Walker & Dunlop Inc (WD) 2010 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the Walker & Dunlop fourth-quarter and full-year earnings conference call. (Operator Instructions). As a reminder, this conference is being recorded, Tuesday, March 29, 2011. I would now like to turn the conference over to your Vice President of Investor Relations, Ms. Claire Harvey. Please go ahead.

Thank you, Frank. Good morning, everyone, and thank you for joining the Walker & Dunlop fourth-quarter and full-year 2010 earnings call. Joining me this morning are Willy Walker, our Chairman, President and Chief Executive Officer and Debbie Wilson, our Executive Vice President and Chief Financial Officer. This call is being webcast live on our website and a recording will be available this morning.

Our earnings press release and website provide details on accessing that archived call. We have posted a presentation on our website this morning that provides additional detail on certain topics which will be referred to during our prepared remarks this morning.

Investors are urged to carefully read the forward-looking statements language in our earnings release. Statements made on this call which are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including statements regarding future financial operating results involve risks, uncertainties and contingencies, many of which are beyond the control of Walker & Dunlop and which may cause actual results to differ materially from anticipated results.

Walker & Dunlop is under no obligation to update or alter our forward-looking statements, whether as a result of new information, future events or otherwise. We expressly disclaim any obligation to do so. More detailed information about risk factors can be found in our reports on file with the SEC. I will now turn the call over to Willy.

Thank you, Claire, and thank you, everyone, joining us this morning for our first earnings call as a public company.

Walker & Dunlop has been in business since 1937 and I'm very pleased to be reporting to our shareholders such strong results for the company's 296th quarter in business. I will provide color on our 2010 year-end and fourth-quarter results, discuss our business and competitive environment, touch on the regulatory landscape, and then turn the call over to Debbie to discuss our financial results in more detail. We will be happy to take any questions at the end of the call.

We embarked on the path to take Walker & Dunlop public during the second quarter of 2010 at a time when the IPO market was just opening up and the word mortgage was probably closer to a four-letter word than an eight-letter word. We became the first mortgage banking company to go public in almost 4 years, and while doing so, produced record operating results for the year. We are extremely proud of those two accomplishments.

Our decision to go public was similar to our acquisition of certain assets of Column Guaranteed from Credit Suisse in 2009. In the depths of the financial crisis, when most lenders were reducing their exposure to credit, we capitalized on the market dislocation, diversified our sources of capital, and made an acquisition that immediately benefited shareholders. Acquiring Column assets in 2009 and taking the company public in 2010 exemplified Walker not Walker & Dunlop's ability to accomplish great things in challenging markets.

2010 produced record origination volumes, record revenues, record servicing fees, and record operating income for the company. After significant market dislocation in 2009 due to the global recession, 2010 was a highly competitive year for loan originations as the economic landscape began to recover and our competitors were back in full force.

Yet Walker & Dunlop grew origination volumes by 42% year on year, beating the industry growth by 17%. We accomplished this by staying focused on our clients, adding value to our transactions, and managing our origination business extremely well. Howard Smith, our Chief Operating Officer, deserves great credit for managing the day-to-day loan origination process so well.

All of our origination success would not be nearly as valuable to the company had we not maintained exceptional credit discipline throughout the mortgage boom from 2004 to 2008. Walker & Dunlop could not have maintained 30+% operating margins simply by growing the top line. Credit performance is key to our success.

Our credit culture under the leadership of Chief Credit Officer, Richard Warner, is outstanding. Our people, processes, and credit analysis capabilities have been recognized with numerous industry awards and are truly best in class. With that said, we are not immune to the highly challenging commercial real estate markets where property values have dropped significantly since 2008.

While our provision for reissuing obligations grew significantly between 2009 and 2010, it is still well below industry benchmarks. We had net write-offs in 2009 and 2010 of 1 basis point and 3 basis points, respectively, of our at-risk portfolio.

Over the past 10 years, we have had net write-offs of approximately 1 basis point per year of our average at-risk portfolio. Those are exceptional statistics.

Although we are, by no means, out of the woods with regard to the challenging commercial real estate credit environment, our 60-day delinquencies peaked in June of 2010 at 1.64% of our at-risk servicing portfolio and were down to 0.85% by year end.

Our management team has operated through cycles and fully understands that credit decisions made today have a ten-year look back on whether they were good or bad decisions. Our track record shows that over time, we have made excellent credit decisions.

Let me turn for a moment to the market fundamentals in multifamily and other commercial real estate asset classes. The multifamily property market is improving. Rents have begun to grow and vacancies are declining. The strengthening fundamentals for multifamily properties should drive increased sales activity as well as financing activity, and improved operating fundamentals for the loans in our at-risk servicing portfolio.

It is important to remember that Walker & Dunlop's only credit exposure is to the multifamily sector, which has withstood the downturn much better than other commercial asset classes. As well, capital is starting to come back to the market for office, retail, and hospitality properties. Walker & Dunlop's capital markets group, which originates loans in these asset classes for life insurance companies and Wall Street conduits, had strong origination volumes in Q4 2010, and we expect to see increased originations in our capital markets group going forward.

I want to give a brief update on agency reform in the future of Fannie and Freddie. We have been active in the discussion on GSE reform, having met with trade associations, lobbyists, members of Congress and Treasury Department officials.

It is impossible to say with any clarity what legislation will be enacted and what impact it will have on the future of the GSEs. Yet two major themes continue to be discussed.

First, passing transformational legislation may be very difficult in this Congress. We will likely see various legislative proposals introduced that are intended to alter Fannie and Freddie's mandate, but getting transformational legislation passed between now and the 2012 election is viewed today as highly challenging from a political perspective.

Second, there is a great deal of discussion around multifamily and what role the federal government will play in supporting multifamily housing. The Obama administration's White Paper prominently discussed multifamily and its importance to US housing policy. How much involvement the government decides to have, however, and at what level of average median income they define affordable housing, will have significant implications on Fannie and Freddie, and eventually, the lending programs will re-partner with them.

We will continue to lend with capital from the GSEs for as long as their programs operate in a price-competitive, efficient manner. And as the future of Fannie and Freddie becomes clearer, we will adapt to any change and find new sources of capital to meet our customers' financing needs.

We believe our current products, scale, and people provide a strong foundation for growth. As highlighted on slide 3, the total commercial real estate financing market is a $3.2 trillion market. Multifamily represents over $842 billion of that $3.2 trillion or 27%. Within the multifamily sector, there is between $25 billion and $53 billion of refinancings every year over the next seven years. For a company that originated $3.2 billion of loans in 2010 or 10 basis points of the overall commercial real estate financing market and $2.9 billion of multifamily loans, or 34 basis points of the multifamily market, the opportunities for growth are abundant. We are currently pursuing several initiatives to put the capital we raised in our IPO to work, and believe there are many opportunities for us to grow our core platform as well as add new products and services.

While we are not going to speak about specific transactions we are working on at this time, it is important to communicate that we remain focused on implementing a successful, multifaceted growth strategy that will not only broaden the company's products and services but also significantly increase shareholder value. We raise capital at the beginning of the economic cycle rather than the middle or the end, which should be advantageous to us over the coming years. It is now up to us to deploy that capital to provide our company and shareholders with the greatest return.

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

Thank you, Willy, and thank you, all, for joining us this morning. 2010 was truly a record year for Walker & Dunlop, and it reflected our long-term strategy to grow the business and to remain focused on operating margins.

Our income from operations for 2010 was $40.1 million, and up 40% from $28.6 million in 2009. We are very pleased with the strong performance, and we believe the income from operations is a key performance metric for our business.

Our net income for 2010 was $8.2 million compared to $39.5 million for 2009. Net income for Q4 2010 -- excuse me, net loss for 2010 Q4 was $21.3 million compared to net income for Q4 2009 of $10.8 million. There are unique revenues and expenses that have a significant impact on the comparability of our quarterly and annual net income for 2009 and 2010. Let me touch on them briefly.

First, the company's tax status changed from a pass-through entity to a C-Corporation concurrent with the closing of our IP. And as a result, we recognized a deferred tax expense of $31.6 million in Q4 2010. Prior to the IPO, corporate income taxes were the responsibility of the individual owners of the company.

The deferred tax liability is primarily attributable to the Mortgage Servicing Rights on our books, and will be payable as the servicing revenue is received over the next 7 to 10 years. In addition to this expense, in 2009, we recognized a bargain purchase gain of $10.9 million from the company's acquisitions of certain assets of Column Guaranteed.

To demonstrate what our financial performance would have been without these unique revenues and expenses, slide 5 normalizes 2009 and 2010 for taxes. It removes the bargain purchase gain and results in pro forma income from operations net of taxes of $24.6 million for 2010, a 40% increase from $17.5 million in 2009. Pro forma income from operations net of tax for Q4 2010 was $6.5 million, a 2% decrease from $6.6 million in Q4 2009.

If you turn to slide 6, you will see the company's total revenues were $121.8 million in 2010 compared to $88.8 million for 2009, a 37% increase.

The increase in revenues was primarily due to higher loan originations in the fees, as well as higher servicing fees.

We saw increased originations in all products and the largest increases in our Freddie Mac and HUD originations. You may remember that the Freddie Mac and HUD loan products were added early 2009 as part of the Column transaction, and we are very happy with their performance.

In the table on the bottom of slide 6, you will see the loan origination volumes by quarter since 2007.

As the graph demonstrates, there is no clear pattern for quarterly loan origination volumes. You should not expect to see straight lined or gradually increasing loan originations each quarter. What you should see, because it is our clear objective, is increased loan origination volumes year over year.

I would like to elaborate on two revenue items.

On slide 7, gains from mortgage banking activities was $85.2 million in 2010, a 47% increase over 2009. There are two components to gains on mortgage banking activity. Loan origination fees and gains attributable to Mortgage Servicing Rights, and we commonly know these as MSRs.

Loan origination fees increased 52% in 2010 to $42.2 million due to the higher loan origination volumes. These fees will vary somewhat with distinct types of originations. For example, Fannie Mae versus HUD, but in general, they will move in tandem with aggregate loan origination volumes.

Loan origination fees did increase 7% to 133 basis points of originations in 2010. We do expect to see some origination fee compression in 2011 and beyond as other sources of capital return to the commercial real estate lending markets.

For the other components of gains for Mortgage Servicing Rights recorded in loan originations in the sale process, in 2010, were $43.1 million, a 42% increase. We only book MSRs for loans we originate for Fannie Mae, for Freddie Mac, and for HUD. The average MSRs recorded in 2010 were 136 basis points of loan originations versus 135 basis points in 2009.

As you can see, our average MSR was very consistent between 9 and 10, even though we originated significantly greater loan volume with Freddie Mac, HUD, and our capital markets group, where MSRs are lower or nonexistent.

The final component of revenue I would like to discuss is our servicing income. Servicing income was $27 million in 2010, a 29% increase over 2009.

This increase in servicing income was primarily attributable to the larger aggregate servicing portfolio, which now stands at $14.6 billion, and a higher weighted average servicing fee, which is now at 20 basis points, up 11% from 2009.

This increase in average servicing fee produces $2.9 million of incremental income for the company per year.

I would now like to focus on our operating margin and some of the cost components that impact our margins. Out operating margin increased to 33% in 2010, up from 32% in 2009. Our operating margins have been very strong throughout the real estate boom and bust over the past decade. Margins will vary by quarter, but we continue to manage the business to produce greater than 30% margins on an annual basis.

Our major cost is personnel expense. But it represents only 35% of our total revenues in 2010. Other operating expenses, which we watch closely, accounted for 11% of total revenues. Finally, the other major cost component is to provision for risk sharing obligation, and it was 6% of total revenues in 2010, up from 3% of total revenues in 2009.

As you can see, we manage our costs closely and any improvement in the credit environment would have a significant impact on our margins.

I would like to spend the next few minutes discussing the company's risk sharing obligations for loans we originate and we service under the Fannie Mae DUS program.

We share some level of credit risk on most of the loans we sell to Fannie Mae. That risk sharing obligation is detailed on slide 8.

As of December 31, 2010, our total servicing portfolio was $14.6 billion, of which $9.5 billion or 65% was service for Fannie Mae. The company does not take full risk sharing on all the loans we originate for and sell to Fannie Mae.

Of the $9.5 billion of Fannie Mae loans in our servicing portfolio, $6.7 billion are subject to the full Fannie Mae risk sharing obligation and are defined as our at-risk servicing portfolio.

As you will see on slide 9, we have taken larger provisions for our risk sharing obligation in recent years. For 2010, we recorded a provision for risk sharing obligations to $7.5 million compared to $2.3 million in 2009, a 230% increase.

While this increase sounds large, it represents 0.11% of our at-risk servicing portfolio and 0.5% of our total servicing portfolio and is well below almost all industry benchmarks for multifamily and commercial real estate loan losses.

As of December 31, 2010, our allowance for risk sharing obligation was $10.9 million or 0.16% of our at-risk servicing portfolio. This allowance has grown to the time it takes to foreclose on properties and settle our risk-sharing obligations with Fannie Mae, particularly when properties are located in judicial foreclosure states.

We do not believe that the funding of these losses will have a significant impact on our cash or liquidity position.

As of December 31, 2010, we have funded $4.7 million or 43% of the $10.9 million of estimated losses through monthly principal and interest advances.

In 2010, we had a net write-off of $2.1 million or 0.03% of the at-risk servicing portfolio and the write-off related to one loan. For the 10 years ended December 31, 2010, we had net write-offs totaling $4.5 million or 0.01% per year of the average at-risk servicing portfolio.

As mentioned previously by Willy, and as illustrated on slide 10, 60-day delinquencies as a percentage of the at-risk servicing portfolio reached their peak of 1.64% in June of 2010 and have since declined to 0.85% in (sic) December 31 of 2010. I am pleased to report that in 2011, we continue to see improvement in the property fundamentals and the credit quality of our at-risk servicing portfolio.

In summary, Walker & Dunlop had an extremely strong 2010. We grew our top line 37%, our servicing income 29%, income from operations 40%, all while absorbing relatively small credit losses.

With our newly raised capital and a well-run origination operation, I'm very confident that Walker & Dunlop will continue to perform well.

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

Thanks, Debbie. I want to repeat what I said at the beginning of this call. 2010 was a tremendous year for Walker & Dunlop due to our successful IPO and record financial performance with 40% year-on-year growth.

I close our prepared comments by simply stating that I am honored to be CEO of Walker & Dunlop and have the privilege to work with such a talented group of professionals throughout the organization every day. I take great pride and a heavy sense of responsibility leading the company that my grandfather and father built.

I would like to welcome all our new shareholders to our company and ensure you that the energy, focus, and leadership that I have brought to my job every day over the past seven years is only heightened by your investment and confidence in our company.

With that, we will now take questions.

(Operator Instructions). Will Marks, JMP Securities.

Thank you. Good morning, Debbie. Good morning, Willy. I guess I wanted to start with -- on the I guess it was the 20 basis point rise in -- or I'm sorry -- your average servicing fee is now 20 basis points. Is that correct?

Yes.

That's right.

What do you expect in 2011? Do you think you will maintain that level approximately?

We have not seen yet, Will, any compression in servicing fees. And so if you think about it, the servicing portfolio has gotten to such a scale now that it takes a significant amount of origination at higher servicing fees to move it, so the fact that we picked up 2 basis points in 2010 over 2009 is honestly wonderful. And as Debbie clearly said, it's almost $3 million of additional income to us on an annual basis. I think -- specifically your question, are seeing compression in servicing fees? Not yet.

And historically, how has that played out? Has it been long-term compression? Is it volatile?

What you would see if you went back in time, Will, is that back in 2006, 2007 in the hyper competitive markets, the servicing fee on our Fannie Mae loans is priced in when we rate lock, and so really is based on what happens in the overall market on where that servicing fee sits. And so you will see servicing fee compression when other capital comes back into the market. But so far, as I said, we have not seen any servicing fee compression.

Okay, great.

Hey, Will, it's Debbie. I just wanted to add that Freddie Mac, the HUD and the [live] has been stable forever, so that virtually doesn't move. So the only thing that does move, as Willy mentioned, is the Fannie Mae.

Okay. And did you mention on Fannie Mae that there are certain Fannie Mae loans where you aren't taking risk at all?

There is some amount of Fannie Mae that we don't take risk on. And let me just go to -- it's on slide 8. There's about (technical difficulty)

Is that feedback. Sorry, but we're hearing feedback on our end of the line. I don't know -- Will, are you hearing feedback from where you are? You're the one person who's got the line right now.

Pardon me, sir, the feedback was coming from Will's line, actually.

Okay, thank you.

Okay, got it. Got it.

Will, do you have another question?

(technical difficulty) completely to you but a little bit just cap rates in the environment. Where you're -- what you're seeing with average cap rates and how you expect that to drive transaction volume this year, particularly for multifamily.

So as I had mentioned in my prepared remarks, multifamily has performed extremely well as an asset class. In major MSAs, we've actually seen cap rates fall back to where they were, sort of in the go-go days of 2006, 2007. In secondary and tertiary markets, not so much.

And as it relates to what that has done from a financing standpoint, since multifamily has held up so well, you are seeing increased sales activity, which is driving increased financing activity. And the real challenge right now is a year ago, Will, it was very difficult to find comps for properties, because there just wasn't that much transaction volumes, so going out and getting an appraisal that had a real number to it of what the market looked like was reasonably challenging.

In today's market with significant sales activity, there are good comps for us to be able to look at what LTDs are.

We are still very much focused on cash flow lending, not value lending if you will, so the LTV is not nearly as important to us as debt service coverage. And so cap rates are in some markets probably lower than one would expect them to be at this time in the cycle. But that's just because of the amount of capital trying to chase good product.

Okay. Thank you. I'll leave it at that.

Bose George, KBW.

Good morning, and congratulations on the first quarter as a public company. I had a couple of questions.

First, just on the gain on sale margin outlook for 2011, are there any other factors? I mean you guys mentioned the changing mix, but apart from that, is there anything else that we should think about in terms of where that margin could go this year?

I don't think so, Bose. I think if you think about origination fees and servicing fees, and where they are, as Debbie highlighted in her comments, we actually had a 7 basis point pickup in origination fees year on year. And then our MSR average fee was actually flat year on year, even though we added a significant amount of Freddie Mac, HUD, and Capital Markets business to the mix, which just shows the strength if you will of our Fannie Mae MSRs during the course of 2010.

But, I would just put forth that in 2011, we expect to see -- we have not seen any degradation, either on the origination fee side or on the MSR side.

Okay, great. Thanks. And then just switching to growth, -- I'm just -- wanted to see if you'd give any color on how you are approaching growth. Have there been good opportunities to hire producers or small bolt-on acquisitions or any color on that would be great.

As I said, I can't talk specifically about what we're up to. I will put forth a couple things. First of all, I think that the acquisition of Column in 2009 and taking the company public in 2010 show clearly that this company knows how to get transactions done. And those were both very significant transactions, so the ability to execute on smaller transactions I would expect we will be quite capable at doing that.

The second thing is that we did the IPO at the end of December, as you know, and then turned to getting back to our normal business, and then also starting to, if you will, put lines in the water to figure out what we were going to do.

And so, the first quarter has been filled with a lot of activity as it relates to talking to interested parties, looking at hiring origination talent, etc., etc. But, as you know in the IPO process, we could not have any of those discussions prior to going public. And so as a result of that, there is a lot going on, but there is nothing to report at this point.

Okay, great. Thanks. And then just actually one last thing -- on the mix of non-GSE HUD product this year, how high do you think that number could get?

How high could that number get? It really depends --

(multiple speakers)

Yes; no, it really depends on how we grow that business beyond the mid-Atlantic. So today, our capital markets group is based in our Bethesda headquarters, and we are primarily doing brokerage work in the mid-Atlantic region.

We've started to source deals in our other offices across the country, but it really will depend on how many people we add to that over the course of the year. But if you look at any of our competitors, and the growth that they are projecting for 2011, in that line of business, there should be significant growth there year on year. But I am holding back from giving you a number, Bose.

Okay. Thanks very much.

Thank you, Bose.

(Operator Instructions). Matt Kelley, Morgan Stanley.

Thanks, guys. Can you hear me? So I was hoping you guys could talk about -- a little bit how much your competition has picked up, where you are seeing the most competition and how you view that right now.

Was your first part, Matt, compensation or competition?

I'm sorry. It's competition.

Okay. The competitive landscape is an interesting one. I guess there are two sides to it.

First of all, on the agency origination side, if you look at our 2010 numbers, and as I said in my comments, it was an extremely competitive landscape in 2010. We have clearly shown that we've been able to compete very well with our largest competitors in the agency lending space. The growth of our HUD volumes, the growth of our Freddie Mac volumes in really our second year in those two businesses, I think shows our capabilities in agency lending. And then year-on-year growth in Fannie Mae was terrific, particularly given that we are already one of the largest Fannie Mae to US lenders.

In that market, there are -- there's a lot of activity going on if you will. The banks are all trying to put out their own capital, so how much they are pushing their agency lending versus pushing their own balance sheet products. You could go down the list of the large banks that we compete with and probably do some digging there to see whether they are really promoting their own products versus agency products, but they all have a lot of capital that they want to put out, and so they are using their origination force to put out all their products, if you will.

As it relates to, there is some M&A going on in the space right now, and that has caused some question marks as it relates to where people are -- are they happy on the teams that they are in, what have you. We've been very pleased to be sort of head down if you will in doing our core business and winning.

And then the other side to it is the overall CMBS market and what's coming back there from CMBS and life insurance companies. Life companies are competing for multifamily for the first time in a couple years. They are winning a deal here and there, generally speaking lower leverage deals. And they're getting very competitive on rate in lower leverage deals.

With that said, the agencies are still dominating the market. And for your standard 75% LTV [125] debt service cover deal, you're going to go Fannie or Freddie 9 times out of 10.

Will the conduit start to try and pick up some multifamily for their pools? Probably. They have not yet. If you look at the pools that have been done so far this year, there's almost no multifamily in those pools.

But the bottom line is that capital is coming back from other institutional sources, and that's a net benefit to our borrowers. And Walker & Dunlop will be there to work on placing the most if you will appropriately structured and cost competitive capital that we can.

Okay. Just one follow-up on that and then one more question for me. On the competition front, how much more important does it become, then, for you guys to provide bridge loans? Will that be a big source of a competitive edge for you?

And then my second question is just on -- I know you talked a little bit about origination volumes year over year, but any sort of indication as to how the first quarter is going? And what's your strongest and weakest points there?

So as it relates to bridge or other products, there's a lot of -- first of all, we are actively focused on getting a bridge product. And we said that during the IPO process, and we have turned to that, and we're in the process of negotiating some term sheets along those lines. So we are very much moving down that path.

As it relates to how much need there is for that bridge product, there's a lot of talk about it, but the number of deals actually getting done, I've tried to pro -- we obviously don't know the volumes that our competitors are doing, but when you talk to people about what's actually getting done in the market, there's clearly the opportunity to do bridge lending or transitional lending if you will until the properties are stabilized for agency take out. But it's not a huge volume of business. It's a very helpful, if you will, arrow to have in your quiver. But it's not necessarily a huge volume driver. And none of our projections are to have huge volumes in that product.

More specifically as it relates to volumes, as Debbie was very straightforward in saying that our business varies on a quarter-to-quarter basis. And so you will see what we did in the fourth quarter of over $1 billion of originations. And you may see $0.5 billion, $0.75 billion in the first quarter. And in no way should that say to somebody, oh, they are off.

Our business -- if you look back at the slide that Debbie pointed out, which I think is slide 6 in the presentation -- if you look at our origination volumes on a quarter-to-quarter basis, over the last four years, there is no consistent pattern there.

What you will see is that there's pretty much a blowout quarter every year, and then the other quarters have consistent volumes between sort of $0.5 billion and $0.75 billion.

And so, we will continue to manage the business towards a year-on-year growth in overall aggregate origination volumes. But, quite honestly, we wake up every morning, come to the office to -- if you will, sell as many loans as we possibly can, but when they hit and how they roll through our P&L varies.

The other issue that I would say is that in Q4, that's when the majority of our producers are at the end of their splits, which means that as a percentage of gross origination fees, they earn a higher number. When we get into the first quarter of the year, they are all basically starting over from zero as it relates to what their commission structure is, and so the company in the first quarter will buy nature of the way that we compensate people, keep more of the origination fee income than we do in the fourth quarter. And so that's an important piece to our overall financials and the way you ought to watch both margins as well as volumes play through our numbers.

Great. Thank you. That's very helpful.

Mr. Walker, there are no further questions at this time. Please continue with your presentation or closing remarks.

We've got nothing else. I would just reiterate we are really pleased where we are, closing out 2010 in the manner that we did and having raised the capital when we did at the beginning of the cycle. We are very focused on deploying that capital and continuing to grow our business and appreciate all of you taking the time this morning to listen to our conference call and ask the questions that you did. So thank you very much.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Have a great day, everybody.