Renasant Corp (RNST) 2008 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second-quarter 2008 Renasant Corporation earnings conference call. My name is Jessica and I will be your coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. (OPERATOR INSTRUCTIONS)

As a reminder, I would like to let you know that this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Robinson McGraw, Chairman and Chief Executive Officer. Please proceed, sir.

Thank you, Jessica. Good morning, everyone, and thank you for joining us for Renasant Corporation's second-quarter 2008 earnings conference call. With me today are Jim Gray, Chief Information Officer; Stuart Johnson, Chief Financial Officer; Harold Livingston, Chief Credit Officer; C.H. Springfield, Chief Credit Policy Officer; Mitch Waycaster, Chief Administrative Officer; Mark Williams, Credit Administration Officer; and Kevin Chapman, our Chief Accounting Officer.

Before we begin, let me remind you that some of our comments during this call may be forward-looking statements which involve risk and uncertainty. A number of factors could cause actual results to differ materially from the anticipated results or other expectations expressed in forward-looking statements. Those factors include, but are not limited to, interest rate fluctuations, regulatory changes, portfolio performance and other factors discussed in our recent filings with the Securities and Exchange Commission.

We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events, or changes to future operating results over time.

Even as record high gas prices, slowing real estate markets and lingering effects from the national credit issues continue to challenge the financial services and banking industry, we are pleased with our solid earnings results for the second quarter of 2008. And looking at the real estate markets within our tri-state footprint, there has been a definite slowdown, especially within the housing market area, in these economies.

The Nashville Tennessean newspaper reported on July 10, '08, weaker home sale prices in the Nashville area for June '08, compared to June '07, with the median price of a single-family home down 6% from a year ago. This is the sharpest one-month decline since 2000. The drop in unit sales volume was 28% for June '08 compared to June of '07.

Nevertheless, we believe that Nashville's diverse economy and its lack of dependency on any one industry will help to insulate Nashville's business and commercial market against the full impact of today's real estate slowdown. The real estate market in our other key Tennessee market of Memphis, where we are the eighth largest bank in the Memphis region, based on deposits, also remained slow.

According to the Memphis area home sales report, 3203 homes sold during the first quarter of '08 as compared to 3940 the same time last year. That represents a decrease of 18%. This area includes Shelby, Fayette, Tipton, Hardin and McNairy Counties in Tennessee.

While the Memphis and Nashville markets are both experiencing a substantial slowdown in real estate and construction activities, we still believe our strategic locations and sound banking practices will grow our banking and financial services moving forward.

Moving to our Alabama markets, we have now successfully relocated our Alabama executive headquarters and our corporate mortgage operations to the Park Place Tower in the downtown Metro area of Birmingham. In addition, our Watts branch has also moved to this downtown location. We believe that this strategic move will add to our presence in Birmingham, not only in physical location, but also as we now have signage on the top of the building that is seen within the city skyline. We believe that this move creates better continuity among our Alabama operations.

In Birmingham, total dollar sales of residential housing increased 11% from April to May of '08. This is still 29% below the same period in '07 according to Birmingham's multiple listing services report. According to the report, it appears that we are beginning to see normal seasonal and month-to-month variations in sales, which MLS considers to be a healthy sign of a bottoming process.

The good news within the Birmingham market is that there was a 5.5% decline in active new listings, and the average days on the market for a new home improved from 162 days to 143 days between April and May of this year.

In looking at our Huntsville, Alabama market, Relocate America, a relocating consumers' directory with community profiles, research and review information about the local housing market, the culture of each community's activities and local businesses, named Huntsville as a Top 10 place to live and relocate for 2008. In addition, according to a Huntsville/Madison County economic report for '08, 18,000 of Alabama's 28,000 new jobs gained over the past year were based in Huntsville. This represents 66% of the state's total workforce gains.

According to MLS real estate reports, May '08 total dollar sales of residential housing in the Huntsville area were 18% higher than April of '08, but still 20% below last year's level during this time period. The time for new homes listed on the market saw a reduction from 152 days to 142 days during this same time period.

In Mississippi, De Soto continues to be the fastest-growing county in Mississippi and one of the top 40 fastest-growing counties in the entire United States, according to the Census Bureau data. The total assessed value of property in De Soto County rose over 6.5% in the last 12 months, according to an article in Commercial Appeal, despite the slowdown in residential development.

De Soto County also has the fourth lowest unemployment rate among the 82 counties in the state, this according to the latest figures from the Mississippi Department of Employment Security.

According to data provided by the North Mississippi Board of Realtors, the number of new listings in a majority of our North Mississippi legacy markets decreased from 484 for the second quarter of '07 to 385 during the second quarter of '08. In Oxford, the University of Mississippi recently announced the addition of a manufacturing-based school to help train workers for careers in automotive manufacturing. We believe that this should not only help supply Toyota with a ready-made workforce, but should help to recruit to new manufacturing industries within the area.

In our corporate headquarters' city of Tupelo, we continue to enjoy strong market share. Toyota Motor Manufacturing North America recently announced that it will make the Prius Hybrid instead of the previously announced SUV Highlander in the new $1.3 billion automotive manufacturing facility. While construction is well underway, with this decision to make the Prius, operations are now expected to commence in late 2010 rather than spring of the same year.

We believe that the shift in production by Toyota is a positive change since consumer demand has been moving away from SUVs due to high prices -- gas prices. We do not expect this change to negatively impact the expected employment gains related to the plant or expected supplier employment gains in the local area and region.

Suppliers in North Mississippi include Toyota Boshoku, Toyota Auto Body, Toyoda Gosei, ViewTech Corporation, PK USA, and Arvin Sango. All have recently announced plant locations in close proximity to Tupelo that will bring approximately $375 million in capital investment and approximately 1800 combined new jobs to the region.

Despite the change by Toyota, we believe that the construction and operation of the Toyota plant and other anticipated Tier 1 and Tier 2 service providers enhances the future growth and prospects in our mature North Mississippi markets and may especially help to insulate Tupelo and the Tupelo market from the full effect of possible downturns in the Mississippi and national economy.

Reflecting on our financial performance for the second quarter of '08, net income was approximately $7.9 million, up over 12.5% compared to $7 million in the second quarter of '07. This increase in net income is attributable to higher levels of net interest income and non-interest income, offset partially by increase in non-interest expense and our provision for loan losses.

Basic and diluted earnings per share were $0.38 compared to basic EPS of $0.42 and diluted EPS of $0.41 for the second quarter of '07. The decrease in basic and diluted earnings per share can be partially attributed to the shares of our common stock issued in connection with the Capital Bancorp acquisition, which was completed on July 1, 2007, and the related equity offering of our common stock during the same year.

The acquisition of Capital on July 1 of '07 increased total assets by $614.8 million, total loans by $516 million, and total deposits by $490 million. These amounts are not reflected in our financial statements as of June 30 of '07. Total assets at June 30 of '08 were $3.8 billion, representing a 4.7% increase from December 31 of '07 and a 35.5% increase since June 30 of '07.

Stockholders' equity was $403.8 million at June 30 of '08, an increase of over 27.5% from $316 million during the same period of '07 and an increase of nearly $400 million at December 31 of '07. Changes in stockholders' equity reflects earnings, dividends paid and changes in unrealized gains and losses on investment securities available for sale. At June 30 of '08, the Company's regulatory capital ratios remained above well-capitalized requirements.

Total loans were approximately $2.54 billion at the end of the second quarter of '08, a decrease of about 1.8% from $2.6 billion December 31 of '07 and an increase of almost 29% from about $2 billion at June 30 of '07.

Total deposits were $2.46 billion at June 30 of '08, representing a 3.17% decrease from December 31 of '08 and nearly 11% increase since June 30 of '07. Net interest margin declined to 2.43% for the second quarter of '08 as compared to 3.66% for the second quarter of '07. On a linked-quarter basis, net interest margin was 3.43% for the second quarter of '08 as compared to 3.52% for the first quarter of '08.

Excluding the impact of income on loans accounted for under AICPA Statement of Position 03-3 and non-accrual loans from net interest margin from both the second and first quarters of '08, net interest margin on a linked-quarter basis decreased 1 basis point during the second quarter -- increased 1 basis point during the second quarter of '08.

Although recent reductions in interest rates have caused our yields on earning assets to decrease, we have mitigated this effect by managing repricing of our deposits and utilizing cheaper sources of alternative borrowings. Our focus on managing our funding costs is reflected by the fact that interest expense increased 4% during the second quarter of '08 as compared to the second quarter of '07, while the average balance of interest-bearing liabilities increased by approximately 40%.

Due to the current economic environment, we, as with most financial institutions, continue to experience an increase in nonperforming loans and net charge-offs during 2008. Annualized net charge-offs as a percentage of average loans were 43 basis points for the second quarter of '08, up from 26 basis points for the first quarter and 6 basis points for the second quarter of '07. Year-to-date, annualized chargeoffs as a percentage of average loans totaled 35 basis points.

As discussed in previous conference calls, we generally target our net charge-offs to be 20 basis points of average loans. In spite of our first and second quarter chargeoffs, we still anticipate net charge-offs as a percentage of average loans for 2008 to be within 10 basis points above this target.

Nonperforming loans were $26.6 million at June 30 of '08 as compared to $16.2 million on December 31 of '07 and $7.5 million on June 30 of '07. We continue to actively monitor all relationships which we believe may be at risk of deterioration. Furthermore, we are persistently tracking our current nonperforming loans and are seeking to bring these credits to resolution by identifying a stable payout stream, taking additional collateral moving towards foreclosure.

Through these efforts, since June 30 of '08, we have experienced a net reduction in nonperforming loans of $2.7 million, of which none were a result of foreclosure. Management has evaluated all nonperforming loans and believe all nonperforming loans have been adequately reserved for in the allowance for loan losses at June 30 of '08.

Nonperforming loans as a percentage of total loans were 1.05% on June 30 of '08, compared to 63 basis points on December 31 of '07 and 38 basis points on June 30 of '07. On a linked-quarter basis, nonperforming loans as a percentage of total loans increased from 85 basis points for the first quarter of '08 as compared to the 105 basis points that we mentioned for the second quarter of '08.

We have $1.2 million in OREO under contract to be sold at a small gain within the next month. Subsequent to quarter end, we reached an agreement with a borrower in our Memphis market to accept deeds in lieu on the property, securing its relationship in the amount of approximately $7.8 million, which was not reflected as a nonperforming loan on June 30 of '08. Based on current sales prices of the homes, we believe there is sufficient equity in the properties to minimize any future losses.

Although nonperforming loans increased, the Company's total past due loans, which are loans past due 30 days or more, or overdue and nonaccrual, as a percentage of total loans decreased from 2.66% during the first quarter of '08, to 2.28% for the second quarter of '08. This decrease in the past-due percentage on a linked-quarter basis was a direct result of our aggressive collection efforts throughout the quarter.

Another positive report related to past-due loans is our HELOC portfolio, which reflects only 64 basis points of total loans over 30 days past due. This represents a decrease from 84 basis points on April 30 of '08.

The allowance for loan losses as a percentage of loans was 1.05% at June 30 of '08, as compared to 1.02% on December 31 of '07 and 1.04% on June 30 of '07. The provision for loan losses was $2.2 million for the second quarter of '08, as compared to $800,000 for the same period in '07.

Non-interest income increased 7.17% to $13.7 million for the second quarter of '08 from $12.8 million for the second quarter of '07. The growth in non-interest income was due to increases in fees from loans and deposits on our mortgage lending division. Other non-interest income decrease during the second quarter of '08 compared to the first quarter of '08 is due to the receipt of $409,000 from the Visa Initial Public Offering and $271,000 in contingency income related to our insurance division during the first quarter of '08.

Excluding these two items for the first quarter of '08, non-interest income for the second quarter actually grew at an annualized rate of 18.6% as compared to the first quarter of '08.

Non-interest expense was $27.7 million for the second quarter of '08, up 18.5% compared to $23.3 million for the second quarter of '07, and up 3% on a linked-quarter basis.

In conclusion, let me re-emphasize that we remain ever vigilant in watching our credit relationships and we have implemented strategies to proactively manage the challenges presented by the current economic conditions. Although it appears that no one is immune to 2008's challenging economic environment, we believe that we have the proper tools, conservative credit culture, underwriting processes and the people in place to aggressively work through any credit issues while minimizing any losses that may arise in the future.

Now, Jessica, I will turn it back over to you for questions.

(OPERATOR INSTRUCTIONS) Brian Klock.

Good morning, Robin. How are you doing? Actually, just a couple of quick questions related to the asset quality. And I just wanted to make sure -- or maybe you can just kind of make sure I understand this correctly. You said that post the end of the second quarter, there was a $2.7 million reduction in nonperforming loans?

Yes, let me give you a little color on what has occurred. During the -- between quarters, let me give you how nonperforming loans changed. We had about 3. -- a little over $3.3 million of nonperforming loans at the end of the first quarter that went into OREO. We had a renewal of a $156,000 loan. About $1.8 million of nonperforming loans in the first quarter paid off during the second quarter, and we had a charge-off of $300,000 of the nonperforming loans during that quarter.

We also added a total of $10.7 million of new loans to nonperformers during the quarter. Actually, though, of that $10.7 million that we added, $2.8 million of that $10.7 million actually moved out and became performing loans after June 30 of this year.

Now, a little color on your other real estate. At the end of the quarter, we had $12.8 million. We actually at that time on June 30 had seven properties under contract. That was $1.2 million of OREO book value. The sale price on the contract was $1,234,000, so there was a slight gain in there.

Of those, three properties have actually -- already closed and have sold, and we had a net gain of $31,000 on those that did close at this point in time. We do anticipate the remaining four properties to in fact close this month.

In addition to that, we have an additional six properties under contract now that came under contract after the end of the month -- at the end of the quarter end, OREO book value of $1,194,000 and the sales price is $1,184,000, which would be a $10,000 loss on that property. So, all that should occur between now and July 31.

We added about $8 million of OREO, as I mentioned during the call, after quarter end. This was actually a performing loan that was in an orderly liquidation. The opportunity came to go ahead and do that liquidation ourselves, and they, through deeds in lieu, gave this property to us. This property has actually been selling for -- we're in at about 80%; they have been selling for pretty much what the value of the houses have been. So we do not anticipate any losses. I can't say that we will have gains, but I think all netting out on the houses, we shouldn't have any losses.

About $2 million of that $8 million is in lots, and we do anticipate probably keeping that in the ORE a little bit longer than the houses. But that was only a small portion in comparison to the whole, and we see the houses continuing to move out as we go forward. So that was the adjustment to ORE since the end of the quarter. And again, I mentioned on the nonperforming loans, the two that moved out have netted about $2.8 million.

Okay, okay. Maybe we will just shift gears a little bit and talk about the $2.8 million of charge-offs in the second quarter. Can you give us a little color on what type of loan that was and what geography those charge-offs were?

Yes. Hang on just a second, Brian. Let me -- charge-offs for the quarter basically boil down to about $3 million of charge-offs; we had recoveries of about $296,000 during the quarter. Of the charge-offs, construction loans were about $598,000; commercial loans were about $58,000; real estate, 1-to-4 family mortgages was about $1,794,000; commercial mortgages about $597,000; and installment loans to individuals, about $70,000.

Then we had some recoveries that netted that out a little bit, and the recoveries were pretty much similar to what we talked about the charge-offs were.

Now, part of that 1-to-4 family mortgage charge-off of the $1,794,000 was the $300,000 we had mentioned on the large home down in [Destin] that we had been talking about.

Got you. Okay. Okay. Let me just ask you two more quick questions and I will let someone else get on. I guess in the other non-interest expense during the second quarter was about $7.6 million, up about $700,000 from the first quarter. And Stuart, was there anything in there that was a nonrecurring item in that second quarter number?

Well, in the second quarter, we did have some ORE of about $160,000. As Robin has said, we believe we are pretty much at par with what is in the ORE right now. So most of the other increases we will probably have into the third quarter. Being like FDIC insurance, our credit runs out with that, so that will continue.

Brian, let me mention something on that ORE. We actually did a gift sale that offset the loss we had in one piece of property which made up of [for] most of that $158,000, that the offsetting tax effect made it a net wash.

Okay. I guess looking at the $7.6 million of other, is that a good run rate to go forward with or will that come down in the third quarter?

It can be down slightly.

We think it will be down slightly. Really, of those additional items, the FDIC assessment kicked up about $168,000, which with our credit running out with the FDIC, that was the reason for that. So that should be part of the run rate, but otherwise, the rest of them, I think, we shouldn't see recurring.

Okay, okay. And I guess last question, in the loan portfolio, overall loans were down $40 million linked-quarter. I like the fact that you were able to bring down the construction exposure without really taking any charge-offs -- significant charge-offs on it. Maybe you can talk about, I guess, the plans within that construction portfolio as far as runoff and what we can expect to see, I guess, overall loan growth to offset that runoff in the construction portfolio or just a little color on that.

Well, our pipeline is good. But again, we continue -- this month, we had -- I mean this quarter, we had about $143 million in new loans and ended up with a net decline. Included in the net decline was about $9 million of loans that were -- student loans that were sold. But we still had a decline in loans, and that is basically because we are not seeing draws, whether it be because of our efforts or the borrowers themselves, on construction lines. And we are not actually making any -- or many of those types of loans at this point in time. So we should continue to see a decline in that area.

For example, of our current pipeline, about 66% of the loans would be classified as not being under the CRE guidelines. So just -- which is a reversal from what we have probably seen in the past. Mostly what we are seeing occur are more owner-occupied real estate, things of that nature, that we have a pretty good comfort level with going forward.

Okay, great. All right, thank you.

Thank you.

Matt Olney.

Yes, good morning. You mentioned $8 million is new OREO that has been put on since June 30. Can you give us an idea of the geography of that OREO?

Yes, it was actually in De Soto County, Mississippi. Of that, we had -- it was actually about a $12 million credit. Someone bought at par about $3.5 million of it, a substantial portion of it. What we ended up getting was actually the residential portion, the houses that were already completed, and about $2 million of actual real estate.

We have about 29 houses that came in in that transaction. These houses have actually been selling -- and I'm just going to give you an example, because this is -- they are at various prices. But you are talking maybe about a $150,000 house that we're in at about $120,000, and they have been selling pretty much for that asking price in the past -- the $150,000, $140,000. And we have seen closings on those houses.

They were in an orderly liquidation and we are doing a job good job. This was a strong builder. They were not ahead of us. We felt like it was the appropriate time, though, to go ahead and take deeds in lieu on this property, and we are continuing with that orderly liquidation. And we anticipate being able to come out at a breakeven basis on this, so we don't anticipate any problems. It will just be -- it will continue with that orderly liquidation, but it is in De Soto County.

But of that $8 million, it sounds like $2.8 million are lots that could stay on OREO for a few quarters.

I think it is 2.1.

2.1?

Yes. And of that, about $1 million of it is an office building and two shops, which we have had some interest in already. And the balance of it is -- about $4.3 million of it consists of 29 houses. And the lots are about $2.4 million --.

Okay. It looked like you added about $100 million in securities since 1Q. Could you give us an idea of what opportunities you are seeing there and do you expect these opportunities to continue going forward?

I will let Stuart answer that for you.

This is Stuart. What we did in the quarter, we bought about $147 million of securities. In that transaction, we funded with laddered Federal Home Loan Bank money. Of that portfolio, about 62% came from mortgage-backs, about 25% from CMOs, 12% were [pretzels], and about 1% were other basically tax credits.

We were able to look -- at that particular time we did it, we were looking at the market, and we were able to evaluate a spread with those particular securities, and then we laddered our Federal Home Loan Bank to match the cash flows of those securities.

So, Stuart, was that transaction -- was it big enough to affect the margin in 2Q? Or is it just too small to affect it?

Yes, in the second quarter, it was close to 4 to 5 basis points.

Dilutive?

No, accretive.

So what is the outlook in terms of a similar strategy going forward in 3Q and 4Q?

We do not have -- we will not be doing any more of that strategy.

Is that because of loan growth outlook?

We don't anticipate we will be doing that in 3 and 4.

Is that because of the loan growth outlook looks better than it did in 2Q? The pipeline?

The pipeline looks better. Again, it goes back on paydowns, as to what we see there. That has been our biggest issue in the first two quarters, has been the issue of paydowns on other lines, so as to what the net result will be. We do anticipate toward the end of the year that we will see some net growth in the loan portfolio. But at this stage, we are still evaluating.

Okay. Thanks, guys.

Andy Stapp.

Good morning. In these securities you purchased, you say there is $12 million in pretzels.

Yes. Well, actually, we've got -- about 12% of that, which would be about $17 million in pretzels.

Okay, what tranche were they?

Pardon? I'm sorry.

Are you talking pretzels -- FTN, KBW CDOs?

Yes, these are pooled trust preferreds.

In which tranche were they? Triple A tranche or --?

Yes.

Okay. And what other CDOs do you have on your books?

We don't really have any -- as far as -- are you saying just trusts preferreds or CDOs? Because we really haven't -- we have stayed away from CDOs. We do have --

Warranty (inaudible) CDOs?

We have some trusts preferreds that are with (inaudible) South. We have one that they had a private issue with trust preferred (multiple speakers).

Okay. These are single issuers then, CDOs, or --?

No, these right here are pooled. What we bought was pooled.

Okay. So they are CDOs, right?

Yes, I guess, if that's your point. Yes.

Okay. I may have missed this, but what was the impact of SOP 03-3 on your net interest margin in the second quarter?

We can give you a pretty good breakdown on that, Andy -- for the last several quarters, a breakdown of what has happened.

Right.

Looking at it on a quarter-by-quarter basis, and a third quarter of '07, our margin was [3.52] and we had no 03-3 and had no impact on non-accrual loads. If you look at taking out the impact of 03-3 and non-accrual loans on quarters 4, 1 and 2, you would see Quarter 7 being about a [3.49], net [3.46] in quarter 1 and a [3.47] in quarter 2. So we actually, on a core basis, saw an uptick of about 1 basis point over this quarter. But we had a zero in 03-3 this quarter.

Okay.

Or if we had it, it was very minimal. If it was a percentage point, it would be zero -- of the basis.

Okay, okay. And, do you hold any Freddie Mac or Fannie Mae securities?

No. Are you talking about equity? No.

Yes, equity preferred, whatever.

No.

Okay. And do you have the dollar amount of development loans at June 30? Maybe you can also tell me how that compared to the -- in the first quarter.

Are you talking all construction and land development or just development?

You disclosed the construction in your earnings release, but I think the development loans are in CRE --.

Yes, --

Either way.

I'm sorry. I didn't hear what you said.

If you can give me all construction development loans, that would be fine too.

Development loans would be $383 million.

And was that -- how did that compare to -- I don't recall where they were at --.

It would be flat, Andy.

Okay. And your reserve coverage of NPAs was down linked-quarter. Is that just a reflection of your comments regarding the resolution of some of these NPAs? I guess, as well, your total noncurrent loans going down. Is that basically it, or anything else?

As we look at what our reserve is, taking into account the remaining 03-3 that we have on the books, that would increase our reserve up to a [113], which obviously is not reflected in there. Based on what we see in the way of chargeoffs, recoveries and provisions in the upcoming quarter, we should see that coverage amount going up (multiple speakers) end of the quarter.

Okay.

Just based on what we see and anticipate happening. By the way, let me go back and remind you and everyone that we are very aggressive in our risk rating system. In addition to that, 22% of our reserve is based on qualitative factors. We have qualitative factors for such things as the oil situation, the real estate crisis, the fact that we are in newer markets and the fact that we have made larger loans over the past couple of years than we have made in the past.

But that is -- nearly $6 million of our total reserve is based on those qualitative factors, $5.8 million plus. And again, that as an increasing number that we do. And this is over and above the specific reserve that we have for the loans in our portfolio which are, in fact, risk rated rather aggressively. So we feel very, very comfortable with where we are from that standpoint.

Okay. And on your -- how do you treat interest reserves on your construction development loans? Do you capitalize interest until the developers cash flow? Do you make them pay periodically interest? Or could you just give me some color on that?

If it's a commercial development, it may include interest in the cost figures that are part of you determining what you are going to loan against it. If it is any residential, we don't -- they have to pay the interest, usually either monthly or quarterly.

Okay, great. That's all I had. Thank you.

(OPERATOR INSTRUCTIONS) And there are no questions at this time. I would now like to turn the call back over to Mr. McGraw for closing remarks.

Thank you, Jessica. We appreciate everybody joining us today, and look forward to you joining us again on our third-quarter conference call. Thanks a lot.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

Thank you.