MFA Financial Inc (MFA) 2014 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the MFA Financial, Inc. first quarter 2014 earnings call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. Instructions will be given at that time. (Operator Instructions). I would now like to turn the conference over to Danielle Rosatelli, please go ahead.

Good morning. The information discussed on this conference call today may contain or refer to forward-looking statements regarding MFA Financial, Inc., which reflects management's beliefs, expectations, and assumptions as to MFA's future performance and operations. When used, statements that are not historical in nature including those containing words such as will, believe, expect, anticipate, estimate, plan, continue, intend, should, could, would, may, or similar expressions are intended to identify forward-looking statements. All forward-looking statements speak only as of the date on which they are made.

These types of statements are subject to various known and unknown risks, uncertainties, assumptions, and other factors, including those described in MFA's Annual Report on Form 10-K for the year ended December 31, 2013, and other reports that it may file from time to time with the Securities and Exchange Commission. These risks, uncertainties, and other factors could cause MFA's actual results to differ materially from those projected, expressed, or implied in any forward-looking statements it makes. For additional information regarding MFA's use of forward-looking statements, please see the relevant disclosure in of the press release announcing MFA's first quarter 2014 financial results.

The discussion today also contains non-GAAP financial measures. Information relating to comparable GAAP financial measures may be found in the first quarter 2014 earnings release and earnings presentation slides, each of which has been filed with the SEC and posted on our website at MFAFinancial.com. We encourage you to review that information in conjunction with today's discussion.

Thank you for your time. I would now like to turn this call over to Bill Gorin, MFA's Chief Executive Officer.

Thanks a lot, Danielle. I would like to welcome everyone to the MFA first quarter 2014 financial results webcast. With me today are Craig Knutson, MFA's President and Chief Operating Officer; Gudmundur Kristjansson, Senior Vice President; Steve Yarad, CFO, and other members of senior management.

Turning to slide 3, Danielle. On slide 3, you could see that in an investment environment characterized by very low short-term interest rates, MFA continues to generate consistent and attractive results. In the first quarter, we generated net income of $72.4 million or $0.20 per common share.

Dividends per share was also $0.20, consistent with the prior quarter. Book value per common share increased approximately 2% to $8.20 as of March 31, from $8.06 as of December 31, 2013. Based on continued improvements in the loan-to-value ratio of the loans underlying our non-agency MBS portfolio, and other factors, in the first quarter we again transferred a sizable amount, approximately $36 million, from credit reserve to accretable discount.

MFA remains positioned for a more flexible monetary policy by the Federal Reserve, based on measures of labor markets, core inflation, and other incoming economic data. By pursuing our strategy of investing across the residential mortgage asset universe, we continue to find opportunities to generate yield without increasing interest rate exposure.

In the quarter, our yield on interest-earning assets increased while our estimated effective duration, a measure of our interest rate sensitivity, decreased. It is important to remember that equity sensitivity to changes in interest rates is impacted by both duration and the leverage utilized. And we continue to maintain a leverage ratio of approximately 3 times.

Obviously, asset selection is what drives both our income and our interest rate sensitivity. But, I would like to point out three attributes of our assets which I believe set us apart. First, we hold $5.7 billion face amount of non-agency MBS, with an average amortized cost of approximately 74% of par. We have a credit reserve of $1 billion against these assets, and these assets generated a loss-adjusted yield of 7.8% in the first quarter.

Second, we continued to maintain historical preference for adjustable-rate and hybrid MBS. Two-thirds of all our MBS are adjustable hybrid, with only one-third fixed rate. And, third, within the fixed rate universe, none of our A to Z MBS are 30 years. They are all adjustable, hybrid, or the shorter 15-year fixed rate.

On slide 4, you continue to see that despite changing interest rates and prepayment speeds, our key metrics have remained generally consistent. They are generally consistent from the fourth quarter of last year to this quarter, and even going back to the first quarter of 2013, they are fairly consistent with a positive trend -- a small positive trend. Our yield and interest-earning assets has gone up. Our net interest rate spread has gone up and our leverage ratio has gone down somewhat.

Turning to slide 5, you see that the book value increased in the quarter, due primarily to the appreciation of non-agency assets. Again, book value was $8.06. It is now $8.20. That is about a 2% increase in the quarter.

Now, turning to page 6, Gudmundur will give some more detail about the interest rate sensitivity of our assets and our hedging strategy.

Thank you, Bill. On slide 6, we show MFA's net duration as well as the duration of our assets and hedging instruments. The top part of the table displays the duration of our agency and non-agency assets, broken down into buckets by coupon reset.

On March 31, we estimated that the duration of our assets was 2.1. The bottom half of the table shows the duration of our hedging instruments, which consists of interest rate swap with maturities of up to 10 years. On March 31, we estimated the duration of our hedging instrument to be negative 3.6.

Finally, when we combine the duration of our assets and hedging instruments, we estimate MFA's net duration to be 0.83 as of March 31. Our net duration declined 7 basis points in the first quarter, primarily because we added short and post reset hybrids -- hybrid ARMs on the agency side, as well as adding $200 million of, on average, six-year or swaps on the hedging side.

MFA's interest rate risk continues to be low, as shown by our low duration. But in addition to that, extension risk in our portfolio remains limited as two-thirds of our assets are adjustable-rate mortgages or hybrid ARMs. Now I will turn the call back over to Bill who will discuss our asset allocation.

Turning to slide 7, on the stage we present our assets, yield, and spreads broken out into four categories. (technical difficulty) So again, turning to page 7, we present our assets, yield, and spreads broken out into four categories. Agency MBS, not agency MBS, new category here of re-performing loans/nonperforming loan MBS, and then cash and other.

In the quarter, we identified attractive investment opportunities and grew both our agency and non-agency MBS holdings. As I mentioned, we grew another asset type, RPL/NPL MBS, which we will break out here for the first time.

This $200 million of RPL/NPL securities are just an example of the type of residential mortgage asset that fits very well into our investment strategy, when and if available at advantageous prices. These RPL/NPL securities are unrated. They're senior-most tranches backed by re-performing or nonperforming residential mortgage loans of the 2005, 2006, and 2007 vintage.

The average subordination level on these securities is approximately 55%, so we are comfortable with the credit exposure. The coupon on the securities increases by 300 basis points if the asset has not been retired by the end of the third year. So we are comfortable with the interest rate exposure.

In addition, because these assets trade near par, due to the subordination and three-year reset, we are comfortable utilizing debt to equity ratio just in excess of 3 times. So, just an example of one of the asset classes we have identified, and we put $200 million to work as of this quarter.

Returning to the final column, the total, you can again see that leverage, yield and spreads have remained fairly consistent and attractive in the quarter.

With that, I would like to turn the presentation over to Craig to provide some details as to the improving housing metrics and how they are impacting MFA's portfolio.

Thank you, Bill. So on slide 8, we continue to see improvement in the LTVs underlying our non-agency portfolio. This is due primarily to both home price appreciation and also mortgage amortization. As a result, we again adjusted our future estimates of expected losses, resulting in a $35.9 million transfer from credit reserve to accretable discount.

And, again, this increase in accretable discount will increase the interest income prospectively over the remaining life of these non-agency MBS.

Turn to slide 9, so, more on LTVs. On the left-hand side, I would call your attention to the green line. This is the LTV of the total portfolio. Again, you can see its decline from the beginning of 2012 from 105% to about 82% today. But I would also point out, if you look back just to a year ago, March of 2013, that average LTV was about 95%. So we have seen about 13 points of improvement in that LTV just in the last 12 months.

On the right-hand side, I would call your attention to two lines. First, the gray line; these are the delinquent loans. So these are the delinquent loans of the portfolio, the percentage of those with LTVs over 100%. Again, if you look back a year to March of 2013, it was approximately 50% of those loans had LTVs greater than 100%, and the numbers declined to almost 25% of those loans.

The second line that I would call your attention to is the orange line. So these are the current loans with LTVs greater than 100%. And the reason that we focus on current loans with LTVs over 100% are -- these are what we call the at-risk loans. So these are the loans that we might worry might default in the future because the borrowers are underwater.

So if you look at the last year change there, last year current loans with LTVs greater than 100%, it was a little more than 35%. That number is less than half of that now. It is down close to 15%, so very good LTV improvements.

Finally, on slide 10, this is a breakdown of our non-delinquents. So these are the loans that are current. So, as I just said, the at-risk loans are the current loans that have high LTVs. And you can see over on the right-hand side, we have fewer and fewer of these high LTVs or at-risk current loans, less than $200 million are over 110%.

Keep in mind also that these underlying loans are on average eight years seasoned. And, again, I would point to the left-hand side here to the loans with LTVs less than 60% and between 61% and 80%. Those are all very refinance-eligible.

So, LTVs below 80%, assuming borrowers have good credit, they would be able to refinance these loans. And, again, because of the significant discount that we paid for non-agency assets, any prepayment at par is obviously a good thing.

Slide 11. This is the transition rate. So this is the rate at which loans that are current in the current period, transition to 60 days delinquent. And you can see, after peaking during the crisis in 2009, that number has continued to come down. We are back down now to basically levels where we saw transition rates in late 2007, 2008. So again, another very good trend.

Then, finally, slide 12. So this shows this credit reserve that we talked about. And you can see on the right-hand side that credit reserve is a little over $1 billion, as Bill mentioned, which represents about 18% of the face amount. And then, on the left-hand side, our purchase price of 74%. So basically, we have purchased these assets at a dollar price of 74%. And, because we have a credit reserve equal to 18% of the face, we are accreting that 74% to 82%. So we are assuming that we get back approximately $0.82 on the dollar on these securities.

And, again, at the very bottom, that purple section, the accretable discount, is about $400 million or about 8%. So that is what we accrete into income. So, whenever we move money from our credit reserve to accretable discount, credit reserve goes down. The accretable discount increases.

And, with that, I will open it up for questions.

(Operator Instructions) Arren Cyganovich, Evercore.

I was just curious on the non-agency CPRs that had come down. Seeing that the LTVs have come down a lot in the portfolio, I would expect that maybe the voluntary repayments would -- prepayments would actually start coming through at a faster pace. What are your thoughts on that side of it?

I think we have seen prepayments across the board lower in the first quarter. And this will be in the Q that came comes out later today, but the voluntary speeds -- so we show a CPR of about 12%. The voluntary is a little less than 8%. So the default rate in the quarter was 2.8% and the voluntary rate was 7.7%.

Okay. And then in terms of the reinvestment of your non-agency, what are you seeing in terms of new yields and what kind of leverage are you able to put on those new investments?

So in legacy, is that what you are referring to?

Yes, and legacy non-agency.

Legacy non-agency. I would say, depending on the asset and depending on the day, they probably yield between 4.5% and 5%. We have actually seen our financing cost improve a little bit. We have actually seen some new players in the financing market.

So haircuts range from, I would say, a low of maybe 15% or 20%. It was as high as 30% or so. So I think our overall leverage ratio is still less than two times. That is not really by design. It is more by accident. As the assets appreciate, our leverage numbers go down.

Okay. And then, lastly, just a quick one on comp expense increased quarter over quarter. And I guess overall, operating expenses increased. What is driving that and is that more of a new run rate that we are at from the first quarter?

Thanks, Aaron. This is Steve Yarad. I think, to answer your question, I would like to make the following observation about our G&A.

So, as you know, that G&A was a little higher in the first quarter. It was $10.4 million. And that compares to $7.6 million for the fourth quarter of 2013 and about $8.5 million for the first quarter of 2013.

And I think it is important to note that in the fourth quarter, our G&A was about $1 million lower because we made some adjustment to our incentive compensation accrual to reflect actual bonuses paid for 2013. When you compare it to the run rate for most of last year, it is about $1.5 million higher. And that is primarily due to compensation and technology budget expenses in support of our residential asset investment strategy.

I think the other comments I would like to make, if you look at our compensation of G&A to equity ratio at the end of the first quarter, it is running at about 1.3. And we believe that is the low-end of our peer group that don't exclusively invest in agency MBS.

And the final comment I would make is that, if you look at the run rate, the expenses for 2014, we think where we are and what we anticipate for the rest of the year, subject to any significant changes in our compensation accrual will be consistent with what we have seen in the first quarter.

Steve Delaney, JMP Securities.

I wanted to touch on this new asset class little bit, if I could. It looks like the $45 million of equity, you are about 1.5% of equity. And I am just curious if, internally, you have sort of a target there. Assuming you can find suitable assets to purchase, how big could this bucket become?

Well, as I mentioned during the presentation, we like the asset depending upon price and when they are available. And we actually were one of the larger buyers over the last 12 months of this asset class. So it is not a huge asset class. It could grow and it is highly dependent on price.

Steve, what is important about it is it's an example of where we can get paid to take an investment position in an asset that is not rated, that we can understand the credit very well and where we are not adding interest rate exposure. So, if it was available at the same terms in a larger size, it would be a larger part of our portfolio.

Got it. Got it. Yes. And it certainly is just an extension of your residential credit team that you have built that is monitoring your legacy RMBS.

In looking at the comparable return, I don't want to beat it to death, but I think in case it might grow, I am just trying to look at this asset relative to your legacy portfolio. And if we take your leverage figures and your spread figures, I am getting sort of a gross ROE on the legacy RMBS of about 11.3%, and the new asset class models out to about 10.8%. So, close; slightly below in terms of ROE.

But I am curious how you viewed the new asset class, the duration profile, and potential rate risk relative to the legacy RMBS given how high the dollar prices have moved in the legacy portfolio.

Yes, Steve, you have got exactly right. The ROEs are comparable, but we do believe there is a lot less interest rate exposure in this asset. And that is why we have allocated more to this asset and a little bit less to non-agency growth.

You have it exactly right. We think, since the coupon steps up after three years, there is not a lot of interest rate exposure in this asset. And that's why we are comfortable running a little more leverage on this asset, too.

Okay. Good. Yes. That's helpful. And then, lastly, I don't want to beat this up too much, but we expected -- book was great, up 2%, but we actually were thinking it might be a little better. We saw bond prices up, somewhere 1 to 2 points in the first quarter. And just curious if there is anything there that we might have missed or we need to think about it a little bit differently.

Great. Good question. I don't know exactly what you are doing, but I can tell you what we are doing.

That's what I really want to know is what you are doing.

First of all, and we have said this before, I just want to reinforce to everyone that, while we don't say our assets are prime, we describe it in the terminology changes over time. At origination the average FICO score of the homeowners was 725. These loan balances are in excess of $400,000. They tend to be at the higher end of the credit quality. Right now they are priced in the high [80s].

So if some people might be comparing us to say ABX index or some other index, it might not be relevant. It might not be a completely good correlation between the value of our assets and some other index. I point that out.

The only other thing I do want to point out is our equity goes up by our OCI. And our OCI, which is the other comprehensive income, basically is a measure of unrealized gains. So when you look at unrealized gains, you really have to look at two factors.

One, what has happened to the market value of the assets, which you could do on your own by looking at the right index. You also would have to know what is happening to the amortized cost basis. It is the difference between the market value and the amortized cost basis, which is ending up in OCI.

Because the non-agency yield is approximately 7.8%, while our coupon yield is 5.2%, there is accretion because we paid a discount. The cost basis moves upward.

Because we are booking more income than the coupon, the amortized cost moves up somewhat, so you can't just take the change in market value to calculate the change in comprehensive income and, therefore, the change in book value. I know that's a long explanation, but hopefully that helps to answer the question.

No. I think that does. And I think the point -- I think what we have to focus on, from our side, is the fact that this yield is picking up as you transfer from credit reserve to accretable. We are just getting a bigger impact quarter to quarter from that cost basis, I think, than we maybe were a year ago or so.

That is exactly right. And that is why -- first time you have seen the trend in the amortized cost moving up. It moved from 72 to 74-something, Steve?

Approximately, yes.

Exactly right. Exactly consistent.

Douglas Carter, Credit Suisse.

I guess sort of sticking to that point, Bill, could you sort of contrast where the market value of your non-agency is relative to the level of those credit reserves you have against them?

Sure, Steve?

So, at the end of the quarter, the average market value of the non-agencies was roughly 88.3. And I not sure --

Well, actually, if you want to look at it on a gross basis and if you just turned -- if you have the press release there, on page 4, you see that market value of the non-agencies was about $5.1 billion and the credit reserve is about $1 billion. Does that answer your question?

Right. So I guess I was just trying to get a sense as to whether the market was implying that you still had more credit reserves to be released over time.

Well, I don't know if you can make that conclusion, but I will say that the market price is somewhat higher than what we hoped to realize. But there is another variable there.

If the coupon on a fixed rate is higher than the market yield, you could still rationally expect to get less in than the market price and still generate the 5% yield. For example, if it is a 6% coupon, and the market price is 88, it doesn't mean the market is saying you are going to get back 88. The market could be saying, you are going to get back 84, but you are going to be booking a higher coupon over the life. Does that answer your question, Doug?

Yes. That's helpful. And then, on the re-performing loans, what is the advance rate that you are getting when you finance them, just to compare that to the leverage that you are using?

So the haircuts range from 20% to 25% to 30%. I think if you look at the 3.4 leverage ratio number, that would imply an average haircut of about 29%. And I think the average haircut is probably about 27% or so.

Got it.

Let me just make another point. In no way have we tried to maximize the debt on our non-agencies. The fact that the leverage has gone down is correct. It is because the assets have appreciated.

It is also because we know it is so readily available. We don't have to use the leverage. We know the leverage is there if we want it.

Joel Houck, Wells Fargo.

Maybe you could just drill down into the accretable discount a little more. I mean, you see it -- obviously, it has a nice impact on the yield and that will translate into higher current income for shareholders as we go forward.

When you think about it, the market value of your assets are 88. I think you said you are basically accreting to 82% recovery value. Should the right way to think about it -- and I heard your comments earlier, Bill, about the coupon has to be taken into consideration.

But it would seem to me that, if we are trying to model this out, that 88 -- assuming HPA doesn't do anything crazy in this year, that is where we are headed toward. Maybe not as high as that, given your comments about the coupon, but can you maybe provide some color on that and give us some help modeling?

Well, in terms of the direction of the prices for non-agency assets, people continue to like this asset class and they are not making a lot more of this. So I can't -- I don't know if I agree that they are not going to continue to move up from here. (multiple speakers)

I guess I was asking more like, the accretable discount is -- assumes 82% recovery value. The market value of the assets are 88. So I trying to see how much that gap will close assuming that there is no more increase in the price of the asset. Does that make sense?

Yes. But, again, Joel, it is hard to say because it depends on the asset. So if you look at hybrid securities, those are typically structured as pass-throughs. So if the coupons get modified, the coupon goes down because we are getting a net coupon, which is the gross coupon less some servicing spread.

But if you look at higher coupons -- and it is not just fixed rate, as Bill mentioned, although we do have a significant amount of fixed rate bonds in our non-agency portfolio. It could be hybrid -- there could be [10/1s] for instance, issued in 2007. So those still have those close to 6% coupons that they had at origination.

But, if these are trading at 4.5% to 5% yield, you could conceivably be getting back much less than you paid for the bond, right? And the way fixed rate deals are structured, it is a fixed coupon. So even if the underlying loans get modified, they still have to pass through a 6% coupon. So you could actually get significantly less than you paid for.

So, it is not a one-to-one relationship and different bonds affect the credit reserves and the accretable discount in different ways.

Joel, let me add -- I will copy the Fed on this. It is highly data-driven and there is still 22 years to go on these assets. And, right now, using our best estimates of projected cash flows, we expect to get back 82. But we have proven to be somewhat conservative over the last couple of years and we have had to make our adjustments.

I think if you asked this question a couple of years ago, I think our number was 78. So whether it eventually ends up at 82 or 88, we don't know. But the housing trend continues to be positive and we will adjust as we get new data each quarter. But, unfortunately, we can't tell you what the ultimate number will be.

Okay. Well, it sounds like the number one number we should focus on may be HPA as that plays out, because that seems to drive lower LTVs, which then obviously impacts the ultimate amount that you are going to realize.

Yes, HPAs and amortized principal payments really helps, too.

Yes. Okay. So obviously, you guys were one of the few that got through the volatility last year in good fashion. If we think about this year, obviously if the [vowels] come in a bit quite a bit here the first four months, but there is a notion that there is a big debate about what is going to happen if the Fed really ends QE.

If we start to see some spread widening, particularly in the back half of the year, what is MFA's view or strategy in terms of maybe capturing some attractive returns in longer dated assets that maybe traditionally haven't focused on, to your credit? Or is the view, hey, we are just going to stick to kind of the shorter duration portfolio and -- because that's what works and there is no need to kind of deviate from the strategy?

So, spread is very relevant if you are hedging your interest rate exposure. Absolute yield is also very important. And based on the absolute yield and the inexactness of hedging a 30-year agency asset, the spreads would have to be very wide for us to make that move. Does that help you? But, certainly, 15 years we have been there when the spreads were attractive and continue to like that asset class, depending on pricing.

So again, maybe a better way to ask it, if we just saw a normalization in the 30-year, that wouldn't be enough to get MFA really that interested. It would have to be greater than just a -- and normalization, I am talking maybe 25 or 30 basis point widening from here.

Yes. I don't think that -- we haven't owned 30-year agencies yet in the last 18 years, and so it would have to take some extreme opportunity for us to change our strategy there.

Henry Coffey, Sterne, Agee.

In sort of dissecting the quarter and looking at the re-performers, are all of those bonds? Or is there a mix between bonds and whole loans? I was uncertain about that.

Henry, it is Craig. They are all bonds. They are all securities. They are unrated and they are the senior piece.

Typically, these deals get structured with 50% or 55% credit enhancement. And it is a fixed rate coupon. It is typically non-callable for one year, but if the securities are still outstanding after three years, the coupon steps up by 300 basis points.

How much insight, when you buy the bonds, into individual loan [takes] do you get and how sensitive are you in terms of who actually is servicing these assets?

It is a good question. We get a lot of detail about the underlying and, as you know, we do focus on the credit. We also focus very much on issuers and servicers. In fact, we have probably met with most, if not all, of the issuers of these securities.

And, again, the theme always with MFA has always been that you are going to manage credit risk more than interest rate risk. Is there an opportunity to expand the general idea of this asset class by looking at things like whole loan purchases, Ginnie Mae, early buyouts, distressed loans, other sort of -- something where you would be buying a more granular asset and perhaps partnering with the right servicer? Or are you going to be focused just on bond classes?

Good question, Henry. So we have devoted a lot of resources to be able to analyze these somewhat seasoned, somewhat credit-sensitive securities and the skill -- those work on loans. We gave an example of the RPL/NPL securities. And we do find merit in looking at the individual loans, too. So it is something that you may see over time.

(Operator Instructions) Daniel Furtado, Jefferies.

You may have mentioned one or two of these early questions, and if so I apologize. But did you disclose the LTVs and severities that are running on that NPL book currently?

We have not, no.

Is that something you are willing to do or not?

We will consider it. Sure.

Okay. And then about how many servicers are associated with that NPL book? Just roughly, is it like one or what are we looking at?

No. It is probably closer to five or six.

Okay. And so I guess the idea with 50% -- I guess it depends on the LTVs, but with the 50% subordination level, the basic thesis here is that so long as loss severities aren't higher than 50%, you should be money good in these positions.

Well, that's true, but the typical structure has all of the cash flow. So all of the interest and principal from the entire deal gets paid to that front bond.

Okay. The very similar so to a re-REMIC, then, is kind of how to think about the structure.

Yes, although re-REMICs typically have coupons on the underlying securities -- on the non-rated securities. In this case, all the cash flow in most cases goes to the senior bond.

Oh, understood. Okay. So they are completely locked out, even on the interest side, the subs are.

Correct.

Okay. And then, turning to the broader theme, and I know this is probably difficult to answer. But, how do you see -- or what are your expectations for emerging asset classes in the mortgage market?

Or I guess more specifically, the development and timing of the non-QM mortgage market. Do you see where -- getting towards the cusp of seeing something here in terms of real development, or do you think this is still pretty far downfield?

Well, our assets, whether they be securities, new securities, old securities, or loans, tend to be older vintage. So we are less focused -- we are not an originator, which seems to be a tough business right now. The people we talk to in the non-QM are all spending a lot of time with their lawyers on these issues.

And the question is, how much more you going are to get paid to own these loans versus the uncertainty of collecting, and the legal defenses against collecting? So we don't yet have the answer and we are probably not going to be at the forefront of this answer. But we will be glad to be a follower here.

Right. I understand. Okay. Well, hey, thanks for the comments, everybody.

There are no further questions at this time.

Thanks, operator. And thank you all for participating in the first quarter 2014 MFA webcast.

Ladies and gentlemen, this conference will be made available for replay after 12 p.m. Eastern today until August 1, 2014 at midnight. You may access the AT&T executive playback service at any time by dialing 1-800-475-6701, and entering access code 326076. International participants may dial one- 320-365-3844. Again, those numbers are 1-800-475-6701, and access code 326076. And international participants can dial 1-320-365-3844.

That does conclude our conference for today. Thank you for your participation. You may now disconnect.