Old National Bancorp (ONB) 2022 Q3 法說會逐字稿

Welcome to the Old National Bancorp Third Quarter 2022 Earnings Conference Call. This call is being recorded and has been made accessible to the public in accordance with the SEC's Regulation FD. Corresponding presentation slides can be found on the Investor Relations page at oldnational.com and will be archived there for 12 months. Management would like to remind everyone that certain statements on today's call may be forward-looking in nature and are subject to certain risks, uncertainties and other factors that could cause actual results or outcomes to differ from those discussed. The company refers you to its forward-looking statement legend in the earnings release and presentation slides. The company's risk factors are fully disclosed and discussed within its SEC filings. In addition, certain slides contain non-GAAP measures, which management believes provide more appropriate comparisons. These non-GAAP measures are intended to assist investors' understanding of performance trends. Reconciliations for these numbers are contained within the appendix of the presentation. I'd now like to turn the call over to Jim Ryan for opening remarks. Mr. Ryan?

Thank you, Form. Good morning. We are pleased to discuss our outstanding third quarter results and update you on our transformational merger. We completed our systems conversion and branding changes during the quarter. Internally, we have branded our merger as better together and these last 2 quarters of strong results demonstrate how we are truly better together to all stakeholders. I also want to take this opportunity to acknowledge and thank our team members for their hard work and dedication to serving our clients, communities and supporting one another throughout this process. Let's start on Slide 4. We -- we reported GAAP earnings for the third quarter of $0.47 per share. The third quarter included pretax charges of $23 million in merger expenses. Excluding these charges from the quarter, adjusted EPS was $0.51 per common share. This quarter's adjusted EPS was almost 11% higher than the second quarter. Our adjusted return on average tangible common equity in assets were a strong 23% and 1.35%, respectively, and our adjusted efficiency ratio was a low 51%, which is the best efficiency ratio I can remember in my 20-year plus career at Old National. Our focused execution on our merger, strong deposit franchise and growing commercial business drove these robust results and leading returns. We saw higher balances in every portfolio in most markets across our commercial business. Total loan growth was 14%, and the commercial business grew 17% on an annualized basis. The higher loan growth, paired with the benefit of a strong deposit franchise contributed to a 38 basis point margin expansion. Our commercial pipeline ended at a strong $5.4 billion. Overall, credit quality remains strong, and we continue to be diligent given the increasing economic uncertainties. However, corporate balance sheets remain solid, and personal clients retain higher saving rates than we saw in previous cycles. We were pleased to grow deposits slightly quarter-over-quarter while maintaining our deposit pricing discipline with just a 5% deposit beta. A quick update on hiring. We successfully welcomed 25 new client-facing commercial and wealth management relationship managers during the quarter. Our talent pipeline remains robust, and we will continue to make these strategic investments. We recently expanded our wealth presence with a new office in Nashville, Tennessee, hiring 7 wealth management professionals. The experienced team who will be led by Steve Cook, who will also serve as our Market President and the office will operate under our new 1834 high net worth wealth management brand. This was a fantastic opportunity, and we are already adding new clients to the bank. Over time, we will look to expand and offer other banking services to this high-growth dynamic market. This further expansion built upon last year's strategic investment in a high net worth team in Scottsdale, Arizona. We were also pleased to announce the hiring of Brett Tishler as our Community Banking CEO. Brett is responsible for all consumer and retail banking segments. I'm excited about his extensive knowledge and experience in leading consumer and small business segments as well as the optimism and enthusiasm he brings to our organization. In early December, we will implement several enhancements to our overdraft protection programs to provide clients with more flexibility. The changes will include eliminating the NSFE and we believe our program will be consistent with current best practices. In closing, we will continue to demonstrate the strength of our expanded franchise with commercial loan growth for the third quarter of nearly 17%, significant improvement to our net interest margin because of our deposit franchise and continued strong credit, capital and efficiency metrics. As we look forward, we expect the loan portfolio to continue to grow, margins to continue to expand, driven by our below peer deposit cost, organic growth of our wealth management client base, disciplined expense management and continued savings from our merger synergies and strong relative credit metrics. I believe we are well positioned to withstand any challenges that lie ahead. Thank you. I will now turn the call over to Brendon.

Thanks, James. Turning to the quarter's results on Slide 5. We reported GAAP net income applicable to common shares of $136 million or $0.47 per share. Reported earnings were impacted by $23 million in merger-related charges. Excluding these charges as well as debt securities losses, our adjusted earnings per share was $0.51, up 19% year-over-year. Slide 6 shows the trend in total loan growth on a historical combined basis, excluding PPP loans. Q3 represents our ninth consecutive quarter of organic loan growth, with total loans increasing 14% on an annualized basis. Commercial loans grew an annualized 17% while consumer loans grew an annualized 7%, driven by residential mortgage. The investment portfolio decreased 6% quarter-over-quarter due to rate related fair value adjustments and reinvestment of portfolio cash flows in support of loan growth. We expect investment cash flows of $850 million over the next 12 months. Slide 7 provides further details of our commercial loans and pipeline. The strong second quarter growth was well distributed with 17% annualized growth in C&I and 15% in CRE. Q3 production puts some pressure on the pipeline, but loan demand remains strong, and we did see a marked increase in the accepted category, which was up $400 million over the prior quarter. Turning briefly to pricing. New money yields on C&I increased 109 basis points from Q2 to 5.29%, with new CRE production yields up 88 basis points to 4.55%. Slide 8 shows details of our Q3 commercial production. The $2.4 billion of production was well balanced across all product lines and major markets. And as always, consistent with our disciplined approach to credit. In addition, all of our product segments posted quarter-over-quarter balance sheet growth, which demonstrates the success we've had in retaining lenders and clients in Chicago, our successful entrances into new expansion markets and the quality of our commercial teams throughout our footprint. Moving to Slide 9. End-of-period deposits were up 1.5% quarter-over-quarter, driven by increases in municipal deposits. We are pleased with the stability of our commercial and retail deposit balances, particularly our non-interest-bearing accounts. Our low loan-to-deposit ratio, coupled with asset liquidity in the form of our investment and indirect book provides flexibility heading into this competitive deposit market. That said, we are actively defending deposit balances through competitive race and pricing exceptions. We are also playing offense through various deposit specials and select geographies where we have limited market share. These actions put up a pressure on rates in Q3, with average total deposit costs up 6 basis points quarter-over-quarter to a still very low 12 basis points. Interest-bearing deposit costs were up 9 basis points to 18 basis points, resulting in a cycle-to-date beta of just 5%. Our granular low-cost deposit base should continue to give us a beta advantage relative to peers throughout this rate cycle, but pricing is expected to increase in Q4. As a reference point, we ended the quarter with a spot rate on interest-bearing deposits of 33 basis points on 30th September. Next, on Slide 10, you will see details of our net interest income and margins. Both improved more than expected due to better loan growth, higher interest rates and better-than-expected deposit pricing lines. Net interest margin expanded 38 basis points quarter-over-quarter to 3.71%. Core margin, excluding accretion and PPP income, increased 48 basis points to 3.46%. Slide 11 provides additional details on our asset liability position and projected margin range. Core margin is expected to continue to expand meaningfully over the next quarter, albeit at a slower pace. The assumption in our outlook includes a Fed funds target rate of 4.5% at year-end and a 4% yield on 10-year treasuries. Our outlook assumes deposit beta is increasing from 5% today to a cycle-to-date beta by year-end of 15%. This equates to a marginal 4Q beta of 30%. We believe the current forward curve should allow us to expand margin beyond 2022. Margin expansion is expected to slow, but we believe we can manage margin deposit betas at or below our asset betas into 2023. Also, while we remain well positioned for rising rates, we have been proactively hedging the balance sheet over the last several quarters to protect our margin from the possibility of a hard economic landing and quick reversal in Fed policy. We added $600 million in hedge protection this quarter with an average for strike of 3%.

Slide 12 shows trends in adjusted noninterest income, which was $81 million for the quarter. This is generally in line with our expectations as market conditions continue to put pressure on mortgage and wealth revenues. The linked quarter decrease was also impacted by $4 million in discrete Q2 items we discussed last quarter. Next, Slide 13 shows the trend in adjusted noninterest expenses. Adjusting for merger charges and tax credit amortization, not expense of $241 million, and our adjusted efficiency ratio was historically low 50.7%. Expenses were higher than anticipated due to $4 million in provision for unfunded commitments related to Q3 loan growth, a $3 million incentive accrual increase and a $4 million conversion-related reduction in deferred loan origination costs. The total $7 million impact of incentives and deferred costs are not expected to recur. Despite the moving parts in Q3, we continue to run ahead of our planned cost synergies and are on track for the promised merger synergies in the fourth quarter. Q4 expenses are now expected to be $225 million, a $2 million improvement from our prior quarter estimate, which equates to approximately 90% of cost synergies achieved by year-end. Slide 14 shows our credit trends. Credit conditions are stable, and our commercial and consumer portfolios continue to perform exceptionally well. Net charge-offs were a modest 2 basis points, excluding 8 basis points of net charge-offs on PCD loans that has an allowance established through acquisition accounting. Our special assets team is continuing to work toward PCD loans, and we would expect charge-offs from this portfolio to remain elevated. The provision expense impact from this effort is expected to be minimal as we carry $61 million or approximately 5% reserve against this book. On Slide 15, you will see details of our third quarter allowance, which stands at $302 million, up from $288 million at the end of Q2. Reserve build was driven primarily by strong loan growth with relatively small increases due to portfolio mix and a marginally worse economic forecast. The financial health of our clients remain strong, and while credit metrics are stable, we believe it is prudent to maintain elevated qualitative reserves given the uncertainty in our base case economic outlook. In addition to the $302 million of total reserves, we also carry $112 million in credit marks. Slide 16 provides details on our capital position at quarter end. Our CET1 ratio remains strong at 9.9%. Our TCE ratio declined 38 basis points quarter-over-quarter due to increases in unrealized losses in our investment book. Total CI is now impacting TCE by 160 basis points. We continue to monitor our balance sheet for economic stress and feel very comfortable with our capital levels. As I wrap up my comments, here are some key takeaways. We grew adjusted earnings per share of 11%. Profitability ratios continue to be strong with an adjusted return on tangible common equity of 22.6% and a return on average assets of 1.35%. We posted another strong quarter of loan growth and better than peer margin expansion, aided by an industry-leading deposit beta. Expenses also continue to be well managed with a record low efficiency ratio of 50.7% with meaningful savings yet to come. Slide 17 includes thoughts on our outlook for the remainder of 2022. We ended the quarter with a strong commercial pipeline, which supports our favorable outlook on loan growth, albeit at a slower pace in Q3. Deposits are expected to be stable, excluding the impact of the HSA sale. Net interest income and margin should benefit from continued loan growth and Fed rate increases consistent with the margin guidance we outlined earlier. We expect our fee businesses to continue to perform well despite headwinds with wealth management and mortgage following industry patterns. Commercial activity should support continued strong capital markets revenues, albeit at a lower level than Q3. We -- we have also finalized plans to implement changes to our NSF OD policies in December that are largely consistent with industry best practice. We estimate this impact to be minimal in Q4 and approximately $5 million for the full year of 2023. Turning to taxes. We expect approximately $4 million in tax credit amortization for the remainder of the year, with a corresponding full year effective tax rate of approximately 24% on a core FTE basis and 20% on a GAAP basis. Lastly, our sale of the HSA deposits is expected to close in mid-November. Real estate repositioning as well as other strategic investments are expected to partially offset the gain from that sale. With those comments, I'd like to open the call for your questions. We do have a full team available including Mark Sander, James Sandgren and John Moran.

Thank you. If you would like to ask a question please press star follow by 1 on your keypad. If for any reason you would like to remove that question please press star followed by 2.

Again, to ask a question, press star 1. As a reminder, if you are using a speaker phone, please remember to pick up your handset before asking your questions. We will pause you briefly as questions are registered.

Our first question comes from the line of Scott Siefers of Piper Sandler.

Good morning, thanks for taking my question and how is everybody doing...

We're doing great.

Great to see you take your right place back as number one.

I even got it down. I've been in the Q since 9:16am. I've got to get a life at some point here.

Glad to hear you were in the queue.

Maybe Brendan, first question is most appropriate for you. So obviously, just a huge ramp-up in the margin and NII with great deposit betas. Just curious, given some of the steps you've taken to kind of protect things, what do you think is your ability to grow NII and the margin sequentially once the Fed stops raising rates? And just maybe kind of qualitatively, how much of this margin is levitating just on a transitory basis and how much can you kind of harvest and keep for a longer period?

A lot to unpack there. And a lot of it will depend on deposit betas and deposit pricing post the Fed move. That said, we have a pretty good view of our margin with the 4 curve out through '23, and we feel really confident we continue to expand the margin as the Fed continues to move rates. Post that, we'll continue to have opportunities to reprice our fixed rate book at much higher levels than what it's running off that. And that will help offset additional deposit costs. I think the big question is how long does the Fed stay there will be a big determining factor and how long we can hold on to the margin at the piece.

And also and Scott, we continue to have a mix shift, right, on a lower-yielding assets and the higher-yielding commercial assets, and that will continue to let the margin grow regardless of what the Fed does or doesn't do.

Okay. All right. Perfect. And then just sort of a cleanup question. Brendan, can you sort of repeat what those offsets were to the anticipated HSA gain in the fourth quarter?

Yes. We're evaluating a number of things. The biggest ones are our thoughts around all of our real estate, both branch and non-branch real estate, and we're working through that now. So that will have an impact, and we'll likely spend some of that gain in the fourth quarter.

Okay. Perfect. So in other words, kind of a onetime gain and that potentially onetime charges offsetting maybe some portion of it.

Which should also lead to some additional savings in the next year.

Yes. Perfect . Thank you guys very much.

Thanks Scott.

Our next question comes from the line of Ben Gerlinger with (indiscernible). Ben, your line is now open.

(indiscernible) about to tie me dial it in you by 2 minutes... We were watching (indiscernible) So we saw that.

I was curious -- I mean, I know that you guys have a pretty large footprint now relative to the past 5 years. So I was curious, just from a kind of a macro perspective, what are you -- what are the kind of the conversations you're having with clients today, some of their concerns and kind of juxtapose against the lending portfolio, does that open up any opportunities for growth or any areas you might want to potentially pivot away from? I know you guys don't change your credit standards throughout the cycle, but just kind of that macro conversation you're having with clients.

The macro conversation with clients is we think we have opportunities across our geographies and across our 4 lines of business, and you saw that this quarter. Real estate was the largest growth driver this quarter, but all 3 of our other lines in commercial, middle market, business banking and specialty all grew about $100 million. So -- and it was widely dispersed geographically. And I just think we have the team to compete and win in every market we're in, Ben. So I don't -- we don't favor one versus the other. I think there's just a lot of opportunity to grow. James, anything you would add?

No, we're going to continue to look to expand in other markets. Obviously, we talked a little bit about Nashville and St. Louis and Kansas City continue to perform well and looking at other potential metro markets that could help support growth.

I think the power of the franchise. Ben, I would just add the power of the franchise is getting noticed in some markets that we hadn't been noticed before. And I think that's really getting people excited about joining our company. And as we talked about, we were able to hire 25 client-facing folks this quarter, and we continue to do that. There is a week goes by that we don't have somebody come through headquarters here looking at an opportunity to join the team, and I'm really excited about that. It's great to tell our story. The story resonates really well with folks, and I think it's going to allow us to continue to make those strategic investments.

Yes. That actually dovetails... Nicely to my next question. I know you just said the plus 25%, and then you highlighted Nashville, specifically from a lender perspective, is there any cities or MSAs you want that you could highlight? I don't know if I divetsdown correctly or not?

No. I would just say, in our existing footprint, we continue to have opportunities adjacent to our footprint, we're having conversations. So we're not looking at expanding outside the Midwest at this point in time. We still feel like we're very comfortable solidly in the Midwest. We do think there's an opportunity to build on Nashville, the wealth management presence. We're in early days there. We really just got started with our office. The great news is, is they are making -- referring lending opportunities to our team. And so we're servicing those opportunities today, but we'll be looking to add folks and that team selectively where it makes sense. So that may be the only place really outside the Midwest that I would note. But it's mostly inside of the Midwest inside our existing footprint or to maybe some adjacent markets where we have opportunities to continue to grow.

And most of the hires reflect our footprint, Ben. I mean, we've hired over the last 2 quarters 7 or 8 people in Chicago, 7 or 8 people in Minneapolis, few in Indianapolis and we've got a handful in a number of other markets...

Appreciate it I am using my cell phone I will step back in the queue.

Thank you, no worries...

Thank you for your question. Our next question comes from the line of Terry Mcevoy with Stephens. Terry your line is now open.

Same here. I guess maybe first question, do you think the potential savings from the real estate positioning can offset the $5 million decline in service charges?

We're early stages of estimating that, but I don't think that's far off what we're hoping to achieve with that repositioning...

Okay. And then maybe just sticking with expenses, the $225 million run rate for 4Q expenses and then you've got some remaining cost savings in the early part of next year. How should we kind of think about and maybe you could frame kind of your expense expectations for next year? Or is it still too early given what you're going to do with some of the real estate repositioning?

No. I think $225 million is a good launching point and base to move off into 2023, and you layer in some merit increases. As we talked about, we're not going to stop hiring, but we also have some cost saves to come. But I think $225 million a good base with Meredith. -- gets you in the ballpark of how we're thinking about next year.

Perfect. And then maybe just a point of clarity, the 15% deposit beta was that by the end of the fourth quarter of this year? And if so, what are your thoughts on, call it, through the cycle deposit betas as we think about the end of next year?

Yes, that is through the end of the fourth quarter. So that will be the cycle-to-date beta at 15%. Who knows where this deposit beta ultimately goes. We've been pleased that we've been able to outperform our expectations to date. I can just tell you last cycle, the combined organization of F&B and OMB had a significant advantage in deposit betas. We expect to continue to keep that advantage in this rate cycle is no matter what deposit betas do.

That's great. Thanks for all the information

Our next question comes from the line of Chris McGratty with KBW. Chris your line is now open.

Brendan, maybe a question on just the size of the balance sheet. You talked in your guide for the Q4, a static balance sheet ex the deposit sale. In your prepared remarks, you talked about around $8 million (indiscernible) of cash flows on the bond book to come off. How should we be thinking about just the size of the investment portfolio? Or maybe another way, what are your expectations for deposit growth?

So I think we're going to fight the whole deposit stable. I think deposits stable next year is a win, I think, given what we've seen in the industry. And so we're going to fight to hold that. We're going to allow investment cash flows to help provide liquidity. We also have an amount of asset liquidity and a few transaction books, including the indirect book. And we have lots of wholesale funding capacity. We just feel like we have a lot of options for liquidity heading into this that we don't have to fight for every deposit, but we're going to go out there and take care of our products. And we think we have room to run. And we're starting from a low loan-to-deposit ratio base as well.

And his comments exclude the HSA sales, as you remember, that will come off the top during the quarter.

Okay. So the $800 million, just to go back to the $850 million of bond cash flows, the expectation is the bond portfolio would shrink to fund loan growth to some degree?

Yes.

Okay. And then maybe, James, just a higher-level question. You were talking probably about the 51% efficiency ratio, which is a great metric. Maybe comment about trajectory from here?

Yes. I think if you look at Brendan's expense guidance and expanded margin, I think modest improvements are expected, but it's not going to be maybe as quickly as we got to 51%. But I think all the trends are heading in the right direction to see that number improve.

Okay. And maybe just a quick credit question. I think in your prepared remarks, you said you expect a little bit higher charge-offs on the PCE book. Maybe any higher-level question or comments about what you might be seeing in the legacy FMBI book, which I think gets a little bit more attention.

Nothing that is unusual that we haven't seen before, Chris, I guess is what I would say. This is Mark. Our commercial clients are still seeing strong demand and profitability and liquidity overall. There's a little growing sense of caution out there. So nothing different than what we're all hearing in terms of economic outlook. So I know we feel good about our credit metrics

Thanks Mark.

Thanks, Chris.

Thank you for your question. As a brief reminder, it is Star 1 on your telephone keypad to register a question. Our next question comes from the line of John Stramit from RBC Capital Markets.

I dialed in at the top of the hour, and just a quick follow-up on Chris' last question. You talked a little bit about moderating moderating growth. But give us a little bit more in terms of what you're seeing there in terms of moderation and severe is the wrong word, but how material is it? And then talk about kind of your approach to the marketplace as well if you're being any more cautious.

Yes. I don't really think we're being any more cautious. I think like everybody else, we're wondering about what next year brings us. But the pipeline was our second highest pipeline of $5.4 billion. Brendan told you our excessive category is up meaningfully. I mean so we continue to expect the portfolios to grow just the pipeline is down after we closed $2.4 billion this quarter, but we're really not slowing down at all. And I think our view is really consistent with what other CEOs are thinking about. I think everybody is looking forward and cautious about potential recession, but there really have not been much signs of it from our borrowers today, particularly in the Midwest, Mark or Jame said another way, but the same thing. Our near-term outlook is favorable because the pipelines are still very strong and clients are still doing quite well.

I mean -- but again, some of the CRE markets clearly immune to the impact of rising rates. But there was plenty of room to run in the former equity levels and debt service coverage ratios of our client our clients. So the pipeline is still really strong there still.

And you follow us a long time, John, 17% annualized growth is a strong number by any measure. And so I think we're all just cautious that how can we continue to grow at these kind of levels over the long term? I think the answer is it's probably going to get -- revert back closer to some kind of long-term average.

And that's what we said at the end of the second quarter, and we surprised on the upside... This quarter. We'll probably be -- we'll still grow in Q4 but at a little lower pace than this quarter.

Okay. Okay. Yes, it's an interesting time. No doubt about it. Brendan, Slide 7, you talk about average new production yields. Can you give us an idea of where things are coming on today on C&I and CRE in terms of yields.

Yes, they're marginally up from there. So today, September yields are up a little bit, 10, 15 bps in commercial real estate, but not much higher. But I expect those continue to go higher given where the 5 year has moved and certainly what we expect LIBOR to do over the next -- and so far to do over the next 60 days.

Okay. Just 2 more. Wealth Management, you've talked about a little bit like Scottsdale and Nashville, and I understand you expect the numbers to be down. But can you talk a little bit more about organic growth, what you're seeing in terms of progress there? I mean I don't know if it's a new household or how you measure it, but take the market impact away, what are you seeing?

Right. We're seeing organic growth, and it's all about focusing on what you can control. And we know we can't control market values, so we can control what we produce and what retention we have, and we feel really good about the opportunities, not just these teams that we hired, that's incremental, but each of our existing markets, we see organic growth be measured by net new clients and net assets under management.

Any numbers in terms of net new clients?

We monitor them. We don't disclose them, I guess, is the best way I could say it. So it is growing.

I think internally, we are meeting our own expectations around our growth in that business from the organic acquisition of new clients. And Nashville and our high net worth teams are off just a really strong start. I mean we're getting some at that we've never had a chance at before, given the sophistication level the new team we're bringing on are we brought on last year and the new team in Nashville. I mean, they are bringing in just great new opportunities for us.

Okay. And then just last one, smaller item. You talked about playing offense in deposit gathering, where you have limited market share. Can you give us an example of that...

Yes. So we'll go out in an area in Michigan, maybe pick a grand wrap is where we have relatively low market share, and we'll put a pretty heavy rate down and money market, a new money, money market account at a fairly high rate. generally to tease a rate, we'll run some price CD specials in those markets and try to be annoying to some of our bank competitors in that space. And that's worked really well for us last rate cycle. And it's allowing us to grow some deposits in this cycle.

Okay, got it. Thank you.

Thank you for your question. We now have a follow-up question from Chris McGratty with KBW. Chris, your line is now open.

Great. Brendan, just a clarification on the non-interest income guidance. It sounds like the run rate on the service charges will make its way to 18%, 18.5% once the implementations go in. And I heard you on the trust. What about the other income line. It's kind of been all over the board. And just trying to get a sense of if we take all these pieces together, what's like a reasonable range for just total fees entering next year?

Yes, I think the other income item, is $11 million on the slide. I think that's a good base to grow from. The noise really was in 2Q, and we had that $4 million of kind of an odd set of factors that hit Q2. But I think the 11% is a good rate base.

So that would put kind of the total run rate around $80 million, something like that?

I think that's fair.

Thanks...

Thank you for your questions. There are no further questions at this time. I'd like to turn the call back to James Ryan for closing remarks.

Thanks for joining us today. I hope you can tell we feel really pleased with the third quarter, and we feel really good about where we're heading. As always, the team is here to answer any follow-up questions. Thank you for participating today, and look forward to seeing you on the conference circuit here shortly. Thanks, (indiscernible).

This concludes Old National's call. Once again, a replay, along with the presentation slides, will be available for 12 months on the Investor Relations page of Old National's website, oldnational.com. A replay of the call will also be available by dialing (866) 813-9403 access code 902-394. This replay will be available through November 8. If anyone has additional questions, please contact Lynell Walton at (812) 464-1366. Thank you for your participation in today's conference call.