look at the Company in this environment, and what are the priorities in terms of performance for the management team in '07?

Well obviously, although we have always been a growth bank, and we still consider ourselves a growth bank, we're just taking a little time off because of some of that pressures out there. But as we look at bonuses, for example for management, we're on the same program as just about everybody else is. We have never compensated ourselves for growth in assets; it has been growth in earnings. And we hope to -- it is quite a bit tough year. We hope to maintain at least the earnings pace that we're at right now. But as far as going from a growth bank to a more ordinary bank -- no, that is not our strategy. We have historically been a growth bank. That is why we have gone into other markets. We still continue to look strongly at the other markets both in Michigan and in other parts of the Midwest.

But to grow just for the sake of growth has never made any sense. And I think the ground is littered with the corpses of bank who have tried to do that. And as Mike said, if we can't get the right deal structure, we are not going to take some of these deals on just to show growth numbers. So we have not changed our philosophy on growth at all. But it has been a commitment to growth, but not for the sake of growth. It has been for the sake of earnings.

For what it is worth, I think these are good decisions. And I have seen other banks make these same decisions. Unfortunately it is painful in the near term, but I think it is --.

It is. We are not used to having a quarter where the earnings are -- I don't know if we ever had one where the earnings are less than they were in the prior year period. But that is the price we are paying, not just for the yield curve, but for the environment that we are in. And we hope that our investors appreciate the fact that if we need to curtail growth for a few quarters to protect our earnings and avoid some of the loan problems that our competitors are having, that is what we are going to do.

And then just a last question, I don't know if it is Mike or Jerry that wants to touch on it, but to the extent you can, can you talk about the impact of Comerica's decision to exit the Detroit as their headquarters might have for your Company? Does it present some opportunities?

We can probably both answer. Again, we will have some. I think here in Grand Rapids it will not be huge. We don't really compete at the same level. You don't see that much until you're looking at credits in the $15 million range. Possibly there may be some opportunities for us over in Lansing, and particularly in Ann Arbor. And Mike, you may have some --.

Yes, Jerry is right. If you look at the [RSMA] here in West Michigan, Comerica is way down the pack as far as market share. So from that standpoint it is not going to be significant. It will help us in Ann Arbor, because they are a more significant player there. And we are in fact, already getting some contract with people who are very disheartened, and potential customers that they are pulling out. We don't know if they are going to move the charter, but I would imagine they would. That would be my guess, and that would probably give us yet another opportunity.

And from a macro level, although I think we are all sorry to see them go, because it is just another one of those headlines that people in the state of Michigan read, and along with the Pfizer and those types of things where it just kind of gets people feeling less optimistic about what is going on out there. So we would feel differently about it depending on what level you are asking, in a sense.

(OPERATOR INSTRUCTIONS). Eric Grubelich, KBW.

Just one thing. Your comment about you don't think the strategy of the bank is changing just because the environment is not great right now, that you are still a growth-oriented bank. Quite honestly, if you were putting on a whole bunch of growth right now, you would probably be more suspect than anything else. So I think what you are saying, at least resonates well with me in terms of your strategy, and that there is no change to it, but that you are taking some time off.

So that is a good thing, but sort of related to that statement, the loan growth, as you mentioned, you have had these $50 million, $60 million type quarters. For the year do you think what may have been perhaps a low double-digit type quarter might be in the high single digits now? Do you think that is realistic?

This is Mike. I would say that is realistic. And we could have a quarter in this year yet where we would have some pretty good -- even above that, but I would say that is pretty realistic.

Good. And then the other -- I have actually three other questions. This is one for Chuck, perhaps. On the net interest margin, when you look at the rate of decay the last couple of quarters, quite honestly, it was roughly in line with where I thought it would be this quarter. Going into the second quarter now that most of the repricing has occurred, do you think we would be looking at margin compression that maybe was half as much as it was this quarter?

Yes, it will probably be somewhere in that neighborhood, again assuming no major changes in interest rates. Obviously, we did a 307 during the whole first quarter, but certainly March was lower than January. So the average for the second quarter will likely be a little bit lower than the 307. But certainly the rate of decay, as you call it, we certainly expect that to slowed dramatically.

Good. That is what I was hoping you would say. And the other question was on the expenses. Can you give us an idea of what the bonus accrual was in the quarter?

It was approximately $200,000 for the non-lender bonus program.

I am sorry, I mean meant the non-lender program.

It is about $200,000.

And then, actually Chuck, also for you -- tax rate was a little low this quarter, anything unusual there, or should we still be looking like at a 31% type rate?

Yes, I think it will be somewhere around 30.5, 31%. Probably 30.5% is what I would go with in accordance with our spreadsheet and our analysis.

I like that. And then the last question I had was -- maybe Mike or Jerry for that matter, either one -- could you talk a little bit about the trend like the 30 to 89 day past due category? A lot of banks have had big bump ups in those numbers for the last couple of quarters. You actually maybe to a smaller degree, certainly the fourth quarter was kind of flat with the third quarter. Where does that stand now? I think in the fourth quarter you have a little bit under $4 million of total 30 to 89 day pass dues. What trends are you seeing there?

This is Mike. That number right now is just a little over $6 million in the 30 to 90 days. But unlike the fourth quarter, most of that is in the 30 day category. And a lot of that in the 30 day is numbers that we think we can get corrected before it matriculates into 60,90 or non-performers.

And then maybe Mike, one last comment too. Everybody is sensitive these days to the real estate markets, whether it is ordinary, residential, 1-to4s which you folks don't have a ton of exposure to, whether it is in home equity or just again regular residential mortgages with the customer. Construction and land development loans, it is about 18% of the portfolio. How much do you think is related to residential-related construction? Do you have any concerns with that exposure right now?

Well, I don't know that -- and Chuck can correct me if he has the number -- I don't know if we would have an exact percentage or number for you. But we do have one in particular residential construction company that right now we are involved with. They are involved with quite a few banks. And we are working it through, and we may end up taking a very small loss on it. But that is about the extent of that particular type of industry that we have in our portfolio.

Also the commercial real estate that we are fighting with, as I said earlier to another question, is really onies and twoies buildings that companies have just struggled with and haven't been able to survive the downturn in the economy, and we are just fighting through the foreclosure process.

Again, that is more commercial rather than residential? I did hear you make that comment earlier.

Yes, like I said, we do have one fairly significant company that was doing very, very well here in town for many, many years. When the market turned, it turned on everybody in that industry, as you know, almost like turning a faucet off. In Michigan especially, the faucet is still pretty tightly closed. So we are in fairly good shape compared to especially where some of the other banks are. But it is always hard to look at the crystal ball and say what is the ultimate loss going to be on it. But we don't expect it to be a significant number.

Ladies and gentlemen, there are no further questions at this time. I will turn the conference back over to management to conclude.

Thank you all very much. This concludes our teleconference.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.