M&T Bank Corp (MTB) 2005 Q3 法說會逐字稿

Good morning, ladies and gentlemen. My name is Carly and I will be your conference facilitator today. At this time, I would like to welcome everyone to the M&T Bank third-quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (OPERATOR INSTRUCTIONS). It is now my pleasure to turn the floor over to your host to Mr. Don MacLeod. Sir, the floor is yours.

Thank you, Carly. This is Don MacLeod. I'd like to thank everyone for participating in M&T's third-quarter 2005 earnings conference call both by telephone and through the webcast. If you have not read our earnings release, you may access it along with the financial tables and schedules on our website, www.M&TBank.com and by clicking on the Investor Relations link.

Also before we start, I'd like to mention that comments made during this call may contain forward-looking statements relating to the banking industry and to M&T Bank Corporation. M&T encourages participants to refer to our SEC filings found on forms 8-K, 10-Q and 10-K for a complete discussion of forward-looking statements. Now I'd like to introduce our Chief Financial Officer, Rene Jones.

Thank you, Don and good morning, everyone. Before I respond to questions, I'd like to highlight a few points from this morning's press release. I'll begin with a summary of the third quarter focusing on changes from this year's second quarter and the third quarter of 2004. Diluted earnings per share, which reflect the amortization of core deposit and other intangible assets, were $1.64 in the third quarter of 2005 compared with $1.56 earned in the third quarter of 2004 and $1.69 reported in the linked quarter.

Third-quarter diluted net operating earnings per share, which exclude amortization of core deposit and other intangible assets, were $1.72. That compares with $1.65 in the third quarter of 2004 and $1.76 in the linked quarter. Please note that this morning's press release contains reconciliations of GAAP results and total assets and equity to net operating results intangible equity, which are non-GAAP.

Net income was $191 million in the recent quarter compared with $186 million a year earlier and $197 million in the sequential quarter. Net operating income for the quarter was $200 million. This compares with $198 million in 2004's third quarter and $205 million in the linked quarter.

The results for the recent quarter included $29 million non-cash other than temporary impairment charge related to $133 million of preferred stock issued by Fannie Mae and Freddie Mac in which M&T retains in its available for sale investment portfolio. M&T recognized the impairment charge at this time in accordance with GAAP in light of the change in circumstance that occurred during the recent quarter. This included an announced further delay in Fannie Mae's ability to provide restated financial information about its results of operation until late next year.

In addition, Freddie Mac's preferred stock issues declined in market value following the release of its results of operations for the first half of 2005. M&T had previously marked these securities to market through other comprehensive income in accordance with FAS 115. Therefore, the charge taken through the income statement in this quarter had no significant impact on M&T's financial position. As a result of the impairment charge and the recognition of available income tax benefit, M&T's reported net income for the quarter was reduced by $18 million or $0.16 of diluted earnings per share.

Results for last year's third quarter also included certain notable events. M&T reorganized certain of its subsidiaries in that quarter, which decreased M&T's effective state income tax rate. As a result, M&T's income tax expense and deferred tax liability of September 30, 2004 were reduced by $12 million. In addition, our principal banking subsidiary, M&T Bank, made a tax-deductible, $25 million cash contribution to the M&T Charitable Foundation, a tax-exempt, private charitable foundation, which reduced after-tax net income by $15 million. The aggregate impact of these events was to decrease net income in the third quarter of 2004 by $3 million or $0.02 of diluted earnings per share.

The net interest margin in the recent quarter was 3.76%, down two basis points from the linked quarter and down nine basis points from the third quarter of 2004. The pressure on margin as a result of a flattening yield curve has been partially offset by an increase in prepayment penalties on commercial real estate loans and by our ability to manage interest rates on certain deposit products in the face of rising market interest rates.

Nevertheless, the interest rate environment is expected to remain challenging in the months ahead. Average loans for the third quarter were 39.9 billion compared with 39.2 billion in the linked quarter. End of period loans totaled 40.3 billion, up more than 400 million from the end of the second quarter of 2005. While growth in our commercial loan and commercial real estate loan categories slowed from the pace that we saw in the second quarter, we attribute this slowing to two specific factors.

First, we experienced a higher than usual level of prepayment activity in our commercial real estate portfolio as a result of low interest rates on a competitive environment. Second, commercial loan growth was negatively impacted by a third-quarter slowdown in automobile floor plan lending. Floor plan loans declined almost $200 million compared to the second quarter of 2005 as a result of lower dealer inventories in advance of the new model year. Excluding floor plan loans, average C&I loans grew at a 9% annualized rate from the linked quarter. On a year-over-year basis, average C&I loans were up approximately 9% while average commercial real estate loans were up approximately 5%.

The commercial loan pipeline was 1.5 billion at the end of September, up from 1.4 billion at the end of June. Commercial line usage declined slightly to 44.5% in the third quarter. The trends in our consumer portfolio have continued as they have for the past three quarters with growth in home equity lines of credit offset by continued declines in indirect auto lending. Credit quality remained strong during the quarter. Nonperforming loans totaled $166 million at the end of the recent quarter, improved from $184 million at the end of the second quarter and from $181 million at the end of September 2004.

The nonperforming loan ratio was 41 basis points at the end of September, down from 46 basis points at the end of the second quarter. The ratio was 48 basis points at the end of September 2004. Net charge-offs for the quarter were $22 million representing an annualized rate of 21 basis points of average loans. That compares with net charge-offs of $14 million or 14 basis points in this year's second quarter and $15 million or 16 basis points in the third quarter of 2004. While the charge-off rate for the third quarter is up from prior periods, the level remains low from a historical standpoint.

The provision for credit losses for the third quarter of 2005 was $22 million, which essentially matched charge-offs and resulted in an allowance for credit losses of $638 billion. Continuing our consistent and conservative philosophy for reserving for bad loans, the allowance stood at 1.58% of total loans at September 30, 2005.

Turning to non-interest income, excluding the other than temporary impairment charge discussed previously, non-interest income for the third quarter was 251 million. This compares to $245 million in both the third quarter of 2004 and the linked quarter. The increase from both periods was driven by higher deposit service charges and mortgage banking revenues. Deposit service charges were 95 million in the third quarter, up one million from the third quarter of 2004 and up $2 million from the second quarter of 2005.

Mortgage banking revenues were $35 million, up $3 million from last year's third quarter and up $4 million from the linked quarter. Operating expenses, which exclude amortization of intangible assets, were $354 million, down $34 million from the third quarter of 2004 and down $12 million from the second quarter of 2005. The recent quarter's results included a $6 million recovery related to the valuation allowance for capitalized residential mortgage servicing rights compared to a $7 million addition to the allowance in last year's third quarter and a $5 million addition in the second quarter of 2005. Excluding the impact of MSR re-evaluations and the 2004 charitable contribution, operating expenses were down about $1 million from the linked quarter and up some $5 million or 1% on a year-over-year basis.

Adjusted to exclude security gains or losses and intangible amortization, M&T's efficiency ratio in the third quarter was 50% compared with 56.4% in the third quarter of 2004 and 52.6% in the second quarter of 2005. Excluding the impact of MSR re-evaluations and the charitable contribution, the efficiency ratio for the third quarter was improved both on a linked quarter and year-over-year basis.

During the quarter, M&T repurchased 1.5 million shares of common stock at an average cost of $107.06 per share. As of September 30th, 2005, there were approximately 900,000 shares remaining on the repurchase authorization announced in December of 2004.

Before we return to questions, I will also highlight some of the related -- I'll also note some of the highlights related to the first nine months of 2005. Most of these were covered in detail in the earnings release. Diluted net operating earnings per share were $5.18, up 10% from 2004. Net operating income was $604 million, up 7%. Net operating return on average tangible assets was 1.59% compared with 1.58% a year ago.

Diluted GAAP earnings per share, which include amortization of core deposits and other intangible assets, were $4.95 for the first nine months of 2005, up 13%. GAAP basis net income was $577 million, up 9%. Average loans were up 7% to 39.2 billion. Net interest margin of 3.79% was down 11 basis points from last year. Net charge-offs were $54 million or an annualized 18 basis points of average loans for the first nine months of 2005, virtually unchanged from last year.

Non-interest income was 701 million, excluding the impairment charge -- that was down -- a $25 million improvement from last year. Operating expenses, which exclude intangible amortization, was 1.1 billion, down 2% from last year. M&T's efficiency ratio for the first nine months of 2005 was 51.4%, improved from 54.5% in the first three quarters of 2004.

Finally, as I noted in this morning's press release, the low revenue growth environment that we discussed in our January conference call has become a reality for us and the entire industry and our ability to contain expenses during this period has been crucial to keeping us on track. Despite the apparent margin stability that we saw in the third quarter, we're expecting to see continued pressure on margin until the yield curve regains some steepness. The forward curve wouldn't lead us to believe this will occur anytime soon. Therefore, we expect the continuation of the slow revenue growth environment going forward. In response to this, we will continue to watch expenses very closely as we have all year long.

We will now open up the call to questions, before which Carly will briefly review the instructions.

(OPERATOR INSTRUCTIONS). Adam Barkstrom, Legg Mason.

A couple of questions here. The impairment charge of the 29 million, can you give us some detail as to exactly how that was determined?

Sure. The accounting rules around FAS 115 really require us to consider two things. First, we are required to take a look at the underlying economic viability of the issuing entities and on that front, management really continues to believe that there really has been no change in the underlying business model or the economic performance of the entity. So if you look at that, these entities are still -- continue to -- excuse me -- continue to be rated as investment grade. There has been no change in their ability to pay or there has been no comment on them declining in terms of their dividend payment. So on that front, we feel very comfortable that there is no real economic change in the business model of the entities.

Having said that, we are also required to assess the likelihood of a near-term recovery in price. And if you go back to our 10-K at the end of 2004 and our June 30th 10-Q, what you would see, at that time, we pointed -- specifically in June, we pointed to a number of factors that we expected to occur for which we would expect to see a near-term -- if the factors occurred, what we would have anticipated is that we would've seen a recovery. And quite frankly, many of those events actually occurred and there was no change in the price. So essentially what occurred is that it became much more difficult for us to view the impairment as temporary in nature.

Having said that, we continue to hold the securities and as I said before, we don't believe that there has been any sort of fundamental underlying economic change in the business model in either of the entities. If you look at the accounting year to the extent that there eventually is a reversal in the valuation of the securities, we would not be allowed to sort of write those back up in terms of -- from an accounting perspective and I guess I would argue that the accounting on these issues, as others have said, is relatively conservative.

Was there any one event that led to taking the write-down this quarter? Were your auditors looking at this? Again, I'm just -- was just kind of curious as to what kind of methodology was used to get specifically to that 29 million. How do you come up with a number that specific I guess is what I was asking?

Well, the $29 million charge is simply what the securities are valued at today by looking into the market and looking at a market price. So there is nothing more to it than that. This is where the securities are priced today. But if you look to the events, there is not one event, but there is a number. Fannie Mae and their announcement that they were going to delay continued financial reporting until the second half of 2006 really was one event that made it pretty difficult for us to anticipate a near-term recovery. The other things that have happened are sort of out there probably but for example, there's been announcements by the GICs that they have or are likely to have met their capital targets that the regulators imposed on them at September 30th yet there was no recovery in price.

The other point I think I would note is that as interest rates rise, we would expect the dividend received deduction on these securities to increase the value of the securities. So the value of that dividend received deduction increases and we anticipated that that would increase the value.

Having said that, there was no change in price again. I think the issue here is that there is really no change in the economics but there is an issue with liquidity in the market around these securities and from our perspective, we're simply following the accounting rules.

Ed Najaran, Merrill Lynch.

It's Ed Najaran. Just a couple of quick questions. Number one, I was wondering if you could give us any kind of range or kind of outlook on the margin pressure that you anticipate. Number two, I wonder if you can comment on your ability to keep operating costs flat in upcoming quarters in light of the low revenue growth environment that you described or should we expect to at least see some expense growth? And number three, I wonder if you could comment on your outlook for increasing your repurchase authorization now that you are almost through it and what sort of your sense is for upcoming repurchase volume? Thanks.

Thanks, Ed. In terms of margin pressure, if you go back to the last call, we talked about the fact that from the first quarter to the second quarter we saw about 5 basis points of margin compression. Much of that was largely due to the actions taken by the Fed to sort of increase rates. We also said that we would have anticipated another similar margin compression in the third quarter. What you saw was only about two basis points of compression but that was a bit inflated by the fact that we had higher prepayment penalties. By our estimates, our prepayment penalties were a little bit above what they normally run at and that gave us a benefit of about 3, 3.5 basis points. So essentially the compression that we have been seeing over the last several quarters hasn't really changed.

As I look out to the next quarter and future quarters, we, as I said in the release, we would expect to see a continuation of that trend at least until the yield curve begins to flatten. If you look in our forward rate scenarios, the yield curve is essentially flat out to the second quarter -- from the second quarter of 2006 out, it is essentially flat and that is the basis that we have used in our scenarios.

In terms of operating costs for 2006, we have talked about this a little bit as well. We think that we won't have realized the full benefits from our five projects until we get into the second quarter of 2006. Having said that, I wouldn't expect that to result in a decline in costs. But the way in which we think about it is that we're trying to maintain this positive revenue expense spread and the work that we're doing on the five projects helps us do that.

If you look at where we are today, we have been able to achieve about a 3 to 4% revenue expense spread due to help of those projects and our objective would be to shoot for a 3% revenue expense spread going forward.

In terms of the share repurchases, as I mentioned, we have 900,000 shares outstanding remaining and there has been no change in our policy for how we manage capital. So we will attempt to maintain that tangible capital ratio between 5.2% and 5.6% with a target of 5.4, which would mean that we would need to go back to the Board for further authorization in the near-term.

Great. That's really helpful. Good quarter.

Robert Hughes, KBW.

I had a couple of questions. First of all, I noticed that the yields on commercial real estate portfolio were up about 50 basis points quarter-to-quarter. I am assuming that reflects maybe some prepayment penalty income. Is that the case?

Correct. That's the effect from prepayments of 4 to $5 million.

Rene, can you give us some sense for the magnitude of the increase in prepayment income quarter-to-quarter or prepayment activity?

I think that's what we've talked about. It's reflected in the margin. We think it's about 3, 3.5 basis points. So you can do the math. It's 4 or $5 million above what is normal and probably what is important about that is that is what you saw in our commercial real estate book and the fact that that was flat from quarter-to-quarter.

Would you highlight any particular reason? Is this related to New York multi-family properties, commercial real estate in other regions?

If you look at the loan growth by region, it was clearly concentrated in our New York City markets and we have talked for some time about the competitive pricing that we're seeing there both from (indiscernible) and from the street. So I would say it is concentrated in New York City.

Not to belabor the point, the change in magnitude say of prepayment penalty income from last quarter to this quarter.

It has doubled.

Doubled.

But I mean -- how do I say that -- it's doubled but keep in mind that that could happen with many relationships or it could happen with one or two depending on the size of the relationship. This was fairly concentrated.

Very good. With respect to mortgage banking, a pretty good quarter obviously and I was wondering if you could give us some color on maybe the volume of loans sold quarter-to-quarter and maybe a little bit of color on the pricing environment from your perspective?

I don't have the sold but I'll tell you I'll give you the trends. Last quarter, we talked about the fact that applications taken during the quarter were 3.3 billion and they were 3.6 billion in the third quarter. So up about 10%. And then closed loan volume last quarter was 1.3 billion and this quarter it was 2.1 billion. So a big jump there. And we saw that sort of transfer -- we are beginning to sort of sell the loans and we saw that transfer into our gain on sale, which was up about 17% on the residential side. We also had a pretty good quarter on the commercial side. If you look as the growth there, I think quarter-over-quarter it was about a $4 million increase and half of that came from the commercial side, half of it came from the residential side.

That's great. Thanks a lot, Rene.

Chris Chouinard, Morgan Stanley.

I was just -- I had a question about deposit trends and I was wondering if you could talk a bit about the decline in the non-interest-bearing deposits sequentially this quarter. If I look at the average balances as well as the change in the mix and in particular your decision to kind of emphasize CDs over sort of savings accounts here. It seems like your lagging your savings accounts deposit rates pretty significantly.

Sure. I think you splitting that out the way you did makes a lot of sense. If you think about the change in mix first with dollars running from low cost none maturity deposits savings in money-market categories and into time, that is something that is clearly factored into our sort of margin performance over the last several quarters. But I think the thing that we think about there is that to the extent that you were to try to price up to offset that shift into time accounts, I think you would probably be hurting your margin a little bit more simply because this is a natural progression.

You can go back over the last 15, 20 years and what you will see is that just as time accounts ran off over the last two years as interest rates declined, the consumer is very logical in moving their money back into the higher paying time accounts as rates increase. So our view is that there is not that much you can do to offset that trend. It is pretty cyclical in nature.

Today, we're still comfortable with that mix and that shift and we're comfortable with the trade-off from losing the lower cost balances and putting on the time accounts. And we think it's one of the things that has helped us to maintain a relatively stable margin over time.

If you look at the deposits, the demand deposit side or the non-interest-bearing categories, I think the decline is somewhere around $280 million from the second quarter. Over $300 million of that was concentrated on the commercial side. And more specifically, it was concentrated in a group of customers that tend to be high-volume payment processors. So it was a very concentrated thing and essentially, I think that when you look at deposit growth by region, there is really nothing that concerns us about that trend. I would say that we are beginning, even despite that isolated incident, we are beginning to see a downward trend on deposits on the commercial side. But again, that is as we would have expected because we are also seeing that loan growth year-over-year is actually up from what it was running.

And this north of 300 million related to this group of customers, is that something that is going to flow in and out of the bank over time or is that sort of -- are you no longer doing business with these guys?

I wouldn't expect a flow in of that same magnitude going forward. The business is a little bit different from what you think about in terms of a typical deposit type business because you're processing transactions for these individuals as well. And so there should be a corresponding decrease in the expenses that you don't have to process the volume as well.

Ranise Quinto (ph), Endeavor Capital.

Hello Sir. Your line is live, do you have a question?

Asked and answered. Thank you very much.

We will move onto our next question. Thomas Stephen (ph), Citadel.

I'm sorry. My question has also been answered. Thank you very much.

Ken Usdin, Banc of America.

Two quick questions. First, can you talk about the growth in the various regions, commercial consumer, and particularly has there been any change to kind of the upstate in Pennsylvania demand on the loan side?

Just one second, Ken, and I will cover that for you. Yes, if you look at -- our upstate New York markets saw growth in loans of about 3%. Pennsylvania saw a growth of about 10%, our mid-Atlantic region, which is primarily Washington D.C., Baltimore and the Chesapeake region, grew about 7%. And then where you saw the decline, we had about a $260 million decline or a 14% decline in our metro region, which includes New York City. So as I mentioned, much of the decline specifically under the real estate piece was concentrated in New York City.

Just as a follow-up to that, that mid-Atlantic number seems softer than it had been running in the last couple of quarters. Is there anything specific going on in that marketplace?

No, not at all. I think actually our line usage is up in that region and if you think back to last year, we talked about very significant growth in the second quarter as well. And then it trailed off a little bit. So I think there is something about that market, which has a little bit of seasonality in it. But year-over-year, we have got very nice growth there. So we're very pleased with that.

And my follow-up on the New York City region is just that -- is this a permanent change that is going on there as far as the takeouts that are happening from the alternative asset managers and insurance companies, etc.? Do you expect that trend to change or do you think that this is kind of going to be a slower growth market because of that excess liquidity?

I think that the competitive environment in New York City is much different than it was two or three years ago. But there have been times in the past, if you can actually go back to the '80s, where we saw very similar trends where the street was getting into the real estate business and securitizing those assets and they put a lot of pressure on price. So I can't tell you if it is going to stay around forever but I can say that what we saw in this quarter was sort of unusual I think relative to what we have been seeing period in and period out. Year-over-year, for the first nine months of the year over the same period in 2004, I think we have done pretty well growing the portfolio at about 5% despite the pressures that we have seen.

Ros Looby, Carlson Capital.

Can you comment on whether or not there is anything of the more sort of onetime nature in the other net interest revenue category this quarter? I know you had some gains on sale last quarter so I can get a sense of run rate?

Other net non-interest income?

Yes. Other fee income.

Sure, sure. Just give me one second there. There really wasn't much that was unusual there. The one thing that we had -- I think we declined about $3 million in that category on a linked quarter basis and we had a little bit lower, maybe 2 million, $2.5 million lower income from bank-owned life insurance. And as you know, that can be a little bit lumpy from quarter-to-quarter. And then we also had -- last quarter, we mentioned that we had gain on lease terminations of about $5 million. This quarter, we had $5.7 million in that category and then by the way of comparison, if you go back to the same third quarter of 2004, we had about $5 million. So as I said last call, that can be a little bit lumpy from period-to-period but it is a core business that we are in and when you look at the gains that we get in that business year-over-year it is pretty steady.

Adam Barkstrom, Legg Mason.

Just a couple of follow-ups. I'm sorry I inadvertently hung up on you before. But anyway, I'm back. The real estate consumer category was up 22% quarter-over-quarter. Can you give us further insight there?

Yes. That's correct. The loans from quarter-to-quarter I think were up about $600 million and essentially what you're seeing there is that with the low rate environment and the high-volume that we started to put on in June/July, that combined with the additional offices -- we added four -- from regions, created a fair amount of volume. And so just the uptick in volume is causing the held for sale portfolio to be up. It is at about 1.9 million today. And the second factor that contributed to that was the fact that on average our loans -- the time between closing of the loans and selling the loans typically averages in or around 40 days. And right now we are between 10 and 14 days higher than that because of the spike up in volume. I would expect that as volume on the front end and the applications in closing start to level off or decline that at that point we would begin to see the held for sale portfolio come down.

So all of that was originated and no purchases in there?

That's correct.

How about the gain on sale margin? Did you comment on that already and what did they do this quarter?

I didn't comment on it but what you're going to see if your sort of look at the numbers is that it will look like you're getting some compression. And the simple reason for that is that all of the volume that we brought on from regions that you can see if you go to last quarter's comments and this quarter's comments, all of that volume is really coming from wholesale business. And the gain on sale margins on that are much lower, maybe 40 or 50 basis points relative to say 100 to 120 basis points for the normal product that we have. So the margin compression that you're seeing there, sort of gain on sale relative to volume, is coming from a different mix. But other than that, we are haven't seen any change.

And I then -- I don't know if you commented on this but you certainly talked about the deposit balances being down on a linked quarter. But conversely, deposit fees, deposit-related fees were up strongly quarter-over-quarter. Can you reconcile that for us?

Yes. I will simply say it is seasonal. If you go back on any quarter, you will see that second quarter is stronger than the first; third quarter is about the strongest. So I would think that that is seasonal.

So really nothing else other than a seasonality issue. No pricing changes, no product changes, no --?

Well, the one thing that I talked a little bit about I think last quarter was the fact that we did make a change in this quarter where we started to tier our NSF pricing. So we have not seen any change in the volume of revenue from that. But I think going forward that will be a benefit to us in terms of retention. Essentially how that works is that the first nonsufficient funds item that hits is actually not charged the full fee and you have to have several items that happen before you actually get up to the full fee. So we think that that was a change but it didn't have any impact on the revenue. We're hoping that going forward it helps us retain deposit relationships.

John Fox, Fenimore Asset Management.

I just wonder if you could clarify. You talked about the net interest margin. Did I hear you say that that would flatten out after the point that the yield curve went totally flat? Can you just repeat those comments?

I think that is so. Because the yield curve is expected to be flat through the course of 2006, it is hard to say what our balance sheet is going to look like at that point. But the way you think about it is much of the compression that we have seen to date has been because we had been, for a long-time, funding incremental volume with wholesale money. And so as we saw the Fed increase rates over time, that is really what has caused our margin compression. So I would gather that as that begins to level out that pressure will go away.

Sal DiMartino, Bear Stearns.

Just two quick accounting questions just for my own clarification. On the GSE securities, what would be the new yield after the write-down and the second question, not to kind of beat a dead horse, but on the prepayment penalties and the impact on the margin, just for my own clarification, do you include all prepayment penalties in the margin or do some go into fee income?

The second question first. We include all prepayment penalties in the margin. So it is all there. And then with respect to -- I don't have the information on what the new yield would be today but if you look at most of the securities are trading around 300 basis points over their index or so.

Great. Thank you. Good quarter.

Jackie Reeves, Ryan Beck & Company.

Just a quick follow-up on the M&A environment if you hadn't commented on this. What's maybe the tenor of activity out there and then also what is your potential appetite?

No change. The activity there has been slow and nothing to report.

(OPERATOR INSTRUCTIONS). John Cantwell, MCB Stockbrokers.

I just had a quick question in terms of the full-year earnings guidance. Is there any change in that?

As we completed the quarter, we thought that with only one quarter left in the year that it didn't make sense for us to sort of update guidance and we think -- so we decided not to update guidance.

There appear to be no other questions. I would like to turn the floor back over to management for any closing remarks.

Thanks, Carly. Again, I'd like to thank all of you for participating today and as always, if clarification of any items in the call or the news release is necessary, please call our Investor Relations department at area code 716-842-5138. Thank you.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your lines at this time and have a wonderful day.