美國合眾銀行 (USB) 2015 Q4 法說會逐字稿

Welcome to U.S. Bancorp's fourth-quarter 2015 earnings conference call.

Following a review of the results by Richard Davis, Chairman, President and Chief Executive Officer, and Kathy Rogers, U.S. Bancorp's Vice Chairman and Chief Financial Officer, there will be a formal question-and-answer session.

(Operator Instructions).

This call will be recorded and available for replay beginning today at approximately noon Eastern through Friday January 22 at 12 midnight Eastern Time.

I will now turn the conference over to Bob [Kleiber] of Investor Relations for U.S. Bancorp.

Thank you, Maria, and good morning to everyone who has joined our call.

Richard Davis, Kathy Rogers, Andy Cecere and Bill Parker are joining me today to review U.S. Bancorp's fourth-quarter and full-year 2015 results and to answer your questions.

Richard and Kathy will be referencing a slide presentation during their prepared remarks.

A copy of the slide presentation, as well as our earnings release and supplemental analyst schedules, are available on our website at USBank.com.

I would like to remind you that any forward-looking statements made during today's call are subject to risk and uncertainty.

Factors that could materially change our current forward-looking assumptions are described on page 2 of today's presentation, in our press release and in our Form 10-K and subsequent reports on file with the SEC.

I will now turn the call over to Richard.

Thank you, Bob.

Good morning, everyone, and thank you for joining our call.

I'll begin our report with a few highlights from U.S. Bank's 2015 full-year results on page 3 of the presentation.

U.S. Bancorp reported record net income of $5.9 billion, or $3.16 per diluted common share.

We achieved industry leading profitability with a return on average assets of 1.44%, a return on average common equity of 14% and an efficiency ratio of 53.8% for the year.

Total average loans grew by 4.1% adjusted for student loans and average deposits grew a strong 7.7% year-over-year.

Credit quality continued to improve with a 12.1% decline in net charge-offs and a 15.8% decrease in nonperforming assets.

Our capital position remains strong and we returned $4 billion or 72% of our earnings to our shareholders through dividends and share buybacks during 2015.

Turning to slide 4 and our quarterly highlights, U.S. Bank reported record revenue of $5.2 billion and net income of $1.5 billion, or $0.80 per diluted common share, an increase of 1.3% year-over-year.

The fourth quarter of 2015 included a gain from the sale of an HSA account deposit portfolio (technical difficulty) diluted earnings per share by $0.01.

I'm very pleased this quarter with the momentum in our linked-quarter loan growth, the continued strength of our payments business and the improvement in our operating leverage.

Total average loans grew 1.7% linked quarter adjusted for student loans, which exceeded the high end of our 1% to 1.5% range.

In addition, we continued to see strong growth in average deposits which included consumer net new account growth of 3.2%.

Credit quality continued to remain strong.

Total net charge-offs and nonperforming assets declined on a year-over-year basis and nonperforming assets declined on a linked-quarter basis as well.

Slide 5 provides you with a five quarter history of our performance metrics and they remain among the best in the industry.

Moving to the graph on the right, you can see that this quarter's net interest margin of 3.06% was relatively stable, as expected, improving 2 basis points from the third quarter.

This was primarily driven by higher loan growth which reduced the amount of cash balances.

Our efficiency ratio for the fourth quarter was 53.9% (technical difficulty).

We expect this ratio to remain in the low 50%s going forward as we continue to see the results of our expanded efficiency effort that we introduced last year, which includes prudent FTE management and a renewed emphasis on other discretionary spending.

As I said earlier, I'm particularly pleased that we were able to achieve positive operating leverage for the quarter which reverses a trend of negative leverage over the past several quarters.

I believe this positions us well as we move into 2016.

While prudent expense management remains a priority for our Company, we also continue to focus on revenue growth and innovation, which means investing in those businesses and products that will provide strong returns.

During the quarter we announce a new agreement with Fidelity Investments.

U.S. Bank is now the exclusive issuer of the Fidelity Investments Rewards Card program.

As part of this arrangement, which closed at the end of 2015, we purchased the existing card portfolio of $1.6 billion.

This follows the announcement from last October about our card issuing partnership with the Auto Club Trust and the purchase of an existing $500 million portfolio.

These agreements exemplify the strength of our payments business model and a continued commitment to strategic growth for our Company.

Turning to slide 6, the Company reported record net revenue in the fourth quarter of $5.2 billion, a 0.8% increase from the prior year which included core revenue growth and a gain on the sale of the HSA deposit portfolio, partially offset by the Nuveen gain recorded in the fourth quarter of 2014.

The revenue momentum we are seeing is primarily due to our growing balance sheet and growth in a number of our fee-based businesses, including our payments and trust businesses.

Kathy will now give you a few more details about our fourth-quarter results.

Thanks, Richard.

Average loan and deposit growth is summarized on slide 7. Average total loans outstanding increased by over $10 billion, or 4.2% year-over-year and 1.7% linked quarter, adjusted for student loans.

As you may recall, we moved our student loan portfolio to held for sale in the first quarter of 2015 and subsequently returned it to held for investment during the third quarter.

In the fourth quarter the increase in average loans outstanding on a year-over-year basis was led by strong growth in average total commercial loans of 9% and 2.5% linked quarter, the strongest linked-quarter growth seen in 2015.

Line utilization, however, remained relatively consistent with the previous quarter and flat year-over-year.

Consumer loans again showed positive momentum led by credit card and auto loans.

Average credit cards increased 4.7% year-over-year and 5% on a linked-quarter basis, which included the acquisition of approximately $500 million Auto Club portfolio at the end of quarter three.

Auto loan growth remains strong, up 13% year-over-year and 2% linked quarter.

Residential mortgages grew 2.1% year-over-year, reversing a declining trend over the last several quarters, and rose 2.2% on a linked-quarter basis.

We currently expect total average linked quarter loan growth to be in the 1% to 1.5% range in quarter one.

Total average deposits increased $19 billion or 6.9% over the same quarter of last year and 1.7% on a linked-quarter basis.

Growth in non-interest-bearing and low interest checking, money market and savings deposits remain strong year-over-year basis and continue to more than offset the runoff of maturing larger dollar time deposits.

Turning to slide 8 and credit quality, total net charge-offs declined 1% on a year-over-year basis and increased 4.5% on a linked quarter basis primarily due to lower recoveries.

The ratio of net charge-offs to average loans outstanding was 47 basis points in the fourth quarter, a slight increase over the third quarter.

Nonperforming assets decreased by 2.8% on a linked-quarter basis and 15.8% over the fourth quarter of 2015.

The fourth quarter provision for credit losses was equal to net charge-offs which compares to a release of reserves of $20 million in the fourth quarter of 2014 and $10 million in the third quarter of 2015.

As we move into 2016 we would expect that reserves will begin to build to support loan growth.

Given the mix and quality of our portfolio we currently expect net charge-offs and total non-performing assets to remain relatively stable in the first quarter of 2016.

Slide 9 gives you a view of our fourth-quarter and full-year 2015 results versus comparable time periods.

As I mentioned, our diluted EPS of $0.80 includes $0.01 related to net impact of the sale of our HSA deposit portfolio, partially offset by accruals related to the legal and compliance matters.

Fourth-quarter net income decreased $12 million or 0.8% year-over-year.

This is principally due to a higher provision for credit losses, increase in net interest income primarily driven by growth in earning assets, lower noninterest income impacted by the 2014 Nuveen gain partially offset by increases in payments-related revenue, trust and investment management fees and the HSA deposit sale gain.

On a linked-quarter basis net income was lower by $13 million or 0.9% mainly due to predicted seasonal increase in non-interest expense and an increase in the provision for credit losses partially offset by higher net revenue primarily due to loan growth.

Turning to slide 10, net interest income increased year-over-year by $72 million or 2.6%.

The increase was a result of growth in average earning assets of 5.1% partially offset by lower net interest margin.

The net interest margin of 3.06% was 8 basis points lower than the fourth quarter of 2014.

The decline was primarily due to a change in loan portfolio mix as well as the growth in the investment portfolio at lower average rates and lower reinvestment rates.

Net interest income increased $50 million on a linked-quarter basis primarily due to higher average total loans.

The net interest margin of 3.06% was 2 basis points higher than the third quarter.

The increase in the net interest margin was principally due to higher loan growth which resulted in lower cash balances.

We currently expect that the net interest margin will be relatively stable in the first quarter.

Slide 11 highlights noninterest income which decreased $30 million or 1.3% year-over-year.

The year-over-year decrease in noninterest income was primarily due to the impact of the 2014 Nuveen gain partially offset by fee revenue growth in the HSA deposit sale gain.

Higher credit and debit card revenue, trust and investment management fees and merchant processing services were partially offset by lower mortgage banking revenue, primarily due to an unfavorable change in the valuation of mortgage servicing rights net of hedging activity.

Momentum in our payment businesses was reflected in our fourth-quarter results.

Credit and debit card fees grew 8.1% on a year-over-year basis principally driven by higher volumes which were up 6% compared to 5.3% in quarter three.

Merchant processing revenue increased 2.3% year-over-year and approximately 6.5% excluding the impact of foreign currency rate changes.

The growth was driven by higher transaction volumes, account growth and equipment sales to merchants related to new chip-card technology requirements.

These equipment sales were modestly lower than the amount recognized in quarter three as expected.

On a linked-quarter basis noninterest income was higher by $14 million, or 0.6% principally due to seasonally higher credit and debit card revenue and the HSA deposit sale gain, partially offset by lower corporate payment product revenue reflecting a seasonally higher quarter three government-related transaction volume.

Mortgage banking revenue was also lower as expected primarily due to seasonally lower origination revenue.

We would expect that fee revenue in quarter one will be seasonally lower on a quarter basis -- linked-quarter basis.

Moving to slide 12, noninterest expense was essentially flat year-over-year.

Higher compensation expense, which reflected the impact of merit increases, and higher staffing for risk and compliance activity, along with higher employee benefit expense driven by pension costs were largely offset by lower marketing and business development expenses principally due to charitable contributions recognized in the fourth quarter of 2014 and lower other expense reflecting a net year-over-year impact of legal accruals.

On a linked-quarter basis noninterest expense increased $34 million or 1.2% as predicted, reflecting seasonally higher costs related to investments in tax advantaged projects and accruals related to legal and compliance matters, partially offset by the favorable impact of reduced mortgage-related compliance and talent upgrade costs which were elevated in quarter three and declined, as expected, in quarter four.

Compensation expense declined reflecting the impact of expense management initiatives and declines in variable compensation.

Employee benefit expense also decline driven by lower payroll tax expense and healthcare costs.

We would expect expenses to be relatively stable in quarter one compared to quarter four.

Seasonally higher benefit expense will be offset by seasonally lower tax credit amortization and the impact of the credit card portfolio acquisition.

Turning to slide 13, as Richard mentioned, our capital position remains strong.

We returned 61% of our earnings to shareholders during the quarter.

Dividends accounted for 32% while stock repurchases accounted for the remaining 29%.

For the full year we returned 72% of our earnings to shareholders and we expect to remain in our 60% to 80% range going forward.

Our common equity Tier 1 capital ratio, estimated using the Basel III standardized approach as if fully implemented at December 31 was 9.1%, which is well above the 7% Basel III minimum requirement.

Our tangible book value per share rose to [1744] at December 31 representing a 9.3% increase over the same quarter of last year and a 1.4% increase over the prior quarter.

I will now turn the call back to Richard.

Thanks, Kathy.

I'm proud of our fourth-quarter and full-year results.

We reported record full-year net income and record revenue for the quarter.

We [remained] industry leading performance measures and reported a [19%] return on tangible common equity in the quarter.

We delivered on our promise to work toward positive operating leverage with the efforts that we've made through our efficiency program.

We continue to make strategic investments in our businesses and focus on innovation for the benefit of our customers.

As we look to 2016 we start the year from a position of strength as we continue to build revenue momentum, thoughtfully manage expenses, work diligently to exceed customer expectations and to create value for our shareholders in a competitive marketplace.

We remain focused on delivering consistent, predictable and repeatable financial results for the benefit of our customers, our employees, our communities and our shareholders.

That concludes our formal remarks.

Andy, Kathy, Bill and I would now be happy to answer your questions.

Maria, we can go ahead now and open for questions.

(Operator Instructions).

Jon Arfstrom, RBC Capital Markets.

Richard, maybe a question for you on just lending and your overall mood.

Obviously pretty negative some of the global macro stuff that we're seeing.

But at the same time you've held your growth guidance, your typical growth guidance.

You're actually coming in a bit ahead of that.

So, maybe if you could just step back and give us a bit of a state of the union on lending and how you're feeling about the economy.

And I guess I'm also curious in terms of what you're seeing from the consumer in terms of their outlook and loan demand there?

First of all, I predicted that question; I was thinking this morning (technical difficulty) a classic American bank.

We do primarily business in the domestic United States and we're very much a consumer small business payments kind of a company.

So despite what's going on in the backdrop around the world with the China reevaluation and what's happening in oil and some of those areas, which we're not immune to, by all intents and purposes we're not seeing the majority of that on our books or by our customers.

So we're actually seeing a continued, steady -- I'll say slow but steady improvement every quarter and our customers are reflecting that across the board from the large corporate customers who are still doing robust M&A transactions to restructuring their portfolio.

All the way down to the small businesses which continue to grow, for us, double-digits based on their interest in setting themselves up for a better consumer-led recovery and just general people who are using banks for the retail services.

So I'm quite optimistic against a negative backdrop.

And I know we won't be immune to all of that, but based on our geography, based on our mix of business, based on our history and based on our appetite for risk, I think we're actually fairly immune from most of those issues at this stage, and yet we stress test for the worst scenarios that would, of course, affect us.

So I would say across the board from a lending perspective that same range you've seen, the 1%, 1.5%, we're predicting again for this quarter.

Already off to a really nice start and we're not seeing any disruption neither from the 25 basis point increase, which we knew would be more symbolic, and actually not yet from the impacts of the stock market or the China revaluation.

So at this point we're remaining optimistic in a cautious and careful way.

Okay.

Thank you for that.

And then is Bill Parker there?

Bill is here.

I am.

Anything to add in terms of from a credit perspective?

Kathy talked about the reserve releases are over and you've all been very transparent on that, but anything from a credit perspective that's making you a bit more nervous, or that is a change maybe compared to a quarter or two ago?

First I'd direct you to the [dependency] slide, and you can look through those.

And if you look at any of the portfolios and you see year-over-year delinquency patterns, they are either stable or better than last year.

So overall very strong.

Of course the one exception is energy and some of the metals and mining-related credits.

We do have that small energy portfolio; it's about 1.2% of our total loans.

So obviously we have seen some downgrades there and we've been building our allocated reserves for that all year long.

But we've built that at low $30s price of oil.

So we feel like we're good for now, but will see where oil settles in.

But either way that's not going to have a material impact on the overall go forward credit performance.

Okay.

And in terms of the way we see things, just the assumption should be maybe a glide path back up in terms of the provision over charge offs just building for loan growth, is that how we should approach it?

Yes, (inaudible) exactly.

Yes.

Yes.

I would jump in there, Jon.

It the old-fashioned days where you are supposed to provide for the next new loan, right?

And I think we're at that inflection point.

I don't know if we'll start moving up very quickly because we're settling here at that turning point of no provision.

But we don't see anything in the near term that's going to harm that.

And I want to pick up on energy and [levels] and mining.

We do stress tests our portfolios routinely and not just for those particular categories, but tangent effects it might have on other parts of our customers and portfolios and in certain geographies.

And as Bill mentioned, we've increased the reserve levels for both of those categories and continue to have the room and the expectation that if we need to do more we can.

All right.

Thanks a lot.

Erika Najarian, Bank of America.

When we last spoke, Richard, I think you were fairly optimistic about your prospects for 2016.

And I think we talked about the concept of USB being a maximized franchise.

As we think about building revenue momentum slow but steady into 2016, could you give us what the top three drivers are in terms of what could drive a year-over-year improvement in revenue outside of, of course, any more increases on the short end?

Yes, sure.

I'll actually add some more to the question as I think I also mentioned when you and I had the fireside chat- - I might add without the fireplace -- we were talking about what kind of assumptions we would have in our plan.

And we actually expected to have two rate increases from the last time I talked to you.

We hoped for one in December, we expect one in June.

And that's really the amount of the risk we placed into our plan this year, so -- and we're halfway with one of them, at least at this point, if it sticks.

So that alone does actually help us, but we're not relying on that to the very point you made.

The most important thing to happen to us is just a continued improved recovering economy where people feel they can consume.

People feel they don't have to save quite as much and that they've got a higher backstop either in their own savings account or in their home equity, or in their own debt positions where they can start spending money and feel more comfortable about it.

That's going to be huge for us.

That's way more important than any interest-rate because, as I said earlier, we're a consumer middle-market wholesale bank and those are the things that matter the most.

But I want to tell you the things that we'll put our shoulder against to watch for improvement this year.

One will be the continued success we're having in relationship management with our customers.

I think I've said this before, but we're developing a much smarter technology around who our customers are, what they expect, what their likely next needs are, particularly around the mobile banking aspect.

And so, we're investing a great deal of money and time.

In this whole efficiency program you never heard me take anything away from our investment in innovation and entrepreneurship, and we're not.

Because I do believe that's going to be the next big idea.

So having a payments business and a bank connected together we have the best of both worlds because we can test virtually any paradigm, buyer, seller and moving money back and forth.

So that's our number one.

We are going to lean on the Bank and the payments businesses coming together.

Number two, the corporate trust business.

It's been remarkably good for us.

Doesn't get a lot of visibility.

It's actually confusing to a lot of people.

But we're not only domestically quite large and capable, but when you start looking at how that is starting to build over -- across the pond over in Europe with both our funds administration and our classic corporate trust, we're going to expect a lot from those two businesses as well in 2016.

And finally I will say the next chapter in our wholesale bank becoming -- we've moved out of the audition stage and we're now bona fide one of the most important banks to deal with the large Fortune 100 companies, anything from an M&A deal to first left lead on a deal to just moving money in a very sophisticated way.

We are continuing to see momentum there.

I'm quite proud of what the wholesale commercial bank has done.

We are celebrating Dick Payne's retirement this quarter and we're also celebrating the addition of two new leaders coming up from within the Company to run the wholesale bank in the capital markets.

And I expect a lot from the two of them and they've got the capability and the energy to pick up where Dick has left us, which is a really good starting point (technical difficulty).

(Technical difficulty).

And I guess maybe, Bill, if you don't mind jumping in, could you remind us what you think -- given the risk portfolio embedded at U.S. Bank right now, what you think is your normal charge-off rate?

And how long does it take to get there?

So again, when we talk about normalized, we call that the through-the-cycle rate and it's a rate that we've talked about before that's between 95 and 100 basis points.

But you don't really get there, you just go through it when you are going into a recession, or you are in a recession.

So in times of stable employment as we're in right now, the rate you see for us is what would be a normal rate in these kinds of -- in this kind of economic environment.

But that over-the-cycle rate is something that we calculate every quarter and it remains between that 95 and 100 basis points.

It really has not materially changed for us for many, many years.

Understood.

Thank you.

John McDonald, Bernstein.

Richard, I guess I was kind of wondering how should we track the progress of your new emphasis on the non-FTE expense controls this year.

What should we look at to kind of see how you're doing from the external metrics?

And then what kind of confidence level do you have in the ability to deliver positive operating leverage this year in the environment that you're planning for?

First of all, you can measure all of our expenses quarter to quarter and I think you know we're as transparent as cellophane.

So we're going to tell you exactly any moving parts and then you can model what's left.

But you will see the benefits in this quarter and you will see them in next -- current year of both the FTE watchful placement we've had on adding people unless we need them and the more discretionary expenses.

I will tell you however, I'm also going to tell you about along the way how we're going to spend money on things that we think are quite important.

I'll start bringing more visibility to our innovation budget and the kind of money we're spending to be at the front end of some of those new ideas.

And we're going to be introducing a fairly significant branding and reputation campaign in 2016, which in fact some of that savings will go toward because I want to keep investing.

I just want to put it in more of the right places.

So don't watch for just a number, watch for the moving parts and I will give you the visibility of that so that you can make that assessment over the course of time.

And in terms of what you're expecting for revenue expense growth this year, Richard?

Oh that, I forgot, yes (multiple speakers).

No one quarter is going to be positive operating leverage in this environment, but we're still planning this year.

Our plan says positive operating (inaudible) for 2016.

I'll also remind all of you that quarter one is our weakest quarter, so it's not the one I'm going to be able to showcase and show off as our strongest quarter because it's just seasonally lower for us.

But it will be, I think, a better first quarter than you've seen in a while, but it's certainly going to be on its way to a positive operating leverage.

If we don't get at least that second of two rate increases, that will put a challenge on that ability, so I'm not going to make any guarantees.

But I'm more concerned less about the rate itself than the fact that rates moving up will continue to reflect that the Fed believes the economy is strong; and what we care most about is a strong economy.

The metrics and the arithmetic of the 25 basis points is far less important.

So, we'll get to watch it as we go and I'll keep you clearly aligned on how we think that's going.

Okay.

And then just a quick follow-up on the loan growth.

What got better this quarter to get you into that 1.7% growth?

And what assumptions underlie the outlook for the 1% to 1.5% range going forward?

Is it more of a consumer pickup driving that and do you assume C&I slows a bit here going forward?

I would say corporate continues to be strong, as you saw.

Are year-over-year growth about 9% and strong on a linked-quarter basis.

I think what's turned a little bit more positive is the consumer side of the equation on two fronts: our mortgage activity on balance sheet, the jumbos principally, continues to be strong; and home equity, for the first time in a while we're seeing growth in that category.

And as we dig into that a little further and understand what that's about, we are seeing consumers taking home equity and using it for home equity, so using it to improve their homes, furnishings and things of that sort.

So those two categories are strengthening and finally card spend and card balances are also growing, so I do think we see continued strength on wholesale with increasing strength on consumer.

Okay.

Thanks, Andy.

Matt O'Connor, Deutsche Bank.

Kathy, if I could just follow up on the 1Q expense outlook.

I think you said stable linked-quarter.

Are there any one-time expenses related to the Fidelity card deal?

Because I think you normally have some seasonality on the way down on expenses in 1Q.

Yes.

Let me talk about that.

There's a couple things that are going on with that because, you are right, we normally would see a first-quarter decline in expenses, but I'll answer your first question then add some more light.

So yes, we would expect to see some one-time expenses related to the Fidelity card deal that will come through in first quarter.

And just the overall operating expenses related to that will increase as we move through the year starting in the first quarter.

Additionally, if you think about our first-quarter expense, we usually have a seasonally lower expense related to our tax credit amortization.

But as you know and you see in our numbers, our tax credit expense in fourth quarter was lower than we normally would have seen and that's really due to a mix of where that's reported, so you also saw that our tax rate was a bit higher.

So, that benefit that we get on a linked-quarter basis for tax credit is going to be lower than what you would have seen in the past and that coupled with the Fidelity causes us to be relatively stable.

Okay.

And then bigger picture, Richard, for you.

Maybe you can comment on your ability and appetite on the acquisition side of things?

I think you guys talked about in the third quarter 10-Q some things around the know your customer.

And obviously there's some price resetting occurring right now as we speak.

So maybe you could update it for the current environment and how you can be a player in that, if at all?

Yes.

So the answer I'll give you, Matt, first and foremost, is what you see we've done is what we want to do more of.

So you saw these two fairly large portfolios in the card business that we continue to be attracted toward.

These are picking up portfolios that already have momentum.

They are picking up a high quality portfolio that's at least as good if not better than the one we have at the prime level, and we're finding more and more people interested in allowing us to take a look at that, so I hope there will be more of those.

We've talked before about our merchant acquiring business and the way we've cobbled that together over the last now 15 years is to find a partner, work with them on a JV kind of a basis with a rent to own sense.

And there's more of that in Europe that we're continuing to look at and hopefully opportunities in that regard as well.

And then finally the more classic kind of opportunity that I talked about, innovation.

And there may be some small businesses and small companies, some small garage deal that we might find were we want to bring the capability in-house and not outsource it.

And if those come along at the right price, at the right moment we'll also not hesitate there.

As it relates to full-bank acquisitions and interest, our interest remains exactly what it was.

We don't have a high interest and there is no one knocking on our door.

And yet at the same time it's a good thing because given the consent order that we entered into in October, we wouldn't be allowed to do a full-bank acquisition until we're through and past that consent order, which we're moving swiftly along and actually have been predicting that we can move that as swiftly as anyone ever has.

So, we are well aware that at the point in time when we want to buy someone, we want to be past that point and our goal is to be there.

But now it's not inhibiting anything that we would otherwise want to do.

And I think portfolios and merchant acquiring would be the two places you should watch the most.

And what's the fastest someone else has gotten through the consent order?

I actually don't know because I'm not exactly sure who all is in one.

But I know that there is -- in our case, we've talked with our OCC, which is the lead regulator here, and made it clear to them that our goal is to satisfy the aspects of the consent order that would otherwise preclude us from being able to buy things and make that our number one area.

And they've made that clear to us that they understand that's our goal.

And I don't believe you have to be all out to be all done.

You just need to be accomplishing the things that are most concerning to them as it relates to branch-related know-your-customer things.

So we're going to approach it on that basis.

The OCC has also been on record saying how one of their goals this year is to move more swiftly with the closure of open (technical difficulty) ability.

So it's not impairing us now.

It will if we're not out of that in a year or two, but it's not in harm's way at this point, Matt.

Okay.

If I could just squeeze in one more here.

I guess the point I'm getting at is, you've been more conservative -- well, pre-crisis, during the crisis, post crisis, and I'm trying to get a sense of the mentality is, let's use some of our conservatism and capital and deposit base to look for opportunities out there.

My guess is some sellers may be interested at a much lower price than before.

There are some assets in the capital markets that are being significantly re-priced.

You could probably gain a lot of share in energy if you wanted to now.

So, I'm just trying to get a sense of is that the mentality or is it just keep plugging and plugging?

Great question, Matt.

We've been together the whole time.

So what you know about us is we kind of set a mantra in place which is we will never do anything that doesn't look sustainable and repeatable.

And it sounds corny but we've done it long enough, it's real.

And you think about opportunities that come along.

If it's a portfolio and it's priced perfectly and it's within the scheme of our risk tolerance, absolutely, we're all over it.

Many of them though will come to us at a slightly disadvantaged risk perspective and we don't convince ourselves to make it up in volume or to buy it now and change our original mantra.

We'll take the hit from you guys for not having that acquisition, but we'll take the benefit years later, months later when we don't have a problem.

So, where I would say our conservatism is every bit exactly what it was before and during the downturn, and we're not tempted by anything right now that would otherwise cause us to change that thinking.

And that could disappoint a few people but slow and steady wins the race, so we're going to stay in that boat.

Okay.

Thanks for taking all my questions.

Scott Siefers, Sandler O'Neill.

First one is sort of a ticky-tack question.

Did you guys quantify the specific size of both the HSA gain and then the legal and compliance accruals?

And if not, could you please?

I'm going to have Kathy do it.

We had a bet that no one would ask.

So I just lost the bet.

So, the gain on the HSA sale was right in that kind of $50 million range.

And I would suggest you think about half of that were related to the regulatory and legal accruals.

Okay, perfect.

Thank you.

And then just so I'm certain, the guidance for fees and expenses in the first quarter is off the reported numbers however, right?

That's right.

Okay, perfect.

And then second question, either for you, Kathy, or Richard, just as it relates to margin.

Even though you guys characterize it as relatively stable, it was still up, which I consider a good thing.

I'm just curious in your minds what it would take to, whether it's how much more rate increases -- how many more rate increases I should say, or an increased pace of increases until the bias gets a little more optimistic.

In other words, at what point do we more visibly see the margin start to expand?

I think that's a couple things.

I do think we need a couple more rate increases to see a material change in our margin.

I think what's as important, Scott, is that we have to -- we've been talking a lot about this pricing pressure on some of the different portfolios and I think we need to see that start to stabilize a little bit.

But certainly as we think about where we are today and if you think about where our margin improved from last quarter, we did have some nice growth in our loan portfolio, which allowed us to essentially fund that through cash, so that allowed us to go forward.

So as we move forward I think the mix of our business, interest rates increasing will certainly help and some of that pricing pressure easing will certainly see us start to lift.

Okay, that's perfect.

Thank you guys very much.

John Pancari, Evercore ISI.

Just back on the margin comment, just to clarify that.

So basically, if you don't see any incremental rate hikes, if you don't get that June hike, is it fair to assume that you expect a relatively stable margin through all of 2016, or could you see degradation?

I think it's going to come -- I would suggest that it would probably I would say -- start with relatively stable.

But I think some of the caveats to that would be really around some of the mix of our portfolio and then of our loan growth.

And then also, as you know in our securities portfolio, we have about $2 billion run off.

So to the extent where those reinvestment rates fall could potentially impact the margin.

And then also I will tell you, we're keeping our eyes very close on the long-term rates and what's happening on the long-term rates.

So I think all of those together would impact it, but with no rate increase I would say we're probably in a little bit of a steady-state here.

Okay, all right, thanks.

And then back to the M&A topic.

Richard, I heard what you said about interest in M&A.

If you did not have the consent order in place, what would be your appetite around large or whole-bank deals?

I know you used to say you had no interest in holding company transactions and shying away from large deals.

But is that appetite steadily changing given the disruption in the opportunity maybe to capitalize on valuations, etc.?

Nope.

I'll exaggerate -- nope.

But the reason I said -- and I'm on record for quite a while, John, saying that from our own experiences, the statute -- I'm going to call it the statute of limitations, it's not legal by any means -- was that you can still pick up a company and you can still be placed in harm's way for dealing with any of their potential problems, let alone your own.

And I think it's all the way back to 2007.

When you take a 7 to 10 year window on when things start to roll off in terms of statute, and we're already seeing things continue to come through and people try to get under the wire.

I've always said 2017 will be the first time we'd want to look at -- well, our appetite for bringing on a risk into our Company we simply couldn't do diligence for and couldn't possibly imagine.

That, at least elegantly, is lined up with our current moment where we can't do it anyway but we don't want to anyway and I wouldn't be interested.

The pricing doesn't change.

You can't get a good enough deal if you don't know what you're getting.

And I could be wrong, but I feel very strongly about that and have for a long time.

And I would say that as the moments clear let's say a year or more from now, our ability is there.

Our appetite will be higher.

The moment in time, I think, will be safer.

And all those things will line up and then we can be very much involved and engaged in that.

But the reason we're most importantly less interested is, we don't really need it.

As much as it's attractive to have the wallpaper behind me and somebody else shaking hands, it's really not necessary for this Company.

We are in every business line that we're in that we want.

We're not in anything we don't want to be in.

If we do we sell it like the HSA deposit business and we don't covet anything we don't have.

We just want to be better at what we're doing and do it better, deeper, wherever we are.

That would be attractive to me.

But it's not going to be a headliner kind of a deal, at least as long as I am around.

It never has been.

It's just going to be a steady-state kind of an approach.

But I would hope that all those stars would line up so our options are better in a year or two from now.

Got it.

Thanks, Richard.

And then if I could just throw in one more.

On the loan growth side, on the residential mortgage front can you just -- I know you indicated that growth could remain around where it is.

I think you implied that.

So you still have the appetite to continue to add to that portfolio regardless of what the longer end of the curve is doing here?

Yes, we continue to add residential mortgages, principally jumbo prime mortgages.

Home equity, as I said, is the other category that's growing and finally credit cards.

Those are areas that the slope is upward.

The area that continues to be strong is auto lending.

And as Kathy mentioned a little bit, the challenge on auto lending is while volume is great, spreads are challenged.

But given our cost of funds they are still very profitable but not as profitable as they were a year ago.

All right, thank you.

Paul Miller, FBR.

On the mortgage banking side, we know we had the new disclosures in the [CFEP] trade, but it looks like your mortgage banking was in line with what we expected.

Can you talk about how you managed to do the trade?

It looks like it wasn't that big of a deal for you guys?

So, we had a significant team of folks focused on that with a [great] effort and we were able to automate much of the process.

We had a pretty major conversion to do that last weekend, in fact.

So, there was a little bit of the backlog that occurred because just the natural process of the new disclosures, new requirements caused more time.

But it wasn't hugely impactful.

And as you said, our results were pretty much in line with what we expected.

We might have a little bit of a pickup in the first quarter from that lag, but we are principally automated on that and in very good shape.

And then on the other side, because you do have a pretty good pulse on the consumers out there, do you see a big pickup in purchases?

We had a very strong purchase market, probably the strongest we've had in seven years in 2015.

Do you see that continue in 2016?

So the year started -- and you know all the facts -- the year started at about 50/50 purchase versus refinance.

Ended the year about two-thirds/one-third.

And sort of a normal environment is 75/25 and that's what I think we expect as we go into 2016, about 75% of the volume being new money and 25% repurchase -- refinancings.

Thank you very much, guys.

Bill Carcache, Nomura.

On your Fidelity co-brand win, it seems like that's a product that's going to give you exposure to national spend from a fairly affluent customer base.

Should we conclude that you guys are seeking to become more of a national player in card?

It certainly seems like you're expanding beyond -- well beyond your footprint.

Well, we already are a national player in card, so this is just adding to that.

What we're seeking is always a good portfolio with good customers and this is a great example.

It's a high quality portfolio.

It offers just a great opportunity for growth and our customer service levels with this portfolio, I think, is what's going to make the difference.

So, it's a continuation of what we're doing.

That would be also the same with the Auto Club portfolio.

So as Richard mentioned, I think those are focus areas for us, have been and will continue to be.

I don't know how long you've followed us, but many, many years ago one of our biggest moments in time was when we lost the WorldPerks card from Northwest Airlines and it went to American Express when Delta bought Northwest.

And we came up with the FlexPerks card, which I'm going to say this now, when I retire will be one of the top three things I think we ever did really, really well here.

And it's very national.

In fact, when I talk to you guys -- if oil were to go down to $10 or $15, and shudder the thought, but if I had to talk to you about where the tangent risk would be, we would be talking about the unemployment issues in those areas affected mostly by oil and energy.

And our very own customers who you may be surprised have a lot of people in parts that we don't have branches that have that credit card and like it a lot.

So it will be our own victim of success here, but it's been quite national for five, six years.

And Andy's right, we just want to be more perceived as that and we're not going to hesitate to take national portfolios, just like we would commercial real estate or wholesale banking.

We want [both our] branches to be considered a national player in everything else.

Thank you.

That's very helpful.

If I could ask one more on a different topic.

There are some banks who many would put into the quality bucket who have significant excess liquidity parked at the Fed.

And there are others that use their excess liquidity to restructure the right-hand side of their balance sheets and therefore don't have that liquidity available today.

Obviously everyone regards you guys as being in that kind of high-quality camp, but you don't appear to have as much excess liquidity that you're holding at the Fed.

Can you remind us of why that is?

Yes, we look at our liquidity -- as you know, we've got 9.1% on our common equity Tier 1 ratio.

That's about 110 basis points above our target of 8%.

And if you think about it, we're holding that excess rate between our target and where we're actually performing because we haven't been able to really reinvest or grow our loan balances as much as we would want to.

So, if we can get back into that 6% plus balance sheet growth and so forth, I think that you'll see our capital be right in line with our real target.

That's exactly right, Kathy.

And I'd add actually one of the reasons we don't have excess liquidity on the balance sheet is because we were building our securities portfolio to address the LCR at exactly the right time.

At the time the deposits were growing faster than loans and we used the excess to build security.

So we were very balanced and we sit in that situation today.

So we are not (inaudible) at the Fed in any material way.

You're right.

Got it.

Thank you very much.

Mike Mayo, CLSA.

Well, I'll repeat the same question as in the past -- Richard Davis versus the 10-year.

And the 10-year has been winning recently, and here you are talking about faster loan growth, which seems to be that you should be winning over the 10-year as far as what the 10-year is saying about growth.

On the other hand, you are seeing what's going on in the market.

So my question is, is the economy getting better or worse?

What's your conviction level and confidence?

And also, as the capital markets, at least in certain areas of the capital markets, liquidity is less plentiful.

Is that an opportunity for you to step in and lend even more?

Because you said the expansion in loan growth is on the consumer side and on the wholesale side it's the same.

But is this an opportunity for you to step in and borrow where some of the nonbanks might be retreating -- I'm sorry, a chance for you to lend more where some of the nonbanks are retreating?

Let's start first on just general lending appetite.

As a junior lender years ago there is still a steady-state paradigm that you only make a loan based on ability, stability and willingness.

And the willingness is the low part.

People are able to take loans.

They are more stable than they've been in (inaudible) eight years, but they are just not willing.

So we can't create willing and we're not going to create willing and those that are most willing are the ones that are too eager and we don't want them.

So that's in part why you're going to see our loan growth, I think, be steady, but not robust because we're going to reflect whatever the economy says.

I also do think our market share has grown a lot and you have all the data to prove it.

So we are getting first look from a lot of customers that maybe a decade before didn't think of us as much.

The capital market side I think [also fine] -- the answer is, yes.

We can step in and now be a lender of support for those who have other alternatives and want to use a more traditional balance sheet approach to growing their business.

And as I said earlier, we're no longer auditioning.

We're well ensconced now as one of the top two or three banks in most large companies' portfolio or the place they would call for the opportunity.

And that comes from our debt ratings, Mike.

If you are a C-suite person in a Fortune anything, or one of the largest private companies, you really do value ratings and you value the top-notch level that we have.

And that means more to you than sometimes pricing, which we also offer.

So I think in many cases we'll get more than our fair share of the capital markets where there's an interest in using that as an alternative to traditional financing and we set ourselves up perfectly to be early call and a chance delivery.

Andy you might add to any of those since you run them.

I think that's right.

And I think the point that you made, which was the market share point of the equation.

So that growth perhaps is a little higher than it would be average and most of that is coming from taking market share.

And that's certainly true on the wholesale side of the equation and it comes back to that ratings discussion that you just had.

On that last point, as you see private equity firms back away from some energy companies and you see some loan funds that have gotten burnt back away, is that an opportunity for you to step in and lend more to say oil and gas companies?

And I'm sorry, I got on the call a couple minutes late.

Did you indicate what are you reserves against oil and gas loans?

First of all, nothing you said changes our appetite for risk.

We're not going to change it no matter how attractive things look and you probably heard that part earlier.

As Bill talked earlier, our energy portfolio is only 1.2% of the Company.

We've added reserves to it this particular quarter.

We're at 5.4% reserves against the energy portfolio for our Company, which I think will prevail to be a reasonable place at this point in time with oil at $29, $30.

I also said we have plenty of room and appetite and willingness to move those reserves higher if we need to, and we're watching it as we stress test the heck out of those things.

But as it relates to taking alternatives, we want to be a Capital Markets alternative to more traditional lending.

But if it has anything to do with a risk profile that's unique or different than it is today, it doesn't matter what it is we're not going to do it.

All right.

Thank you.

Vivek Juneja, JPMorgan.

A couple of questions, just trying to get a sense of what you are seeing in the marketplace.

C&I loans, your yields were flat, LIBOR was up through the quarter.

Can you talk a little bit about -- we're not seeing any impact of that -- why?

And then yields are fairly low at [286] or something like that I believe, so -- or no, [268] actually.

Vivek, this is Andy.

So the corporate spreads are a function of two things.

One is where our growth is coming is more from the high quality side of the portfolio, so a little bit less on the highly levered things like that that are falling off on some of the leasing portfolio, and we're seeing high quality corporate growth which is a little thinner spread, as you are right.

The second is some of the growth that you are seeing is also short-term in terms of its tenor which is causing -- it's a little bit of a thinner spread, perhaps linkage to a bond deal that's short-term in nature related to an M&A transaction.

So it is a little thinner again than what is typically on the books.

But again, high quality, still profitable, but just a little different mix.

Okay, got it.

Thanks, Andy for that.

Secondly, on the NIM side, going back to the comments you and Kathy and the others made, you've got a very healthy amount of noninterest deposits, even though I know it's only 25 basis points.

I'm presuming -- are you firstly, are you passing -- have you begun passing anything on at all to any of your customers?

And secondly, given that shouldn't we -- what's offsetting the NIM benefit from all of your low cost deposit base?

So, at this point we're passing, we are seeing some interest rate increases particularly around our wholesale side.

We haven't seen a whole lot of movement right now on the consumer side, and I think that's pretty true across the industry.

So that is, as we look into quarter one, the fact that those repricings are starting but starting a little bit maybe lower than what we would have potentially modeled, I think is basically benefiting us.

Okay great.

Thank you.

Nancy Bush, NAB Research.

Richard, several quarters ago I asked you about projects that you might be investing in, if you saw better revenue trends.

I think you said at that time you had a whole list of projects that you wanted to dive into when things looked a little better.

Are we at that point yet?

Do you still have that list, or have you started to implement some of these investments?

I remember saying that.

And first of all, what we didn't do is -- with our efficiency program we didn't stop, as I said earlier, our innovation and our investments in technology.

So, one thing that I would have put back first was something I never took out.

The other one I think I mentioned was wealth management and the ultrahigh net worth and building more locations, physical locations for people to come and visit.

We currently have six.

I'd love to move that to a much higher level.

It's going to be a long investment lead, so I've got to be thoughtful.

I'd do it if I could right now, but the investment lead is so long that until I see a more robust economy with interest rate increases I would be putting too much ahead of that and put ourselves in harm's way.

So those would be the two that I mentioned -- I meant, when I mentioned it to you.

And one of them we're still doing, the other one we've got -- on the placeholder ready to roll when it needs to.

Okay.

Yes, and could you just give us -- Andy, this might be a question for you -- you mentioned the auto business.

What's your outlook for this year?

You're coming off such a strong year.

Can you just sort of give us some color on that segment?

I would expect the growth to be similar to what you saw in 2015.

More focused on the lending side versus the leasing side and a little bit -- principally prime auto on the lending side.

So the spread situation, what might have been 110 basis points or 120 basis points is maybe down to 100 or right around that area.

A lot of that is because of the aggressive nature of the manufacturers, but I think the growth prospects for 2016 are going to be very similar to what you saw in 2015.

Are you picking up market share there?

Is that part of your growth picture?

Yes, we are both with dealers as well as certain manufacturers that we're trying to partner with in different ways.

A little bit on the lending side but also on the leasing side.

Okay, thank you.

Sure.

Chris Mutascio, KBW.

A lot of my questions have been asked and answered.

A couple nitpicky things I guess.

Kathy, can you refresh my memory, who did you sell the HSA deposit portfolio to?

Yes, that was sold to OptumBank.

I'm sorry, to whom?

OptumBank.

Optum is part of UnitedHealth.

Great, thank you.

And then, and Richard, I appreciate you calling out the gain in HSA and maybe the possible offset in terms of the expenses in the quarter to get more of a run rate.

And I hope you don't think I'm beating you up too much, but should I really back out the expenses in the quarter tied to legal and compliance since first quarter your level expense is supposed to be similar to the reported level in fourth quarter?

There's going to be a lot of moving parts to this and we're very early in the quarter.

But I think that if you go with the guidance of just relatively stable -- I think you'll -- in fact, that's kind of what we're thinking of as we look out into the first quarter.

I'm going to give you something you don't know, which is why you call.

This year we're going to look back on 2015 and we are not going to be a 100% of our bonus pool.

This is my 10th year as CEO, it'll be the first year we didn't.

And I'm okay with that because we live and die by the sword, and our guys are amazingly competent and capable and when we have great years we pay them out handsomely over 100% of target and when we don't, we don't.

And so what that means to you is, the accrual goes back to 100% in first quarter because you expect to make your plan.

And so that's a fairly interesting delta -- I'm not going to size it for exactly, but that would be something that I would've told you more next quarter, but I might as well to you now because you're struggling to think it through why we would otherwise want to say stable.

That's another fairly meaningful part of it.

Okay.

I appreciate the color.

Thank you.

Eric Wasserstrom, Guggenheim.

Just one final question on expenses, which has been discussed at great length.

But I just want to understand how -- what is actually funding these growth initiatives.

Is it strictly the benefit of the top-line growth that's occurring in some measure?

Or is it coming from efficiency savings that continue to be gained in other places?

Both.

In terms of you are speaking innovation particularly.

We just had that in the run rate for about seven or eight years.

It's just something that would be easy to slow down and that's the part I'm defending that we didn't.

I can't underestimate enough, when you have an acquiring payments business, not just an issuing, you get to work with the merchant, not the commercial customer, the merchant, the one who sells stuff.

And then you get to bring your consumers in.

And we pilot and test all kinds of relationships and partnerships and we learn best practices, consumer preferences, merchant preferences and some of the stuff never makes it to the Street because it's a really bad idea but it looked good.

So that we don't want to slow down.

That's been in the run rate for, Eric, for as many years as I can remember, so there's no new increased costs.

It as I said earlier, things like our large brand reputation campaign we're going to launch this year will cost money.

We haven't had the run rate, but it's going to come in part from the efficiency program.

Some we'll give back to the shareholders.

Some we'll keep for ourselves and invest in things we've long wanted to do.

So that's kind of the way to think about it.

Okay.

And you've given I think very clear guidance about the first quarter, but has anything that's occurred in terms of portfolio acquisitions or other kinds of dynamics further disrupt what would be the typical quarterly cadence in terms of expense seasonality?

Not at all.

You're right to ask that.

In fact, I think in this quarter we're going to go back at our next opportunity and show and remind people how steady our four quarters are and which quarter is strongest, which one is weakest and how the linked quarter's move.

And I'm only saying that because it's so consistent you can set your watch by it and it's probably a good way to go back and look.

Great.

Thanks very much.

Ken Usdin, Jefferies.

Credit quality for you guys has been good and you continue to expect that it's going to remain very good, but the world is obviously starting to worry about bigger other things.

So you guys don't have to worry so much about energy, but Rich, I'm just wondering -- I don't know if Bill's there -- but back in all of your industries and your subgroups, what are you starting to watch for?

What, if anything, are you concerned could go the wrong way?

We're certainly not seeing it in NPAs, delinquencies, etc., across the Company.

So can you just tell us your underlying comfort in terms of how things are going and what you will be watchful of?

Yes, I'm going to have Bill answer that, Ken, but I do want to call out what a good question that was because, even with our Board of Directors, we haven't really focused on credit in many years.

And I'm putting it right back on the front burner because we're going to start watching trends, and we're going to watch competitors and we're going to watch different buckets and tranches.

And we're going to learn a lot, all of us, by what's about to happen as we start learning about -- these small moves now don't look very big but they can be quite telltale for what's going to happen.

So, ask more questions like that because that's going to, I think, give us a chance to -- I'll talk about risk profile and likely future losses.

But Bill, why don't you answer the question on what we're most worried about after energy and precious metals?

Yes, really it's the impacted areas in the country that we would look most closely at.

So if you think about the Dakotas and there's not a lot of people or infrastructure up there other than what's in the oil and gas.

But if you get to a state like Texas in the Houston area where it is a fairly energy dependent economy.

So you really look at newly unemployed trends.

That's the thing that's going to generate potential delinquencies in the consumer portfolios.

And then that just has a ripple effect in terms of lower demand for small business growth, etc.

So we're focused very closely on watching the economies around the energy belt areas in the United States.

We do have, as Richard said earlier, we're national in our commercial real estate, national on our auto lending cards.

So we have been watching carefully.

We have not seen any impact yet, even though we do see that 50,000 oil workers have lost their jobs in the last year or so.

But it really has not shown up yet.

But those are the kinds of things that we watch every day.

Okay and one follow-up.

You guys talk a lot about the strength in the payments businesses and then we still have that offsetting potential benefit from the energy subsidy that's not quite coming through.

So in terms of just payments growth and underlying, can you just talk about do you envision the energy subsidy starting to get spent?

Or do you think that's just an ongoing drag in certain parts of the businesses and we're not quite seeing it offset to the positive in other?

I wouldn't say that the energy subsidy is being spent to a large degree, so we're seen steady growth.

Our card growth, as you saw, is very good.

We had a fairly good Christmas season.

The holiday season if you compare and contrast to the MasterCard numbers, which from Black Friday through Christmas Eve let's say a 7.9% growth.

Ours was over 10% growth, which is better than it was last year, but it's not substantially better.

So it's good and steady, but we're not seeing all the dollars saved on the energy side move into spend on the consumer side.

Okay.

Thanks, guys.

Appreciate it.

Terry McEvoy, Stephens.

I was wondering if you could just talk about the headwinds to credit and debit card revenue in 2016 just from lower equipment sales that kind of were up in Q3.

You mentioned they were down a bit in Q4.

And then maybe just as a follow-on, that same question on revenue given lower gas prices and what that does to the fleet vehicle card at Elavon?

Right, so actually the spend activity on merchant terminals peaked in the third quarter, came down about 1% or 2% in the fourth quarter and I would expect it to be fairly level going into 2016.

So there is still a number of merchants who haven't purchased new terminals that would expect a steady stream of that occurring.

But the headwind, so to speak, as you described it, was about 1.5% to 2% in the fourth quarter, but I don't expect a lot of further headwind going into 2016.

And then just a quick question for Kathy.

The tax rates kind of jumped around.

Could you give us a little insight into full-year 2016 for the tax rate?

Thank you.

Yes, you're right.

The tax rate did rise in the fourth quarter and that was principally due to the fact that we had some mix change in our tax credit business.

So as I look out into 2016 I'd put that rate in the -- kind of in that 28% to 29% range.

And as I said today, probably right in the middle of that range.

Perfect.

Thanks again.

This concludes our Q&A portion for today's call.

I will now turn the call back over to management for any additional or closing remarks.

Thank you for listening to this review of our fourth-quarter 2015 and full-year 2015 results.

Please contact us if you have any follow-up questions.

Have a good day.

Thank you.

Thank you.

This concludes today's conference call.

You may now disconnect.