ArrowMark Financial Corp.
Q3 2018 Earnings Call Transcript

Published: 4 Nov 2018

[Operator:]

Greetings, and welcome to the StoneCastle Financial Corp. Third Quarter Financial Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Rachel Schatten, General Counsel of StoneCastle Financial. Thank you, Ms. Schatten. You may begin.

[Rachel Schatten:]

Good afternoon. Before we begin this conference call, I'd like to remind everyone that certain statements made during the call may be considered forward-looking statements based on current management expectations that involve substantial risks and uncertainties. Actual results may differ materially from the results stated in or implied by these forward-looking statements. This would depend on numerous factors, such as changes in securities or financial markets or general economic conditions; the volume of sales and purchases of shares of common stock; the continuation of investment advisory, administrative and service contracts; and other risks discussed from time-to-time in the company's filings with the SEC, including annual and semi-annual reports of the company. StoneCastle Financial has based the forward-looking statements included in this presentation on information available to us as of September 30, 2018. The company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of today, November 1, 2018. Now, I will turn the call over to StoneCastle Financial's Chairman and Chief Executive Officer, Josh Siegel.

[Josh Siegel:]

Thank you, Rachel. Good afternoon, and welcome to StoneCastle Financial's third quarter 2018 investor call. In addition to Rachel, joining me today is George Shilowitz, President; and Pat Farrell, our Chief Financial Officer. I'd like to start the call today with a review of StoneCastle Financial's quarterly results and then provide updates on the company. Then I will turn the call over to Pat, who will provide you with greater detail on our financial results, before I open up the call for questions. Net investment income for the quarter was $2.6 million or $0.40 per share. Total assets were approximately $190.8 million, and the value of the invested portfolio was approximately $186.9 million. The net asset value at the end of the quarter was $22.04, up $0.03 per share from the prior quarter. We believe no meaningful credit issues currently exist within the portfolio, and the majority of the underlying banks continued to be scored investment grade by Kroll Bond Rating Agency. Now let me turn to the portfolio review. This was another quiet quarter within the community banking industry. As published by SNL, there were 8 reported sub-debt deals closed in the quarter, raising approximately $1.9 billion. 2 of the largest deals were the combined issuance of $1.7 billion, closed with an average 4.05% coupon rate. The balance of the reported 6 deals raised approximately $165 million with an average coupon of 5.86%. This puts into perspective the value of our adviser in being disciplined and patient as we made a $4 million investment during the quarter in TransPecos Financial Corp., yielding 9%. Also, as we reported last quarter, we became aware of Wintrust Financial's intent to redeem Chicago Shore Series A and B, which had been in the portfolio since 2014. In early July, we exchanged our preferred stock positions in Chicago Shore for variable rate preferred stock issued by a new financing vehicle, First Marquis Holdings. First Marquis received the unpaid dividends of approximately $1.8 million as well as the $6.55 million principal repayment from Chicago Shore subsequent to the end of the quarter. First Marquis is expected to pay quarterly dividends to StoneCastle at a current rate of approximately 13% per annum, which started this quarter. Consistent with our conservative view of managing the portfolio, this transaction was designed to provide shareholders with stable, long-term economic benefits with multi-year cash flows rather than a one-time income pickup. The portfolio's estimated annualized current yield of 9.16% is a continued testament to shareholder value created by our adviser. This yield is a pickup of 44 basis points from June 30. The estimated yield is subject to fluctuations as the mix of portfolio investments will change, but it has been consistently above 9% for the last 7 out of 10 reported quarters. The quarter-end schedule of investments can be found in the company's SEC filings and on the company's website. Now let me turn to the market for new investments. As I mentioned earlier, the market remained slow with bank demand for capital below historic norms due to the high equity capitalization within the banking industry and remaining tepid economic growth. As the interest rate environment continues in transition, we believe the best course of action is that of patient capital and prudently utilizing our line of credit for any additional asset growth. Therefore, we continue to focus on credit quality as a priority in the portfolio. We're not in any hurry to invest into this relatively low credit spread environment. As always, our origination team is focused on investments that outperform and that are accretive to our portfolio. Also, I want to remind our shareholders that StoneCastle's investments predominantly ranked higher than common stock in the community banks' capital stack. This offers protection in an environment where asset quality concerns maybe heightened due to rising rates and equity market's volatility. Now let me turn to community bank financial trends. In general, the community banks continue to show positive results. In the FDIC's latest quarterly banking profile for Q2, net income growth for community banks was up 21.1% year-over-year, with 73% of banks reporting higher net income compared with a year earlier. This growth was reported on higher net operating revenues and lower income tax expenses. Community bank loan and lease balances rose by $103.2 billion or 7% compared with a year earlier, exceeding the growth rate by 400 basis points over non-community banks. Net charge-offs declined by 3 basis points to 0.15%, a rate that remained well below that of non-community banks at 0.54%. Let me conclude my remarks by commenting on StoneCastle as an investment. Given the current market volatility, particularly in the emerging markets, I want to emphasize that an investment in StoneCastle Financial is a pure domestic play on local market economies across the United States. With approximately 60% of our dollar-weighted underlying bank investments in the heartland of the country, banks offer a strong geographic diversification across over 30 states. StoneCastle invests in small community banks. The majority of which have $1 billion in assets or less. These banks for the most part served in local markets, which is a differentiating factor from regional banks. We continue to believe that an investment in StoneCastle Financial afford shareholders a greater opportunity for capital preservation relative to the market. Now I want to turn the call over to Pat to discuss the financial results and provide details on the underlying value of the company.

[Patrick Farrell:]

Thank you, Josh. As I do each quarter, I will present the financials by going through the detailed components to help you understand the value of the company. The net asset value at September 30 was $22.04, up $0.03 from the prior quarter. The NAV is comprised of 4 components

[Josh Siegel:]

Thank you, Pat. Now operator, we would like to open up the call for questions.

[Operator:]

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Devin Ryan with JMP Securities. Please go ahead.

[Devin Ryan:]

Great, thanks. Good afternoon, guys. How are you?

[Josh Siegel:]

Good. How you doing?

[Devin Ryan:]

Doing well. A pretty straightforward quarter. So not too much for me. I'm a little perplexed by the recent stock decline, just given the stability in the portfolio. So more of a statement than a question, but a good quarter. I guess, my 1 question, really, just more around CISO. And just, I know, you've said that many banks, really, aren't prepared for CISO, I mean, that's kind of what we've been seeing as well. And obviously, there's been some recent calls for delays. And so I'm bit curious if you're hearing anything there. And then just with the existing kind of portfolio, other banks within kind of where you already have exposure to that that you think you could need more capital, assuming CISO continues to move forward here?

[Josh Siegel:]

Well, that's a good question. I was actually down meeting the new Chair of the FDIC 2 days ago and CISO was 1 of the topics that came up. Just haven't had a chance to meet Chairman McWilliams before. And they, kind of, have that same concern that a lot of banks have been able to quantify what the number is, there is still a number of different software solutions that are out there, which is basically a calculator, but the big challenge is what are the right assumptions. That's the same challenge that we have looking at any individual bank is not having the unbridled access to loan information makes it hard for even us to have the right data. That's said, there's definitely some banks in our portfolio that simply for the accounting reason will need more capital to remain well capitalized, if CISO goes into effect, but again, that's still a year and a half down the road at least before that goes into effect officially. So, it's not going to have a short-term effect and we stay pretty center in the industry and stay in those industry discussions, so that, as those opportunities come up, we will be there to catch them. But it's a little early still for anything to come from that.

[Devin Ryan:]

And then just a follow-up here. So obviously, that the broader equity markets have been pretty volatile over the past month or so. But we haven't seen a lot of movement in, kind of, whether it be various credit spreads or bank loan indices. And so, I'm just curious, you guys have a lot of data at your fingertips around the banking industry, I mean, it doesn't sound like it, but are you seeing any signs of change in direction around credit or anything that's worrying at all. I mean, it seems like, some stocks have traded as if yet. We haven't really seen it and, obviously, potentially, there's a slowing of growth in the economy, but, kind of the calls for recession, we haven't been seeing as well, either. So I'm just curious because it seems like that maybe your stock has been pulled down as well with some of that, but it doesn't really seem warranted based on the direction of the underlying portfolio. So, I'm just curious for some thoughts there as well.

[Josh Siegel:]

Well, let's go in reverse chronological order. I mean, there is nothing that justified the correction in the stock price. I think, it's just again that we have a more thinly-traded company. If you have somebody wants to sell some shares and there isn't another side there to pick it up. It moves the needle more than it would elsewhere. Nothing has changed in the portfolio that gives us any concern, there is nothing that's really changing the industry. I mean, of all states, I don't know, what was it, last week, I was up in Michigan, I think it was, I was brought into teach the Michigan Department of Financial Institutions for a couple of hours. And so, I had every examiner and the commissioner for few hours at my disposal and they were pretty much saying all is quiet in Michigan and granted, that's 1 state, but that's what I hear from still all the states. There is really no hotbeds of problems. Even what was happening with sub-prime consumers 6 months ago, it hasn't really picked up in pace. So we're not seeing anything. It doesn't mean that it's not there, just no one's is really seeing any effects. Banks are still - for lack of a better term hoarding excess capital. Very few banks are tight on capital right now. And you're right, sort of, going with your first question, we are sitting mostly in debt or preferred senior debt. We're quite a faraway away from the banks' ROE. Before we take any kind of a credit loss, you have to have massive, massive losses at these banks, and I mean, that hardly even happened during the financial crisis of '08 to '13. I mean the community banks had a cumulative default rate under 1% per annum. It just wasn't that bad. So I just see - I don't see a lot that would justify, sort of, a change in view, I also think people are maybe a bit over-nervous. There was the whole sort of Bank of the Ozarks in the industry. About 2 credits they had since the crisis, where basically the regulators said, I'd like you to change the mark on it. It sounds like they've made fresh loans and took a loss. In fact, it's very reminiscent of what happened with Chicago Shore. When we invested in that, we knew every loan that was in there, the 2 loans that regulators wanted them to re-markdown ultimately worked out just fine. This is a very similar situation. The difference is these guys have lost a few billion of market cap. So, it seems overblown, maybe, we're all missing something and there is some real problem there, but outside of that, we're not seeing it. I don't think that - and this is a more macro point, I don't think that there's anything wrong with the market letting off some steam and evolved them thinking it's a bit too high and I think folks are now trying to grasp for a reason to correct it. But broadly enough, there still isn't anything meaningful to point to that would show much different. I mean, just watching last couple of days of earnings in other sectors, corporate earnings tend to be still generally good. So, your guess is as good as ours.

[Devin Ryan:]

Well I appreciate this perspective is always Josh, thanks very much.

[Josh Siegel:]

Sure, our pleasure.

[Operator:]

Our next question is from Christopher Testa with National Securities. Please go ahead.

[Christopher Testa:]

Hey, good evening, guys.

[Josh Siegel:]

Hey. What's going on?

[Christopher Testa:]

Not much. Thanks for taking my questions as always. And Josh, last quarter when we spoke, you had mentioned that one of the biggest concerns for banks is deposit flight given the uptick in short-term rates and since we've seen this kind of continue to grind higher, just wondering how much more worried are the banks today compared with last quarter when we were speaking about this potential issue?

[Josh Siegel:]

More worried. The buzz in the industry is almost - I'd say, if you had to pick a ranking of what their focus is, 70% of their worry right now is liquidity. Not that they have any liquidity problems, they're just realizing I can't get away with paying as little as I did a few years ago. And you're seeing a bit of a bifurcation in the industry. You have a subset of 500 or 1,000 banks who tend to be the faster growing banks who are paying up for deposits to compete with sort of the larger money center banks who have gotten more aggressive, but you still have a great number of community banks that are trying to hold off as long as they can. They don't have a lot of loan growth, yes, they have a lot of credit issues but increased deposit cost put pressure on earnings. And I think to some extent that is still fueling some of the M&A that we've seen this year, which is at the same pace so far as it was last year. So, from the standpoint of the market, you're hearing more discussions about creating digital banking experiences, trying to reach out to new markets. I was on with the bank from Texas today, and they were telling us what they've done of creating a true digital branch network. I mean, there definitely are banks that are starting to look at things they wouldn't have looked at a year ago as new ways to cap sources of liquidity. So, I don't think there is a liquidity concern, still the loan to deposit ratio in the industry is at historic lower points, not the lowest, but it's still quite low. So, it's not a risk to the industry, but that the earnings pressure is real, because if the Fed keeps going, loan rates are backing up a bit. In fact, we've seen on deals that have come our way. I mean it's up 100 basis points in the last 6 months. So, it is starting to come back up, it's still not up as high as we'd like, but things that are coming through the trends now are meaningfully wider than they were just a few months ago. So, it is translating through a bit, but the deposit side is going to be remaining pressures.

[Christopher Testa:]

And looking at the deals that you cited from the SNL data, I mean the coupons are just at staggering low levels, I guess, especially compared to the 9% that's on your books currently. So, I mean, I guess my question is what's causing this? Is this more of, there is either new entrants in the market, just not a lot of activity or is it that the banks are so at each other's growth over loans that they just simply don't have the high enough earnings power to actually support higher rates from the people willing to lend to them?

[Josh Siegel:]

Let just start with the last one first. If they did have the excess earnings, they're still not going to spend it if they don't have to. They're not going to offer to pay a higher rate. I mean if they can clear the market at 5%, I'll be thrilled to take it at 5%. So, it's not really that last piece. Part of it is that you still have a drought of good product, meaning, good credit products for fixed income investors to buy. Every insurance company we talk to is scrounging to find things to buy. There just isn't enough paper, given the amount of liquidity that a lot of these financial asset-based companies are sitting on. And that is really the #1 driver. There is just too many buyers, not enough good product. We have the advantage in that a $200 billion insurance company isn't going to waste time on TransPecos. We've known Pat Kennedy a long time, we've looked at him often on for years, the opportunity came up and that's what we do, is we try to find that value. And while we're - while the market is a bit slow for new deals and we're not going to go chase market deals at the rates you just pointed out, it's not like we're sitting here idle at the firm either. We're extracting value from things like First Marquis, we're starting to look at whether we could refinance the CLO early and pick up some extra value there, no guarantee we can do that because it had a 5-year non-call for refinancing, but we're having discussions. We're going to see if we can extract value. So we're trying to find the nickels and dimes everywhere we can to not bend on our credit view, but still maintain and hopefully improve earnings; that's the goal. But to your sort of what you're getting at, we can't fight the market. If this perpetuates longer, we'll just have to work with it and maybe bring our yields down. We don't have to do that right now, but we're not averse, because we're not going to bend on credit.

[Christopher Testa:]

And just I guess, so it's one of my earlier points on this, are you seeing new entrants? I mean, we've seen obviously a lot of pressure in middle-market lending and that's sort of kind of started to seep into venture lending now. I have seen deterioration in terms, so come into bank lending as well?

[Josh Siegel:]

No, no, it hasn't. I mean I think the most important stat isn't the numbers from what we cited on the number of deals done. It was the number of deals done, 8 deals in total out of 5,400 banks is just quiet. In fact, there was a firm that does occasionally dabble in the space called Angelo [indiscernible] few years ago. From what I think we had seen publicly, they had filed to try to create a copycat for StoneCastle Financial and they recently just pulled the deal. So, it's not that we have new entrants, in fact, which is good, we're losing competitors, but the deal flow is low, but that's fine. We're sitting here with a big catchers net and when things change, if we're the only person standing and have great credit quality, perfect for us.

[Christopher Testa:]

And just on CISO, I know that you've stated the banks are not preparing in terms of them taking on more sub-debt and the kind of beefing up Tier 2. Are you anticipating or have you heard anything regarding them potentially changing composition of their loan portfolio to maybe more short-dated type residential real estate loans and things of that nature, so that they don't have to provision as much?

[Josh Siegel:]

It's a good question. The most recent time that I was in a closed door session with about 20 bank senior executives, there was definitely that discussion point. That's not something you can change on a dime, right? The average duration of the portfolio is 4.5 to 5 years. So, it can - if you like the Titanic, you can start to move the writer, but it's not going to move the barrel shift too quickly. That said, it is one of the things that they're thinking about is if this proceeds exactly as planned, we're going to have to factor in the duration of these loans and come in shorter. I mean it's the only way they were ever going to be able to make it economically viable or if the industry settles on just passing the cost through to the borrowers, right to normalize it. As we've said before, you can look at bank earnings through all different interest rates and they tend to normalize, right? The banking industry needs a certain amount of excess spread to live. And if that means that the borrowing costs have to be higher, the industry just by default passes it through to borrowers. There is no way around it. You can't have banks losing money. So ultimately, will normalize, but in the short-term, you are definitely seeing banks contemplate that as a possible tool.

[Christopher Testa:]

And last one for me, I know you said the First Marquis vehicle started to pay this quarter. Just my questions are, was this a full quarter of that 13% yield from First Marquis and where is that showing up on the income statement? Is that counted as interest or dividends?

[Josh Siegel:]

That was a partial quarter and that's showing up as interest for this quarter.

[Christopher Testa:]

So, when you take partial pack, you have like a ballpark estimate, just how much?

[Josh Siegel:]

Let's say, a full quarter is about $220,000, I think about $180,000 this quarter.

[Operator:]

Our next question is from Bryce Rowe with Robert W. Baird. Please go ahead.

[Bryce Rowe:]

Just I guess a couple of quick ones here on the common equity investments and I think you guys talked about this last time, but maybe I'm wrong, just kind of curious what's your appetite is on Howard and keeping it in the portfolio? Is there any thought to try to exit that position?

[Josh Siegel:]

Yes, it's been on our list. Now that we have more flexibility to exit out, it is something we're looking at, because again, if we don't see that the - our view of the rate of return from here is worthwhile and it's not going to exceed what we can do either on a cash-based rate of return or another equity investment, yes, we'll exit. So, it's definitely on the review list for at some point, maybe rotating out and the same potential, we can go for Happy as well. We've been in that, we've had a great sort of increase in value just from the increase of their book value, not in change of price-to-book just the growth of the bank. So, that's been good. And at some point, we might rotate out of that as well to pick up some additional earning assets - earning in terms of cash earning rather than appreciation.

[Bryce Rowe:]

So, yes, I was going to ask about the valuation higher on Happy. So that's primarily just an increase in their book value, you haven't applied a higher price-to-book multiple to get to that higher value?

[Josh Siegel:]

Not in the past, going forward, we may. One kind of rare thing about a private community bank, Happy, at least twice a year, sometimes more than that on a quarter-end, they do an open buy/sell. So they go out to all their private shareholders, which is very heavily community-based investors and they make a price and they will either issue or buy at that price. Kind of unique, very few banks do that. It's - it created an equity machine for those guys. Because investors know they can get liquidity, they're more out to invest and so he has done an amazing job on his own, no investment bankers just raising tens of millions of equity locally. So, we get those prices when he sets those. So, I mean, that is as true a market it can be, because it is an open market if we want to sell into it. So, when we get those levels from the bank, we will reflect that in our pricing.

[Bryce Rowe:]

Got. That's good detail. Thanks guys that's all I had. I appreciate it.

[Josh Siegel:]

You got it.

[Operator:]

Our next question is from Dominick Gabriele with Oppenheimer. Please go ahead.

[Dominick Gabriele:]

Hey, thank you so much for taking my questions.

[Josh Siegel:]

Sure, of course, yeah.

[Dominick Gabriele:]

I just want to touch on some of the expenses, total expenses as well as interest costs in the quarter. They had - interest cost had kind of a decent step up quarter-over-quarter. Could you give some color on your outlook for interest expense and where you think this could trend over the following few quarters, given the Fed rate path as the 540 kind of like the new starting point or is there something in there that kind of pushed it temporarily higher?

[Josh Siegel:]

So, Pat maybe you want to start out with the expense side and then I can talk to at least crystal ball on interest rates.

[Patrick Farrell:]

So, yes, true for the quarter, our interest expense did go up by $42,000. Really that number does fluctuate intra-quarter in terms of our borrowing amount. So depending on how much we have borrowed, what we're paying down, how money comes in, we try to manage that as low as possible so that we can keep our expenses down. This quarter, we did have some increase in the rate for the quarter and actually, I think this quarter we actually did a 2-month LIBOR selection instead of a 1-month in order to save a few points over the longer term during the quarter. And looking forward however, it's really a question of where we think rates are going to go and I think I'll pass it to Josh to give his thoughts on that.

[Josh Siegel:]

Yes, the other thing on that, that factors in is sort of the end license statistics, because our balance sheet is only sort of a snapshot at the end of the quarter, but through the quarter, which is unusual for us, because we have a revolving line of credit. So we may borrow and then pay down before the end of the quarter, so you look at that and you'd be right as an analyst to say, wow, the interest expense, the dollar amount was high. Yes, but it could be on average higher borrowings during the quarter, which won't show up in the financials, so just keep that in mind, because sometimes things will pay off before the end of the quarter, so the snapshot looks like a lower debt amount, yet your interest cost was higher. So, you kind of keep that in there. On the interest rate forward, if you believe the dot chart, it's going to go up a few more times. On the other hand, our President is getting quite agitated with his Fed and even though he can't control the Fed by rule, he's clearly trying to put public pressure to say, slow it down. Whether the Fed cares, what the executive branch says, it's up to them, right, none of us really know. His history would say that they're not going to bend to the will of whatever the legislative or executive branch wants, they have - they are independents to hang on to. So, who knows, when you do look though at the shape of the curve, you do start to worry about creating an inverted curve as the Fed where you're manufacturing, it's not that the market shifted and long rates came down so when inverted. This would be a sort of a forced inversion. So that has to weigh on their minds, because clearly, you will put pressure on banks if their baseline rate is lower for the long-term loan than it is for their overnight deposits. But again, this is conjecture and crystal-ball, who really knows. All we know is right now and we model all the time, changes interest rates on our line of credit. Yes, it affects our financials a bit, but it's just –we're so - it's an under-levered company because where we're at, we just can't borrow that much. It just doesn't move our needle all that much, especially compared to BDCs or REITs, especially BDCs with the new BDC loan, they can lever up even more. It's just going to have more impact on them than it will on us.

[Dominick Gabriele:]

And then just on when I think about the efficiency ratio, which I calculate as total expenses over total investment revenue, there had been some pretty, pretty nice improvement in the past few quarters. And I was just seeing what you thought of that? Is there anything else in the expense base that has risen at all or that any investments there you're planning on making of any kind outside of the rise in interest expense?

[Patrick Farrell:]

On the expense side, I think the one that has gone down a bit is in our professional fees are legal fees. We've tried to manage that more closely. And that also has some impact with regard to deals and things we're working on. We did have some higher expenses, if you recall, just over the past couple of years when we came out with the various like CLO 2018, we did our community funding before that. So those did incur some additional expenses, but overall, most of our expenses have been flat. We've had some decrease in some of our insurance expense over the last 2 years or last quarter really, where we negotiated some better deals there. But generally...

[Josh Siegel:]

ABA fee.

[Patrick Farrell:]

Yes, the ABA fee came down $100,000, I guess last year that checked in, so that's in the current year. But other than that, I think we're at the point now where most of our expenses should be pretty stable for the most part and it's the interest expense is really the line item and of course with the advisory fee depending on quarter-end net assets.

[Josh Siegel:]

Always love to harp on the fact that we've been begging shareholders for years. So, let us convert to a trust, we can save $90,000 more a year, but we can't get enough shareholders to vote. So, just [indiscernible] there, reporting the news.

[Dominick Gabriele:]

You guys have done a great job in controlling expenses in general, just wanted to touch on that. And then there is that roughly $19 million in preferred - in the index fund there, is there any kind of thoughts around moving that money into something else at some point or is that - how do you view that particular investment versus others in your portfolio?

[Patrick Farrell:]

Well, I mean, we've always viewed that as a very nice yielding cash substitute for us that paying us monthly at a roughly 5.5% rate versus cash at maybe 1.5% to 2%. Yes, it does have a credit exposure, but it's on average single A risk $15 billion highly liquid ETF. So, it's been a good place to keep dollars in the short-term and as long as that rate is still accretive to our Atlanta credit, it's not bad and of course we manage it. We could pay - just pay - or sell it and then pay down the line, you will pick up a lot, rather pick up every nickel of earnings we can that's accretive, but yes, so it's a cash substitute for us and as we find lucrative investments like the TransPecos, we sell out some PFF and put it to work. So, it sort of sits there and so we have a longer term opportunity with more yield.

[Dominick Gabriele:]

Great, thanks so much for taking my questions. I appreciate it.

[Patrick Farrell:]

Our pleasure.

[Operator:]

There are no further questions registered at this time. I would like to turn the floor back over to Josh Siegel for closing remarks.

[Josh Siegel:]

Thank you, operator. Thank you, everyone for listening. I believe our next call is going to be in the New Year. So at this time, I'd like to wish everyone a healthy and safe holiday season, even though it's a little ahead of schedule, but we'll talk to you next year.

[Operator:]

This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation, and have a pleasant day.