M&T Bank Corp (MTB) 2005 Q4 法說會逐字稿

Good day. My name is Jackie and I will be your conference facilitator today. At this time, I would like to welcome everyone to the M&T Bank fourth-quarter and full-year 2005 earnings conference call. At this time, 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, Mr. Don MacLeod, Director of Investor Relations. Sir, you may begin your conference.

Thank you, Jackie, and good morning. This is Don MacLeod and I would like to thank everyone for participating in M&T's fourth-quarter 2005 earnings conference call, both via telephone and through the webcast. I hope everyone has had an opportunity to read our earnings release issued this morning. If you have not read it, you may access it, along with the financial tables and schedules, from our website at www.mandtbank.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, including those filed on Forms 8-K, 10-K and 10-Q, for a complete discussion of forward-looking statements.

Now I would like to introduce our Chief Financial Officer, Rene Jones.

Thank you, Don, and good morning, everyone. I'll begin by covering a few points from this morning's earnings release, and then I'll respond to questions.

Diluted earnings per share, which include the amortization of core deposits and other intangible assets, were $1.78 in the fourth quarter of 2005, up 10% from the $1.62 in the fourth quarter of 2004 and 9% higher than the $1.64 earned in the linked quarter.

Amortization of core deposit and other intangible assets amounted to $0.07 per share in the fourth quarter of 2005, compared to $0.08 per share in the fourth quarter of 2004 and in the third quarter of 2005.

There were no merger-related costs recognized in either 2004 or 2005.

Fourth-quarter diluted net operating earnings per share, which exclude the amortization of core deposits and other intangible assets, were $1.85, up 9% from the $1.70 in the fourth quarter of 2004 and up 8% from the $1.72 in the linked quarter.

This morning's press release contains a tabular reconciliation of GAAP and non-GAAP results, including tangible assets and equity.

Net income for the fourth quarter of 2005 was 205 million, up 7% from a year earlier and also up 7% from the $191 million earned in the sequential quarter. Net operating income for the quarter was up $213 million, up 5% from the fourth quarter of 2004 and up 7% from the $200 million earned in the linked quarter.

Return on average assets was 1.48% in the recent quarter, compared with 1.45% in the fourth quarter of 2004 and 1.39% in the third quarter of 2005.

Net operating return on average tangible assets was 1.63% in the quarter, compared with 1.62% in the prior year's fourth quarter and 1.54% in the third quarter of 2005.

Return on average common equity was 13.85% for the quarter, compared with 13.37% in the fourth quarter of 2004 and 12.97% in the linked quarter.

Net operating return on average tangible common equity was 29.12% for this quarter, compared with 29.69% for the fourth quarter of 2004 and 27.67% in the linked quarter.

Turning to our net interest margin, the net interest margin in the fourth quarter was 3.69%, down 7 basis points from the linked quarter and down 13 basis points from the fourth quarter of 2004. A return to a more normal level of pre-payment penalties on commercial real estate loans accounted for approximately 3 basis points of the decline in margin. Average loans for the fourth quarter were 40.4 billion, compared with 39.9 billion in the linked quarter, giving annualized growth of over 5%.

Commercial and industrial loans grew an annualized 9% over the third quarter. This was consistent with the full-year growth as average C&I loans for 2005 were up 10% over 2004.

Our pipeline for commercial commitments was down from September, partially due to a step-up in the loans that closed at the end of the year. Commercial real estate loans were up an annualized 2% from the linked quarter, reversing a slight decline that we saw in the third quarter. This business continues to be where we see the most competition, both for new business and refinancing. On a full-year basis, however, average commercial real estate loans grew over 8% from 2004.

Average consumer real estate loans grew at an annualized 38%, reflecting increased held-for-sale loans due to a strong third-quarter mortgage origination volume, while consumer loans declined an annualized 7%.

Credit quality continued to be strong during the fourth quarter. Non-performing loans totaled $156 million at the end of the recent quarter, improved from 166 million at the end of the previous quarter. The non-performing loan ratio was 39 basis points at the end of the recent quarter, compared with 41 basis points at the end of the third quarter. The non-performing loan ratio was 45 basis points at the end of 2004.

Net charge-offs for the quarter were $23 million, representing an annualized rate of 22 basis points of total loans. This was little changed from the 22 million or 21 basis points in the linked quarter, but improved from the $27 million or 29 basis points in the fourth quarter of 2004.

The provision for credit losses for the fourth quarter of 2005 was $23 million -- up $23 million covered net charge-offs and resulted in a total allowance for credit losses of $638 million or 1.58% of total loans. This ratio is unchanged from the end of the linked quarter and down from 1.63% at the end of 2004.

Loans past due 90 days but still accruing were 129 million at the end of the recent quarter, compared with $131 million at the end of the third quarter of 2005 and $155 million at the end of 2004. At December 31, 2005, this category included $106 million in loans that are guaranteed by government-related entities.

Non-interest income was $249 million in the fourth quarter, up 5% from a year earlier and up 12% from the third quarter of 2005. You will recall that third-quarter results included a $29 million impairment charge related to certain preferred securities issued by Fannie Mae and Freddie Mac that M&T holds in its investment portfolio.

Operating expenses, which exclude any merger-related charges and amortization of intangible assets, were $356 million, up $11 million from the fourth quarter of 2004 and up $2 million from the third quarter of 2005. The fourth quarter's results include a $5.6 million partial reversal of a valuation allowance for capitalized residential mortgage servicing rights, compared to a $6.3 million partial reversal in the third quarter of 2005, and a $200,000 reversal in the fourth quarter of 2004.

Adjusted to exclude security gains and intangible amortization, M&T's efficiency ratio in the fourth quarter was 50.7%, compared with 50.0% in the previous quarter and 50.6% in the fourth quarter of 2004.

Before we turn to questions, let me review some of the highlights related to the full year of 2005. In aggregate, excluding securities gains and losses, we generated 3.6% year-over-year revenue growth, while operating expenses, excluding the $25 million charitable contribution in 2004, grew by less than 1%. This enabled us to deliver a positive revenue expense spread for the year and was the crucial factor in driving bottom-line earnings growth over the year.

Diluted net operating earnings per share were $7.03, up 10% from 2004. Net operating income was $817 million, up 6% from 2004. Net operating return on average tangible equity was 29.06% in 2005, compared with 28.76% in 2004.

Diluted GAAP earnings per share were $6.73, up 12% from 2004. Net income was $782 million, up 8% from 2004. The GAAP return on common equity for the year was 13.49%, up from 12.67% from last year.

Average loans were up 6% to 39.5 billion and end-of-period loans were up 5% to 40.3 billion. The net interest margin of 3.77% in 2005 was down 11 basis points from 2004.

The provision for credit losses of $88 million more than covered charge-offs for the year and was lower than last year's provision of $95 million. And M&T's efficiency ratio, which excludes intangible amortization and the effects of security gains and losses, was 51.2% for 2005, compared with 53.5% in 2004.

As I mentioned in this morning's press release, overall we are very pleased with our results for 2005.

Turning to our outlook for the coming year, the environment for 2006 is not terribly different from what we have experienced last year. We expect continued pressure on the net interest margin until the Federal Reserve slows or stops increasing the interest rate. Forward rates currently reflect just two more Fed rate increases in the first part of the year. As such, we are expecting a more stable margin during the second half of 2006. Assuming the forward rates prove accurate, our estimate of average net interest margin for 2006 is in the range of 3.60% to 3.80%.

Our expectations for overall loan growth are consistent with this past year's experience, and when combined with our margin outlook would likely result in another year of modest revenue growth. This will again require us to focus on carefully managing expense growth to deliver a positive revenue expense spread in the coming year.

On the credit side, the outlook remains stable. In terms of capital management, the share repurchase authorization was recently replenished and we expect to continue to manage that program as we have in the past.

All of these projections are, of course, subject to a number of uncertainties and various assumptions regarding national and regional economic growth, changes in interest rates, political events and other macroeconomic factors which may differ materially from what actually unfolds over the course of 2006.

Finally, as of January 1, 2006, most companies, including M&T, are required to adopt Statement of Financial Accounting Standards 123R, which requires the recognition of expense related to stock-based compensation.

Previously, as of January 2003, M&T had voluntarily adopted FAS 123 in recognizing the expense for stock-based compensation. One of the byproducts of FAS 123R is that beginning in 2006, M&T, as required, will begin accelerating the recognition of compensation expense for option awards granted to retirement-eligible employees and to employees who become retirement-eligible prior to the full vesting of their awards.

Said differently, although aggregate compensation expense to be recognized over the life of the options is unchanged, the practical effect of this provision will be to accelerate the recognition of stock-based compensation expense for options granted to retirement-eligible employees.

For example, based on our prior history of option grants and the demographics of our pool of option recipients, we would estimate that the acceleration of expense would result in an additional 6 to $8 million of pretax expense in the first quarter of 2006 and roughly 4 to $6 million of expense for the full year from what would have otherwise been recognized in 2006. Of course, the pretax expense that would've been recognized for that same pool of options in future years would be lower by the same amount.

Now we'll open up the call to questions, before which Jackie will briefly review the instructions.

(OPERATOR INSTRUCTIONS). Brent Erensel, Portales.

Thanks for quantifying the MSR recapture. I'm wondering, first of all, how sustainable that is, what might be left there? And I'd also like the same for the corporate finance advisory fees that you mentioned on the revenue side, if you would first quantify that and then give us some metrics around both of those numbers.

Sure. I think at December 31, 2005, we had about $19 million -- roughly $19 million of MSR reserve remaining. And again, as you know, that is a number that swings back and forth from quarter to quarter, as we have seen interest rates move and where they've sort of benchmarked at the end of the month. So that has fluctuated, I think, between, say, 15 and $30 million over the last couple of years.

In terms of the financial advisory fees, this is a business that was inherited from Allfirst and for which we think we do a pretty good job at. On a linked quarter basis, we saw advisory fees increase by about $3 million. And essentially what that is is the advisory services that we offer to our commercial customers. Again, it is housed in Baltimore, but we offer those services throughout our footprint.

An example of the types of things that we -- deals that they would counsel on would be, for example, this quarter we advised a large industrial company on the purchase of assets. I think that's a good business and it's a core business. So year on year, we would expect that business to keep producing results.

And the base of that business -- can you quantify that?

I believe the number was about $7 million for the full year.

Jennifer Thompson, Oppenheimer.

Could I just quickly confirm what you said, the last part of your statement about the 123? You said 6 to 8 million pretax for the first quarter. And then for the full year, did you say 4 to 6 million?

Yes, that is correct.

So 4 to 6 after the first quarter and the last three quarters?

No, that is not correct. Essentially what happens is that the -- what 123R requires is that you expense for retired employees that you take the expense immediately. And then what would end up happening is relative to what you would have done in the past, you have lower expense going forward.

So we will take all of the expense for options issued to retirement-eligible employees up-front in the first quarter. But that will then be less expense than we would have taken going forward. So the full-year effect we believe to be between 4 and $6 million on a pretax basis.

Got it. And then in terms of the loan growth, could you just talk about what you are seeing on a geographic basis and what the pipeline was at the end of December?

Sure. In terms of the geographies, give me one second here. We saw -- in upstate New York we saw loan growth -- annualized loan growth of 1%. In metro, which is New York and Philly, we saw 2% loan growth -- annualized loan growth, 2% in Pennsylvania and 5% in the Mid-Atlantic. And then in our multi-region, which is primarily the mortgage volume that we've been putting on, we saw about 11% growth.

If you look at the fourth quarter of '05 over the fourth quarter of '04, the results are really similar to what we've been talking about all year, where the Mid-Atlantic region had over 13% growth year over year. And then on top of that, our multi-region group, probably about 9%. So again, not a lot of change from what we've been seeing in the past in terms of where our loan growth is coming from.

To your question on the pipeline, the pipeline for commercial commitment declined from 1.5 billion to 1.4 -- I'm sorry, from 1.5 billion to 1.1 billion at the end of the quarter. And what you're seeing there is that much of that decline I think was caused by the fact that we had a lot of new commitments come out of the pipeline. And one of the things where you can see that is if you look at our as-at loan growth from an end-of-period to end-of-period, you'll see that I think we had something like 18% growth in C&I on an end-of-period to end-of-period basis.

And just one last question -- the mortgage originations this quarter?

Yes, mortgage originations -- I think last quarter, we talked about the fact that our applications were about 3.6 billion in the fourth quarter. Those were down to 2.6 billion. And if you look at closings, I think we went from 2.1 billion down to 1.7 billion. So as the interest rate environment has changed over the last quarter, as would be expected, we saw a slowdown in the volume there.

But I think that sort of gets you back to the first question that was asked about the MSR impairment. Clearly, the reversal of the MSR of $5.6 million had to do with the increase in rates. And we tend to look at those things as somewhat of a hedge, which would mean that we would expect a little bit slower volume or revenue going into the first quarter.

[Ross Luby, Carlson].

I guess I was a little disappointed in your deposit trends this quarter. Assuming I am doing the math right, your non-expiring was down about 1.25% sequentially and savings were down 2%. Can you talk about whether you're planning for deposit growth in those core areas in 2006 and what the dynamics are?

Well, I mean, I'm just going to confirm your numbers -- I think on the non-interest-bearing, they were down 1%, and on an end-of-period to end-of-period, they were up 1%. So we've been seeing that trend for some time. I mean, quite frankly, from my perspective it would be great to see higher growth in demand deposits, and we've got a lot of focus on that, particularly throughout our footprint but particularly in the Mid-Atlantic region.

What you're seeing in the non-maturity categories -- savings, money market categories -- is that simple shift that we've been seeing quarter in and quarter out from those categories at the time. As I have said in the past, I don't think that you are going to -- there's much you can do to sort of change that shift because if you try to sort of price up your book of business on the savings accounts, I think you are going to see the migration anyway, but you're just going to be pricing up and sort of dampening your margin.

When we look at the margin, as I have mentioned before, I think last quarter, I think our margin was 376. And we said that -- we thought that was a little bit inflated by about 3 basis points from the higher pre-payment penalties. So we had about 5 basis points of margin compression in the second to the third quarter.

If you take that normalized basis to the fourth quarter, we had about 4 basis points of margin compression. And we think about 2 of that comes from that simple shift, which is sort of shifting customer behavior.

So we are constantly doing things to sort of try to manage that runoff, but we also don't want to do anything that doesn't make economic sense.

Adam Barkstrom, Stifel Nicolaus.

The normalized commercial pre-payment penalties -- what is the margin effect? I heard 4 basis points, 5 basis points and earlier I heard 3 basis points.

No, I think both on the last call and on this call, we talked about it as being 3 basis points.

What were you just saying -- it was 4 basis points?

If you normalize for the pre-payment penalties and you look at second quarter to third quarter, we dropped about 5 basis points in net interest margin. And then we would have dropped another 4 basis points from the third to the fourth in our net interest margin -- normalized trend.

I guess one of the big things in the quarter was expense control. Was wondering if you could talk about that a little bit? And you mentioned that kind of in your outlook. I'm just kind of wondering how much more can you really squeeze out of that expense base in '06? In other words, how much would that truly help your '06 numbers?

Well, I think if you think about the projects that we've discussed all year, we said during the course of the year that we expected our expenses to be flat. And that pretty much bore out.

We think that we are well -- those projects are all well on their way and have pretty much reached their conclusion from a project standpoint. Obviously, we have groups of individuals that are going to be managing our SmartSpend initiative, our basic procurement initiative going forward. And we think that there's some work still to be done there that will take place through the first half of the year.

I can't say whether our expenses will be flat or not because we're always thinking about making investment decisions, but I know that we think that there is enough momentum there carrying into 2006 to really help us produce that positive 2, 3, 4% revenue expense spread that we see in the past.

Ed Najarian, Merrill Lynch.

Just a quick question on the margin. If I use the midpoint of your guidance for '06, that is 370, which is about where you were in the fourth quarter. And yet you talked about getting some more margin pressure in the first half of '06. To me, that implies that you expect the margin to rebound a little bit in the second half of '06. So I guess the first question is, is that true? Is that sort of how you expect it to play out?

And secondarily, last year at this time you did give some specific EPS guidance, which I did not hear this time around. Is there any reason for that change in thinking? Thanks.

Sure, Ed. With respect to the margins, I think to start off with, it is very important, and we say this each time, but it is very important to understand that our interest rate scenarios are run from the forward curves. And so what is most important about any estimates that are made is that to the extent that the forward curves bear out, our margin should behave pretty much as one might expect.

If you think about it, Ed, we had about eight Fed rate hikes during the course of 2005 -- pretty steady throughout the year. And the forward curves are calling for two. Whether that is two or three, that would be a slowing, so some of the pressure that we saw during 2005, it would imply that some of that pressure would be off. Obviously, with this flattening of the yield curve, we sort of -- it looks almost like we have a little bit of a liability-sensitive portfolio because the short end is coming up and the long end was not moving.

Having said that, we also think that we're getting a little bit of lift because some of our assets that were lagging are beginning to reprice. We've talked about in the past that in particular our home equity portfolio is always lagging by 25 basis points.

And then the other thing that has been happening is that if you look at the growth, growth in our portfolio has been in C&I, a little bit less in real estate over the last couple of quarters, so moving from variable to fixed. We've been running off fixed rate indirect auto loan and replacing that to some extent with variable-rate HELOC. So it's giving us a little bit of lift, I think, as those assets begin to reprice. So that's the sort of basic thought process behind our outlook for the margin.

In terms of EPS guidance, there's really nothing major behind the fact that we've chosen not to give guidance. I talked about earlier how we think about the individual pieces that make up the outlook for the year. And we think that probably what's most important is to be able to sort of continue a dialogue with -- an open dialogue with the investor community by talking about the things that matter to us in terms of running our business.

Over a long period of time, we have focused on being an above-average performer relative to the industry without taking on too much risk. And in fact, we are attempting to have a lower-risk profile. I don't think there is going to be any change in that. But the idea that we would actually come out and talk about what a GAAP range is really just does not fit well with how I think we manage the Company. So not a big issue there.

Okay, and then just as a quick follow-up, could you just re-highlight what you said in terms of credit quality for your outlook for '06? I just think I missed that.

There is nothing in the credit trends that would suggest that there's any change in the current trends. So this year I think we finished at 19 or 20 basis points of average loan. And until we see some signs that that is going to change, I believe our outlook is unchanged.

Jackie Reeves, Ryan Beck & Co.

Just some follow-ups to some geographic color, specifically on the business environment, maybe some client feedback, in addition to touching on loan pricing trends and competition that you're seeing on that side in addition to deposit pricing, as -- geographically, if you could.

In terms of feedback, I guess what I would describe is that we think it has been relatively quiet on the loan front, which tells me that there's no change, for example, in the New York City area. We were happy this quarter that we did not lose any large relationships. But I think that the pricing pressure there is sort of what it has been for the last several quarters.

While we were pretty pleased with the loan growth that we have seen and in particularly in the Mid-Atlantic region, I have said this before, in quarter in and quarter out, when we talk to our folks that are out there with customers, it's not as if we're seeing a big boom in the pipeline for business. Things are relatively quiet. So that is sort of what leads us to believe that our loan growth next year will be very similar to what it was last year. I think that's as much color as we have there.

In terms of deposit pricing, again, I think there it has been a little bit spotty. A lot of the larger rational competitors have continued to behave very rational. I think in our upstate markets, we're seeing individual institutions, maybe upstate New York and Pennsylvania, actually get a little bit more aggressive. And in part, that is leading to some of the pressure that we talked about earlier on our deposit and particularly on the non-maturity areas.

We have held pretty steady. And we think that it would be great if those individuals were more rational, but I think you're always going to have a couple of competitors that are out there increasing pricing for various reasons.

Ken Usdin, Banc of America.

One quick follow-up on credit quality. I just wanted to understand a little bit better as far as the outlook for the credit quality remaining in line with your expectations, is it reasonable to expect that credit costs might approximate last year's levels again this year? Or are you expecting at least some seasoning in charge-off levels just with kind of the normal progression?

I think the thing that we look to in particular is first, we look to a lot of the non-performing. And I just read to you the non-performing ratios. And they're at 39 basis points of total loans. That's much lower than we were at the beginning of the year. And that has trended down each quarter.

If you look at sort of what the drop was in, it is interesting to note that there was only one loan which came back into performing status that was over $1 million. It was like $1.5 million related to a nursing home. Everything else were a lot of small credit, which gives me some sense that as you look at that trend that that is sort of the underlying trend in the economy.

It's not that different from the fact that the commercial credit cycles tend to be long. Having said that, in terms of making predictions, you could probably be pretty accurate one quarter out, maybe two quarters out, but what happens in the second half of the year is really unknown.

And then, as you know, on the consumer side, that business relative to the commercial side tends to be more predictive than not. And we haven't seen any major signs of anything turning there. So that’s our thought process.

And one quick follow-up just on the loan side this quarter -- period end loans were pretty flat, but the averages were up. But you mentioned some of the commercial loans perhaps closing toward the year end. Could you just explain that discrepancy? Was there any specific transactions that occurred or just timing issues?

I think it may be a little bit of timing. We were pleased with the fact that in the last couple of weeks, we just saw a pickup in terms of fundings and loans that actually closed. So you'll see that from time to time. I don't think there's anything special about it. We think it helps us out as we go into January.

Chris Chouinard, Morgan Stanley.

A couple of clarifying questions. First, I just wanted to make sure I heard you correctly -- did you say that loans in the Mid-Atlantic were up 5% sequentially?

On an annualized rate.

On an annualized rate, okay. That is helpful. And then when I look at total C&I, what was the impact from a sort of rebound and floorplan loans this quarter?

I believe that that was up -- I want to say 300 million. I believe it was up from -- it went from 1.2 billion to 1.5 billion. We had a nice recovery, as we would have expected. You remember I think at the end of the second quarter, it was 1.4 billion. People ran out their inventories with all the sales and then those got replenished in the fourth quarter.

And on the consumer side, can you give us sort of some numbers around home equity versus auto loan growth?

Yes. I think our total annualized growth from the third quarter to the fourth quarter in home equity line was 4%. And when we look at applications and closings and those things, we see a bit of a seasonal dip in the fourth quarter. So if you look at, for example, fourth quarter of '04 over '05, there was 9% growth there. So we think that's a little seasonal slowness from what we have been running year over year. But nothing is changing there.

And then the runoff in our indirect portfolio has been pretty consistent. It declined by about $200 million during the quarter on average.

And if you will allow me one more, can you just talk about mortgage banking gain on sale trends in the third quarter -- in the fourth quarter versus the third quarter, and sort of the outlook here in 2006?

If you think about what we have been talking about in the past, we said that our gain on sale margin was going to narrow because of the types of business that we brought on for region. If you look at a lot of the sale activity that occurred in the fourth quarter, it was from that work that -- loans that were closed in the previous quarter and again related to the region.

So we saw some narrowing, but simply because of the change in mix. If you look at our held-for-sale portfolio at the end of the period, we were about $1.9 billion in our held-for-sale real estate portfolio. That dropped down to about 1.4 billion. So again, just confirming that a lot of the sales were related to that sort of change in mix.

I think a little late in the third quarter, beginning of the fourth quarter, we were hearing some question about margin pressure. The folks tell me that we haven't seen much since, though, so things have been fairly well-behaved. I think if you just look at the volume numbers that I gave you, it would suggest that plus the fact that our pipeline is down would suggest that we will be a little bit slower into the first quarter.

Bob Hughes, KBW.

A couple quick questions. I know last time we talked, you guys have indicated that some of the efficiency initiatives you had underway would probably run out of juice maybe mid-2006, and hopefully at that time you would start to see some benefit from some of the revenue initiatives. I was just wondering if you could give us an update on the revenue side and whether you're making progress there?

I think that the revenue initiatives that we have done have gone really well. But I think what you will see is that that takes a lot longer to occur. So essentially when you're talking about cross-sell, you're talking about building relationships over long periods of time. So it would be very difficult to talk about that on a quarter-to-quarter basis, Bob. But maybe by the late next year, we will have something to talk about there.

And then finally, could you just give us an update on the M&A landscape? Has there really been any change since we spoke last?

No, not at all. As I look at it, it seems as though everybody's expecting a lot of the smaller thrifts to get acquired, and they've priced that in, so things are unchanged.

Todd Hagerman, Fox-Pitt, Kelton.

Just a quick follow-up. Rene, I don't know if you mentioned the leasehold termination gains this quarter. Any color in terms of the lease book and what transpired in this quarter?

Things were relatively quiet on that front. You remember the past two quarters we've had a little over $5 million. I think last quarter we had $5.6 million due to the expiration of leases there. That number was probably less than $1 million this quarter. So, again, we think that is a great business. We are likely to stay in that business and do more of that business going forward. So I would expect that year over year, we would expect to continue to see some of that activity.

And just a follow-up on the earlier question. I think you were talking earlier about the corporate advisory fees in the quarter. Was there any other unusual items that just flowed through the other revenue line in the quarter relative to Q3?

No, there was nothing unusual. The corporate advisory fees combined with our merchant card business were the two things that sort of contributed to offset the lower lease gains.

And how much were the merchant fees in the quarter?

I think both of them were up about $3 million or so. You know, with the merchant business, obviously, you are going to get a lot of activity in the fourth quarter with the holiday spend.

There are no further questions. I would like to hand the floor back over to Don MacLeod.

Thank you, Jackie. again, I would like to thank everyone for participating today. And as always, if clarification of any items in the call or on the news release are necessary, please call our Investor Relations department at 716-842-5138.

Thank you. This does conclude today's teleconference. You may now disconnect your lines and have a wonderful day.