OFG Bancorp (OFG) 2013 Q3 法說會逐字稿

Good morning. My name is Lori, and I will be your conference operator today. Thank you for joining us for this conference call for the OFG Bancorp. Our speakers are Jose Rafael Fernandez, President, Chief Executive Officer, and Vice Chairman; and Ganesh Kumar, Executive Vice President and Chief Financial Officer.

There is a presentation that accompanies today's remarks. It can be found on the investor relations website under the webcast presentations and other files page.

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 OFG'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.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. During the question-and-answer session, we ask questioners to not use cell phones, as they might cause loud static on the line.

I would now like to turn the call over to Mr. Fernandez.

Thank you, and good morning to all. I will cover the general overview and Ganesh will discuss key aspects of our financial results.

Please turn to slide 4. OFG had another strong core performance in the third quarter. We earned $0.34 a share, diluted, versus $0.68 in the second quarter. Please note that $0.68 included $0.43 from two extraordinary items. The first was a net of increasing our DTA and the second was an increase in provision related to moving NPLs to held for sale.

There were a number of significant accomplishments during this quarter. First, we saw continued high levels of loan income and production, of wealth management and banking fees, and of deposits. Second, our net interest margin continues among the best in the industry. Third, we further enhanced our already strong credit quality by selling virtually all residential mortgage NPLs booked prior to 2010.

And shortly after the quarter ended, we successfully completed the Oriental BBVA Puerto Rico technology conversion on schedule and on budget. Not only will this enable us to operate more efficiently, it will also enable us to launch new technology-enhanced products and services to our target customer base. A good example is our recently introduced Cuenta Libre, our Freedom Account, for online and mobile customers.

On a strategic level, our client base, both commercial and retail, continues to expand. We're gaining increased recognition for our highly service-oriented approach, and now that we have completed the operational and technological integration of Oriental and the former BBVA Puerto Rico operations, we're building a franchise and culture based on a set of core values.

Before I turn the call over to Ganesh, I wanted to speak for a moment about Puerto Rico. As you know, economic and fiscal conditions here are challenging. While it might be a surprise for some outside of Puerto Rico, we have been living and working in this economic climate for seven years now. Recognizing this increased interest in Puerto Rico's financial position, we are sharing with you more detail about our government-related loans and securities and our outlook for both Puerto Rico and OFG.

As to how the balance of 2013 looks for OFG, given our earnings trajectory so far this year and our pipeline of business, we are very confident operating results in the fourth quarter should be very similar to the third quarter. As a result, we believe we will be able to exceed our 2013 guidance of $1.55 GAAP EPS.

With that, I would like to turn the call over to Ganesh.

Thank you, Jose. Thank you all for your time.

Let me start walking you through our operating results that echo Jose's sentiments he expressed now. The quarter's highlights, to recap, are strong core performance, completed technology conversion, vastly improved asset quality. All performance ratios are comparable to stateside good performing institutions.

In all, we can say we are delivering on our promises we made prior to our acquisition.

On slide 5, you can see that we are building our non-covered loan balances very nicely. We had anticipated some runoff prior to BBVA PR acquisition on our modeling. But actual results are much more encouraging. Balances are up 4.2% from second quarter and slightly ahead of year 2012, combined. These higher balances have resulted in a greater level of interest income year to date and it has also benefited our NIM trends.

To give you some color on our portfolio, commercial institutional loans showed strong growth. This includes new commercial loans, as well as expanded government loan book that we will be discussing in a few slides.

Residential mortgages decreased this quarter. We expect the balances to continue to taper down gradually as we do not add more nonconforming loans as part of our overall production.

Auto loans are flat. We are primarily maintaining our market share, and as well as the portfolio, as the production balances repayments and charge-offs.

Consumer loans are continuing to do well, including -- increasing our portfolio.

On page 6, we present you the trends in our loan generation. Prior to acquisition, we expressed that one of our key strategy is to build our loan generation capabilities. We demonstrated this in second quarter, which we are pleased to repeat again in the third quarter.

Production increased 68% from preceding quarter to a record $550 million. This $550 million included a commercial and institutional production that was up 250%. Approximately $220 million of this increase was from the government-related activities, which also included $100 million in tax anticipatory credits.

Later in the presentation, we have a summary of total exposure and show why we are comfortable with our positions that we are holding today.

The balance of the increase in production in this segment was primarily commercial and industrial loans, which we continue to have a good pipeline. Residential mortgage production was down 40% to $61 million. And as you have seen and overall in the market, we have also seen considerable shrinkage in the local market as well.

As a result, we believe the mortgage production going forward will probably remain at these lower levels. It could also be potentially be lower when CFPB restrictions come into effect shortly.

Order production is stable. Year to date, auto loans have been flat or slightly up. However, we are seeing high levels of price-based competition in the local market.

Consumer production is up, and it's getting stronger due to our expanded branch network and integration of our platforms.

On page 7, you can see that we continue to expand our deposit base while reducing our cost of deposits. Since the beginning of the year, we have reduced $125 million of expensive time deposits and replaced them with lower-cost savings accounts.

Looking at this quarter, you can see the retail balances remain flat after a 7% increase last quarter. Similarly, commercial and institutional balances have declined 6%, after increasing 9% last quarter. However, we are able to retain our good-quality clientele and as well as the account base, especially considering that we have consolidated nine branches and as well as completed our technology integration during the quarter.

The deposit interest expenses continue to decline. Our efforts have reduced the cost of deposits from 125 basis point in the second quarter of last year to 94 basis points in the third quarter of this year. At the same time, we have increased our core deposit base considerably. Looking ahead, we believe accounts such as Cuenta Libre and other new services in the works will enable us to continue to grow our retail deposit base and as well as further reduce cost of funds.

On slide 8, you can see we are continuing to achieve high levels of interest income and as well as net interest margin. Loan income is comparable to second quarter, removing one-time items. Second-quarter yields were higher, however, on a GAAP basis, primarily as a benefit of early repayment of acquired loans, cost recoveries of covered loans, and as well as other purchase accounting impacts.

Removing this, NIM was almost the same as in the last quarter; however, on a different or lower on a US GAAP basis. It is slowly reaching to a more normalized level as the effect the purchase accounting go away. Over the next few quarters, we expect it to reach approximately the 5% level and continue to hold there.

That is a little higher than what we originally anticipated for 2013, mainly due to higher loan balances that we've been able to do and what we have been able to do in terms of deposit cost reductions.

Please turn to page 9. Core non-interest income continues to be strong as we capitalize on our large platform and client base. We are continuing to target $90 million to $95 million in 2013. Banking service revenues, however, were slightly down, mainly due to large one-time fees we had in second quarter associated with certain repayments of acquired loans.

Mortgage banking revenues reflect lower level of production, as we had discussed previously. Wealth management was down slightly. Despite all the turmoil in the local market that kept the transaction volumes down, we have been able to continue to deliver strong results in this area.

Broker-dealer assets gathered, $2.5 billion, were down from $2.8 billion in second quarter, primarily because of market fluctuations. Trust asset managed of $2.7 billion were up from $2.6 billion in the second quarter. Both groups of these assets reflect a combination of market changes -- or changes in market values, as I previously mentioned.

Now I would like to take a moment to explain our approach to wealth management. At our broker-dealer, we have always emphasized risk-averse diversified investment approach. Only 3.6% of our total broker-dealer assets under management are leveraged by our clients. And around 25% of our assets are invested in PR bonds and closed-end bond funds that come under margin pressure at this point in time.

We're happy to say that we already have a favorable position going forward, and we believe in the current crisis, the investment approach in the local market needs to change to reflect the risks involved.

On page 10, as you can see on this slide, from the magnitude of difference this quarter is close to a normalized quarter, what I would consider as a normalized quarter but for the following items, which I'm going to walk through. First, the provision. The provision reflects the assumption that current historical loss factors, what we have seen combined in our legacy and as well as our covered portfolio, will continue to -- will continue in future.

Higher loan balances due to originations result -- also result in requiring new provisions. The covered loan provisions of $3 million reflect the annual cash flow re-forecasting we do periodically to refresh all the cash flows of all the pools in the covered loans.

Second, regarding the FDIC loss-share expense, it is down $4 million from second quarter, primarily because of lower levels of cost recoveries, as I mentioned earlier.

The third point is the non-interest income. In the non-interest income, we have $1.4 million of a charge associated with selling additional nonperforming loans, as we originally anticipated. This also requires -- this $1.4 million also includes [$700 million] retention by the buyer for -- towards the property tax receipts that we had to pay from the escrow account.

Finally, the taxes. This quarter, the applicable tax rate remained to be 35%. However, we had two beneficial items that really -- that brought the effective rate down to 25%. The first was the DTA increase due to remeasurement that Jose Rafael mentioned earlier in his section. The second is also a closing of the tax BBVA PR tax positions and certain remeasurement purchase accounting adjustments that we did, which effectively benefited us to bring the tax rate down to 25%.

However, going forward, we assume the effective tax rate to be at 35%.

Let's turn over to slide 11, which is a new slide that we have included to describe our Puerto Rico exposure. In all, as you can see, we have $983 million in loans and securities. As you know, we did not have much exposure as of end of last year. The current book of loans is part of the acquired business and the one that we feel comfortable to continue.

Out of the $983 million total exposure, $837 million are in loans and the remaining $146 million is in investment securities.

In analyzing the exposure that we present, please consider the following three points. First, all of these loans have a very defined source of payment. This makes us very confident in calculating the debt service ratios and the ability of various government entities to meet its obligations.

Second, let's look at the maturities. Two-thirds of our loan, because of the nature, do have maturity within the next 12 months or so. This is because most of these credits are tax revenue anticipatory notes or other types of short-term funding -- short-term lending to fund government's operating needs.

Third, the loan and security amounts we are showing do not include an additional 2.61% valuation as allowance we had already taken, and this provides enough coverage in terms of our provisioning that makes us feel comfortable about the exposures that we have in this sector.

Finally, to give you some more color on the investment securities, our Puerto Rico-related investment securities fall into two groups. One is $121 million comprised of obligations to PR government and its subdivisions. Of that, $99 million is a short-term credit facility to the Puerto Rico government, structured like a bond, but is mark to market currently close to par.

The balance of the PR-related investment security is $20 million of CRA-eligible investment that we are required to hold. You can also see that we have around $491 million of deposits from municipalities, central government, and other government entities.

On page 12, you can see our already strong credit quality was further enhanced by our sale of residential mortgages, mortgage NPLs in third quarter. The sale involved a total of $122 million in nonperforming loans at 49.2% of UPB. All these loans were originated prior to 2010. As such, they carry higher underlying collateral risk due to their vintage. $62 million of these NPLs were originated by Oriental, and they were shown as part of the non-acquired loan credit statistics we present.

This sale enhances our current credit quality. I would like to bring your attention to the reported metrics on table 6 in our financial supplement. Over the last five quarters, we have brought down the NPLs from 10% to 3.4%, accumulated $37 million charge-off over the same period.

Not only are our asset qualities better than the local peers, but it also compares well with US peers. More than 50% of our loan portfolio is under purchase accounting, with approximately $800 million in non-accretable yield and some with remaining loss-share coverage.

We believe that these aspects should be considered when our risk profile is compared to other institutions. We're also very proud that we were able to transform our balance sheet, manage residual credit risk, and acquire an integrated large bank while increasing our combined capital strength at the same time.

As you can see on slide 13, our shareholders' equity grew as retained earnings more than offset the small decline in OCI due to reduction in unrelated gains on our investment securities. Net income increased shareholders' equity by about $20 million this quarter. Similarly, our tangible book value also increased $0.20 to $13.47.

We are very confident in OFG's ability to grow, as all our businesses continue to increase market penetration and profitability.

Capital ratios have continued to improve across the board. You can find all these numbers in our financial supplement and as well as in the presentation. We anticipate our capital position to strengthen further in the subsequent quarters.

That concludes my part of the presentation. Let me turn it over to Jose.

Thank you, Ganesh.

Please turn to slide 15. While we're still formulating the details of our plan for next year, we want to give you a broad overview of our thinking regarding 2014 and 2015. In general, given the local economic condition, we assume we will experience a decline in our interest-earning assets. However, we believe we will be able to more than offset this through cost savings, most of which are already built in, and thus enable us to continue to progress.

There are three key areas of savings we are focused on. We expect to continue to reduce the cost of deposits as the local market gets closer in line with that of the mainland. Two, starting in the fourth quarter of 2013, we expect to begin to benefit from the first wave of BBVA Puerto Rico related cost savings, with another wave starting in the fourth quarter of 2014.

And third, in the second quarter of 2015, we will be able to eliminate the large amount of FDIC indemnification asset amortization that we have been expensing so far.

We also believe there are significant core noninterest revenue opportunities in wealth management, insurance, and corporate trust, as we continue to take advantage of our new and larger customer base and the recent disruption in the local market.

With no legacy issues, we have a high degree of capital flexibility we can deploy. If interest-earning assets are not where we want them to be, we can return more capital to investors via increased dividends or share buybacks. And if conditions present themselves, we can continue our strategy of market consolidation through the acquisition of complementary businesses or other strategic opportunities.

Please turn to slide 16. I would like to conclude today's call with our outlook for Puerto Rico and OFG itself. With regards to Puerto Rico, we believe that the central government has demonstrated its commitment to meet its debt obligations and to get the economy moving again. The government has started to enact a series of reforms -- fiscal, pension, and relating to public corporations -- while instituting new tax measures for fiscal 2014, all tailored to reduce structural budget gaps.

Tax revenues so far for the first quarter of 2014 fiscal year are coming in slightly ahead of expectations. We applaud all concerned for their efforts, and have and will do what is safely within OFG's ability to help and lead.

As for OFG itself, the challenges that Puerto Rico faces are not new to us. We have been living closely with them since at least the mid-2000s. And we are carefully watching for any negative economic impact the new taxes could have. With that in mind, our strategy will be to continue what has worked for us so well in the past. That is operating conservatively and being ever mindful of the current economic and fiscal situation and its impact on credit underwriting.

Given our financial strength and focusing on customer service as opposed to price as a differentiating factor, we will continue to concentrate on acquiring a quality clientele. This is so we can deliver quality results to all our stakeholders, which include our depositors, our retail and business customers, our investors, our people, and ultimately the communities we serve.

With this, I will end our formal presentations. We are also here with Norberto Gonzales, our Executive Vice President and Chief Risk Officer. All three of us will be available for the question-and-answer session.

Operator, please open the call for questions.

(Operator Instructions). Brian Klock, Keefe, Bruyette, & Woods.

I guess just a real quick question, I guess, and clarification. Jose Rafael, in your earlier comments at the beginning of the call, you talked about a core run rate of earnings similar to what the third quarter was. So should we take the $0.34, add back the $0.03 of merger cost, the losses on securities, and then the loss on the sale of NPLs, so are you talking about a core run rate that is more like $0.40? Is that what you mean?

I am referring to really the end of the 2013 year when I -- so I just want to, first of all, frame it there. And just giving a comfort to everyone that we feel very comfortable that the results on the fourth quarter are very much in line with this quarter, and yes, your comments are quite accurate.

Okay, okay (multiple speakers)

(multiple speakers) would like to add -- Brian, I would like to add the ETR will go back to be 35%, as opposed to being 25% this quarter, as of right now.

I guess thinking about -- Ganesh, with the net interest income and the margin guidance that you gave, I know you said that, obviously, there's a lot of the accretable yield and the purchase accounting noise that goes through there, and eventually you would expect to see that margin compress down to the 5% range. It seems like, though, that you did have some more transfers from the non-accretable discount into the accretable yield, so it almost seems like there's going to be some more accretable yield coming through the NII line in the next few quarters. Does that make sense?

Correct. Not next few quarters, so over the average -- weighted average life of the loan, I should say. If you see the 10-Q accretable yield and then what we are showing in this table, preliminary results, it is about $60 million increase in accretable yield quarter to quarter between the end of the second quarter and beginning of the third quarter.

That's because of the remeasurement that we are continuing to do. Basically, the way we work was throughout the year, we have until December 18 to do the remeasurement, complete the remeasurement. We take pool by pool our loans in terms of significance, in terms of balances, and continue to work down. So that's part of the changes.

And I think if you ask me, are there more remeasurement that is yet to come? We are almost very close to performing it and -- or showing it, and therefore there will be very little changes in this quarter, and that's why I think I said that this quarter is very close to being a normalized quarter. And to me, I think the noise primarily comes from some provisions, higher provisions, because we did a higher covered provisions as part of the annual recasting, and the FDIC is always an issue, and then the tax.

Got it, okay. Thank you. I'm going to jump back in the queue. Thanks for taking my questions, guys.

Emlen Harmon, Jefferies.

I was actually hoping to continue on the provision for a little bit, as well. I did see you guys increase the reserve on the consumer and auto books. Could you give us a little bit of color behind the decision there, and do you feel like the provision on the noncovered portfolio is at a run rate we should expect going forward?

If you see out of what we did, Emlen, is obviously our allowance methodology replaces what charge-offs we have done, because that is our historical loss factor.

And we assume, as I mentioned, that going forward the historical loss factor is the actual experience that we're going to have. It is not going to go anymore lower than that. That is our assumption, working assumption.

And if you consider our production levels, if you have to maintain the same 2% sort of allowance to the total loan portfolio, if you take the new production and see, basically the 2% is what we have provided for the new loans.

Got you, okay. But the balances there were on a net basis, I guess, relatively flat in those two books. So I guess based on what you are telling me, if we see limited growth in the auto or the consumer book, should we essentially expect you guys to be replacing charge-offs from this point going forward?

Emlen, remember what you are saying as the overall book --

Exactly.

-- is correct. But we have -- the new book is growing quite rapidly on the consumer side.

And that's because of the auto. (multiple speakers). The way it happens, Emlen, is the -- order production, the net of the charge-offs, and all those kind of outflows, it comes out of the SOP book and it goes into the new book, which needs provisions.

Got you. So there is going to be (multiple speakers) a churn, essentially, over the next year or two?

Exactly.

Exactly, exactly.

Got you. Okay, and then a couple questions on the expenses. The decline in interest earning assets, you noted there were some expense saves that come along with that. Is that separate and distinct from the three areas that you laid out near the tail end of your prepared remarks?

Decline in interest? Could you repeat that question again?

Yes, sure. So you note you are expecting a decline in interest-earning assets as we head out into next year. And in conjunction with that, you'd also said there were some cost savings, I guess, that you were expecting to help offset that. Is that something separate and distinct from the three areas that you laid out for us at the very end of the call here, or is that -- are those expense cuts included within those three areas?

They are all included. They are all included, and as I mentioned, a part of those saves come from deposit costs saves that we anticipate, and including in that, we can also say that we have already taken some BBVA cost saves in 2013, which we will add in 2014 an additional portion, and together, the full impact you will see it in 2015. And that is how we have laid out the cost saves into the acquisition.

Got it, okay. And then one final one, if I could. Thanks for giving us a little bit of color on how you're thinking about capital longer term. How should we think about return to shareholders versus keeping something in store for strategic activities that may come up? Should we think about -- you guys are at a level in 2015 where you can -- you feel like you have some capital in store for doing acquisitions or other strategic actions, and we should expect the majority of earnings to be returned? Or how do we think about where you are in 2015 and what you want to hold in store for anything that comes up?

The way we look at it, Emlen, is we kind of look at tangible common equity levels, and we think we should operate slightly above the 8% PCE. So right now, we're around 7.43%, and we think that we can target 8% on the PCE, we will be comfortable having a -- I don't want to use the word excess, but I guess I am, so (multiple speakers) comfortable with the levels of capital.

We are comfortable today, but we will be then getting into some more, let's say, capital management strategies. Having said that, and as I mentioned on my prepared remarks, we feel that there is an opportunity for us to start looking at the dividend and start evaluating that possibility.

Okay, thanks. I appreciate the responses.

Todd Hagerman, Sterne, Agee.

A couple of questions. First, Ganesh, one of the leverage points is the cost of funds as it relates to deposits specifically. And I was wondering if you could just talk a little bit more, as I look at the average yields in table 5, I noticed that both brokered and the borrowings did come down, which is positive, yet the brokered deposits, really no change in yield and we had the tick up on the borrowing side. I'm just wondering if you could just give a little more detail in terms of those leverage points, particularly with some of those higher-cost funding sources.

Sure. As I mentioned, Todd, we do have time deposits, as well as some institutional CDs that are maturing, and we are going to reprice them. And I think that's in the plan.

And we have not taken wholesale efforts in order to reprice the consumer deposits, primarily because we were focusing on integrating the organization and the branch network and all those kind of things. So as we have always said, there are some opportunities in deposit cost reductions.

And I think the first order of business after this quarter for us is to take a look at the institutional time deposits and continue to wind down the broker CDs as we run excess off loans, so as they come mature. And I think that is our first order of business. And then in 2014, we can always take a look at lower-cost deposits on the consumer side.

I'd also like to point out also, Todd, that during the quarter, we also took advantage of restructuring or the maturity of a couple of repos that we had, and that is why you see a little bit of a higher cost on the repos this quarter, and that is basically us maintaining our asset and liability strategies in place as we had some short-term repos that we wanted to extend for 1.5 to 2 years going forward.

Okay, that's helpful. And just a follow-up, Ganesh. In terms of the institutional time deposits, could you just give us a sense of what the average rate there is and what the order of magnitude, where that could possibly reprice?

The institutional deposits, what we refer to institutional deposits, are primarily deposits from local cooperatives, and there is absolutely no need for excess liquidity at this point in time, and therefore these deposits, which are priced at 120 basis points, as and when they come to maturity, we may be able to offer them lower rates, and in case if they don't renew into -- continue the relationship, we do have liquidity, enough liquidity, and loan to deposit coverage to let them go.

So I think that primarily, as I said, this quarter, we need to take a look at those relationship and start repricing them as we can.

Okay, great. Then just finally, Jose, you mentioned about the positive pipeline, I believe on the commercial side. I am just curious in terms of this quarter if you could just give a little bit more detail in terms of the impact that the government borrowing did have on the growth this quarter. And related to the pipeline going forward, does the government play -- that segment play any kind of meaningful role in terms of your pipeline going forward?

Let me say a couple of things. One, Ganesh mentioned in his remarks the exposure that we have to the government of Puerto Rico was pretty much acquired from the BBVA acquisition back in December. And I think we are pretty much covering our exposure in terms of how much more we want to be exposed in terms of the government of Puerto Rico.

Having said that, though, we are here to continue to work with the government, and try to help and lead in terms of what needs to be done to help get things restarted in terms of the economy.

From that angle, I can say that the production here this quarter was basically a tranche that was maturing -- that matured in the second quarter, that we had $125 million of tranche that matured, and we basically originated a new tranche for $100 million on the same type of tax anticipation note, which will come due April, May, and June of next year.

The rest is a couple of municipal -- very strong municipal loans that we gave, and these are municipalities that have a very longstanding relationship with us in terms of other banking products and services, and we feel very confident and comfortable with their operations.

I would say we also did a couple of significant new loans on the commercial side that add to our good relationships, commercial relationships, and we continue to grow those and expand those client services as we have more capabilities now.

That's very helpful. I appreciate the comments.

(Operator Instructions). John Stein, FSI Group.

Just a couple more questions on the Puerto Rico loan exposure, and thank you for putting this slide 11 in here. But the 2.61% valuation allowance, is that just on the investment securities portfolio or is that on the overall portfolio?

That is actually not in the investment portfolio. It is on the loan portfolio and it is part of our acquisition mark (multiple speakers)

So that's the acquisition mark? Okay.

That's the general valuation allowance. And the securities is mark to market (multiple speakers)

But the new loans that you are making, you aren't specifically provisioning on?

The new government loans?

Yes.

According to our provision methodology.

The general valuation allowance and according to provision methodology, it is covered under the provisions.

What is the yield profile of the new government loans that you're putting on?

The new government loans are coming in around 350 to 400 basis points above LIBOR, and mind you to let you know that these are tax exempt, so there is an effective tax (multiple speakers).

Full-time equal -- fully-taxable equivalent is there.

Correct.

And you emphasize a relatively short duration. Do you expect to keep the portfolio size stable as these loans mature, or shrink it down?

It just really depends. We do have a constant communication with the government, and I think we need to work with them and make sure that we help on all fronts. So my expectation would be to keep it at this level, and if there is some opportunities to reduce that exposure, we will take advantage of them, but we also want to be able to provide some help locally.

Okay, thank you.

At this time, there are no further questions. I will now turn the call back over to management for closing remarks.

Thank you, and we will look forward to talking to you next quarter when we hold our fourth quarter call, next year, actually. Thank you all for your time, and have a great day.

Thank you for participating in today's conference call. You may now disconnect.