OFG Bancorp (OFG) 2011 Q3 法說會逐字稿

Good morning. My name is Jackie, and I will be your conference operator today. Thank you for joining us for this conference call for Oriental Financial Group. Our participants today are Jose Rafael Fernandez, President, Chief Executive Officer and Vice Chairman; Norberto Gonzalez, Executive Vice President and Chief Financial Officer; Jose Ramon Gonzalez, Senior Executive VP Banking and Corporate Development; and Ramon Rasado, Senior Vice President and Treasurer.

Please note this call may feature certain forward-looking statements about management's goals, plans and expectations, which are subject to various risks and uncertainties outlined in the Risk Factors section of Oriental's Securities and Exchange Commission filings. Actual results may differ materially from those currently anticipated. We disclaim any obligation to update information disclosed in this call as a result of developments which occur afterwards.

(Operator instructions) I would now like to turn the call over to Mr. Fernandez. Please go ahead.

Good morning and thank you for listening in today. During today's call, I'll review overall performance, Norberto will review other key aspects of our income statement and balance sheet, and then we'll open it up for question and answer.

From a big picture point of view, we continue to show significant progress delivering on our strategies on all fronts. Growing our Oriental Bank and Trust and Oriental Financial Services franchise, in particular our commercial banking business, continuing to be on the lookout for inorganic opportunities in Puerto Rico, and third, returning capital to investors through increased dividends and share buybacks.

This resulted in income per common share of $0.35 compared to a loss of $0.75 in the year ago quarter, and income of $0.56 in the June quarter. Book value per share of $14.96, up 8.5% from a year ago, and slightly up from the June quarter. Common shares outstanding at quarter end of 44 million shares, down 5% from a year ago due to stock repurchases.

Our third quarter highlights, we had several key developments in the quarter. Among those -- one, we continue to grow our commercial lending business and we have lower cost of retail deposits. Two, we continue increasing our fee income from wealth management business. Three, we have improved our expected cash flows from the former Eurobank portfolio and this has resulted in higher interest income and in a recapture of the loan loss provision. Four, higher premium amortization on mortgage-backed securities due to an increase in prepayments. Five, gain on sales securities and deleveraging of a repurchase agreement. Six, we continue reducing our wholesale funding balances. And seven, we have had a good execution on our cost control strategy.

Interest income from securities declined about $17 million from the second quarter to about $36 million. As everybody knows, prevailing rates on mortgages on the mainland came down sharply during the third quarter and prepayment speeds increased. This resulted in increased amortization on our mortgage-backed securities portfolio. If rates stay at current levels, we would expect amortization to remain stable.

There were a couple of other things that affected interest income from investments during the quarter. We sold approximately $205 million in securities and realized a gain of about $14 million. Part of the proceeds from the sale of the investment securities was used to pay off a $100 million repurchase agreement we had at the holding company.

Secondly, because yield had fallen, we held onto more cash. Our cash position increased more than 84% to $517 million. I'll talk more about our outlook for net interest margins in a couple of minutes.

Loan production remains strong with residential mortgage volume of $53 million, commercial of $30 million, and leasing and consumer of $11 million combined. Year-to-date total loan production and purchases of $289 million is up about 7% with commercial production alone of up -- close to 39%.

Our commercial business continues to play out as expected. We continue to attract and bring in highly desirable clients with good solid credit, and we're building long-term profitable relationships. We believe we are starting to get traction in the market. That's not something that we can accomplish in just one quarter, but is the result of steadily building credibility and building momentum.

We have built an excellent commercial team as you know, and we are looking for opportunities to continue to grow faster through bringing in new members with new relationships. When you look at our commercial business, you just can't look at loan growth alone. You also have to look at the fees being generated.

Year-to-date our point of sale business has generated more than $3 million, up 50% the same time last year, and although smaller, cash management and account analysis is up 100% year-to-date. And recently, we just launched trade services business. That's an example of the things that we're building into our commercial banking business.

Interest income from covered loans, which represent the former Eurobank portfolio, increased more than $5 million from the second quarter to more than $18 million. We have seen consistently better performance than originally expected on some of the loans, so we have re-yielded them. As a result, in the third quarter we had a $1.9 million net recapture of the loan loss provision on these loans.

Our analysis continued to reflect that the actual cash flows from these portfolios have exceeded the original estimates by approximately $20 million since the April 30, 2010 acquisition. Interest income from non-covered loans increased more than 8% from the second quarter, which included a $1.8 million negative adjustment, which we discussed during our previous quarter conference call. Excluding this adjustment, interest income was approximately level. As we have predicted, income from our growing commercial loan portfolio is replacing declining income from our residential mortgage portfolio.

On the interest expense, we continue to have lower levels of total interest expense. In core retail deposits, we were successful in increasing balances while letting higher priced CDs mature. As I mentioned on August 16th, we paid off a 4.47% $100 million repo. This will reduce interest expense going forward.

Net interest margin for the quarter was 2.02% versus 2.63% in the June quarter. We believe net interest margins should rebound in the fourth quarter to approximately 2.30% and for 2012 we expect net interest margin to be around 2.50%.

During the fourth quarter, our net interest margins should benefit from the re-yielding of the former Eurobank portfolio, the extinguishment of that high-priced repo that I mentioned earlier, and the continuing reduction in the cost of retail deposits.

In other production areas, we're up substantially this quarter in wealth management, a nearly 18% increase. We said in prior quarters we were building higher wealth management assets on an average quarterly basis, and now we're increasing income as we generate fees from that. At the end of the quarter, total assets managed were about $4 billion. That's a more than 12% increase year-over-year, but down from the June 30th, mainly due to market fluctuations.

Mortgage banking activities are up 8% from the June quarter. That's been driven by lower rates. That helped increase production and enabled us to obtain favorable pricing on loans sold into the secondary market.

Just before the end of the third quarter, and subsequent to the quarter end, we bought approximately 894,000 shares at an average price of $10.24 per share. These repurchases will reduce the fourth quarter share count as they settle after September 30th.

So this is it for me for now. I will pass to Norberto so he can explain in detail the remaining parts of our results.

Thank you, Jose. First let's look at the income statement. Jose covered the first half of the income statement, so I'll start with the non-core non-interest income.

This netted $5.9 million to income compared to a loss of $21.9 million in the year ago quarter and income of $6.5 million in the second quarter. There were three major items in the third quarter number. First, there are gains of close to $14 million on sale of approximately $205 million in investment securities. Second, a $4.8 million loss on early extinguishment of the $100 million repurchase agreement referred to by Jose Rafael. And third, $2.4 million in the amortization of the FDIC loss-share indemnification asset.

The amortization of the FDIC indemnification asset was a function of the improved performance of the former Eurobank loans. Due to good execution of our cost control strategy, non-interest expenses of $30.4 million declined 7% year-over-year and were a little less than in the second quarter.

We are very focused on running as efficiently as we can. During the third quarter, this enables us to carry through with plans to increase advertising and marketing in support of our commercial banking business while still reducing total costs.

We had an income tax expense of approximately $580,000 compared to a benefit of $1.4 million in the second quarter, which was mainly to the settlement of various tax contingencies in the second quarter.

Let's turn now to the balance sheet. Total investments of $4.1 billion declined 5.8% from a year ago and 8.5% from June 30th. About 90% of Oriental investment -- 97% of Oriental investment portfolio consists of agency mortgage-backed securities guaranteed or issued by Fannie Mae, Freddie Mac or Ginnie Mae.

Our total non-covered loans of approximately $1.2 billion increased 1.8% from a year ago and where virtually flat with June 30th as commercial loans and leases offset the reduction in residential mortgage loans.

Our allowance for loan losses of $35.9 million increased 4.8%, equal now to 3% of total non-covered loans and leases. Net credit losses of $2.2 million were down 12.2% year-over-year and 5.9% quarter-over-quarter. Regarding non-performing loans, this increased $2.7 million from June 30th. The covered loans of $524.5 million declined as these loans continued to pay down.

Regarding our retail deposits, they are now at $2 billion and increased 3.9% from a year ago, and rose slightly from June 30th while the cost of those deposits grew up to 1.82%.

Interest bearing savings and demand deposits increased 10.5% from a year ago and 4.6% from June 30th more than offsetting the decrease in certificates of deposit.

Wholesale deposits of $389.6 million declined 42.8% from a year ago and 2.5% from June 30th while borrowings of $3.8 billion declined 4.2% from a year ago and 2.3% from the end of last quarter.

Regarding stockholder's equity, as of September 30th, 2011 stockholders' equity is at $726.6 million. This is up 2.8% from a year ago and 0.3% from June 30th. This sequential change reflects an increase in retained earnings and a decrease in other comprehensive income.

The other comprehensive income was negatively affected by a decrease in the value of our forward settled interest rate swaps. These swaps give us the option of renewing the funding of a total of $1.2 billion in maturing repos in December and the first half of next year at a significantly lower cost. The negative mark on these swaps was partially offset by a positive mark on our available for sale investment securities portfolio.

We continue to maintain regulatory capital ratios well above the requirements of a well-capitalized institution. At September 30th, 2011, the leverage capital ratio was 10.12%, tier one risk based capital ratio was 31.41%, and total risk based capital ratio was 32.69%.

Now I would like to turn the call back to Jose.

Thank you, Norberto. As a conclusion, we certainly continue to execute on our organic strategy. We are taking advantage of the market here in Puerto Rico. We are encouraged with all the progress that we are making on commercial lending and banking, just as we began attracting more consumers a couple of years ago, which enabled us to significantly grow our retail deposits. We are gaining recognition in Puerto Rico as a solid commercial bank and attracting good commercial clients and relationships.

Our wealth management unit performed excellently as we expected. From a retail perspective we continue to grow deposits while lowering the cost of our funds, so that's also very good. The acquisition of Eurobank has been not only accretive in the past, but it's becoming significantly more accretive as we have better performance from the loans we acquired. We're also seeing other financial benefits, the retail and commercial customers we retained from the acquisition are expanding the services they use with Oriental.

We also are pushing our strategy of not relying as much on our investment portfolio, identifying opportunities for us to delverage and holding more in cash while we repurchase some stock.

The Puerto Rico economy continues to contract but at a lower pace. We are beginning to see some economic indicators that are showing a hint of stabilization. A couple of quarters of stabilization will help confirm that we are no longer in a recession.

So I'm very enthusiastic about what's going on. For us at Oriental this is once in a lifetime opportunity to continue to push for and execute our strategy to become the best bank in Puerto Rico.

Now we'd be happy to take your questions.

(Operator instructions) Michael Sarcone, Sandler O'Neill.

First question, you mentioned delevering of the securities portfolio in the press release. Can you give us any updated thoughts on a potential delvering at the end of the year?

We are as we speak evaluating those possibilities. As you know, we have $600 million of repos maturing at the end of December, so we're doing our own internal analysis to decide on which way we go. Certainly the reduction in the cost of the repos going forward since we have the swaps is significant and that's part of the analysis that we need to take into consideration, Mike. So at this point we're still in the analysis and are not yet ready to conclude on which is the way to go.

And so is it safe to say though that kind of your -- it's going to depend on your outlook for the NIM?

Correct, yes. There is a -- certainly interest rates have gone down and we have here an opportunity to improve our net interest margin significantly. So that's part of what is being considered.

And on the securities portfolio, what are your thoughts on HARP 2.0? Like what kind of effect do you expect it may have on your portfolio and prepaid?

We looked at it yesterday and Ramon Rasado, our Treasurer, he's with us today. So Ramon, can you add some thoughts to that?

Sure. Well, as you know, HARP 2.0 it opens the field to borrowers wider than the HARP 1 did obviously. They still have the constraints in terms of the threshold that -- the time threshold. They're still looking at June '09 as the date that these loans have to be either sold or guaranteed by Fannie Mae. So that's a big constraint.

The opening of the LTV beyond 125, well that apparently will help state -- borrowers in states where the healthy market has collapsed. In terms of our own portfolio, we looked at coupons that might be subject to erosion in terms of repayment. And we think that those coupons are coupons of 5.5 and above. And when you look at our portfolio and segregate those mortgages that originated before June of '09, that's about 20% of the portfolio.

We dug deeper into that portfolio and we really don't see any concentration in these states that are under duress. I mean we have limited exposure to Florida, Arizona or Nevada. So we really at the end of the day don't think that this will have a great impact on our portfolio.

And my last question, just on the NIM guidance for 2012 of 2.5%, can you walk us through the moving parts there?

Yes, we certainly are assuming interest rate to remain around this level, so we are expecting amortization of premiums to be level with what we are seeing in this quarter and expect to see in the fourth quarter. We will have a better accretable yield or a benefit from a higher accretable yield on the Eurobank portfolio. We are also looking at lower cost of deposits as we continue to see more movement towards lower rates in Puerto Rico.

We also have the FDIC note that we have $100 million or around $5 million that comes due in March of 2012. And that has a cost of around 3% or change. So those are part of the moving targets that we're seeing. The 250 assumes that we not do any deleverage from the repos. So that's kind of a base case scenario that we're using for the guidance of the 250 for 2012.

So you can say that the positive NIM effects will offset the decline of the covered loan portfolio? Is that how you're thinking?

Remember that since we have a higher accretable yield now, it increased from $117 million in June to $168 million or $169 million as of September 30th, we have a higher accretion going forward, so that's been taken into account. And so that's going to be a positive, not necessarily a negative. It kind of catches up on us later on.

Brett Scheiner, FBR Capital Markets.

If you see a [bullet hit], you see the economy contracting, what effect would you say that would have on Oriental, particularly on credit?

Well, the economy has been contracting for five years in a row. If you think of it, I don't think there are many countries in the world that have contracted for five years in a row since the Great Depression in the '30s. So what we've seen in the last five years is actually improving because the pace of that reduction is slowing down. So that's what's to us encouraging.

We're seeing some stabilization on non-performing loans across the system and from our portfolio and from our perspective, we really don't have too much credit exposure and no construction exposure at all. So all those factors bode well for our credit performance going forward, in an improving economy, albeit a stagnant still economic environment.

Also, in the past we've talked about premium amortization flowing through on a somewhat lag basis. So if refis were to peak in November or December, which I've heard people in the market mention, does that mean fourth quarter and then first quarter as well would see increased premium amortization?

No, that's not what we are expecting on the (multiple speakers). We're seeing more of kind of a peaking now this quarter on the premium amortization and see more of a stable level similar to what we saw this quarter.

And then on that 250 NIM, obviously you're talking about assuming no further deleveraging. Can you give some idea of the earning asset base you would expect?

Yes, it's around $6.5 billion or so. The earning assets.

That's similar to what we have right now.

Yes.

And then one last question. There have obviously been some inorganic opportunities discussed in the market that you've looked at. Can you talk about either specifics or whether or not you're continuing to look for something of material size?

Well, as we've said all along, we have a three tier strategy, growing and building our commercial based business and we're showing progress on that quite fast. We also have said that we are on the lookout for inorganic opportunities as we want to continue to expand and develop our strategic plan here locally in the island.

And those two main strategies we have evaluated and looked at all throughout this year and we plan on continuing to do that because I think there are still too many banks in the island and there's a potential opportunity for us to look at acquiring assets or businesses that complement our strategy going forward.

Chris Gamaitoni, Compass Point.

On the MBS portfolio, what is your embedded gains -- unrealized gains at the end of the quarter?

It's $102 million.

And do you have any estimate of what the costs would be to terminate additional repo [funding] lines like during the quarter? Like how much that would cost you and whether those gains would offset the majority of that?

Remember that coming December the repos mature. They don't have to be terminated, so there's no cost to those $600 million.

I meant longer than that. Just we have a very low interest rate environment where the benefit to NIM in earnings is a lot less than it used to be. So I'm just trying to think about how the Company would operate and the give and takes in a perpetually low interest rate environment.

Let me give you the general profile of our wholesale funding here. We, as I mentioned, the $600 million repos are mature in December. We have 225 (inaudible) banks that also mature next year between the first and second quarter of 2012. And we have the $1.25 billion [steepener], which right now costs us 0 to 25 basis points.

So that's the bulk of it and then we have some longer-term repos, three years out, $300 million. And am I missing anything else here? And then we have a longer repo for 2017 that has -- that's a costly repo there. And that's how we -- that's the landscape of our wholesale funding. I don't see many opportunities for us to cancel any of those repos, or at least financially making sense for us. So that's where we are at.

So that 2017, do you -- there's no benefit of offsetting gains with canceling that high-cost repo?

Not at this time.

And then just related to the premium amortization. If we think about how HARP 2.0 is structured and the capacities to the industry, I would expect most of that prepayment to occur in the first quarter. I know changes have to be made to the TBM market before that. So isn't it possible that we would see less impact next quarter and more in the first quarter?

The way we're looking at this is more on a -- assuming interest rates remain where they are, and Ramon explained earlier the potential effects of HARP, which can accelerate prepayments. Just to give you an idea, this quarter end we had a CPR of around 18. Our CPR as of June 30th was around 10, so that's the acceleration and prepayment that we had in the quarter. We do not expect to have much of a difference in speeds in the fourth quarter and in the first quarter, so we see amortization of premiums stable going forward.

And then can you just give us a little color on deposit competition? It looked like deposit balances on non-interest bearing were down slightly quarter-over-quarter. It wasn't anything of concern, it was just there wasn't much growth there. Do you have some color on how competitive those core funding deposits are now on the island?

Yes, I think everybody here in the island is trying to get as cheap funding as possible and competition is strong. Although I think we have a benefit from being a very solid, safe financial institution and that has attracted good clients and good relationships to Oriental. So any blip or dip that you see on the non-interest bearing deposit is just more of a transitory effect, maybe end of the quarter withdrawals made by some clients and stuff, but not necessarily anything to be of concern.

We do have good expectations of continuing to grow not only the non-interest bearing deposits, but also the retail deposits. As you noticed they have gone up also and we continue to lower the cost of those deposits.

Joe Gladue. B. Riley.

I guess just want to start out on loan production. I know you've addressed it a little bit, but I guess hoping for a little more color on just -- particularly on the commercial side production is jumping around from quarter-to-quarter and I guess sort of hard to project where that's going. When do you think you can sort of get to a more, I guess predictable or stable growth pattern or what's causing some of the jumping around?

I'll take (inaudible) first, and then I'll past it to Jose Ramon. I think, Joe, that we need to start evaluating the performance of the commercial, let's say production business from the perspective that we're building. And really the team was assembled late last year and early this year, so what you're seeing is still the process of us building the team and kind of streamlining everything.

From a production perspective, I'll let Jose Ramon talk to you and give you some more insight, and add to anything that I've said now.

It continues to be a market with limited quality borrowers. So you have to grow carefully and you have to grow with clients who are able to repay you and pursuant to original terms. And the economy of course is, as Jose Rafael said in its fifth year of recession it's still weak, at best stabilizing. And in such a market, you build volume carefully. We do not want to build it without prudence and I think we are -- you may see fluctuations from quarter-to-quarter, but I think over a series of quarters you will see volume reaching a more sustainable recurrent level on the commercial side.

This past quarter was weaker than the previous quarter in terms of production. It actually had to do what some significant loans that could not be closed by the end of the quarter that are spilled over into next quarter in terms of pipeline and volume. So there may be again some irregularity in the pattern. You have to grow carefully and prudently, but we are satisfied that we have a growing pipeline of good quality borrowers with whom we can establish long-term relationships, which is also what we're looking for, not just one of financing.

So it's not a booming economy, so you cannot expect a sort of frothy growth in production at this moment.

And I guess just wanted to touch a little bit more on capital deployment. You've I guess increased the dividend and started some share buybacks, but absent the ability to complete an acquisition, you're still -- even with those, you're still building up more capital and more cash. And just wondering if you've given any thought to increasing the dividend payout ratio more or becoming more aggressive on the buyback?

Our thoughts are along those lines, Joe. We -- as you know, we're the only bank in Puerto Rico who has not stopped paying a dividend and we last year started growing our cash dividend or increasing it. We expect to evaluate that at the end of this year or again at the Board.

Regarding the repurchase plan, we have the $70 million repurchase. You saw what we have bought. There is a constraint, I mean there are not many sellers and there's not much volume on our stock. So those are somewhat constrictive.

But we continue to look at those two capital deployment strategies and growing them as well as strategically reevaluating what are the best alternatives for us to deploy capital into the future to grow our franchise and to grow the strategies that we have.

(Operator instructions) Derek Hewett, Keefe, Bruyette & Woods.

Could you talk about the loan-pricing environment on the island? And then also, how would you characterize the pipeline today versus maybe 30 days ago?

The pipeline today versus 30 days ago is strong. It's sustained. Again, the production to some extent relies upon logistics of closing within quarters, and some of the things we have to do to close in Puerto Rico are slower than they've been in other times, particularly getting appraisals because of appraisal backlogs and whatever, given what people are doing with their -- some of their distressed portfolios. So that affects time to closing to some extent, but -- and that affects, to the previous question, the -- makes (inaudible) irregularity in quarterly production numbers.

But if a better measure is the pipeline, then I would say you -- we are seeing a more normalized consistent pipeline with -- as compared to a previous quarter, a stronger profile, so perspective for ongoing production I think is positive.

With respect to pricing, this quarter I would say pricing has become -- we've seen more aggressive pricing from some of the competitors in the market. It may be as a result of a realization that we're going to be in a low interest rate environment for a sustained period of time, or it may just be that some layers are facing the need to carry volume or retain the volume for their balance sheet. Obviously some of the competitors have also sorted out some of their capital issues.

But I would say the pricing environment in the third quarter on the loan side is more competitive than it had been the first two quarters of this year. And we are reacting to that as required, but still trying to maintain a disciplined stance in terms of pricing on a risk basis.

And could you -- or maybe this is for Jose Rafael, could you talk about your goals for next year? If your ROA goal of 1% or your ROE goal of 12% has materially changed, given your outlook for the margin?

Not really. I think at this time we're still sticking to the 1% ROA and 12% ROE given the strategies that we've put in place and the opportunities that we have in our funding side. So we're still with the same levels and targets that we talked about in quarters prior.

Brett Scheiner, FBR Capital Markets.

Just a quick follow-up on the buyback. Would you consider tendering for a block of stock to speak of as how cheap the shares are on a tangible book basis? How accretive it would be?

Yes, something that we can evaluate also and we're looking at all those scenarios, Brett.

Michael Sarcone, Sandler O'Neill.

Just on the asset quality, can you walk us through what you're seeing in terms of commercial and residential?

Sure. I mean I think asset quality for us is reasonably stable on the commercial side. I think in general in the marketplace it is not worsening significantly, but it is not great in general for the banking sector in general in Puerto Rico. I think we have a better than average asset quality profile for the market. And I would say the trends are stable for our portfolio.

I think early delinquency on commercial is almost zero. It's like $200,000, $300,000.

Practically nil.

So our profile on commercial side is pretty good. You want to add something, Norberto?

What I will add is that the number [from this loan] has been fairly stable. There has been some minor increases. But net (inaudible) losses for us continue to be low. We just had like $2.2 million this quarter and obviously the -- as we disclosed, the expected cash flows and the portfolio acquired in the Eurobank transaction is performing better. The expected cash flows have improved.

So we feel fine generally in terms of asset quality.

Let me also add, Michael, the residential mortgage portfolio, we have really a lower profile -- a lower credit profile -- higher credit profile mortgage portfolio, given the fact that we have not done in the past any construction type of loans. And the fact that we have stayed away mostly from 100% loan to value and the investment property and second home type of financing.

So when you look at our residential mortgage portfolio, we have high levels of non-performing loans. And as Norberto mentioned, we do not expect material increases -- or actually we're starting to see stabilization on the charge-offs too on that pocket of loans also. So we feel pretty good about the credit profile that we have in our loan portfolio here in Puerto Rico.

And we are continuing with our approach in terms of the provision and providing more than the charge-offs. So our loans have continued to decrease and now we stand at basically 3% of non-covered loans.

That was going to be my next question. Do you plan on continuing to build the allowance for non-covered loans?

Well, that's a matter of analysis. We really do not target a specific ratio. We do a thorough analysis every quarter and it's a function of delinquencies and so on. But let's say, yes, as a direction I think based on how the economy's going and so on, we think that provisions will continue to be slightly higher than the charge-offs for the quarter.

Last question. On the compensation expense, I know you guys said you're continuing to build the commercial franchise. Can you quantify any kind of headcount increases that you expect on the commercial side?

Well, when you talk about commercial we're not only thinking about commercial lending, we also talk about credit, administration, work out, loan review, et cetera. So it's a bigger picture than just commercial lending.

And having said that, we do expect to increase and continue to add team members to the commercial, let's say bank in general as we continue to grow our presence here in the island from a business perspective. So yes, (multiple speakers).

A lot of it happened this year already.

Yes, most of the build up started last year and this year. And what we're going to be is adding to what we have. We're not kind of going to increase significantly those numbers.

That was our final question. I'd now like to turn the floor back over to Mr. Fernandez for any closing remarks.

Thank you, everyone, for listening today. We look forward to talking to you again in December or January when we report the December numbers. So looking forward to speaking to all of you. Have a great day.

Thank you. This concludes today's conference call. You may now disconnect.